• May 13, 2019 2:32 PM | Connie Shipley (Administrator)

    What's Happening (OSCC Political Observations)

    House and Senate Republicans ground the session to a crawl last week as both caucuses employed tactics designed to slow the pace of the session. Senate Republicans simply did not come to the capitol and effectively denied the necessary quorum to conduct Senate business.

    Senate Republicans continue to negotiate with Senate President Peter Courtney on a slew of bills and a "go home" package. They hope to be able to come to agreement by Monday.

    The result was an atypical slow legislative week in what would have otherwise been an intense week of jockeying as major deadlines loom. May 10th was the deadline for all policy bills to be posted for a work session in order to move forward. By May 24th, all bills must have been voted out of their second chamber policy committee in order to survive. Bills in Rules, Revenue, or Ways & Means will remain 'in play' through the end of session, although many of those committees will be wrapping up their work by mid-June.  

    Activity on Major Issues

    • The $2 billion Commercial Activity Tax (HB 3427) was most impacted by the work stoppage last week in the Senate. What was slated for an expedited Senate vote last Tuesday is still on hold. 

    HB 3427 includes the following components: 

    • Gross receipts tax rate of 0.57% on top line sales over $1 million;
       
    • A 35% subtraction from receipts for labor OR the cost of goods sold (COGS), whichever is higher; and
       
    • An exemption for groceries (defined as those that qualify for 'SNAP' sold at retail). 

    Senate Republicans are trying to force the bill back to committee to lower the tax rate and/or increase the $1 million exemption. It is unclear whether they will be successful. 

     PERS Reform finally made an appearance (SB 1049). On Friday afternoon, Speaker Kotek and Senate President Courtney unveiled their plan to tackle PERS costs. Under their plan: 

      • Tier 1 and Tier 2 members, who are public employees who entered the PERS system before 2004, would have 2.5% of their salaries diverted from their individual retirement accounts into paying off the system's debt.
         
      • Workers hired 2004 or later (PERS Tier 3 and Tier 4), would face a lower diversion - 0.75% of their salaries.
         
      • Public employees earning less than $30,000 a year would be exempted.
         
      • A reduction in assumed interest rate for retirees who use the "money match" method of calculating their pension benefits.
         
      • Most significantly, legislators seem to have abandoned efforts to raid SAIF to cover PERS liability, which is a good development for Oregon employers. 
         
    • Cap-and-Trade (HB 2020) Legislators unveiled the latest version of the carbon pricing bill in the -84 amendments last week. The amendments made a handful of changes, but failed to address some of the bigger affecting the business community such as the huge cost pressures associated natural gas and transportation fuel.

    The new version of the bill contains the following:

    • Natural gas utilities receive 60% free allowances in 2021 that decline in 2022 in contrast to 100% for investor-owned electric utilities. Similar to California, these allowances are consigned, which limits how the utility can use them. That means many ratepayers-particularly industrial and commercial facilities-will see rate increases beginning in 2021.  This was not a win for local business communities.
    • Trade-exposed manufacturers and processors are assigned a benchmark of free allowances based on the best available technology.  This is an attempt to keep some of the state's bigger job-providers from moving out-of-state.
       
    • Transportation fuels will bear the brunt of the cost increases in the early years of the cap-and-trade program.  A tax refund may be available for off-road fuels used in forestry and agriculture, but it is subject to a study of legal challenges.
       
    •  Assistance may be available to low income Oregonians to help cover cost increases for automobile fuels, propane, and home heating oil. 

    There is still a lot of work to be done, because as written, the -84 amendments will still result in a competitive disadvantage for local Oregon businesses. Our sources tell us that legislators plan to adopt the -84 amendment on Friday this week and pass the bill to Ways & Means. We will keep you updated as the process unfolds or as opportunities to weigh in come up.
     

    • Diesel Regulations (HB 2007) Negotiations have been ongoing on HB 2007, the on-road diesel engine retrofit and replacement bill. The bill is scheduled for a public hearing and work session early next week with an amendment that is expected to: 
       
      • Scale down the phase-out and diesel retrofit requirement for on-road diesel engines to the tri-county (Metro) area which includes Clackamas County, Washington County, and Multnomah County.
         
      • By 2029, all heavy duty diesel trucks must have a 2007 or newer engine. Also by 2029, all medium duty diesel trucks must have a 2010 engine or newer. Farm vehicles and motor homes will be exempted. 
         
    • Paid Family Leave (HB 2005Paid family leave has dominated the labor conversation this session. HB 2005 is the last remaining paid family leave bill, and it currently sits in the House Rules Committee. Labor unions have threatened a ballot measure in 2020 if HB 2005 fails to pass. However, a draft policy is currently in the works to forestall a ballot measure, including the below components (modeled loosely on Washington): 
    • 12-weeks paid family and medical leave annually
       
    • All employees are eligible after they've earned $1,000
    • State-run insurance program, funded through payroll tax contributions
       
    • Payroll tax of up to 1% (60% employee paid, 40% employer paid)
       
    • Employers with 25 or fewer employees are not required to pay the premium
       
    • Job protection requirements come into effect after 90 days of employment 
       
    • Marijuana Accommodation (SB 379) In a bit of good news, SB 379 is officially dead. This bill would have undermined and nullified all employers' workplace drug-free policies and would have required employers to accommodate off-duty marijuana use. Although the Senate Judiciary Committee passed the bill on a party-line vote, Senate President Courtney refused to let it come to the Senate floor when it was clear that OSCC and other secured enough votes to defeat the bill.


  • May 09, 2019 5:27 PM | Connie Shipley (Administrator)

    Now is the time to act on HB 3427

    This is a critical time for this NEW $2.8 billion business sales tax, which would levy a gross receipts tax on all Oregon businesses with at least $1 million in sales. 

    If this bill passes, local businesses and consumers will be subject to pyramiding of taxes up and down the supply chain and increased costs that are certain to hurt small business and stifle Oregon’s economy.

    With our Action Alert on Tuesday, we were able to send 100 messages to key Senators. If you have not sent in your testimony to your elected Senator, now is the time. 

    Please tell your Senator that HB 3427 hurts small business and does nothing to ensure that Oregon's PERS costs will now swallow up the entire tax increase within a few short years. 

    Click the link below to log in and send your message:
    https://www.votervoice.net/BroadcastLinks/Tv-AyIDYK2j_M6jOknQznw


  • May 08, 2019 3:49 PM | Connie Shipley (Administrator)

    ACTION ALERT

    HB 3427-A is the wrong approach for Oregon


    HB 3427-A would levy a $2.8 billion gross receipts tax on all Oregon businesses with at least $1 million in sales. This is NEW revenue to fund proposed education priorities. The goal is laudable but the mechanism is not.  A gross receipts tax, as proposed in HB 3427, is one of the most regressive taxing mechanisms.  If this bill passes, local businesses and consumers will be subject to pyramiding of taxes up and down the supply chain and increased costs that are certain to stifle Oregon’s economy.
     
    Enough is enough!  The total cost of proposed taxes, programs and fees being considered by the 2019 Legislature is $5.67 billion over the next two years.  That is too great a burden on local Oregon businesses. 

    Click the link below to log in and send your message:
    https://www.votervoice.net/BroadcastLinks/DKlm_qeAjoOfUeU5KgydpA


  • May 08, 2019 3:48 PM | Connie Shipley (Administrator)


    -What's Happening (OSCC Political Observations)

    We think that things will start getting more interesting now that the major $2.8 billion business tax passed the House 37-21. Even though the tax bill was muscled through the House, there is still not yet a clear path to the goal.

    Because although legislative leadership appears to have made a deal with some business organizations that includes:

    1. HB 3427, the $2.8 billion gross receipts tax on businesses with $1 million or more in sales. The details of the tax are still in discussion.
       
    2. An undefined PERS reform proposal
    3. A paid family leave proposal that would require both employers and workers to pay new taxes
       
    4. The death of HB 2269, the employer health care tax

     

    ...there are still some serious unanswered questions that have real consequences. For instance:

    • What will Senator Betsy Johnson do? She's never been a supporter of higher taxes.
       
    • With only 12 members to account for, Senate Republicans clearly have a realistic ability to deny quorum and shut down Senate business. Will they?
       
    • What are the details of the deal struck between some business groups and legislative leadership? The devil is always in the details, and to our knowledge, there are no details on the issues that were agreed to. Negotiations have yet to occur on PERS or paid family leave, and yet business has already given up its leverage by going neutral on the major tax hike.
       
    • What happens if the unions oppose elements of the deal including the paid family leave program or PERS reform? Will Democrats be able to deliver the votes for these issues if their major benefactors oppose them?
       
    • And if Democrats cannot deliver the votes on these issues, will business groups have the standing to ask for Republican support after having just crossed them on the $2.8 billion gross receipts tax?
       
    • What about Cap & Trade? Cap & Trade was not addressed in the deal-making, and yet the dual impact of Cap & Trade with a gross receipts tax could be devastating to businesses.

    Like we said, it's starting to get interesting.

     

    Activity on Major Issues

    • The $2 billion Commercial Activity Tax (HB 3427) passed the House on a party line vote, 37-21. It is scheduled to hit the Senate floor on Tuesday, but Senate Republicans may force a delay. As it stands, HB 3427-A has the following components:

    -  A gross receipts tax rate of 0.57% on Oregon sales over $1 million;

    -  A 35% deduction from taxable sales for labor OR business inputs, whichever is higher;

    -  An exemption for receipts from sales to a wholesaler or ag cooperative for any sales outside of Oregon; and

    -  An exemption for groceries (defined as those that qualify for 'SNAP').

    • Cap and Trade (HB 2020). The Joint Committee on Carbon Reduction will unveil yet another re-write of the Cap-and-Trade on Monday evening. OSCC and other business groups will quickly analyze the new version of the bill to understand potential impacts. The committee will meet again on Friday to further consider the re-write. OSCC will share analysis and impacts of the new version of the bill as soon as we are able to conclude our analysis.

     

    What happened last week?

    • Equal Pay Technical Fixes (SB 123A). SB 123 passed out of the Senate Rules Committee with an amendment to provide clarity to employers in implementing Oregon's Equal Pay Act.  OSCC joined other business organizations in supporting the amended bill.  Some technical amendments were not included in SB 123A, but Senators Kathleen Taylor (D-Portland) and Tim Knopp (R-Bend) put forward a letter, requesting that BOLI look at making other necessary fixes in rulemaking later this year.  We appreciate their work to help local businesses understand and implement the equal pay law. 
    • Prevailing wages in enterprise zones. HB 2408 requires prevailing wages on all private projects in Enterprise Zones in excess of $20 million. Such a policy erodes one of Oregon's last remaining economic development tools. The bill received a very robust public hearing last week in the Senate Workforce Committee in which there was very strong opposition. OSCC is actively opposing the legislation and lobbying it. We anticipate that the bill will need to be amended in order to pass the Senate. 
    • Workers' compensation compromise (HB 3022). OSCC initially testified against this legislation, which would have upended 30-years of successful workers' compensation reforms and drastically raised workers' comp costs on employers. However, the bill was deftly negotiated by SAIF so as to end up a compromise bill that won't impact employer rates. The House Rules committee passed negotiated version of the legislation last week, which eliminates a major threat to the business community.

      

    Other key issues coming up this week.

    • Diesel regulations (HB 2007). The House Rules Committee is expected to amend HB 2007 this week and pass it out to Joint Ways & Means for additional consideration. HB 2007 would phase out 2010 and older on-road diesel engines over a ten year period, including both public and private fleets. It also allocates the remaining Volkswagen Settlement dollars (approx. $55 million) to retrofit and replace older on-road medium- and heavy-duty trucks. We anticipate an amendment this week to narrow the scope of the bill before it moves out of committee. 
    • Lawsuit Damages (HB 2014). The Senate Judiciary Committee will hear this bill Monday. HB 2014 would repeal Oregon's legal limit of $500,000 on non-economic damages in personal injury and negligence lawsuit claims. OSCC, health care groups, and business organizations are opposing this legislation because it is a significant factor in driving up health care costs and general liability costs for employers. We have been successful in killing this bill in the Senate for several session. We expect another major fight on this bill in the coming weeks.

     



  • April 29, 2019 4:06 PM | Connie Shipley (Administrator)

    Save Oregon’s Enterprise Zones!
    Oppose HB 2408A: Public Procurement Requirements on Private Projects

    Property tax abatements are among our best tools for growing local businesses, particularly in economically distressed areas. HB 2408A puts future investments in local economic development in jeopardy!  

    HB 2408A imposes public procurement requirements on projects within enterprise zones; specifically, the requirement to pay prevailing wages. Requiring prevailing wage rates on private construction projects offsets the very local economic development incentives provided by tax abatements. By eliminating this incentive, private investors may decide against industrial expansion or may choose a site outside of the state.

    This bill already passed the House, and we need your help to let your state Senator know that HB 2408A is bad for Oregon’s local business community. 

    A public hearing on the bill is scheduled for tomorrow morning at 8:00 am.

    Please write your Senator and/or show up tomorrow and tell policymakers that HB 2408A is the wrong policy for Oregon!

    Click the link below to log in and send your message:
    https://www.votervoice.net/BroadcastLinks/DcKJfkZK1r020ButjCfGfQ 


  • April 29, 2019 9:57 AM | Connie Shipley (Administrator)

    ACTION ALERT

    OSCC will be issuing an Action Alert for HB 2408 this week. This bill, which will require prevailing wages in privately-funded Enterprise Zone projects of $20 million or more, would be a strong hindrance to much needed economic development projects. Enterprise Zones are one of Oregon's last remaining viable economic development tools.


  • April 29, 2019 9:56 AM | Connie Shipley (Administrator)

    What's Happening (OSCC Political Observations)

    Negotiations are underway on what a "go home" package of legislation would be for legislative Democrats who hold strong majorities in the legislature.

    Legislative leadership appears to be signaling to the business community that they will pass:

    1. HB 3427, the $2 billion gross receipts tax on businesses with $1 million or more in sales. The details of the tax are still in discussion.
    2. An undefined PERS reform proposal.
    3. A paid family leave proposal that would require both employers and workers to pay new taxes.
    4. A buy down of PERS liabilities that would include about a $300 million contribution from SAIF.
    5. An amended version of Cap and Trade (HB 2020). 

    The one concession that leadership appears to be willing to make is to kill HB 2269, the employer health care tax. It is unclear at this point which policy bills will get wrapped up in the negotiation.

    Activity on Major Issues

    • The $2 billion Commercial Activity Tax (HB 3427) is now clearly the top priority of legislative leadership. Although there was a serious effort to pass the bill out of committee on Thursday evening, the bill ultimately did not move.

    Absent any real movement on negotiations with democrat leadership in the House and Senate, the bill is slated to move out of committee on Monday night.

    As it stands, HB 3427 has the following components:

    • A gross receipts tax rate of 0.49% on Oregon sales over $1 million;
    • A 25% deduction from taxable sales for labor OR business inputs, whichever is higher;
    • An exemption for receipts from sales to a wholesaler or ag cooperative for any sales outside of Oregon; and
    • An exemption for groceries (defined as those that qualify for 'SNAP').
    • Cap-and-Trade (HB 2020). The Joint Committee on Carbon Reduction is scheduled to resume its work again this week with two meetings (Monday and Friday) to consider new amendments to HB 2020, the Cap-and-Trade bill. OSCC anticipates that amendments will be released Monday for consideration by the committee. We will keep you updated after we've had a chance to review changes in the amendments. The rumor is that there will be a serious attempt to pass HB 2020 out of committee right as early as next week (the week of May 6th).

    What happened last week?

    • Employer Health Care Tax (HB 2269A). Last Monday, OSCC joined Oregon Business & Industry, Oregon Farm Bureau, and the Northwest Grocers in testifying in opposition to HB 2269A. This bill would require employers with 50 or more employees (who work at least 8 hours a week) to provide a minimum payment towards the employees' health care or pay the state the difference. Although it's not being called a "tax", the Oregon Health Authority is projecting $0.50 per hour worked per employee and a total revenue generation of $500 million. 
    • Sexual Harassment (SB 726A). SB 726A passed out of the Senate with a 23-6 vote. Individual liability for owners, officers and executives (who knew or should have known about the alleged harassment) remains out of the bill, but there are still concerns about the ability of small businesses to maintain records and data for the new 5-year statute of limitations to file harassment claims. Under the bill, employers are prohibited from using non-disclosure agreements as a means to settle harassment claims. 
    • Pregnancy Accommodations (HB 2341A). HB 2341A moved out of the Senate Workforce Committee last week. As written, employers with 6+ employees must provide reasonable accommodations for pregnant employees, but any of those businesses may file an undue hardship exemption with BOLI. Easy final passage is expected on Senate floor. 
    • Expressing Milk in the Workplace (HB 2593A). Under HB 2593A, all employers must provide reasonable rest periods for an employee to express milk during a child's first 18 months. However, an employer with 10 or fewer employees may file an undue hardship exemption with BOLI. The next stop is the Senate floor for final passage. 

     

    Other key issues coming up this week.

    The upcoming week is going to be fairly quiet on key issues. There will be no additional hearings on Cap and Trade this week, but there will be consideration of the following: 

    • Prevailing wages in enterprise zones. HB 2408 requires prevailing wages on all private projects in Enterprise Zones in excess of $20 million. Such a policy erodes one of Oregon's last remaining economic development tools. The bill easily passed the House and is already up for a public hearing in the Senate Workforce Committee on Tuesday. OSCC will issue an Action Alert on this critical economic development issue. 
    • Workers' compensation compromise. (HB 3022) OSCC initially testified against this legislation, which would have upended 30-years of successful workers' compensation reforms and drastically raised workers' comp costs on employers. However, the bill was deftly negotiated by SAIF so as to end up a compromise bill that won't impact employer rates. The bill will see committee action in the House Rules Committee on Monday.


  • April 25, 2019 5:48 AM | Connie Shipley (Administrator)


    It is vitally critical that chambers respond to the Action Alert on HB 3427, the $2 billion gross receipts tax on Oregon businesses. We have very little ability to impact this debate unless Chambers show up!

    HB 3427 is the wrong approach for Oregon

    We’ve reached the mid-point of the 2019 Legislative Session with the clear theme of generating revenue.  You name it, there’s a tax for it.

    HB 3427 would generate $2 billion in NEW revenue to fund proposed education priorities. The goal is laudable but the mechanism is not.  A gross receipts tax, as proposed in HB 3427, is one of the most regressive taxing mechanisms.  If this bill passes, local businesses and consumers will be subject to pyramiding of taxes up and down the supply chain and increased costs that are certain to stifle Oregon’s economy.
     
    Enough is enough!  The total cost of proposed taxes, programs and fees being considered by the 2019 Legislature is $5.67 billion over the next two years.  That is too great a burden on local Oregon businesses.  

     
    Tell Oregon legislators that HB 3427 is the wrong approach for Oregon!

    Write you

  • April 25, 2019 5:47 AM | Connie Shipley (Administrator)

    What's Happening (OSCC Political Observations)

    From a business perspective, the 2019 session can be distilled into four primary categories:

    1. Revenue. As we've noted, there is currently over $5.67 billion in additional revenue proposals that are alive in the legislature. The crown jewel of the revenue proposals is HB 3427, the $2 billion gross receipts tax for K-12 and early education. OSCC is also very concerned about HB 2269, the sneaky $500 million health care tax on employers with 50+ employees. HB 2005, a $1+ billion tax to establish a new paid family leave program, is also alive in the legislature.
       
    2. Cap and Trade. OSCC has consistently opposed HB 2020 and is currently working with key legislators on changes to the bill that would offset the increase in costs on electricity and natural gas for local businesses. These efforts could prove successful. But at the same time, there appears to be very little legislative effort underway to reduce the major increases in gas taxes that would result from the bill. An initial 16-cent per gallon gas tax hike is projected from the legislation. HB 2020 also establishes a new bureaucracy, the Carbon Policy Office, which would have broad powers over the economy.
       
    3. SAIF raid / PERS reform / Cost containment. The response to the Governor's proposal to take $500 million from SAIF, take $500 million from the 'kicker,' and require active Tier 1 and Tier 2 public employees to contribute 3% of salary to their pension has hit with a thud. Republicans will not support taking the 'kicker,' unions won't support public employee contributions to the pension, and business is vehemently opposed to raiding SAIF.
       
    4. Ancillary business issues. OSCC continues to be concerned with the significant number of bills that would hurt business operations (SB 379, marijuana accommodations), hurt economic development (HB 2408, prevailing wages in enterprise zones), hurt existing programs (SB 595, diversion of transient room taxes to fund housing), create additional liabilities (SB 726, workplace harassment liability) and add additional business costs (HB 2014, eliminates $500k cap on non-economic damages in civil lawsuits). 

     

    Activity on Major Issues

    • The $2 billion Commercial Activity Tax (HB 3427) is now clearly the top priority of legislative leadership.

      The Thursday public hearing was a disaster for business as only OSCC and two agricultural groups showed up to testify against the gross receipts tax.

      HB 3427 has the following components:
      • A flat $250 tax on all business entities for sales under $1 million;
      • All business entities with sales over $500,000 must register with the state;
      • A gross receipts tax rate of 0.49% on Oregon sales over $1 million;
      • A 25% deduction from taxable sales for labor OR business inputs, whichever is higher;
      • An exemption for receipts from sales to a wholesaler or ag cooperative for any sales outside of Oregon; and
      • An exemption for groceries (defined as those that qualify for 'SNAP').

        OSCC testified against the proposal because of its impacts on small and start-up businesses.
    • SAIF. There is ongoing negotiation between SAIF and the Governor's office about SAIF's potential contribution to the PERS unfunded liabilities. The Governor's office is looking for a $700 million contribution from SAIF while SAIF believes it can contribute somewhere in the neighborhood of $300 million over the next 7 years without impacting policyholder rates and dividends. OSCC continues to be opposed to a raid on SAIF to pay down PERS liabilities.      

     

    What happened last week?

    • Prevailing wages in enterprise zones. OSCC was disappointed to see that HB 2408 passed the House floor so easily. The bill required prevailing wages on all private projects in Enterprise Zones in excess of $20 million. Such a policy erodes one of Oregon's last remaining economic development tools. OSCC will fight the bill much harder on the Senate side.

     

    Other Key Issues Coming up This Week

    The upcoming week is going to be fairly quiet on key issues. There will be no additional hearings on Cap and Trade this week, but there will be consideration of the following:

    • HB 2269 health care tax.  OSCC strongly objects to this legislation which will give the Department of Consumer and Business Services (DCBS) a blank check to determine how much each business 'should' be spending on health care for its employees and then tax each business that does not spend as much on health care as DCBS believes it should. The bill will be engineered to raise $500 million per biennium. To make matters worse, Legislative Counsel has determined that because the bill simply allows an agency to construct and levy the tax, it does not require the 3/5th supermajority to pass the legislature.
    • HB 3022 workers' compensation compromise. OSCC initially testified against this legislation, which would have upended 30-years of successful workers' compensation reforms and drastically raised workers' comp costs on employers. However, the bill was deftly negotiated by SAIF so as to end up a compromise bill that won't impact employer rates. OSCC continues to monitor to ensure that the terms of the compromise are honored.


  • April 24, 2019 2:36 PM | Debbie Utberg (Administrator)

    Stop the Raid on SAIF

    Governor Kate Brown recently proposed raiding SAIF, Oregon’s leading workers’ compensation insurance carrier of nearly $500 million to cover unfunded liabilities within our state’s Public Employee Retirement System (PERS). 
     
    Small businesses, school districts, and local governments depend on SAIF’s affordable rates and safety programs to ensure a safe and healthy workplace.  Raiding SAIF’s reserves could damage what’s been a very successful model for Oregon employers and injured workers.  In a recent editorial, The Oregonian newspaper cautioned against the raid stating it, “risks destabilizing an entity that has competently, reliably and efficiently administered workers’ compensation for public and private employers for years.”  We agree!
     
    Raiding their reserves increases the likelihood of rate increases and fewer resources for accident prevention and workplace training programs.
     
    While PERS faces a $26 billion deficit, there is no tie or correlation between their unfunded liability and the premiums that Oregon employers pay to SAIF.  Should it ever be determined that SAIF does have excess reserves those funds should be returned to policyholders and not grabbed by politicians for unrelated matters. 

    Click the link below to log in and send your message:
    https://www.votervoice.net/BroadcastLinks/CpBUntByQaJOpD_hFU-5kQ


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