Committee advances bill creating BOLI expense fund after legal debate over revenue test

The Joint Committee on Ways and Means voted Feb. 25 to advance House Bill 4027, which establishes a continuously appropriated BOLI Expense Fund and authorizes a new worker-benefit assessment mechanism to finance it. The bill also raises the statutory cap on the prevailing-wage fee from $7,500 to $12,500.

Why it matters: Sponsors and bureau officials said the measure will sustain recent staffing increases at the Bureau of Labor and Industries and support wage-claims and civil-rights work that the agency has struggled to process. Opponents raised constitutional and policy questions about creating a dedicated revenue stream and whether fees are an appropriate long-term funding method rather than general-fund appropriations.

The measure’s fiscal mechanics drew the most scrutiny. Legislative Fiscal Office staff told the committee the measure is expected to generate roughly $4.25 million a year in new revenue in the early years. Committee members asked whether the bill required revenue‑raising procedures and a three‑fifths vote: Representative Reschke and Senator Taylor debated whether the bill should have come through the Revenue Committee and whether the constitution’s ‘‘bill for raising revenue’’ test applied.

Legislative counsel told the committee it had posted a new legal opinion on OLIS concluding the bill is not a bill for raising revenue under Oregon case law. Senior Deputy Legislative Counsel Alan Dale explained the tests applied by Oregon courts, including whether the bill, as written, would immediately bring money into the treasury and whether it has the essential features of a tax levy. He said a key difference is that HB 4027 delegates rate‑setting to an agency, so money would not flow automatically on enactment, and the opinion concluded the bill did not meet the judicial tests to be classified as a revenue bill.

BOLI Deputy Commissioner Jessica Gentino Viatoro described how the prevailing-wage fee functions in practice: the fee's statutory rate (one‑tenth of 1%) would remain unchanged, but the cap on the fee paid by large public‑works projects would increase from $7,500 to $12,500. Gentino said the prevailing‑wage fee supports education and enforcement work and that some current positions (about 18) were funded in the prior session and additional positions could be funded later by the new assessment subject to later legislative authorization.

Contentions and concerns: Several senators cast the proposal as an attempt to fund agency work via targeted fees rather than general‑fund appropriations. Senator Gerard described the bill as, in his words, “a huge tax increase” and said it looked like a ‘‘slush fund’’ for the commissioner. Senator McLean and others said they were troubled by management and oversight questions at the agency and opposed advancing additional resources before management issues were addressed.

Outcome and next steps: The committee voted to send HB 4027 to the floor; members recorded objections for the record but the motion carried. Legislative counsel’s posted opinion and the fiscal estimate on OLIS are part of the official record; the bill will proceed to the next stage of the legislative process where further floor debate is expected.

Authorities and legal sources cited in committee: Oregon Revised Statutes cited in discussion (ORS 650.050) and a Legislative Counsel opinion posted to OLIS concluding HB 4027 is not a bill for raising revenue.

What to watch: Whether the Department of Consumer and Business Services or BOLI sets assessment rates by rule and, if so, the timing of when funds begin accumulating; any floor amendments addressing oversight or funding mechanics; and any further fiscal estimates from LFO or legislative counsel.