The Attorney General’s Office has been working with the State Auditor to put some numbers on what can only be described as a failing second injury fund. Senator Scott Rupp of St. Charles has proposed a bill that would allow the Director of Revenue to increase the surcharge on business tax, capping it at 6 percent.
Sen. Rupp (right) discusses his bill with Sen. Parson during a Senate Small Business Committee hearing.
The state’s business lobby, including the Missouri Chamber, Associated Industries, Missouri Merchants, General Contractors, the Restaurant Association, Independent Businesses and others, support the measure.
Opposing the measure are Missouri Association of Trial Attorneys and the AFL / CIO, representing Labor as a whole. AFL / CIO attorney and lobbyist John Boyd says keeping that money with business owners allows them to offer more jobs, growing employement numbers and the economy.
Rupp’s bill would also eliminate some injuries from qualifying to collect on the fund in order to make the fund solvent.
Chamber of Commerce consultant Richard Moore tells the Senate Small Business Committee a 3 percent surcharge on workers’ compensation payments used to be enough to feed the fund … until the recession. He says increasing the surcharge to 6 percent over the next six years — from 2014 to 2020 — would bring the fund back into the black. Supporters of the bill say the interest rate should float based on what the economy is turning out.
The additional surcharge on business tax, he says, would generate about $28 million to pay the fund’s unpaid obligations. Businesses currently pay 3 percent, which was a cap set in 2005.
“It appears to me that partial reform, or partial elimination, is most likely to get legislative approval and a signature from the Governor,” Moore says.
The fund collected $74 million in 2005 — with a $33 million surplus — at the 3 percent rate, he explains to the committee, compared to now, when it only collected $42 million in 2012.
AUDIO: Jessica Machetta reports (1:29)
BILL SUMMARY —
SB1 – Modifies the law relating to workers’ compensation <http://www.senate.mo.gov/13info/bills/sb001.htm> LR Number:. Committee:. Last Action:. Current Bill Summary. SB 1 – This act modifies the law relating to the Second Injury Fund.. This act allows the Director of Revenue to set the interest, with respect to workers’ compensation matters, to equal the adjusted prime rate charged by banks in certain instances.
Background:
The second injury fund awards benefits to workers who are injured a second time on the job, adding further incapacitation to previous injuries.
“The Attorney General called me and said ‘we’re having real problems,’” State Auditor Tom Schweich tells Missourinet. “The last audit our office did was five years ago … the problem has gone from bad to now a very grave situation.”
He says the issue is both controversial and complex, and that’s why lawmakers have shied away from it in recent years.
“Now the courts are getting angry,” he says, “and something must be done.”
The fund was created after World War Two to encourage the employment of previously injured or disabled workers without exposing employers to liability for the previous injuries. Schweich says it’s possible the program no longer serves the purpose it was created for 70 years ago.