It is our analysis that a $2 billion schools tax will pass. At this time, it is prudent for OSCC to analyze its options as we have no ability to stop this tax increase.
OSCC's current position is in opposition to HB 3427, the $2 billion gross receipts tax. Our opposition, while appreciated and meaningful to our members and allies in the legislature, renders us unable to affect any outcomes in a very adverse legislative session. Our opposition is also only a small impediment to ultimate passage of the tax.
It may be prudent at this time to signal a willingness to support $2 billion in taxes if certain conditions are met. It is acknowledged that signaling a willingness to support $2 billion in taxes is both out of character for OSCC and carries some risk. However, there is also a risk to not adapting to our political surroundings - namely, forgoing any chance to protect small business from the proposed tax, advocating for increased funding for community colleges, and being better leveraged to defeat additional bad bills that will impose major additional costs on our members.
Below is the analysis stemming from yesterday's OSCC Government Affairs call:
Context: OSCC currently opposes HB 3427, the $2 billion gross receipts tax on business. However, it is our analysis that the $2 billion tax for Oregon schools will pass. There’s 18 votes in the Senate and at least 36 in the House. There will be a $2 billion tax that passes the legislature. The overall package is currently being negotiated, but leadership wants to “fast track” the issue. The question is whether OSCC would be willing to support $2 billion for schools if certain conditions are met. __________________________________________________________________________________ OSCC Decision Options: (1) Continue to oppose HB 3427 and $2 billion tax. (2) Indicate support for $2 billion in additional taxes if certain conditions met. __________________________________________________________________________________ ‘Opposition’ upside: Our members expect us to stand with them on issues that affect their ability to be profitable. Maintain ability to join coalition to refer measure to Oregon voters. ‘Opposition’ downside: We are steamrolled with a 0.49% gross receipts tax that hurts small businesses down to $1 million in sales. No ability to kill additional bad legislation. No seat at table. ‘Support’ upside: Seat at table. Can potentially shape the tax to protect small business. Can potentially shape how money is spent. Can potentially kill other threatening bills that would impose additional burdens on our members. ‘Support’ downside: Our ability to shape the tax, the expenditures, and kill other threatening bills may not meet expectations. Our members will have difficulty with supporting a tax increase. We lose leverage to refer the measure to voters. __________________________________________________________________________________ Possible OSCC conditions: 1. No gross receipts 2. Protect small & start up business 3. Cost containment of $1 billion 4. Community colleges must receive priority funding 5. Other damaging bills must die – HB 2020, HB 2269, HB 2408
If you want to make your opinion known, contact Mary Ann Gray, who is East Portland's representative on the OSCC Government Affairs Committee at MaryAnn@westsidesec.com.
Public Hearing on $2 Billion
Gross Receipts Tax TONIGHT
Dear OSCC members and colleagues -
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.
The first public hearing on the proposed gross receipts tax is scheduled for Tuesday, April 16, at 5:00 PM in Hearing Room F. Show up or write in, and tell Oregon legislators that HB 3427 is the wrong approach for Oregon!
OSCC has issued an ACTION ALERT for SB 379(Marijuana Accommodation). Please respond today! This issue continues to be extraordinarily timely until we get confirmation that the bill is dead.
Write your Senator now
What's Happening (OSCC Political Observations)
The second half of the 2019 session is now underway.
Legislative leadership has made the timing decision to prioritize the $2 billion business Commercial Activity Tax (HB 2019) and put it at the front of the line. We are expecting quick consideration of HB 2019 with public hearings on the new tax as early as this week.
This means that Cap & Trade (HB 2020) has been postponed until after consideration of the business tax hike. This could push Cap & Trade back by a month or more as it is currently mired in complexity primarily from the transportation sector.
The major focus of the legislature this week will be passing bills during numerous floor sessions so that they can move bills to the second chamber in a timely way. Committee activity will be greatly diminished this week as both the House and Senate will be focused on casting floor votes this week.
Activity on Major Issues
The major issue that will be moving forward this week in the Joint Student Success Committee is the$2 billion Commercial Activity Tax (HB 2020), which was finally unveiled last week. Also of note, the Governor unveiled her PERS liability buy-down proposal last week along with a PERS reform proposal that would require Tier 1 and Tier 2 active employees to contribute 3% of pay down the unfunded liability of the state's pension program.
This proposal is likely to change over the next week, and OSCC will keep chambers apprised of any changes to the tax reform package. In the meantime, the business community continues to oppose a commercial activity tax.
The one piece of PERS reform proposed by the Governor is to institute pension contributions from public employees. The governor's plan calls for active Tier 1 and 2 members of PERS - those hired before August 2003 and still working - to contribute 3 percent of their pay to an account that would help pay for their pension benefits. Employees' first $20,000 in salary would be exempt from the contribution. Those hired after that date would contribute 1.5 percent of their pay after exempting the first $20,000 in salary.
Those changes could bring in about $100 million per biennium.
What happened last week?
Paid Family & Medical Leave. (HB 3031; HB 2005) After the April 9 deadline, only one paid family and medical leave vehicle remains, HB 2005. HB 2005 gives the Employment Department the authority to levy up to a 1% payroll tax on employers and a 1% income tax on employees to implement a 26-week per year paid family leave program. The bill would apply to all employers with at least one employee and raise $1.5 billion in new taxes every biennium.
Bounty Hunter Law. (SB 750) OSCC joined other business organizations in opposition to SB 750, which would allow employees and third party organizations to act as private attorneys general to supplement enforcement actions by public agencies. This would create a wave of costly litigation against Oregon employers.
Pay Equity Technical Fixes. (SB 123) Following BOLI rulemaking in November 2018, OSCC brought forward necessary technical fixes to assist local businesses in complying with the Oregon Equal Pay Act. SB 123 is the vehicle for these fixes. Unfortunately, the negotiated product ran into problems when labor logged opposition on Monday evening. The bill moved to the Senate Rules Committee where conversations will continue.
Sexual Harassment in the Workplace. (SB 726) SB 726, the workforce harassment and discrimination bill, moved out of the Senate Workforce Committee with the -5 amendment. The -5 amendment removed the individual liability and "should have known" standard for third parties, which was a positive change for Oregon employers. After the bill passed, the Committee Chair indicated that a work group would be formed to continue to explore individual liability.
OSCC appreciates the work of Rep. Shelly Boshart Davis (R-Albany) and Rep. Karin Power (D- Milwaukie) to find middle ground to provide reasonable pregnancy protections in the workplace.
Workers Compensation. (HB 3022) Last week, business interests and the trial lawyers reached a compromise on HB 3022. As a reminder as originally drafted, HB 3022 would undo the Mahonia Hall Reforms that make Oregon's Worker's Compensation program one of the best in the country. Conversations will continue on an amendment in the House Rules Committee.
Other Key Issues Coming up This Week.
Marijuana Accommodation. (SB 379) OSCC is still pushing hard to DEFEAT SB 379. SB 379 would undermine and nullify all employers' workplace drug-free policies and would require employers to accommodate off-duty marijuana use. OSCC is very concerned about the ability of employers to implement and enforce workplace drug-free policies. SB 379 is passed out of Committee on a party line vote but has not been scheduled for a floor vote yet. We suspect we may have defeated this legislation but we do not have official confirmation.
We know there is widespread anticipation and concern regarding the new $2 billion business tax being promoted by legislative leadership.
Last evening, the detailed plan was finally made public.
At a high level, it is a 0.49% gross receipts tax with a 25% deduction for either business inputs or labor costs, whichever is greater. The tax applies to all business entities with gross sales in excess of $1 million.
Although this is a new 25-page tax bill that undoubtedly has many complexities, our understanding is that legislative leadership intends for the process to move quickly. There may be limited opportunity for input or to amend the bill.
In another area of concern, we also believe that the Governor/Governor's office will be presenting her PERS pension reform package today at the noon hearing for Ways & Means Capital Construction subcommittee. We have reason to believe that a raid on SAIF resources and reserves will be a part of that discussion, but the particulars are not clear. We also anticipate their will be other fund "sweeps" to help buy down escalating PERS rates, particularly for schools.
Cap-and-trade has far-reaching consequences for Oregon. Beyond raising prices for everyday items like gasoline and food, HB 2020 would hurt Oregon's economy by putting thousands of jobs at risk for in the manufacturing sector. Supporters of the bill have even acknowledged the impact the proposed bill would have on manufacturing. And because of the importance of the manufacturing sector to Oregon's economy, other sectors will also be weakened as a result.
Cap-and-trade, as envisioned in House Bill 2020, would sacrifice many Oregon manufacturing jobs. Even those who seek to offset jobs losses in one manner or another underestimate the tidal wave of economic damage that would flow from a poorly designed carbon-reduction program. As currently written, HB 2020 would lead key industries to reduce their Oregon presence, remove major employers from rural communities and increase costs for the manufacturers that remain. Read the full article here.
OSCC continues to ask for your assistance to shine a light on the negative impacts of cap-and-trade. Individual chambers can start by joining the Partnership for Oregon Communities. The Partnership will coordinate grassroots voices with concerns about the rising costs of fuel and energy.
Email firstname.lastname@example.org to join the coalition. OSCC will continue to follow up as we learn of opportunities for public testimony and engagement with the legislature.
OSCC has issued an ACTION ALERT for HB 2020 (Cap & Trade) for all legislators. PLEASE RESPOND ASAP WITH YOUR MESSAGE.
By Tuesday, April 9th, all bills need to be voted out of their original committee in order to survive. This is the turning point of the session. Priorities get whittled down and the playing field becomes clearer as extraneous legislation falls by the wayside.
We will know much more on Wednesday morning as committees will work into the evening up until the very last moments on Tuesday evening.
We want to reiterate the four major tax hikes being pushed by legislative leaders. As of now, all four proposals are serious and viable. Please get familiar with and distribute this infographic. It is the story of the 2019 Oregon legislature.
What is the total biennial cost to the all the tax increases that are now on the table? $5.67 billion.
Write your senator here -https://www.votervoice.net/OSCC/campaigns/62827/respond
Write your Senator now
We've passed the first major deadline of the 2019 legislative session.
Bills needed to have been scheduled for committee votes by the end of this past Friday in order to stay alive. By Tuesday, April 9th, all bills need to actually be voted out of their original committee in order to survive.
At this point, it looks like about half of all legislation is now dead.
Among the bills that were killed on the Friday deadline: Anti-insurance industry bills (SB 728 and HB 2421), anti-forestry legislation (HB 2656), legislation that limits the enforceability of employment contracts (HB 2489), pro-business legislation fixing manufacturing overtime restrictions (SB 110), and all the PERS reform bills (SB 532 and SB 533).
But for the most part, the majority of relevant legislative threats to business are still alive.
The emergence of a new health care tax proposal from Governor Brown this week (HB 2269) and the full-scale threat of a new paid family leave bill (HB 2005) mean that the 2019 Oregon legislature could easily be the most costly legislature in history for local businesses.
Here are the four major tax hikes being pushed by legislative leaders. As of now, all four proposals are serious and viable:
What is the total biennial cost to the all the tax increases that are now on the table? $5 billion.
The next two-and-a-half weeks will be the toughest weeks of the session.
Looming deadlines mean that all 3,000 of the bills currently introduced will be in play as advocates rush to meet deadlines that mean life or death for their legislation.
Bills need to be posted for committee votes by the end of Friday, March 29th in order to receive further consideration. By Tuesday, April 9th, all bills need to be voted out of their original committee in order to survive.
This means there will be a litany of surprise hearings and committee votes on relevant bills all over the capitol that will be largely impossible to track and influence in real time, but we're going to give it our best effort!
· Applies to employers with 1+ employees
· Mandates 32 weeks of paid and protected family and medical leave each year
· Creates state-run family insurance program administered by DCBS
· Establishes new payroll tax of up to 1% to pay for the family-leave insurance:
· Expands OFLA eligibility to 1+ employees
· Mandates 24 weeks of paid and protected family leave AND an additional 24 weeks of protected family and medical leave for some types of leave each year - total leave could be 48 weeks!
· Requires employer to pay 100% of employee wages while employee is on paid leave
OSCC will argue that Oregon's small businesses are still scrambling to comply with the state's minimum wage increases, paid sick leave law and the new equal pay law. Now is NOT the time pass 'Cadillac' family and medical leave proposals that would further burden local businesses.
Proponents for these bills are planning to turn out hundreds of people on Monday evening. We need your help to show that Oregon employers have had enough and can't bear the costs of these workplace mandates! Please plan on attending Monday's hearing AND sending a letter to legislators about your opposition to HB 3031 and SB 947.
Email your legislators AND send personalized comments to the committees using the suggested talking points below. Check out the Oregon State Chamber of Commerce Advocacy Book for help with writing your testimony.
Chair Jeff Barker, House Business & Labor Committee: email@example.com
Chair Kathleen Taylor, Senate Workforce Committee: firstname.lastname@example.org
Other Key Issues Coming up This Week
What do the bills do?
HB 3031(requires 3/5 vote)
· Applies to employers with 1+ employees
· Mandates 32 weeks of paid and protected family and medical leave each year
· Establishes new payroll tax of up to 1%:
o0.5% paid by employers
o0.5% paid by employees
oCreates state run family insurance program
oDoesn't allow employers to provide substantially similar plans/ currently existing plans
HB 3140/SB 947(don't require 3/5 vote)
· Expands OFLA eligibility to 1+ employees
· Expands family member definition
· Mandates 24 weeks of paid and protected leave AND an additional 24 weeks of unpaid family and medical leave each year
· Requires 100% of employee wages to be paid 100% by employers while employee is on leave
When: Monday, March 25th at 6:00 PM
Where: The Oregon Capitol (900 Court St NE, Salem, OR 97301)
Who: Public and private employers with 1+ employees
On Monday, March 25th, the House Business & Labor Committee and Senate Workforce Committee plan to host a joint public hearing on a paid family & medical leave bill that would SIGNIFICANTLY alter Oregon’s business climate.
As national competitiveness rankings have shown, doing business in Oregon is often costlier and more difficult than running the same business in other states. With every workplace mandate the Legislature has passed, the competitive distance between Oregon and other states has increased.
We understand the intent of this bill. However, the proposals establish impractical requirements on businesses, large and small, and will cost Oregonians billions!
Oregon’s small businesses are still scrambling to comply with the state’s minimum wage increases, paid sick leave law and the new equal pay law. Now is NOT the time pass cadillac family and medical leave proposals that would further burden local businesses.
Proponents for this bill are planning to turn out hundreds of people on March 25th. We need your help to show that Oregon employers have had enough and can’t bear the costs of these workplace mandates! Please plan on attending Monday’s hearing AND sending a letter to policymakers about your opposition to HB 3031.
Download 2019 EPCC Magazine
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