Dear Members and Colleagues: 

Unlike the 2015 and 2016 sessions which started at an explosive pace, the 2017 session returned to historical norms with a slow and cautious start.

The two critical issues of the 2017 legislature were the need to balance a state budget that started in a $1.8 billion deficit as well as the need to pass a major transportation funding package. 

By the opening gavel, there was no "master plan" to deal with the state's $1.8 billion budget deficit. Although Democrats held substantial majorities in both the House and the Senate, they didn't have the votes to pass either the necessary cuts, spending reforms, or potential taxes without Republican support. Bipartisan deal-making was needed. 

In OSCC's view, the commitment to bipartisanship, particularly in the Senate, was the defining theme of 2017. From the beginning, Senate President Peter Courtney (D-Salem) committed the Senate to bipartisanship in 2017 that had the effect of derailing many partisan issues that could have harmed sensitive negotiations around balancing the budget and passing a transportation funding plan. 

Here's what happened:

State budget gets balanced with no business taxes; PERS left off the table

The $1.8 billion budget deficit rapidly improved over the course of the session. Due to positive revenue forecasts in February and again in May, the state realized an additional $400 million in tax revenue, lowering the effective budget deficit to $1.4 billion.

But it was the solving of Oregon's Medicaid budget shortfall ($900 million) that allowed the legislature to get out of session without any general tax increases on businesses or the public. HB 2391 levied a variety of taxes on hospitals, medical providers and health insurance premiums that would raise nearly $600 million in new revenue and leverage additional federal dollars to lower the overall budget gap to less than $500 million. 

The bill represented a significant sacrifice by hospitals and other health care providers and consumers. It effectively paved the way for the legislature to balance the budget without additional revenue or the need for any special sessions.

In the wake of HB 2391, the legislature balanced the budget through modest program reductions, mostly by way of reducing the costs of 2016 voter-approved ballot measures on Career & Technical Education funding and Veterans' services funding.

Finally, the legislature passed a cost reduction measure - SB 1067 - which responded to demands from the business community to reduce long term costs. SB 1067 stopped the practice of including automatic inflation increases for services and supplies in state budgets, capped state government employment at 1% of the general population, and eliminated jobs left vacant more than six months. All told the savings were projected near $200 million.

What was conspicuously absent from the budget resolution was any additional reductions to the Public Employee Retirement System (PERS). Although the Senate deliberated on proposals to reduce PERS costs for over two months, the system remained untouched.

The closest that the legislature came to PERS reform was SB 1068, which would have redirected 2% of employee contributions from the Individual Account Program to shore up the unfunded liability of the pension program. The bill was scored as a $400 million biennial cost savings to the program.

But at the end of the day, Democrats would only agree to support SB 1068 if Republicans would agree to raise business taxes. No deal was made.

Business avoids a major tax increase

Very early in session, Senate Revenue Chair Mark Hass (D-Beaverton) signaled his desire to pass a major tax reform bill that would replace Oregon's corporate income tax with a gross receipts tax.

Business groups had just scored a decisive victory in November with the defeat of Measure 97 - a $6 billion gross receipts tax on large businesses. But Chair Hass was still intrigued by the prospect of a scaled down gross receipts tax measure that might avoid the economic pitfalls of Measure 97.

HB 2830 was the vehicle for Hass' tax reform effort. It would have created a gross receipts tax on all businesses with $3 million or more in Oregon sales and would have raised a little less than $1 billion in additional revenue for the upcoming 2017-19 budget. It took until early June for House Speaker Tina Kotek (D-Portland) to endorse the proposal. Up until that point, she had been holding out in the hopes for a tax plan that would raise closer to $4 billion. 

But a comprehensive tax increase proposal needs a 3/5th supermajority approval from the legislature, meaning that at least one Republican was needed in each chamber to support the bill.

Chair Hass abandoned his effort to pass HB 2830 in late June when it became clear that there were no Republican legislators willing to vote for the bill.

The House Leadership quickly responded by passing a bill to increase taxes by $196 million on small business. HB 2060 eliminated the 'small business tax cut' passed by the 2013 legislature and passed by a bare majority in the House. But the Senate did not follow suit. By this time, the Senate had decided to balance the budget without additional revenue.

Transportation funding package passes against all odds

Rarely has there been an issue that combined such a universally acknowledged need (transportation infrastructure funding) with such massive political headwinds and pitfalls.

Although nearly everyone acknowledged the need for added investment in Oregon's transportation infrastructure, nearly every interest group was prepared to defeat legislation if it did not meet their needs.

Prior to the 2017 legislative session, the Legislative Assembly created the Joint Committee on Transportation Preservation and Modernization (JTPM) to develop a transportation policy and funding package for introduction during the 2017 session. The JTPM committee spent five months holding hearings across the state to take testimony from the public and local elected officials and to tour transportation facilities in preparation for assembling the legislation. Once the 2017 session began, the committee created five work groups to develop recommendations for highway preservation, traffic congestion, public transit, public safety, multimodal transportation, and accountability.

Their work product was embodied in HB 2017 which threaded the needle - a 7-year, $5.3 billion transportation funding plan which addressed major maintenance and seismic needs, multi-modal investment, traffic congestion relief and public transportation funding. 

The bill passed both chambers in the last days of session with bipartisan majorities. 

Going forward ... what we are watching for

• Will the balanced budget hold? Any significant reversal of economic fortunes or fluctuation in revenues could wreak havoc on the 2017-19 budget. Remember, the 2017-19 budget was balanced on the strength of record high revenues.

• The 2017-19 budget may still yet be in trouble. At least one lawmaker is preparing a referendum on the hospital taxes and health insurance premium taxes in HB 2391. A statewide special election would be called in January 2018 if enough signatures are gathered to force an election.

• Will the legislature start planning now for the 2019-21 budget cycle? OSCC believes the 2017 legislature largely postponed the major budget calamity for another two years. The painful decisions will come in 2019.

• What will the public employee unions do on taxes? They are already collecting signatures for a "Son of 97" gross receipts tax ballot measure. But will they double down on a losing 2016 effort and a failed attempt to raise taxes in 2017?

• How will the Hospitals react to being treated so poorly in 2017? After voluntarily agreeing to tax themselves to help solve the budget gap, lawmakers doubled down and implemented price controls on services rendered to public employees. The shoe may be on the other foot in 2019 as Hospital cooperation is needed to extend the hospital tax for another tough budget cycle.

• Will the bipartisan cooperation in the Oregon Senate continue to hold? While the bipartisan tone produced some meaningful outcomes for the 2017 legislature, it also risks causing some severe backlash among traditional democratic constituencies that want more action on progressive policies.

• The organized business community is undergoing significant transformation.  Associated Oregon Industries and the Oregon Business Association are now merged under the Oregon Business & Industry (OBI) name. It could result in significant business unification, or conversely, fracturing of the business community if OBI is perceived as too Portland-centric. The jury is out.   

The 2018 legislative session will convene again February 5th

The 2018 session is Constitutionally limited to 35 days. Session will convene Monday, February 5th with a legal end date of 11:59 pm on Sunday, March 11th.

In the meantime, the legislature will convene for "legislative days" and committee meetings on September 18 - 20, November 13-15, and January 10-12.  

To read OSCC's Legislative Session Recap on bills particular to the OSCC Legislative Priorities click here.

We will continue with our Advocacy calls, however they will be once a month out of session. A schedule will be sent out in the near future.

Thank you for all of your grassroots participation this session. It had a marked impact.

Best regards,

Alison Hart, Executive Director

alisonh@oregonchamber.org

503-231-5421 

Dear OSCC Members and Colleagues -

The legislature is now done. The Senate adjourned at noon on Friday and the House followed suit at 3:30 Friday afternoon.

This is what happened in the final week of session that will impact local business communities.

Labor Bills:

BOLI Overtime Fix: House Bill 3458 was negotiated and passed with bipartisan majorities. It gives much needed relief to manufacturers and food processors from new BOLI regulations that required double overtime payments with employees who worked both 10+ hours per day and 40+ hours per week.

But it also capped the work week on all manufacturers and food producers at 60 hours per week.

Amendments were added that would allow up to 21 weeks of "undue hardship" that would allow food processing employees to work in excess of 60 hours per week. Seafood processors were exempted altogether.

While this was not a perfect bill for manufacturers and food producers, it achieved a hard fought policy victory of remedying a BOLI rule that would have imposed significant cost increases on manufacturers and food producers.

Predictive Scheduling: SB 828 passed with strong bipartisan support. The bill was watered down significantly 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. It is OSCC's belief that the negotiated bill is a 'best case' scenario for Oregon businesses.

Environmental Regulation:

Cleaner Air Oregon: OSCC helped to totally defeat HB 2269, which would have increased Title V and ACDP fees to fund the new DEQ 'Cleaner Air Oregon' regulatory scheme. This was a total victory. DEQ's budget was also stripped of all money for the 'Cleaner Air Oregon' scheme.

Diesel engine regulations: SB 1008 was watered down totally to include no additional on-road or off-road diesel engine regulation. Instead, the bill just allowed the state to receive Volkswagen settlement monies and spend $20 million on upgrading local school bus fleets.

No additional environmental regulations passed. OSCC was cautious that the legislature might try to empower the Department of Energy to become the agency with direct responsibility for "Climate Change" policy and enforcement. Ultimately, that did not occur.

Liability:

Liability Costs / Damage Awards: All attempts to increase non-economic damage awards in civil lawsuits were defeated. The $500,000 limit on non-economic damages in civil lawsuits will stay in tact. HB 2807, which would have increased those limits to $10 million, was defeated in the final week of session. This issue, in particular, is testament to the power of staying vigilant. This issue was in play all 23 weeks of the legislative session, and we prevailed through persistence.

Business Taxes:

While the Oregon House narrowly approved HB 2060-A, which eliminated the 'small business tax cut' for employers with fewer than 10 full time employees, the Senate did not follow suit. The bill was effectively a $200 million tax increase on small business, but the Senate did not give the proposal any consideration in the final week.

Chamber grassroots activism made all the difference here. The feedback from Chambers all over the state made HB 2060 unpalatable in the Senate.

All attempts to raise business taxes in 2017 failed.

State Government Cost Reductions:

PERS Reform: All attempts to reform PERS were abandoned as legislative leadership threw in the towel on plans to pass a comprehensive tax increase. PERS reform and tax hikes were linked.

Cost Containment: Senate Bill 1067 had some good provisions - eliminating automatic inflation increases for services and supplies in state budgets, slowing down the process for filling vacant state government jobs, and eliminating jobs that have been left vacant more than six months. The savings were about $100 million for the biennium.

But the part of the bill that drew strong opposition from the business community was a limitation on health care reimbursements to hospitals for services rendered to public employees. This represents a $200 million cost shift onto the commercial market in addition to the $145 million health insurance premium tax that passed in HB 2391. 

Transportation Package:
House Bill 2017 - a 7-year, $5.3 billion transportation funding package - passed the legislature with strong bipartisan support in the final days. There are several new taxes in the bill - gas taxes, registration fee increases, new vehicle surtaxes, and payroll taxes. You can see a summary of the bill here.

OSCC will be holding a legislative wrap up call on Friday 7/14. Additionally, a Legislative report card will come out around the end of the month.

Best regards,

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

Dear East Portland Chamber of Commerce,

Later this month, the Oregon State Treasury will begin sending out notices to employers across the state about its new retirement savings program, OregonSaves. We wanted to make sure you knew that these notices would be going out, and we are hoping you might be able to help us raise awareness about the program’s rollout.

If possible, it would be great if you were able to include the message below in any upcoming newsletters you may be sending out or forward it to any mailing lists you might maintain for employers, employees, and others who might benefit from knowing about OregonSaves, such as CPAs, financial professionals, and payroll providers.

If you have any questions about OregonSaves, please contact our Client Services Team at 844-661-1256 (employer assistance) or 844-661-6777 (employee assistance). You can also email clientservices@oregonsaves.com.

Materials about OregonSaves can be found online at http://www.oregon.gov/retire/Pages/Newsroom.aspx, including an animated video that explains what the program is and how it works, a PowerPoint presentation and recorded webinar, and informational flyers in English, Spanish, and Russian.

--- NOTICE ---

The Oregon State Treasury is launching a new program called OregonSaves that may impact your business, clients, and members. OregonSaves is a simple and convenient way for workers to save for retirement. It allows them to save a part of each paycheck through payroll deductions facilitated by their employer and invest their savings in professionally-managed investment options in a Roth individual retirement account. The account is also portable, allowing them to take it with them from job to job.

Any business with employees that does not sponsor a qualified retirement plan* will need to register to facilitate OregonSaves for its employees. The registration process is designed to be simple in order to limit any burden on employers. Employers can choose to offer their own retirement plans to some or all of their employees instead of participating in the program.

The program is scheduled to roll out in phases, and the State will let employers know when their phase will begin. The deadlines for employers to register to facilitate are as follows:

• An employer employing 100 or more employees: November 15, 2017
• An employer employing 50 to 99 employees: May 15, 2018
• An employer employing 20 to 49 employees: December 15, 2018
• An employer employing 10 to 19 employees: May 15, 2019
• An employer employing 5 to 9 employees: November 15, 2019
• An employer employing 4 or fewer employees: May 15, 2020

The State will send a notice about the program to employers approximately six months before their registration deadline. The State will send another notice to employers one month before the deadline with instructions about how to register. Employers will have until the applicable deadline above to complete the registration process.

For more information, including answers to frequently asked questions, visit www.oregonsaves.com or call (844) 661-1256.

*A qualified retirement plan includes a plan qualified under Internal Revenue Code sections 401(a) (including a 401(k) plan), qualified annuity plan under section 403(a), tax-sheltered annuity plan under section 403(b), Simplified Employee Pension plan under section 408(k), a SIMPLE IRA plan under section 408(p) or governmental deferred compensation plan under section 457(b). It does not include payroll deduction IRAs.

OregonSaves is overseen by the Oregon Retirement Savings Board. Ascensus College Savings Recordkeeping Services, LLC (“ACRS”) is the program administrator. ACRS and its affiliates are responsible for day-to-day program operations. Participants saving through OregonSaves beneficially own and have control over their Roth IRAs, as provided in the program offering set out at saver.oregonsaves.com.

OregonSaves' Portfolios offer investment options selected by the Oregon Retirement Savings Board. For more information on OregonSaves' Portfolios go to saver.oregonsaves.com. Account balances in OregonSaves will vary with market conditions and are not guaranteed or insured by the Oregon Retirement Savings Board, the State of Oregon, the Federal Deposit Insurance Corporation (FDIC) or any other organization.

OregonSaves is a completely voluntary retirement program and investing in a Roth IRA will not be appropriate for all individuals. Employer facilitation of OregonSaves should not be considered an endorsement or recommendation by your employer of OregonSaves or Roth IRA investments. Roth IRAs are not exclusive to OregonSaves and can be obtained outside of the program and contributed to outside of payroll deduction. Contributing to an OregonSaves Roth IRA through payroll deduction offers some tax benefits and consequences. You should consult your tax or financial advisor if you have any tax or financial related questions.

--- END OF NOTICE --

All the Best,

Joel Metlen, Public Engagement Manager, OregonSaves

Oregon State Treasury

503.559.4154

Joel.metlen@ost.state.or.us | www.oregonsaves.com

Dear OSCC Members & Colleagues:

Here's a legislative update for today. We expect that the legislature will adjourn tonight. 

What's happening:

1. We have defeated HB 2060-A which repealed the small business tax cut passed by the 2013 legislature. It would have been a direct $200 million tax increase on small business, but the Senate did not move forward with the legislation.
    
2. The transportation funding package - HB 2017 - passed the House last night and will likely pass the Senate today. This is a 7-year, $5.3 billion funding package that levies several new taxes and puts billions in new investments into the state transportation system. You can read the summary here.
    
3. Predictive scheduling - SB 828 - passed with strong bipartisan support. 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. The 'Overtime Fix' legislation - HB 3458 - will gain final passage today. The bill fixes an adverse BOLI ruling that levies double overtime payments when a manufacturing employee reaches both daily and weekly overtime thresholds. The final legislation takes into account many industry concerns that were raised during the course of the debate. The bill passed the Senate 30-0 yesterday. Final approval in the House is expected to be strongly bipartisan.
    
5. We have defeated all attempts to increase Oregon's $500,000 non-economic damage limits. SB 487, SB 737, and HB 2807 were all defeated. Business and health care groups, including key local Chambers, were very effective at blocking this legislation all session.
    
6. The major rent control legislation - HB 2004 - was defeated in the final days.
    
7. Our belief that there was an expedited pathway to balancing the state budget and adjourning with (1) no additional tax revenue needed, and (2) without the need for a "special session" to balance the budget, has proven to be true. But all of this will be totally contingent on the state's economy providing record amounts of revenue. The state budget is balancing on the head of a pin. If there's a hiccup in the state's economy, we'll likely be in some trouble.

Sine Die:

Legislators are working aggressively to adjourn this evening. The work may bleed over until tomorrow, but at any rate, the die is cast and all bills are simply waiting for floor votes. There are no bills left in committee.

OSCC Activity:

THANK YOU for the overwhelming response to the OSCC ACTION ALERT on HB 2060-A. Local chambers were a HUGE factor in the Senate not moving forward with HB 2060-A.

Best regards,

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

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.