Legislative Update: May 3, 2019 (HB 3427, SB 379, HB 2005)

Last night (May 2nd), the community of McMinnville was honored to have Representative Ron Noble in town for a Town-Hall style meeting to discuss important issues and pieces of legislation. He updated us with key bills that are moving at the capitol in Salem and offered great insight as to the climate and environment around legislation during this session. People had the opportunity to ask questions and gain information on bills that are of importance to the community.

The major issue that will be focused on this week is the Commercial Activity Tax. This is a new $2 billion Commercial Activity Tax (HB 3427). This bill will allocate the $2 billion for education funding. It has the following components:

–       A flat $250 tax on all business entities for sales under $1 million;

–       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 agricultural cooperative for any sales outside of Oregon;

–       An exemption for groceries (defined as those that qualify for ‘SNAP’).

This bill is the main focus of legislation right now. Oregon State Chamber of Commerce (OSCC) has taken the position to oppose, until other issues are focused on as well. This includes negotiation on some bills and the elimination of others. While this bill is penned as an economic development tax plan, it will impact every single business and individual not only within our community, but the state as well. Additionally, it will heavily affect the small business community. It has passed through the House in a 37-21 party-line vote and is currently in the Senate.

If you believe this bill will adversely affect your business, you have an opportunity to write to senators before they bring this to a vote. We all agree that education is important, and we want our small businesses to be able to continue operations. You can find a list of the Oregon State Senators here: https://www.oregonlegislature.gov/senate/Pages/SenatorsAll.aspx

Governor Brown unveiled her plan to halt the rise of PERS costs for Oregon schools by sweeping almost $700 million in reserves held by SAIF (State Accident Insurance Fund). SAIF believes it can contribute somewhere around $300 million in the next 7 years without impacting policyholder rates and dividends. This proposal also includes taking $400-500 million in kicker payments to pay down the K-12 PERS liability. The catch with taking the kicker would be that it requires a 2/3 vote by each chamber of the legislature. Another piece of the PERS reform proposed by the Governor is to institute pension contributions from public employees. The plan calls for active Tier 1 and 2 members of PERS – those hired before August 2003 and still working – to contribute 3 percent of their pay to an account that would help pay for their pension benefits. Employees’ first $20,000 in salary would be exempt from the contribution. Those hired after that date would contribute 1.5 percent of their pay after exempting the first $20,000 in salary.

The scope of this bill requires prevailing wages on private projects valued at $20 million or more in enterprise zones. Such a policy erodes one of Oregon’s last remaining economic development tools. This passed on the House floor very easily. All private projects in Enterprise Zones in excess of $20 million would require prevailing wages on all private projects.

This bill gives the Employment Department the authority to levy up to a 1% payroll tax on employers and a 1% income tax on employees to implement a 26-week per year paid family leave program. It would apply to all employers with at least one employee and raise $1.5 billion in new taxes every biennium. (Now looking like: 37% employer / 63% employee cost share).

The Senate Committee on Workforce had a work session on this bill, which would create major changes to Oregon’s harassment and discrimination statutes. New amendments to this bill removed the section that held those with and executive authority personally liable if they merely “should have known” about the harassment and failed to prevent it from occurring. This bill recently passed in the Senate and is now in the House for deliberation and work sessions.

While these are other major issues, much of the current legislation has been focused on the Commercial Activity Tax. Because of this, the bill has been in constant change while other bills have been put on hold.

USMCA – The New US-Mexico-Canada Agreement

The White House has issued industry-specific fact sheets and resources on the latest USMCA. Please go to this site https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-sheets/usmca-issue-specific-fact-sheets to learn more about the updates.

We will update you with more information as it becomes available!