The 2017 Legislative session began with two very important issues: a $1.8B deficit and the need for a transportation package. The legislature began with no strategy to solve the enormous deficit and faced partisanship potentially stalling any movement. The Senate fully committed to bipartisanship and, as evidenced, the largest problems faced at the beginning of session were settled by the end.
Regarding the deficit, the state gained an additional $400M in tax revenue, decreasing the deficit to $1.4B. It was further impacted by the passing of HB2391 solving the State’s Medicaid budget shortfall. The budget was ultimately balanced through additional reductions in programs, career and technical education and veteran’s services.
One of the highlights of the session was the passage of a seven-year $5B transportation bill. The bill raises taxes and fees to fund new roads, bridges and other infrastructure. The gas tax will increase by 4 cents as of January 1, 2018 and thereafter 2 cents each year of 2020, 2022 and 2024. Additionally, there will be a change to vehicle registration rates, requiring those with fuel efficient vehicles to pay higher fees. A 0.5% tax on the sale of new vehicles will pay for rebates to encourage the purchase of electric cars. The bill also has a 0.1% payroll tax to fund public transportation. The Newberg-Dundee Bypass was named specifically in the legislation, allotting $20M for highway design. A delegation from the McMinnville and Newberg Chambers of Commerce visited with legislators to request their help in keeping the bypass in the bill.
Here is a rundown of this year’s bills and the impact on business (highlighted bills passed and are now law):
- HB2060-A – Would have repealed the small business tax cut passed in 2013 by the legislature. It passed the House on party lines but failed in the Senate. The McMinnville Chamber, Oregon Chamber and many other organizations opposed this bill.
- HB2830 – This bill, orchestrated by Senator Mark Hass (D-Beaverton), would have replaced the current business tax structure with a gross receipts tax on all businesses with $3 million or more in Oregon sales. This bill died for lack of a 3/5 supermajority vote.
- HB2391 – Although this solved the State’s Medicaid budget shortfall of $900 million, it adds a tax of 1.5% on health insurance premiums for commercial health insurance policies. It is a tax on hospitals, medical providers and insurance premiums. The tax will raise nearly $600M and lower the budget deficit to approximately $500M. Representative Julie Parrish (R-District 37) is moving forward with a campaign to have a referendum on the ballot regarding some of the pieces of the hospital provider tax bill.
- HB2019 – The Corporate Tax disclosure bill would require public disclosure of tax liability for some companies utilizing tax credits. Business argued that there is no policy justification to require public disclosure and would not provide any useful data not currently available elsewhere. Thankfully it did not leave the House but may be back as a ballot measure or a bill next session.
- SB828 – This bill ended quite differently than its first iteration. Predictive scheduling impacts employers with more than 500 employees in retail, food service and hospitality. The business must give employees seven-day advance notice on work schedules and changes. The compromise for business was the exclusion of local jurisdictions from passing their own scheduling mandates.
- SB984 – would fix BOLI’s interpretation of overtime. It was killed in the House.
- HB3458 – This is the House response to the BOLI overtime fix. It gave some relief on the most recent BOLI overtime interpretation. Manufacturing employers will pay the greater of daily or weekly overtime, however the work week is capped at 60 hours. Food processing industry businesses are allowed to exceed the 60-hour work week for no more than 21 weeks per year.
- HB3087 – Paid Family Leave was a bill of concern at the opening of the session. The bill would have established a 0.5% payroll tax on employers and 0.5% tax on employees. House and Senate Republicans opposed this, effectively killing it. The bill will likely return in the 2018 session.
- HB2005 – Wage Equity prevents employers from discriminating in payment of wages based on Oregon’s protected classes. After a few changes, the bill passed both House and Senate.
- SB301 – Marijuana in the workplace would have made it unlawful to discriminate against marijuana users of a ‘lawful substance’. It was killed in the Senate after passing the Senate Judiciary Committee.
- HB2856 – Union organizing bill would have created a grant program for private worker advocate organizations to use Wage Security Funds to inform workers of their rights at their workplace. It would have created community outreach and labor education program within BOLI to promote awareness of employee rights. The bill died.
- HB2269 – The Cleaner Air Oregon bill would increase DEQ fees (Title V and ACDP) to fund the new Cleaner Air Oregon regulations. The bill died.
- SB1008 – The Clean Diesel Regulation bill. The bill will use monies from the Volkswagen Environmental Mitigation Trust Agreement to award grants for reducing emissions from school buses powered by diesel. Originally the bill would have placed mandates on both on road and off-road diesel engines, this was later stripped out of the bill.
- HB 2135; HB 2468; SB 557; SB 748; HB 3023; HB 2478; HB 3307 – Cap and Trade bills are on hold and carbon tax bills were all defeated as the legislature focused on passing a transportation bill.
- HB2064; HB2768; HB2744 – These bills were aimed at allowing local government the ability to spend TRT money on tourism related projects not related directly to tourism promotion. None of these bills were able to move forward and are effectively dead.
- SB1067 – Cost containment was a topic of much discussion this year. This bill would have eliminated the automatic 2% increase for services and supplies in the state budget, slow the process of filling vacant state government jobs and eliminate any positions open for over six months. The bill had strong opposition from business due to the limitation on health care reimbursements to hospitals for services provided to public employees. It moves $200M in costs to private employers on top of the $145M health insurance premium tax that was passed in HB2391. The bill passed.
- SB1068; SB559; SB560; SB913 – SB1068 Pers Reform bill was an attempt to decrease the unfunded liability of the State Pension Program. It would have directed 2% of employee contributions towards the liability and would have a $400m in cost savings in the biennium. It did not pass because Democrats would agree to support only if Republicans agreed to a business tax. Since neither would budge, the bill was stopped.
- HB2087; SB737; SB478 – These bills would have eliminated the cap on non-economic damages in civil lawsuits. It was killed by the Senate President in the final days of the session.