HB 2575 Deducts $35 Million from Oregonians' Paychecks in 2009-11

SALEM - On a party-line vote, House Democrats today passed a new payroll tax on Oregon workers to fund a government-run family leave insurance program.  Once the program is fully operational during the 2009-11 biennium, House Bill 2575 will withhold over $35 million from the paychecks of 1.2 million Oregonians.

"Democrats are sneaking through a payroll tax at the end of the session," said House Republican Leader Wayne Scott (R-Canby). "This is another tax increase to create another unsustainable program."

House Democrats passed the measure with 31 votes.  Speaker Jeff Merkley (D-Portland) ruled HB 2575 was not a tax increase requiring a supermajority vote.  House Republicans challenged the ruling, arguing many Oregonians taxed under HB 2575 may not actually benefit from the program.  However, the majority Democrats shut down this discussion and sustained the Speaker's ruling.

HB 2575 deducts one cent per hour from workers' paychecks, and deposits the funds into an account administered by the Bureau of Labor and Industries (BOLI). Rep. Bruce Hanna (R-Roseburg) said "BOLI has no experience running an insurance program, and there's no assurance the fund won't run out of money.  No actuarial work has been done to ensure it's sustainable, and the legislation does not establish a reserve fund to protect taxpayers from any unfunded liability that might occur."

Added Rep. Hanna, "how many private insurance companies can come to Oregon and set up a new program with no reserves and no actuarial work?"

Rep. Kevin Cameron (R-Salem) said Oregon workers will be hit by the payroll tax during the 2007-09 biennium, yet taxpayers won't receive any benefit from the $9 million that will be deducted from their paychecks. He said the revenue is only going to be used to "create a bureaucracy that's bound to fail, or until the Legislature is forced to raise the payroll tax again."