The legislature took the first major step to balancing the state budget last week when the House passed the Medicaid funding package. If the Senate follows suit – which is a big ‘if’ – then the legislature will have solved over $900 million of the $1.4 billion budget deficit.
Finding the remaining $500 million to balance the budget is hardly insurmountable. In fact, the legislature could largely balance the budget by passing SB 1067, the major cost containment bill being pushed by leadership. But SB 1067 has provisions that are fiercely opposed by hospitals and health care providers as it effectively “doubles down” on the hospital tax in a way that demonstrates bad faith.
Also, it appears that Democratic leadership will swing for the fences and try to pass a major tax bill – HB 2830 – before adjournment. But at this point, we are unsure of how the bill will look. There are amendments swirling everywhere.
But the fact remains that the legislature does not need to raise taxes to balance the 2017-19 budget. In fact, the legislature now appears to be on a path to adopting a balanced budget and adjourning by the July 10th deadline.
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 bill continues to limit the number of hours that can be worked in a manufacturing facility.
Predictive Scheduling: SB 828 is now moving forward with bipartisan support due to finalized negotiations between business and labor. 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. It is OSCC’s belief that the negotiated bill is a ‘best case’ scenario for Oregon businesses.
Paid Family Leave: The conversation around this bill – HB 3087 – is still happening in the background, 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.
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. It appears that we will simply have to make do with defeating the bill at this time. It was hoped that we could leverage our strength on this bill to affect greater cooperation with the DEQ on the ‘Cleaner Air Oregon’ program, but it appears to be a longshot now.
Diesel engine regulations: We had long felt that SB 1008 was poised to move in some form this year. There were new amendments that were being hailed as a compromise between industry and environmental advocates. The bill is scheduled for a vote in the Senate Rules committee this week but the common insider opinion is that the bill will likely die.
A final note here… do not be surprised if we see an 11th hour environmental bill emerge that is passed to assuage an increasingly restless environmental activist community which is turning critical toward majority democrats who have not delivered any substantive environmental ‘wins’ for their base.
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 continue to 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 or HB 3469, both of which are in the Joint Tax Reform Committee. These are the two potential bills 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. They would also temporarily increase the corporate income tax from 7.6% to 9.0% and eliminate the pass-through tax cuts passed by the 2013 legislature. The bill would raise about $900 million in the upcoming biennium. We do believe this bill will pass out of committee this week, setting up a vote on the House floor over this Measure 97-lite legislation.
Please understand that with all the amendments swirling around HB 2830, this issue can change dramatically during the course of a single day. We also have reason to believe that the House Revenue Committee may simply take the bull by the horns and pass its own bill – HB 3469.
House Bill 2391, the major Medicaid funding package that just passed the House, included a $145 million tax on small and medium businesses by way of a 1.5% health insurance premium tax.
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.
HB 2064 (TRT expenditures) continues to hang around. It allows local governments wider latitude on how they spend TRT funds. The bill continues to sit in the House Revenue Committee where it is continually posted for a vote, yet consistently gets pulled off the calendar each day. OSCC is watching this closely.
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.
Theoretically, the legislature could balance the remainder of the $500 million budget deficit with this legislation.
But the part of the bill that’s drawing opposition from 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 in addition to the $145 million health insurance premium tax that just passed the House.
PERS Reform: The bill to watch is SB 1068. The bill is widely 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. OSCC does not expect this bill will advance.
