Dear OSCC Members and Colleagues:
OSCC is closely watching several issues as we prepare for the 2018 Legislative Session.
Measure 101 Debate Coming to Your Chamber
Measure 101 will be the subject of a special election on January 23rd. A "Yes" vote will preserve a 1.5% provider and health care insurance premium tax passed by the legislature during the 2017 session. A "No" vote will repeal the tax. At stake is between $222 and $333 million of state funding that is directed toward the state's Medicaid program - also known as the Oregon Health Plan - which funds health services for low income Oregonians.
Chambers need to understand the tension surrounding this issue as members will likely have strong feelings on both sides of the debate.
You can expect your local hospitals and physicians groups to be in strong support of Measure 101. Preserving the 1.5% tax on providers and health insurance premiums keeps funding intact for the Oregon Health Plan. Proponents claim that as many as 350,000 Oregonians risk losing their health insurance if the tax is not preserved. In addition, keeping the tax intact will reduce uncompensated care and therefore reduce the costs that are shifted onto commercial and private ratepayers. Finally, proponents argue that eliminating the 1.5% provider and premium taxes will simply force the legislature to find $300 million elsewhere - perhaps in the form of other, less acceptable taxes.
Opponents of Measure 101 will likely come from small business owners who don't appreciate a 1.5% tax ($145 million) on their already expensive insurance premiums. They observe the mismanagement of the Oregon Health Plan - including over 55,000 ineligible recipients being allowed to collect benefits and more recently, that the state overpaid $74 million for Medicaid services - and oppose higher taxes to fund a health care program that lacks integrity. Opponents argue that there is more than enough money in state government to account for the $222 - $333 million without requiring small employers to pay $145 million in additional taxes to keep the Medicaid program whole.
Oregon PERS UAL Task Force
The Oregon PERS UAL Task Force released its final recommendations on November 1st. The task force was instructed by Governor Brown to generate $5 billion to pay down a portion of Oregon's unfunded liability. The recommendations from the group will likely inform and shape legislation in the 2018 short session.
- Reduce excess risk capital across state-controlled entities ($750 million - $1.5 billion): State Controlled entities hold cash and short-term investments to mitigate financial risk and maintain credit ratings. This money could be pooled at the state level and used in part to reduce UAL.
- Create a new PERS investment fund for non-state employers (unknown revenue generation): Entities such as cities, counties and school districts hold excess cash in mostly short-term investment funds. This money could be pooled at the state level and invested in long-term, higher-yield accounts and revenues could be credited against those employers' UAL.
- SAIF Corporation ($500 million or more):
- Transfer SAIF surplus capital to PERS or require investment in state notes for PERS.
- Require payments to PERS instead of payment of excise taxes or allocate future dividends to PERS.
- Sell SAIF to policyholders or investors.
- Dedicate unanticipated revenue to PERS ($1.2 billion or more): Harvest revenue in excess of projections to PERS. Potential revenues could include capital gains tax, estate tax, lawsuit settlements, increased debt collections, and foreclosed properties.
- Unclaimed property revenue ($200 million or more): The state could take ownership of unclaimed property after 10 years which currently amounts to $200 million but will grow as other unclaimed properties reach the 10-year threshold.
- Reduce agency reserve funds (unknown revenue generation): The state could establish fund balance targets for agencies and transfer excess reserves to PERS.
- Increase state alcohol revenues ($453 million or more): Oregon could increase excise taxes on beer and wine, shift to a demand-based pricing structure or implement commercial best practices.
- Privatize public universities ($250 million - $1.5 billion): Research universities or the health science university could seek private backing to buy the university out of the public sphere. No philanthropic donor with the necessary assets and interest to undertake privatization has been identified.
- Maximize financial value of real property assets ($128 million or more): The state could sell high value property such as the Portland State Office Building ($120 million) or other state-owned property ($8 million).
- Natural resources ($330 million - $530 million or more):
- Undertake harvests on federal land and negotiate with the federal government to dedicate a portion of revenues to offsetting PERS costs.
- Increase the amount that private landowners pay toward fire suppression costs to save General Fund money that could be redirected to PERS.
- Increase the fee charged by the state when issuing future water rights.
- Increase lottery revenue ($175 million or more): Expansion of offered lottery games will increase lottery revenue. Increased funds above a certain baseline could be assigned to PERS UAL. Lottery funds are constitutionally restricted in their use.
- Rainy Day Fund ($200 million): Projected deposits into the Rainy Day Fund for the 2017-2019 biennium total $246 million. $200 million of those projections could be redirected to PERS instead.
- Early sunsetting of Enterprise Zones and Urban Renewal districts.
The PERS UAL Task Force's recommendations total $4.2 to $6.4 billion dollars. The feasibility of each option varies significantly, but OSCC expects several of the above concepts to be introduced as legislation in the 2018 session under the pretense of lowering PERS costs.
Please see the full report linked below.
2017 PERS Task Force Final Report
PERS: Panel delivers ideas to cut pension deficit by $5 billion (Oregon Live article)
BOLI Rule Making on Work Week Caps
BOLI proposed rules regarding the new limitations on work hours in manufacturing facilities passed by the 2017 legislature (HB 3458).
House Bill 3458 limits the work week to 55 hours in exchange for fixing BOLI's interpretation that manufacturers must pay both daily and weekly overtime rates. HB 3458 clarified that manufacturers must pay the greater of either daily or weekly overtime, but not both.
Here, you will find BOLI's proposed rules in addition to BOLI's new consent form that will be required for any manufacturing worker to work more than 55 hours (but no more than 60 hours) per week.
'Cap & Trade' Debate Imminent for 2018
'Cap & Trade' will be the issue with the largest implications for Oregon's business community. A $700 million annual tax levied on just over 100 companies will have significant impacts on business operations for those companies as well as substantial impacts on energy and transportation costs for all companies doing business in Oregon.
We've prepared a short and comprehensive primer on the issue. The primer will be helpful in understanding the background, the process, and the implications for 'Cap & Trade' in Oregon.
Click here to download 'Cap & Trade' primer: Cap and Trade Memo & Cap and Trade Who's Impacted
Please feel free to reach out with thoughts or concerns regarding the items described in this email, as there are business implications for many of these proposals.
Alison Hart, Executive Director