Initiative 1082: Workers' compensation program will improve with competition

WHEN state agencies play politics with tax dollars, it's wrong. Our Department of Labor and Industries (L&I) is doing just that.

L&I, the state-run monopoly providing employers with industrial insurance for workers injured on the job, announced it will wait until after the Nov. 2 election to release next year's tax rates for business owners. Although agency officials traditionally announce tax rates each September followed by public hearings and a final rate decision in December, they claim this year is different.

Why? Because Initiative 1082 is on the ballot, and voters could decide to allow competition for L&I to provide business owners with workers' compensation insurance.

L&I's announcement leads employers to the conclusion that the agency will announce a huge rate increase immediately after the election. Whether this is actually the case is unknown, because L&I refuses to provide the financial information lawmakers and employers have requested to plan budgets for the upcoming year. The agency is demonstrating a shocking disregard for the principle that government works for its citizens — not the other way around.

As elected representatives, we asked the L&I director about the possibility of a rate increase during a recent meeting of the Senate and House Commerce & Labor committees. L&I refused to provide any information.

Monday's guest column by Sen. Jeanne Kohl-Welles and Rep. Steve Conway implied the Legislature invested "a great deal of time" making improvements to the workers' compensation system. This is categorically untrue. In fact, despite bipartisan support for legislation to improve the system in the 2010 session, they refused even to hear the bills, further exacerbating L&I's problems.

Kohl-Welles and Conway also expressed concerns about the impact of I-1082 on local governments and other public entities. Their cost estimates were based upon the faulty assumption that these public agencies would continue to subsidize a failing government system instead of seeking out the best coverage at the best possible rate, as any responsible steward of public funds ought to do. Ironically, they also ignore the fact that these government employees along with every private employee will no longer have workers' compensation premiums deducted from their paychecks. I-1082 will offer all employers a choice, and all employees a pay raise.

While L&I refused to disclose potential rate increases, the agency answered questions about the system. It admitted the average number of days an injured worker is at home collecting a workers' compensation benefit check is more than twice the national average at 280 days.

L&I also awards more "pensions" than most states, meaning a worker is deemed permanently disabled from a workplace injury and awarded a lifetime pension check instead of returning to work. In 2009, L&I awarded more than 1,700 pensions, but the national average is closer to 200 per year. Compare that with our neighbor, Oregon, which awarded only nine pensions in 2009.

L&I's admission that more than one of the workers' compensation reserve funds is operating in a deficit shouldn't be surprising. The Accident Fund Contingency Reserve is hundreds of millions short, and the agency secured loans to bail out the agency's shortfall in the Supplemental Pension Fund on at least two occasions this year alone.

The looming insolvency is disconcerting news for employers bracing for an unknown rate hike, which would be added to last January's $117 million workers' compensation tax increase and $325 million unemployment insurance tax increase. We know someone will foot the bill for L&I's poor performance — the employers struggling to keep their doors open and create jobs, as well as the workers depending on those jobs.

Voters have an important decision to make: allow L&I to continue operating without improvement driven by competition, or allow competition for employers' workers' compensation business.

L&I is asking citizens to cast a significant vote without the benefit of information they need to make informed decisions.

Voters, employers, workers and our economy deserve better.