Senate bill demands cash fund pay back (6981)

Filed under: News |

Supporters of Senate Bill 112 say the Colorado General Assembly is robbing Peter to pay Paul, and business owners are picking up the slack through increased taxes and fee assessments. Tim Jackson, executive director of the National Federation of Independent Businesses, a proponent of SB 112, said in a February news release, “When the going gets tough, the tough don’t pull out the credit card, but tighten the purse strings and make do until times get better.”

Although state lawmakers are not pulling out credit cards, they are raiding cash funds to make up for budget shortfalls

SB 112, sponsored by Sen. Ron May of Colorado Springs and Rep. Shawn Mitchell of Broomfield, requires the General Assembly to consider any cash fund transfers as “loans to be repaid from the general fund before any new state-funded programs are created or any existing state-funded programs are expanded that would obligate general fund monies.”

According to the bill, “The General Assembly (as state revenues declined in 2001, 2002 and 2003) enacted bills requiring the state treasurer to transfer monies from various cash funds & to the general fund.”

A few of the hijacked cash funds listed in the summary of the bill are the employment support fund, the subsequent injury fund, the unemployment compensation fund, the workers compensation fund and the department of state cash fund.

May quoted the dollar amounts plucked from the above funds and transferred to the general fund. The worker’s compensation fund is down by $168 million. The real estate recovery fund lost $3.2 million, and legislators snatched $20 million from the unemployment compensation fund. May said that when the unemployment fund drops below a certain amount businesses are assessed additional unemployment costs.

“For example,” May said, “Tom Perkins, owner of Perkins Motor City Dodge didn’t realize, until I pointed it out, that his employment compensation costs went up by $13,000 this year.” May is not confident the bill will pass, but he said a vote against it is a vote against business. “It is ludicrous to take money that is not taxpayer money; there is no authority to borrow from it (individual funds),” he said.

Jackson said other funds that were raided include Cover Colorado, the state’s insurance plan for residents who are unable to buy insurance because of pre-existing illnesses.

Cover Colorado has bridged the gap between what subscribers pay in premiums and what the fund pays in expenses through the unclaimed-properties’ fund and its interest. When a lack of revenues caused statewide budget shortfalls, lawmakers transferred the unclaimed-property funds and the interest to the general fund.

In order to replenish Cover Colorado funds, the General Assembly asked for permission to apply fee assessments to companies that purchase employee health insurance packages.

Jackson said those employers are assessed a yearly $27.20 per-subscriber fee to make up the Cover Colorado gap.

Jerry McElroy is the director of government relations for Kaiser-Permanente. McElroy said Kaiser factors the fee assessments in with the subscribers’ insurance premium renewals; however, he said other insurance companies, such as Blue Cross Blue Shield, separate the charge as a line item identifying it as a state mandate.

“A couple of years ago, the state added a $2 surcharge to the state income tax returns to make up for the gap in Cover Colorado coverage,” McElroy said.

The government’s decision to cover the gap through fee assessments, which are based on the number of health insurance subscribers a business carries, has one insurance company up in arms.

Great West Life filed a lawsuit against the Colorado insurance commissioner and Cover Colorado claiming that the fee assessments violate the Tabor Amendment. According to the lawsuit, McElroy said, the fee is not a user fee, but a tax.

McElroy said the good news is that lawmakers are considering compromises to lessen the burden on businesses.

On March 4, Gov. Owens signed a bill that transfers $5 million of the $10 million former certified capital company (CAPCO) funds to Cover Colorado. McElroy said that state Treasurer Mike Coffman is supporting a bill that designates a portion of the unclaimed property funds to Cover Colorado.

McElroy also said the gap between Cover Colorado expenses and the premiums paid is narrowing. He said subscribers are leaving Cover Colorado because of various reasons, like high premiums, and the program has instituted an extensive disease-management program to keep subscribers healthy and expenses at a minimum.

Cover Colorado is not among SB 112’s list of cash funds that need legislative protection. However, McElroy said SB 112 protects all the cash funds. “It’s a good thing, a commendable bill,” McElroy said. “They borrowed this money, and if they don’t pay it back, it’s stealing.”

Jackson said, “Our message to the legislators is simple: Don’t go through the back door to increase taxes.”