State of the State, Unemployment Insurance Trust Fund, and more

State of the State
Gov. Tim Walz presented his annual State of the State address last Sunday evening. The speech was delivered in person to a joint session of the legislature for the first time since 2019. The 54-minute speech touched on the issues of Child Care, Education, Mental Health Care, Public Safety, Paid Family Leave and Health Care. Walz reflected on the challenges of the COVID-19 pandemic, expressing optimism about the direction of the state’s recovery, saying, “Our budget reserves have hit a record high, and our COVID infections and hospitalizations have hit record lows.” He urged for compromise from the Legislature, stressing that the projected $9.25 billion budget surplus should leave room for a deal on Unemployment Insurance/Frontline Worker Pay. 

Unemployment Insurance Trust Fund
Following Gov. Walz’s call for action at the State of the State, the House passed HF 3166 late Monday evening. Back in February, the Senate passed SF 2677, the legislation proposing to repay the federal government and replenish the state’s unemployment insurance trust fund to pre-COVID levels. Protecting Minnesota’s employers by paying back the federal loan and funding a surplus in the Unemployment Trust Fund is one of the highest priorities for Senate Republicans.

For months, the House DFL held off, only willing to replenish the fund under the condition of expanded frontline worker pay. On Monday night, the House finally passed HF 3166 with amendments to include the House DFL’s priorities for frontline worker pay and unemployment benefits for hourly school employees. Passage of this bill set up the process to begin the work to reach agreement.

The House’s urgency was likely sparked by today’s deadline, which would kickstart higher payroll taxes for employers to replenish the fund. First-quarter tax bills reflecting the increase started going out in March and are due April 30. Any employers who already paid the increased first-quarter tax would receive a refund. In addition to replenishing the UI trust fund, the final bill includes one of the House DFL caucuses’ most pressing priorities: frontline worker pay. The House’s bill includes $500 million to provide additional pay to workers who worked on the frontline during the pandemic. This includes health care, law enforcement, school employees and grocery store workers.

The House and Senate appointed a conference committee, which met late Thursday evening to hammer out the differences between the two bodies’ versions of the bill. The committee adjourned at 11:50 p.m. with an agreement that includes the Senate Republicans’ priority to refill the Unemployment Trust Fund, and the House Democrats’ priority to expand frontline worker pay. The deal will include $500 million for frontline workers such as nurses and long-term care employees. The checks are expected to be approximately $750 per person for the 667,000 workers who are eligible to apply for them. The agreement also appropriates $2.7 billion to refill the Unemployment Trust Fund before employers face tax hikes on Saturday. However, DEED Commissioner Steve Groves has said that the agreement has come too late and that employers need to pay the amount they were billed and wait for credits and/or refunds to be issued in the 2-3 months that he expects it will take for DEED to “unwind” this issue. 

Read more: Public Safety and Other Legislative Priorities Passed by the House and Senate