• 2021 Legislative Session Update - February 22, 2021

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    What’s Happening (OSCC Political Observations)
     
    The 2021 legislative session is unlike any other session we’ve been a part of. The state legislature has adopted precautionary measures to prevent the spread of COVID-19, excluding lobbyists and members of the public from the Capitol. Everything is remote—from testimony in policy committees to meetings with legislators. This format provides opportunities for virtual engagement, regardless of where you live, but also is incredibly challenging as the legislative process relies significantly on in-person interaction and relationship.
     
    This session is off to a crawl. And it slowed down even more last week as the first half of the week was cancelled due to power, internet and phone outages resulting from the winter storms that battered the state.
     
    The Oregon House of Representatives currently meets just once a week to introduce legislation (and didn’t meet at all last week), and the Oregon Senate has only convened in-person three times since the beginning of session on January 21 to introduce legislation. This has substantially slowed the bill introduction process.
     
    Currently, the legislature is considering approximately 2,400 bills, but the House Speaker announced this past week that she expects the release of 4,000 bills for the 2021 session (more bill concepts than have ever been introduced). And while this number of bills is certainly overwhelming, the sheer volume of bills also provides an opportunity to prevent more damaging concepts from moving forward.
     
    Before session started, House leadership outlined four goals: (1) Redistricting; (2) COVID-19 Recovery; (3) Wildfire Recovery; and (4) Racial Justice and Equity. Unfortunately, with the substantial number of bills under consideration, it seems unlikely that the legislature will focus on just these issues this session.
     
    Still, they will likely face severe time constraints due to the virtual nature of session. Committees are getting bogged down in bills. Negotiations around even minor bills takes much longer. Bills will inevitably come out with major errors and unintended consequences if there is any attempt to rush and push through complicated legislation.
     
     
    Activity on Major Issues
     
    Revenue. The state faces a $1.6 billion shortfall for the 2021-2023 biennium, primarily related to backfilling the Medicaid budget. As with previous sessions, legislators will be looking at numerous mechanisms to address the budget hole. Hearings have already begun on HB 2839 and SB 137, which would disconnect Oregon from Federal CARES Act tax provisions that allow for the immediate monetization of business losses through the tax code to help with cash flow issues as a result of the pandemic.
     
    These provisions include: (1) increasing the business loss limitation, (2) allowing net operating loss to be applied to previous tax years, and (3) the increasing business interest expense limitation. Both the House and Senate majority seem intent on moving a disconnect bill forward, which is estimated to generate $83.9 million in the current biennium and $32.6 million for the 21-23 biennium. To be clear, this is a $115 million tax increase on Oregon business who would otherwise expect to be able to claim these tax incentives.
     
    Legislators are also considering whether to eliminate the lower tax rates for pass through businesses that passed in 2013 as part of the Grand Bargain. The Governor’s recommended budget called for the elimination of the small business tax cut in order to raise revenue by another $100 million. We will let you know as this conversation develops.
     
    Workforce. Perhaps the biggest threat this session is the introduction of two agricultural overtime bills: SB 616 and HB 2358. Just six states have enacted some form of overtime mandate for agriculture, and there is currently very little information available about the impacts to farmers, affiliated industries, or workers. With the racial justice lens this session, these bills are likely to receive public hearings and potentially move forward.
     
    Labor groups have also introduced several bills that would add to the cost of doing business in Oregon or increase employer liability substantially. HB 2205 would deputize third parties/ plaintiffs attorneys to file class action lawsuits against employers for any violation of Oregon law—wage and hour, workplace safety, etc. This is a policy that only California has enacted and one that has devastated local businesses.
     
    SB 488 and HB 3025 create an automatic presumption of workers’ compensation compensability for COVID-19 and apply specifically to the food and agricultural sector, among others. HB 2489 would change independent contractor laws and turn most independent contractors into W-2 employees. SB 716 would require employers to accommodate employees’ child care schedules and needs as they schedule work shifts. SB 477 and SB 483 lower the bar to bring workplace retaliation and discrimination claims and will inevitably lead to more lawsuits. HB 2813 and HB 2588 would require employees to have respirators when the local air quality index is above 151 due to wildfire smoke. It will be all-hands-on-deck this session to deal with these bills – and these are just the bills we are aware of.
     
     
    What’s Coming Up?
     
    Please see OSCC’s Friday announcement for key bills coming up this week.
     
    1. SB 137 would raise taxes by $115 million on Oregon businessesOSCC OPPOSES
    2. HB 2638 would limit liability for employers following COVID directivesOSCC SUPPORTS
    3. HB 2205, the Private Attorney General Act, would deputize third parties/ plaintiffs attorneys to file class action lawsuits against employers for any violation of Oregon law—wage and hour, workplace safety, etc. OSCC OPPOSES
    4. HB 3177 would prevent the Governor from shutting down restaurants and gyms in any further emergency declaration. OSCC SUPPORTS
     
    We are also expecting the official February Revenue Forecast on Wednesday. This will be important as budget writers start to figure out how to balance the upcoming budget. To date, it is expected that the budget deficit for the 2021-23 biennium will reach $1.6 billion. This forecast will be a key indicator whether the deficit will shrink or continue to grow.
     
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