Today, we will be issuing a full 2018 legislative report for you to share with your members. In the meantime, here is a full accounting of the 2018 bills that OSCC worked on or monitored this session:
• ‘Cap and Trade’ (HB 4001 / SB 1507) Proposed legislation would have capped industrial emissions at 25,000 metric tons per entity and charged the DEQ with creating a program for pricing emissions and determining allowances for regulated businesses and exemptions for trade exposed businesses. It designated money to be spent on impacted communities, rural areas, tribal entities and financial support low income utility customers and workers dislocated or adversely affected by climate change policies. Industry strongly opposed ‘Cap and Trade’ measures and were able to defeat the bills and push the conversation into 2019. ‘Cap and Trade’ defeated in 2018. But $1.5 million approved for further study in 2018 directed by the Governor’s office. We also anticipate a new joint legislative committee to be appointed over the interim to sustain momentum on the issue.
• Cleaner Air Oregon (SB 1541) OSCC lobbied as part of a business coalition in support of SB 1541, which created a more reasonable, pro-business alternative to the air toxics regulatory program that the DEQ was poised to administer. SB 1541 established an attainable health-based program with more reasonable health-based benchmarks codified in statute. Industry was rightfully concerned that proposed DEQ regulations would force many businesses to curtail operations due to unrealistic benchmarks. SB 1541 allayed those concerns. In exchange for the implementation of the new statutory program, industry would remove its stranglehold on Title V and ACDP fees. SB 1541 passed and will be signed by the Governor. It should also be noted that the legislature appropriated $1 million to pay for the program, effectively reducing the proposed fee increases on permits.
• Pass-through Income Deduction (SB 1528) The legislature rammed through SB 1528 with bare majorities in what was the most contentious tax issue of the session. SB 1528 disconnected from one piece of the 2017 federal ‘Tax Cuts and Jobs Act’ – the 20% income deduction for pass-through business entities (S corps, LLCs, Partnerships, Sole Proprietors). OSCC argued for full connection to the federal tax cut legislation, particularly those provisions that benefitted small businesses. SB 1528 effectively denied Oregon pass-through businesses the ability to claim the pass-through deduction on Oregon tax returns. In doing so, the state will be gaining an additional $200 million per year in additional tax revenue that would have otherwise gone toward small business tax relief. SB 1528 passed legislature, but Governor has made clear she will entertain a veto request.
• Document Recording Fee (HB 4007) OSCC supported and made the difference in the passage of HB 4007, which increased the document recording fee from $20 to $60 to generate a consistent funding stream for housing assistance and new housing developments. Early in session, the advocates were able to reach an agreement with the Realtors Association to increase the document recording fee from $20 to $60. This increase will bring in $60 million per biennium. HB 4007 also established a newly created First Time Home Buyer Savings Account, which provides first time buyers a tax deduction for savings applied to buying a home. The key policy change that earned OSCC’s support was that the criteria was changed to allow money to be used for workforce housing, not just low-income housing. HB 4007 passes and raises a $60 million per biennium to meaningfully address homelessness and build affordable workforce housing units.
• PERS Side Accounts (SB 1566) The governor’s priority bill on PERS was the creation of an ‘Employer Incentive Fund’ that would capture windfall revenues and direct those revenues to bring financial assistance to local governments and school districts in need of paying down their PERS liabilities. The question, however, was how to capitalize the fund. That question was answered with the passage of SB 1529, which directed more than $100 million of one-time repatriated income tax receipts (from the federal ‘Tax Cut and Jobs Act’) into the fund. In a very real way, Oregon’s largest companies are now directly buying down the PERS debt of local governments and K-12 districts. SB 1556 passed and funded by windfall tax receipts.
• Data Breach (SB 1551) OSCC carefully monitored data breach legislation. In response to the Equifax data breach, the Oregon Legislature introduced Senate Bill 1551, which originally represented a significant administrative burden for businesses faced with a breach of customer data. After significant negotiation, SB 1551 passed and contains the following provisions: (1) Requires free security freezes and thaws, (2) Prohibits upselling security products after a data breach, (3) Requires 45-day notice of breach by the responsible party only (defined as the party that was subjected to the breach and owns, licenses, or otherwise possesses the information), (4) Maintains requirement that notice is only necessary when a combination of data is stolen that would provide access to accounts. If the stolen information is not sufficient to access accounts, it is not subject to this legislation, and (5) the final version of the bill does not contain a private right of action provision.
• Diesel Engine Requirements (HB 4003) House Bill 4003 would have imposed additional emissions regulations on medium and heavy-duty diesel trucks as well as off-road diesel engines used primarily in construction. The concept showed signs of life toward the end of session but did not advance out of House Rules Committee. HB 4003 defeated, no new diesel regulations in 2018.
• Paid Family Leave (HB 4160) Paid Family Leave was introduced late in the session. To pay for the mandated leave, the bill would have established a new payroll tax on employers and income tax on employees. As in 2017, the bill required a three-fifths vote, which prevented the concept from emerging as a major threat. Legislators have formed an interim work group to examine this issue and come back in 2019 with recommendations. OSCC will participate in the workgroup during the interim. HB 4160 failed to advance, but it will be a top priority for Democratic leaders in the 2019 session.
• Overtime Law Fix (HB 4021) OSCC and others have asked the legislature for continued work on the work week cap for manufacturing production employees passed by the 2017 legislature. OSCC is concerned that the new law will make it hard for manufacturers to meet customer demand, particularly when those employers are in workforce-constrained locations. HB 4021 was introduced by Senator Betsy Johnson (D-Scappoose) to help continue to make the new law workable for various industry concerns. HB 4021 did not receive any consideration.
• Health Care Penalty Payments (HB 4105) For several sessions, there have been various measures introduced that would penalize employers if employees receive public assistance. HB 4105 would have required employers to pay a tax for any employees working 30+ hours per week who was also enrolled in public medical assistance. Would have applied to any company with 50 or more employees. HB 4105 did not advance.
• Corporate Taxes (SB 1529) OSCC supported passage of SB 1529 as a means to (1) ensure that all Oregon businesses received the full depreciation benefits of the new federal tax law, and (2) ensure that Oregon’s tax haven law (which results in state double taxation on foreign earnings when combined with the new federal tax law), would be repealed. SB 1529 passed the legislature.
• Transient Lodging Taxes (HB 4120) Legislators finally succeeded in passing legislation that would ensure payment of state lodging taxes for short term rentals booked through online platforms. HB 4120 clarified that short-term rental intermediaries are responsible for collecting and remitting transient lodging taxes. The legislation was supported by the Oregon Restaurant and Lodging Association as well as local government. HB 4120 passed.
• Non-Economic Damage Caps (No Bills Introduced) Very notable this session was the absence of legislation to increase or eliminate Oregon’s cap on non-economic damages in health care and general business lawsuits. No damage cap legislation or amendments were introduced. Non-economic damage caps not considered in 2018.
