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Forum Editorial: Minnesota should act fast to protect businesses from an expensive cost increase

Minnesota is paying $50,000 a day in interest to repay a loan for its depleted unemployment insurance fund. Legislators should act quickly to avoid a March 15 premium increase for employers already reeling from the pandemic.

Editorial FSA
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The pandemic has been brutal for many businesses, especially during the lockdown phase. Businesses shut down to help slow the spread of the coronavirus.

Predictably, business shutdowns and interruptions caused unemployment to soar. As a result, the Minnesota unemployment insurance fund was depleted and is in need of replenishment.

Urgently in need. If the Minnesota Legislature doesn’t act by March 15, employers’ unemployment insurance premiums will go up significantly. That would be another blow to businesses still reeling from the pandemic, supply chain and workforce challenges.

Minnesota leaders simply can’t let that happen.

Fortunately, a strong bill to replenish Minnesota’s unemployment insurance fund has passed the Senate. Senate File 2677 would appropriate $2.7 billion to immediately pay off the state’s $1.2 billion unemployment insurance fund debt.

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Minnesota is paying $50,000 a day in interest on the federal loan.

To repay the loan and replenish the fund to pre-pandemic levels, the bill that passed the Senate would appropriate $2.3 billion from the state fiscal recovery fund and $408.5 million from the general fund.

An alternative House bill wouldn’t really replenish the fund, but would repay the $1.2 billion loan.

On this issue, Gov. Tim Walz and a few DFL legislators support using $2.7 billion of the state’s ample surplus — basically agreeing with the Republican position embodied in Senate File 2677.

So the idea has bipartisan support. Sen. Kent Eken, DFL-Twin Valley, supported the bill in the Senate. Now Rep. Paul Marquart, DFL-Dilworth, and Rep. Heather Keeler, DFL-Moorhead, should follow suit and vote for this bill to immediately repay the federal loan and restore the unemployment insurance fund.

Businesses in Minnesota — the vast majority of them small businesses — would be penalized through an average of 16.5% higher premium surcharges if the state fails to meet the fast-approaching March 15 deadline.

That would be irresponsible governance. It would be bad for business, and therefore detrimental to the economy. Without action, the Minnesota Department of Employment and Economic Development estimates that it would take more than 10 years of higher employer premiums to replenish the unemployment insurance fund and pay off the federal tax penalty.

This is a problem that has been allowed to fester too long. It’s a problem the state can fix. The burden shouldn’t be allowed to fall upon employers, many of whom sacrificed during lockdown. And it’s a problem with an obvious solution.

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The Minnesota House should move quickly to pass Senate File 2677 to pay off the debt and keep the unemployment insurance trust fund sound.

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