The next quarterly revenue forecast comes out Feb. 22. This forecast will drive budget and resource conversations for the next several months, including conversations around tax credits. OBI will issue a summary report on the forecast after its release.
A big step forward occurred last week, when an initial legislative concept was released during a meeting of the Joint Semiconductor Committee. Given that OBI has been working with a large semiconductor stakeholder group for more than a year, we are pleased to have a concept for review. While some aspects of the initial concept are good, this package falls short of what is needed to make Oregon competitive for CHIPS Act grants. It is good that the proposal includes new executive authorities for strategic land acquisition as well as a fund for forgivable loans and assistance for smaller Oregon businesses in making grant applications. It is a good first step, and the Legislature should advance these components. But it won’t get the job done. To make Oregon competitive, there must be tax credits, industrial site development support and more. You can see the concept here.
R&D Tax Credit
OBI testified last week on SB 55. Oregon is one of only 12 states without an R&D credit and the only state without the credit that is also seriously attempting to position itself for CHIPS Act grants. This is a competitive disadvantage. It is important to note that OBI’s support of this tax credit—and the language in SB 55—is not limited to the semiconductor industry. This is important for all Oregon manufacturers and innovators. We remain hopeful that an R&D tax credit will become law this session.
Competitiveness Task Force
Another of OBI’s Growth & Innovation Roadmap concepts will have a hearing this week. SB 45 creates a tax competitiveness task force to undertake a comprehensive analysis of Oregon’s position compared to other states, and then provide policy recommendations based on that analysis. The task force would build upon OBI’s work to better understand Oregon’s tax burden, which has gained quite a bit of traction in recent months, and hopefully result in policy recommendations that will grow Oregon’s economy.
Two of OBI’s regulatory reform bills received a public hearing in the Senate Committee on Rules last week. There was significant interest from committee members on SB 38 in how the goalposts shift for permit applicants when new rules are adopted after permit applications are submitted. We are following up with more information on the permitting process to demonstrate the importance of this bill. We also explained the need for SB 42, which would enhance fiscal impact statements and require third party verification of these economic analyses in certain circumstances. The committee expressed concern about how to fund more accurate fiscal impact statements when DEQ already has difficulty funding core programs. Read a synopsis of the legislation and testimony here.
Improving access to child care is important to OBI and its members, and it has been described as a bicameral and bipartisan priority this session. This month, SB 599A passed the Senate with bipartisan support. The bill would help reduce barriers to providing child care in rental properties, with certain protections remaining for landlords. In no way is this small step, which must still pass the House, a panacea, but it is an example of one of the many barriers to care that can be reduced. OBI supports such efforts.
Last week, OBI opposed SB 159, which would give preference to non-profit organizations when competing for certain government contracts, even if the non-profits’ costs were 10% higher than other providers. OBI opposed this bill because it would create an uneven playing field simply based on an organization’s tax status. Current law allows for some preferential treatment in public contracting, but those are meant to encourage behaviors like investment in the local economy or reduction of waste. This preference would only serve to encourage one tax filing status over others. It is worth noting in this context that only 18% of small businesses surveyed by OBI believe lawmakers care about their success.
The Joint Committee on Transportation has yet to turn its attention to funding the Interstate 5 bridge replacement project, although OBI continues to meet with key legislators about this effort. No specific proposals have been offered by ODOT at this point.
The House Committee on Climate, Energy and Environment held a hearing last week on HB 2396, which targets indirect sources of emissions. Sharla Moffett testified in opposition. A version of this policy has failed before in the Legislature and has been rejected by the Department of Environmental Quality as well. An amendment was introduced that demonstrates intent to regulate construction and establish emissions standards for mobile sources. With the exception of California, state emission standards are preempted by the federal Clean Air Act. Committee members from both sides of the aisle expressed concern with a bill that violate the federal Clean Air Act. We understand that DEQ has no interest in creating yet another regulatory program to implement and we’re receiving strong signals that the bill will not move forward.
Universal Health Care
SB 704, which would establish a universal health care (UHC) governing board, was heard in the Senate Health Care Committee on Feb. 13 and 15. You can read OBI’s comments in opposition here. The establishment of a governing board for UHC is woefully premature. The state has not established a move to universal, single-payer coverage; only a small percentage of Oregonians lack coverage; the cost estimates from the UHC task force were extraordinary; and there are myriad unanswered questions. A work session vote is scheduled for Feb. 22. The bill has a subsequent committee referral to the Joint Ways & Means Committee, so if it passes on Feb. 22, as it is expected to, it will go to that committee rather than to the Senate floor.
HB 3158 received a public hearing last week. The bill would impose six new taxes, including a 3% retail sales tax on tires, a privilege tax for businesses that provide nonroad diesel equipment, a tax on the use of nonroad diesel equipment purchased out of state, a tax on the rental of nonroad diesel equipment, a privilege tax on heavy-duty vehicles, and a license tax on dyed diesel. The bill demonstrates a fundamental lack of understanding of how many businesses operate and the equipment necessary to accomplish critical work. OBI provided strong testimony is opposition to the bill, noting, among other things, that the new taxes would lack any clear value nexus for Oregon consumers, families or small businesses. At this time, we do not see a path for this bill’s passage.
Greenhouse Gas Codification
On Feb. 21, the Senate Committee on Energy and Environment will hear SB 522, which would codify former Gov. Kate Brown’s greenhouse gas reduction goals of 45% by 2035 and 80% by 2050. The bill also would rename and expand membership of the Oregon Global Warming Commission in a way that would tip the balance significantly in favor of more stringent climate policy. OBI opposes SB 522 and will testify raising concerns about the expansion of the commission and the bill’s fiscal impact.
On Feb. 22, the House Committee on Business and Labor will hear a bill that would increase insurance rates for almost every driver in Oregon. HB 2920 would prohibit insurers from using credit score, education, employment status and non-fault accident records to determine a driver’s auto insurance rates. OBI opposes this bill because auto insurance rates have significantly increased in every place where this language has passed. It would prohibit insurers from considering information correlated to safe driving.
Labor Agreement Threshold
On Feb. 23, the Senate Committee on Labor and Business will hear SB 850, which would require project labor agreements on any public contract for more than $750,000. OBI opposes this bill because the low threshold would require contractors to abide by extremely burdensome requirements for virtually any public contract and put open-shop contractors at a significant disadvantage.
Right to Repair
SB 542 is a so-called “right to repair” bill, and OBI testified against it in a hearing on Feb. 14. One of OBI’s policy principles calls for the protection of intellectual property rights, and SB 542 would not protect those rights for original equipment manufacturers (OEMs). Additionally, the current proposal would create broad new legal rights of action for individuals to take against OEMs. This would have a chilling effect on manufacturers and Oregon’s efforts to position itself as a research and innovation hub.