Last week was a classic good news, bad news week for our businesses.
The good news? The legislative leadership scrapped plans to pursue a major tax increase. At issue was House Bill 2830, which for weeks looked like it would be passed out of committee as a new gross receipts tax on businesses with $3 million or more in Oregon sales. HB 2830 will not advance.
The bad news? The House totally switched gears and re-focused on taxing small business. Upon the failure of HB 2830, the House abruptly took up consideration of House Bill 2060 which eliminated the ‘small business tax cut’ passed by the 2013 legislature. The House took a particularly egregious tact by cancelling the tax cut for all employers with fewer than 10 employees, raising the ire of small business groups including OSCC. HB 2060 is a $200 million tax increase on small business, and it squeaked through in a special Friday session with a 31-28 vote.
We believe at this time that the Senate is very leery of passing HB 2060 due to the optics of raising taxes specifically on the smallest of businesses.
As of now, the legislature really does not need any additional tax money to balance the state budget. The small business tax increase was a tactic of the progressive House leadership to appeal to its progressive support base.
There is absolutely no reason why the legislature cannot produce a balanced budget and adjourn by the July 10th deadline.
BOLI Overtime Fix: The House Rules Committee passed HB 3458 late last week. The bill caps the work week at 55 hours for manufacturers and food processors. Manufacturers must ask for permission from employees to work an additional 5 hours per week (to 60 hours per week).
Furthermore, manufacturers are allowed up to 17 weeks of “undue hardship” that would allow employees to work in excess of 60 hours per week. But again, it would require employee consent.
OSCC very much supports the underlying bill (formerly SB 984) which fixes a negative BOLI interpretation requiring manufacturers to pay both daily and weekly overtime, which results in double overtime payments. But with HB 3458, the price for this “fix” is very high.
Predictive Scheduling: SB 828 is now moving forward with bipartisan support due to finalized negotiations between business and labor. The bill has been watered down to only apply to food service, retail and hospitality businesses with 500 or more employees. Business groups gain a statewide preemption on all local scheduling ordinances. It is OSCC’s belief that the negotiated bill is a ‘best case’ scenario for Oregon businesses.
Cleaner Air Oregon: HB 2269 would increase Title V and ACDP fees to fund the new DEQ ‘Cleaner Air Oregon’ regulatory scheme. We do have the votes to defeat this legislation at present as the current regulations being proposed by DEQ will kill off many local employers who won’t be able to comply with the new emissions standards. It appears that we will defeat the bill.
Diesel engine regulations: We had long felt that SB 1008 was poised to move in some form this year, but the bill will be used primarily to give the state permission to receive Volkswagen settlement funds.
A final note here… do not be surprised if we see an 11th hour environmental bill emerge that is passed to assuage an increasingly restless environmental activist community which is turning critical toward majority Democrats who have not delivered any substantive environmental ‘wins’ for their base. In particular, OSCC is paying attention to HB 2020, which would put the Department of Energy in charge of ‘climate’ policy.
Liability Costs / Damage Awards: The trial lawyers’ third attempt at trying to increase damage awards for negligence and personal injury lawsuits is faltering. Having been defeated with SB 487, then SB 737, the trial lawyers stuffed their amendments into HB 2807 and passed the bill out of the Senate Judiciary Committee on a partisan vote. HB 2807 increases non-economic damage limits from $500,000 to $10 million. We believe that we have the votes to defeat this bill for a third time.
The Oregon House narrowly approved HB 2060-A which eliminates the ‘small business tax cut’ for employers with fewer than 10 employees. The tax cuts were passed by the 2013 legislature and went into effect for the first time in 2015. The bill is effectively a $200 million tax increase on small business – a very curious target for a tax-hungry House leadership.
Don’t be surprised if another tax bill pops up in the waning days. In particular, OSCC is paying attention to legislation that would disallow the deduction of the wages of highly compensated management employees and owners.
State Government Cost Reductions:
PERS Reform: We believe PERS reform is dead now that the legislative leadership has abandoned plans to pass a comprehensive tax increase.
OSCC believes that a transportation funding package – House Bill 2017 – is now a realistic possibility if Republicans are able to secure cost control on Oregon’s low carbon fuel standard. The plan will likely be scaled back from the 10 year, $8 billion plan that was unveiled earlier this month.
Be watching here for details.