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    2019

    2019 Legislative Report - Week 17
    Dear OSCC members and colleagues -
     
     
    What's Happening (OSCC Political Observations)
     
    This is the final week for policy committees to pass bills. Any bill not passed out of a policy committee (other than Rules or Revenue) is dead after Friday.
     
    All legislation passed after Friday will have to come from either Rules, Revenue, or Ways & Means. This signals that the 2019 legislature is in the homestretch. It also signals that the decision-making will really come down to just a handful of legislators. Most legislators will have little or nothing to do from this point forward other than casting votes on the floor.
     
    Democrat leadership can pass any bill it wants. The only reason there would need to be any negotiation whatsoever going forward is because:
    1. Republicans are still employing delay tactics which could be very impactful as the June 30th constitutional end date draws closer.
       
    2. Republicans have complete leverage on a key Measure 11 'reform' bill sought by Democrats as Democrats do not have the votes to pass SB 1008 on their own.
       
    3. Republicans have some leverage on PERS reform as it is unlikely that Democrats can produce all the votes needed to pass SB 1049 on their own.
       
    4. Republicans have complete leverage on the "kicker" issue as Democrat leadership is seeking to be able to spend some of the $1.4 billion personal kicker. 
    Activity on Major Issues
    • The $2.8 billion Commercial Activity Tax (HB 3427) was signed into law by Governor Brown. Starting on January 1, 2020, all businesses doing business in Oregon will see: 
       
      • A gross receipts tax rate of 0.57% on Oregon sales over $1 million;
         
      • A 35% deduction from taxable sales for labor OR business inputs, whichever is higher;
         
      • An exemption for groceries (defined as those that qualify for 'SNAP') and transportation fuel. 
    • Cap-and-Trade (HB 2020). On Friday, HB 2020-A passed its first major milestone. After three hours of debate, the Joint Committee on Carbon Reduction adopted the -94 amendments on a party line vote and sent the bill to the Joint Committee on Ways & Means for further deliberation. Democrats voted down all other amendments that were brought forward, although it was widely acknowledged that rural Oregon would suffer job loss and economic hardship under the bill. 

      The OSCC position has not changed since Day 1, primarily because the basic precepts of the legislation have not changed despite amendments that changed the bill on the margins. Transportation costs will increase. Natural gas costs will increase. Propane costs will increase. Local food processors and manufacturers will face a real competitive disadvantage. Small businesses and households will see increases in transportation and energy costs.

      OSCC still believes there are still opportunities to change this bill in the Ways & Means Committee. 
     
    What happened last week?
    • The state revenue forecast added $770 million to state coffers for the upcoming 2019-2021 biennium. Just from the last forecast in March, every metric grew by eye-popping numbers due to a historic influx of revenue over the tax season.

      In addition to the influx of $770 million into the upcoming budget cycle, the kicker almost doubled in size.  It's now projected at $1.4 billion. Net reserve funds are now nearly $3.5 billion.

      But the real impact of the historic revenue forecast is that it will tamp down on talk of additional tax revenue for the remainder of the 2019 legislative session. 
    • The legislature's attempt at PERS reform was unveiled with Senate Bill 1049SB 1049 contains the following provisions: 
       
      • Tier 1 and Tier 2 members, who are public employees who entered the PERS system before 2004, would have 2.5% of their salaries diverted from their individual retirement accounts into paying off the system's debt.
         
      • Workers hired 2004 or later (PERS Tier 3 and Tier 4), would face a lower diversion - 0.75% of their salaries.
         
      • Public employees earning less than $30,000 a year would be exempted.
         
      • A reduction in assumed interest rate for retirees who use the "money match" method of calculating their pension benefits.
         
      • Most significantly, legislators seem to have abandoned efforts to raid SAIF to cover PERS liability, which is a good development for Oregon employers.  
    The future of SB 1049 is uncertain. Although it is only a modest cost-saving measure, the unions oppose it in force and it is unlikely that majority Democrats can carry the issue themselves.
     
    • Equal Pay Technical Fixes (SB 123-A). On Tuesday, the Oregon Senate passed SB 123 unanimously. The bill includes several important technical fixes to give employers clarity in implementing Oregon's Equal Pay Act. Oregon's law is the most comprehensive in the country, and it has been difficult for many employers - large, small, and seasonal - to implement. OSCC supports these fixes, which streamline implementation and provide important protections to employers who are trying to do the right thing. We anticipate rulemaking later this year to address several other issues identified by Sen. Kathleen Taylor and Sen. Tim Knopp.
     
    Other key issues coming up this week.
    • Prevailing wages in enterprise zones (HB 2408). We are expecting the Senate Workforce Committee to take up HB 2408 this week. In its current form, the bill requires prevailing wages to be paid on private enterprise zone projects of $20 million or more. OSCC is actively opposing and lobbying the legislation. 
    • Lawsuit Damages (HB 2014). We are expecting the Senate Judiciary Committee to vote on HB 2014 this week. HB 2014 would repeal Oregon's legal limit of $500,000 on non-economic damages in personal injury and negligence lawsuit claims. OSCC, health care groups, and business organizations are opposing this legislation because it is a significant factor in driving up health care costs and general liability costs for employers. Although we expect the Senate Judiciary Committee to approve the bill on a party line vote, we believe we have an opportunity to defeat the bill on the Senate floor.
     
    ACTION ALERT
     
    HB 2020: Cap-and-trade will increase the cost of living and working in Oregon - all residents will bear the cost of fuel increases and increased natural gas rates. It's projected to immediately drive up the cost of gas by $0.16 per gallon, and natural gas customers will face double digit rate increase in the first year of the program!  

    There are fewer than 45-days before session adjourns, and NOW is the time to make your voice heard.
    Best regards,
     
    JL Wilson & Jenny Dresler
    Legislative Counsel
    503-363-2182

     

    2019 Legislative Report - Week 16
    Dear OSCC members and colleagues -
     
     
    What's Happening (OSCC Political Observations)
     
    House and Senate Republicans ground the session to a crawl last week as both caucuses employed tactics designed to slow the pace of the session. Senate Republicans simply did not come to the capitol and effectively denied the necessary quorum to conduct Senate business.
     
    Senate Republicans continue to negotiate with Senate President Peter Courtney on a slew of bills and a "go home" package. They hope to be able to come to agreement by Monday.
     
    The result was an atypical slow legislative week in what would have otherwise been an intense week of jockeying as major deadlines loom. May 10th was the deadline for all policy bills to be posted for a work session in order to move forward. By May 24th, all bills must have been voted out of their second chamber policy committee in order to survive. Bills in Rules, Revenue, or Ways & Means will remain 'in play' through the end of session, although many of those committees will be wrapping up their work by mid-June.  
     
     
    Activity on Major Issues
    • The $2 billion Commercial Activity Tax (HB 3427) was most impacted by the work stoppage last week in the Senate. What was slated for an expedited Senate vote last Tuesday is still on hold. 
    HB 3427 includes the following components: 
      • Gross receipts tax rate of 0.57% on top line sales over $1 million;
         
      • A 35% subtraction from receipts for labor OR the cost of goods sold (COGS), whichever is higher; and
         
      • An exemption for groceries (defined as those that qualify for 'SNAP' sold at retail). 
    Senate Republicans are trying to force the bill back to committee to lower the tax rate and/or increase the $1 million exemption. It is unclear whether they will be successful. 
     
    • PERS Reform finally made an appearance (SB 1049). On Friday afternoon, Speaker Kotek and Senate President Courtney unveiled their plan to tackle PERS costs. Under their plan: 
       
      • Tier 1 and Tier 2 members, who are public employees who entered the PERS system before 2004, would have 2.5% of their salaries diverted from their individual retirement accounts into paying off the system's debt.
         
      • Workers hired 2004 or later (PERS Tier 3 and Tier 4), would face a lower diversion - 0.75% of their salaries.
         
      • Public employees earning less than $30,000 a year would be exempted.
         
      • A reduction in assumed interest rate for retirees who use the "money match" method of calculating their pension benefits.
         
      • Most significantly, legislators seem to have abandoned efforts to raid SAIF to cover PERS liability, which is a good development for Oregon employers. 
         
    • Cap-and-Trade (HB 2020Legislators unveiled the latest version of the carbon pricing bill in the -84 amendments last week. The amendments made a handful of changes, but failed to address some of the bigger affecting the business community such as the huge cost pressures associated natural gas and transportation fuel.
    The new version of the bill contains the following:
    • Natural gas utilities receive 60% free allowances in 2021 that decline in 2022 in contrast to 100% for investor-owned electric utilities. Similar to California, these allowances are consigned, which limits how the utility can use them. That means many ratepayers-particularly industrial and commercial facilities-will see rate increases beginning in 2021.  This was not a win for local business communities.
       
    • Trade-exposed manufacturers and processors are assigned a benchmark of free allowances based on the best available technology.  This is an attempt to keep some of the state's bigger job-providers from moving out-of-state.
       
    • Transportation fuels will bear the brunt of the cost increases in the early years of the cap-and-trade program.  A tax refund may be available for off-road fuels used in forestry and agriculture, but it is subject to a study of legal challenges.
       
    •  Assistance may be available to low income Oregonians to help cover cost increases for automobile fuels, propane, and home heating oil. 

    There is still a lot of work to be done, because as written, the -84 amendments will still result in a competitive disadvantage for local Oregon businesses. Our sources tell us that legislators plan to adopt the -84 amendment on Friday this week and pass the bill to Ways & Means. We will keep you updated as the process unfolds or as opportunities to weigh in come up.
     

    • Diesel Regulations (HB 2007Negotiations have been ongoing on HB 2007, the on-road diesel engine retrofit and replacement bill. The bill is scheduled for a public hearing and work session early next week with an amendmentthat is expected to: 
       
      • Scale down the phase-out and diesel retrofit requirement for on-road diesel engines to the tri-county (Metro) area which includes Clackamas County, Washington County, and Multnomah County.
         
      • By 2029, all heavy duty diesel trucks must have a 2007 or newer engine. Also by 2029, all medium duty diesel trucks must have a 2010 engine or newer. Farm vehicles and motor homes will be exempted. 
         
    • Paid Family Leave (HB 2005Paid family leave has dominated the labor conversation this session. HB 2005 is the last remaining paid family leave bill, and it currently sits in the House Rules Committee. Labor unions have threatened a ballot measure in 2020 if HB 2005 fails to pass. However, a draft policy is currently in the works to forestall a ballot measure, including the below components (modeled loosely on Washington): 
    • 12-weeks paid family and medical leave annually
       
    • All employees are eligible after they've earned $1,000
       
    • State-run insurance program, funded through payroll tax contributions
       
    • Payroll tax of up to 1% (60% employee paid, 40% employer paid)
       
    • Employers with 25 or fewer employees are not required to pay the premium
       
    • Job protection requirements come into effect after 90 days of employment 
       
    • Marijuana Accommodation (SB 379In a bit of good news, SB 379 is officially dead. This bill would have undermined and nullified all employers' workplace drug-free policies and would have required employers to accommodate off-duty marijuana use. Although the Senate Judiciary Committee passed the bill on a party-line vote, Senate President Courtney refused to let it come to the Senate floor when it was clear that OSCC and other secured enough votes to defeat the bill.
    Best regards,
     
    JL Wilson & Jenny Dresler
    Legislative Counsel
    503-363-2182
    Oregon State Chamber of Commerce
    503-363-2182 
    867 Liberty Street NE, Salem 97301