Retro Bill Passed by Senate Committee

AGC and a broad business coalition are working to oppose legislation that would affect the workers compensation retrospective rating programs offered by AGC and several other organizations.

SB 6035 has been passed by the Senate Committee on Labor Commerce and Consumer Protection. Among other things the bill restricts refund flexibility ignores the risk assumed by retro associations and holds retro association to a different standard than would apply to the rest of the State Fund for funds use.

We believe this bill is both short sighted and unfair said AGC Executive Vice President David DHondt. The fact that we are arguing over refund money speaks to the success of the system. Organizations have refund money only because they have so successfully improved workplace safety and managed costs. SB 6035 hamstrings organizations with regard to the use of their refunds. This diminishes the economic incentive that the group retro system gives employers to manage costs.

DHondt added that it is unfair for the state to restrict how a private entity uses its own money. It is important to remember that no taxpayer money is in play he said. The system is funded not by state general fund dollars but by the premiums paid by employers. A refund is not a refund of taxpayer dollars but a refund of the premiums paid by employers out of their own pocket. Restricting the use of the refunds is akin to the state paying a contractor to build a state highway and then saying to that contractor ‘By the way you can spend any profit you made on this project on these things but not on these things. Its simply an overreach of state authority.

This bill was introduced at a time when the state is spending more than $600000 on a study of the group retro system. The money was appropriated in 2007 for a comprehensive review of the system with the involvement of all stakeholders to be completed with a report to the Legislature later this year. DHondt says SB 6035 is a waste of that $600000 and a unilateral solution to a problem that may or may not be identified by the retro study group.

Contact Christine Swanson AGCs Government Affairs Manager at 360-352-5000 with questions or comments.