Taxation Without Representation (All States)

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Taxation Without Representation (All States)

Postby davidd on Tue Nov 24, 2009 4:51 pm

*****************EDITORIAL by David J DePaolo*********************
The following editorial represents the opinion of the author only!

I made a stink in May when Governor Schwarzenegger ordered work furloughs for all of state government, including those agencies, such as the Division of Workers’ Compensation, that do not take any money from the General Fund because they are self funded through “user assessment” fees – the hidden tax.

Last year this hidden tax was increased by 22%. There was no outcry, no objection, no tea party. No one even noticed.

Except Department of Industrial Relations administrators - they noticed the apathy.

“Hey John,” I could sense a DIR deputy telling top dog Duncan, “no one even blinked last year when we raised fees, so let’s really make it worthwhile – let’s go for 37%! We can justify it. We’ve spent $60 million on a new computer system that still needs more money because it doesn’t work. The Legislature handed us full fiscal responsibility for Cal-OSHA. And the state faces a $21 billion deficit still. This is an easy pay raise!”

How does this happen? How is it that there are no checks and balances when it comes to administrative spending?

Here’s how: SB 228 (Alarcon) was signed in to law on 9/28/2003 by then Governor Gray Davis and became effective 1/01/2004. The key statute is Labor Code section 62.5, which is the section that established the Workers’ Compensation Administration Revolving Fund. It is a “special account” in the State Treasury and the method for assessing this tax is set forth in paragraph (e) of that section.

Paragraph (e) provides no system for restricting or monitoring the assessment process other than stating that, “In no event shall the total amount of the surcharges paid by insured and self-insured employers exceed the amounts reasonably necessary to carry out the purposes of this section.”

While the director “shall adopt reasonable regulations governing the manner of collection of the surcharges,” the “regulations adopted … shall be exempt from the rulemaking provisions of the Administrative Procedure Act.”

In other words, the administration was given a license to steal, and they are abusing the privilege. They adopt their own standards for “reasonable” and there is no public vetting.

We had a war about this issue a couple hundred years ago – I believe the outcry was something about taxation without representation…

Now, I may not be so upset if I felt the public was getting something for their money – but we are not.

I pointed out in May that when assessments increased 22% last year, the public actually was receiving 10% less service due to mandated work furloughs.

Now we have a 37% insult to injury imposed by the latest budgetary hocus-pocus.

According to the assessment memo released by DIR yesterday, nearly three cents of every policy dollar is now going to fund $426.8 million of various agency activity. This is an increase of $115 million from last year. Out of this the administration is going to spend $233 million on workers’ compensation - a nearly 17% increase from last year. This part of the fund provides us with adjudication and administration services.

So, please folks, keep me in check here because I need to be sure I understand everything. The funding for DWC activity is increased by 17%, but with unemployment hovering near 12% claims frequency for the first quarter of 2009 was 14.8% less than the first quarter of 2008 and 30% less than its all-time high in 1991 (stats by the Workers’ Compensation Insurance Rating Bureau).

Oh, I get it! This is the old grocery trick! Give the consumer less for more! Since claim frequency is down 15% from last year that means DWC needs $115 million more to ensure that state offices remain closed every other Friday.

Anyone up for a tea party?
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Re: Taxation Without Representation (All States)

Postby rider001 on Wed Nov 25, 2009 10:13 am

Our company is doing a quasi-newsletter advertisment and i would like to use your editorial on the next issue. Can you email me or give me a call. 408-288-7811. Thanks
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