Employers Fight to Protect UI Benefits against Misuse
What happened: On Feb. 6, representatives of several business groups testified before the Senate Labor and Business Committee in opposition to SB 916, which would extend unemployment insurance benefits to striking workers (see video here). The hearing on the bill will continue on Tuesday, Feb. 11, when OBI will testify. OBI has submitted written testimony, which you can read here.
The problem: The unemployment insurance system is built to protect people who lose work involuntarily. SB 916 would extend those benefits to people who choose to walk off the job to go on strike. This would increase strain on the state’s unemployment insurance system, which is funded by an employer-paid tax that is the nation’s third highest, according to the most recent data. It also would reduce the buying power of Oregonians’ tax dollars, as agencies, which aren’t taxed, must pay for UI benefits on a dollar-for-dollar basis, thus redirecting taxpayer funds to support public employee strikes. Finally, making unemployment benefits available to striking workers would provide an incentive to lengthen strikes, extending the disruption of services and increasing pressure on struggling employers.
What other states do: Only New York and New Jersey make unemployment benefits available for striking workers. Coincidentally, those are the only states deemed less business-friendly than Oregon in CNBC’s 2024 America’s Top States for Business rankings.
The consequences: Passing SB 916 would make Oregon less appealing for business investment, which is needed to create jobs and generate revenue needed by state and local governments.
What’s next: The hearing on SB 916 will resume on Tuesday, Feb. 11, when OBI will testify.
OBI Urges Lawmakers to Index Tax Thresholds to Inflation
What happened: On Feb. 4, OBI Policy Director and Counsel Derek Sangston testified before the House Committee on Revenue in support of HB 2083, which contemplates indexing to inflation the threshold at which the highest personal income tax brackets and corporate excise tax brackets apply. Go here to watch Derek’s testimony.
The underlying problem: Because Oregon does not index these tax thresholds to inflation, taxpayers experience “bracket creep,” in which the amount of income subject to taxation grows without any corresponding increase in purchasing power or, in the case of businesses, market share.
What other states are doing: Of the 43 states that levy an income tax, 23 have joined the federal government by fully indexing tax brackets to inflation. Middle-income Oregonians are particularly vulnerable to “bracket creep” because the state’s top bracket kicks in at only $125,000 for single filers. California’s, by contrast, kicks in at $1 million.
Why it matters: “Bracket creep” reduces the buying power of middle-income people in Oregon, where the cost of living is already high. Oregon’s current top personal income tax rate, 9.9%, went into effect in 2012 and applies to income over $125,000 for single filers. That threshold has not changed even though the buying power of $125,000 in 2012 is the equivalent of nearly $171,000 in 2024. Bracket creep also weighs on businesses, providing an incentive to invest in other states rather than in Oregon. Business investment creates jobs and generates the tax revenue needed by state and local governments.
Oregon Competitiveness Agenda: Indexing tax thresholds to inflation is a component of OBI’s Oregon Competitiveness Agenda, which recommends dozens of policies to improve the state’s competitiveness. Read more here.
Developer: PLA Order Will Boost Affordable Project Cost 37%
What happened: On Dec. 18, Gov. Kotek issued an executive order that requires the use of project labor agreements (PLAs) on construction projects funded by the state. In effect, the order requires the use of collective bargaining agreements for most state-funded projects for which on-site labor costs will make up at least 15% of total costs – in other words, everything. PLAs, the executive order said, will ensure that a project “will have the highest standards of quality and efficiency at the lowest responsible cost … (emphasis added).”
Actual cost impacts: On Feb. 3, TMT Development President and CEO Vanessa Sturgeon told the House Committee on Economic Development, Small Business and Trade about the effect the PLA requirement will have on an affordable multiunit project her company is building. TMT, she said, recently calculated the per-square-foot cost of units before the governor’s executive order and the cost after the executive order. The pre-EO cost was $273 per square foot. The post-EO cost is $373 per square foot, a 37% increase. Go here to hear her testimony.
Why this matters: The governor’s executive order will substantially increase the cost of state-funded projects, eroding the buying power of tax dollars for, among other things, affordable housing. Solving Oregon’s affordable housing crisis is one of the governor’s top priorities.
Does it apply? The governor’s office has added an FAQ to its executive order claiming, among other things, that it does not apply to “(a)ffordable housing projects that are owned by non-state entities.” However, the order itself contains no such exemption. Meanwhile, TMT’s estimate challenges the order’s claim that it ensures that the projects to which it does apply – which currently include affordable housing – will be built at “the lowest responsible cost.”
What’s next: OBI will continue to seek actual, legal clarification on the order and stand firm against this and other policies that will drive up the cost of construction.
Oregon Test Results Point to an Accountability Problem
Declining test scores: Scores for Oregon students on standardized tests continue to be among the nation’s lowest. On Jan. 29, the National Center for Education Statistics released results for the 2024 National Assessment of Educational Progress (NAEP), a biennial set of math and reading exams administered to students in grades four and eight. Oregon students scored lower relative to their peers in other states in three of the four exams than they did in 2022. Only in eighth-grade reading did Oregon students gain.
Oregon’s rankings: Oregon fourth-grade scores ranked 48th in math and 46th in reading. Eighth-grade scores ranked 38th in math and 31st in reading. In 2022, Oregon’s fourth-grade scores ranked 44th in math and 45th in reading. Eighth-grade scores in 2022 ranked 34th in math and 36th in reading.
The Urban Institute recalculates NAEP scores for each state to account for student demographics, including poverty, race and native language (read about the methodology in The New York Times here). The exercise places Oregon last in both fourth-grade exams, 49th in eighth-grade math and 47th in eighth-grade reading.
Spending-performance disconnect: As the graph above shows, per-student spending in Oregon has increased substantially in recent years even as NAEP scores have dropped. The graphic ends with 2022, but the story in 2024 would be the same. Oregon’s fourth grade math average rose by one point in 2024, to 229. According to the National Education Association, meanwhile, Oregon’s estimated per-student spending for the 2023-24 school year rose to $16,507, or 22nd nationally. From 2023 to 2024, Oregon’s spending per student increased by 4.65%, the eighth-highest rate in the nation.
Why it matters: Oregonians deserve to see better outcomes for the billions of dollars they spend every year on public education. These include businesses, which pay a premium for education through the corporate activity tax and through the relinquished corporate kicker. Any business will tell you that customers will walk, if they can, when prices go up and service levels go down.
The takeaway: Oregon’s education system is not performing well, and identifying the source of the problem is necessary to address it. As the numbers show, Oregon’s problem isn’t funding. Rather, Oregon’s public education system does not make effective use of the money available to it. Oregon’s employers care deeply about education outcomes. Not only are they parents themselves, but their employees are parents, and businesses need a trained and ready workforce. To boot, Oregon’s employers pay for a significant portion of K-12 spending through direct income taxes, personal income taxes and the corporate activity tax.
Read more: Understanding how Oregon funds public schools is difficult. To learn more, see Oregon School Funding: Sources and Distribution, a 2024 report provided by the OBI Research and Education Foundation.
Legislative and Rulemaking Updates
Recycling Rules: The Department of Environmental Quality provided some updates about the Plastic Pollution and Recycling Modernization Act, including important deadlines. The first major deadline is a reporting requirement due March 31. As a reminder, these are broad policies creating several compliance obligations for producers and covered products. If you don’t know whether this applies to you or your vendors or suppliers, double check. Click here to determine if a product is covered and who is considered the “producer” for that product.
Permitting Bill: Team OBI’s request of Gov. Kotek to introduce permitting executive orders like those issued recently by Washington Gov. Bob Ferguson caught the attention of legislators. Now, Rep. Ed Diehl, R-Salem, is drafting legislation that would replicate Ferguson’s permitting and housing executive orders, with cautious optimism that there will be bipartisan interest in some Oregon legislative version of these sensible efforts.
Rulemaking Modernization: Two of OBI’s key proposals to modernize the rulemaking process are scheduled for hearings on Wednesday, Feb. 12. HB 2692 proposes numerous changes to improve transparency, fairness and agency accountability. HB 3382 would centralize rulemaking information in one location and require more information to be easily accessible by the public. These bills are essential first steps in addressing regulatory burdens that are hindering Oregon’s competitiveness.
Hydrogen Bill: On Feb. 10, the Senate Committee on Energy and Environment will hold a hearing on SB 685, which would create burdensome and unnecessary provisions in the development of hydrogen energy. Hydrogen energy is key to meeting Oregon’s emissions-reduction goals and complying with regulations like the Climate Protection Program. Businesses are eager to adopt technology to mitigate greenhouse gas reductions and meet new demands, and to that end research and innovation should be incentivized, not discouraged. Natural gas utilities are investing in hydrogen blending operations to reduce carbon emissions, and additional regulations would reduce the use of hydrogen energy sources and increase customer costs. OBI will testify in opposition to the bill.
Liability Expansions: Continuing the trend of heightened regulation and liability for health care providers and insurers, HB 3234 would subject health insurers to civil liability in suits brought by the attorney general for any activity that “reduces timely consumer access to health care by an act or practice that constitutes a monopoly, a business combination in restraint of trade or commerce or a substantial reduction or elimination of competition or competitors within a region or market of this state, or that otherwise constitutes an unlawful trade practice.” The breadth of what could be included in such an action is alarming. OBI will testify against the bill to prevent the expansion of liability for Oregon businesses.
Container Port: OBI testified in favor of HB 3050, which would establish a financing program within Business Oregon to invest in container port infrastructure. This is immediately needed for Terminal 6 at the Port of Portland and, in the long term, would be of potential value to both Morrow and Coos Bay. Container facilities are critical for Oregon’s importing and exporting businesses, and a functioning, well-operated T6 is key. Oregon businesses have suffered from over a decade of uncertainty at T6 driven by a multitude of factors. Business Oregon introduced the bill. Funding was included in the governor’s recommended budget, but a legislative budget will not be settled until later in the session.
Microgrid Bill: OBI testified Feb. 6 in opposition to three microgrid bills, HB 2064, HB 2065 and HB 2066, which blur the lines between regulated utilities “microgrids.” Microgrids are local electricity networks that can operate independently or connect to the main power grid and supplement existing power sources. While OBI does not oppose microgrids generally, the three bills need much more work to establish clear and appropriate roles between microgrids and regulated electric utilities to ensure appropriate safety protections, regulatory oversight, cost shift protections and other standards that apply to utilities to protect the public.
Parking Requirement: HB 2961 would require that 50% of all parking spaces have electric vehicle charging available in all new commercial construction and multifamily housing (defined as housing developments with more than five units). This obviously would increase development costs and intensify Oregon’s housing crisis. OBI testified in opposition and is pursuing possible amendments should the bill gain traction.
Washer Ban: On Feb. 12, the Senate Committee on Energy and Environment will hold a public hearing on SB 526, which would eventually require clothes washers that are sold in Oregon to include microfiber filtration systems. While the bill would not become operative until 2030, industry would almost certainly struggle to comply with this first-in-the-nation requirement. In addition to questions about the efficacy of these systems, Oregon simply is not a big enough market to spur economy-wide changes to a product like this. The supply chains on which Oregon relies are national, not local, and packaging a machine with an uninstalled filter would add even more complication in distribution, sale and – of course – consumer cost and use. The bill acknowledges these filters can cause severe damage to clothes and washing machines, as it requires special labeling provisions informing consumers of special maintenance requirements to mitigate such damage. SB 526 would reduce the number of washing machines sold in Oregon, increase prices for those that are, and impose extreme burdens on Oregonians.
Notable News
Governor’s PLA Order: Gov. Tina Kotek has affirmed her commitment to her union-friendly executive order that sparked widespread opposition from construction trade groups and Republican lawmakers. Now, those opponents are weighing their options to fight back while Democratic lawmakers, who hold large majorities in both legislative chambers, are mostly staying silent (The Oregonian).
School Spending vs. Results: Students in Oregon saw their reading and math scores decline over a decade when the state’s spending on schools rose by 80%, an analysis by Georgetown University shows (Willamette Week).
Homeless Enforcement Pause: A Josephine County judge on Feb. 3 ordered the city of Grants Pass to halt enforcement actions against homeless campers for two weeks, pending a deeper review of a legal challenge (The Oregonian).
Bend Homelessness: Law enforcement officers with the U.S. Forest Service rolled through China Hat Road in the Deschutes National Forest southeast of Bend recently, visiting RVs, trailers and cars, letting people know of the agency’s plans to close the area in a little more than three months. The plan — a 34,000 acre vegetation management program to mitigate wildfire — will result in closure and removal of one of the region’s largest homeless camps, the latest of several recent actions by local governments to address growing homelessness on public lands outside of Bend and Redmond (The Bulletin).
Washington County Shoplifting: The Washington County District Attorney’s office is sending a message to crooks: “Shoplifting is prosecuted in Washington County” (KGW).
Portland Labor Dispute: The city of Portland says it has reached tentative agreements with two public employee unions whose members had threatened to walk off their jobs, averting a pair of potential labor strikes and widespread disruptions to municipal services. It required some costly concessions to get a deal, which is all but certain to further compound the city’s mounting budget shortfall (The Oregonian).
Zenith Decision: The city of Portland has approved a land-use credential for Zenith Energy – a key step in the fuel company’s continued operations along the Willamette River (The Oregonian).
Intel and China: Intel could be collateral damage in the Trump administration’s nascent trade war, with the Financial Times reporting that China is contemplating an antitrust investigation of the chipmaker (The Oregonian).
Portland Sports Facility: The Portland Thorns and the city’s incoming WNBA team will share a $150 million state-of-the-art practice facility, slated to open in 2026 (Portland Business Journal).
Energy Demand: Over the next decade, Oregon’s need for clean energy is expected to grow exponentially thanks to rising demand for electricity from data centers, heat pumps, electric cars and state climate mandates (The Oregonian).
Check Out OBI’s Member Benefits
OBI offers members a range of programs that can save money or help small businesses offer benefits normally available only to much larger companies. Benefit programs include:
- HealthChoice: Helps businesses with fewer than 100 employees offer comprehensive health-care benefits through our partnership with Regence BlueCross BlueShield of Oregon.
- CompSAFE: Helps eligible companies enjoy workers’ compensation discounts through SAIF Corporation.
- Fuel Program: Helps members save fuel costs through our partnership with Ed Staub & Sons.
- ODP Business Solutions: Helps OBI members save money on office furniture, supplies and other services.
- LegalPLUS: OBI members receive 15 minutes of free legal consulting per month from Innova Legal Advisors.
Go here to learn about all of OBI’s member benefits.