Montana is a big state. They have big, wide open areas. They have big ranches. They have “big” speed limits. They have, as their tagline implies, big sky. And they also have big stupid ideas – or at least one big stupid idea. That stupid idea is centered around cash to which the state government thinks it is entitled.
This big stupid idea seems to be the brainchild of Montana Governor Steve Bullock, who proposed and supported Senate Bill 4 (decidedly the legislative bill naming convention in Montana is NOT big) in last years special session. The bill, now signed into law, is intended to impose a management fee on the Montana State Fund’s assets. If successfully executed, it is estimated that the state could end up seizing $30 million from the Fund.
WorkersCompensation.com contributor Liz Carey yesterday highlighted a court case brought in the state attempting to stop it from taking this action, calling the entire process unconstitutional.
This is actually the second lawsuit to be brought. The Montana State Fund brought suit in November, but after the Governor removed and replaced two Fund board members, they voted to drop the lawsuit. We’d better add “Big Stink” to the list of big attributes attached to Montana right now. It certainly smells crappy to me.
Montana wouldn’t be the first state to have greedy politicians trying to cover their financial shortfalls by appropriating funds reserved for the workers’ comp system. Colorado’s Pinnacol Assurance fought off a $500 million cash grab by its state representatives a number of years ago. In Oregon, a task force was assembled by the Governor to find $5 billion to “pay down a portion of Oregon’s unfunded liability” (Let that one sink in – $5 Billion – with a B – to pay down a “portion” of their unfunded liability). The vast majority of that liability is in the lavishly generous state employee retirement system, known as PERS. One of the task force’s recommendations? Take $500 million or more from the reserves of SAIF Corporation, the state-owned workers’ compensation insurer.
So, what is wrong with politicians taking this money; money that is just sitting around doing nothing? Well for starters, it isn’t their money. And it isn’t “doing nothing.” The money in these accounts are held for the benefit of future injured workers and was provided by employers in the form of insurance premiums. Forfeiting them for use elsewhere is quite simply an undeclared tax on employers. This latest attempt to abscond with reserve funds in Montana is unique, to say the least. To label the charge a “Management Fee” is laughable and is a nakedly pitiful attempt at disguising the truth.
The truth is politicians just hate seeing money lying around that they can’t spend.
Carey’s article contained a quote that really set me off. She noted that State Rep. John Fleming told the Great Falls Tribune that he “supported SB 4 and noted that the Montana State Fund has a surplus of more than $1 billion.” My knee jerk response to that useless observation was, “So what?” So, they have a billion dollars; that doesn’t mean a portion of it should be taken and used for purposes never intended. After all, this isn’t a debate about reserve adequacy. It is a debate about who that money was intended to be available for.
If the reserves are too high, the money should go back to the employers, and nowhere else.
I am hopeful that the Montana courts will set this straight. If they don’t it will mean a couple things. One, it will be years before I am invited back to again speak at the Montana Governors Conference on Workers’ Compensation, and two, it will be open season on Montana State Fund reserves; money intended to help injured worker’s and protect the businesses they work for.
And that is one big stupid idea.
Editor’s Note: A source at the Montana State Fund has clarified that their surplus is not “$1 Billion”, but is instead approximately half that amount.