2026 Legislative Session Begins, Moves Quickly
What happened: The 2026 short legislative session began on Feb. 2 and has progressed rapidly. The first significant session deadline passes today. It is the deadline by which bills must be placed on a committee agenda or die. This deadline does not apply to certain committees, including joint committees and the rules and revenue committees in both chambers. The session must conclude no later than March 8.
Key bill status: OBI has said consistently that this session is an important opportunity for the Legislature and the governor to take meaningful steps to improve Oregon’s economy and its competitiveness. The legislative and rulemaking section below provides a more comprehensive list of the most important bills OBI is following. Below, however, are a handful of bills that undermine the state’s competitiveness:
- SB 1506: OBI does not oppose this bill’s policy goal, which would increase funding for the Bureau of Labor and Industries. The problem is the process. As a revenue-raising bill, it should originate in the House and require three-fifths majorities of both chambers to pass. However, its journey has begun in the Senate as an attempt to circumvent supermajority voting requirements. OBI believes this is unconstitutional. There is a House companion, HB 4027, but there seems to be a plan to move it forward without those required majority thresholds.
- SB 1507: An amendment to this bill would partially disconnect Oregon from the federal tax code, preventing Oregonians from fully realizing the benefits of H.R. 1. Proposed changes affect bonus depreciation, small business stock treatment and the deductibility of car loan payments.
- SB 1541: This so-called “polluter-pays” bill would impose strict liability on businesses that extracted or refined fossil fuels resulting in “climate damages” between 1995 and 2024. The bill would increase fuel costs substantially.
- HB 4089: This bill would impose criminal penalties for wage claims, including prison time, for employers found to have underpaid employees and independent contractors. Notably, it applies even to wage disputes involving meal and rest periods, which employees often curtail voluntarily.
Strong Revenue Forecast Undermines Case for Tax Hikes
What happened: On Feb. 4, the Oregon Office of Economic Analysis (OEA) presented its most recent Economic and Revenue Forecast, which is for the first quarter of 2026.
At a glance: While the national economy is strengthening (real GDP exceeding 2%, inflation slowing to 2.7%, and the risk of an economy-wide recession falling to 20%), Oregon’s economy continues to lag. The report shows that the state continues to suffer from private sector job losses and stagnant population growth. There was good news, however, as the OEA increased its revenue projections for the 2025-27 biennium. Accordingly, the state’s ending fund balance is now projected to be $197.9 million, which is an increase of $261.1 from the last forecast.
Economic outlook: Oregon Chief Economist Carl Riccadonna compared Oregon’s growth to the U.S. average. At 4.4%, Oregon’s real GDP growth trailed U.S. GDP growth of 4.7%. The report also shows Oregon’s payroll continued its trend of almost flat to negative change, which is rare outside of a recession.
The forecast additionally shows Oregon’s labor market continues to struggle, especially in the private sector. From December 2024 to December 2025, the manufacturing sector lost over 5,000 jobs. Only the health care and social assistance, leisure and hospitality, and other services industries gained jobs over the past year. Again, payroll declines like those Oregon is experiencing (9,200 jobs lost last year) are unusual outside of a recession. As a state that relies on personal income taxes for government funding, the decline in employment, especially private sector employment, will jeopardize Oregon’s long-term economic and fiscal outlook. The Legislature must enact pro-growth and pro-businesses policies to match trends in other states.
Oregon’s population is still projected to grow at an annual rate of only 0.5% through 2035. Since Oregon relies on in-migration for population growth, policymakers need to enact policies that will attract working age people by enhancing affordability, moderating taxes and improving schools. Doing so also would help businesses recruit new employees to the state.
Revenue forecast: Due mostly to much stronger than anticipated corporate tax collections, now adjusted for H.R. 1 effects at the state level, the OEA increased its general fund revenue forecast. This produces an ending balance of $197.9 million for the 2025-27 general fund.
No need for increases: With the ending fund balance now in the black, any proposal to increase the state’s tax burden or pass new taxes should be off the table. Oregon’s businesses, which already saw their effective tax liability increase 33% from 2019-2023, need tax certainty and the pro-growth tax provisions that would be curtailed by SB 1507.
Cut to rebalance: The state’s general fund can be balanced with existing revenue. Policymakers do need to look at cuts to the portion of the state budget funded by federal money. They should not backfill federal funding with general funds. Instead, they should make common-sense cuts to obsolete programs and discontinue those created with one-time funds received during the pandemic. Legislators in the past have balanced steeper declines in state revenue without raising taxes. Those decisions helped fuel the economic boom of the 2010s, which helped grow Oregon’s population, GDP and government resources.
You can read the full OEA report here. You can read OBI’s joint statement with the Oregon Farm Bureau and Food Northwest here.
Burdensome Recycling Law Stalled by Court Injunction
What happened: On Feb. 6, federal district court Judge Michael Simon denied Oregon’s motion to dismiss the National Association of Warehousers and Distributors’ (NAW) lawsuit questioning the constitutionality of Oregon’s Plastic Pollution and Recycling Modernization Act (RMA). Judge Simon additionally granted NAW’s motion for a preliminary injunction preventing the Department of Environmental Quality from enforcing the program against NAW’s members until the court rules on the merits of the case.
The law’s problems: OBI has raised many issues with the law – including constitutional issues, its rushed implementation and DEQ’s haphazard enforcement scheme – since it was passed. According to the NAW’s press release, Simon “agreed with NAW that the law’s opaque regulatory scheme raises serious questions about whether the Act violates the Due Process and Dormant Commerce Clauses in the United States Constitution.”
What’s next: Trial is scheduled to begin July 13.
In the Legislature: OBI is pushing for an amendment to HB 4030 that would provide a business-to-business exclusion from the RMA. That amendment will be considered during a Feb. 10 public hearing on the bill, which includes other fixes. Oregon’s RMA does not allow for this exclusion, which is common among similar programs emerging elsewhere. Oregon’s outlying business-to-business treatment has led to much higher costs. OBI’s amendment would ensure that producers do not pay fees for packaging that is recycled outside of residential waste streams.
Learn more: Visit OBI’s Recycling Modernization Act web page to learn more about the program.
A Talk with Oregon Entrepreneurs Network President Cara Turano
In an episode released today, Oregon Business Matters host Angela Wilhelms talks with Cara Turano, president and executive director of the Oregon Entrepreneurs Network, about the important role of entrepreneurs in the state’s business ecosystem. They discuss the major challenges entrepreneurs face, the common mistakes they make, what it’s like to start a business in Oregon and more.
In case you missed them, check out our recent episodes with Tax Foundation Senior Fellow Jared Walczak and a joint interview with Portland Mayor Keith Wilson and Portland Metro Chamber President and CEO Andrew Hoan.
These and other episodes can be found on OBI’s website here and on major podcast platforms, including Apple, Spotify and YouTube.
Oregon Scorecard Employment Updates
Oregon Scorecard updates: During the first week of February, OBI updated employment information on the Oregon Scorecard.
Mixed results: Both overall and private-sector employment grew more slowly in Oregon in 2025 than in the nation as a whole. Employment growth in key sectors was uneven, with government, professional and business services and private education and health services growing faster than the national average. Growing more slowly were trade, transportation and utilities; leisure and hospitality; construction; manufacturing and financial activities.
Manufacturing losses: The drop in manufacturing employment was particularly dramatic. In terms of job creation, Oregon’s manufacturing sector has now trailed the national average for six consecutive years. And in 2025, only Montana experienced a greater percentage decline in manufacturing employment than Oregon. This trend is particularly harmful given the fact that manufacturing jobs pay on average 17% more than jobs in other industries, according to OBI’s Condition of Oregon’s Manufacturing Sector report. To reverse it, legislators must support pro-growth policies and stop adopting policies that erode the state’s business climate.
Policy and Rulemaking Updates
Disconnect bill hearing: Despite the state’s strengthening revenue picture, the Senate Committee on Finance and Revenue last week held a public hearing on SB 1507, which it intends to amend to include disconnection from a handful of pro-growth provisions of H.R. 1. First is bonus depreciation, which is a timing tool rather than something that reduces net state revenue. Another provision is the elimination of state treatment for Section 1202 qualified small business stock gains, a Clinton-era tool focused on encouraging small business growth. Disconnection would undermine the state’s tax competitiveness, which the nonpartisan Tax Foundation now ranks only 35th nationwide. A committee vote is scheduled for Feb. 9.
Recreational liability: On Feb. 9, the Senate Committee on Commerce and General Government will hold a public hearing on SB 1593, which would address an extreme Oregon Supreme Court decision that invalidated liability waivers for recreational activities. Businesses in other western states are protected from this type of liability. The decision has hurt Oregon’s ski resorts, outdoor recreational businesses and gyms, which have struggled to find affordable insurance. Many insurers have left the market. SB 1593 would ensure that liability waivers for simple negligence arising from recreational activities are valid – a necessary fix.
Private rights of action: HB 4098 would allow private rights of action against insurance companies for violating Oregon’s Unfair Settlement Practices Act under Oregon’s Unlawful Trade Practices Act. The bill received a hearing on Feb. 5 in the House Commerce and Consumer Protection Committee. If the bill passes in its current form, Oregon would have the most punitive insurance regulatory scheme in the nation. As a result, litigation would increase, insurers would be incentivized to leave the market, and prices would increase for Oregonians.
Climate Superfund: The Senate Natural Resources and Wildfire Committee on Feb. 5 held a hearing on SB 1541, which would impose strict liability on companies that extracted or refined fossil fuels between 1995 and 2024 for climate damages. OBI and several other business groups testified in opposition. Proponents of the bill say it doesn’t apply to any Oregon-based companies, but it certainly applies to companies with operations – and jobs – in the state. The cost impacts are unclear, but it likely would raise fuel prices significantly. The bill is expected to pass out of committee and move to the Joint Committee on Ways and Means due to the high cost of administering the program. While it is not expected to pass out of Ways and Means, the OBI team remains vigilant.
Third-party permitting: HB 4102 was heard in House Climate, Energy and Environment Feb. 3 and then voted out of committee on Feb. 5. OBI supports the bill, which enables DEQ permit applicants an alternative to the traditional permitting process. Although OBI strongly supports the bill as an important tool for permit applicants with time-sensitive permits, it would not reform the broken permitting process and is a costly option as applicants would pay for all applicable DEQ permits plus the cost of the third party to write the permit.
Campaign finance reform: Efforts to refine a package of technical fixes to the campaign finance bill the Legislature adopted in 2024 are under way. OBI agrees with the secretary of state’s office and union representatives about what should (and should not) be included in this year’s bill, and legislative leaders agree that lawmakers need to act this session. The details matter here, though, and early draft language has not hit the mark. The package will eventually take the form of an amendment to HB 4018 in the House Rules Committee. The bill is scheduled for a public hearing on Feb. 10. OBI expects to testify in support of the amended bill, but that is contingent on the agreed-upon language being finalized before the hearing.
JOBS Act: One of OBI’s top priorities is SB 1586, the Oregon JOBS Act, sponsored by Sen. Janeen Sollman, D-Hillsboro. The bill brings critically needed land into Hillsboro’s UGB, expands funding and eligibility for Oregon’s R&D tax credit, establishes an optional local property tax exemption for new capital equipment and machinery in advanced manufacturing, extends Oregon’s enterprise zone incentive and modifies job requirements on rural regionally significant industrial sites. The good news is that there is broad and growing support, including from union electrical contractors, the University of Oregon, Associated General Contractors and the Oregon Manufacturing Extension Partnership. The bad news is the opposition is quite extreme, particularly to the Hillsboro land. The bill is being broadly mischaracterized, particularly in environmental circles, playing off recent coverage about data centers and energy prices. Further, labor pressure to apply either prevailing wage law or project labor agreements to enterprise zones and opposition from Washington County, led Sollman to announce that she’s taking out the enterprise zone expansion. OBI expects further changes to the bill, some positive and some less so, and a hearing on Feb. 16.
Transportation funding: The Legislature now has another transportation-related committee (the fifth) after leadership established the Joint Special Committee on Referendum 2026-302. It has a single purpose: passing SB 1599, which would move the transportation referendum vote from November (as specified by the petitions voters signed) to May. The bill is sponsored by Senate President Rob Wagner, D-Lake Oswego, and Speaker of the House Julie Fahey, D-Eugene.
Immigration bill: HB 4111 contains three provisions related to immigration. It would amend the evidence code regarding immigration status, impose liability on employers and add immigration status to the profiling law related to law enforcement. OBI is engaging on the bill.
- Evidence code: HB 4111 would make immigration status inadmissible except to prove a party’s claim. OBI has suggested amendment language modifying that section so that it can be admissible if “immigration status is an essential fact to prove an element of party’s cause of action or a party’s claim for relief.” This language aligns with Washington’s evidence rule and would give employers the necessary flexibility to defend claims.
- Employer retaliation: The bill adds an unlawful practice claim for retaliating, discriminating or taking adverse action against an employee for changing their personal information such as name, Social Security number or employment authorization documentation. OBI successfully negotiated an exception for actions of third-party benefit administrators that covers health insurance and other benefit providers. Importantly, OBI and the Oregon Farm Bureau have been pushing for language that would clearly protect employers that have had to take action to comply with federal law, regulations or federal requests related to federal employment authorization documentation.
- Profiling: OBI has not taken a position on the profiling portion of the bill.
Open primaries: The House Rules Committee held a public hearing on HJR 201, which proposes a referral to Oregon voters to amend the state Constitution and allow non-affiliated voters to participate in primary elections. HJR 201 would place the names of all candidates on a single ballot, with the top two vote getters advancing to the general election. The resolution also provides a pathway for minority party candidates to access the general election ballot. Consistent with OBI’s history of support for open primaries reform, OBI testified in support of the resolution. Lawmakers have considered similar concepts in prior sessions, though none have advanced. Regrettably, a similar fate is expected for HJR 201. In the meantime, the ballot titles for complementary ballot measures (IP 55/IP 56) that similarly seek to open Oregon’s primaries remain before the Oregon Supreme Court for review.
Rulemaking improvements: OBI’s legislation to improve rulemaking transparency, modernize processes and establish an arbitrary and capricious standard for agency actions, HB 4073, will be heard in the House Rules Committee on Feb. 10. There is growing interest in certain provisions, including the arbitrary and capricious standard.
Wage claims penalties: HB 4089 would make failure to pay wages of all sorts owed to workers subject to criminal penalties in addition to current remedies through the Bureau of Labor and Industries and the courts. Criminal penalties would include up to five years imprisonment and a civil penalty of up to $125,000. Many opponents and proponents testified on the bill last week, including OBI. After hearing concerns from employers and both district attorneys and criminal defense attorneys, proponents have offered amendment language. The amendments significantly narrow the applicability of the bill but also enhance the penalties related to unlicensed construction labor contractors.
Vacation payout: HB 4094 would require employers to pay any unused but accrued vacation upon the termination of employment. The bill also would make vacation pay subject to wage claims, and failure to pay all vacation owed could result in an employer owing up to 30 days of penalty wages. Even though OBI has informed the sponsor of the bill that employers would simply change their vacation accrual policies in response to such a law, he continues to push for the bill. The League of Cities joined OBI in testifying in opposition to the bill.
Industrial symbiosis: Along with several OBI members, OBI testified in favor of HB 4086, which would establish four pilot programs around the state. Industrial symbiosis is something businesses have been doing for millennia, but if naming it and putting some statutory constructs in place leads to incentives and economic development opportunities, that’s a good thing. The bill includes $900,000 in state funding for the pilot programs and an additional $640,000 to the Oregon Coast Visitors Association to advance a 100% Fish economic development strategy modeled after Iceland’s – an exciting approach that was heavily featured at the Oregon Coast Economic Summit last fall.
Proposed wealth tax: In December, a Portland resident filed a prospective 2026 ballot initiative proposing a 2% annual wealth tax on Oregon residents with net assets of $30 million or more. The initiative remained dormant until the petitioner submitted the sponsorship signatures necessary to begin the ballot title process on Jan. 21. The secretary of state’s office subsequently verified those signatures as exceeding the 1,000-signature threshold. The next step is for the attorney general’s office to issue a draft ballot title, which will be made public in the coming week. OBI will provide comment on the title and prepare for an appeal to the Oregon Supreme Court for further review. Petitioners cannot begin gathering signatures until officials certify the ballot title and resolve all related appeals. To qualify the measure, petitioners need to submit 117,173 signatures by July 2.
Medicaid ‘shame’ list: HB 4147 would create an annual requirement for the state to collect data on businesses with 50 or more employees and the wages, benefits and public assistance they and their dependents use. Nevada and Washington have passed similar laws, and this concept has been introduced in Oregon in previous sessions. OBI submitted testimony in opposition, noting, among other things, that the bill fundamentally misunderstands the relationship between employment and state benefits. Drawing inappropriate linkages and creating a complicated new state reporting requirement would accomplish nothing. OBI will continue to work with members and other stakeholders on this.
Farm stand rules: The House Agriculture, Land Use, Natural Resources and Water Committee held a Feb. 4 public hearing on HB 4153, which provides regulatory certainty for farmers operating farm stores and agritourism activities while maintaining land use protections to ensure operations remain under agricultural regulation. The bill offers a middle ground after contentious rulemaking at the Department of Land Conservation and Development last year. OBI submitted comments in support of the bill.
Notable News
Oregon unemployment: The number of open jobs in Oregon declined last fall to the lowest number in more than five years, another discouraging signal from the state’s declining labor market (The Oregonian).
School staff growth: As Oregon public school leaders face reductions in state funding, they turn to their biggest expense to find cuts—about 85% of their budgets go to personnel. This time around, they have more staff to cut: Over the past five years, the number of full-time employees at the state’s 197 school districts has grown by nearly 17%, according to an analysis of Oregon Department of Education data. At the same time, student enrollment has shrunk nearly 3% (Oregon Journalism Project).
Trail Blazers financing: Portland’s cash-strapped leaders are looking to divert dollars from the city’s lucrative voter-approved climate tax to prop up a public financing deal deemed essential to keep the Trail Blazers from leaving town (The Oregonian).
Housing bill: Gov. Tina Kotek is asking lawmakers to approve a bill that would allow cities to once again expand their urban growth boundaries so long as they use it to build senior housing or manufactured homes (The Oregonian).
Flawed liability bill: Ski resorts and other recreational interests on Feb. 4 strongly opposed the first of two approaches offered in the 2026 Legislature to address concerns that Oregon’s liability laws will drive them out of business. The ski resorts told the Senate Judiciary Committee that new compliance regulations contained in Senate Bill 1517 would make their problems even worse (Portland Business Journal).
Transmission needs: Utilities and other energy providers in the West need to add more than 12,600 miles of new electric transmission lines in the next decade — at an estimated cost of $60 billion — in order to reliably meet rising demand, integrate renewable energy and address aging infrastructure in the existing electrical grid. That’s the top conclusion of an unprecedented interregional transmission study released this month (The Oregonian).
Unspent housing funds: The number of unspent dollars in Portland Housing Bureau coffers, for months believed to be $21 million, has grown fivefold in a week. As of Feb. 6, City Administrator Raymond Lee disclosed that the surplus now totals a whopping $106 million (Willamette Week).
Unspent preschool funds: Oregon’s child care agency left unspent $66.6 million intended to provide free preschool to needy children in 2025, the agency’s leaders acknowledged Feb. 3 (The Oregonian).
GOP candidates: Three of Oregon’s top Republican gubernatorial candidates recently offered some of the clearest insight yet into how they’d take the reins of the state’s highest office at their first forum together ahead of the May primary (Oregon Capital Chronicle).
I-5 bridge funds: A $100 million Easter egg for the Interstate Bridge Replacement Program was included in the federal spending package approved by Congress on Feb. 3. The line item for light rail on the Portland-to-Vancouver Interstate 5 bridge replacement was included as part of $1.7 billion in capital investment grants that will be paid through the Federal Transit Administration (Oregon Public Broadcasting).
Nike EEOC investigation: The U.S. Equal Employment Opportunity Commission is investigating whether Nike discriminated against white workers. As part of its investigation, the federal agency wants a federal judge to force Nike to turn over more documents and records about its diversity, equity and inclusion programs (The Oregonian).
Wood business acquisition: A Eugene manufactured wood business has been acquired by a Georgia material science firm. Atlanta-area company Arclin said Feb. 3 it acquired Willamette Valley Co., a wood product maker and concrete repair business with 500 employees and eight manufacturing facilities. Terms of the deal were not disclosed (Portland Business Journal).
Roseburg job cuts: Roseburg Forest Products announced Feb. 4 it is cutting approximately 146 positions at its Riddle Plywood facility as part of a strategic production realignment (KOBI).
Vigor Marine sold: Portland-based Vigor Marine Group is set to be acquired in a pending deal with a private equity firm. Antin Infrastructure Partners announced Feb. 4 it had reached an agreement with Vigor Marine owner Titan Acquisition Holdings and its parent Lone Star Funds to acquire the company (Portland Business Journal).
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.
- Partners Retirement Plan: Allows multiple employers to offer a 401(k) benefit to employees through a group structure while maintaining individual company design and control over the benefit – such as eligibility, employer match, and vesting.
- 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.