Colorado Attorney General: Workers’ Comp Assets Off Limits

April 13, 2009

The Colorado solicitor general says tapping a state-created workers’ compensation insurance company for money to balance the state budget would be unconstitutional.

The analysis from Solicitor General Dan Domenico was released on April 10, one day after the state Senate gave initial approval to bills that would take $500 million from Pinnacol Assurance. The company has a surplus that has grown to almost $700 million.

Republicans object to the plan. Pinnacol also opposes the proposal, although company officials have been talking to the governor’s staff about a possible way the insurer could voluntarily use some of its assets to help the state out of its budget crunch.

“Pinnacol’s funds are not assets of the state and Pinnacol’s policyholders have vested rights in any surplus funds,” Domenico wrote in a legal analysis requested by Republican Attorney General John Suthers. Seizing the money “would violate the Colorado Constitution,” Domenico wrote.

Domenico wrote that he could not “envision how our office would make a good-faith defense of such an action,” and even if it could, it would be a long and costly court battle.

Democrats have supported the plan to use Pinnacol money to undo $300 million in proposed cuts for colleges and universities to balance the state budget for the next fiscal year.

A final Senate vote on the bills and the $17.9 billion budget is expected April 13, which would move the package to the House.

Senate Majority Leader Brandon Shaffer, D-Longmont, said the memo from Suthers’ office on the Pinnacol proposal was an attempt to “spook” lawmakers. House Majority Leader Paul Weissmann, D-Louisville, said Suthers was “playing politics.” He said a lawsuit may be inevitable.

House Minority Leader Mike May, R-Parker, said the memo showed the plan to balance the budget with Pinnacol’s assets was unwise.

“I’m pleased at the attorney general’s opinion,” May said, “and I’m hopeful we’ll abandon this crazy course.”

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