Reform Retro!

There have been many attempts at reforming the Retro program during the past several years. These attempts were all based on the assumption that the Retro program was somehow saving tax payers money and that the only real problem of the Retro program was funds were being used for purposes other than improving worker safety. The goal of all of these reform efforts was merely to limit Retro Refunds to legitimate purposes as defined in existing State law.

This report brings five new concerns to the table, none of which have been considered by past reform efforts:

·         First, the Retro Reform program is not saving the State money. Instead, according to the August 2009 Wyman Report, Retro Refunds have been hundreds of million of dollars too high.

·         Second, Retro “Refunds” are not refunds of over-payment of premiums after paying off all developed claims. Instead, they are actually tax payer subsidies amounting to hundreds of millions of dollars every year.

·         Third, this problem is getting much worse every year. It currently accounts for the diversion of over $1 billion dollars a year into a program that has no public benefit.

·         Fourth, L & I is currently losing money at more than $3 billion per year and the Contingency Reserve Fund will be at zero within a year.

·         Fifth, while L & I has acknowledged that their errors led to Retro Refunds being at least $500 million dollars too high, they are only planning on recovering $30 million of the over payments. This hidden “policy decision” will cost tax payers at least $470 million dollars!!! (and is further evidence of the extreme pro-retro bias at L & I).

Hopefully, these five new facts will increase the chances for Retro Reform finally passing in the 2010 legislative session. However past attempts at Retro Reform have faced stiff opposition in the House and Senate.

It is therefore worth considering who has supported or opposed Retro Reform in the past in terms of whether passage of reform might be possible in the 2010 session. Given the money at stake, it is going to take some very courageous legislators who are willing to stand up to the BIAW.

In the 2009 session, a Retro Reform bill (Senate Bill 6035) was introduced in the Senate by Senator Kohl-Wells with cosponsors McDermott, Franklin, Keiser, Jacobsen, Fraser, Regala, Murray, Kline and McAulliffe. This bill attempted to reign in the BIAW slush fund by clarifying that Retro Refunds could only be used for administration of insurance and worker safety programs.  This courageous bill passed in the Senate by a vote of 25 to 24. The ten original sponsors were joined by Senators Berkey, Brown, Eide, Fairley, Hobbs, Kastama, Kauffman, Marr, Oemig, Prentice, Pridemore, Ranker, Rockefeller, Shin and Tom.

Unfortunately six conservative Democratic Senators joined all the Republicans in voting to oppose closing the BIAW campaign fund loophole. These were Senators Hargrove, Hatfield, Haugen, Jarrett, Kilmer, and Sheldon.  Hopefully, all 24 who voted against Retro Reform in the Senate will reconsider their position during the 2010 session. The abuse of a billion dollars in tax payer money is something which should not be condoned by either political party.

Senate Bill 6035 was then sent over to the House of Representatives where it went through votes in two different committees. Those in the House who voted in favor of the Retro Reform bill in committees included Representatives Conway, Wood, Green, Moeller, Williams, Pettigrew, Appleton, Cody, Dickerson, Miloscia, Morrell, and Roberts.

These 12 Representatives are also to be commended for standing up to the BIAW. The only Democrat to oppose the Retro Reform bill was Representative Seaquist.

Despite being approved in two House Committees, Senate Bill 6035 was killed in the House Rules Committee and thus never came up for a full vote in the House in 2009.

Hopefully, in light of the fact that failing to reform Retro has cost tax payers one billion dollars, and is costing tax payers hundreds of millions of dollars a year, a better Retro Reform bill will be brought  to a full vote in 2010.

There was also a Retro Reform bill (House Bill 1875/Senate Bill 5842) introduced in the House in 2005. Co-sponsors included Representatives Fromhold, Conway, Campbell, Wood, McCoy, Hunt, Simpson, Sells, Ormsby, Williams, Kenney, Chase, Moeller, Hasegawa, Cody and Hudgins. These 16 Representatives also deserve to be commended for putting their political careers on the line in opposing the BIAW.

Sadly, this bill too was killed in the House Rules committee.

Hopefully the new information contained in this report will be enough to get the bill out of committee for a full vote during the 2010 legislative session. In fact, this issue is so important, it should be the single highest priority of the 2010 session.

We can simply no longer afford to be handing retro employers $200 million per year in hidden tax breaks at the same time we are closing schools and firing teachers.