2019 Legislative Report – Week 20

What’s Happening (OSCC Political Observations)

The 2019 legislative session must adjourn by June 30. Tensions are high as legislators make a last push to pass priority bills before the Constitutional end of session. A number of large policy priorities remain-diesel, cap-and-trade, paid family leave -and the next three weeks will be chaotic as they work to get the votes on remaining bills.

Activity on Major Issues

  • Cap-and-Trade (HB 2020). On Tuesday, Representative Christine Drazan (R-Canby) released a memo from legislative counsel that questioned whether or not HB 2020 is actually a bill for raising revenue, requiring a 3/5 vote. The memo indicated that HB 2020 likely violates Article 8 of the state Constitution, which states that any taxes levied on the sale, distribution or use of natural gas must be dedicated to the Common School Fund. The memo went further to explain that taxes on natural gas are likely capped at 6% in the state Constitution.

    On Wednesday evening, the Ways & Means Subcommittee on Natural Resources held a special evening work session to pass out the cap-and-trade bill, HB 2020. After two hours of public testimony and debate, the committee passed HB 2020 on a party line vote with all republicans voting ‘NO.’ Republican committee members supported amendments to remove the emergency clause (and allow Oregonians to vote the bill up or down), but the amendment was rejected.

    At the same hearing, legislators passed  SB 1051 (introduced by Sen. Lee Beyer), which refunds any cost increases due to cap-and-trade for off-road fuels used in agriculture. Sen. Beyer’s bill is an effort to mitigate some of the fuel price increases that farmers will face under HB 2020 – now estimated at $0.22 per gallon in 2021.

    Even though HB 2020 passed out of the subcommittee on Wednesday,  passage of the bill is not a done deal. Early projections indicate that HB 2020 would raise $1.3 billion in new taxes in 2021-2023, and approximately 75% of the impact is borne by the transportation sector. A broad coalition of business representatives – including OSCC – has been working hard on a solution that protects businesses and ratepayers as well as the transportation sector. These efforts (-102 amendment) would protect local businesses and consumers from the negative impacts of cap-and-trade and give the Legislature time to sort out numerous constitutional challenges before cap-and-trade is fully implemented. The amendments are just now getting traction, but this bill is being fast-tracked. Now is the time to weigh in on the more damaging components of the bill and ask instead that the legislature adopt the -102 amendment.

  • Diesel (HB 2007).  Negotiations are still in the works on HB 2007, the on-road diesel engine retrofit and replacement bill. If new amendments get traction, the bill is likely to move next week. The current version of the bill:
    • Limits 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.
    • Exempts:
      • F-Plates, farm tractors, and implements of husbandry
      • Log trucks
      • Low use of 5,000 miles or fewer in a year
      • Motor homes
  • Commercial Activity Tax – Technical Fixes (HB 3427). Senate Revenue Chair Mark Hass has been working on technical fixes to HB 3427, the commercial activity tax, which is a $2.8 billion tax increase on Oregon businesses with sales over $1 million. HB 2164 (the technical fix bill) and specifically the -1 amendments made several improvements to the bill, particularly for the insurance industry.However, the amendment also contained a not-so-subtle carve-out of the new gross receipts tax for a major Intel project (see Sections 7-13).
  • Community College Funding (HB 5024). The Higher Education Coordinating Commission budget appears to have approximately $645 million allocated to Oregon’s 17 community colleges. While this is a $50 million increase over current service levels, it is far short of the $647 million base budget plus $140 million to expand CTE and Student Success programs.
  • Paid Family Leave (HB 2005). Paid family and medical leave has dominated the workforce conversation this session. On Friday, Oregon Business and Industry entered into final negotiations with House leadership to pass HB 2005 this session and forestall a ballot measure. The draft policy under consideration is modeled loosely on Washington and includes:
    • 12-weeks paid family and medical leave annually
    • All employees are eligible after they’ve earned $1000
    • State-run insurance program, funded through payroll tax contributions
      • Premium collection begins in 2022
      • Employees can begin to take leave in 2023
    • 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

We anticipate the release of a final amendment by the end of the day on June 10 and will share to get local chamber feedback. We could see this bill move out of the House Rules Committee as early as June 11 if the amendment is written correctly and without technical errors.

What happened last week?

  • Lawsuit Damages (HB 2014). In a very rare occurrence, OSCC helped defeat HB 2014 on the Senate floor last week when the bill only received 14 votes (16 votes are needed for passage). HB 2014 would have repealed 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 opposed this legislation because it is a significant factor in driving up health care costs and general liability costs for employers.

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