April 15, 2009 08:27 PM UTC

Pinnacol Funds Bill Dies, Budget Plan In Chaos

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• by: Colorado Pols

UPDATE: Governor Bill Ritter’s statement after the jump. Excerpt:

One idea to help ease the remaining $300 million budget shortfall was to tap into surpluses held by Pinnacol Assurance, the state’s largest workers’ compensation insurance company. Members of my staff and I have tried in good faith to reach an agreement with Pinnacol.

“However, there remain too many unresolved issues and questions for Colorado citizens and Pinnacol shareholders and customers. Therefore, with a budget deadline looming, I have halted negotiations with Pinnacol. Together with my budget office, the JBC and legislative leadership, we are now focusing on a number of other steps to erase the shortfall caused by the economic downturn, without devastating cuts to higher education.”

As the Denver Post reports:

The plan to transfer $500 million from Pinnacol Assurance, a state-chartered workers’ compensation fund, fell through today as lawmakers yanked the bill authorizing the raid.

Instead of using money from Pinnacol to balance the budget to avoid additional cuts to higher education, lawmakers now say they will look at finding more money in cash funds, possibly eliminating some tax exemptions and tax credits and making more cuts. One scenario being floated calls for about $210 million in revenue measures and about $94 million in cuts.

The demise of Senate Bill 273 came after a meeting between Gov. Bill Ritter’s office and legislative leaders this morning in which the Democratic governor’s administration said the Pinnacol transfer was not an option.

“We talked about where we go from here,” said Rep. Jack Pommer, D-Boulder, the chairman of the House Appropriations Committee, which was to consider the bill today. “I think we’ve all come to the conclusion that it (the Pinnacol raid) would be risky to try to balance to the $300 million (hole).”

We’re not sure what’s going on here, but we’re comforted by the fact that very few others know, either. The news yesterday was all about how the bill passed House Appropriations 9-3, and how Pinnacol was drawing heavy fire for lavish pay and costly furnishings at its headquarters.

And something…happened. Involving the Governor. We’re awaiting an explanation, and it had better be good. We enjoy a good partisan chess game like anybody, but we would really prefer not to screw the entire budget process just to deny Josh Penry another bogus talking point.

Developing, very tense discussions with the Joint Budget Committee underway as of this writing.

FOR IMMEDIATE RELEASE

WEDNESDAY, APRIL 15, 2009

CONTACT

Evan Dreyer, 720.350.8370, evan.dreyer@state.co.us

GOV. RITTER STATEMENT ON THE BUDGET

Gov. Bill Ritter issued the following statement today regarding the state budget and Pinnacol Assurance:

“Along with the Joint Budget Committee and bipartisan members of the General Assembly, I have worked extremely hard these past few months to balance the budget to protect as much as possible key priorities like education, transportation and health care, and help position Colorado for a strong recovery.  I look forward to continuing to partner with them as we finalize additional cuts and other balancing strategies.

“One idea to help ease the remaining $300 million budget shortfall was to tap into surpluses held by Pinnacol Assurance, the state’s largest workers’ compensation insurance company. Members of my staff and I have tried in good faith to reach an agreement with Pinnacol.

“However, there remain too many unresolved issues and questions for Colorado citizens and Pinnacol shareholders and customers. Therefore, with a budget deadline looming, I have halted negotiations with Pinnacol. Together with my budget office, the JBC and legislative leadership, we are now focusing on a number of other steps to erase the shortfall caused by the economic downturn, without devastating cuts to higher education.

“For the long-term, I believe we must examine Pinnacol’s legal and financial structure, its unique status as a non-taxable, state-created entity, and all aspects of the legislation that governs Pinnacol. This includes a financial and performance audit, an actuarial analysis of Pinnacol’s value and surplus, and a possible refund to its policy holders.

“I appreciate and applaud Senate Majority Leader Brandon Shaffer and the other bill sponsors for raising these important policy and fiscal issues.

Majority Leader Shaffer said: “Extraordinary times require us to make tough decisions. With the shortage of revenues and a severe recession, none of our budget choices are easy, and every decision draws support and criticism. What’s important is that funding for higher education is preserved. All of us pray that we steer the wisest course for a prosperous Colorado.”

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