Governor, Businesses, Labor Defend SAIF from Initiative

By | October 6, 2004

The battle over a ballot measure to abolish SAIF Corp. has moved into the final month with big spending by supporters and tough talk by Gov. Ted Kulongoski, who has emerged as the top defender of the state-owned workers’ compensation insurance company he helped reform 15 years ago.

“The test of this, more than anything else, is how business and labor have come together and they both have said it is important, it is critically important, to workers, to the state’s economy, to the business community, that we keep the State Accident Insurance Fund,” Kulongoski said.

The largest business lobbying organization in the state, Associated Oregon Industries, and the largest organized labor group, the Oregon AFL-CIO, both stand squarely behind the Democratic governor in his effort to block the proposal to abolish SAIF.

Measure 38 and the campaign to support it are funded by Liberty Northwest, a subsidiary of insurance giant Liberty Mutual, based in Boston.

Campaign expenditure reports released this week show that Liberty Northwest already has spent almost $1.6 million in its effort to eliminate the state from the workers’ compensation insurance market.

Lisa Gilliam, spokeswoman for Oregonians for Accountability, the Measure 38 campaign, argues that rates will decrease if the market is left to private insurers.

“It’s basic free enterprise economics,” Gilliam said. “Downward pressure on rates will result from more competition in the marketplace.”

But early in the week, Kulongoski announced that workers’ compensation insurance rates will not increase in 2005, the third straight year without an increase following 12 years of rate reductions he said have saved Oregon employers $10.1 billion.

The governor, who led a major reform of SAIF in 1990 as state insurance commissioner, said the lower rates will help attract business to Oregon when neighboring California and Washington state both are expecting increases in their insurance rates.

“We are, compared to any state west of the Mississippi, one of the lowest-cost states on (workers’) compensation,” Kulongoski said, noting that Oregon has fallen from sixth-highest in administrative costs for workers’ compensation programs to 35th, among the lowest nationally.

Gilliam, however, points out there are 15 states where workers’ compensation insurance rates are lower than Oregon.

“There are other states that do it better and we think we can do it better too,” she said.

A wide range of business leaders, however, have said they believe SAIF is doing a good job. They had contributed nearly $2.4 million to defeat Measure 38 as of Sept. 16, including a $1 million loan from Associated General Contractors, a trade group for the heavy construction industry.

Pat McCormick, spokesman for the Committee for SAIF-Keeping, organized to defeat the measure, says his group expects to be outspent 3-to-1 in the remaining weeks before the November election.

Oregon television stations have confirmed more than $1.8 million in advertising planned by Liberty Mutual and Oregonians for Accountability in the coming weeks, McCormick said.

“I’m sure it will add to the impression that Liberty Northwest will spare no expense in their effort to pass this measure,” he said.

Gilliam said that Measure 38 supporters need to boost public awareness to counter what she calls a “virtual government monopoly” on workers’ compensation insurance.

According to the Department of Consumer and Business Services, the state agency that regulates workers’ compensation, SAIF provided coverage to about 42 percent of the employers in 2003 while private insurance companies provided slightly more, at about 43 percent. The remaining 15 percent of the market was self-insured.

Gilliam said TV ads and other campaign advertising on the final stretch will focus “on what’s happening to real people” instead of the recent complaints about lobbying bills that Kathy Keene, the former president of SAIF, racked up during her tenure.

The agency recently agreed to pay a $2,000 penalty to settle a 10-month inquiry into a complaint it underreported lobbying expenses.

“Honestly, I think if SAIF was so great, then why isn’t our economy better?” Gilliam said. “Why do we continue to have the highest unemployment rate in the country?”

If Measure 38 is approved, however, both McCormick and Kulongoski say Oregonians can expect workers’ compensation insurance rates to increase rapidly.

“There’s no payday for anybody but Liberty Northwest,” McCormick said.

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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