We are now entering the homestretch of the 2018 session. Although the Constitutional end date to this session is Sunday March 11th, we would be very surprised if the session lasted past Monday, March 5th.
There is, quite simply, no compelling reason for the legislature to continue to be in session. There is no budget emergency or compelling issue that requires legislative work. Both House and Senate leadership are well aware of this, and both chambers are looking for closure.
In our view, the session could easily end over the coming weekend, but Monday is probably most likely. We think it’s clear that legislative leaders do not want to be in session during the Tuesday, March 6th candidate filing deadline. The pageantry associated with this day (along with the fundraising opportunities) would be lost if the legislature were in session.
Here are the major developments of Week 4:
1. We believe ‘Cap and Trade’ is now definitively dead. This is the first time we’ve felt comfortable making this statement since the session began. House leadership tried to revive the ‘Cap and Trade’ bill – House Bill 4001 – with amendments last week that would have completely punted all ‘Cap and Trade’ policy-making to the Oregon DEQ to start immediately. The amendment gambit was a disaster. Not only did the amendments harden opposition to the bill from opponents, but they also fractured the proponents. The interest groups who were promised money in the current legislation were no longer promised money in the amendments. There may yet be a half-baked effort to force a vote in the House on HB 4001, but the Senate is absolutely done with the issue
2. The Senate passed SB 1528 by a 16-13 margin. This tax bill contains one central provision that impacts pass-through local businesses – it disconnects from the 2017 federal ‘Tax Cuts and Jobs Act’ provision that allows a 20% off-the-top deduction from pass-through business income. This is a major denial of tax benefits that would otherwise be due to local pass-through business entities (S corps, LLC’s, etc). The state will net nearly $200 million per year with this denial of tax benefits to these businesses. It is expected that SB 1528 will easily pass the more progressive House. (Please note, SB 1528 only affects state tax filings, not federal tax filings).
In a related development, the previous version of SB 1528 which effectively repealed Oregon’s ‘small business tax cut’ for pass-through businesses was defeated. As of today, Oregon’s lower tax rates for Oregon pass-through businesses have survived the legislative onslaught.
3. A ‘Cleaner Air Oregon’ compromise bill – SB 1541 – continues to look promising. OSCC is tentatively supportive of the current version of the compromise bill which codifies more reasonable risk levels than the current version of the Cleaner Air Oregon rule. In exchange for these more reasonable benchmarks, industry will agree to pay for administration of the program. This issue will simply come down to one thing – whether House leadership will try and re-negotiate the deal. If they do, it will likely be unacceptable to business groups and will die. If the policy bill dies, DEQ will be denied additional funding for its rulemaking. OSCC will be closely monitoring this legislation.
4. Affordable Workforce Housing. House Bill 4007 is still very much alive. It proposes to raise the document recording fee from $20 to $60 to put more money into first time homebuyer incentives and tens of millions of dollars for affordable and workforce housing projects. There is now a compromise consensus around the $60 level. This bill is probably the best hope to advance workforce housing progress this session and the deal-making surrounding this bill is the linchpin around which the session will start to shut down. As indicated on the OSCC government affairs call, OSCC will potentially weigh in support of the legislation now that the $60 fee is agreed to.
5. As we pointed out last week, the progress of HJR 203 through the legislative process continues to amaze and baffle us. This legislation makes access to affordable health care a constitutional right enshrined in the Oregon Constitution. The budget and tax ramifications are enormous. The legal ambiguity surrounding the state’s new obligations under this measure are murky and potentially bankrupting. The legislation passed the House on a party-line 35-25 vote. It was widely expected that the Senate would be the more sober chamber and decline the opportunity to advance the measure. But as of right now, it appears the Senate is poised to approve the measure also. If it does, it will appear on the November 2018 general election ballot.
6. There continues to be no real employment law legislation of note except for a new data breach law that industry is now largely supporting. SB 1551 would impose some additional requirements on businesses that experience a security breach involving customer data, including a 45-day window in which to notify customers, but again, the new changes are largely supported by industry.
7. OSCC will be tracking truck idling legislation – SB 1509 – which allows local governments to regulate commercial truck idling near schools, daycare facilities or health care facilities. The bill further exempts trucks with model year 2008 clean diesel engines from all idling restrictions. The bill was a compromise which passed the Senate unanimously, but there are potential shenanigans in the House which could derail industry support. The legislation that would have further regulated diesel engines – HB 4003 – now appears dead.
8. Fiscal Reform. The Governor’s primary PERS push is going to be a bill which creates PERS ‘side accounts’ to help school districts be able to pre-pay their PERS liabilities. The bill is Senate Bill 1566. It is unknown at this point exactly where all the funding will come from to fund the side accounts in a meaningful way. Overall, it is a very modest proposal that could help ease the PERS crunch on school budgets on the margins. We are still expecting SB 1566 to advance.