2019 Session At-A-Glance The 2018 general election yielded great results for Oregon Democrats as they rode a blue wave to a supermajority in both the Oregon House and Senate. For the 2019 legislature, Democrats held a 38-22 majority in the House and an 18-12 majority in the Senate. Without the need for Republican votes on tax policies, moderate Democrats, particularly in the Senate, became the focal point of nearly all policy discussions. The lack of need for bipartisan deal-making drew a stark contrast from previous sessions.
The 2019 legislative session began with significant revenue-raising policy ambitions. Following the failure to pass a Cap-and-Trade measure in the 2018 short session, legislative Democrats worked throughout the interim on a new version of the policy, while Governor Kate Brown ran a well-staffed parallel effort, all aimed at passing a Cap-and-Trade bill and having it on the Governor’s desk for a signing ceremony on Earth Day. But in reality, negotiations on this carbon and tax policy would overshadow much of the legislative session right up to the end. Another major revenue issue loomed alongside Cap-and-Trade.
Despite Oregon voters’ overwhelming rejection of Measure 97’s gross receipts tax in 2016, legislators eager for new revenue for K-12 schools worked the issue again in 2019. In addition to the need for new school revenue, the legislature faced a $950 million funding gap for the Oregon Health Plan. Proposals for new or increased taxes were plentiful in 2019, but their passage was contingent on some sort of PERS debt-reducing legislation. The new composition of the Oregon legislature changed the flow of bills through the system. Unlike previous years, very few bills died with the first posting deadlines as they breezed through policy committees with ease. Bills flooded the Ways and Means and the Rules committees, which are exempt from committee deadlines. As sine die drew closer, Cap-and-Trade (HB 2020) stayed true to its controversial nature and overshadowed everything else. Both sides organized rallies and public displays of grassroots strength. Tension grew as the bill passed out of committee, and then passed the House floor on a party line vote.
With only 11 days until sine die, HB 2020 hit the Senate floor, but Senate Republicans did not. Instead, they organized a walkout in a final effort to stop the legislation. By denying the Senate a quorum for nine days, HB 2020 died. Having achieved their objective, Senate Republicans did return in the final two days to pass the remaining budget and policy bills that piled up and avoided the prospect of a special session. The legislature adjourned on Sunday, June 30th, using all 160 days allotted by the Oregon Constitution.
Here’s what happened: Oregon moves from the red to the black with unexpected surge of revenues At the outset of the 2019 session, the State of Oregon was in the red. Revenues were expected to generate $23.6 billion, while current service level (CSL) expenditures were projected at $24.2 billion. But almost immediately, the legislature began raising resources. House Bill 2010 raised insurance premium taxes to pay for the Oregon Health Plan, netting about $330 million. Then the legislature passed HB 3427, a commercial activities tax on all businesses with gross sales above $1 million that would net the state an additional $2 billion per biennium.
Then, just days after the passage of the major business tax increase, legislators were greeted with the shock of the session – the May quarterly revenue forecast projected yet another $770 million of additional, unanticipated general fund revenue. In addition to the new revenue, Oregon’s unique 2% ‘kicker’ law would send back an additional $1.4 billion back to Oregon taxpayers in tax credits in 2020. Very quickly, the state became flush with money. The historic May revenue forecast fueled legislative debates over revenue and taxes, but largely served to tamp down on calls for additional tax proposals. Republicans touted the influx of revenue as evidence that new taxes were unnecessary while the Governor and Democrats pivoted toward using some of the $1.4 billion ‘kicker’ to fund additional needs. Although there was much discussion about the state keeping some of the ‘kicker’, the votes did not materialize. All $1.4 billion will be sent back to taxpayers. Democrats flex their supermajority muscle
Following a successful November election for Democrats, the party was well-primed to pass policy priorities in the legislature. With a supermajority in both chambers, both policy and tax bills could be passed and signed into law without Republican votes. Democrats leveraged their new majorities for some significant policy wins. Perhaps most notable was the nation’s first statewide rent control policy (SB 608), which was fasttracked to the Governor’s office for signing by late February. National Popular Vote (SB 870), another Democrat priority, finally passed after having failed the previous several sessions. In another key Democratic objective, legislators moved to ease Measure 11 mandatory prison sentencing provisions for juveniles with SB 1008. Oregon Democrats also won passage of several environmental policy wins with the passage of HB 2509 (a statewide ban on single-use plastic bags) and SB 90 (plastic straw ban). They pushed HB 2250, requiring DEQ and OHA to assess changes to the Clean Air Act, the Water Pollution Control Act and the Safe Drinking Water Act in an effort to undo any rollbacks enacted by the Trump administration. Finally, they pushed through a ban on old diesel engines (HB 2007), both on road and off road, in the Portland metropolitan area. Commercial Activities Tax (CAT) passes with the Student Success Act HB 3427 proposed a $2.8 billion commercial activity tax on all Oregon businesses with sales above $1 million. It was the top priority for legislative Democrats. The bill went through several rounds of hearings and amendments, bringing educators, advocates, parents, students and businesses to the capitol.
Business groups remained opposed to the taxes in the bill, while Republicans and moderates demanded that additional revenue be accompanied by debt-reducing legislation on PERS, the state’s pension program. In an 11th hour deal, the Oregon Business & Industry trade organization marshalled an agreement with legislative leadership to be neutral on the tax bill in exchange for PERS reforms and a less-costly version of a Paid Family Leave program (HB 2005). This agreement broke the logjam and facilitated passage of the tax bill. HB 3427 passed the House on a party line vote before being sent over to the Senate. Senate Republicans brought the legislature and the Student Success Act to a halt for nearly a week by organizing a walkout. Within hours of their return to the capitol, HB 3427 passed the Senate on another party line vote. Prior to registering her ‘aye’ vote, the swing vote, Senator Betsy Johnson, made it known that her vote was contingent on the passage of substantive changes to the Oregon PERS system. Oregon legislature passes PERS reforms
PERS reforms became the focus of the legislative leadership immediately on the heels of the passage of the major business tax hike. Governor Brown was the first to release a plan. The Governor set her sights on one-time-funds that could be used to buy down PERS liabilities. She was met with strong business opposition as she proposed redirecting the $1.4 billion ‘kicker’ tax rebate and using reserve funds from the State Accident Insurance Fund (SAIF). Labor unions opposed the steep 3% employee contribution diversions in her proposal. While the Governor’s proposal collapsed under the opposition, it allowed the legislature to design a less sweeping PERS bill, Senate Bill 1049, which authorized a 2.5 percent diversion of Tier 1 and Tier 2 member contributions to reduce pension liabilities. It also authorized all new sports gaming revenue to be directed to buying down the PERS liability. SB 1049 was a tough sell for Democrats who were effectively harming their primary support base – public employee unions – but it passed the House and Senate with the bare majorities needed.
Medicaid funding shortfall plugged with new premium tax and general fund support Prior to the 2019 session, Oregon faced a $950 million Oregon Health Plan funding shortfall. This immediate need was met with immediate action. HB 2010, which proposed a 6 percent Medicaid tax on hospitals and a 2 percent tax on health insurance premiums, was the first major bill to pass. HB 2010 raised over $330 million and was signed by the Governor in less than two months. A second leg of the Governor’s proposal to plug the Medicaid budget was HB 2269, the ‘Employer Assessment’ legislation that would assess all employers of 50 or more employees with a tax to cover the health care costs of all their employees. The bill met with stiff opposition from the business community and was killed when the deal was struck by OBI to stand down on the corporate activities tax hike. Ultimately, the Medicaid shortfall was solved in 2019 due to the huge influx of general fund revenues that came from the state’s booming economy. The additional $770 million that materialized with the May revenue forecast provided enough to keep Medicaid fully funded.
Lack of agreement causes Cap-and-Trade to crash spectacularly at the finish line On the heels of a failed 2018 effort, Cap-and-Trade Proponents spent the interim working on a revamped policy for 2019 with well-funded committees, research staff, and economic reports. HB 2020 was destined to become an all-out fight over this carbon pricing policy, with momentum growing for proponents. The newly-created Joint Committee on Carbon Reduction held multiple informational and public hearings each week through February, March and April, before passing the bill to the Ways and Means Committee in May. By that time, the bill had seen 94 different amendments, significant representation from impacted businesses concerned with the economic impacts of the legislation, and a slew of proponents demanding action on climate change.
When the time came to pass HB 2020 out of Joint Ways and Means, several Democrat Senators had voiced apprehension toward the policy. Cracks were staring to show. The vote for passage in the Ways and Means Committee was tenuous. One vocal democratic opponent was replaced. Another gave just a ‘courtesy’ yes vote. HB 2020 was on the House floor on June 17th and passed on a 36-24 party line vote after nearly 7 hours of grueling debate. With sine die only 11 days away, Senate Republicans used the only tool they had left to stop Cap-and-Trade: a walkout. By denying the Senate the necessary 20-member quorum, Republicans essentially closed the Senate and were willing to leave hundreds of budgets and bills on the table to die in order to kill HB 2020. Ultimately, they succeeded. It was an unprecedented ending to the 2019 session.
Going forward … what we are watching for:
Resignations, special elections, and new legislators. A number of legislators are rumored to be considering quitting, which would necessitate some special elections. There could be a slew of new legislators appointed in the coming months.
Will Oregon’s economy continue to generate huge revenue gains? Oregon’s balanced budget is built on unprecedented revenue growth over the past two years. Any hiccup in revenues will cause major budget disruptions. The budget is dancing on the head of a pin and probably not sustainable.
What will be the fate of Cap-and-Trade? Will it gain momentum for a special session? Will it regain momentum for the 2020 session? Both sides accumulated very impressive grassroots organizations that in many ways was the culmination of a growing statewide culture war in which Cap-and-Trade is the clear flash point.
Will opponents of PERS reform legislation be able to make their case to the Oregon Supreme Court? Opponents of SB 1049 will likely challenge the legislation in court. If successful, PERS reforms may never be considered again. And budget holes will need to be filled.
The 2020 legislative session will convene again February 3rd The 2020 session is Constitutionally limited to 35 days. Session will convene Monday, February 3rd with a legal end date of 11:59 pm on Sunday, March 8th. In the meantime, the legislature will convene for “legislative days” and committee meetings on September 16 – 19, November 18-21, and January 13-16.
HB 2020 is scheduled for a House vote on Monday! It's important that legislators continue to hear from local businesses about the real concerns with HB 2020 -specifically fuel, natural gas, and propane cost increases.
The revenue impact statement was posted to the Legislature's website, which laid out the impact of the bill on Oregonians, stating:
Make your opinion known:
What's Happening (OSCC Political Observations)
There are only a handful of major business issues left in the 2019 session. All of the remaining business issues are still shrouded in some doubt and uncertainty in the final days.
We are anticipating that the legislature is on track for adjournment mid-next week. The legislature must adjourn by June 30.
What's left in 2019?
OSCC members have had in-depth discussions on this legislation. Although OSCC is aware that this is potentially the most employer-friendly proposal likely to emerge, and OSCC is also aware that this proposal is likely more favorable to any potential ballot measure, OSCC will oppose the legislation.
OSCC is opposing the legislation due to decisive and overwhelming member feedback that their local business communities are bending under the weight of recently passed employment regulations and taxes. There is also widespread feeling that HB 2005, if passed, will only grow more costly as leave rights are expanded over time and current cost constraints prove ineffective.
Now is the time to engage on cap and trade
We still have one last chance to pass the -102 amendments that will dramatically improve the legislation of HB 2020 by removing the major cost impacts on businesses and consumers.
Tell your legislator that we need to pass the -102 amendments, or we simply need legislators to vote NO on HB 2020.
Write your Legislators now
The 2019 legislative session must adjourn by June 30. Tensions are high as legislators make a last push to pass priority bills before the Constitutional end of session. A number of large policy priorities remain-diesel, cap-and-trade, paid family leave -and the next three weeks will be chaotic as they work to get the votes on remaining bills.
Activity on Major Issues
We anticipate the release of a final amendment by the end of the day on June 10 and will share to get local chamber feedback. We could see this bill move out of the House Rules Committee as early as June 11 if the amendment is written correctly and without technical errors.
What happened last week?
Cap and Trade HB 2020: We still have one last chance - in the full Ways & Means Committee - to pass the -102 amendments that will dramatically improve the legislation by removing the major cost impacts on businesses and consumers.
The revenue impact statement was posted to the Legislature's website last week, which laid out the impact of the bill on Oregonians, stating:
Last night, the Ways & Means subcommittee on Natural Resources approved the Cap & Trade bill, HB 2020.
You can see the press release from our partners here.
We still have one last chance on Friday - in the full Ways & Means Committee - to pass the -102 amendments that will dramatically improve the legislation by removing the major cost impacts on businesses and consumers.
Please see our information on the -102 amendments and please use our Voter Voice system ASAP to tell your legislator that we need to pass the -102 amendments. If we don't pass the amendments, we simply need legislators to vote NO on HB 2020.
Click the link below to log in and send your message:
HB 2020: Cap-and-trade will increase the cost of living and working in Oregon - all residents will bear the cost of fuel increases and increased natural gas rates. It's projected to immediately drive up the cost of gas by $0.16 per gallon, and natural gas customers will face double digit rate increase in the first year of the program!
Click the link below to log in and send your message:
This is the final week for policy committees to pass bills. Any bill not passed out of a policy committee (other than Rules or Revenue) is dead after Friday.
All legislation passed after Friday will have to come from either Rules, Revenue, or Ways & Means. This signals that the 2019 legislature is in the homestretch. It also signals that the decision-making will really come down to just a handful of legislators. Most legislators will have little or nothing to do from this point forward other than casting votes on the floor.
Democrat leadership can pass any bill it wants. The only reason there would need to be any negotiation whatsoever going forward is because:
Activity on Major Issues
What happened last week?
The future of SB 1049 is uncertain. Although it is only a modest cost-saving measure, the unions oppose it in force and it is unlikely that majority Democrats can carry the issue themselves.
Other key issues coming up this week.
Today, the State of Oregon just realized a historic and massive revenue forecast.
Just from the last forecast in March, every metric grew by eye-popping numbers due to a historic influx of revenue over the tax season.
Available resources for the next biennium (2019-2021) grew by $770 million.
The kicker almost doubled in size. It's now projected at $1.4 billion.
Net reserve funds are now nearly $3.5 billion.
The dark clouds are evident, however, as economists are now projecting declines in personal income tax revenues going forward.
Nonetheless, the short term forecast was truly historic and will likely tamp down on talk of additional tax revenue for the remainder of the 2019 legislative session.
Dr. Lee Cowles attended the PBOT presentation we had at the last Education meeting May 1st. He plans to speak in front of City Council against the proposal and is asking for others to back him. If you wish to endorse his concerns, please contact the commissioners with the following suggested wording. The Board will follow up with members to see if they agree that EPCC should also endorse the efforts of Dr. Lee Cowles. If you want to speak directly with Dr. Cowles, you can reach him at 503-255-1506.
Vision Zero’s “NE 102nd Trial Project”, scheduled to begin construction June, 2019, will provide some helpful safety features. However, there are always trade-off’s and consequences from changes. The Project will reduce north and southbound lanes from two to one lane each direction. According to ODOT’s Crash Analysis Division (CAD), this section of 102nd had 253 accidents, 2005 through 2016. The intersections of Prescott and Wygant had 110 of those, of which 76% had at least one injury. CAD analysis shows that 84% of those 110 were accidents due to congestion.
Studies and reports by the states of Maryland, North Carolina, Iowa, and the U.S. Dept. of Transportation concluded that increasing congestion increases the number of accidents. Oregon hasn’t done such a study, but the results were confirmed by the CAD supervisor.
Decreasing the lanes will increase congestion, increase accidents, and increase injuries on 102nd, especially at Prescott and Wygant, and connecting side streets. In addition, Project results will not be known for at least two and a half years, according to Vision Zero, and they already have several “Trial” projects underway.
Therefore, despite the Project’s safety improvements for pedestrians and lower speed limits, the consequences far outweigh the benefits. The following organizations have reviewed the Project, and request that this Project be tabled immediately and re-designed to prevent increased accidents and injuries on 102nd.
Download 2019 EPCC Magazine
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