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State budget proposals target comp programs

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State budget proposals that target employee safety programs and agencies, including workers compensation systems, are raising questions about the balance between federal and state oversight of comp and safety enforcement under the new presidential administration.

Wisconsin Gov. Scott Walker introduced Assembly Bill 64, a two-year budget bill, to the State Legislature earlier this month with a provision that would eliminate the state’s Labor and Industry Review Commission. Reviewing administrative decisions of the Division of Hearings and Appeals related to workers comp is among the agency’s responsibilities.

West Virginia Governor Jim Justice’s budget proposal, announced earlier this month, diverts $38 million from the $50 million designated annually to pay down unfunded comp liabilities to the state’s general fund. Pennsylvania Gov. Tom Wolf’s proposed budget, also introduced earlier this month, includes a provision to centralize government services, including directing the state’s Department of Community and Economic Development to create a single point of entry for workers comp along with unemployment and other services. And the San Diego City Council’s Budget Committee voted to ease workers comp reserve policies to free up $25 million in the city’s budget, according to a report in the San Diego Union-Tribune.

“Periodically states have budget concerns and will look to other departments for money to help balance their budget,” said Peter Burton, senior division executive for state relations at the Boca Raton, Florida-based National Council on Compensation Insurance Inc.

These budget activities don’t necessarily reflect a wider trend, he said.

“It happens every two to four years,” Mr. Burton said. He noted some states have even gone in the opposite direction by bringing the workers comp administrative process under the purview of government agencies rather than the courts.

But these types of budget initiatives viewed against a backdrop of a potential shift away from federal workplace safety enforcement activities under President Donald Trump raise questions about funding of workplace safety programs and what impact that might have on federal and state enforcement activities.

Twenty-two states have opted out of federal U.S. Occupational Safety and Health Administration oversight by establishing their own state OSHA agencies that are approved and partially funded by the federal agency, said Deborah Berkowitz, senior fellow with the Washington-based National Employment Law Project.

With potential budget cuts to the federal agency on the horizon under the new administration, state enforcement budgets will also be cut, she said. That coupled with state-level legislation and budget cuts targeting workers comp, along with a trend of decreasing benefits paid to injured workers since the early 1990s, means workers could be negatively impacted, said Ms. Berkowitz.

“I think you could say this is the beginning of an assault on workers, with Congressional rollback of protections, budget cuts in worker protection agencies, shifts away from enforcement and also a race to the bottom in terms of workers compensation benefits,” Ms. Berkowitz said. “In the end, workers lose, and they’ll lose twice over. They’ll lose if they get injured, and they’ll lose because of lack of oversight of their companies.”

Nickole Winnett, an attorney at Washington-based law firm Jackson Lewis P.C., said state safety agencies and labor departments are often not a high priority in state budgets and do not receive all the resources they request to enforce safety and health initiatives, which results in less enforcement and compliance assistance available to employers.

“Both federal and state OSHAs will likely spend more time on compliance assistance and less on enforcement,” Ms. Winnett said of the potential shift under the new administration. “Certain states, like California, that already have an active state plan program may ramp up enforcement if they feel like the federal government is not doing as many inspections. But a lot of states don’t have the resources or money to have a robust inspection program like the federal government does, so most states will likely maintain the level of enforcement they typically have had.”

Another outcome of the changing administration is a potential easing of tension between federal OSHA and state agencies, said John Martin, an attorney with Washington-based law firm Ogletree, Deakins, Nash, Smoak & Stewart P.C.

States that opt out of federal OSHA oversight are required to have a program that is considered “as effective” as the federal program, Mr. Martin said. Some states believe achieving compliance with regulations meets that standard even if they use different methods to achieve compliance, while the federal agency has tended to require states to run their OSHA programs exactly the same as the federal agency, which sometimes conflicts with state laws, Mr. Martin said.

“Under the last administration, there were a lot of arguments between state and federal OSHA about what it meant to have a state plan,” Mr. Martin said. “I think we will see a little more cooperation.”