Opinion: Tax increase will not fix Second Injury Fund

In the final days of the 2011 legislative session, a broad coalition of business organizations including Associated Industries of Missouri, the National Federation of Independent Businesses, Associated Builders and Contractors, Associated General Contractors of Missouri, Missouri Retailers Association, Missouri Grocers Association, Missouri Merchants and Manufacturers Association, made numerous phone calls and sent e-mails to legislators, asking them to defeat a series of tax increases to support the failing Second Injury Fund.

Attorney General Koster and one supporting business group [Missouri Chamber of Commerce] have expressed their disappointment that their tax and cost increase proposal was not passed to fix the broken Second Injury Fund – a proposal that also was supported by the Missouri Association of Trial Attorneys. Employers can reasonably expect the same ill-conceived concept will emerge again in the future. It is for that reason that the coalition is seeking the support of Missouri’s business community.

While the coalition of business organizations mentioned above has been meeting for the past six years to address real reforms to reduce costs, this year’s proposal would only have moved the costs of the Second Injury Fund to the workers’ compensation system, rather than solving the true problem of rising costs.

Under the failed plan, Missouri employers would have been required to pay between $146 million and $200 million more than an alternative plan supported by most other business organizations. In addition to these “temporary” increases that would last several years, the plan also would have resulted in a permanent cost increase because nonwork related previous injuries and conditions would be covered under Missouri’s workers’ compensation system. These permanent increases would have cost employers between $50 million and $105 million annually after the “temporary” increases expired.

In 1926, the first workers’ compensation law passed the General Assembly. It was meant to provide quick relief to injured workers and protect employers when injuries occur in the workplace. The system was never intended to cover injuries outside of the workplace, and certainly not diseases and injuries that are the result of lifestyle choices, sports accidents or other conditions that have nothing to do with the employer’s workplace. As business representatives, we are appalled that any business organization would want to increase taxes and costs for Missouri employers to support such a plan – especially at a time when Missouri employers are struggling to survive.

This plan would have resulted in the largest tax and government-imposed cost increase on Missouri employers in state history. The largest previous tax increase was $136 million collected in support of education.

The failed proposal would have:

• Moved existing Second Injury Fund eligible claims into Missouri’s workers’ compensation system and added nonwork related pre-existing conditions to the workers’ compensation system. This would have increased workers’ compensation premiums paid by employers by 7 percent to 15 percent;

• Increased the current 3 percent surcharge on workers’ compensation premiums to possible 7 percent surcharge; and

• Allowed the Missouri Department of Labor and Industrial Relations to transfer funds from Missouri’s workers’ compensation fund to pay for the broken Second Injury Fund.

We are pleased that lawmakers stopped this tax and cost increase proposal. The Missouri legislature should endorse a plan that does not increase the Second Injury Fund surcharge and addresses real reform without moving nonwork related injuries into the workers’ compensation system.
 
Ray McCarty is president of 90-year-old Associated Industries of Missouri in Jefferson City. He has more than 25 years of economic development and taxation experience from state business organizations and departments. He can be reached at rmccarty@aimo.com.[[In-content Ad]]