Reviewers press proponents on $150 million payment, TABOR treatment in proposed Pinnacle Assurance conversion

A state review panel on March 5, 2026 pressed proponents of proposed initiative 2-48 to clarify financial and procedural details of a plan to separate Pinnacle Assurance from the state and use conversion proceeds to fund workforce training.

Jennifer Berman of the Office of Legislative Legal Services summarized the measure’s core elements: converting Pinnacle Assurance from a political subdivision to an independent mutual insurance company; a one-time $150,000,000 payment to the state as part of that conversion; subjecting Pinnacle to premium taxes; directing the commissioner of insurance to facilitate the conversion; and creating a skilled workers and trades fund credited with the $150 million and future premium-tax receipts.

The panel asked several substantive drafting and constitutional questions. OLLS asked whether the $150 million payment and premium taxes would be excluded from the state's annual revenue and spending limitations under section 20 of article X of the Colorado Constitution (TABOR) and, if so, what constitutional basis would support that exemption. Proponents responded that the intent was to treat the payment as a voter-approved revenue change and noted precedent discussed as "Taber," but staff asked for clearer drafting to establish the constitutional basis.

Staff also raised procedural issues about dispute resolution. The measure currently caps Division of Insurance direct costs at $250,000 and assigns the Division the obligation to provide an administrative hearing if parties cannot agree on costs. OLLS recommended referencing the State Administrative Procedure Act (section 24-4-105 CRS) and specifying whether an administrative law judge appointed under part 10 of article 30 of title 24 should preside and what standard of proof applies; proponents said they would consider those drafting changes.

The panel questioned a provision that would bar third-party claims arising from the separation. Proponents clarified the intent: the exception is meant to allow enforcement between Pinnacle and the state, not to permit third-party suits against Pinnacle or the state arising from the separation.

OLLS flagged ambiguity in language that says money "shall remain in trust" for the fund's purposes; staff warned that phrase could be read to invoke the Colorado Uniform Trust Code and suggested clearer language ensuring the funds cannot be transferred or revert to the general fund. The panel also asked whether the board administering the fund would cover the costs of the state auditor's annual audit; proponents said they would consider specifying that point.

Proponents responded during the hearing that they agreed with several of the drafting suggestions and would review and potentially revise the language, including whether the Division of Insurance should bear the burden of proof at hearings and clarifying who provides workers' compensation coverage for employers unable to procure it in the voluntary market.

The review is advisory: LCS and OLLS provide comments to help proponents refine ballot language and to make statutory and constitutional implications clear to voters. The panel concluded its substantive questions and moved on to a companion proposal, initiative 2-49.

The hearing was convened by Erin Reynolds of Legislative Council staff and included OLLS attorneys Jennifer Berman and Renee Leon and the proponents and counsel. The panel recorded a number of recommended drafting changes; proponents indicated they would consider edits and clarifications.