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Costly Tax on Oregon Sales Proposal Submits More Signatures

Last week, the petitioner behind Initiative Petition 17 (IP17), submitted another batch of signatures, bringing the total he has submitted to just over 156,000. IP17 proposes an increase to the state’s corporate minimum tax structure by adding a 3% tax on Oregon sales in excess of $25 million.

The petitioner has until July 5 to gather signatures and ultimately need 117,173 valid signatures to qualify for the November ballot. There is always some error rate associated with submitted signatures, so it’s common for petitioners to aim for well over that required amount to account for the error rate.

This gross receipts tax will have extremely negative consequences, particularly since it applies at every stage of the supply chain. It will drive up costs of everything from groceries and gas to prescription drugs and housing construction.

And what happens with the money raised from this tax increase? It’s “rebated” (the petitioner’s language) to anyone living in Oregon for 200-plus days, including children, and regardless of whether an individual pays taxes.

OBI is gearing up for the campaign against this costly tax on Oregon sales. Stay tuned in the coming days for ways you can help us defeat this measure. We’ll release:

  • Endorsement forms for individuals, businesses and organizations
  • Talking points you can share with your networks
  • Information on how you can contribute to the campaign
  • And more.

Oregon Climate Policy Would Stop Manufacturing Growth

The Department of Environmental Quality (DEQ) held the final meeting of the Climate Protection Program (CPP) Rulemaking Advisory Committee (RAC) June 25, presenting the draft rule and fiscal impact statement. The draft attempts to address compliance challenges unique to energy-intensive, trade-exposed (EITE) manufacturers but, in fact, does little to ameliorate the program’s exorbitant compliance costs. As a result, it fails to address the CPP’s threat to the competitiveness of Oregon manufacturers while simultaneously having no guarantee that measurable greenhouse gas reduction will occur despite massive fees paid into the program.

EITEs are particularly vulnerable to regulations that increase costs in ways that erode their competitiveness in regional, national or global markets. When faced with such costs, they may have to cease operations or shift production to other states or nations. Such disruptions produce no net environmental benefits, as production and related emissions simply move elsewhere. Meanwhile, such a shift would deprive Oregon of high-wage jobs and other economic benefits.

The draft rule proposes to allow approximately 20 businesses to be regulated directly under the emissions cap for natural gas combustion emissions and would be subject to a slightly slower ramp-down of emissions. However, the draft retains many provisions whose excessive compliance costs would erode the economic viability, at least in Oregon, of EITE businesses.

The Oregon Legislature less than two years ago agreed, through Senate Bill 4, to invest hundreds of millions of dollars in the state’s semiconductor industry. Ironically, the very same state is now making it virtually impossible for chip manufacturers to grow. This disconnect speaks to the need for greater policy coordination as well as a coherent state strategy for economic development.

The draft rule includes additional notable elements. It:

  • Reshuffles compliance instruments in a way that reduces the cap for transportation fuel suppliers, making it more difficult for this sector to comply;
  • Provides no cost containment measures for non-EITE natural gas consumers, such as residential and commercial customers like schools and hospitals;
  • Applies only to the state’s 20 largest EITEs, leaving dozens of manufacturers without options to reduce compliance costs;
  • Provides free compliance instruments for the first, three-year compliance period equivalent to a company’s average emissions from 2017-2019. This will create an immediate deficit of compliance instruments for some companies that have already increased production;
  • Prohibits growth in the manufacturing sector;
  • Provides a small reserve of instruments for new market entrants;
  • Does not allow the use of offsets;
  • Retains the purchase of costly Community Climate Investment credits as the only method for complying with the program if a business cannot reduce emissions at the rate specified.

OBI is working with members subject to the regulation and other stakeholders to write comments that will be submitted to DEQ before the proposed rule is issued later this summer.

OBI continues to advocate for a legislative solution through a market-based program that could be linked with the Washington and California cap-and-trade programs and result in a more reasonable, workable climate policy.

Supreme Court Backs Grants Pass in Homelessness Decision

On June 28, the U.S. Supreme Court ruled that restrictions on public camping issued by the city of Grants Pass do not constitute “cruel and unusual punishment,” reversing lower court rulings that had limited the tools available to west coast cities struggling to control an epidemic of homelessness.

In an opinion written by Justice Neil Gorsuch, the court concluded that the Eighth Amendment prohibition against cruel and unusual punishment cannot be used to limit government responses to homelessness. Lower courts, including the Ninth Circuit Court of Appeals, had cited the amendment in striking down the Grants Pass ordinance. Grants Pass had banned sleeping in cars parked on the street and in public parks.

In appealing to the Supreme Court, Grants Pass was supported by many west coast cities, including San Francisco and Los Angeles, that have struggled to combat the spread of homeless encampments that have eroded livability and threatened businesses.

Prior to oral arguments before the court, OBI joined a U.S. Chamber of Commerce amicus curiae brief that detailed the consequences of stripping state and local governments of “the discretion to enforce public health measures and ensure public safety for the benefit of all citizens.”

As a consequence of lower-court rulings, the brief noted, “businesses throughout the circuit bear the brunt of local governments’ inability to respond effectively to the public-health issues and criminal activity that invariably follow in the wake of burgeoning homeless encampments.”

Among the many examples included in the brief is that of a business in Bend that boarded horses until a nearby homeless encampment drove its customers away. Meanwhile, it noted, the effects of crime have been particularly acute in Portland, where more than 2,600 downtown businesses have filed changes of address with the U.S. Postal Service to leave downtown ZIP codes.

Go here to read the court’s ruling.

Supreme Court Limits Authority of Regulatory Agencies

On June 28, the U.S. Supreme Court overturned a 1984 decision, Chevron v. Natural Resources Defense Council, that directs courts to defer to the expertise of federal agencies in interpreting ambiguous statutes.

Joined by various states and other groups, the U.S. Chamber of Commerce had repeatedly challenged the use of so-called “Chevron deference” in weighing regulations not clearly authorized by underlying statutes.

Chevron deference “has increasingly become unbounded,” the Chamber wrote recently. “In its current form, Chevron deference poses a triple threat to the tripartite scheme of government that the Supreme Court had intended to protect. It entices Congress to abdicate its duty to make the law. It entices the Executive Branch to stray far beyond its duty to enforce the law. And it entices the judiciary to abandon its duty to say what the law is.”

By abandoning Chevron deference in its June 28 ruling, notes The Wall Street Journal, the Supreme Court has created a wider avenue for parties unhappy with agency decisions to challenge them in federal court on the grounds that regulators exceeded their statutory authority.

Jay Timmons, President and CEO of the National Association of Manufacturers, called the court’s decision “a game changer for manufacturers as Chevron was at least partly to blame for the unpredictability and overreach that have become synonymous with the modern regulatory state.” Timmons said that manufacturers “will not waste a moment in seizing this opportunity … to leverage this decision to rein in the regulations that are holding back manufacturers from improving lives.”

Go here to read the U.S. Chamber of Commerce’s take on the court’s decision, here to read the National Association of Manufacturers’ response and here to read the majority opinion.

OBI is Oregon’s affiliate for both the U.S. Chamber of Commerce and the National Association of Manufacturers.

OBI to Present Sept. 25 Employment Law Summit

Does your business need help understanding the constantly changing complexities of state and federal employment law? You’re in luck. On Sept. 25, OBI will host a full-day Employment Law Summit in Wilsonville. Legal experts will cover a variety of employment topics, including:

  • Paid Leave Oregon
  • Scheduling, overtime and break laws
  • The latest from the National Labor Relations Board
  • Reasonable accommodations under ADA
  • Navigating noncompete and nondisclosure agreements
  • Case law update

The summit is open to everyone but will be particularly helpful to HR staff and managers of small and medium-sized businesses. Continuing legal education and HR credits are pending.

Registration is $175 and includes all materials and lunch.

The summit will run from 9 a.m. to 4 p.m. at the Holiday Inn Wilsonville, which is located at 25425 SW 95th Ave.

Go here to register.

OBI Leaders Urge Lawmakers to Heed Competitiveness Crisis

In an op-ed published June 28 by the Portland Business Journal, OBI Board Chair Lori Olund and President and CEO Angela Wilhelms urge state leaders to acknowledge Oregon’s competitiveness crisis and seek to change its causes. Otherwise, they argue, “the damage to Oregonians, their communities and their public institutions will be significant.”

The most recent evidence of Oregon’s weak competitive position, they note, is a June presentation by economic consulting firm ECONorthwest to regional leaders that found, among other things, that Oregon fared worse than every other state in generating jobs during 2023.

Over the long term, Olund and Wilhelms argue, “Oregon cannot support stable government services, much less growing government services, with a withering private sector.”

The problems underlying this trend are many and include Oregon’s high taxes and its regulatory environment, both of which legislators must address to encourage businesses to invest in the state.

DEQ Seeks to Rush Unworkable Recycling Rules into Effect

The effort to develop rules for Oregon’s Plastic Pollution and Recycling Modernization Act continues to falter even as its operational date – July 1, 2025 – approaches. OBI has consistently pointed out problems with the program to the Department of Environmental Quality (DEQ), which is developing rules, and will do so again in July.

When the Legislature passed Senate Bill 582 in 2021, Oregon became the third state to adopt a so-called extended producer responsibility (EPR) recycling program, following California and Maine. Colorado, Maryland and Minnesota have since adopted EPR programs of their own, but Oregon’s program is scheduled to become the first to be operational. Maine would follow suit, one year later, and California plans to complete the rollout of its program in 2032.

Oregon’s haste to launch its program has produced confusion. The currently proposed rules do not clearly explain the obligations of producers, retailers and local governments. Meanwhile, OBI has been notified that DEQ will reject the only proposal it has received to run the program. That proposal, submitted by the Circular Action Alliance, featured costs 68% higher than those contemplated by the Legislature when it passed SB 582. A follow-up proposal won’t be accepted until late this year, leaving businesses only months to adjust to a complex and expensive program about which they know very little.

A public hearing on the draft rules took place on June 27. OBI and other business associations argued that the overly broad nature of the rules prevented the Circular Action Alliance from submitting a plan deemed workable by DEQ. OBI and others also noted the enormous potential cost of the program, which could exceed $1 billion by 2027, according to the Circular Action Alliance’s plan. Given the program’s estimated cost and its lack of clarity about business’ obligations, OBI argued that it should not be implemented before July 1, 2025.

OBI will submit final written comments by the July 26 deadline and advocate with legislators for a statutory delay in the program’s implementation.

First Meeting of Legislative AI Task Force Takes Place

The first meeting of the legislative Joint Task Force on Artificial Intelligence took place June 28. Established during the 2024 session through the passage of House Bill 4153, the task force will examine and identify terms and definitions related to artificial intelligence that are used in technical fields and may be used in legislation. While the task force’s scope is narrow, a bill that passed recently in Colorado suggests that AI-related legislation is likely to be broad. As a member of the task force, OBI will seek to ensure that businesses that rely upon AI tools may use them without fear of unjustified penalties.

The task force’s first meeting was devoted largely to administrative matters.

If your business has thoughts or concerns about this issue, contact Derek Sangston at dereksangston@oregonbusinessindustry.com.

Notable News

Portland’s Heavy Taxes: Taxes that Portland residents and businesses face — a hot pandemic-recovery topic in the city — are indeed remarkably high, according to a comprehensive new report. The report finds Portland has the highest business taxes and the second-highest top marginal rate on wage income in the country (Portland Business Journal).

Company’s Florida Expansion: The Biden administration announced July 1 it has awarded $6.7 million in CHIPS Act funding to Rogue Valley Microdevices, a Medford electronics manufacturer, to help finance a small factory in Florida. The company cited Florida’s “affordability, technical workforce, and business friendly economic environment” (The Oregonian).

Estate Tax: Revenue from Oregon estate taxes has increased more than sixfold over the past two decades, rising from less than $50 million annually to around $300 million (The Oregonian).

Oregon Ag Exports: The most valuable agricultural commodities across Oregon got even more valuable in 2022, according to the latest data from the Oregon Department of Agriculture. As consumer price inflation began to accelerate that year, the total value of production for the state’s top 20 commodities hit $6.5 billion, up 9.6% from 2021. International export of all agricultural commodities reached $2.4 billion (Portland Business Journal).

Chain Store Ban: An organized campaign to prevent the spread of chain dollar stores in Wallowa County scored a significant victory earlier this month. The Joseph City Council passed an ordinance banning “formula” businesses from operating within city limits. While the law doesn’t identify any chain stores by name, it arrived amid community concern over the spread of dollar stores throughout Wallowa County and eastern Oregon (Oregon Public Broadcasting).

Logging Decision: A federal appeals court has sided with environmental groups over logging private land that was once part of the Elliott State Forest. The Ninth Circuit Court of Appeals on June 26 affirmed a 2022 district court ruling that logging mature and old-growth trees on the 355-acre parcel would violate the Endangered Species Act because logging would harm the marbled murrelet (Oregon Public Broadcasting).

Stimson Mill: Stimson Lumber Co. is spending $50 million to install a high-velocity sawmill line that can process younger, smaller trees into usable wood. The new 350-foot sawmill line at Stimson facility near Forest Grove is set to open in early 2026 and could triple production by the end of that year (The Oregonian).

Business Sentiment: Umpqua Bank has issued its Business Barometer for six years. In none of those years was the gap between the outlook and plans of middle market companies and small businesses wider. The survey, conducted by Portland’s DHM Research, indicates that “middle market optimism and key growth indicators have surged to six-year highs, while small businesses proceed cautiously as they manage persistent impacts of higher costs for goods and capital,” the Lake Oswego-based bank wrote (Portland Business Journal).

Semiconductor Tool Warehouse: ASML, a Dutch company that makes some of the most advanced tools for manufacturing computer chips, will expand into a large new warehouse in North Plains next year. The 210,000-square-foot building will accommodate increased demand from local customers and larger manufacturing tools, according to the ASML. But the company says it doesn’t plan to add to the 800 people it already employs in Oregon (The Oregonian).

Bend Expansion: Bend is jumping on a chance to fast-track a 100-acre expansion of its urban growth boundary through recent legislation intended to spur the growth of affordable housing across Oregon (The Bulletin). Meanwhile, the state agency that owns 262 acres of land destined for development in southeast Bend has retained a real estate company to sell the property. Bend added the tract into its urban growth boundary in 2023 through a special process legislated two years earlier by Oregon House Bill 3318, which prescribed the sale to benefit state funding for schools and address the shortage of developable land in Bend (The Bulletin).

Kotek Endorsement: Gov. Tina Kotek on June 26 endorsed Portland City Commissioner Carmen Rubio for mayor. Rubio’s top opponent is City Commissioner Rene Gonzalez, who has been endorsed by the city’s firefighter and police unions (Willamette Week).

TriMet Enforcement: TriMet will step up the enforcement of its rules against fare evasion and what it called “disruptive” behavior. The Portland-area transit agency said in news release it would increase fare checks and enforcement of existing rules, including bans on smoking, playing loud music and carrying items that could leak or block walkways (The Oregonian).

PGE CEO: Portland General Electric CEO Maria Pope on June 19 was elected board chair of the Edison Electric Institute, a major electric utility trade group. That same day, two U.S. senators sent her a letter with pointed questions related to EEI’s challenge of a Biden administration rule limiting climate gas emissions from coal- and natural gas-fired power plants (Portland Business Journal).

Nike Results: Nike closed the book June 27 on one of the most disappointing years for financial performance in the company’s storied history. The sportswear giant reported sales grew just 1% for the year that ended May 31 (The Oregonian).

Boeing Sanction: Boeing is being sanctioned by U.S. investigators for sharing information about a federal investigation of a door plug blowout that left a gaping hole in a Boeing 737 Max 9 (Associated Press).

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.

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