legislative session 2

The Legislature has entered the final week of the 2024 session, which must end no later than March 10. Here’s where several key bills stand:

Drug Criminalization

HB 4002, which will recriminalize hard drugs in Oregon and end the failed Measure 110 experiment, passed the House with a 51-to-7 vote and the Senate with a 21-to-8 vote. The bill is massive but ultimately does four things that should give law enforcement and local governments the tools they need to combat Oregon’s drug crisis. The bill:

  • Creates a so-called “drug enforcement” misdemeanor that carries a maximum of 180 days in jail.
  • Makes it easier for law enforcement to prosecute drug dealers.
    Imposes a heightened punishment for dealing drugs in public areas like parks.
  • Establishes county-led deflection programs to provide sufficient paths to treatment rather than jail.

A companion bill, HB 5204, devotes substantial funding to Oregon’s struggling behavioral health and criminal justice systems. Oregon’s business community has endured the symptoms of Measure 110’s failed experiment through the open use and sale of drugs, retail theft and property crime, and constant threats to the safety of customers and workers. The passage of both HB 4002 and HB 5204 is the kind of bold action OBI and other members of the business community called for the Legislature to take during the 2024 session. Oregon simply could not have waited until 2025 or beyond.

Campaign Finance Reform

The -5 amendment to HB 4024 receives a hearing and vote in the House Rules Committee this morning. To go from a system that has no limits (but full disclosure and transparency) to a system that establishes limits for the first time is a lot. It’s brought together an unusual coalition of partners and will require a lot of work by the secretary of state, organizations like OBI and others. And while there are certainly components of the -5 OBI would not choose to see in a bill, the package is far better overall than the imbalanced, highly restrictive and unfair systems proposed as ballot measures. The version expected to be passed in House Rules is nearly complete, though OBI does expect one more round of amendments to tackle things like drafting errors, clarity and perhaps a few final compromises.

Tax Disclosure

OBI made solid progress this last week on efforts to clarify in state law that public disclosure of taxpayer information is prohibited at the state and local levels in Oregon. The House Revenue Committee passed HB 4031, which puts this clarification in tax statute, on a 7-0 vote. The amended bill is scheduled for a House floor vote on March 5, after which it will go to the Senate for what should be quick action.

Budget Bills

Budget work through the Joint Ways and Means Committee will pick up this week. Budget writers will rebalance some of the agency and program budgets passed in 2023 and provide funding for this session’s higher-profile policy initiatives. These include nearly $370 million for the governor’s signature affordable housing bill, SB 1537, and over $200 million, as noted above, for HB 4002. OBI also supports HB 4154, which would provide $15 million for a new semiconductor workforce talent program, part of the unfinished semiconductor support work from 2023, and HB 4042 which would fund a new loan fund for the development of commercial and industrial lands. The original ask for the latter bill was $40 million and appears to have been pared down to $10-15 million. There is also some important economic development funding related to the Hillsboro Hops’ stadium ($15 million), along with other sport facilities and youth sports programming, that OBI supports. OBI hopes to see more details in the coming days. Much of the funding for these initiatives will come from existing general fund resources, which now include over $400 million of unspent money from the last biennium.

Timber Tax

While the forest products community is working to find new money for wildfire management, SB 1593 is definitely not the solution. The bill proposes a new timber severance tax scheme. Proposed amendments to the bill were rooted in biased information and misconceptions about Oregon’s forestry and forest products industries. OBI’s testimony at the public hearing focused on the overall tax burden faced by businesses across Oregon. Our overall tax burden studies coupled with the industry-specific tax data provided by our partners at Oregon Forest Industries Council demonstrate the dramatic costs faced by businesses in the forestry and forest products sectors. Our understanding is that the hearing was a courtesy to the sponsors only and that the bill will not move.

Workers Comp. Fraud

SB 1580 would clarify Oregon law to hold employers accountable if they attempt to undermine Oregon’s workers’ compensation system by submitting fraudulent payroll forms. It passed unanimously out of the House Committee on Judiciary. It should make it through the legislative process this week with strong bipartisan support. The original proposal, which OBI opposed, would have created a Class C felony crime and carried an extremely punitive fine. The bill now clarifies that employers are subject to the same law (a Class A misdemeanor) as workers if they knowingly submit a false payroll form with the intent to reduce their workers’ compensation premiums. OBI fought for this change, as Oregon’s business community exercises overwhelming compliance and should not face the unfair burden the bill originally would have imposed.

Warehouse Workers

HB 4127 is a less onerous version of the Warehouse Worker Protection Act than early drafts of the bill. It is on track to become law after passing out of the budget subcommittee to which it was assigned. Unlike prior versions, HB 4127 borrows definitions adopted by other states and would no longer add burdensome layers to Oregon’s already strict meal and rest break laws. Importantly, the scope of industries affected by the bill has been narrowed. While OBI still believes this bill is simply not necessary, the current version will not place extreme burdens on business.

Tax Reconnect

A big concern at the beginning of this session related to a rumor that key legislators were considering a partial disconnect from the federal tax code. The alleged motivation related to federal legislation allowing immediate expensing of research and development costs and 100% bonus depreciation for short-lived assets. State lawmakers were concerned about changes to Oregon’s revenue stream if the state allowed similar treatment. Given that the federal legislation will very likely not pass before Oregon’s session adjourns, talk of this disconnect has tempered. OBI testified last week in the House Revenue Committee in support of HB 4034, which is the standard annual reconnect bill, noting how important connection to the federal tax code is both for easing administrative and compliance burdens and for supporting a competitive economic environment in Oregon.

Mandate Review

During this session’s first week, OBI offered comments in support of HB 4091 which would establish a Health Insurance Mandate Review Advisory Committee (HIMRAC). The bill calls for a balanced stakeholder group to review any proposed health insurance mandates submitted to interim legislative committees and report back. The House Committee on Behavioral Health and Health Care passed the bill on a bipartisan 10-1 vote. The bill is now in the Joint Ways and Means Committee, which is where the 2023 version of this concept died (HB 3157). Despite bipartisan support and no stated opposition, HB 4091 appears headed for the same fate. The OBI team continues to advocate for this widely supported, common-sense bill, but it remains unscheduled.

Cost Responsibility

The Joint Transportation Committee failed to move any of the bills introduced this session aimed at addressing the disproportionate burden freight users are shouldering to fund Oregon’s transportation system (HB 4165SB 1519 and SB 1543). Although OBI and others assumed the committee would wait to address the problem in the 2025 transportation package, freight users will continue to overpay as they have for several biennia. It is estimated that the freight community will have overpaid by $500 million by 2025. Oregon’s Constitution requires that all classes of vehicles (e.g. passenger, medium-duty, heavy-duty) pay a proportionate share of road funding relative to their impact on the transportation system. OBI testified in support of fixing this problem. High freight costs increase the cost of consumer goods, disproportionately burden companies that produce commodity products (they are unable to recoup these higher costs from consumers) and diminish the competitiveness of Oregon companies since businesses from other states do not face the same disadvantage. OBI will be heavily engaged in addressing this problem in the 2025 transportation bill.