SAIF Announces $135 Million Dividend
The board of SAIF, Oregon’s nonprofit provider of workers’ compensation insurance, has declared a $135 million dividend for policyholders. The dividend is SAIF’s 26th since 1990.
To determine whether to issue a dividend, SAIF considers capital levels, claim trends and the overall economic environment, according to a Sept. 6 press release. This year’s dividend will be distributed in October to 52,023 policyholders. It will be based on premium for policies whose term ended in 2022.
Also on Sept. 6, the Oregon Department of Consumer and Business Services announced that the state’s employers would, on average, pay less for workers’ compensation coverage in 2024. According to DCBS, the decline marks the 11th straight year of average decreases in the pure premium rate, which is the base rate insurers use to determine how much employers must pay for medical costs and lost wages.
On average, says DCBS, employers would pay 90 cents per $100 of payroll for workers’ compensation costs in 2024, down from 93 cents in 2023, under a proposal by DCBS. This cost covers claims costs, assessments and insurer profit and expenses.
Meanwhile, the pure premium rate would drop by 6.7% on average under DCBS’ proposal.
Go here for additional information from DCBS.
Labor Department Seeks 55% Boost in Overtime Threshold
The U.S. Department of Labor on Aug. 30 released a notice of proposed rulemaking that would increase minimum pay for salaried workers exempt from overtime requirements under the Fair Labor Standards Act (FLSA). The proposed rule would establish a threshold of $1,059 per week, which is equivalent to $55,068 annually. The current exempt threshold, established in 2019 and effective since Jan. 1, 2020, is $684 per week, which is equivalent to $35,568 annually. The change would represent a nearly 55% change in minimum salary.
Under the FLSA, employees must receive overtime pay for hours worked in excess of 40 in a workweek unless they fall within an executive, administrative or professional (EAP) exemption. To fall within this exemption, employees generally must be paid a salary that meets or exceeds the federal threshold and primarily perform executive, administrative or professional duties.
The Department of Labor proposes to increase the exempt threshold, it explains, because during the past three years “salaried workers in the U.S. economy have experienced a rapid growth in their nominal wages, which lessens the effectiveness of the current salary level threshold.” The proposal would automatically update the salary threshold every three years.
The Department of Labor estimates that the proposed rule would cost employers $1.2 billion in its first year and affect more than 3.6 million workers.
According to The New York Times, the Obama administration in 2016 sought to raise the overtime cutoff for salaried employees to about $47,500 from $23,500. However, a federal judge concluded that the Department of Labor lacked the authority to raise the threshold so substantially and suspended the rule.
Webinar: Paid Leave Oregon – How’s it Going?
Paid Leave Oregon, the state’s paid family and medical leave insurance program, is now operational. The program started taking applications from employees on Aug. 14, and benefits began Sept. 3. Because the program is in its infancy, employers still have many questions.
To answer them, staff with Paid Leave Oregon will join OBI on Thursday, Oct. 19, for a webinar that will run from 10 – 11 a.m.
Representatives of Paid Leave Oregon will include:
- Shannon Ball, policy lead
- Phillip Hudspeth, outreach program analyst
- Emily Sokolski, outreach program analyst
Register for the webinar here.
Webinar: What Employers Should Know about OregonSaves
July 31 was the deadline for Oregon businesses to enroll in the state’s mandatory retirement plan, OregonSaves. However, as Oregon Public Broadcasting reported days later, many employers didn’t know about the deadline – or even what OregonSaves is.
On Sept. 14, officials with the state treasurer’s office will present an overview of the program and answer questions from webinar participants.
For those who aren’t familiar with the program, employers that don’t offer their own retirement plans are required to enroll in OregonSaves. The program automatically directs 5% of employees’ salaries into their own IRAs via payroll deductions. Employees may choose to leave the program or change their contribution amounts.
The webinar will run from 10 a.m. to 11 a.m. on Thursday, Sept. 14. Register here.
Member Profile: Nuance Systems Inc.
Nuance Systems Inc., or NSI for short, provides critical devices to producers of semiconductors, solar panels and LEDs. Demand for NSI’s products is high, and the company is growing rapidly as a result. NSI and its 90-plus employees moved recently into a 60,000-square-foot manufacturing facility in Sherwood, quadrupling its floor space in the process.
The company, founded in 2008 by Kyle Kimmerle, manufactures highly precise gas and chemical delivery systems. Click the button below to learn more about NSI and its products.
Read more here.
Payroll Tax: Salem City Council on Aug. 28 rejected a proposal to repeal its recently enacted employee payroll tax. Voters will now decide its fate in November. Both the Salem Reporter and Statesman Journal have reported the decision.
Insurance Costs: Health-insurance costs are climbing at their steepest rate in years, significantly affecting businesses and workers, The Wall Street Journal reports. Costs for employer coverage are expected to increase by about 6.5% in 2024, adding significantly to the cost for employer plans that already average more than $14,600 for employees, according to the Journal. Leading factors include hospitals’ higher labor costs and heavy demand for new and expensive diabetes and obesity drugs.
Pumped Storage: Pumped-storage hydropower projects, like one permitted in Klamath County, have lower lifetime greenhouse gas emissions than other utility-scale methods of storing energy, according to a study by the National Renewable Energy Laboratory, the Portland Business Journal reports.
Knopp Challenger: Bend City Councilor Anthony Broadman has announced that he will seek the Democratic nomination to challenge Sen. Tim Knopp, R-Bend, next year, the Oregon Capitol Chronicle reports. The Oregon Secretary of State’s Office determined in August that Knopp and several other Republic senators who staged a legislative walkout this year were not eligible to seek re-election in 2024 due to Measure 113. However, Knopp and four colleagues are challenging that decision.
Climate Fund: The Department of Environmental Quality announced Aug. 31 that Portland-based nonprofit Seeding Justice will administer the Community Climate Investment Fund, which is part of the state Climate Protection Program, The Oregonian reports.
Portland Incentives: Portland commissioners on Aug. 31 approved a trio of moves intended to retain and grow business in the city, including one aimed specifically at Daimler Truck North America, which is deciding where to site a $40 million facility. The city’s Daimler proposal includes an enterprise zone property tax break on new investments that does not include a requirement that it grow employment by 10% within a year, the Portland Business Journal reports.
Urge Congress to Accelerate R&D Expense Deductibility
For nearly 70 years, federal tax policy had allowed businesses to deduct R&D expenses immediately. This came to and on Jan. 1, 2022, however, thanks to a policy change that requires companies to deduct R&D expenses over a period of years.
This change discourages innovation by making it harder for businesses to make critical investments. U.S. R&D policies are now less competitive than those in 29 of the 38 countries that make up the Organization for Economic Cooperation and Development.
Fortunately, more than 140 representatives have signed on to a House bill that would allow for the immediate deductibility of R&D expenses. Thirty-eight senators have signed onto a companion bill, and support in both chambers is bipartisan.
Please help push Congress to fix this problem by the end of the year. To do so, follow this link to a National Association of Manufacturers form you can use to send an email of support.
Forecast Predicts Further Tax Revenue Growth
The September Revenue Forecast, released Aug. 30, is the first since the end-of-session forecast that was used to guide state budgeting for the 2023-25 biennium.
Up again but more moderate
Economists reported, again, that they have seen stronger than expected economic output since the June forecast. It is worth nothing that 13 consecutive quarterly forecasts have come in better – often much better – than expected. In releasing the June forecast, state economists indicated that they would make methodological changes in response to their consistent underestimation of revenue. The forecast issued today is the first to incorporate the new modeling methods. In their presentation, state economists noted that growth and expectations of future growth have stabilized. They also noted that there is greater agreement now among economists and modeling systems around trends. This includes, importantly, a growing consensus that we will achieve a “soft landing” and avoid near-term recession.
Another $447 million anticipated
Compared with previous forecasts, September’s predicts that tax revenue will grow modestly. Income tax revenue is expected to exceed end-of-session estimates by $44 million, and corporate income tax revenue is expected to top estimates by $321 million. These increases, along with expected growth in lottery funds and revenue from other taxes, will generate an additional $447 million in general fund and lottery revenue for the 2023-25 biennium.
State economists did note that they are seeing a greater correlation between Oregon corporate tax income and the federal Tax Cuts and Jobs Act (TCJA) of 2017, specifically noting that the incentives within the TCJA to onshore revenues for tax liability purposes seem to be contributing to the unexpectedly strong growth in the state’s corporate tax revenue.
Ending balance and reserves
The ending balance for the current (2023-25) biennium is now expected to be $880 million, up $437 million since the June forecast. Rainy day fund expectations grew to $1.36 billion, while the Education Stability Fund is now expected to be $713 million. This results in total effective ending balance and reserves of $2.95 billion, which represents 11.6% of the general fund budget.
The net general fund and lottery revenue forecast for the 2023-25 biennium, which began July 1, is $25.7 billion, exceeding the $25.3 billion forecast at the end of the session. Including some end-of-session accrual adjustments and ending balances, the state’s projected net available resources for the biennium are now projected to be $32.8 billion, compared to $32.3 billion at the end of the session.
Big kicker on the way, but not for businesses
The personal income tax kicker, to be paid in 2024 is projected to be $5.6 billion. The kicker includes tax revenue that exceeds the amount used to set the state budget.
The corporate kicker is projected to be $1.8 billion. However, corporate kicker revenue will not be returned to the businesses that paid the taxes. In 2012, voters approved a constitutional amendment (Measure 85) redirecting corporate kicker revenue to the general fund to support K-12 education.
Given the continued growth in tax revenue and significant recent increases in business contributions, which include the kicker redirection, the corporate activity tax and other state and local levies, legislators in 2024 and 2025 have no justification to seek higher rates.
Go here to see the full September forecast.
Registration Open for Manufacuring Roadshow
Registration is now open for OBI’s second annual Manufacturing and Innovation Roadshow, which will visit facilities in eastern Oregon, the Columbia River Gorge, Hood River, central Oregon and the northern Willamette Valley in early October.
The itinerary, which will be expanded in the coming weeks, includes the following stops:
- Oct. 2: Pendleton Chamber of Commerce roundtable breakfast, Pendleton Woolen Mills, Tillamook Columbia River Processing (Boardman), Hood River Distillers.
- Oct. 3: Daimler Truck North America Proving Grounds (Madras), Bend Chamber of Commerce roundtable lunch, Epic Aircraft (Bend), BASX Solutions (Redmond).
- Oct. 4: Freres Engineered Wood (Lyons), Salem Area Chamber of Commerce roundtable lunch, Machine Sciences Corp. (Tualatin), PGE Sherwood Training Center.