On November 23, Republican leaders in the Minnesota House of Representatives sent a letter to Governor Walz seeking relief for small businesses from impending unemployment insurance payroll tax increases. You can read the letter here.
The letter urges Gov. Walz to:
- Prioritize UI debt relief in any special session between now and the 2022 regular session;
- Work with the Minnesota Congressional Delegation to reinstate the interest waiver and seek UI debt forgiveness;
- Strengthen UI fraud prevention measures at DEED; and
- Examine options to suspend tax increases until the debt is eliminated and the UI Trust Fund reserve is restored.
As a result of an unprecedented surge in unemployment claims due to the COVID-19 pandemic and state mitigation policies, the Unemployment Insurance Trust Fund (UITF) used to cover unemployment insurance costs ran out in July 2020. Minnesota has borrowed over $1 billion to continue covering claims since then, and employer payroll taxes will increase to pay interest on the debt, pay off the debt, and restore the trust fund reserve to over $1.5 billion.
Without state intervention, payroll tax hikes will take effect on January 1, 2022.
Over 30 states have used federal pandemic relief funds to relieve the burden on small businesses. So far, Minnesota has used $0 of the $2.6 billion from this year’s American Recovery Plan (ARP) to address the UI debt.