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April 08, 2009 08:56 PM UTC

Shaffer: We Can Take The Money

  • 37 Comments
  • by: Colorado Pols

Senate Majority Leader Brandon Shaffer writes in the Denver Post today on behalf of the emergency proposal to transfer “excess” reserves from the state’s workman’s comp insurance entity, “backfilling” otherwise devastating cuts to higher education:

This week, Colorado’s General Assembly is setting the state’s budget for next year. It is more than just a set of numbers; it’s a moral statement reflecting our values.

The current recession has torpedoed revenues, leaving Colorado with a $1.4 billion shortfall. In an effort to craft a fiscally responsible, balanced budget, we have been forced to make hundreds of millions of dollars in deep and painful budget cuts.

For example, we’ve cut the senior homestead tax exemption, cut funding for preschool through 12th-grade education and delayed Medicaid payments. We’ve closed a prison and postponed the opening of another, frozen employee salaries, and abolished performance pay incentives.

We’ve cut or frozen the budgets of state agencies and departments. We’ve put systems of transparency and accountability in place to ensure that programs operate as efficiently as possible. And we’ve drained our reserves. But, after all of this, we are still $300 million short.

The fact that we have budget issues isn’t a surprise. With the downturn in the economy, we knew we would have shortfalls, so we asked our staff to review each division of government to see if there were any “stones left unturned.” We found one: Pinnacol Assurance.

Pinnacol is a state entity that sells workers’ compensation insurance and currently holds nearly $700 million over and above the reserves it has set aside to pay both current and future claims.

No government agency wants to reduce its assets, spending, or authority. Pinnacol’s managers are no different, and they oppose this transfer. However, as state legislators, we have a responsibility to look beyond Pinnacol’s narrow interests and consider the general good of the entire state.

A poll follows.

Can the legislature transfer excess reserves from Pinnacol to balance the budget?

View Results

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37 thoughts on “Shaffer: We Can Take The Money”

  1. As to moral authority and a moral statement, the taking of money from those who have paid into this mutual insurance company is a major question of law.

    Sometimes the difficult decisions are the hardest to swallow.

    So just how many state employees do we have now vs 1, 3, 5 years ago?  And just how fat is that state spending vs 1, 3, 5 years ago?  Now compare that to the state of your household.

    1. I have heard no compelling reason EVER why a state or government entity should operate in ways similar to a household, or why cutting spending or increasing spending at a ratio similar to households is net-beneficial to a state or it’s citizens.

      Herbert Hoover might have loved it, but we all know how well he falls by historical standards of presidential performance.

      Why should a state, in this instance Colorado, act the same way as a 4-6 person home?

      1. In a 4-6 person household or even a 3 or 1 person one, the head of household will many times increase savings for a rainy day when flush with cash, reduce spending on things that are nice to haves or in downtimes … increase handouts to their child in hopes they make the most of the cash, get a degree, then a job and then leave the household to create their own.

        Remember 1977, it sure seems or smells a lot like Carter. Inability to manage the economy, schooled by those that oppose our international policies, micro management and a perception that government can do it all.

        You remember Welcome Back, Kotter, right…


        Welcome back,

        Your dreams were your ticket out.

        Welcome back,

        To that same old place that you laughed about.

        Well the names have all changed since you hung around,

        But those dreams have remained and they’re turned around.

        Who’d have thought they’d lead ya (Who’d have thought they’d lead ya)

        Here where we need ya (Here where we need ya)

        Yeah we tease him a lot cause we’ve hot him on the spot, welcome back,

        Welcome back, welcome back, welcome back.

        1. No one under the age of 40 remembers that TV show. Honestly, if you’re relying on the lyrics to a lame 1970s TV show to somehow prove your point I think you’ve just conceded the argument.

          You also didn’t answer his question, why should the state act in the same manner as the hypothetical household?

          We know what happens when states curtail spending in down times, it increases the downward spiral of demand.

          This is basic economics. Arguing that the state should operate as a household does is economic buffoonery. I’m tired of having this “debate” as if your position has any merit whatsoever. It simply doesn’t.  

          1. As I stated above … In a 4-6 person household or even a 3 or 1 person one, the head of household will many times increase savings for a rainy day when flush with cash, reduce spending on things that are nice to haves or in downtimes … increase handouts to their child in hopes they make the most of the cash, get a degree, then a job and then leave the household to create their own.  

        2. People are FAR more likely to act economically irrationally during times when flush with capital, spending on excessive and untenable goods and services. A vast majority of them are not likely to save.

          And yes, you did not answer my question. Why should the state act in the same manner as a household?

          And Kotter was an AWFUL show. At least pick a decent Nick at Nite quote (which even a 20-something like me watched as a kid). Maybe Taxi?

          1. Those that don’t save or are frivolous (Wachovia, FannieMae) should go to the penalty box.

            Why the government bailouts? Where is the accountability? Do you have no dignity? Why do you allow low expectations and their outcomes to be rewarded? A 30-50% drop-out rate at DPS is o.k. with you?


            1. You make a lot of assumptions. I didn’t support TARP (and continue to disagree with it’s premise and implementation) but do support a vigorous safety net for those hard-hit by these problems. Food stamps, Medicaid availability, and access to vibrant public and higher education.

              I have plenty of dignity. Fuck, I’m an out gay liberal from Colorado Springs who works in tax policy. I like a challenge. I’m also an educator who’s quitting his job in 3 months to begin teaching. Personal responsibility and dignity are both political and apolitical issues.

              Low expectations should never be rewarded. Outcomes, though, are relative. I think DPS has a long way to go. A combined merit-pay program coupled with the elimination of the CSAP and a focus on diverse types of schools (magnet programs, gifted institutes, montessori programs, etc.) would foster a return to creativity in the classroom, as opposed to rigidity. Rote learning might teach you to pass a test, but it won’t teach you to creatively solve real-world dilemmas like a dynamic classroom will. My views on education policy are constantly evolving, and I think if you were less of a blowhard and more interested in engaging in policy discussions, you might find some common ground between us.

              But alas, you’re mainly just a blowhard. And you STILL haven’t answered my question (which I knew you wouldn’t).

              What policy advantages arise for the citizens of a state when said government acts like a household?

    1. Where is the ballot measure to kill Tabor and the Csap … aren’t those the two items creating all this carnage and ruin.

      Tim Geithner, prompt taxpayer and purveyor of generational theft.

      NEA-CEA, promoting the kind of school reform that drives 50%+ dropout rates and increases the cost of educational delivery.

  3. Can someone please give me a Leg Council opinion on this matter? How about the Govs Legal office? Suthers? I have yet to read anyone give a legal basis for this. I’m not unsympathetic but I’d like someone to point me to the statute, case law and/or precedent that the proponents are relying on.

    I wrote a lengthy blog post this morning at my place on this very topic. Here’s some of that…

    Mainly, I’m not entirely sure how much control the state actually has over Pinnacol. I understand it was a state created entity and that prior to 2002 this sort of cash transfer would be legitimate. I’m not entirely sure how much control the legislature can exercise now that Pinnacol is considered a political subdivision of the state but is no longer under direct control. It’s a legal morass as far as I can tell. I’d be shocked if Legislative Council hasn’t given an opinion on the issue but I haven’t seen that published anywhere (I’d love to read it if someone wishes to share it). Basically I’m not convinced that this is legal.

    From an ethical standpoint I don’t like the idea of the JBC purposefully pitting Pinnacol against higher ed like this. The JBC is holding a gun to the head of higher ed and demanding that Pinnacol pay the ransom – or the kids get it. I’m an advocate of hardball politics when its done smartly and strategically. This to me doesn’t appear to have been done either smartly or strategically. I’m not privy to whatever backroom manuevers may have been taking place in the past few weeks so maybe this was the last stand but this just looks thuggish and, frankly, ugly.

    Maybe that’s the point though? Maybe JBC is taking a calculated stand to demonstrate to the public writ large just what a hole TABOR has left the state in? It’s a possibility I suppose…

    For the record, I am completely unpersuaded by the arguments of the GOP and business interests that since this transfer would only be a short-term fix and thus we shouldn’t move forward with it. If this is legal and there is clear and convincing legal opinions arguing as such then we should do it. Saving higher education in this state for just one more year is worth it…

    The question I’m left to grapple with is, do the ends justify the means? Is saving higher ed such a worthy cause that it excuses the use of potentially extra-legal means? My heart says yes, higher education is one of the most important economic and social drivers for our state and we should protect it at all costs. My head isn’t quite there yet.

    Obviously I’m doing a lot of thinking aloud here. My mind isn’t made up. There are a lot of “ifs” that when (or if) they are resolved could push me one way or the other. This is a very tough decision for the JBC, the legislature and the governors office and I’m not going to pretend that its a clear cut choice simply because I think higher ed is critically important.

    The bigger take-away from all of this is that this is what life under TABOR and Arveschoug-Bird looks like. We can keep treating the symptoms (like the JBC has proposed here) and continue to watch the quality of life in our state decline or we can remove the cancer that is TABOR and Arveschoug-Bird and allow our state to thrive and our elected representatives to govern.

    http://steampoweredopinions.bl…

    1. That would seem to suggest the technicality of being possible is answered.

      I don’t see what difference it makes unless Pinnacol has the authority to grant dividends or premium refunds to those of us who paid in.  If the reserves were ever underfunded, the Legislature would have to pay claims anyway. At least that’s how  it was explained to me when I started paying in.

  4. The fact is, TABOR should have been dealt with years ago.  And the Pinnacol solution is only kicking the can down the road for another year.  And what happens next year?

    The future of higher ed in Colorado is bleaker than most people realize in light of the current economic crisis.  Those colleges who get funding from local tax districts face enormous losses in the next couple of years due to loss of property tax revenue as the foreclosures hit the property tax valuations.  Colleges have lost money in their endowment funds due to the market freefall.  Not to mention the possibility that without the Pinnacol money, higher ed could lose access to some of the federal stimulus money (since that is dependent on a certain level of state funding).  This isn’t just about the state funding.  That’s just what is rearing its ugly head now.  It’s only going to get worse.

    Higher ed has been paying the price for TABOR for years.  We have gone from being near the top of the state list in higher ed spending per capita in the 70’s to 48th now.  Something has to change, or Colorado’s economy will begin to suffer the consequences of the inevitable brain drain that would follow the collapse of our public higher education system.  I just hope the public will get behind a long-term solution soon, or it might be too late.

    1. Well, we can’t even deal with TABOR until 2010, so we are forced to do something until then. This could be cut $300 million from higher ed and/or other state expenditures thus crippling them or raid yet another public fund promising there will be no negative effects on Pinnacol long-term.

      I’m not willing to watch public higher education die in Colorado in the meantime. I am hoping that the Colorado public will finally realize how our fiscal policy is crippling the state. Well that and a damn-good, well-messaged campaign in 2010 to end TABOR.

      1. Pinnocol remains solvent after the transfer to balance the budget, I think it is probably a reasonable budget decision. I know it’s not ideal to many but sometimes you have to bite the bullet and make the tough decision.

        I agree that a 300 million hit on higher education is unacceptable and will cause us to fall further behind in ensuring an educated workforce in Colorado.

        Amen to your “well messaged” campaign in 2010 to end Tabor.

              1. Fastracks was voted on by people in the RTD only, and the de-Brucing votes are all local.

                Ref. C is not a tax increase.

                I’m specifically asking when was the last time statewide voters approved a measure on the ballot that starts “Shall the state increase taxes…”

                I know it’s happened under TABOR, I’m just curious about the last time it happened, what the increase was for, and how the people running the campaign managed to convince the voters it was the right thing to do.

                People tend to be OK with local tax increases as you demonstrated above, but they tend to be ultra-conservative statewide.

    2. By the most consistent measure, Colorado now ranks 50th in the country (per capita funding of higher ed)  If the budget is slashed as proposed, we will be secure in that 50th position for many years to come.

  5. The problems with TABOR have way more to do with other things that have nothing to do with tax increases.  The ratchet down effect for one thing.  The inability to save money for another. The requirement of a constitutional amendment, not just a vote of the people, to put any taxes on real estate,(Doug Bruce being a slum lord and all) etc…. If we go to the ballot for reform, look to the proponents to keep the ability to vote on taxes, but fix the many other things wrong with TABOR. Yes, a tax increase would help, but if we didn’t have some of the other structural problems that TABOR created, we might not need a tax increase.  

      1. No matter what approach is used – something similar to A59 (SAFE Amendment) last year, or something more comprehensive in a Constitutional Convention which at best would take several years – it will take a large and long-lasting education effort.

  6. They want to do a 2.9% across the board cut in each agency and then steal $100 million from K-12 and put it in remedial programs in higher ed.  Because it really makes sense to wait till after a young person reaches college to have the resources to teach them to read and think.  Duh! Also with across the board cuts, the problem is they count all federal dollars and cash funds when they come up with the percentages, but only programs that are general funded end up taking the hit.  So some programs get decimated, and we let the federal government funding be the determiner for what lives and dies in Colorado.  Does that make any sense?

  7. Why should K-12 be entitled to all the money?  If you oppose TABOR because you think it is a straightjacket, then you have to be consistent and oppose Amendment 23 and the damage it has wrought on our budget.  No one is proposing to cut K-12.  They are proposing a slower increase in K-12 funding to help higher ed.  Makes sense to me.

      1. No program should be considered sacrosanct, the cuts should be applied appropiately across all programs. And like you, I also believe education is key to our future. But it’s this approach of some things must be funded at a set level that has made it impossible to react well to this economic mess.

      2. If you’ll forgive me for saying so, I don’t think it’s particularly cool to assume that a) anybody commenting negatively on Amendment 23 automatically hates kids and b) that Amendment 23 was the right way to ensure funding for K-12.

        Amendments like 23 are a way for the legislature to cop out on making decisions.  Protect everything by enshrining its funding in the Constitution, and you have a responsibility-free legislature!  “We have to cut higher ed–it’s the only thing not protected by the Constitution!”  So what then?  Do we get an amendment forcing a certain level of funding for higher ed?  Then what?  Ask California.

        As somebody who gets to deal with the output of K-12, I’m a pretty big fan of making sure K-12 is well-funded and effective.  But I don’t think that funding should be taken out of the legislative budgeting process.

  8. Since the 1920’s, and the constitution of 193something, Florida’s tax policies have been very much like a Ponzi scheme: Let the newly arrived pay for things.

    Now that it’s more like the recently departed and with property values plummeting, the legislature is yelling, “Wha’ happened?”  What happened is reported in a just out, uh, institutional report how our tax policies have been a Ponzi scheme.  FL is one of only seven states without an income tax. Our constitution prohibits one, reflecting a hope that the promise of low taxes would encourage growth. Yeah, sure.  Now we have sky high property taxes and suggestions of adding more to the sales tax.  Pay me here or pay me there.

    There is a bill in both the House and the Senate to bring TABOR to Florida!  They don’t use the “T” word and they are not getting much press.  I’m watching closely; a recent letter in the paper pointed out what a disaster Colorado’s TABOR has been.  (Did you know that?)

    There is a lot more gloom in the Sunshine State these days, probably worse than in CO because of our Ponzi economics (grow! grow! grow!) coupled with our Ponzi tax system (Next arrival!)

    At least when things pick up there’s no ratchet effect to stand in the way of increasing revenues and expenditures.  Although I’m sure our Republican dominated lege will scream.

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