The 2017 legislative session is very slowly gaining focus and momentum. The big, defining political discussions of 2017 around the budget (how to solve the state’s $1.8 billion budget gap) and transportation (how to pass a comprehensive transportation funding package) are really just now starting to take shape.
But outside of those two major discussions, the legislature has yet to really pursue any other major themes – no aggressive push for any additional labor, environmental, energy, education or economic development goals are evident.
On balance, given our recent experiences with the legislature, this is a good development. It represents a sort of “Back to Basics” approach to state government.
Here’s what we know from the past week:
Chief budget writer calls for $500 million in cuts and $500 million in added taxes. The legislature’s chief budget writer, Senator Richard Devlin (D-Tualatin), was the first ranking legislator to publicly announce a framework to balance the budget. Over the weekend, he announced his support for a budget proposal that would cut $500 million in costs and add $500 million in new tax revenue.
This is a critical opening salvo for a couple of reasons. First, Devlin is a respected legislator who has more influence over the state budget than any other legislator. Second, the framework is plausible even though it will cause discomfort to all sides of the debate. Democrats will argue that they can’t find $500 million in budget reductions. Unions will argue that $500 million in new taxes is nowhere near enough. Republicans will argue that there is no need for additional tax revenue when state revenue is already growing over 8 percent per budget cycle.
Where will the new tax revenue come from? At this stage, OSCC is recommending that members pay attention to SJR 41 or any other proposal that aims to establish a gross receipts tax. We have reason to believe that legislators don’t think they can raise enough money without turning to a completely different source of revenue – either a Commercial Activities Tax (CAT) or a straight Gross Receipts Tax (GRT) similar to the Washington B&O. OSCC believes this is the direction that legislative leadership is going. We believe that the legislature will attempt to put a gross receipts tax on the ballot, perhaps as soon as November of this year.
Senate’s continued focus on PERS reform is surprising, but unlikely to yield much. The Senate Workforce Committee has devoted considerable time and effort in analyzing various PERS reform proposals…far more than would have been expected in a Democrat-controlled legislature. This past week, the committee took inventory of dozens of proposals from the general public on how to save money in the PERS system. But OSCC’s analysis is still that significant PERS reform is unlikely and that the legislature may very well turn its attention to other cost drivers (state employee compensation and health benefits) in order to capture cost savings.
Corporate tax disclosure hearings yielded no new information. The House Revenue Committee heard HB 2019 and HB 2940, both designed to require C corporations to publicly disclose more of their tax information. OSCC opposes this legislation for several reasons. Going into the legislative session, the government employee unions claimed this legislation was among their top priorities, but the hearings on the bill did not yield any new participants or any new information from previous attempts to pass this type of legislation. OSCC anticipates that we may have a real fight on this issue in the House, but it is unlikely the Senate would consider it.
Here’s what’s coming up this week:
The business community response to ‘Cap and Trade’ will be heard this week in a joint meeting of the House and Senate Environment committees. To date, the committees have only given time to the environmental activists seeking to place emissions mandates and costs on employers. But the business community commissioned its own modeling and economic impact study of a ‘Cap and Trade’ proposal that looks significantly different than those of the proponents and the DEQ.
The business modeling, conducted by FTI, shows reduced economic activity, higher costs and job losses – primarily in the manufacturing sector – as a result of ‘Cap and Trade.’ You can view the FTI report here.
The House Business & Labor Committee will try – AGAIN – to pass its first bill with serious business opposition. HB 2005 would mandate ‘pay equity’ for all protected classes, would switch the burden of proof from plaintiff to employer, and would make each paycheck in which a disparity is claimed as a cause for remedy.
Business groups stalled the bill last week with a major effort to support a compromise ‘pay equity’ bill that encompasses pay discrimination based on gender, race and ethnicity (so long as burden of proof remains with the plaintiff) and curtailing the bill’s many rights of action against employers. See our correspondence here.
Several key House Democrats have been supportive of the business position and want a compromise bill now instead of being forced to vote on a bill that business does not support.
However, it appears that Democratic leadership in the House intends to continue its time-honored tradition of steamrolling over the business community this week and passing the original bill.
Community ‘Right to Know’ legislation to be heard in the House Environment & Energy Committee. HB 2669 is being closely watched and strongly opposed by manufacturers and the business community at large. It proposes to amend a long standing agreement struck in 1999. That agreement – existing law – authorizes local governments to establish community ‘right to know’ regulatory programs of the kind found in the City of Eugene.
Businesses already publicly report hundreds of chemicals that are stored and released from facilities through state air and water permits, State Fire Marshal reports, federal toxics release inventories, and others. In addition, businesses are constantly improving processes to reduce chemical use and to reduce input and regulatory costs (as required under Oregon’s landmark Toxics Use and Hazardous Waste Reduction Act).
HB 2669 is an overreach because:
- It removes the requirement that local governments demonstrate the need for the program;
- It removes protections for sensitive business information, including trade secrets;
- It removes the requirement that DEQ, OHA, and the State Fire Marshall have an opportunity to provide comment;
- It requires reporting of chemicals down to the .02 pounds, and
- It increases maximum annual fees five-fold from $2,000 to $10,000.
First Hearings on Paid Family Leave. The House will commence hearings on a new paid family leave bill – House Bill 3087 – which grants up to 12 weeks of paid leave for employees who take time off under the Oregon Family Leave Act. The program is funded by a new 0.5% tax on employees and 0.5% payroll tax on employers.
The bill extends full benefits to anyone employed for 90 days, and in one of the more curious aspects of the bill, only extends benefits if funds are available. HB 3087 allows for paid family leave to be taken in as little as 8-hour increments.
The fact that HB 3087 requires a tax means that the bill must pass with a 3/5 supermajority vote, which is unlikely. We also anticipate that proponents will try and find a way to raise the necessary funding in the bill so that the 3/5 supermajority vote requirement does not apply. OSCC will oppose the legislation.
