Washington Senate Democrats Want More Transparency in Rebates

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Senate Democrats proposed increasing oversight of a Washington State business insurance rebate program, citing rebate overpayments of at least $150 million.

Last week, the state Department of Labor & Industries announced that, since 1994, it made the excess payments to business groups that purchase insurance from the department. Labor and Industries blamed an agency computer glitch.

“This error, dating back to 1994, and the magnitude of its consequences highlights the fact that the program has been operating without proper transparency and oversight, nor any disclosure requirements,” said Sen. Jeanne Kohl-Welles, D-Seattle, the bill sponsor.

But Republicans say the Democrats may have another agenda.

Sen. Janea Holmquist, R-Moses Lake, said that the measure is “an attempt to restrict funding to political campaigns and issues with which the sponsors of the bill do not agree.”

“Democrats in the Legislature, and their allies in liberal advocacy groups, want to silence the free speech of their political opposition,” Holmquist said in a statement.

Majority Democrats say portions of past refunds were spent by partisan business groups on political campaigns. The Building Industry Association of Washington, one of the larger groups to receive refunds, aggressively attacked Gov. Chris Gregoire during her recent re-election campaign.

For its part, the BIAW said the Democratic-controlled Legislature is taking advantage of the opportunity created by the computer glitch-generated refunds to ram home legislation limiting the association’s ability to make political speech. Similar bills — all of which would have effectively limited the BIAW’s fundraising abilities — have been proposed in past years.

“I think we’ve obviously fought this battle before,” said BIAW spokeswoman Amy Brackenbury. “It’s a case where, after an election, Democrats try to take away any source of funding we have to advance our ideas in future elections.”

The Democrats’ plan would require business groups to disburse most refund money to the pool of businesses that paid for the insurance within 90 days of receiving a rebate. Business groups could keep some of the money for administrative costs, but the proposal would also require those groups to show those they insure, as well as L&I, how the rebate money was spent.

Kohl-Welles disputed the BIAW’s characterization of the measure.

“The bill is what it says it is. There’s nothing hidden in there,” she said. “This is not a BIAW bill, though certainly they are a group that will be affected.”

Democrats say this year’s effort isn’t as punitive as similar measures proposed in years past.

They say the bill wouldn’t actually prevent groups like the BIAW from using refund payments for political activities, since it allows such use for “administrative expenses.” It would merely require business groups to clearly document their expenditures.

Brackenbury disagreed with the Democrats’ analysis. She said L&I would most likely set rules to determine which kind of activities could be written off as administrative expenses, and that those activities would most likely not include political ones.

Brackenbury said Democrats in the Legislature are trying to sound like they’re standing up for small businesses that aren’t aware of the BIAW’s political agenda. But she said the companies that buy insurance through the BIAW are the same companies that comprise the BIAW — in other words, they support the BIAW’s political activities.

A public hearing on the bill was held on Feb. 17, 2009.