2017 Legislative Report (Week 3)
Dear Members and Colleagues -
The 2017 Oregon legislature continues to plod along at a cautious pace. Again, only a few hundred additional bills were introduced in the past week, a far lesser amount than anticipated. Only a few committees are delving into controversial issues, but many of those are simply informational hearings. Only the House Business Committee has taken up controversial anti-business legislation to date, while both the House and Senate Revenue Committee are exploring tax issues that have significant impact on the business community.
Here's what we know from the past week:
Again, there is not yet any sort of "master plan" to deal with the state's $1.8 billion budget deficit. All the different sides in the debate are still collecting information and exploring options.This process will unfold slowly through negotiation and will likely take several months. Although Democrats hold substantial majorities in both the House and the Senate, they don't have the votes to pass either the necessary cuts, spending reforms, or potential taxes without Republican support. It will truly require bipartisan deal-making. Three weeks into session, lawmakers are simply gathering information and learning how to work with each other.
Senate commitment to bipartisanship could pay significant dividends to business, particularly in the area of costly environmental regulation. This is potentially the most significant theme of 2017, and we'll be paying close attention to it all session. Senate President Peter Courtney (D-Salem) has committed the Senate to bipartisanship in 2017 that has the potential to derail many partisan issues that could potentially harm business. Of particular note, it appears that extreme environmental regulatory policies may be the first casualty of the commitment to bipartisanship. Issues such as 'cap & trade', diesel engine regulations, and emissions regulations appear to have very little traction so far. This is a far different environment than we witnessed in 2015 and 2016.
The House Business Committee continues to be the committee most likely to consider and pass anti-business bills. This past week, the committee took testimony on HB 2167 (which creates an unlawful employment action for 'hostile' work environments), HB 2169 (which gives only employees the ability to collect attorney fees in wage and hour employment cases), HB 2180 (which allows employees to file liens against employer property for wage claims) and HB 2181 (which presumes employers guilty until proven innocent for adverse employment actions against employees with pending wage claims). OSCC opposed all four bills. Of note, the inclusion of Representative Janelle Bynum (D-Happy Valley), a McDonalds restaurant owner, on this committee has made the committee more moderate and less inclined to pass radical legislation such as the aforementioned bills.
The 'Small Business Tax Cut' is clearly being targeted for repeal or significant change. The Senate Finance and Revenue Committee took testimony this past week on SB 165, which requires small businesses to show an increase in employment before being able to take advantage of Oregon's lower tax rates for 'pass-through' small businesses. OSCC opposes this legislation and strongly opposes repeal of the lower tax rates for small business. OSCC believes that the 'small business tax cut' should be expanded to include more small businesses, including sole proprietors, who are currently precluded from taking advantage of the lower rate schedule. The Senate committee heard clearly from CPA's and others that SB 165 was not a good idea because it added complexity and uncertainty for small businesses in the tax code.
Silly Tax Proposals. The past week was particularly interested for the number of silly tax bills that were introduced that would impact local businesses, including:
Here's what's coming up this week:
Marijuana accommodation in the workplace. This is perhaps the biggest potential event for the business community this coming week. The Senate Judiciary Committee is planning a hearing and a vote on SB 301, which prevents an employer from discriminating against prospective employees due to marijuana use. This bill is in direct conflict the Oregon Supreme Court's decision in the Emerald Steel case, which held that Oregon employers are entitled to enact 'zero tolerance policies' on marijuana use. OSCC will strongly oppose this bill. We are further puzzled why the bill is scheduled for a committee vote when there are clearly not enough votes to pass the bill in the Senate. We do not anticipate that this bill can pass the legislature.
Environmental Regulation Hearings. The Senate Environment & Natural Resources committee will continue to take testimony this week on regulatory issues - this time on 'cap & trade' and a 'clean air tax'. OSCC is closely monitoring these issues, but again, we do not anticipate that the legislature, particularly the Senate, intends to take up these issues in 2017.
Property Tax Reform Hearings Continue. The Senate Finance & Revenue Committee will continue hearings on property tax reform which would likely have the effect of accelerating values and property taxes for industrial properties. The legislation being considered is SJR 3. This bill repeals Measure 50 and requires that property taxes be assessed on real market value instead of assessed value (which can only increase 3% per year). SJR 3 is being considered alongside a companion bill, SB 151, which creates a sizable homestead exemption to lower property taxes for homeowners. The effect of the two bills is to effectively lower property taxes for homeowners and increase property taxes for commercial and industrial properties. Please note that both bills face a very uphill climb with steep hurdles, not the least of which is that Oregon voters must approve the change.
'Equal Pay' Legislation Considered. The House Business and Labor Committee will take a look at HB 2005 this week. The legislation is another attempt to establish additional 'equal pay' provisions in statute. The bill makes it illegal to discriminate in pay for similar jobs. The bill also makes it illegal for an employer to consider pay history of a prospective employee. It is not yet clear how additional 'equal pay' laws will enhance the pay discrimination laws already on the books. OSCC will monitor this legislation closely, particularly for additional avenues to sue employers.
We received several emails this week from Chambers with questions on status of particular legislation or specific details. Keep them coming. We are here to support you. Send any questions or issues that are arising.
2017 Legislative Report (Week 2)
Dear Members and Colleagues -
The 2017 legislative session has concluded its second week at a very cautious pace. Only 200 or so additional bills were introduced in the past week, a far lesser amount than anticipated. Committees are not yet diving into controversial issues. But this week there are a handful of legislative committees that will be sticking their toes in the water on legislation that business will oppose.
Here's what we know from the past week:
There is not yet any sort of "master plan" to deal with the state's $1.8 billion budget deficit. This will unfold slowly through negotiation and will likely take several months. Although Democrats hold substantial majorities in both the House and the Senate, they don't have the votes to pass either the necessary cuts, spending reforms, or potential taxes without Republican support. It will truly require bipartisan deal-making. At this stage, lawmakers are simply gathering information and learning how to work with each other.
Business is figuring out its role and trying to find its 'voice' in the budget debate. The organized business community has been clear about how it would advise lawmakers to balance the state's budget and set the state on a path to fiscal sustainability. First, grow the economy (including stopping additional regulatory burdens). Second, slow down the escalating costs in state government (including health care and PERS). Finally, add new revenue when the first two objectives have been dealt with in a meaningful way. Business groups are feeling their way along on how to strongly advocate its positions without undercutting legislative negotiations.
The public disclosure of "confidential" meetings between Senate President Peter Courtney, House Speaker Tina Kotek, and union and business leaders, was met with severe backlash from Republicans and many business groups.
Senate commitment to bipartisanship. This is potentially the most significant theme of 2017, and we'll be paying close attention to it all session. Senate President Peter Courtney (D-Salem) has committed the Senate to bipartisanship in 2017 that has the potential to derail many partisan issues that could potentially harm business. At this stage, Courtney has pledged that in order to build trust and cooperation around the herculean tasks of solving the state budget gap and passing a transportation funding package, the Senate will not advance any legislation that does not have support from members of both parties. This has the potential to forestall many pending labor, environmental and tax issues that business groups had feared could come to fruition in 2017. Stay tuned here...this commitment by Senate President Courtney could potentially stave off many 2017 threats to our local business communities.
Here's what's coming up this week:
PERS Hearings. The Senate Workforce committee will hold public hearings on the two most significant PERS reform bills introduced to date. Senate Bill 559 calculates final average salary of PERS beneficiaries over five years instead of three. Senate Bill 560 redirects future employee contributions out of the individual account program into the pension. This bill has the single biggest impact on reducing the PERS unfunded liabilities, but it's also totally unacceptable to the unions. The reason this hearing is significant is because both bills are considered Republican bills, and yet the committee is willing to give both bills a serious hearing. This indicates a seriousness about addressing PERS costs that seemed lacking from the Governor and legislative leadership in the months leading up to the legislative session.
Environmental Regulation Hearings. The Senate Environment & Natural Resources committee will take testimony this week on potential efforts to curb on-road and off-road diesel emissions. OSCC is closely monitoring this topic. Also, the committee will hear testimony on the "Cleaner Air Oregon" regulatory initiative that OSCC is also closely monitoring. OSCC fears that "Cleaner Air Oregon" regulations have the potential to shut down local manufacturing in Oregon due to regulations that cannot be met.
Property Tax Reform Hearings. The Senate Finance & Revenue Committee will conduct hearings on property tax reform which would likely have the effect of accelerating values and property taxes for industrial properties. The reforms being floated by Chair Mark Hass (D-Beaverton) contemplate repealing Measure 50 and requiring property taxes to be assessed on real market value instead of assessed value (which can only increase 3% per year). Hass proposes this switch, in conjunction with a sizable homestead exemption, to effectively lower property taxes for homeowners and increase property taxes for commercial and industrial properties. The legislation being considered here is SJR 3.
Small Business Tax Cut Repeal. Another issue being considered this week in the Senate Finance & Revenue Committee is the effective repeal of the "small business tax cut" passed by the 2013 legislature. The tax cut was designed to give pass-through businesses (S corps, LLCs, partnerships) a lower tax rate starting at 7% instead of the 9% that was previously levied on these businesses. Senate Bill 165 would only allow small businesses to utilize this lower tax rate if they show employment and wage gains year over year. OSCC will oppose this legislation. It appears to be a backdoor repeal of the small business tax bracket.
Business Tax Reform. The House Revenue Committee will hold hearings all week on 'business tax reform,' whatever that means. Presumably, it means how to increase taxes on Oregon business, but we will know more after this week's hearings.
House Business & Labor Committee Will Take Up Labor Issues. The historically anti-business House Business & Labor Committee will take up controversial legislation this week when it holds hearings on House Bill 2167, which would make an "abusive work environment" an unlawful employment practice, and House Bill 2180, which would allow for liens against employer real and personal property by claimants alleging unpaid wages. These bills would be detrimental to local businesses.
Of particular interest to OSCC members:
- HB 2875 would add a new five cent per pound tax on ground coffee beans to be levied at the wholesale level. This is first time OSCC has ever seen this tax proposal.
- HB 2876 would add a new 13 percent tax rate for income above $250,000. This is a significant issue for small business as business income is typically taxed at the personal income tax rates.
- HB 2877 would enact a new $1,000 tax on vehicles over 20 years old. Again, this is the very first time that OSCC has ever seen this specific tax proposal.
Reach out with any questions or issues on which you would like more information.