By. Sen. Mike Kopp, published in The Pueblo Chieftain
What if we could lift a costly and obsolete tax off the backs of Colorado’s businesses while also imposing a little more fiscal discipline on our state government - all in one move? Especially with the state’s economy slumping amid a deepening national recession, there is no surer way to help our state’s employers create jobs than to lighten the load heaped on them by government.
We can accomplish that and more through legislation I have introduced in the General Assembly. Senate Bill 37 will repeal a state surcharge on the premiums that employers pay for their insurance policies covering their workers' job-related injuries. The surcharge is one of the many hidden taxes Colorado’s businesses pay, eroding their ability to invest in expanded operations and new jobs.
We could inject nearly $300 million back into our state's economy over the next five years by eliminating this assessment on businesses. In fact, ending the tax would free up additional business cash flow that would amount to the equivalent of 5,000 jobs at $50,000 a year each. That could give a boost to businesses up and down the Front Range and across the state, especially among smaller employers. What’s more, the tax is obsolete. It was implemented decades ago to help defer the high costs associated with catastrophic on-the-job injuries. The revenue has gone into two funds -the Subsequent Injury Fund and the Major Medical Fund - which were closed to new beneficiaries years ago for a number of reasons.
The tax itself was structured to bring in more revenue than is annually paid out in benefits to remaining beneficiaries. The reason for that was to allow the funds to amass enough revenue over the years so that they could someday cover all future obligations to beneficiaries without additional cash infusions. At that point, the tax on businesses was supposed to cease. That was supposed to happen in 2003.
Unfortunately, “someday” never came. Instead, lawmakers have tapped the funds - raided them, actually - to cover unrelated operating expenses of state government in economic downturns. That occurred in 2003, during the administration of former Gov. Bill Owens, when lawmakers following the governor’s lead took more than $200 million from the funds.
It is about to happen again, amid our current budget shortfall, as Gov. Bill Ritter is proposing to take well over $100 million from the funds this year and next.
As a result of playing fast and loose with this money, Colorado’s businesses continue to pay the surcharge - for obligations to injured workers that they actually made good on years ago. In short, they are being forced to replenish a fund that is being robbed.
There is over $200 million in both funds today, and if left alone, they now will become self-sufficient as soon as next year. If lawmakers, at the behest of the Ritter administration, raid the funds once more, it will wind up pushing back the solvency date yet again.
Make no mistake; this is not “free” money. Employers continue to pay into funds that were supposed to stand on their own long ago. And the payments aren’t benefitting newly injured workers; they are subsidizing free-wheeling spending on unrelated state government programs. In other words, employers are being forced to support the bad habits of our state’s elected policy makers.
By ending this outdated and onerous tax on business we will help elected officials kick that habit. Once they realize there won’t be more money coming into the funds, they will know they cannot tap into them without running the risk of shortchanging the rightful beneficiaries. That would be a win-win: for businesses as well as for greater fiscal responsibility.
Let’s rein in our state government’s free-spending ways and free up employers to create more jobs.
Sen. Mike Kopp is a Littleton Republican in the Colorado Senate.