Oregon State Chamber of Commerce provides us with fantastic updates about the 2018 Oregon legislative session:
Here is some key backdrop information that Chamber members need to know:
Here are some of the major themes for local business as we enter the 2018 session:
Environmental Regulation: OSCC and local chambers will actively participate in the ‘Cap & Trade’ debate that will dominate the first week of the session. House Bill 4001 and Senate Bill 1507 will be the two ‘Cap & Trade’ bills. We anticipate that HB 4001 will be the bill that gains momentum.
‘Cleaner Air Oregon’ funding will also be a huge issue. DEQ is proposing legislation (HB 4002 and SB 1508) that raises Title V and ACDP fees by $2 million to help initiate the air toxics regulatory structure known as ‘Cleaner Air Oregon.’ There will be significant industry opposition. Please be aware there may be a ‘compromise’ bill in the offing – SB 1541 – which would limit the stringency of the new rules in exchange for the increased fees. OSCC is actively abreast of the compromise efforts. OSCC will only support the compromise if it is in the best interests of food processors. As of now, it is too early to tell.
Diesel engine regulations are also being considered with HB 4003. The bill requires DEQ to adopt new emissions standards for medium and heavy duty on-road diesel engines as well as off-road diesel engines.
Employment Regulation: While there is a bill that helps address OSCC’s concerns about the new overtime regulations recently promulgated by BOLI (HB 4021), we are not optimistic that the bill will receive any kind of consideration. HB 4021 was introduced by Sen Betsy Johnson (D-Scappoose) and Rep Debi Boone (D-Cannon Beach) to help alleviate problems that will arise for seafood processing and food processing in general, it appears the AFL-CIO has already told House Leadership to kill the bill.
For OSCC members who store customer information, there will be a significant push for data breach regulation in the wake of the Equifax data breach. The legislation in question – SB 1551, HB 4114, and HB 4147 – would add additional regulations on businesses that store consumer data.
OSCC is also watching HB 4105, which would levy penalties on employers who do not offer health insurance for any employee who works an average of 30 hours per week. The legislation would apply to any company with 50 or more employees.
Affordable Workforce Housing: House Bill 4007 is the bill to watch here. It proposes to raise document recording fees to put more money into first time homebuyer incentives and incentives for affordable and workforce housing projects.
Fiscal Reform: The Governor’s primary PERS push is going to be a bill which creates PERS ‘side accounts’ to help school districts be able to pre-pay their PERS liabilities. The bill is Senate Bill 1566. It is unknown at this point exactly where all the funding will come from to fund the side accounts in a meaningful way. Overall, it is a very modest proposal that will help ease the PERS crunch on school budgets on the margins.
Taxes: There will be two big issues here – (1) connection to the new federal tax cuts, and (2) the viability of the Oregon Small Business Tax Cut which taxes pass-through income at lower rates.
OSCC members that are C corporations will be paying attention to whether the legislature opts to ‘connect’ or ‘disconnect’ from the new federal provisions that allow for 100% upfront depreciation on capital expenditures between 2018-2022. OSCC members that are pass-through businesses will be paying attention to whether the legislature opts to ‘connect’ or ‘disconnect’ from new federal provisions that allow for an upfront 20% income deduction for pass-through shareholders.
Also at stake this session is the future of Oregon’s special small business tax rates for pass-through income. As of today, Oregon’s tax rates on pass through-income start at 7% (as opposed to 9% for W-2 income) and gradually move up. The reduced rates apply to pass-through income up to $5 million. OSCC anticipates there will be discussion of curtailing Oregon’s reduced pass-through rates in order to capture some of the revenue lost to the federal tax cuts.
One final tax issue of concern to local business communities – particularly those that rely on tourism – is House Bill 4120, which requires short term rentals to collect transient lodging taxes. This bill will be a major initiative of both the Oregon Restaurant & Lodging Association and local government.