Deal to Stop Minnesota Business Tax Increase Remains Elusive

ST. PAUL, Minn. (AP) — Minnesota legislative leaders remain so far apart on a deal to avert a looming increase in unemployment insurance taxes on businesses that they couldn’t even agree Thursday on whether the deadline is next Tuesday, or April 30.

Bills reflecting the automatic tax increase are due to go out to employers from the state on Tuesday. The money would be used to replenish the state’s unemployment insurance trust fund, which has been drained by the COVID-19 pandemic.

The Senate approved a $2.7 billion bill to tap federal coronavirus relief money to pay the state’s debt to the U.S. government for jobless benefits and to avert the tax increase on a bipartisan 55-11 vote three weeks ago. But House Democrats continue to link a fix with a long-stalled plan for “hero pay” for front-line workers who took risks to stay on the job during the pandemic.

Republican legislative leaders, Democratic Gov. Tim Walz and the state Department of Employment and Economic Development agree that the House needs to act before Tuesday to prevent the increase.

“Businesses are staring down a massive tax increase and Democrats in the House are doing absolutely nothing about it,” said GOP Deputy House Minority Leader Anne Neu Brindley, of North Branch. She led an attempt by House Republicans on Thursday evening to force a vote.

But Democratic House Speaker Melissa Hortman, of Brooklyn Park, told reporters after meeting with the governor and GOP Senate Majority Leader Jeremy Miller, of Winona, that she views April 30 as the real deadline for resolving the dispute because that’s the due date under state law for employers to make the first tax payments under the higher rates.

The meeting yielded no apparent progress. Miller declined to comment afterward. Hortman is holding out for $1 billion in bonuses for a broad pool of front-line workers, while Senate Republicans have tried for months to hold that to $250 million for a smaller group and keep it separate from the unemployment insurance dispute.

“There’s no willingness to negotiate on giving money to workers on the part of the Republican Senate,” Hortman said. “So all they want to do is cut taxes for businesses, and not do anything for workers, and we’re not interested in that.”

House Democrats have held out the possibility that employers who pay the higher tax once they get the bills next week could get refunds after a deal is reached. But Doug Loon, president and CEO of the Minnesota Chamber of Commerce, said Tuesday is a real deadline that matters for businesses.

“They cannot have a tax increase at this time,” Loon said, explaining that businesses need to keep their money so they can stay competitive in the marketplace and so that they can attract and pay workers “at a time of grave uncertainty.”

Community banker Brady Folkestad, of Lakeview Bank in Lakeville, which employs 21 people, said many small employers fully tapped their lines of credit and savings to get through the pandemic and pay employees.

“They’re places in your neighborhood and they want to be here for you today and tomorrow, next week and next month,” Folkestad said. “They really can’t sustain another tax increase.”