by Sen. Doug Whitsett
Candidates often talk about the importance of small business and agriculture as the backbones of Oregon’s economy when they are campaigning for office as a state representative or senator. Unfortunately, too many legislators seem to lose sight of their stated commitments to those very important sectors of our economy sometime between the November elections and the start of the Legislative session.
I know firsthand how challenging it can be to operate a small business. I spent nearly three decades as the owner and operator of a veterinary clinic and animal supply store in Klamath Falls. The preponderance of Oregon lawmakers don’t have that kind of real-life experience and perspective. Regrettably, that lack of business experience does not dissuade them from insisting on advocating for bills that will cause tremendous harm to small business owners.
Two of those bills were passed by the budget-writing Ways and Means Committee during a work session last Friday, June 5. Both bills were passed without the vote of a single Republican Senator or Representative.
House Bill 2960-A creates the Oregon Retirement Savings Board in the office of the State Treasurer. It directs the Treasurer to develop a payroll deduction retirement plan for employees of private businesses. I warned about the negative implications of this kind of legislation last December.
This bill creates a new “voluntary” payroll deduction for private sector employees. Business owners “must offer” the new retirement plan. Employees are automatically enrolled in the plan but may choose to “opt-out.” The original plan will be separate from, but parallel to, the state’s Public Employee Retirement System (PERS) that has plenty of problems of its own.
Democratic legislators are not alone in advocating for this plan. The Oregonian recently supported it in this opinion piece, where they ask the question of why an estimated 20 states are considering the same issue. My response is that those states are looking at the issue because it’s being aggressively pushed on a national level by the nation’s largest public employee union. Inexplicably, the Service Employees International Union (SEIU) expresses extreme concern regarding the lack of retirement benefits for private sector retirees.
The Oregonian article also appears to cite the nearly bankrupt Illinois PERS system as an example of why our state should go down this road. By contrast, I feel that following the same steps taken by nearly bankrupt entities is bad public policy.
Further, I am extremely concerned that the end-game may be to combine both public and private sector retirement plans. What better method to “shore-up” the financially troubled public employees retirement plans?
During last Friday’s Ways and Means Committee meeting, my colleague, Sen. Chuck Thomsen (R-Hood River) stated that there are a “lot of unanswered questions” about HB 2960-A. He also said the bill could potentially put employers who are forced to offer the retirement plans at significant risk for civil lawsuits when retirement plan investments fail to meet the employees’ expectations.
Sen. Fred Girod (R-Stayton) recalled that the Treasurer’s Office and Oregon Investment Council had lost around 40 percent of the value of the PERS Trust Fund in 2002 and again in 2008 due to fluctuations in the stock market. He correctly asked why state officials are deciding they can do better for people in the private sector.
A chief sponsor of the bill claimed that the plan is on sound financial ground. I focused my objections on committee testimony that clearly did not support that allegation.
The Internal Revenue Service has not yet even issued an official opinion on whether contributions to the retirement plan would be deductible on a participant’s federal tax return. The United State Department of Labor has not yet issued an opinion on whether the plan is even legal under the federal Employee Retirement Investment Savings Act.
Nevertheless, the bill includes an emergency clause where an actual emergency plainly does not exist. The only conceivable purpose for the emergency clause is to prevent referral of the bill for a vote of the people.
HB 2960-A passed on a party-line vote, with all of the Democrats on the Ways and Means Committee in favor and all the Republicans opposed.
SB 454-A was also passed out of committee on a party-line vote. This bill requires all employers to implement sick leave for their employees and obligates employers with more than six employees to provide up to 40 hours of annual paid sick leave.
Any violation of the provisions of the Act would be an unlawful practice subject to the jurisdiction of the Bureau of Labor and Industries (BOLI). The bill also creates a private right of civil action for the employee against an employer who violates any provision of the Act.
As the owner of an orchard, Senator Thomsen is very familiar with how agricultural enterprises operate. He introduced an amendment to the bill that would exempt agriculture from its provisions. He pointed out that the industry often relies on seasonal employees that help to harvest very perishable products.
Furthermore, he said that owners of agricultural operations have no control over the price of their products. His thoughts were echoed by Rep. John Huffman (R-The Dalles), who said that the bill would be “impossible for agriculture.” Sen. Thomsen’s motion was defeated on a party-line vote.
Sen. Girod offered up amendments that would exempt businesses with fewer than 25 employees. That motion was defeated on a party-line vote, along with a motion by Sen. Bill Hansell (R-Athena) to adopt amendments exempting businesses with 50 employees or less.
I stated that this proposal will cause an across-the board two-percent increase in payroll costs for Oregon businesses. It will also create significant disruptions to businesses because it allows for hourly sick-leave absences at the will of the employee.
Employers who have the temerity to suggest an employee is abusing the paid sick may find themselves in BOLI’s crosshairs or subject to a civil suit by the employee. Further, the onerous record-keeping requirements will create accounting problems for businesses, especially the smaller ones.
“You folks have no idea, if you don’t live in a rural area, what this will do to agriculture,” Sen. Hansell said in committee.
Sen. Girod observed this bill will ultimately end up “clubbing agriculture over the head.” He said “if you’re not from Portland, this has a totally different effect.”
In order to pass these very bad bills, the majority party had to resort to some procedural shenanigans. Ways and Means Committee member Sen. Betsy Johnson (D-Scappoose) was poised to join Republicans in opposing both bills. Her vote would have killed both bills in committee.
Unfortunately, a Ways and Means Committee rule interjected by the presiding officers allows the presiding officer to replace a member of his or her own party in these committee meetings. Senate President Peter Courtney (D-Salem) passed both bills out of committee by substituting his “yes” vote for Sen. Johnson’s “no” vote on both bills.
It’s easy for politicians to forget that many small businesses don’t have accountants, human resources departments or tax or labor attorneys on their staffs. Rather, the owners are more likely to be a husband and wife sitting together at the kitchen table at ten o’clock at night after a 12-hour day, trying to figure out how to comply with state-imposed mandates without running afoul of regulatory agencies like BOLI.
This lack of legislative understand of basic business practices is a major cause of why Oregon continues to struggle. All new businesses begin as small businesses. The successful ones grow by hiring more employees. The fact of the matter is that most new family-wage jobs are created by small businesses.
Bills such as SB 454-A and HB 2960-A serve to shackle small business-driven job creation. They are a primary reason why Oregon is a perrenial national leader in unemployment, why our per capita income is more than 10 percent below the national average and why nearly 20 percent of our population relies on food stamps for basic survival.
I’ve often said that the key to our prosperity is a thriving private sector economy, in which entrepreneurs feel comfortable making investments and hiring more employees. Regardless of their stated intentions, members of the Democrat majority continue to impose more government interference based on feel-good policies that ultimately do more harm than good for the average Oregonian.
Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls