This session, Colorado Democrats have introduced HB 18-1001 – titled as the “FAMLI Family Medical Leave Insurance Program” as one of their “signature” bills and indeed this was the first bill introduced in the 2018 session.
The bill is described as follows:
“The bill creates the family and medical leave insurance (FAMLI) program in the division of family and medical leave insurance (division) in the department of labor and employment to provide partial wage-replacement benefits to an eligible individual who takes leave from work to care for a new child or a family member with a serious health condition or who is unable to work due to the individual’s own serious health condition.
Each employee in the state will pay a premium determined by the director of the division by rule, which premium is based on a percentage of the employee’s yearly wages and must not initially exceed .99%. The premiums are deposited into the family and medical leave insurance fund from which family and medical leave benefits are paid to eligible individuals. The director may also impose a solvency surcharge by rule if determined necessary to ensure the soundness of the fund. The division is established as an enterprise, and premiums paid into the fund are not considered state revenues for purposes of the taxpayer’s bill of rights (TABOR).”
This bill is problematic for a number of reasons, and it should be voted down by the Colorado House of Representatives.
It Calls For an Income-Based TAX
This government-run, mandatory “insurance” program would be funded by a tax on all salaried employees in the state of Colorado. This tax would start at 0.99% and would not be subject to any income caps – i.e. the taxpayer pays the 1% if they earn $10,000 per year or $1,000,000 per year. It is not subject to any exemptions, exceptions, excuses or other reasons for non-payment.
All employers in the state, from the remaining Fortune 200 to the mom-and-pop liquor store would be responsible for withholding this tax from all employees on the payroll and remitting it to the state. The bill drafters tried to make this more palatable to businesses by including a provision for “nominal and reasonable” compensation for their trouble, but make no mistake: this bill imposes an extra regulatory burden with the associated costs on every business in the state of Colorado.
While the bill drafters tried to call this “tax” a “premium” and have structured the language so as to create an “enterprise” and therefore make this governmental program exempt from TABOR and voter approval, it is still a TAX. Any money taken by force from citizens to fund government programs – whether it is a specific program or general expenditures – is a TAX and in Colorado should be subject to approval by the voters.
It Creates a Government “Enterprise”
One of the things this bill would do is to create a government-run insurance program to be administered by the Department of Labor and Employment. Leaving aside the fact this will add to the already bloated government payrolls and PERA burden, this creates yet another government entity that will be exempt from oversight by the General Assembly and will be accountable to nobody but the governor.
This division of the CDLE would have the power to issue revenue bonds to support the “insurance” program created by HB 18-1001. There is no limit to the revenue bonds that could be issued, nor are there other requirements for debt ratios or other covenants. For those who aren’t familiar with revenue bonds, they are bonds that are issued by entities that are repaid from the money taken in by that entity.
This means that as time goes on the FAMLI division will have debt to service as well as claims to pay.
Which Brings Us to Tax Increases and “Solvency Surcharges”
The director of the FAMLI division will have the power to increase the 0.99% income tax at will, with no permission needed from the Governor, the General Assembly, the taxpayers or the voters of the state of Colorado. There is no limit to how high this tax can go. There is no limit to how often or how much the tax can be raised. (The Fiscal Note says the director adjusts the “premium” based on claims experience, but the bill contains no limiting language.)
By the end of 2020, this program will most likely be in the red, as most government programs are. But don’t worry! The Director of the division will have the power to impose a “solvency surcharge” on all employees paying the tax. There is no limit to the surcharge in terms of percentage of income or dollar amounts. The sky’s the limit!
Government Outreach
Because our progressive friends view people as basically incapable of caring for themselves without government assistance, the Director is directed by this law to develop and implement “outreach services” so that everybody knows about this wonderful new government benefit. This outreach information should be “easy-to-understand” [sic], “culturally competent” and “linguistically appropriate”. (No, I’m not making this up!) Employers will be required to post information about the FAMLI program in a “prominent location” in the workplace and notify employees of the program in writing upon hiring and upon learning of an employee experiencing a “qualifying event”. In other words, employers will be required by law to monitor life events of their employees so they can notify them of this benefit in case they can qualify. While no penalties for failing to do this are mentioned, they are only another law away.
HB 18-1001 By the Numbers
The tax (yes, it’s a TAX) imposed by HB 18-1001 represents a 21% increase in the Colorado Income Tax rate, without a vote of the taxpayers as required under the TABOR amendment.
And remember, this is just the beginning. Who really thinks this tax rate will stay at 0.99%?
As with most leftist income redistribution schemes, this one is less favorable the higher up the income ladder the taxpayer goes. Remember, there is no limit to how much you will pay in taxes under this program. There are, however, limits to the benefits, and the benefit percentages go down with higher incomes.
Eligibility, Penalties and Other
In order to be eligible for the FAMLI “insurance” benefit from the benevolent State, one must be or have:
| – Serious health condition personally |
| – Caring for a new child |
| – Caring for a family member |
| – An exigency regarding military service |
| – to care for a “designated person” who can be changed annually by election. (This can be literally ANYONE, they don’t need to be related in any way) |
Yes, these are all life events that pose difficulties in people’s lives. But that is what private insurance is for and many employers already offer similar benefits to employees. To the people on the lower steps of the economic ladder, yes, they are more impacted by these events. That is what families, communities and private charities are for.
What happens if you are working a second job and you want to take a leave from your first job? No problem!
IF THE ELIGIBLE INDIVIDUAL IS ABLE TO CONTINUE WORKING A SECOND JOB WHILE TAKING FAMILY AND MEDICAL LEAVE, THE DIVISION SHALL NOT CONSIDER THE ELIGIBLE INDIVIDUAL’S WEEKLY WAGE EARNED FROM THE SECOND JOB.
Yes, you read that right. There is also no penalty for simultaneously collecting unemployment.
Finally, while it is against the law to fraudulently collect government benefits, with regard to the FAMLI program, it’s OK. The Director has the ability to “exercise his or her discretion to waive, in whole or in part, the amount of any repayments where the recovery would be against equity and good conscience.”
This program promises to get out of control very quickly. Between minimal qualifications to receive the lavish benefits, no penalties for having second jobs or collecting unemployment, and the possibility of having fraudulent payments waived, this program is ripe for insolvency, abuse and fraud.
Conclusion – “No” on HB 18-1001
While a statewide or a national conversation about family and medical leave may be appropriate and even President Trump has called for a program of this nature, I believe that this program is fatally flawed and for all the reasons outlined above. In addition, the government does not belong in the insurance business.
Finally, this bill is based on a patent lie. As I stated at the top, any money collected by government force to fund a government program is a TAX. Fancy lawyer language to pretend the amounts collected under this bill are premiums are a blatant lie and a bald attempt to evade the spirit of the Taxpayers Bill of Rights enshrined in Section 20 of Article X of the Colorado Constitution.
This bill was heard in the House Business Affairs and Labor Committee on February 6, 2018 and was passed out of that committee to the House Finance committee, where it was heard on March 7, 2018. After the hearing, it was passed on to the Appropriations Committee, and the next action date is unknown at this time.
The members of the House Finance committee are listed below with their e-mail addresses. If you agree with me that this is a terrible bill, please email them prior to March 7 to ask them to vote “No” on this bill. Please email your state representative and state senator to ask them to be aware of and vote “No” on this bill should it come before them.
Richard D. Turnquist
February 25, 2018
Updated March 11, 2017 for committee status.
Other voices against HB 18-1001
Dave Perry, editor of the Aurora Sentinel
“Colorado paid family leave act is a fatally flawed, noble cause legislators should block”
Megan Schrader, in the Denver Post
“The hard economics of paid family leave in Colorado”
Note: Mr. Perry and Ms. Schrader are certainly no right-wingers, and both call the FAMLI leave tax a “tax”.
Principles of Liberty from their “POL Report February 05, 2018”
Members and email addresses for the House Appropriations Committee
| Name | Email Address |
| Dave Young, Chair | dave.young.house@state.co.us |
| Millie Hamner, Vice Chair | rephamner@gmail.com |
| Jon Becker | jon.becker.house@state.co.us |
| Susan Beckman | susan.beckman.house@state.co.us |
| Jesse Danielson | jessie.danielson.house@state.co.us |
| Justin Everett | justin.everett.house@state.co.us |
| Alec Garnett | alec.garnett.house@state.co.us |
| Chris Hansen | chris.hansen.house@state.co.us |
| Tracy Kraft-Tharp | reptracy29@gmail.com |
| Patrick Neville | patrick.neville.house@state.co.us |
| Dan Pabon | dan.pabon.house@state.co.us |
| Bob Rankin | bob.rankin.house@state.co.us |
| Faith Winter | faith.winter.house@state.co.us |
Expected Expenditures under HB 18-1001 (from the Fiscal Note prepared by legislative staff):
Note that this new division will employ over 211 FTE and cost half a billion dollars by Fiscal Year 2021-2022:
