Home, Auto Insurance Premiums Could Go Up To Fund Disaster Mitigation

DENVER (CBS4)- If you drive a car or own a home or a business, what you pay for insurance will go up under a new bill at the state Capitol. Over the last few years, state funding for disaster mitigation has gone from $10 million to $3 million. Now, some lawmakers want us to pitch in.

The legislation is aimed at mitigating damage from any kind of hazard.

"In Weld County it may be a tornado or in Eagle County it may be a wildland fire," said Kevin Kline, Director of Homeland Security and Emergency Management.

Under the bill, the state would levy a .05% fee on premiums insurance companies collect from policy holders - an estimated $4.5 million in the first year. The money would go into an enterprise fund that local governments could tap for hazard mitigation grants.

Bill sponsor Rep. Lisa Cutter says the fund will help the local governments leverage federal dollars that require a 25% match, "So if we were to spend a total of $5 million, we would be able to draw down $15 million from FEMA."

The bill received its first hearing Thursday where Republicans like Rep. Lori Saine questioned why private business should have to do government's job, "Why isn't this a general fund obligation? Why are we putting this on the people paying these insurance policy premiums?"

Rep. Tim Geitner argued the bill is it is an end-run around the Taxpayer Bill of Rights that requires tax increases be approved by voters, "This fee is calculated as a percentage of sales or premium and is sent in with their taxes, so how is this not a tax?"

Carole Walker with Rocky Mountain Insurance Information Association said the fee is a tax - on insurers, who will pass it on to policy holders, "Our insurance consumers who would be paying for this through their insurance policies, which are already some of the highest rates in the country, they're going to get taxed on it and it may not have any direct benefit to them."

Cutter disagrees. She said wildfires impact air and water quality for all of us, and disasters raise everyone's premiums, "So we can argue all day long about how we get this money and how we make this happen, but we have to starting doing something and make it happen."

Cutter said Colorado is at high risk of a fire like the one that devastated Paradise, Calif. last year.

The bill specifies that Public Safety will oversee the enterprise fund and use FEMA cost-benefit criteria to decide who gets the money for what projects.

Opponents want more transparency. Right now, it's unclear how much the bill will cost policy holders. Supporters said it could be as little a few dollars a year, but it will depend, in part, on what you pay now.

The committee that heard the bill delayed a vote on it.