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.
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.
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.
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
JL Wilson, Legislative Counsel