2017 Legislative Report – Week 13



There are very few real bills of consequence to OSCC members that are still under consideration.

The biggest issues still outstanding are (1) business taxes, (2) transportation funding, (3) predictive scheduling legislation, and (4) increased DEQ fees that would help implement a new regulatory scheme – ‘Cleaner Air Oregon’ – that OSCC is opposing.

In addition, there are a handful of opportunities to do a few good things for business … the chance to overturn a recent BOLI interpretation that forces double overtime payments, the opportunity to execute a rational approach the regulation of diesel engines, and opportunity to solve the state’s $1.8 billion budget hole with meaningful cost reductions that would put state government on a path to affordability and sustainability.

Here’s what we know from the past week:

Governor Brown unveiled her own cost containment proposal. This was the biggest story of the past week. She proposed selling off or borrowing against state assets to buy down the PERS unfunded liability. She also proposed ramping up debt collection from taxpayers and vendors as well as taking a harder line in contract negotiations with government employee unions.

Governor Brown has already announced a 2-month hiring freeze as the state closes out its 2-year budget cycle on June 30th.

In addition to her recommendations, Governor Brown also proposed leading an expert panel on state financial matters that would study, among other things, various PERS reform proposals. It is unknown how much, if anything, the Governor’s proposals would save.

The Governor’s announcement was widely viewed as underwhelming, and another exercise in trying to pare back state spending without having to make a tough decision.

The Governor’s announcement came on the heels of the first presentation by the legislative “Cost Containment” workgroup, which was also underwhelming. Very few specifics emerged. A lot of academic discussion on PERS reform and curtailing state hiring, but most of those ideas seemed to be met with great resistance.

It will be interesting to see if anything of substance emerges as a way to curb the escalating costs of state government. Time is starting to slip away and the proposals to date have lacked specificity or substance.

Here are the bills we are most paying attention to for OSCC members:

Labor:
SB 301: would effectively preclude employers from enforcing zero tolerance drug policies. Although the bill passed out of Senate Judiciary on a 3-2 party-line vote, OSCC immediately went to work to defeat the bill. Although we have been assured the bill will be sent back to committee to die, we haven’t seen confirmation.

SB 828: implements predictive scheduling for food service, retail and hospitality businesses. OSCC is seeking legal guidance on how the bill would apply to OSCC businesses that have ancillary retail or food service positions. SB 828 will be the focus of a lot of pressure from union groups. They are coalescing to try and pass the bill as it is their last major opportunity to pass ‘pro-worker’ legislation.

HB 2005: wage equity – would mandate wage equity among all protected classes for similar jobs. The problem with the bill for business is that it is broadly applied to all Oregon protected classes, that it includes punitive damages, and that each paycheck for which a discrimination is claimed represents its own claim for damages. We believe this bill will spur considerable class action claims.

HB 3087: paid family leave – is still alive in the House Revenue Committee. The bill implements a .5% payroll tax on employers to fund the $800 million/year program that grants 12 weeks of paid leave. We don’t believe this bill will advance any further.

SB 1040: would implement local union security agreements and prevent local right to work measures. The bill passed the Senate and is now in the House.

SB 984: fixes BOLI’s bad interpretation on daily/weekly overtime pay passed the Senate unanimously. Good bill, but the unions may negotiate a heavy price for this bill in the House.

Environmental Regulation:
One key ‘cap and trade’ bill is now dead – SB 557. The other, HB 2135, was kept alive, barely. OSCC will continue to keep watch on HB 2135 although we have every reason to believe the bill will die this session.

SB 1008: the costly mandate for diesel engine retrofits and replacements, was stripped down to require the state to take inventory of diesel engines operating in Oregon with no additional regulation. This is a reasonable approach that OSCC can support. But we are skeptical that SB 1008 will move forward in this form.

The big bill here – HB 2269 – which would increase Title V and ACDP fees to fund the new DEQ ‘Cleaner Air Oregon’ regulatory scheme, was voted out of committee on a 5-4 party-line vote and sent to the Ways & Means Committee. This will likely be the big environmental fight of the session. OSCC will keep members apprised.

HB 2236 requires the DEQ to conduct a study and develop recommendations relating to emissions of air contaminants from industrial sources. We are keeping a watch on this dormant bill because it could be used to do some bad things.

Liability:
SB 737: would eliminate the $500k cap on non-economic damages in civil lawsuits (product liability, negligence, personal injury, etc.), is the trial lawyers top priority for 2017. We defeated it on the Senate floor early last week. The bill was sent back to committee, where we expect it will continue to get attention until the final gavel drops.

Taxes & Budget:
Senate Revenue Chair Mark Hass (D-Beaverton) has said that he will unveil his new corporate tax proposal this week. Despite all the pushback from business, Hass has not abandoned his push for a gross receipts tax. OSCC anticipates that Hass will propose a ‘Commercial Activities Tax’ somewhere in the neighborhood of 0.5% with a corresponding elimination of corporate income taxes.

We will inform OSCC members of the specifics of Hass’ plan when it is unveiled this week.

But we also want to caution that the odds of passage for any such tax proposal are very long. For starters, there hasn’t been a serious effort yet to curb state spending that business and Republicans would require for any new revenue.

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