Dear OSCC Members and Colleagues -

What a difference a week makes.

If the legislature solves the state's Medicaid budget shortfall of $900 million - which it is poised to do with a variety of taxes on hospitals, medical providers and insurance premiums embedded in HB 2391 - then the legislature needs to find only $500 million (out of a nearly $21 billion budget) to solve the budget shortfall.

There are many ways this can happen, including finding efficiencies and cost reductions (pay attention to SB 1067) as well as the use of one-time funds that are found in various accounts sprinkled throughout state government.

Suddenly, it appears that the legislature can actually balance its budget with no additional business taxes and adjourn by the July 10th constitutional deadline.

Interestingly, Governor Kate Brown's final "to do" list, which she unveiled last week, does not contain tax increases. Her final three priorities are (1) a transportation funding package, (2) solving the state Medicaid shortfall, and (3) passing a state government cost reduction bill (SB 1067).

Here's a look at the major issues still in play with 30 days left.

Labor Bills:
BOLI Overtime Fix: No new developments on HB 3458. OSCC very much supports the underlying bill which fixes a negative BOLI interpretation requiring manufacturers to pay both daily and weekly overtime, which results in double overtime payments. But with HB 3458, the price is too high because it caps workweeks at 60 hours per week, which will have significant workforce implications for manufacturers, particularly those in areas with labor shortages. OSCC will oppose the bill so long as the 60 hour work week cap is contained in the bill.

Predictive Scheduling: SB 828 is the subject of 11th hour negotiations. The bill has been watered down to only apply to food service, retail and hospitality businesses with 500 or more employees. Business groups gain a statewide preemption on all local scheduling ordinances. As a backdrop to the discussion, the unions have even filed two prospective ballot measures on the issue, presumably to pressure lawmakers into passing something now. The ballot measures filed by the unions are much more intrusive and harmful to business. As the bill gets continually watered down, it appears that the unions are becoming less interested in it and more interested in the prospective ballot measures.

Paid Family Leave: The conversation around this bill - HB 3087 - is resurrecting, but the fact remains that because the new paid leave program requires a new payroll tax on employers and a new income tax on employees, it requires a 3/5 vote of the legislature, which it won't get. However, we need to pay attention to it because it is getting a fair amount of 11th hour attention from advocates and Democratic leadership.

Environmental Regulation:
Cleaner Air Oregon: HB 2269 would increase Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme. We do have the votes to defeat this legislation at present as the current regulations being proposed by DEQ will kill off many local employers who won't be able to comply with the new emissions standards. We are supporting amendments to the bill which will force DEQ to work cooperatively with the business community instead of just running us over. The fundamental question here is whether we can leverage short term political strength on this issue to force a long term regulatory process that's workable for us. 

Diesel engine regulations: SB 1008 is the diesel engine regulatory bill that looks poised to move in some form this year. There are new amendments that are being hailed as a compromise between industry and environmental advocates. We'll let you know as we receive and analyze amendments.

Liability:
Liability Costs / Damage Awards: The trial lawyers' third attempt at trying to increase damage awards for negligence and personal injury lawsuits is faltering. Having been defeated with SB 487, then SB 737, the trial lawyers stuffed their amendments into HB 2807 and passed the bill out of the Senate Judiciary Committee on a partisan vote. HB 2807 increases non-economic damage limits from $500,000 to $10 million. We believe that we have the votes to defeat this bill for a third time.

Business Taxes:
Gross Receipts Taxes (GRT): Pay attention to HB 2830. This is the bill that will be used to push an end-of-session tax plan that implements a 0.48% baseline gross receipts tax on all businesses with $3 million or more in Oregon sales. The most recent development is that House Speaker Tina Kotek has now joined forces with Senate Revenue Chair Mark Hass to support this baseline GRT proposal. The reason this is significant is because previously, Kotek and her progressive allies made very clear they did not support Hass' GRT plan because it did not raise enough new revenue. She has now endorsed Hass' plan. OSCC is opposed to this bill and will continue to work in concert with the business coalition to keep it from moving forward.

Temporary Tax Plan: We are also watching for a temporary tax plan that's been introduced that would increase the corporate income tax from 7.6% to 9.0%, eliminate the pass-through tax cuts passed by the 2013 legislature, and double the corporate minimum tax on all companies. This plan is being referred to as the "Bridge Plan."

Use of TRT funds: HB 2064 is the bill that expands the allowable use of TRT monies to include 'beautification' and maintenance on tourist facilities. We anticipate that the House Revenue Committee will finally take up this issue this week over the objections of local Chambers of Commerce and the Oregon Restaurant and Lodging Association. Stay tuned for updates on this issue as it may potentially move forward.

Other tax legislation of concern to OSCC members includes HB 2067, which blacklists certain countries as 'tax havens' and increases the tax burden on Oregon companies with affiliates located in these tax havens. HB 2067 blacklists some countries such as the Netherlands and Switzerland that have significant investment in Oregon. We believe we can stop this legislation.

HB 2019, which requires the public disclosure of Oregon taxes of any company that avails itself of at least $5,000 in Oregon tax credits, is also a bill that OSCC is actively engaged in. OSCC joins its business association partners in opposition to this intrusive bill. It is clearly meant to harass companies for whom the unions don't believe pay their "fair share." We believe this legislation is an active threat.

State Government Cost Reductions:
The bill that's being pushed here is SB 1067, which would stop including automatic inflation increases for services and supplies in state budgets, saving a projected $211 million in the next biennium, slow down the process for filling vacant state government jobs, saving as much as $145.3 million in the next biennium, and eliminate jobs that were left vacant more than six months, saving an estimated $67.8 million in the next biennium. 

But the part of the bill that's drawing opposition from OSCC and the business community is a limitation on health care reimbursements to hospitals for public employees. This represents a major cost shift onto the commercial market. Click here to see the testimony that OSCC submitted in opposition to1067.

PERS Reform: The bill to watch is SB 1068. The bill is being panned as largely symbolic, but it does re-direct 2% of employee contributions from the Individual Account Program to shore up the unfunded liability of the pension program. Democratic leadership is offering this bill as a "carrot" to help incent Republicans to support revenue increases. But to date, Republicans have concluded that the bill doesn't save enough money to warrant tax increases.

Transportation Funding:
We do not yet have a political bead on HB 2017, the 300-page comprehensive transportation funding bill. The bill is weighted down with several tax increases - enough to produce over $8 billion over ten years - such as an increase in the gas tax, weight mile tax, a payroll tax, a bicycle sales tax and a tax on auto dealers. 

The bill is opposed by several business groups including the Trucking Association and the Fuels Association. The bill was even opposed by the government employee unions, who insisted that the legislature must pass corporate tax increases as a precursor to a transportation bill. The unions threatened to refer HB 2017 to the ballot if the legislature failed to pass business tax increases.

Further complicating the bill politically is that it does not contain any cost control provisions for the low carbon fuel standard, which Republicans have insisted upon.

But the overall sheer desire to see a transportation funding package pass by both parties is what is keeping the bill alive. A "normal" bill would not otherwise survive these political headwinds.

Alison Hart, Executive Director
alisonh@oregonchamber.org
503-231-5421

JL Wilson, Legislative Counsel
jlwilson@pacounsel.org
503-363-2182