HELENA — The state Senate on Saturday endorsed a bill requiring the state workers’ compensation fund to use its surplus to pay down a 20-year-old debt – despite claims that the bill violates state law and could raise work comp premiums for businesses.
“Let me tell you, this bill does raise rates … because you can’t just take money out of the till and say it’s not gone,” said Sen. Fred Thomas, R-Stevensville. “This Legislature has fought long and hard to make this (work comp) system better. This does not help in any way, shape or form.”
Supporters of the bill, however, said the Montana State Fund has ample money to pay down the old debt, and that taxpayers don’t need to continue paying for it out of the state treasury.
“You have a choice of either charging the taxpayers $13 million, or taking it out of the (State Fund’s) $350 million of equity,” said Sen. Jim Keane, D-Butte, and sponsor of Senate Bill 173. “That’s the choice that we make here today.
“This has nothing to do with premiums on any insurance policy that will be sold now. This bill will not raise premiums, but it will solve a problem.”
The Senate voted 34-15 to endorse the bill, but then later referred it to the Senate Finance and Claims Committee for further review. Most Democrats supported the bill, which is backed by the Bullock administration, but majority Republicans were split. Fifteen Republicans favored it, while 13 voted against it.
SB173 requires the State Fund to use its own assets to pay the cost of pre-1990 claims from its “old fund.” Under current law, the state treasury pays those claims, estimated to cost $13 million the next two years.
The State Fund is a quasi-public state agency that writes work comp insurance for 26,000 Montana businesses, many of them small businesses. The insurance pays claims from workers injured on the job, and all businesses are required to carry it.
Thomas, an insurance broker, said state law prohibits using State Fund assets to do anything but pay the cost of claims for workers injured after mid-1990. Claims from before that date, when the State Fund was in severe financial trouble, are the responsibility of the state, he said.
Sen. Scott Sales, R-Bozeman, said the state has an obligation to pay the debt, and that SB173 is merely an attempt to create more money in the state treasury so it can be spent.
“This isn’t the right way to run a business; this is not the way to run a government,” he said. “This is crud.”
Those who supported the measure, however, said the State Fund appears to have money to burn, with its rising equity and the high salaries and bonuses it can pay its top executives and employees.
Keane also noted that he had the bill amended in committee to forbid the State Fund from raising premiums on its customers to pay off the “old fund” debt.