Governor's jobs budget targets workers, businesses amidst 'unprecedented' times

The COVID-19 pandemic has brought into focus many weaknesses in the state’s economy that need to be addressed before it can even start to return to pre-pandemic levels.

Those issues were highlighted Monday to the House Workforce and Business Development Finance and Policy Committee.

“This has been an unprecedented and challenging year for both workers and businesses,” said Steve Grove, commissioner of the Department of Employment and Economic Development, during a budget presentation.

Several items in Gov. Tim Walz’s budget are crucial to helping both workers and businesses not just weather the pandemic, but to grow and thrive when the pandemic eases, he said. These include:

• a Paid Family and Medical Leave Insurance program, funded by a 0.6% payroll tax;
• $150 million investment in redevelopment appropriation bonds to support rebuilding efforts for small businesses and other private property in Minneapolis and St. Paul that were damaged after the death of George Floyd last year;
• $50 million for a Small Business COVID Support forgivable loan program, to be split equally between the metro area and Greater Minnesota;
• $6 million in the 2022-23 biennium for supporting small businesses hit especially hard by COVID-19; and
• $750,000 to fund the creation of new – and expansion of existing – child care facilities for Minnesota families.

The $50 million in forgivable loans would support the cultural, entertainment, and hospitality industries that have been hardest hit by the pandemic, Grove said. The program also includes set-asides for businesses with fewer than six employees, minority-owned businesses, and ethnic malls.

[MORE: View the DEED budget recommendations]

The Paid Family and Medical Leave Insurance program would be structured like the state’s Unemployment Insurance program, which is self-funded through payroll taxes on workers and employers.

However, to get the program started, Grove said the governor’s budget includes a one-time appropriation of $11.4 million from the General Fund in fiscal year 2022.

Although the pandemic has exposed some shortcomings in the state’s economy, Grove said it has also revealed how the state can be an active partner with both workers and private businesses to achieve shared goals.

“It is in times of great challenge that government needs to step in and help an economy survive and thrive,” he said.

Fortunately, Grove said the state has a very diverse economy that will help it recover more quickly than other states with less economic diversity.

The committee took no action, but will do so later when DEED funding bills are heard by the committee in the coming weeks, said Rep. Mohamud Noor (DFL-Mpls), the committee chair.