Three major business groups sued the state this month over a new law that creates a dedicated funding stream for the Bureau of Labor and Industries, arguing the Legislature broke the Oregon Constitution by passing the bill without the required three-fifths supermajority in the House.

House Bill 4027, signed by Gov. Tina Kotek in late March and now Chapter 30, sets up a new BOLI Expenses Fund. It tells the director of the Department of Consumer and Business Services to set an extra assessment on the existing Workers’ Benefit Fund payroll charge. That money is meant to cover BOLI operations, build a 12-month reserve, and limit how many new positions can be added. Officials put the extra cost at about two-tenths of a cent per hour worked, or roughly $4.16 a year per employee, split between the worker and the employer. The bill also raises the cap on the prevailing-wage fee that public agencies pay from $7,500 to $12,500. Full text of the enrolled measure is available here.

Oregon’s constitution requires three-fifths of the members in each chamber to pass any bill that raises revenue. In the 60-member House that means 36 yes votes. On Feb. 27 the House passed HB 4027 with only 33 yes votes, 11 no votes, and 16 members not voting. The Senate cleared it 18-12 a week later. Roll-call details are posted on The Oregonian’s bill tracker.

Local lawmakers split on the measure. Rep. David Gomberg, D-Otis, voted yes. Sen. Dick Anderson, R-Lincoln City, voted no. Neither was listed as a sponsor of the bill, and there is no public record showing either helped write it. The main sponsors were Rep. Mari Watanabe and Sen. Kathleen Taylor.

Legislative analysts labeled the bill as having “no revenue impact,” which let it move forward on a simple majority. Lawmakers and their lawyers argued it was not a revenue-raising bill because the Legislature itself did not set the rates. Instead it handed that job to an agency director.

Oregon Business & Industry, the National Federation of Independent Business, and the Portland Metro Chamber filed the lawsuit July 14 in Oregon Tax Court. They call the assessment a new tax and say the House vote fell short of the constitutional mark. Their full statement and complaint summary are available on the OBI website. “Process matters,” the groups wrote. “Simply delegating rate-setting to a director or hitching new revenue-raising plans to existing taxes does not negate the obligation before the Legislature.”

The Oregon Freedom Coalition raised the same points this week in its latest “Blank Check Report.” CEO Nick Stark said the Legislature “blew right past the three-fifths requirement” and handed an unaccountable agency the power to set the rates. He pointed to the lawsuit as the proper next step.

Supporters say the bill gives BOLI steady funding after years of understaffing and backlogs in wage and civil-rights cases. A bipartisan work group recommended the approach. Labor leaders call the lawsuit a threat to hard-won progress in rebuilding the agency’s capacity.

The new assessment takes effect Jan. 1, 2027. The Tax Court will decide whether the Legislature followed the constitution or not.