Legislature Passes SB 1507, Discouraging Business Investment
What happened: On Feb. 25, the Oregon House passed SB 1507, which will disconnect Oregon partially from the federal tax code and deny state businesses and residents the full benefits of three components of H.R. 1. The bill had cleared the Senate nine days earlier and will head to the governor’s desk for her signature.
The details: The components of H.R. 1 affected by the disconnection allow state taxpayers to deduct interest payments for new car loans; improve tax treatment for qualified small business stocks; and allow for bonus depreciation of machinery, equipment and other capital improvements. The business-related policies are intended to spur investment, which ultimately leads to job growth. If the governor signs SB 1507, as she is expected to do, those tools will not be available in Oregon despite economic conditions that have deteriorated so badly that the governor last year rolled out the Governor’s Prosperity Roadmap and assembled her Prosperity Council.
Revenue and budgets: The revenue impact of the partial disconnection is roughly $300 million over the next 18 months. Most of that money, however, is tied to bonus depreciation, which simply changes the timing of revenue, not necessarily the net amount. Allowing businesses to depreciate machinery entirely up front, however, would have increased the short-term cash flow that many need to invest in the first place. According to the most recent state revenue forecast, meanwhile, the state general fund was expected to have an ending fund balance of roughly $200 million this biennium even without disconnecting from H.R. 1.
What’s next: The bill awaits signatures. OBI and allied groups have sent a letter urging the governor to veto it. You can read it here. Please consider sending your own request to the governor as well.
Save the Date: Oregon Economic Summit to Take Place May 28
Join OBI for its first annual Oregon Economic Summit on May 28 at the Salem Convention Center. The event is a rebrand of our historical Annual Meeting event. Go here to read the flyer and to register.
This is an opportunity for us to build on our messaging and be clear in the call to action to restore Oregon’s competitiveness, grow the economy and create private sector jobs.
Oregon Scorecard Update: Electricity Prices
What happened: Average electricity prices on the Oregon Scorecard now include 2025 data for four categories: all sectors, residential, commercial and industrial. The information below appears on the Scorecard’s Business Climate and Quality of Life pages, where 20-year trend information also is available:
All-sector average: Oregon’s all-sector average price increased by 3.6% in 2025 to 11.51 cents per kilowatt hour (KWH). The national average price increased by 5.3% to 13.63 cents per KWH. Oregon’s average price in 2025 was the nation’s 20th lowest, improving from 22nd lowest in 2024.
Residential price: Oregon’s average price increased by 4.6% in 2025 to 15.37 cents per KWH. The national average increased by 5% to 17.3 cents per KWH. Oregon’s average price in 2025 was the nation’s 26th least expensive, dropping from 24th least expensive in 2024.
Commercial price: Oregon’s average price increased by 4.5% in 2025 to 10.56 cents per KWH. The national average increased by 5.2% to 13.41 cents per KWH. Oregon’s average price in 2025 was the nation’s 11th least expensive, dropping from 10th in 2024.
Industrial price: Oregon’s average price increased by 2.9% in 2025 to 8.28 cents per KWH. The national average increased 6% to 8.62 cents per KWH. Oregon’s average price in 2025 was the nation’s 23rd least expensive, improving from 27th in 2024.
Longer-term trend: In 2025, Oregon’s average electricity prices moved modestly relative to those in other states. In most categories, however, Oregon’s rankings have moved substantially in recent years. Oregon’s average industrial rate was the nation’s sixth lowest as recently as 2021, its residential rate was the eighth lowest in 2022, and its all-sector average was the seventh lowest in 2022. With the exception of the average commercial rate ranking, which has remained stable, rates in Oregon have moved rapidly closer to the middle of the national pack.
Why it matters: For many years prior to about 2020, relatively low electricity prices had served as a competitive advantage for Oregon. In most sectors – and for Oregon residents – that advantage has eroded in recent years even as the state’s business tax burden has increased and regulations have proliferated. The net effect: Oregon has become less appealing to business and individuals than other states, slowing economic and population growth. Oregon must avoid policies that exacerbate these price increases.
ICYMI Oregon Business Matters Talks with Deschutes Brewery CEO
In the latest episode of OBI’s Oregon Business Matters podcast, host Angela Wilhelms talks with Peter Skrbek, CEO of Bend-based Deschutes Brewery, about the iconic craft brewer’s history, its approach to product innovation, its partnership with Costco, its connection to Central Oregon and much more.
In case you missed them, check out our recent episodes with Oregon Entrepreneurs Network President and CEO Cara Turano, 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.
Policy and Rulemaking Updates
Oregon JOBS Act: SB 1586 remains a top priority. The only bill focused on boosting Oregon’s manufacturing economy has strong bipartisan support but remains opposed by environmental interests and now public employee unions. A third hearing was held on Feb. 23, largely to hear the precise contours of the main amendment (which OBI helped craft) and to finish testimony from prior hearings. No further action is scheduled as of this writing, but OBI has seen some late signs of possible progress toward a vote out of the Senate Committee on Finance and Revenue.
Governor’s development bill: In a precarious position is HB 4084, the governor’s economic development bill, which would improve the enterprise zone program, invest in industrial site readiness and improve permitting processes and transparency. The bill would make improvements OBI supports, but those helpful provisions must not be watered down or laden with restrictions that make the bill unhelpful in the end. The bill is scheduled for a vote in the Capital Construction Subcommittee of the Joint Committee on Ways and Means on March 2 and, assuming passage in that subcommittee, a vote in the full Ways and Means Committee later in the day.
BOLI funding bill: HB 4027 would create a tax that would be divided equally between employers and employees, with an expected rate of about 0.2 cents per hour worked. The revenue would flow to a BOLI operations fund to maintain current staffing levels. OBI supports the concept and underlying policy given the need to better support BOLI obligations. However, OBI opposes the bill on constitutional grounds. It is a revenue-raising measure but is advancing without meeting the constitutionally mandated three-fifths voting requirement in both chambers. HB 4027 passed the House floor with only 33 votes, short of the 36 votes equaling a three-fifths majority. It now heads to the Senate, where OBI expects it to pass.
Rulemaking bill endangered: HB 4073, OBI’s common-sense bill to improve rulemaking through greater transparency and predictability and the establishment of an “arbitrary and capricious” standard, sits in the House Rules Committee, where it remains technically alive. However, notwithstanding widespread interest in improving the business climate and improving oversight of executive branch activity, HB 4073 is unlikely to see further action this session.
Statewide preschool: On Feb. 24, Gov. Kotek announced that she is “convening state and national early learning experts to provide recommendations to improve access to affordable, quality child care and preschool across the state, with the ultimate goal of ensuring access to preschool for all.” Child care remains an important topic for employers and their employees. OBI will watch with great interest and ensure that businesses are part of this discussion. Serious steps forward could be helpful as long as these do not involve expanding broken programs and systems statewide.
SALT cap workaround: On Feb. 25, the Senate passed SB 1510A, an omnibus revenue bill that includes provisions updating how Oregon attaches to international tax law. Additionally, thanks to an proposal offered by OBI, it would renew Oregon’s helpful but limited SALT cap workaround by allowing owners of pass-through entities a PTE tax election. That election allows those small businesses to claim more of the taxes they pay the federal government as a business expense, which is not limited by federal tax law. Unfortunately, the Oregon Legislature remains uninterested in expanding this program so that manufacturers, farms and businesses experiencing the death of one partner could also use it. The bill is scheduled for a public hearing and possible vote in the House Committee on Revenue on March 2.
Transportation referendum bill: SB 1599, which would move the date of the transportation referendum election from November to May, has passed the Senate but run into a delay in the House, with lawmakers postponing a vote until March 2. That means lawmakers failed to meet a non-binding Feb. 25 deadline that Secretary of State Tobias Read had established. Read had warned previously that missing this deadline would undermine his office’s ability to fully execute the expedited election. He restated his concerns in late February in a memo to lawmakers. Despite intense pushback from the public and bipartisan opposition, Democratic leaders appear determined to pass the bill before the end of session.
Data broker bill: SB 1587 was introduced as part of a broader package of immigration-related bills aimed at pushing back on federal enforcement practices. The bill originally proposed prohibiting data brokers from selling personal data for civil law enforcement purposes, including immigration, and created a private right of action. However, lawmakers ultimately determined that directly regulating Oregon’s roughly 300 registered data brokers was more complex and difficult to implement during the short session than initially anticipated. As amended, the bill now focuses on restricting what state and local public agencies may share with data brokers, prohibiting disclosure of personally identifiable information unless the broker provides written assurances that the data will not be used to enforce federal immigration law. SB 1587 is scheduled for a vote on the House floor March 2 before it heads to the governor’s desk.
Medicaid shame list: HB 4147 as introduced would have required several state agencies to study and report on employers with employees or employee dependents who receive Medicaid benefits. OBI has negotiated an amendment that anonymizes employers and excludes dependents from reporting. The inclusion of dependents was a significant flaw, as there may be many reasons for dependents to receive public assistance, including Oregon’s expansive approach to covering children through state programs. With the amendment, OBI has no position on the bill. The bill is scheduled for a vote in the House on March 2 and is expected to pass along party lines.
Third-party permitting: HB 4102 would ease the use of third-party permitting, under which DEQ may contract with a third party to write a time-sensitive permit on behalf of an applicant. The authority exists but has been difficult to use. The application of third-party permitting is limited since an applicant must pay both permit fees and the cost of the contractor. However, it provides an important tool. It has cleared a key committee and now heads to the Senate floor.
Wage claim bill: As introduced, HB 4089 would have made failure to pay wages of all sorts subject to criminal penalties as well as the current remedies through BOLI or the courts. The bill was amended to clarify the current law for theft of services and provide enhanced penalties for contractors and subcontractors that have multiple convictions for using unlicensed construction labor contractors. Initially opposed to the bill, OBI is now neutral. The bill passed the House, and OBI expects it to pass the Senate.
Recreational liability bills: SB 1593 would overrule an Oregon Supreme Court decision that invalidated liability waivers for recreational activities throughout the state. By doing so, the bill would bring Oregon in line with every other western state. Unfortunately, the bill languishes in the Senate Committee on Rules despite overwhelming support and clear industry need. Meanwhile, the Legislature is focusing on the flawed approach taken by SB 1517, which is overwhelmingly opposed by industry. Its many exemptions make its promised protections unusable. A public hearing is scheduled for SB 1517 in the House Committee on Rules on March 2.
Rule notice bill: HB 2021 was moved out of the Senate Committee on Rules with a minor technical amendment. The bill requires roughly one month advance notice before adopted rules become effective in order to help regulated entities adjust. This concept appears in OBI’s Oregon Competitiveness Agenda.
Health mandate committee: The Health Insurance Mandate Review Advisory Committee (HIMRAC), a longtime OBI agenda item, is alive and well within HB 4040, a health care omnibus bill. The HIMRAC takes a slightly different form than in previous sessions, but the intent remains the same: It would analyze the cost of legislatively imposed health insurance mandates. The Joint Committee on Ways and Means has approved the bill, and it will head to the House floor for a vote.
Campaign finance reform: The Senate Rules Committee held an informational hearing on HB 4018A, where lawmakers heard from panels of stakeholders, including OBI, about the challenges of implementing the campaign finance law adopted in 2024 and the proposed technical fixes to remedy those challenges. The bill is scheduled for a vote in the Joint Committee on Ways and Means Capital Construction Subcommittee on March 2. To pass, it will need to clear that subcommittee, the full Joint Committee on Ways and Means, the House floor and the Senate floor by adjournment.
Farm stand rules: The Joint Committee on Ways and Means will vote March 2 on HB 4153, which would provide much-needed legal clarity for Oregon’s agricultural community regarding the operation of farm stands. This concept was the subject of a very contentious rules advisory committee over the summer, and conservation groups have predictably remained opposed to any concept that changes Oregon’s land use system. OBI submitted testimony in support of the bill when it was in a House policy committee.
Fluorescent light bill: HB 4060 has cleared the Senate Committee on Energy and Environment. The bill would provide a four-year extension to convert to LED lights for entities whose facilities statewide exceed one million square feet. That underlying requirement was established by the Legislature in 2023. Unfortunately, an amendment providing a two-year extension for entities whose total Oregon footprint is less than one million square feet was not adopted. A floor vote in the Senate is next.
Tax increase preparations: HB 4014 would establish a task force to study how Oregon attaches to federal provisions on international taxation. The task force is a step toward raising business taxes during the 2027 session. During testimony, OBI made it clear the very existence of the task force could result in diminished competitiveness. The bill is scheduled to receive a vote on the House floor, and OBI expects it to pass despite bipartisan opposition.
Transit funding: HB 4008, which would authorize a task force to examine revenue sources for public transit, is stalled in the Joint Committee on Ways and Means. Although examining transit funding sources is appropriate, OBI opposes the bill because it doesn’t include important items such as demand, usage, needs, priorities and farebox recovery as factors to be considered. Regardless of the bill’s outcome, Gov. Kotek is expected to set a table for a group to look at transit funding prior to the 2027 session.
Notable News
Minimal budget cuts: For months, the Legislature’s top budget writers warned that Oregon faced a $650 million to $750 million hole in its state budget due to President Donald Trump’s sprawling tax- and budget-cutting bill. On March 1, they made public their planned cuts – and they total just $128 million, a teensy fraction of the $39 billion state budget (The Oregonian).
Oregon export drop: Oregon exports declined by $5.9 billion in 2025, a massive 17% drop amid the global upheaval triggered by President Donald Trump’s trade war. Tariffs are just part of the story, though. Damon Runberg, economist with the state economic development agency Business Oregon, says the decline also reflects cyclical trends in the semiconductor industry and broader weakness among the state’s businesses (The Oregonian).
ODOT funding: After several weeks of private discussions, Oregon lawmakers have unveiled their plan to close a $289 million budget gap through next year at the state transportation agency (The Oregonian).
Prosperity council unhappy: Governor’s Prosperity Council member Jordan Schnitzer has criticized Gov. Kotek’s support of SB 1507, which partially disconnects Oregon from the federal tax code. He says other members of the Prosperity Council are also not happy with the governor’s position (Oregon Journalism Project).
Housing slump: Local, county and state housing officials issued permits for only 4,800 multifamily units in 2024—the lowest total in 12 years. Preliminary data shows 2025 will barely exceed that dismal figure (Oregon Journalism Project).
Tax administration: Oregon counties say they’re opposed to Gov. Tina Kotek’s economic development legislation because it doesn’t provide them financial help to offset the rising costs of administering tax breaks (The Oregonian).
Eugene climate fund: Inspired by the unprecedented financial success of Portland’s cash-rich climate fund, environmental groups are pushing to establish a similar fund in Eugene. Environmental activists in Eugene have submitted an initiative petition that would establish a fee on large corporations to fund local climate action. Their plan: to collect enough signatures to get the initiative petition before city voters in November (The Oregonian).
PGE renewable project: Portland General Electric is turning to batteries and more batteries — and some solar — to meet rising demand and clean energy mandates. The state’s largest electric utility has announced deals that will bring it 650 megawatts of new battery energy storage capacity by the end of 2028 (The Oregonian).
Wildfire settlement: Portland-based PacifiCorp will pay $575 million to settle U.S. claims related to four Labor Day 2020 wildfires in Oregon and two fires in California, the U.S. Department of Justice announced Feb. 20 (Portland Business Journal).
School attendance: The Oregon Legislature is poised to pass a bill that would supersize public reporting of student attendance data. Researchers say the move is a key first step towards lowering Oregon’s near-worst-in-the-nation rate of chronic absenteeism (The Oregonian).
Preschool for All: Multnomah County commissioners will soon embark on another summer of Preschool for All revenue discussions—and an early draft report from a key group of advisers provides some insight into what might be on the table. There are two notable points in the draft recommendations issued by the program’s technical advisory group, or TAG. First, the majority of TAG members recommend the board again delay a scheduled 0.8% tax increase, this time until fiscal year 2029, before once again reassessing. The second big takeaway is that the TAG does not yet recommend commissioners index the tax to inflation, an option popular among some of the program’s critics (Willamette Week).
Décor business sold: Portland decor manufacturing and retail company Schoolhouse has been acquired by a New York group months after it appeared on the brink of closing. Hudson Valley Lighting Group, based in Wappingers Falls, New York, said Feb. 20 it had acquired the company for an undisclosed price (Portland Business Journal).
Portland business taxes: Portland elected leaders are pressing ahead with a proposal to significantly increase a tax break for small businesses as the city looks to spur economic growth and opportunities. The measure would raise the city’s business license tax exemption from $50,000 in gross receipts annually to $75,000 for tax year 2026 and to $100,000 for tax year 2027 (The Oregonian).
Data center taxes: Economic development legislation championed by Oregon Gov. Tina Kotek is poised to dramatically expand the state’s tax breaks for data centers, which are already among the largest in the nation (The Oregonian).
Data center impacts: Gov. Tina Kotek said Feb. 24 that data centers’ impact on Oregon is “not sustainable” at the current growth rate, citing the industry’s consumption of water, energy and community resources (The Oregonian).
Portland multifamily rebound: Portland’s multifamily market ended last year on firmer footing. Multifamily property transaction deal flow has snapped back, vacancy has improved amid a period of rent softness and national headlines are starting to favor Portland as a travel destination again (Portland Business Journal).
Portland building purchase: A downtown Portland office building returned to its lender in 2024 has been purchased. Big Pink owner Jeff Swickard purchased the Five Oak building at 421 S.W. Oak St. following a competitive bidding process (Portland Business Journal).
Labor commissioner race: Oregon Labor Commissioner Christina Stephenson may soon have a notable challenger as she works toward reelection. In recent weeks, state Sen. Dick Anderson, a Lincoln City Republican, has been exploring a race to run the state’s Bureau of Labor and Industries. The lawmaker is now leaning heavily toward jumping in (Oregon Public Broadcasting).
Bend climate fee: The city of Bend is planning to develop a new fee on natural gas appliances installed in newly built homes to reduce greenhouse gas emissions and advance its climate action goals (The Oregonian).
City of Roses: The Metro regional government is scrutinizing the work of a prominent Portland disposal company it hired to sustainably manage garbage and recycling from the Oregon Convention Center, City of Roses Disposal & Recycling, after determining the hauler dumped more than 17 tons of plastic in a landfill even though it was supposed to be recycled (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.
- 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.
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