This is a continuation of the recent article, Prop 118 Provides Paid Family Medical Leave for All Employees.

Proponents Argue Prop 118 Is Needed in Colorado

Before the proposition was passed, proponents for it raised 10 times more money than those campaigning to vote “no.” Much of the money to support the bill’s passage came from organizations that put money into progressive legislation across the country.

Politicians that endorsed the bill included Senator Michael Bennet, former Governor and Senator-Elect John Hickenlooper, State Attorney General Phil Weiser and a slew of other democratic congressmen and state legislators.

According to the Vote Yes on Proposition 118 website, four out of five Coloradans do not have access to any type of paid family medical leave insurance. The proponents argued that during the coronavirus pandemic it was even more important for Colorado workers to be able to take time off to care for loved ones.

“Proposition 118 means that 2.6 million Colorado workers will no longer have to choose between paying their bills and caring for a newborn, themselves or a seriously ill family member,” the website said. “Small businesses want to do right by their employees and provide them with benefits like paid family leave, but it’s often too costly for them on their own. As small businesses struggle to recover from this economic downturn, this program is part of the solution, providing an affordable paid leave option that helps level the playing field with big corporations.”

The website also said that the bill received support from over 150 small businesses across the state including some that said they wanted to offer their employees the ability to take time off for family-related reasons.

Other local business owners believe that the passage of the proposition will keep them from losing employees to bigger companies that offer paid family medical leave benefits.

Opponents of Prop 118 Argue the Cost Could Harm Small Businesses

Before the election, several organizations spoke out against the bill saying that the fees advertised were too low to cover the costs in the long run.

The National Federation of Independent Businesses spoke out against the proposition saying that in the long run the program would cost Colorado jobs and money. The Colorado Chamber of Commerce, the Colorado Springs Chamber of Commerce and other chamber of commerce organizations across the state all opposed the paid family medical leave program saying that the costs to small businesses could be too much to handle.

The Colorado Springs Chamber of Commerce took an official stance against the proposition saying that businesses are already hurting too much due to coronavirus pandemic regulations. According to the chamber, some businesses have had to dip into their savings to keep paying their employees and that a higher payroll tax could hurt them even more. Chamber officials said that adding a new tax to businesses is not a good way to jumpstart the job market that is already suffering.

The Colorado Chamber of Commerce cited a study completed by the Common Sense Institute that stated that the state program could eventually run out of money. The chamber said that if the amount of claims exceeds the amount of money in the pool, then the state might have to raise the amount contributed by the employee and employer. A press release issued by the state chamber of commerce, noted that the passage of Proposition 118 could raise corporate income tax rates by 204 percent by the year 2025.

The Common Sense Institute issued a report saying that passage of the proposition could pose a number of issues for the state. The study pointed out that Colorado is offering a higher percentage of coverage with the benefits than other states. The study projected that the demand would exceed the money in the pool and that the rate would have to keep raising to pay for the benefits.

The study also pointed out that the cost to implement the program would come out of taxpayer dollars. “The net cost across the entire state, after accounting for the reduction in expenses for the cost of current paid leave benefits, is projected to be $10.9 million in FY24, 56 percent of which will come from the General Fund,” the Common Sense Institute’s study said. “Second, the paid leave benefit payments are not subject to state income taxes, therefore benefit payments that replace taxable income, will reduce state income tax revenue. The state fiscal note estimates the benefit payments to be $1.1 billion in FY25. Given the state’s current income tax rate of 4.63 percent, that could mean up to a reduction in state income tax of $50.9 million.”

The study also found that the program will have “unintended consequences” for different types of businesses by mentioning two case studies. “A restaurant with 30 employees and a 3 percent margin would see its margin reduced by 10 percent and costs increase by $159 per employee if they would need to replace every worker who takes leave,” the report said. “A biotech research company that has 200 employees, wants to offer its employees a 100 percent wage replacement rate and has a margin of 15 percent will see its margin decrease by 2.4 percent after paying an additional $545 per employee in net costs if it only needs to replace 50 percent of workers on leave.”

The Maverick Observer, or “The Moe” as we affectionately call it, is an online free-thinking publication interested in the happenings in our town. We launched in February 2020 to hold our politicians and businesses accountable. We hope to educate, inform, entertain, and infuse you with a sense of community.