What’s Happening (OSCC Political Observations)
We think that things will start getting more interesting now that the major $2.8 billion business tax passed the House 37-21. Even though the tax bill was muscled through the House, there is still not yet a clear path to the goal.
Because although legislative leadership appears to have made a deal with some business organizations that includes:
- HB 3427, the $2.8 billion gross receipts tax on businesses with $1 million or more in sales. The details of the tax are still in discussion.
- An undefined PERS reform proposal
- A paid family leave proposal that would require both employers and workers to pay new taxes
- The death of HB 2269, the employer health care tax
…there are still some serious unanswered questions that have real consequences. For instance:
- What will Senator Betsy Johnson do? She’s never been a supporter of higher taxes.
- With only 12 members to account for, Senate Republicans clearly have a realistic ability to deny quorum and shut down Senate business. Will they?
- What are the details of the deal struck between some business groups and legislative leadership? The devil is always in the details, and to our knowledge, there are no details on the issues that were agreed to. Negotiations have yet to occur on PERS or paid family leave, and yet business has already given up its leverage by going neutral on the major tax hike.
- What happens if the unions oppose elements of the deal including the paid family leave program or PERS reform? Will Democrats be able to deliver the votes for these issues if their major benefactors oppose them?
- And if Democrats cannot deliver the votes on these issues, will business groups have the standing to ask for Republican support after having just crossed them on the $2.8 billion gross receipts tax?
- What about Cap & Trade? Cap & Trade was not addressed in the deal-making, and yet the dual impact of Cap & Trade with a gross receipts tax could be devastating to businesses.
Like we said, it’s starting to get interesting.
Activity on Major Issues
- The $2 billion Commercial Activity Tax (HB 3427) passed the House on a party line vote, 37-21. It is scheduled to hit the Senate floor on Tuesday, but Senate Republicans may force a delay. As it stands, HB 3427-A has the following components:
– 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 receipts from sales to a wholesaler or ag cooperative for any sales outside of Oregon; and
– An exemption for groceries (defined as those that qualify for ‘SNAP’).
- Cap and Trade (HB 2020). The Joint Committee on Carbon Reduction will unveil yet another re-write of the Cap-and-Trade on Monday evening. OSCC and other business groups will quickly analyze the new version of the bill to understand potential impacts. The committee will meet again on Friday to further consider the re-write. OSCC will share analysis and impacts of the new version of the bill as soon as we are able to conclude our analysis.
What happened last week?
- Equal Pay Technical Fixes (SB 123A). SB 123 passed out of the Senate Rules Committee with an amendment to provide clarity to employers in implementing Oregon’s Equal Pay Act. OSCC joined other business organizations in supporting the amended bill. Some technical amendments were not included in SB 123A, but Senators Kathleen Taylor (D-Portland) and Tim Knopp (R-Bend) put forward a letter, requesting that BOLI look at making other necessary fixes in rulemaking later this year. We appreciate their work to help local businesses understand and implement the equal pay law.
- Prevailing wages in enterprise zones. HB 2408 requires prevailing wages on all private projects in Enterprise Zones in excess of $20 million. Such a policy erodes one of Oregon’s last remaining economic development tools. The bill received a very robust public hearing last week in the Senate Workforce Committee in which there was very strong opposition. OSCC is actively opposing the legislation and lobbying it. We anticipate that the bill will need to be amended in order to pass the Senate.
- Workers’ compensation compromise (HB 3022). OSCC initially testified against this legislation, which would have upended 30-years of successful workers’ compensation reforms and drastically raised workers’ comp costs on employers. However, the bill was deftly negotiated by SAIF so as to end up a compromise bill that won’t impact employer rates. The House Rules committee passed negotiated version of the legislation last week, which eliminates a major threat to the business community.
Other key issues coming up this week.
- Diesel regulations (HB 2007). The House Rules Committee is expected to amend HB 2007 this week and pass it out to Joint Ways & Means for additional consideration. HB 2007 would phase out 2010 and older on-road diesel engines over a ten year period, including both public and private fleets. It also allocates the remaining Volkswagen Settlement dollars (approx. $55 million) to retrofit and replace older on-road medium- and heavy-duty trucks. We anticipate an amendment this week to narrow the scope of the bill before it moves out of committee.
- Lawsuit Damages (HB 2014). The Senate Judiciary Committee will hear this bill Monday. 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. We have been successful in killing this bill in the Senate for several session. We expect another major fight on this bill in the coming weeks.