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October 27, 2010 at 6:33 PM

BIAW says L&I lied about workers' comp rates

The Building Industry Association of Washington says public records show the Department of Labor and Industries lied to lawmakers who asked about next year's rates for the workers' compensation system.

L&I Director Judy Schurke, however, said she didn't provide a rate to the lawmakers because the agency hasn't yet decided on one.

BIAW -- which put Initiative 1082 on the November ballot to allow private insurance companies to offer workers' compensation coverage -- said public records requested by state Sen. Janea Holmquist, R-Moses Lake, and Rep. Cary Condotta, R-Wenatchee, show that L&I had a 2011 "indicated rate" in August, well before Schurke told state lawmakers she didn't have the numbers for 2011.

L&I redacted the indicated rate in the document, citing a public records exemption covering an agency's internal drafts and opinions, the BIAW said.

The indicated rate is the rate necessary for the system's estimated revenues to balance out estimated costs, and L&I releases it along with a proposed rate, which tends to be lower.

“Obviously Labor & Industries has known for months what the indicated rate is for 2011,” said Patrick Connor, who directs the campaign for I-1082. “These new documents prove it.”

He added, “L&I has been caught red-handed lying to the Legislature, and the only explanation is they are desperate to hide the indicated rate because it shows what we’ve said all along -- a massive tax hike is coming.”

L&I has made no secret of the fact that last year it adopted a rate below the indicated rate, using contingency reserves, to help businesses struggling in the recession.

If I-1082 passes, businesses would see an automatic rate hike because employees would no longer be required to contribute a portion of their workers' compensation premiums. The employee portion that would be shifted to employers accounts for, on average, 18 percent of this year's premiums.

L&I announced in September it would wait to propose a 2011 rate until after the election. Although the agency historically has proposed rates for the upcoming year in September, it's not legally required to do so.

Uncertainty about investment income and hiring in higher-risk industries, such as construction, transportation and manufacturing, have made it harder for actuaries to develop firm estimates for next year, Schurke said.

More than anything else, L&I wanted to give employers "the firmest estimate at the time we announce the proposed estimate," Schurke said.

The agency said it expects to propose 2011 rates sometime in November after the election results are certified and adopt final rates in January.

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