Already struggling trucking companies in Washington state were stunned following the recent announcement that the Department of Labor and Industries will increase workers’ compensation insurance premiums in 2009.
While the average increase will be 3 percent for all businesses in the state, L&I spokesman Steve Pierce admits the rates will be more for higher risk industries such as trucking.
“We have to give an average, and that’s what we’ve done here,” he told Land Line Magazine on Friday, Dec. 12.
This announcement comes after several state lawmakers – including Rep. Lynn Kessler, D-Hoquiam – said the L&I workers’ compensation rates could put fledgling businesses under if approved.
“If we keep raising their taxes, how in the world are they going to stay afloat when they are barely hanging on now,” Kessler, who is majority leader in the House, told Land Line in mid-November.
Pierce told Land Line the increases are needed to ensure the contingency reserve remains “solvent.” He also said he recognizes that “businesses are struggling and that we are in very difficult times economically,” which Pierce said is why L&I didn’t ask for more.
“The rate should have been around 6.3 percent. … We are trying to do what we can,” Pierce said.
As of late November, Elaine Fischer, a Labor Department spokeswoman, told Land Line the agency had a $1.6 billion budget surplus, while another lawmaker, Kessler, said the actual amount may be as high as $3 billion.
Pierce said the agency’s budget surplus may have half the money it had then because of “what’s going on in the markets.”
“While there is this impression that we are sitting on this pile of money and we’re not doing anything with it, that isn’t correct,” he said. “We are required to keep contingency reserves, which is standard practice in the insurance industry.”
Pierce said he wasn’t sure of the minimum amount the contingency reserve was required to maintain.
For small-business truckers like Sherrie and Bob Bond of Chehalis, WA, this may be the nail in the coffin for their five-truck log-hauling business. She said every employer and every employee in the state should be “railing against the L&I rate increases.”
“For businesses already struggling in this state, this is terrible news,” she told Land Line on Friday. “Every employee in this state is at risk of losing their jobs because their employers can’t afford to pay the increased workers’ compensation rates, so they have to weigh keeping their businesses afloat versus letting people go instead – and that’s just wrong.”
– By Clarissa Kell-Holland, staff writer