August 24, 2010
Senate Democrats began an inquiry into possible rate irregularities at Pinnacol back in 2009. Initial efforts to hold interim committees or hold a peformance audit were vigorously opposed by Pinnacol and some of their political allies.
The state audit report found several problems, but specifically identified irregularities in Pinnacol's rate and premium practices. Pinnacol had relied on several rate factors that were never filed with the Division of Insurance, in violation of state law. They also were "double" or "triple" dipping on some rate factors leading to some businesses being over-charged.
The Division of Insurance promptly responded with another indepedent investigation indicating that Pinnacol had filed to file all of their rate factors and could not justify their rates. Specifically, the Division found Pinnacol's rates to be excessive and discriminatory -- which also violate Colorado law.
DORA was scheduled to present its evidence to an independent hearing officer tomorrow, when Pinnacol agreed to a settlement to avoid the hearing. DORA's press release about the terms of the settlement is replicated below:
Division of Insurance Assesses Pinnacol $80,000 Civil Penalty;
Pinnacol to Credit $15 Million to Certain Policyholders in 2011
The Division of Insurance announced it has reached a settlement agreement with Pinnacol Assurance, the state’s largest workers compensation insurer.
Pinnacol has agreed to credit policyholders a minimum of $15 million against premiums in 2011. Only policyholders who are schedule-rated will receive credit. A schedule rating is a tool that workers compensation carriers can use to adjust premiums, either up or down.
In addition, Pinnacol Assurance will pay a civil penalty of $80,000 (representing $10,000 per year for violations where the company used unfiled schedule rating factors to set premiums for some policyholders.)
“We have come to an agreement that the Division of Insurance believes will provide relief to Pinnacol policyholders,” said Colorado’s Commissioner of Insurance, Marcy Morrison. “Because Pinnacol is the workers compensation insurer of last resort in Colorado, employers who are Pinnacol policyholders often accept the rates without question or complaint. It’s important that the Division of Insurance maintain its vigilance to be sure that rates are not excessive, inadequate or unfairly discriminatory.”
Pinnacol will cease to use two rate filing factors which the Division of Insurance asserted were violations of Colorado law. The use of these two unfiled rating factors resulted in an agreement for Pinnacol to credit the $15 million to certain policyholders.
Pinnacol Assurance was the focus of a state-ordered audit in the spring of 2010. Details uncovered in the audit identified the use of rating factors which were not filed with the Division of Insurance as required by law. Findings in the audit raised concerns that Pinnacol’s practices could result in excessive, inadequate, or unfairly discriminatory rates.
“Thanks to the leadership of the Commissioner of Insurance, premiums for workers compensation have decreased over 35 percent in the past three years in Colorado. This agreement continues that trend and helps employers in Colorado by keeping their costs low so they can invest their capital in growing their businesses,” said Barbara Kelley, Executive Director of the Department of Regulatory Agencies.
The settlement agreement and original notice of hearing (now cancelled) can be viewed on the Division of Insurance website at
The “Notice of Hearing” is at
The settlement agreement addresses four main violations outlined in the “Notice of Public Hearing.”
June 21, 2010
For those of you who could not make it, our last townhall meeting on June 17, was on "Money & Politics". We were extremely lucky to be joined by:
- Bernie Buescher, Secretary of State
- Jenny Rose Flanagan, Colorado Common Cause
- Jon Caldera, Independence Institute
- Martha Tierney, Election, Campaign Finance Attorney
The panelists covered a wide range of topics from how much money is spent on our elections, how the public can trace the money and where the current loopholes are. The panel discussed the impact of Citizens United US Supreme Court case.
As of the time of writing this post $2.3 billion dollars has already been spent on the 2010 election on campaigns. (www.opensecrets.org).
Yet, a series of U.S. Supreme Court decisions has opened the floodgates for money on politics. The original line of decisions decided that "money" was "speech" and the recent line of cases (Citizens United) went further to decide that "corporations" were also "people". The net effect is that the ability for wealthy individuals or rich corporations to bring an influx of cash to our elections is given a great deal of 1st Amendment protections.
Some of the issues raised are:
- Have we moved away from one person, one vote?
- If money is "speech", do rich people have more speech rights than others?
- If corporations are "people" do they in essence get 2 votes?
- Do limits on campaign finace contributions level the playing field or drive donations underground?
- Is the free flow of money in politics really just an extension of a "free market"?
- What are the possibilities of publicly financed campaigns to help reduce the role of special interest money in elections?
- Does special interest money influence access or shape public policy?
- How can regular citizens find out who is behind political ads?
Colorado has a few basic features as a part of campaign finance reform that you should know (that the voters approved):
- $400 limits a candidate can receive from an individual or PAC;
- Any contribution beyond that can not be coordinated with the candidate but could be spent as an independent expenditure;
- Colorado prohibited direct contributions from corporate or union treasury to candidates or from making independent expenditures from their direct treasury;
- Colorado law prohibits contributions from foreign individuals.
The decision in Citizens United removed the prohibition against corporations and labor unions making independent expenditures, which has opened up the prospect of potentially unlimited amounts of money from previously prohibited sources. SB 203 (M. Carroll - Weissmann) was brought to at least close the disclosure loopholes, however, Colorado voters will not be inundated with new sources of previously prohibited campaign transactions.
Tools for Voters: In order to know where and how to follow the money, every voter should be armed with the following:
- Secretary of State's website: provides state candidate, PAC, 527, Issue committee, small donor committee disclosure, and lobbyist disclosures and will now include independent expenditure committees. Their website is:http://www.sos.state.co.us/
- Follow the Money. org: this website provides great information about macro trends about who is donated where, to which candidates, and which parties. It is particularly helpful to identify the spending of various special interest groups. Their website is: http://www.followthemoney.org/
- Open Secrets. org: this website provides great information about macro trends about who is donated where, to which candidates, and which parties. It is particularly helpful to identify the spending of various special interest groups. Their website is: http://www.opensecrets.org/
February 13, 2010
By State Rep. Randy Fischer (D-Fort Collins) and State Sen. Morgan Carroll (D-Aurora)
As citizens travel throughout Colorado, they pass by some of the world's most productive farmland. How could anyone confuse fruitful land with the menacing slums, abandoned or derelict buildings, and crime ridden streets that are characteristic of urban blight? We can't and we don't think most Coloradans can either.
We need to recognize in statute what is common sense: farmland is not urban blight.
We are pleased to run House Bill 1107 as one part of a package of solutions addressing Colorado's fiscal crisis. HB 1107 places reasonable limits on the inclusion of agricultural land into urban renewal areas (URAs). This bill will save Colorado millions of dollars and provide more transparency, accountability, and equity among the entities that levy local property taxes.
The definition of "urban blight" contained in Colorado URA laws has major problems. It turns out that municipalities have complete and total authority to designate almost any piece of property, including productive agricultural land, as "urban blight". This "blight" designation is required to establish a URA and to reap the lucrative subsidy known as tax increment financing or TIF.
TIF essentially uses other people's tax dollars to subsidize new development.
Under our URA statutes, a city may declare an area as urban blight and then include the properties in that area in an URA. The increase in property tax dollars that accrue as a result of the increase in the land's value during its conversion from "blight" to new commercial, retail, or residential development is called the increment. The tax increment goes to the developer as a direct subsidy, hence the term tax increment financing or TIF.
Under TIF, tax dollars that were approved by the voters to fund our schools, county government, fire departments, and first-responder agencies are diverted to private development interests with no transparency or accountability.
Agricultural land is an attractive target for developers wanting to take advantage of TIF because it has the lowest base tax rate of any other property classification. When TIF is applied to farmland, the tax increment is huge and diverts large sums of future revenue away from other taxing entities to the private development interests -- with no voter approval.
Frequently, TIF schemes involve the development of new retail space to raid the sales tax revenue of their neighboring cities. This practice encourages sprawl development and hurts existing retail businesses. This practice also has a hidden impact on Colorado's general fund budget because the local school taxes lost through TIF must be backfilled by the state under our current school finance equalization laws.
Since the initial discovery that cities could actually get away with a blight designation on farmland, the practice is now seen as an entitlement and has grown out of control. House Bill 1107 is designed to put the brakes on the exponential growth in the state's backfill of local school revenues that are being siphoned off through TIF.
At a time when the state legislature is being forced to cut over $2 billion in state spending, this loophole costs Colorado taxpayers over $50 million per year. Alarmingly, the high growth rate in the state's share of TIF back-fill could end up costing the state over $200 million by 2020.
With the passage of HB 1107, Colorado will take a common-sense step toward fiscal stability and greater equity for counties, school districts, and other vital service providers that have experienced the worst effects of TIF abuse. If we succeed in adopting this blight reform legislation, we will help prevent a fiscal train-wreck that looms in Colorado's future.
Randy Fischer is a Colorado state representative and represents House District 53. Morgan Carroll is a Colorado state senator and represents District 29.
February 02, 2010
In a time when Colorado is facing an historic budget crisis and the state will need to make another $1.3 billion in cuts to the 2010-11 budget, the need is greater than ever to be able to follow every taxpayer dollar in order to maximize efficiency and ensure proper accountability.
The state's total budget is approximately $18 billion and the agencies and departments are clearly subject to Colorado's Open Records Act. However, over $3 billion was spent in 2009 alone to state contracts with private vendors or in "public-private partnerships". Ambiguity over the applicability of open records requirements with state contractors has left significant gaps in our ability to follow taxpayer money.
Colorado has experienced some high profile problems with state contracts that raise the question about whether we are really getting our money's worth: e.g.
* CBMS: $223 Million. Cost and time over-runs, failure to deliver Medicaid benefits, triggered $11 Million fines from feds.
* CDOT (ERP): $38 Million. Errors on over 1,000 employees paychecks in CDOT
* CSTARS: $10.3 Vehicle Registration system did not work, cost over-runs to fix
* GENESIS -Accenture: $27 Million. 20% Error rate in election system. Contract cancelled.
* SCORE – Accenture – $10.5 Million. Missed federal election deadline for voter registration software.
In a time of budget crisis and bailouts, we can not afford anything other than 100% transparency to taxpayers of where there money is spent so we can make informed decisions about maximizing efficient use of limited dollars.
The Taxpayer Transparency Act of 2010 SB 114 (M. Carroll – Weissmann) provides that any entity who receives public funds for a public function is subject to Colorado's Open Records Act on the portion pertaining to public functions. It also requires transparency in state government contracts. It does not require disclosure of any private funds, private donors or private functions.
This bill passed the Senate Judiciary committee 6:1 today and is headed for the Senate floor.
January 30, 2010
I have never met a person who felt we should create special interest corporate tax loopholes. In fact most have wondered, then why or how did they get into law? Simple. They lobbied successfully to redistribute the taxes away from them and onto you and claimed it was in your best interest to do so.
The Denver Post documents that, "The state faces a shortfall of at least $1.3 billion in the 2010-11 budget year and will have bridged a $2.2 billion budget gap in the current year.
So in a budget climate where the additional $1 billion in cuts we need to make means we are closing schools, deferring repairs on state roads, buildings and bridges, closing DMV offices, closing beds for the mentally ill at Ft. Logan, funding veterans, higher ed, services for developmentally disabled and mentally ill at the lowest levels in the country, making our 4th reduction on provider reimbursement rates in Medicaid, reducing treatment programs in prisons — have we done everything to be fiscally prudent with existing laws and funds?
The answer is no. There are several special interest corporate loopholes that shift taxes away from corporations and onto you. We intend to close those loopholes. These are not enough to balance the budget without making significant other cuts, however, it would be irresponsible in this budget climate to leave them on the books. These groups fought hard for their special treatment and will fight hard to keep them, but don't be fooled. What are we talking about?
Junk Mail Loophole - $1.5 Million
Companies in the U.S. spend tens of billions of dollars producing and sending junk mail every year. In Colorado, they don't pay taxes on those materials.
Industrial Energy Use Loophole
Manufacturing companies currently consume as much energy as they please without paying taxes on it.
Doggie Bags Loophole – $2.1 Million
Currently, restaurants do not have to pay taxes on cartons, bags, plastic-ware and other items not essential to serving food to diners.
Junk Food Loophole - $18 Million
Colorado does not tax food to ensure that people, regardless of how much money they make, can afford nutritious foods that promote health and reduce risks of malnutrition, obesity, and other significant health problems. Candy and soda are high-calorie, low-nutrition foods, not the necessities that must be protected by tax-free status. Additionally, eliminating the tax exemption on candy and soda may deter the consumption of unhealthy foods, which will lead to a healthier population and reduce the burden that poor nutrition imposes on our healthcare system.
Agricultural Compounds, Pesticides, & Bull Semen Loopholes - $4.6 Million
Agriculture is a $16 billion a year industry in Colorado. Right now, farmers and ranchers do not have to pay taxes on the hormones, pesticides, insecticides, fungicides, and other compounds used to treat their livestock and crops. They also don't pay taxes on prized bull semen used to breed genetically-superior cattle.
Software Loophole - $20.4 Million
We all pay sales tax when we buy a new computer program or game, but currently, businesses do not have to pay that same tax, which depletes our budget by tens of millions of dollars.
Online Shopping Loophole - $5 Million
Currently, companies who sell goods online in our state do not collect state sales tax. This creates unfair competition for businesses physically operating in Colorado that must collect sales taxes.
Lower-Standard Alternative Fuel Vehicles Loophole – $2.7 Million
The state offers incentives in the form of tax credits for purchasing certain alternative fuel vehicles. To help balance our budget, this year we are eliminating the credit for the lowest-standard category of these vehicles.
Alternative Minimum Tax and Tax Credit
The alternative minimum tax is widely considered to be unfair, needlessly complex, and antiquated. That is why we plan to eliminate it.
Net Operating Loss - $16.8 Million
By capping net operating loss claims at $250,000 for the next three years, we are asking businesses to take a temporary timeout from accounting methods that allow them to reduce their tax liability in profitable years.
Enterprise Zone Investments - Subsidizing Developers
This proposal asks big corporations to take a temporary timeout on tax credits provided in enterprise zones. Right now, businesses can take a 3% tax credit on equipment investments. This measure would limit the size of the credit to $250,000, which will only affect big businesses.
Our tax policy should be simple, fair and should not give big corporations special breaks that redistribute financial burdens onto families. If they are not paying their fair share, then you are paying more than your fair share.
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