legislative session 2

Salem City Council to Consider Employee Payroll Tax

Salem City Council has scheduled a June 12 informational meeting on an ordinance that would impose an employee payroll tax of 0.814%. City Council tentatively plans to hold the first public hearing on June 26 and approve the tax at its July 10 meeting. It would become effective as early as July 1, 2024.

The tax would apply to all wages for work performed in the city, including self-employment earnings, though it would not be imposed on people making the minimum wage.

According to the city, taxpayers would contribute an additional $28 million per year, which would be used to support an array of existing and new services. The city argues that the tax is necessary because existing funding sources, including property taxes, aren’t increasing as quickly as the cost of government services. The city also believes new revenue will be needed to support services for the homeless.

Under the proposed ordinance, the tax would be referred to voters no later than July 1, 2031, after it had been in effect for a number of years. Under the proposal, voter approval would be required to continue the tax after that point, though Salem City Council could decide to change the ordinance and eliminate the referral before then.

For more information about this proposed tax, read the city staff report here and the text of the proposed ordinance here. For information about the Council’s agendas, how to watch meetings and submit comments on the tax and other topics, go here.


Omnibus Climate Package Receives a Work Session

A work session was held June 8 on HB 3409, a climate funding package, in the Ways and Means Joint Subcommittee on Natural Resources. The omnibus package is a hodgepodge of ideas found in other bills and proposals throughout the session. It contains more than a dozen climate-related bills including medium- and heavy-duty electric truck incentives, more aggressive greenhouse gas reduction targets, funding to implement aspects of the Climate Protection Plan and major revisions to state building code. OBI has opposed many of the bills included in the package because they continue to put policy ahead of available technology, supply and infrastructure. The bill is scheduled for a work session in the full committee June 12.


Harmful Amendment Considered for CAT Bill

On June 6, the Senate Finance Committee held a hearing on SB 140 and several proposed amendments. While most of the proposed amendments were innocuous technical changes, the -3 amendment would make substantive and troubling changes to the corporate activity tax. The amendment would raise the exemption to $2 million (from $1 million), which is good if it did nothing else. However, because the change was designed to be revenue neutral, it would lower the cost of goods sold and labor cost carveout to 30% (from 35%) and raise the CAT rate to .615% (from.57%, an 8% hike) for companies with Oregon “activities” above $10 million. Because the proposal is revenue neutral, Legislative Counsel determined that the bill could pass with a simple majority and not require the three-fifths vote normally needed for tax increases despite the fact that the amendment would raise taxes on thousands of Oregon businesses. There was substantial opposition to the amendment from industry and association partners, and OBI was pleased that the amendment seemed to gain no traction in the committee. OBI will continue to watch this closely as negotiations take place and as the session inches closer to adjournment.


Funding Questions Loom for Interstate 5 Bridge Replacement

Questions loom over the fate of the Interstate 5 bridge replacement project. Oregon still needs to fund its $1 billion share of the project this session to be eligible for key federal grant funding opportunities. Last week, Sharla Moffett wrote a letter signed by more than 40 stakeholder organizations and sent to the Joint Committee on Ways and Means co-chairs. The letter urges them to pass a $1 billion funding package. OBI hopes that Oregon will pass a funding commitment as part of an end-of-session or a special session negotiation. Until this happens, OBI remains concerned that approximately $3 billion in federal funding will evaporate.


House Passes Early Learning Budget

The House passed several budget bills last week, including two important education budgets. The first, HB 5013, would fund the relatively new Department of Early Learning and Care. The department’s biennial budget would be $1.3 billion funded through a combination of general funds ($474 million), federal funds ($381 million) and other funds ($457 million). This is a modest $8 million increase from the current biennium. The other funds identified are from the Student Success Act’s Early Learning Account. As we enter another biennium with the CAT in place and money from it dedicated to education, OBI will do a deep dive into how collections vary from early estimates and where the money is going.


House Passes State School Fund Bill

The House also passed the State School Fund, HB 5015. This bill would increase state K-12 education funding to $10.2 billion for the 2023-25 biennium, an increase of $900 million (9.7%) from the current biennium. That $10.2 billion includes general fund ($8.8 billion), lottery funds ($647 million), Student Success Act (CAT) funds ($702 million), marijuana tax revenue ($41 million), and state timber tax revenues ($600,000). The $10.2 billion does not include local funding, mostly through property taxes, and some other state, federal and categorical aid. All-in, the K-12 fund should be about $15.3 billion before specific additional carve-outs, which do not affect the funding formula’s distributions to district.


Key Retail Theft Bill Stranded

When SB 318 was assigned to the Public Safety Subcommittee of Joint Ways and Means Committee, OBI and the other members of the Organized Retail Crime Task Force were optimistic the bill would swiftly be scheduled for a subcommittee vote and then a full committee vote. However, the bill has stalled in the subcommittee. SB 318 is the final piece of the Organized Retail Crime Task Force’s three-bill package. This one would fund an analyst and two investigator positions in the Department of Justice to coordinate statewide prosecution of organized retail theft. Although it’s stalled, it may still pass. The session isn’t over yet. And it may become part of any end-of-session or special session negotiations and thus make its way into the so-called “Christmas Tree” bill that will provide funding for various programs and projects.


Governor Signs Leave-Alignment Bill

Gov. Kotek on June 7 signed SB 999 into law. SB 999 ensures Paid Leave Oregon and the Oregon Family Leave Act run concurrently, use the same definitions when determining who is a family member and align benefit years and job protection requirements. As OBI has noted before, the bill is just a first step. A lot of work remains to consolidate these leave programs to truly make them manageable for employers, employees and state agencies. OBI is hosting a webinar on Paid Leave Oregon on Aug. 4 to help educate employers about the changes and last-minute details as the program begins offering benefits in September. Please look out for a future email from Derek Sangston asking for any question you want addressed during that webinar.