JOBS & ECONOMIC DEVELOPMENT

Beginning the 2020 Legislative Session the state had a significant forecasted surplus. In a matter a few months the legislature took the unprecedented step of needing an update budget forecast as a result of the economic uncertainty COVID-19 created. The updated forecast found swung negative by $4 billion resulting in a deficit of $2.426 billion.

The pandemic created a health and economic crisis across the country. Congress responded by passing the CARES Act which provided $2 trillion dollars in stimulus. As part of that bill unemployment insurance was extended, worker protections were increased, individuals able to qualify for unemployment were given a $600 supplement to their benefits, and unemployment insurance was extended to qualifying small business owners/independent contractors. Resources was also made available from the federal government for businesses through the Small Business Assistance programs.

The impacts of COVID-19 cannot be understated. The pandemic forced Governor Walz to issue Stay At Home orders to protect public health and ensure hospitals had time to ramp up. In a matter of months, over 600,000 filed for unemployment and businesses struggled.

COVID-19 provisions passed

Presumed Workers Compensation Benefits for Frontline Workers: Qualifying public safety and health care workers who contracted COVID-19 were presumed to have become ill in a work setting and would be eligible for workers’ compensation benefits. The bill streamlined the process for workers to have access to compensation benefits for workers most at risk of getting COVID-19 in the process of caring for people. (HF 4537)

Small Business Emergency Loans: Approximately $30 million for businesses directly impacted by Governor Walz’s Executive Order closing restaurants, bars, and other places of public accommodation was made available in the form loans and grants. To pay for the program $20 million was taken from the Minnesota 21st century fund and $10 million from the Minnesota Investment Fund.  This proposal was included in an Executive Order but was later added to statute. (HF 4531)

Small Business Loan Guarantee Program: The Legislature appropriated $10 million to help small businesses impacted by COVID-19 but do not qualify for an SBA disaster assistance loan. The proposal guarantees 80% of loans up to $200,000. A small business is defined as employing no more than 250 full-time equivalent employees. The loans could be used for machinery or equipment purchases, maintenance or repair, and working capital if it is secured by fixed assets when possible. This proposal was included in an Executive Order but was later added to statute. (HF 4531)

Provisions not passed

Workers Comp Reimbursement: A fund was created to offset the cost of HF 4537 (Presumed Workers Compensation Benefits for Frontline Workers). The language allows a self-insured local government entity, local government self-insurance pool, self-insurer to be eligible for reimbursement when workers’ compensation claims reach $100,000. For other providers, eligibility occurs when COVID-19 related workers’ compensation claims reach $1,000,000. (HF 4206)

Small Business Emergency Loans II: Approximately $60 million dollars is award for small businesses. Additionally, the proposal appropriates $60 million in FY 2020 from the coronavirus relief fund for small business relief grants. Of this appropriation, $30 million is for grants to the Minnesota Initiative Foundations which shall distribute it to greater Minnesota and $30 million to serve businesses in the seven-county metropolitan area through grants to nonprofits. The grants would target small and micro-businesses as well as reserve money for cultural malls. Approximately $15 million of the appropriation will target women, minorities, and people of color. Resources were also made available for cultural malls ($2.5 million).

This proposal would also repay the Minnesota 21st Century Fund from future budget surpluses. Resources was taken from this source previously to fund the Small Business Relief Program.

First special session update

COVID-19 provisions passed:

Small Business Emergency Loans II: This bill did not pass during regular session but was a priority during the special session. The proposal provides for $62.5 million in resources for small business development grants, with approximately $60 million coming from the coronavirus relief fund. The money will be equally divided between the metropolitan area and rural Minnesota. Additionally, the money is reserved as follows:

  • $18 million must be awarded to businesses with 6 FTEs or less
  • $15 million is reserved for minority businesses ($10,000,000), veterans ($2,500,000), and majority owned and operated by women ($2,500,000)
  • $2,500,000 is reserved for retail space and food markets that has an ethnic cultural emphasis
    • 25% tenants need to have fewer than 20 employees; Up to $250,000 per operator, all but $10,000 needs to be awarded to subgrants to existing tenants; must be used to maintain existing tenants, and 50% of the grant be used to forgive rent of existing tenants.

To qualify, businesses must be located in the state of Minnesota and owned by a permanent resident of the State of Minnesota. They also need to be in good standing with the Department of Revenue and the Secretary of State pre-COVID 19, employ 50 full-time workers or less, and be financially impacted by COVID-19. Funds can be used for working capital, payroll, rent, mortgage payments, and utilities.

This proposal would also repay the Minnesota 21st Century Fund from future budget surpluses. Resources were taken from this source previously to fund the Small Business Relief Program.

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