Oregon committee hears debate over HB 4,027 to create BOLI Expense Fund; business groups cite constitutional concerns

The House Committee on Labor and Workforce Development held a public hearing Feb. 9 on House Bill 4,027 (dash 1), which would establish a Bureau of Labor and Industries (BOLI) Expense Fund and authorize the director to set assessments on employers and employees to support BOLI operations.

BOLI witnesses described long case backlogs and staffing shortages that have delayed resolutions for workers. Josh Nasby of the Bureau of Labor and Industries said many claimants are in financial distress, asserting that "62 percent of filers are facing food, housing or medical insecurity," and noted that a nearly $15,000,000 one-time transfer the agency received expires in 2029. Nasby and other proponents urged a shared assessment to provide ongoing funding for the agency’s core work.

Labor unions and agency staff argued the proposal is modest in per-worker cost and necessary to retain recently hired employees. Senator Kathleen Taylor, sponsor of the mirrored Senate measure (SB 1506), described the assessment’s size as "one tenth of 1¢" per hour on employer and employee sides in a typical small-employer example and said the measure was developed by a bipartisan work group.

Business groups acknowledged BOLI’s needs but pressed process and constitutional concerns. Anthony Smith, Oregon state director for the National Federation of Independent Business, opposed the bill on policy and process grounds and argued the proposal functions as a revenue-raising measure that should meet constitutional origination and supermajority requirements. Paloma Sparks of Oregon Business and Industry told the committee OBI "could be neutral" if the bill were amended to include a three-fifths vote requirement.

Legislative counsel addressed that process question in detail. Alan Dale, senior deputy legislative counsel, reviewed Oregon case law and testified that courts construe the phrase "bill for raising revenue" narrowly; he said a two-part test applies — whether a bill brings money into the treasury and whether it levies a tax in the strict sense — and that an exclusion exists for measures that primarily regulate behavior and impose charges incident to regulation. Dale said the dash-1 amendment appears closer to that regulatory exclusion and thus was not treated as a conventional revenue bill in the opinion provided to the legislature.

MLAC (the Managed Care/Labor Advisory Committee) and agency staff reported they had reviewed the proposal. Sean O'Dea, director at the Department of Consumer and Business Services, and Matt West, administrator of the Workers' Compensation Division, said MLAC concluded the proposed separate subaccount for BOLI expenses would not negatively affect the workers' compensation system and submitted a letter reflecting that result.

Witnesses and committee members discussed specific guardrails in the bill. Agency staff explained the dash-1 creates a separate BOLI Expense Fund and contains language prohibiting transfers from the workers' benefit fund into that new account; committee staff cited statutory sections that set separate calculation methods for assessment rates and caps on the second tranche of positions (capped at $5,250,000 in cumulative positions as drafted) and described an additional tranche of staffing estimated at about $10.5 million for expanded positions.

The committee did not vote on the bill. Chair Graber said she would consult with Senate sponsors and committee leadership about next steps; the public hearing was closed and the committee adjourned.

The hearing produced a factual record of competing concerns: proponents emphasized the operational need and modest per-worker cost, while business groups focused on constitutional process questions about whether the measure must be classified as a revenue bill and require a three-fifths threshold. Legislative counsel’s opinion that the measure fits the regulatory exclusion — and MLAC’s letter about fund safeguards — were central to the committee’s deliberations.