Paid leave, business tax proposals also have businesses jittery
State Director Anthony Smith reports from Salem on the small-business agenda for the legislative week ending March 15
March 15 made it Day 53 of the 160-day Oregon Legislative Session, which means we’re one-third of the way to Sine Die. Here’s the scoop since the last update:
- Paid Family & Medical Leave: Several bills have been introduced to enact a new paid family and medical leave system for Oregon workers. It hasn’t been posted yet, but NFIB received word that the House Committee on Business and Labor will hold hearings on this issue on Monday, March 25.
- Workers’ Compensation: House Republicans responded with a press release to The Oregonian story mentioned two weeks ago about Gov. Kate Brown’s plan to raid SAIF’s reserve funds. The release prompted a follow-up story by reporter Ted Sickinger.
- Business Taxes: The Joint Subcommittee on Revenue has released modeling for both a commercial activities tax (CAT), which is a type of gross receipts tax (GRT), and a business activities tax (BAT), which is a type of value-added tax (VAT).
The following is more information on each of the above.
Paid Family & Medical Leave
According to NFIB sources, the House Committee on Business and Labor will hold two hearings on Monday, March 25, to receive public testimony on one or more bills relating to paid family and medical leave. There will be a morning hearing when the committee will hear invited testimony from advocates and opponents, followed by an evening hearing (probably from 5 p.m. to 8 p.m.) for members of the general public to weigh in with their thoughts on the proposal(s).
Here are some of the bills that could be up for consideration by the committee:
House Bill 3031 (Seven chief sponsors, 27 regular sponsors)
- Creates a family and medical leave insurance program to provide employees who are eligible for coverage with a portion of wages while employees are on family and medical leave or military family leave.
- Requires employer and employee contributions to fund the program via payroll tax.
- Directs the director of the Department of Consumer and Business Services to determine contribution amounts and weekly benefit amounts.
- Protects an eligible employee’s position of employment with their employer while the employee is on leave if the employee has been employed with their employer for a minimum of 90 days before commencing leave.
- Prohibits an employer from retaliating against an employee who invokes the program and from interfering with the employee’s rights under the program.
- Establishes a right of employee for civil action for certain employer violations.
House Bill 3140 (Three chief sponsors – Reps. Salinas, Hernandez, and Piluso)
- Expands the definition of “family member” for purposes of family and medical leave.
- Makes family and medical leave requirements applicable to all employers, regardless of the size of the employer.
- Reduces the number of days and hours an employee must work for an employer in order to become an eligible employee.
- Extends the length of leave an employee may take for bereavement, family, and medical leave.
- Requires employers to grant family leave with pay.
- Allows the employee to determine the order in which accrued leave is to be used when more than one type of accrued leave is available to the employee.
- Allows an employee who separates employment with their employer to automatically reestablish eligibility to take family and medical leave if certain conditions are met.
- Allows recovery of compensatory and punitive damages for a civil action brought alleging a violation of family and medical leave requirements.
Both of these proposals are bad news for small-business owners, but as you can see, HB 3031, which is funded by a new employer/employee payroll tax has the most support (in terms of bill sponsorship). HB 3140 would set up the system similar to Oregon’s Paid Sick Time law, but without any exemptions for the smallest of employers. Small businesses would not only have to grant leave to workers and hold their jobs for them, but also pay them directly while on leave.
There are rumors that another bill or two could be coming soon – one would be a bill sponsored by members of the majority party and the other would be an employee-paid alternative sponsored by moderate Democrats and Republicans. There are a couple of Senate Bills floating around too, but conventional wisdom is that this effort will start in the House.
When NFIB last balloted this issue, members in Oregon overwhelmingly opposed paid family and medical leave (92 percent voted NO.)
SAIF/Workers’ Compensation
The Oregonian/OregonLive’s Ted Sickinger recently reported that Gov. Kate Brown is considering selling SAIF corporation or tapping its reserves to hold down future pension costs for school districts around the state, You can read the original story here.
House Republicans responded quickly with a press release focusing on SAIF’s good financial management and their safety record that benefits both businesses and workers:
“The Governor’s proposed indiscreet confiscation of SAIF’s reserves is a smash and grab, endangering hardworking Oregon wage earners,” said House Republican Leader Rep. Carl Wilson (R-Grants Pass). “Employees and their families depend on SAIF’s worker compensation plans during the dire times when they are injured and can’t work.”
The Oregonian/OregonLive then wrote a follow-up article with more background, calling into question the legality of the governor’s plan. It’s important that this issue stays front and center.
Remember:
- SAIF’s reserve funds are not a true surplus – it’s their operating capital – and a large part of what keeps their workers’ comp premiums affordable and stable.
- If these reserves were unnecessary, we would be the first ones to cry foul – it’s our members’ money!
- Raiding money from a successful and fully-funded state operation to pay for an irresponsible, unfunded public pension system is terrible governance. In the private sector, business practices like this would drive a company into bankruptcy in no time!
Business Taxes
The Joint Subcommittee on Revenue released modeling for both a commercial activities tax (CAT), which is a gross receipts tax (GRT), and a business activities tax (BAT), which is a value-added tax (VAT).
You can compare models for the CAT and BAT here: short-term CAT model and long-term CAT model versus short-term BAT model and long-term BAT model. Clearly, when you make an apples-to-apples comparison of these models, the CAT is more harmful to the economy in nearly every way, particularly in job losses and disposable household income.
We’ve always known that the pyramiding effects of a gross receipts tax are one of the most compelling reasons why voters overwhelmingly rejected Ballot Measure 97 in 2016, but now the state’s own Legislative Revenue Office has crunched the numbers and has demonstrated that a consumption-based business entity-level tax without pyramiding performs better, economically.
That’s not to say that NFIB supports the BAT – it doesn’t.
NFIB members strongly oppose a new consumption-based business entity-level tax. We asked our members about this on the 2019 state member ballot and 91 percent were opposed. But it will be interesting to see what the Legislature does with this information. Do they risk moving forward with the CAT knowing most of the business community will rally together in opposition, or do they consider the BAT, hoping to generate at least some support from businesses looking to minimize the potential damage from a new tax on the economy? Time will tell – and very soon. Joint Subcommittee on Revenue Co-chair, Sen. Mark Hass (D-Beaverton) announced March 12 that the subcommittee will be making a decision on which plan to move forward within the next week.
Previous Reports from the State Capitol
March 4—Oregon’s Workers’ Compensation System Under Legislative Attack
February 3—Will the Small Business Tax Cut be Eliminated
January 18—Oregon State Legislature Opens 2019 Session
