Minnesota lawmakers strike deal to avert business tax hike

The pandemic's frontline workers are set to get a cash bonus and businesses will see a looming tax hike rolled back under a tentative deal announced by Minnesota leaders Thursday.

What's new: After weeks of gridlock and stalled talks, Gov. Tim Walz and legislative leaders struck an agreement to spend $2.7 billion to refill the depleted Unemployment Insurance Trust Fund and increase the pot of cash for frontline workers from $250 million to $500 million.

• Lawmakers in both chambers are aiming to pass the package and send it to Walz's desk on Friday.

How we got here: Leaders had touted resolving the two issues as a possible "early session" win. But a disagreement between House Democrats and Senate Republicans over how much to spend on both areas resulted in months of inaction.

• With a Saturday deadline for businesses to file higher tax bills triggered by the unemployment fund's debt status fast approaching, leaders agreed to meet in the middle on the hero pay.

The catch: The deal, confirmed by legislative leaders at a MinnPost Festival panel Thursday morning, was reached too close to the wire for the state to recalculate businesses taxes by the weekend, Department of Employment and Economic Development commissioner Steve Grove told MPR News.

• But the bill states pushes the date for paying the taxes to the end of May, meaning businesses have time to figure out what they owe.

Details: Lawmakers estimate that more than 660,000 workers in qualified professions should be eligible to apply for bonuses of at least $750. If fewer people apply, the checks could get bigger.

• The package, paid for by a combination of federal coronavirus relief cash and the state's general fund surplus, also gives the Walz administration $190 million to spend on ongoing COVID mitigation and response measures.

What's ahead: It will probably take a few months for frontline workers to actually get the payments, according to Sen. Karin Housley, a top GOP negotiator on the issue.

• The Department of Employment and Economic Development, meanwhile, will start the process of refunding or crediting businesses that already paid the higher amount.

Of note: An unemployment insurance and frontline worker bill passed by the House this week included language that would make more hourly school workers, such as bus drivers, eligible for unemployment benefits during the summer months.

• That provision didn't make it into this agreement, but Speaker Melissa Hortman (DFL-Brooklyn Park) said Democrats will continue to push for inclusion in a broader jobs spending bill.

This is a developing story. Check back for updates.