Legislature may raid Workers’ Comp fund

Legislature may raid Workers’ Comp fund
By John Ledger
Associated Oregon Industries

Discussions are taking place in the capitol about how to drain millions of dollars from scores of dedicated fee accounts, paid for by Oregon business, and divert that money into the General Fund (GF). The GF is the repository for income and many other taxes and is the funding source for the majority of education and health programs.

Here’s just one example how it can cost you money: The Workers’ Compensation Premium Assessment jumped from 4.6% to 6.4% last September. This money, which you pay as your assessment to support the Workers’ Compensation Department, is held in the Workers’ Compensation Premium Assessment Operating Account. Safely, you assume. But if the Legislature raids the fund and diverts your assessment dollars into the General Fund, the Department would have to extract yet more of your money to keep the agency afloat. In essence, you have had an increase in your taxes without even knowing it.

The term used for such an account drain and diversion is called “fund sweep.” Although some accounts are protected by the State Constitution or federal law, most are not, and new legislation implementing a fund sweep supersedes existing statutory limitations or guarantees. Some funds sweeps occurred last session, but the possibility of repeats and expansions is raising concerns in the business community.

The targets for 2011 fund sweeps are many and diverse; it is difficult to think of many state-business interactions that do not require a fee. These fees, each with a dedicated account, were often established or increased with the support of the payers with the clear expectation they would be used for purposes strictly specified by statute. DEQ permitting or Department of Agriculture food safety programs are just two examples.

Regardless of its consequences, the temptation to sweep may prove irresistible, despite its inherent unfairness to fee payers and agencies alike. After all, why should business pay or support increasing fees to support a program, as AOI has traditionally been able to do to improve DEQ permitting, if it turns out to be a bait and switch? At the same time it is not much of an exaggeration to say that the pressure on legislators to finance GF programs and avoid state personnel cuts will become asymptotic to infinity as the session wears on.

There is another interesting angle. To date, bills diverting fee dollars to increase GF revenue have not required a 60% vote to pass, as would normally be required for new revenue raising measures. The rational appears to be that if the Legislature decides to “reprogram” funds already collected, regardless of expectations or statuary mandates applying at the time of collection, the funds can be moved into the GF with a simple majority vote. In other words, the 60% vote requirement to increase GF revenue can be sidestepped by identifying or increasing fees and then sweeping them into the GF.

AOI is actively working with a large group of business and other associations opposing sweeps from business-financed accounts, especially in the areas of natural resources and environmental permitting agencies.

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