Legislative and Rulemaking Updates
April 4 is the next big session deadline. By that date, all bills must be moved out of policy committees in their chamber of origin. Given the number of bills that remain alive, the next several days are bound to be crazy.
This session has seen a remarkable number of substantive policy proposals showing up on dockets at the last minute. You’ll see examples below, but this is happening in nearly every policy area. It has folks scrambling to keep up on what’s coming, fully prepare for hearings, and—importantly—provide relevant information to legislators before votes. That has led to a great deal of frustration among a wide variety of stakeholders.
Movement on contentious social issues such reproductive rights, gender affirming care and gun policy also has contributed to a shift in the tone of the session. Three months remain until June 25, when the Constitution requires adjournment. It’s going to be a bumpy ride.
Budget Framework Released: The co-chairs of the Joint Ways and Means Committee released their framework budget last week, calling for $31.6 billion in General- and Lottery-Fund spending during the next biennium, which will run from July 2023 to July 2025. This would be an $8.3 billion increase in spending over the current budget, which covers the 2021-23 biennium. The proposal includes increases in the following program areas:
- $600 million for K-12 education
- $2.3 billion for human services, including $485 million for behavioral health program expansion
- $1 billion for public safety
- $200 million for the judicial branch, including $35 million for additional public defenders
- $515 million for state and contract employee raises.
The proposal also includes spending on new program areas, including:
- $217 million for homeless services
- $210 million for Oregon CHIPS Act (semiconductor) incentives
- $120 million for early learning initiatives
- $100 million for child care infrastructure expansion.
The budget includes a $274 million addition to the Rainy Day Fund and a resulting positive ending balance of $326 million, which is about 1% of next biennium’s budget. The ending balance is expected to be $4.8 billion at the end of the current biennium. However, $3.9 billion will cover the 2024 personal kicker refund, and the remainder (above that $326 million figure) would go toward the new spending noted above. We will continue to watch departmental budget discussions, including important conversations about opportunities that would drive economic activity.
Interstate Bridge Replacement: Finally, there is news to share about the $1 billion package to fund Oregon’s portion of the Interstate 5 bridge replacement project. Leaders of the Joint Committee on Transportation revealed the funding proposal, which includes $300 million in general obligation bonds (backed by the General Fund and the highway user tax program) and $700 million paid from ODOT’s budget at an unspecified rate per year over an unspecified number of years. The bill, which we expect to see this week, needs to be passed by approximately May 1 for the bridge project to be eligible for up to $3 billion in federal funds.
Insurance Mandate Review: HB 3157 would establish a committee to review legislation that would expand mandated coverage of specified procedures. The bill is scheduled for a vote on March 27 in the House Committee on Behavioral Health and Health Care. This OBI proposal is a component of our Growth and Innovation Roadmap. The -3 amendment would modify our proposed committee composition by adding “a member representing an organization that promotes health equity policies and practices that are informed by racial justice principles” and removing a member with expertise in the provision of health care in rural areas. We expect that amendment to pass. Despite those changes, OBI remains encouraged by the momentum of the bill.
Child Care Pilot: OBI submitted comments in support the -1 amendment to SB 1040, which would direct the Department of Early Learning and Care to create a micro-center child care pilot program. The department would choose three child care centers to participate in the pilot project with the intent of developing a model to be used throughout Oregon. Micro centers are one room child care centers located in schools, hospitals, businesses or community centers. They would be a small, but welcome, step toward addressing Oregon’s child care shortage. The Senate Labor and Business Committee sent the bill to the Joint Ways and Means Committee March 20 with a do-pass recommendation.
Warehouse Regulation: HB 3568 has a hearing and possible vote on March 29, and we have not yet seen an amendment. For now, the bill at that link contains placeholder language. Based on information obtained thus far, however, we expect that amended language would prohibit employers from enforcing performance metrics, leading to a proliferation of lawsuits despite the existence of a robust enforcement structure for worker safety issues. Such legislation would make Oregon less competitive than other states in securing projects such as distribution centers and manufacturing facilities.
Opportunity Zones: HB 3039 was heard in the House Revenue Committee last week. The bill would disconnect Oregon’s tax code from the federal opportunity zone program, effectively creating a 9.9% tax increase for Oregon taxpayers who invest in these zones. The federal program, which started in 2017, is designed to encourage investments (by deferring capital gains taxes) in designated low-income zones across the country. HB 3039 would reduce the incentive to invest in these areas by adding back the deferred taxes as income for Oregon taxpayers. A timely national report, which came out the same day as the hearing, shows how effective opportunity zones are across the county and how Oregon, at 76%, has the nation’s highest zone investment rate. The demonstrable success of opportunity zones in Oregon should make it very difficult for program detractors to prevail.
Diesel Ban: SB 803 would phase out the sale of petroleum diesel statewide by 2030. It is scheduled for a work session this week. OBI has testified in opposition to this bill, noting that inadequate supplies of renewable diesel would cause market volatility and other challenges. There are discussions about an amendment that would pivot to a task force to study renewable diesel supply.
Universal Health Care: On March 21, the Senate Committee on Health Care held a work session on SB 704, which would establish a Universal Health Care Governing Board (UHCGB). The -8 amendment was adopted, and the bill was moved to the Senate Rules Committee, where it awaits further modification and a subsequent referral to the Joint Ways and Means Committee. The -8 amendment makes several changes to the base bill in an effort to mitigate opposition. Notably, it removes the direction to the UHCGB to develop a comprehensive plan for a single-payer Universal Health Plan, with an eye toward 2027 implementation of that plan. Instead, it would direct the UHCGB to continue the work of the Task Force on Universal Health Care and present to an interim legislative committee a comprehensive plan for a universal health plan, including a plan for funding, by Sept. 15, 2024. While we are relieved that the implementation directive was removed, we believe that the money and focus devoted to this issue are imprudent. It would be better to focus on more practical and less disruptive ways to provide coverage for the small percentage of Oregonians who lack it. Several other states have explored the idea of a universal health plan, ultimately concluding that there are far too many complexities and exorbitant costs. Oregon would stand alone in moving down this path.
Self-Serve Gas: HB 2426A passed the House with a vote of 47-10. The bill is now in the Senate, awaiting referral to committee. In simple terms, the bill would allow Oregonians to pump their own gas. There are some restrictions for more populous counties, such as maintaining at least one attendant on site to give customers the option of full serve. But it looks like this perennial policy proposal may actually move forward this year.
Insurance Legislation: Last week, the House Committee on Business and Labor sent two bills to the House floor. HB 3242 and HB 3243 would significantly raise insurance rates and bog down Oregon’s court system with unnecessary litigation by allowing individuals to file lawsuits against insurance companies for alleged “bad faith” negotiating tactics. They also would strip the insurance industry’s exemption under Oregon’s Unlawful Trade Practices Act. The bills are unnecessary, as consumers who are wronged by insurance companies already may be made whole through agency enforcement actions. OBI expects a contentious floor fight that will result in a very close, party-line vote in the House. OBI and others will then push for these bills to stall in the Senate.
Sports Task Force: OBI submitted comments in support of HB 3250, which would create a task force built upon the state of sport report released last year by the Portland Business Alliance, Oregon Business Council, U.S. Bank, OBI and many other partners. The bill should move from the House Committee on Economic Development and Small Business to the Joint Ways and Means Committee on March 28. The ultimate goal is to have the state create an economic development plan that leverages Oregon’s strengths in the sport, apparel, team and recreation ecosystem.
Notable News
Economic Gloom: Sixty four percent of Oregonians surveyed are worried about their finances, according to a poll by DHM Research, The Oregonian reports. Sixty percent say Oregon’s economic conditions are poor, which is a significant increase from last summer, when almost half rated economic conditions poor.
CHIPS Act Editorial: A March 19 Oregonian editorial urges the Legislature to go beyond the funding and land-use measures contained in Senate Bill 4.
Climate Program Complication: A fight between HF Sinclair Corp. and the Department of Environmental Quality over “compliance instruments” tied to the state’s Climate Protection Program could lead to higher fuel prices in Oregon given a court’s recent ruling on behalf of the DEQ, the Portland Business Journal reports.
Homeless Spending: Multnomah County spent less than half of the Metro homeless services bond money it had expected to spend over the first half of the current fiscal year, Willamette Week reports. The county attributes the underspending to contractor understaffing. The money is generated by a voter-approved tax on individuals and businesses.
New Tillamook Plant: The Tillamook County Creamery Association, an OBI member, is opening its first plant outside of Oregon, the Portland Business Journal reports. The Illinois plant will make ice cream.
Daimler Profile: Check out this Portland Business Journal profile of OBI member Daimler Truck North America, which manufactures electric trucks in Portland.
Entek Expansion: OBI member Entek, which produces battery parts and recently received a significant U.S. Department of Energy grant, will build a $1.5 billion manufacturing campus in Indiana by the end of 2027, The Oregonian reports. Entek CEO Larry Keith said the company chose Indiana for several reasons, including “the excellent workforce opportunity, a nearly shovel ready construction site with available utilities located in an industrial park, excellent vocational education, and the business-friendly incentives from both the state and local governments.”
Federal Law Updates Employee Retirement Plan Rules
The Miller Nash employee benefits team has produced a guide to employee retirement plan changes created by the Consolidated Appropriations Act, 2023. The act, signed by President Biden on Dec. 29, 2022, includes the SECURE Act of 2022, which updates the SECURE Act of 2019. SECURE is an acronym for Setting Every Community Up for Retirement Enhancement.
The updated SECURE Act contains more than 90 provisions and makes significant changes that aim to increase retirement plan participation and preserve retirement savings. Go here to see Miller Nash’s guide.