Worker bonuses, business tax break sent to Walz for signature

ST. PAUL, Minn. (FOX 9) - A $3.4 billion deal to provide businesses with a tax break and give $750 bonus checks to many workers on the frontlines of the COVID-19 pandemic is headed to Gov. Tim Walz for his signature.

The bill includes $2.7 billion to refill the state's unemployment insurance fund, $500 million in bonus payments to reward frontline workers, and $190 million for the Walz administration's response to the pandemic.

The measure passed overwhelmingly in both the House and Senate on Friday after legislative leaders struck the deal a day earlier. It cleared the Senate 65-1, with only state Sen. Omar Fateh, DFL-Minneapolis, voting no. It then passed the House 124-5, with three Democrats and two Republicans against.

"I think it’s proof," state Sen. Jim Abeler, R-Anoka, said during Friday's floor debate, "that we actually can get something really hard done."

The frontline worker bonuses will average $750 for 667,000 workers. Top lawmakers agreed to use the distribution system approved by the House in February, which makes workers in 15 industries eligible for the checks, including health care, grocery stores, food service and child care.

The $500 million pool is half the size that House Democrats had sought in negotiations. The DFL favored $1,500 bonus checks.

"Providing $2.7 billion to the businesses in the state and only $500 million to the workers means there really isn’t the proper balance that there should be," said state Sen. Sandy Pappas, DFL-St. Paul.

The worker bonuses came together after a nine-month stalemate over how to reward people who worked at their jobsites during the pandemic.

To claim a bonus, a worker would need to: have worked at least 120 hours in an eligible industry between March 15, 2020 and June 30, 2021; not have been eligible for telework; and not have collected unemployment benefits for more than 20 weeks during that period. Income is capped at $175,000 for people who worked with COVID patients and $85,000 for all others.

Workers will eventually need to apply to the state Department of Labor. The agency is waiting until the bill passes before building out the application portal, a spokesman said.

The $2.7 billion for the unemployment insurance fund will repay a federal loan and bring the account's balance back to required levels. Without legislative action, state law requires businesses to bear the burden through payroll tax increases, and quarterly payments are due April 30.

The last-minute deal comes too late to avoid the tax increase because there's no time to recalculate and send out updated bills before Saturday, state Department of Employment and Economic Development officials said.

So, lawmakers extended the quarterly tax payment deadline to May 31 from April 30 by waiving fees and penalties for nonpayment. Businesses that have already paid the higher tax will get the money back through refunds or credits, a process expected to take two or three months.

Businesses have already paid in $90 million in first quarter payments, state officials said. A total of $427 million is due, though the deal would cut that nearly in half, to $230 million.

Separately, the deal gives Gov. Tim Walz authority over $190 million in general fund money for the state's pandemic response.

The agreement does not include $161 million to make hourly school workers eligible for unemployment benefits during the summer months. House Democrats had inserted that provision into a bill earlier this week, and top DFLers said they would continue pushing for the change later in the legislative session.

Lawmakers have now used $4.2 billion of the state's projected budget surplus and federal relief cash since the start of the session. It leaves more than $6 billion in available money over the next year.