In the middle of responsible deliberations between the governor’s office and Pinnacol Assurance about privatizing the quasi-public entity, the head of the Colorado Senate sayswithout explanation — that the deal’s off as far as he’s concerned.
“I think it’s a bad deal on a variety of different levels, and I’m not willing to go forward with it,” Sen. Brandon Shaffer told The Denver Post’s Tim Hoover.
The Longmont Democrat declined further explanation. His stance prevents any late bill to privatize Pinnacol from being filed in the Senate.
It would seem the regrettable Pinnacol Follies have returned.
We wish Shaffer had held his fire until all the details of the proposal are known. While the results of an appraisal now being conducted at Pinnacol’s expense may justify his concerns, it strikes us as reckless to come to such a conclusion without considering the as-yet-unavailable findings.
As compensation for providing workers’ compensation to even the riskiest of clients, Pinnacol doesn’t pay state taxes. The company is willing to forgo that exemption on policies outside that so-called residual market and start paying yearly taxes now estimated at $5.3 million, as well as give the state $200 million over 30 years. The bulk of that payment would come during the next two years, at a time when legislators are trying to bridge a $2.2 billion shortfall this year and an expected $1.3 billion in the fiscal year that begins in July.
Last spring, Shaffer was one of the leaders of an effort to raid Pinnacol’s reserves of $500 million, while keeping the company more firmly under state control, saying at the time that the raid represented “the only real solution we have in front of us on how to fill that [budget] hole.”
Now Pinnacol is offering to help solve the state’s budget crisis — and even cover the company’s appraisal by Morgan Stanley.
Yes, Pinnacol’s executives are doing so because they fear bills this session that would alter their business model. It is possible the company is trying to buy its way out from under increased regulation and that the result of privatization would be bad for Colorado.
Since word broke that Gov. Bill Ritter was negotiating with Pinnacol, we have advocated taking a hard look at the pros and cons of such a deal. Ritter has correctly stated his position as neutral while the details remain under review. Shaffer’s stance, however, shows whatever clout Ritter has with the legislature is already waning.
The process seemed to be moving along in far better faith than last year’s recriminations, but sadly that was not to last.
Several Democrats have come forward to deride Pinnacol’s offer as “laughable” and “outrageous.” But House Speaker Terrance Carroll, D-Denver, has called for a more measured approach, saying, “I think it is premature to say that anything is off the table, considering the economic environment we find ourselves in.”
We agree, and urge lawmakers to give Morgan Stanley a chance to complete its work.
