Briefs: Biz Buzz April 05, 2009
Raiding the reserves of one of Colorado’s largest suppliers of workers’ compensation insurance might be a novel approach, but it has yet to win his support, Gov. Bill Ritter said Saturday.
Legislators have suggested that the state use $500 million of the $700 million in reserves of Pinnacol Assurance to help balance the state budget and offset cutbacks by colleges and universities.
“I appreciate the fact that the Legislature is trying to be very creative,” Ritter said in an exclusive phone interview with The Daily Sentinel.
“I have not said I support going to Pinnacol, but at the same time I am looking for any way
I can to avoid making cuts to higher education,” Ritter said, noting he “has put more new money into higher education than any governor in the history of this state.”
The Legislature’s Joint Budget Committee last week slashed more than $300 million from higher-education spending, cutting the amount it previously had allocated for colleges and universities by 35 percent.
To make up for the cuts, the committee proposed using $102 million in federal stimulus funds and $300 million from Pinnacol’s reserves.
The committee also proposed using $200 million from those reserves to shore up the state general fund.
Whether Pinnacol even has those reserves remains to be confirmed, Ritter said. It’s also not clear that the state can take the reserves, he said.
Pinnacol officials say the state has no business appropriating the reserves, which they say belong to the company’s policyholders.
The final question is whether it’s the right thing to do, Ritter said.
Pinnacol is a quasi-governmental agency that operates as a mutual insurance company.
It pays no state taxes and is the insurer of last resort for Colorado employers.
Ritter has several options on the table, he said, but declined to offer specifics. He is discussing those options with the budget committee, he said.
State Sen. Josh Penry, R-Grand Junction, the Senate minority leader, said there had been “mixed messages” but that it seems Ritter has decided that trying to raid Pinnacol is a bad idea.
Ruling out using Pinnacol’s reserves means the Legislature will have to make cuts, and “I mean looking at the whole budget and not just plunking virtually all of the cuts onto the backs of college kids,” Penry said.
Adams State College officials have forecast its students could see as much as a 32.4 percent tuition hike next year if the cuts stand.
Mesa State College President Tim Foster said Mesa might have to consider tuition increases as well, but he hasn’t said how big they might be, preferring to decide “when the dust settles.”