Dear OSCC Members & Colleagues:

Here is your daily update.

What's happening:

1. The House is convening today in a special Friday session to vote on HB 2060-A which repeals the small business tax cut passed by the 2013 legislature. OSCC has issued a floor letter on this bill.
    
2. As highlighted in The Oregonian yesterday, we do not believe we will see additional efforts to pass either comprehensive tax legislation or PERS reform.
    
3. Predictive scheduling - SB 828 - passed the Senate yesterday with a strong 23-5 bipartisan vote. We expect quick passage in the House as well. The bill requires 7-day advance notice of scheduling with additional wages due for scheduling changes. It applies to retailers, hospitality establishments and food service establishments with 500 or more employees. In return, business gets a preemption on all local workplace scheduling ordinances.
    
4. We continue to believe that a major agreement is holding on a transportation package (HB 2017) and expect to see amendments by Monday.

What to watch for today:

We'll be watching the House floor vote on HB 2060-A today. It is an extraordinary development to see that House leadership is moving toward a direct $200 million tax on small business.

OSCC Activity:

OSCC has issued an ACTION ALERT on HB 2060-A. If the House passes HB 2060-A (which we expect it will with the narrowest majority possible), we will issue the Action Alert again for the Senate.

Best regards,

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

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

Dear OSCC Members and Colleagues -

We continue to believe that the legislature has no real political pathway to balance the budget and finish its business in time for the July 10th constitutional deadline.

There are not the votes to pass major "cuts" budgets. There are not the votes to pass meaningful cost savings legislation. There are not the votes to pass increased taxes. 

We have heard that the Democratic leadership has a major PERS reform bill they are willing to pass, but only if Republicans supply votes for tax increases. Republicans aren't interested.

Everything just feels stuck.

But in the meantime, OSCC recognizes and applauds the effort of Senate President Peter Courtney, who has made a determined effort to keep partisan bills off the Senate floor in the waning days - which generally has benefited business.

Two major things happened in the past week:

First, the business community - organized under the banner of the "Brighter Oregon" coalition - testified for the first time in the Joint Tax Reform Committee on its views on taxes and revenue. Tillamook Creamery CEO Patrick Criteser represented the business community and testified to the business community's willingness to come to the table with increased revenues if the legislature did the hard work of balancing the current budget with available revenues.

Second, the union-backed Our Oregon coalition, which sponsored the failed Measure 97, unveiled three more potential ballot measures for the November 2017 ballot. One measure would implement another major gross receipts tax - a "Son of 97." Another measure would require public disclosure of corporate tax information. A third measure would eliminate the 3/5th supermajority vote of the legislature needed to raise taxes.

Fortunately, business groups have the Measure 97 infrastructure intact to respond quickly to these ballot initiatives should the unions decide to pursue them.

Key Labor Bills:

BOLI Overtime Fix: OSCC continues to exert its influence on HB 3458, which fixes a new BOLI interpretation that requires food processors to pay both daily and weekly overtime when applicable. But the house bill requires too high of a price to fix this BOLI interpretation by placing a hard limit of a 60 hours workweek cap for all manufacturers. We have heard clearly from businesses across the state that a 60 hour workweek cap will irreparably harm operations of many chamber members.

The bill is effectively blocked right now due to concerns about the 60 hour workweek limit, but we do hope that legislative leaders will pass the underlying bill without the cap. The underlying bill which strictly fixes BOLI's interpretation (SB 984) has already passed the Senate unanimously. But it appears House leadership won't support the bill unless it contains some provisions favored by the unions.

Predictive Scheduling: OSCC believes that SB 828, which implements predictive scheduling for food service, retail and hospitality businesses, will start to gain traction again before the end of session. Business groups are hoping to leverage the bill to get a permanent statewide ban on local scheduling mandates. Unions are coalescing to try and pass this bill as it is their last major opportunity to pass 'pro-worker' legislation. The bill is undergoing several changes to gain the necessary business and union support. The latest version of the bill applies only to companies with 500 or more employees.

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.  

Environmental Regulation:

Cleaner Air Oregon: HB 2269 would increase Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme. OSCC testified in opposition to HB 2269. 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 believe there will be amendments to the bill which will force DEQ to work cooperatively with the business community instead of just running us over. OSCC is cautiously optimistic we could get a workable outcome here.

Diesel engine regulations: SB 1008 is the diesel engine regulatory bill that keeps resurrecting as environmental groups desperately seek some sort of victory in 2017. The bill is the subject of new negotiations. As it stands now, the bill requires the state to do an inventory of all off-road diesel engines in Oregon and requires that the data be aggregated. But this clearly isn't enough to satisfy environmental groups. OSCC is actively monitoring the issue. We believe that several moderate Democrats will not allow the bill to become any more intrusive than it already is.

Liability:

Liability Costs / Damage Awards: The trial lawyers' third attempt at trying to increase damage awards for negligence and personal injury lawsuits is going about as well as the previous two attempts. 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. OSCC believes we have the votes to defeat this bill for yet a third time.

Taxes:

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. HB 2067 was sent back to committee this past week when it was clear it did not have the votes to pass the House. Amendments could be forthcoming.

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."

HB 2064 could be used to allow diversions of TRT revenues to local "tourism related" projects in lieu of tourism promotion. Local governments, especially cities, have been seeking this change for several years, but have been successfully rebuffed by the tourism industry, particularly the state restaurant and lodging association. OSCC will be watching for amendments to HB 2064. We expect that House Revenue Committee chair Phil Barnhart will continue to make some noise on the issue, but we don't expect it has the momentum to make it through the legislative process.

HB 2391: Hospital taxes. This is the bill to watch for the taxes that will be needed to fund the state Medicaid shortfalls. The current tax scheme proposed by HB 2391 includes some provisions that business will generally support - increasing the Hospital Tax from 5.3% to 6.0% and adding rural hospitals into the tax scheme at a 4% rate. But there are also some elements not supported by business, including a 1.5% premium tax on health insurance plans. The total package raises about $575 million in new revenue.

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

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

Dear OSCC Members and Colleagues -

Here's a Week 17 recap of key issues in the Oregon legislature.

It's getting hard to see how the legislature is going to be able to bring this session in for a landing by the Constitutional end date of July 10th. The gulfs between Democrats and Republicans, and between the House and the Senate, seem almost insurmountable.

There is a $1.4 billion difference between available revenue and the budgets that legislative leadership want to pass.

There are not enough votes to pass any of the big budgets. There are not enough votes to pass any increases in revenue. Legislative leadership has been slow to unveil any meaningful reductions in state government costs. There also does not appear to be the necessary votes to pass a meaningful investment into the state's transportation system, either.

In short, it's a mess.

This article from the Oregonian over the weekend is the most accurate assessment of the 2017 legislature as it stands today. 

Also of note...this is another important week in the legislature as June 2nd is the next hard deadline of the session. By Thursday, all bills must pass their final policy committee or else they are considered dead. After Thursday, the only committees that will be open are House & Senate Rules, House & Senate Revenue, and any Joint Committee. All policy committees will be closed by the end of the week.

Key Labor Bills:

BOLI Overtime Fix: SB 984 fixes BOLI's bad interpretation on daily/weekly overtime pay and passed the Senate unanimously. But the House is prepared to kill this bill and replace it with House Bill 3458, which includes all the elements of SB 984 that manufacturing employers need but also includes some seriously harmful provisions including a hard cap on hours that an employee may work at 60/hrs per week. OSCC is working hard to strip this provision out of the bill. OSCC can only support the bill if this provision is taken out. OSCC can't support knowingly hurting businesses, especially those in rural areas with workforce shortages, by supporting a bill with a 60 hour workweek limit.

Predictive Scheduling: OSCC is still concerned that SB 828, which implements predictive scheduling for food service, retail and hospitality businesses, will gain traction before the end of session. As part of the bill, business groups including AOI and the Oregon Restaurant & Lodging Association are seeking a total, permanent statewide ban on local scheduling mandates. Unions are coalescing to try and pass this bill as it is their last major opportunity to pass 'pro-worker' legislation. The unions have even filed a ballot measure on the issue, presumably to pressure lawmakers into passing some version of SB 828 and to force business groups to the table. 

Union Organizing & Sick Leave Penalties: OSCC believes it has now killed a nasty bill - HB 2856 - which creates a Community Outreach and Labor Education Program within BOLI to promote awareness of employee rights. The bill takes $2 million of employer-paid money (Wage Security Fund) to fund union organizing campaigns. In addition, the bill also adds punitive damages to Oregon's paid sick leave mandate. OSCC is actively working to oppose this bill in the Ways & Means Committee. 

Environmental Regulation:

Cleaner Air Oregon: The big bill here is HB 2269, which would increase Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme. OSCC testified in opposition to HB 2269. We anticipate this will be the major environmental fight of the session. OSCC and business groups are not seeking to kill the bill so much as get the DEQ to work with business in a cooperative way around these regulations. The current proposed regulations will put many manufacturers out of compliance and prove very costly for local business communities and cause a loss of local jobs.

Diesel engine regulations: SB 1008 is the diesel engine regulatory bill that won't die. It is the subject of new negotiations. As it stands now, the bill simply requires the state to do an inventory of all off-road diesel engines in Oregon. OSCC believes it is premature to engage in diesel engine regulation without taking inventory of off-road engines in use throughout the state. But environmental proponents are hoping to score some kind of win with diesel engines, so the bill is undergoing 11th hour discussion and negotiation that would implement California-style regulations on off-road engines. OSCC is actively engaged in this issue.

Liability:

Liability Costs/Damage Awards: Last week the trial lawyer association took yet another stab - their third - at trying to increase damage awards for negligence and personal injury lawsuits. 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. HB 2807 increases non-economic damage limits from $500,000 to $10 million for all lawsuits with the exception of wrongful death suits. This is a perfect case-in-point on why organizations need to stay vigilant until the final gavel drops. The bill is designed to pierce policy limits and force health care providers to settle out of court even on marginal claims. OSCC believes we have a good opportunity to defeat this bill for yet a third time.

Business Taxes:

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 and companies in Oregon. HB 2019, which requires the public disclosure of Oregon sales and 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 these bills.

Also of note, the Gross Receipts Tax (GRT) proposal being developed by Senator Mark Hass is inching forward, but as of today does not appear to have the votes to advance. There is pressure coming from both the business community and progressive Democrats in opposition to the proposal. The business community is not generally supportive of the GRT due to the significant bottom line impacts to low margin and unprofitable companies, and progressive Democrats believe that Hass' proposal raises far too little (less than $1 billion) in new revenue. The progressives are seeking more than $3 billion in new revenue from a GRT. 

We do not see a resolution to this in the offing, other than the legislature continuing to fund state government by use of temporary 'Continuing Resolutions' and coming back into special session after some cooling off has occurred. We do not see a clear pathway to bridging the $1.4 billion budget gap with six weeks left in the legislative session.

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

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

Dear OSCC Members and Colleagues - 

Here's a Week 16 recap of key issues in the Oregon legislature.

The biggest issue of Week 16 was the release of the May revenue forecast, which historically has signaled the 'home stretch' of the legislative session. The reason the May forecast is so important is because it informs the legislature of the amount of money it will have to budget for the upcoming 2-year budget cycle.

The May 2017 forecast was sensational. In all, it produced $600 million in added revenues, BUT it also produced a $400 million personal "kicker" rebate due to revenues coming in too high. So on balance, the legislature will net an additional $187 million for the upcoming 2017-19 budget cycle.

To remind members of the budget context of this session - when the legislature convened in February, it assumed it had a $1.8 billion budget deficit. Then the February forecast produced an extra $200 million, meaning that the budget deficit had shrunk to $1.6 billion. Now the budget deficit is reduced further to just over $1.4 billion.

This has created an interesting dynamic in which Democrats argue that they need new revenue in order to justify passing reduced budgets or passing cost-savings proposals. Democrats don't have the votes to pass budgets that cut programs and Republicans certainly won't help them. In addition, Republicans will not help Democrats pass tax increases, either. They argue that there is no need to pass revenue enhancements when the state is bringing in record amounts of revenue.

It is getting increasingly difficult to see how the legislature passes a balanced budget and adjourns. People are starting to talk about special sessions as if it's a foregone conclusion.

Key Labor Bills 

BOLI Overtime Fix: SB 984 fixes BOLI's bad interpretation on daily/weekly overtime pay and passed the Senate unanimously. But as of now, it appears that the House is prepared to kill this bill and replace it with HB 3458, which includes all the elements of SB 984 that manufacturing employers need but also includes some seriously harmful provisions, including a hard cap on hours that an employee may work at 60/hrs per week. As of now, OSCC believes this could have a severely damaging effect on food producers and will oppose the bill. However, if OSCC is successful in deleting the 60/hr week workweek cap, we will support the bill.

Predictive Scheduling: SB 828 implements predictive scheduling for food service, retail and hospitality businesses. As part of the bill, business is seeking a total, permanent statewide ban on local scheduling mandates. Unions are coalescing to try and pass this bill as it is their last major opportunity to pass 'pro-worker' legislation. The bill is dormant - for now. OSCC expects that this will become a major issue in the waning days of session. Some business groups are now seeking to pass the bill if it contains a total statewide preemption on local government scheduling ordinances.

Union Organizing & Sick Leave Penalties: OSCC is working to kill a bad bill - HB 2856 - which creates a Community Outreach and Labor Education Program within BOLI to promote awareness of employee rights. The bill takes $2 million of employer-paid money (Wage Security Fund) to fund union organizing efforts. In addition, the bill also adds punitive damages to Oregon's paid sick leave mandate. OSCC is actively working to oppose this bill in the Ways & Means Committee. We do believe we'll be successful in defeating this bill.

Environmental Regulation 

Cleaner Air Oregon: The big bill here is HB 2269, which would increase Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme. OSCC testified in opposition to HB 2269 last week in the Ways & Means Natural Resources subcommittee. It will receive another public hearing this week. We do anticipate this will be the major environmental fight of the session.

OSCC can have an impact on this issue. Special thanks to the Springfield Chamber for working with the City of Springfield to testify and to the Klamath County Chamber who submitted a letter in opposition, which you can view here. OSCC encourages Chambers to send letters testifying against this bill to the Joint Ways and Means Subcommittee on Natural Resources jwmnr.exhibits@oregonlegislature.gov with customized information on how this bill will effect your members. Testimony must be submitted by Wednesday May 24th at 12pm. Talking points on HB 2269 are provided here.

Diesel engine regulations: SB 1008 popped up again and is the subject of new negotiations. As it stands now, the bill simply requires the state to do an inventory of all off-road diesel engines in Oregon. OSCC believes it is premature to engage in diesel engine regulation without taking inventory of off-road engines in use throughout the state. But environmental proponents are hoping to score some kind of win with diesel engines, so the bill is undergoing 11th hour discussion and negotiation. OSCC is actively engaged in this issue.

Liability

Liability Costs / Damage Awards: We received notice late Friday that the trial lawyers would take yet another stab - their third - at trying to increase damage awards for negligence and personal injury lawsuits. It appears that having been defeated with SB 487, then SB 737, the trial lawyers will try and stuff their amendments into HB 2807 this week. This is a perfect case-in-point on why organizations need to stay vigilant until the final gavel drops. The bill is designed to pierce policy limits and force companies to settle out of court even on marginal claims.

Tourism

The battle over the use of TRT funds is picking up steam in the House Revenue Committee. As anticipated, HB 2064 was unveiled last week with several amendments that would change current parameters around use of TRT funds. The
-1 amendments would allow TRT dollars to be spent on an expanded list of tourism-related expenditures not related to tourism promotion. The -2 amendments would increase local government share of future TRT revenues to 50 percent (currently it's locked in at 30 percent). But at the end of the hearing, the committee did not adopt any amendments or take action on the bill.

OSCC will keep close watch on this issue as it develops.

Business Taxes 

OSCC is actively engaged in the business tax reform discussion with Senator Mark Hass. There are several competing proposals to reform business taxes, all of which contemplate a new Gross Receipts Tax (GRT). The GRT discussion is inching along. Despite assertions in the Oregonian that a compromise deal is in the works, it still remains a faraway possibility. 

The progressive Democrats oppose Hass' plan because it raises far too little in revenue. The Republicans have no intention of voting for tax increases when revenue is streaming into the state (see revenue forecast discussion above).

OSCC wants to emphasize that these discussions are extremely fluid and there is nothing set in stone.  Any GRT proposal at this stage would be predicated on budget cuts/government efficiencies that are not materializing at this point. 

Other tax legislation of concern includes HB 2067, which blacklists certain countries as 'tax havens' and increases tax burden on companies with Oregon affiliates located in these tax havens, and HB 2019, which requires the public disclosure of Oregon sales and Oregon taxes of any company that avails itself of at least $1,000 in Oregon tax credits. OSCC joins its business association partners in opposition to these bills.

Government Cost Savings

OSCC sees no progress to-date on PERS reform, health care cost savings, state hiring freezes, etc. Proposals and ideas are being tossed around loosely but there has been absolutely no concrete policy development or leadership around any of these ideas.  

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

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

Christian Kaylor is a Workforce Economist for the Oregon Employment Department, specializing in the Portland are. He provides data analysis and advice relating to the Portland economy to local businesses, business associations and government agencies to facilitate intelligent decision making. His monthly newsletter on the Portland economy has 750 subscribers.

Please click here to download his May 2017 presentation to the East Portland Chamber of Commerce.

Dear OSCC Members and Colleagues - 

Here's a week 15 recap of key issues in the Oregon legislature.

Key Labor Bills:

Predictive Scheduling: SB 828 implements predictive scheduling for food service, retail and hospitality businesses. As part of the bill, business is seeking a total, permanent statewide ban on local scheduling mandates. Unions are coalescing to try and pass this bill as it is their last major opportunity to pass 'pro-worker' legislation. The bill is dormant - for now, however OSCC expects that this will resurface and become a major issue in the waning days of session.

Wage Equity: HB 2005 would mandate wage equity among all protected classes for similar jobs. The problem with the bill for business is that it is broadly applied to all Oregon protected classes, it adds a new protected class (armed services veterans), it includes punitive damages, and that each paycheck for which a discrimination is claimed represents its own claim for damages. The bill was amended this past week in the Senate to be slightly more employer-friendly (more affirmative defenses) and to include more bona fide business reasons for wage disparities. Some business groups are now even supporting the legislation. At the very least, it's a more palatable bill than the one that passed the House.

BOLI Overtime Fix: SB 984 fixes BOLI's bad interpretation on daily/weekly overtime pay and passed the Senate unanimously. It's a good bill, but the unions may negotiate a heavy price for this bill in the House including a hard cap on hours that an employee may work at 60/hours per week. OSCC believes this could have a severely damaging effect on food producers. OSCC is expecting a new bill to be introduced in the House this week to encompass all the elements. OSCC will be seeking member feedback.

Union Organizing & Sick Leave Penalties: HB 2856 OSCC is working to kill a nasty little bill, which creates a Community Outreach and Labor Education Program within BOLI to promote awareness of employee rights. The bill takes $2 million of employer-paid money (Wage Security Fund) to establish the program. If that weren't bad enough, the bill also adds punitive damages to Oregon's mandatory paid sick leave law. OSCC is actively working to oppose this bill in the Ways & Means Committee.

Environmental Regulation:
Cleaner Air Oregon: HB 2269 This big bill would increase Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme. This will likely be the big environmental fight of the session. If the 'Cleaner Air Oregon' regulations are allowed to go forward, it will put many manufacturers out of compliance and may prove very costly for local business communities. OSCC will keep members apprised. OSCC testified in opposition to HB 2269 last week in the Ways & Means Natural Resources subcommittee.

Liability:
Liability Costs / Damage Awards: SB 737, which would eliminate the $500k cap on non-economic damages in civil lawsuits (product liability, negligence, personal injury, etc.), is the trial lawyer's top priority for 2017. We defeated it on the Senate floor earlier this month, but the bill was sent back to the Senate Rules committee, where we expect it will continue to get attention until the final gavel drops. This is a key business bill and OSCC will be paying close attention to it until the end.

Business Taxes:
OSCC is actively engaged in the business tax reform discussion with Senator Mark Hass. There are several competing proposals to reform business taxes, all of which contemplate a new Gross Receipts Tax (GRT).

Senator Hass is contemplating a GRT at about 0.48% for all businesses with more than $1 million in Oregon sales. He has explicitly stated he will not entertain Speaker Kotek's and House Democratic Leadership's proposal of 0.95%.

OSCC wants to emphasize that these discussions are extremely fluid and there is nothing set in stone. Any GRT proposal at this stage would be predicated on budget cuts/government efficiencies that are not materializing at this point.

Small Business Tax Cut: OSCC is particularly concerned about SB 164, which limits the 2013 small business tax cut to just a few traded sector industries. Even worse, the amendments we've seen says that a business must have at least 10 employees to receive the tax cut. OSCC testified in opposition to the changes in SB 164 that are aimed at reducing the ability for small business to claim the reduced tax rates. OSCC believes the small business tax cut should be expanded to include sole proprietors and not limited to larger-sized small businesses.

Tax Disclosure: HB 2019 is very troubling for OSCC. It would require any business that claims $1,000 or more in state tax credits to disclose certain tax information such as Oregon sales, Oregon taxable income, and Oregon tax liability. OSCC is very concerned about a state policy that publicizes confidential tax information and gives activists a platform to politicize corporate tax returns.

Government Cost Savings:
PERS reform, health care cost savings, state hiring freezes, etc. Proposals and ideas are being tossed around loosely but there has been absolutely no concrete policy development or leadership around any of these ideas. This is important because business has made a point of saying that there will be no entertainment of revenue increases unless there are concrete proposals to reduce the state government cost structure. Stay tuned here. The substance behind any of these 'cost containment' proposals will ultimately be the key to how the budget gets balanced.

Transportation:
A 10-year, $10 billion transportation package was unveiled for the first time last week. The proposal relies on gas taxes, registration fees, and payroll taxes to add more capacity to I-5 and I-205 and other major projects. Now that a straw man proposal has been released, the discussions start in earnest. OSCC will keep members apprised, but the $1 billion per year in added taxes will be a very heavy lift.

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

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

Dear OSCC Members and Colleagues - 

Week 14 of the 2017 Oregon legislature was perhaps the quietest of the session to date. Policy bills are largely lying dormant. The biggest issue of the week was undoubtedly the House Democratic Leadership's announcement of their 2017 'Tax and Fiscal' Plan. 

The plan outline?

• $400 million in undefined state government cost containment strategies (PERS, state employee health care, etc)
• $250 million in one-time undefined cuts to the state budget
• $3 BILLION IN CLEARLY DEFINED NEW TAXES ON BUSINESS

In exchange for $650 million in undefined cost reductions, Speaker Kotek and House Leadership are asking businesses to pay a 0.95% gross receipts tax on all Oregon sales above $5 million - a $3 billion new tax on Oregon businesses.

OSCC is going to pay close attention as this develops. There are now several competing tax and spending plans - none of which has real support. But we expect that the plan unveiled by House Leadership will be a major factor in end-of-session negotiations.

Here are the bills we are most paying attention to for OSCC members:

Key Labor Bills:

SB 301: would effectively preclude employers from enforcing zero tolerance drug policies. As of late last week, this bill is now officially dead!

SB 828: implements predictive scheduling for food service, retail and hospitality businesses. OSCC is seeking legal guidance on how the bill would apply to OSCC businesses that have ancillary retail or food service positions. SB 828 will be the focus of a lot of pressure from union groups. They are coalescing to try and pass the bill as it is their last major opportunity to pass 'pro-worker' legislation.

HB 2005: wage equity - would mandate wage equity among all protected classes for similar jobs. The problem with the bill for business is that it is broadly applied to all Oregon protected classes, it includes punitive damages, and each paycheck for which a discrimination is claimed represents its own claim for damages. We believe this bill will spur considerable class action claims. But we also believe we have an opportunity to amend some of the worst aspects of the bill to make it more workable.

HB 3087: paid family leave - would implement a .5% payroll tax on employers to fund the $800 million/yr program that grants 12 weeks of paid leave. OSCC believes this bill is dead although it will likely continue to receive hearings during the session.

SB 984: which fixes BOLI's bad interpretation on daily/weekly overtime pay passed the Senate unanimously. Good bill, but the unions may negotiate a heavy price for this bill in the House including a hard cap on hours that an employee may work at 60/hrs per week. OSCC believes this could have a severely damaging effect on some manufacturers. We will work to eliminate this provision if possible.

Environmental Regulation:

The big bill here is HB 2269, which would increase Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme, was voted out of committee on a 5-4 party-line vote and sent to the Ways & Means Committee. This will likely be the big environmental fight of the session. If the 'Cleaner Air Oregon' regulations are allowed to go forward, it will put nearly all manufacturers out of compliance. OSCC will keep members apprised. OSCC is actively opposing this bill and is lobbying legislators.

Tourism:

HB 2064: This bill could potentially be amended in the House Revenue Committee to allow local governments to spend more TRT funds on 'tourism-related' projects not directly tied to tourism promotion. The Oregon Restaurant & Lodging Association sent out an alert on this issue last week, but we have not seen it appear on any committee agenda. OSCC will be watching this.

Liability:

SB 737: which would eliminate the $500k cap on non-economic damages in civil lawsuits (product liability, negligence, personal injury, etc.), is the trial lawyer's top priority for 2017. We defeated it on the Senate floor, but the bill was sent back to committee, where we expect it will continue to get attention until the final gavel drops. This is a key business bill.

Taxes & Budget: 

Senate Revenue Chair Mark Hass (D-Beaverton) did, in fact, unveil his new corporate tax proposal this past week, but it was overshadowed by the announcement from House Democratic leadership of their plan to increase business taxes by nearly $3 billion. 

Senator Hass has not abandoned his push for a gross receipts tax, and by comparison to the House leadership plan, it looks downright modest. Hass is proposing a 'Commercial Activities Tax' somewhere in the neighborhood of 0.25% to 0.75% with a corresponding elimination of corporate income taxes and a lowering of personal income taxes.

But Senator Hass' plan was not nearly as detailed as the House Leadership plan.  There are many details left to be worked out. But the effect of the House Democratic leadership plan is that they clearly do not believe that Hass' plan raises enough money. The two competing plans are clearly at odds with each other.

One final note...OSCC wants to caution that the odds of passage for any such tax proposal are very long. Yes, the proposals are startling and it's easy to assume given recent history that OSCC members will see these taxes foisted upon them by an unsympathetic legislature.

But in reality, there is not enough support for any of these taxes. With respect to taxes, Republican legislators have enough leverage to defeat tax increases.  Republicans are already adamant that the state should not by levying more taxes when revenue is increasing 10% per biennium without any new tax revenue.

There also hasn't been a serious effort yet to curb state spending that business groups would require for any new revenue.

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

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

Dear OSCC Members and Colleagues - 

There are very few real bills of consequence to OSCC members that are still under consideration.

The biggest issues still outstanding are (1) business taxes, (2) transportation funding, (3) predictive scheduling legislation, and (4) increased DEQ fees that would help implement a new regulatory scheme - 'Cleaner Air Oregon' - that OSCC is opposing.

In addition, there are a handful of opportunities to do a few good things for business ... the chance to overturn a recent BOLI interpretation that forces double overtime payments, the opportunity to execute a rational approach the regulation of diesel engines, and opportunity to solve the state's $1.8 billion budget hole with meaningful cost reductions that would put state government on a path to affordability and sustainability.

Here's what we know from the past week:

Governor Brown unveiled her own cost containment proposal. This was the biggest story of the past week. She proposed selling off or borrowing against state assets to buy down the PERS unfunded liability. She also proposed ramping up debt collection from taxpayers and vendors as well as taking a harder line in contract negotiations with government employee unions.

Governor Brown has already announced a 2-month hiring freeze as the state closes out its 2-year budget cycle on June 30th.

In addition to her recommendations, Governor Brown also proposed leading an expert panel on state financial matters that would study, among other things, various PERS reform proposals. It is unknown how much, if anything, the Governor's proposals would save.

The Governor's announcement was widely viewed as underwhelming, and another exercise in trying to pare back state spending without having to make a tough decision.

The Governor's announcement came on the heels of the first presentation by the legislative "Cost Containment" workgroup, which was also underwhelming. Very few specifics emerged. A lot of academic discussion on PERS reform and curtailing state hiring, but most of those ideas seemed to be met with great resistance. 

It will be interesting to see if anything of substance emerges as a way to curb the escalating costs of state government. Time is starting to slip away and the proposals to date have lacked specificity or substance.

Here are the bills we are most paying attention to for OSCC members:

Labor:
SB 301: would effectively preclude employers from enforcing zero tolerance drug policies. Although the bill passed out of Senate Judiciary on a 3-2 party-line vote, OSCC immediately went to work to defeat the bill. Although we have been assured the bill will be sent back to committee to die, we haven't seen confirmation.

SB 828: implements predictive scheduling for food service, retail and hospitality businesses. OSCC is seeking legal guidance on how the bill would apply to OSCC businesses that have ancillary retail or food service positions. SB 828 will be the focus of a lot of pressure from union groups. They are coalescing to try and pass the bill as it is their last major opportunity to pass 'pro-worker' legislation.

HB 2005: wage equity - would mandate wage equity among all protected classes for similar jobs. The problem with the bill for business is that it is broadly applied to all Oregon protected classes, that it includes punitive damages, and that each paycheck for which a discrimination is claimed represents its own claim for damages. We believe this bill will spur considerable class action claims.

HB 3087: paid family leave - is still alive in the House Revenue Committee. The bill implements a .5% payroll tax on employers to fund the $800 million/year program that grants 12 weeks of paid leave. We don't believe this bill will advance any further.

SB 1040: would implement local union security agreements and prevent local right to work measures. The bill passed the Senate and is now in the House.

SB 984: fixes BOLI's bad interpretation on daily/weekly overtime pay passed the Senate unanimously. Good bill, but the unions may negotiate a heavy price for this bill in the House.

Environmental Regulation:
One key 'cap and trade' bill is now dead - SB 557. The other, HB 2135, was kept alive, barely. OSCC will continue to keep watch on HB 2135 although we have every reason to believe the bill will die this session.

SB 1008: the costly mandate for diesel engine retrofits and replacements, was stripped down to require the state to take inventory of diesel engines operating in Oregon with no additional regulation. This is a reasonable approach that OSCC can support. But we are skeptical that SB 1008 will move forward in this form.

The big bill here - HB 2269 - which would increase Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme, was voted out of committee on a 5-4 party-line vote and sent to the Ways & Means Committee. This will likely be the big environmental fight of the session. OSCC will keep members apprised.

HB 2236 requires the DEQ to conduct a study and develop recommendations relating to emissions of air contaminants from industrial sources. We are keeping a watch on this dormant bill because it could be used to do some bad things.
 
Liability:
SB 737: would eliminate the $500k cap on non-economic damages in civil lawsuits (product liability, negligence, personal injury, etc.), is the trial lawyers top priority for 2017. We defeated it on the Senate floor early last week. The bill was sent back to committee, where we expect it will continue to get attention until the final gavel drops.

Taxes & Budget:
Senate Revenue Chair Mark Hass (D-Beaverton) has said that he will unveil his new corporate tax proposal this week. Despite all the pushback from business, Hass has not abandoned his push for a gross receipts tax. OSCC anticipates that Hass will propose a 'Commercial Activities Tax' somewhere in the neighborhood of 0.5% with a corresponding elimination of corporate income taxes.

We will inform OSCC members of the specifics of Hass' plan when it is unveiled this week.

But we also want to caution that the odds of passage for any such tax proposal are very long. For starters, there hasn't been a serious effort yet to curb state spending that business and Republicans would require for any new revenue.

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

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

Dear OSCC Members and Colleagues - 

The April 18th committee deadline is now behind us. We know everything that's in play. All in all, OSCC members are in far better shape than in previous sessions.

Yes, there are a handful of threats to the general business community - predictive scheduling, taxes, and a 'Cleaner Air Oregon' regulatory scheme that could threaten business operations, but those threats are relatively limited compared to what we've seen in the past.

There are also a few opportunities... the chance to overturn a recent BOLI interpretation that forces double overtime payments, the chance to execute a rational approach the regulation of diesel engines, and a chance to solve a $1.8 billion budget hole with no general business taxes.

Here's what we know from the past week:

The tax/revenue environment is very fluid. As we said last week, OSCC has reason to believe that the emerging strategy of the legislative leadership is to pass an "all cuts" budget and then refer a tax increase measure to the ballot in order to add back programs that will be cut in the newly-adopted budget.

But it looks like this strategy simply has too many holes to work. For one, the Democratic majority likely won't have the votes to pass the necessary cuts without Republicans. Also, any attempt to refer a tax measure to the ballot would also likely require a 3/5 supermajority. Quite simply, this won't happen.

Business opposition is growing against a gross receipts tax... so much so that we no longer believe it is a viable option.

The legislative "Cost Containment" workgroup made their first presentation on Friday. In a word, it was underwhelming. Very few specifics emerged. There was a lot of academic discussion on PERS reform and curtailing state hiring, but most of those ideas seemed to be shot down immediately by members of the Ways & Means panel. It gave the distinct impression that there was not a single thing the state could do to slow down escalating costs.

PERS Reform was kept alive, but barely, and certainly not in a manner that would suggest that there will be a serious effort to implement any cost saving reforms to the state pension program. After 10 weeks of discussion, both PERS reform bills, SB 559 and SB 560, were sent to Ways & Means unamended and with no recommendation - hardly a prescription for success.

Here is the fate of the bills of concern to OSCC members:

Labor:
SB 301 would effectively preclude employers from enforcing zero tolerance drug policies. Although the bill passed out of Senate Judiciary on a 3-2 party-line vote, OSCC immediately went to work to defeat the bill. It is being sent back to committee where it will die.

SB 828 / HB 2193 would implement predictive scheduling for food service, retail and hospitality businesses. Both bills are alive. SB 828 will be the focus of a lot of pressure from union groups. They are coalescing to try and pass the bill.

HB 3087: paid family leave - is still alive in the House Revenue Committee. The bill implements a .5% payroll tax on employers to fund the $800 million per year program that grants 12 weeks of paid leave.

SB 292: unlawful employment action for "workplace bullying," is now dead.

SB 1040 and HB 3420 would implement local union security agreements and prevent local right to work measures. Both bills are still alive.

SB 997 would levy fines on all employers with 50 or more employees whose employees opt to enroll on the Oregon Health Plan. This bill is now dead.

SB 984, which fixes BOLI's bad interpretation on daily/weekly overtime pay was sent to the Senate floor for a vote. 

SB 329, which preempts local employment law mandates, was also kept alive. 

Energy & Environment:
One key 'cap and trade' bill is now dead - SB 557. The other, HB 2135, was kept alive, barely. OSCC will continue to keep watch on HB 2135.

SB 1008, the costly mandate for diesel engine retrofits and replacements, was stripped down to require the state to take inventory of diesel engines operating in Oregon with no additional regulation. This is a reasonable approach that OSCC can support. SB 1008 was kept alive.

HB 2669: 'Community Right to Know' - was killed. This bill would have allowed local jurisdictions to implement their own 'Right to Know' chemical inventory programs and would have allowed local governments to levy annual fees up to $10,000 on regulated businesses.

Air Quality:
The big bill here - HB 2269 - which would increase Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme, was voted out of committee on a 5-4 party-line vote and sent to the Ways & Means Committee. This will likely be the big environmental fight of the session.

HB 2236 was also kept alive, which requires the DEQ to conduct a study and develop recommendations relating to emissions of air contaminants from industrial sources.

SB 197 - a disaster for the dairy industry - allowed the DEQ to adopt a program for regulating air contaminant emissions from dairy confined animal feeding operations. This bill is now dead.

Tourism and TRT Funding:
Both HB 2744 and HB 2768 were killed in the House Economic Development and Trade Committee. These bills would have allowed local government much more latitude to spend state TRT money on 'tourism-related' projects not related directly to tourism promotion. The bills pitted local governments against the Restaurant, Lodging and Hospitality industry. In the end, they fought to a stalemate and the bills did not advance.

HB 3260 authorizes coastal counties to impose local transient lodging taxes on residential short-term vacation rental properties by submitting the issue to county voters. This bill is still very much alive.

Liability:
SB 737 (formerly 487), which would eliminate the $500k cap on non-economic damages in civil lawsuits, passed out of the Senate Judiciary Committee on a party-line vote. As of right now, we expect this to be the first major bill of the session to be defeated and sent back to committee. We are expecting a vote this week.

HB 2169 would have disallowed attorney fees for employers who prevail in wage disputes with employees. Current law allows the prevailing party to collect attorney fees. HB 2169 is now dead.

Taxes & Budget:
As we suggested last week, the House Revenue Committee is taking up the issue of corporate tax disclosure for any company that avails itself to a business tax incentive. The bill is House Bill 2019. We now believe that this bill is a legitimate threat. Any company that receives $500 or more in business tax incentives will be subject to disclosure on Oregon sales, Oregon taxable income and Oregon tax liability.

We also reiterate our belief that there will be a real attempt to scale back the small business tax cut passed by the legislature in 2013. This is one issue that we expect that Republicans may assist Democrats in raising revenue. Republicans have shown a willingness to consider eliminating the lower tax rates for LLP's. The bills to watch here are SB 164 and SB 165.

Also of note, all tax and budget issues are still alive. Any tax bill residing in the Revenue Committees, or budget bill residing in Ways & Means, is not subject to deadlines. OSCC will monitor these bills until the very end of session. 

As we noted last week, OSCC expects that the Ways & Means Committee will be engaged in an inordinate amount of policy work this session as committee chairs have now punted critical policy bills to Ways & Means to keep them alive.

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

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