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Walkout by Senate Republicans Continues

A nearly two-week walkout by Senate Republicans continued Monday following an unsuccessful pause in floor sessions to allow negotiations between Democratic and Republican leaders. This means not only that a number of significant bills will remain trapped in the upper chamber, but also that Republicans will begin to rack up enough unexcused absences to run afoul of Measure 113. Voters approved the measure in November to discourage legislative walkouts.

Members of the minority party walked out on May 3, denying the Senate the two-thirds quorum needed to conduct business. The walkout coincided with partisan friction over legislation involving firearm regulations, abortion and gender-related health care. Republican leaders characterized the action as a protest against the passage of bills that fail to meet legal requirements for readability. The 1979 readability law in question, the Oregon Capitol Chronicle reports, requires every bill summary to be written at the equivalent of a middle-school reading level.

Senate paralysis has left several important bills in limbo, including those that would provide funding for the Interstate 5 bridge project, create a research and development tax credit, combat organized retail theft, reform Oregon’s estate tax and more.

Lending the walkout added drama is Measure 113, which penalizes legislators who accumulate at least 10 unexcused absences from floor sessions. According to that constitutional amendment, “Failure to attend, without permission or excuse, ten or more legislative floor sessions called to transact business during a regular or special legislative session shall be deemed disorderly behavior and shall disqualify the member from holding office as a Senator or Representative for the term following the election after the member’s current term is completed.”

Following Monday’s continuation of the walkout, three senators have hit the disqualification threshold: Daniel Bonham of The Dalles, Dennis Linthicum of Beatty and Brian Boquist of Dallas, an independent. The triggering of the Measure 113 penalty likely will lead to a lawsuit challenging the measure’s constitutionality.

Some speculate that the Republicans are out for the duration while others believe they will come back for the final day of session, June 25, to ensure a state budget is passed. If a budget is not passed, the state would operate under a previously adopted continuing resolution that contains some funding provisions, at least until Sept. 15.

Walkouts have long been a tactic used by parties in the minority to stall legislative action in Oregon. According to a list compiled by KGW, Republican legislators have staged seven previous walkouts, beginning with a protest over tax legislation in 2007. Before that, Democrats staged three walkouts, the most recent in response to a 2001 redistricting plan.


Legislative and Rulemaking Updates

Bonus Bill Gutted: One of OBI’s biggest priorities this session is to pass a bill, HB 3205, that would allow employers once again to offer hiring and retention bonuses, which are effectively barred by Oregon law. The bill would help recruit and retain workers and is supported by a coalition of public and private employers. After substantial negotiation earlier this session, the House passed an amended version of HB 3205 without any opposition. This version would allow employers to offer retention bonuses 30 days after the start of a worker’s employment. The bill was expected to move swiftly through the Senate without further amendment. However, an amendment was introduced on May 10 that effectively guts the bill. The adopted amendment removes all of the previously negotiated language, replacing it with a requirement that the commissioner of the Bureau of Labor and Industries adopt rules clarifying the existing law. OBI will work to restore the negotiated language.

Employee Commuting: On May 11, the Department of Environmental Quality announced that it would pause the Employee Commute Options rulemaking in response to comments filed by rulemaking advisory committee (RAC) members. On May 12, more than 20 legislators sent a letter to DEQ Director Leah Feldon expressing concerns with the draft rule. The complex rule has two basic parts. First, it would require employers in Clackamas, Multnomah and Washington counties with more than 100 employees at a worksite to reduce employee commuting by 20%. These employers are subject to a longstanding version of the regulation, and the new version would double the trip reduction target. Second, the proposed rule would require employers in Salem, Albany, Corvallis, Eugene, Springfield, Medford and Bend with more than 100 employees at a worksite to reduce employee commuting by 15%. Rulemaking has been paused for an indeterminate period to gather more input from employers and the RAC.

Huge Fee Increase: OBI has expressed opposition to HB 3229, which would increase Department of Environmental Quality fees on Title V air quality permits by roughly 85.5% through 2024. A fee hike of this size could cost some companies hundreds of thousands of dollars. Historically, permittees have been notified well in advance of large fee increases, but this proposal was not discussed before the bill’s introduction. On May 10, Sen. Michael Dembrow, D-Portland, shared an amendment that would raise fees 88.5% in total through 2024. OBI continues to seek a better alternative than this enormous increase, and we have spoken with agency staff and leadership, as well as with legislators, about the total fee burdens and rapidly escalating compliance costs companies face across all air quality programs. The Department of Environmental Quality says that 11 positions would be cut from the Title V program if the fee increase is not approved.

Leave Alignment: On May 10, the House Commitee on Business and Labor heard another of OBI’s top priorities this session, SB 999, which would better align Paid Leave Oregon with the Oregon Family Leave Act. OBI testified in support. of the bill, but we noted that SB 999 would not alone align the two laws sufficiently. More work will be required. The bill is scheduled for a committee vote on May 17 and would move to the House upon passage. Because the bill has not been amended since its passage by the Senate, it would not have to return to that chamber for concurrence. Thus, a walkout should have no bearing on its passage.

Economic Incentives: Both enterprise zone (EZ) and Strategic Investment Program (SIP) bills have been amended in disappointing fashion. HB 2199 was a simple bill that extended the existing sunset date for Oregon’s EZ program, an important economic development tool. Adopted amendments would carve out the property tax component of an EZ exemption after its fifth year. This would reduce the total exemption value by more than 40%, drastically eroding the program’s efficacy. Meanwhile, HB 3457 would have adjusted the minimum level for an SIP project to account for inflation. Adopted amendments would severely limit the critical gain share program, reducing the ability of counties to negotiate SIP deals. Amendments also would place a five-year sunset on the SIP, which previously did not have a sunset. Worse, the committee adopted these amendments without any public discussion. The committee passed the bills on split votes with subsequent referrals to the Joint Tax Expenditure Committee. OBI has requested public hearings on these bills, which could happen as soon as May 19. Oregon’s EZ and SIP programs are vital tools for economic development and job creation, particularly in light of Oregon’s worsening tax and regulatory environments.

Contracting Preference: On May 11, the Senate Committee on Labor and Business passed HB 3572, which would create a public contracting preference allowing B corporations to charge 5% more than competing bidders. OBI represents a wide variety of entities, including some fantastic B corporations. However, we do not support this bill. A company’s governance structure should not qualify it to receive a premium paid by taxpayers. This preference would create a dangerous precedent, reduce competition in public contracting and increase public costs. You can read OBI’s testimony here.

Estate taxes: Two estate tax bills continue to receive attention, including time on the Senate Finance and Revenue Committee’s agenda May 15. First, the committee will vote on SB 498, which would raise the estate tax exemption for farm, forestry and fishing businesses to $15 million (from $1 million). OBI supports this bill, which is a critical step toward protecting these small, often family owned businesses and the jobs they provide. SB 456, which would eliminate the estate tax beginning with the 2023 tax year, will receive a public hearing. That concept is not likely to be the one that moves. Instead, an amendment would simply increase Oregon’s general estate tax exemption from $1 million to $1.5 million. OBI believes the estate tax should be eliminated. At a minimum, however, the exemption should be raised to $2 million with an inflationary index going forward. This would at least create parity with Washington. Right now, Oregon’s exemption is the lowest (worst) in the country, and a move to $1.5 million would not change that. Any changes to estate tax laws are likely to be moderate given the political and budgetary environment. As with other tax policy, the May 17 revenue forecast will be highly informative.

Oregon Tax Court: Last week, the Senate Finance and Revenue Committee was supposed to vote on HB 2576, OBI’s bill giving the Oregon Tax Court exclusive jurisdiction over local income tax disputes. However, the meeting was postponed as a result of the Senate Republican walkout. The vote is now scheduled for May 15, assuming business resumes. The bill has the support it needs to pass.

Closed Captioning: On May 8, the House Committee on Early Childhood and Human Services passed SB 569, which would require half of all televisions in places of public accommodation to have closed captioning activated. The original version of this bill included a private right of action and much more stringent requirements. OBI worked to remove the private right of action and align the bill with a law already enacted in Washington. With those changes, the bill is manageable, though it would impose new regulations on businesses at a time when many are struggling to comply with a large number of recent legislative and agency requirements.

Recycling Mandate: On May 9, the House passed SB 123, which has been amended to blunt its potentially harmful effects. The latest version would ask producer responsibility organizations to consider and develop recommendations for digital labeling relating to packaging recyclability. Though the bill would no longer require such labeling, OBI remains opposed because the bill is unnecessary and would complicate the ongoing implementation of 2021’s Recycling Modernization Act (now in rulemaking). Further, Oregon is likely better off learning from the implementation of similar requirements in larger markets such as California.


Notable News

Portland Fee Freeze: Portland Mayor Ted Wheeler on May 8 invited representatives from regional governments, utilities and others to a meeting to discuss a flurry of planned increases in taxes, fees and utility rates, The Oregonian reports. Shortly after the meeting concluded on May 11, Wheeler announced a one-year freeze on nearly all planned and proposed city increases in taxes, fees and utility rates. The invitation recognizes the combined impact of local taxes and fees on the cost of living, echoing OBI’s 2022 report on the rising business tax burden in Oregon and, locally, in the Portland area. The report found that Portland now features the nation’s second highest marginal personal income tax rate, behind only New York City.

Gas Stove Bans: Eleven attorneys general, including Oregon’s Ellen Rosenblum, have asked the U.S. Consumer Product Safety Commission to study health hazards created by gas stoves, according to The Oregonian. Cities in several states, including Eugene, have imposed local gas stove bans in new homes, but a recent opinion by the Ninth Circuit Court of Appeals has deemed such bans invalid.

Secretary of State: Secretary of State Shemia Fagan resigned May 8 as intended following the disclosure of her contract with a troubled Oregon cannabis retailer, the Oregon Capital Chronicle reports. Deputy Secretary of State Chery Myers will serve in her stead until Gov. Kotek names a replacement, which she said she would do after the May 16 election.

COVID Conclusion: Oregon health officials on May 10 announced the end of COVID vaccine requirements for teachers and health care workers and officials, the Oregon Capital Chronicle reports. The relaxation of rules for health care personnel began May 11, and those for teachers will begin June 17, to coincide with the end of the school year. The state also will no longer ask people with COVID to isolate for five days. The state’s announcement came one day before the May 11 conclusion of the federal COVID public health emergency.

Rep. Brian Stout: House Speaker Dan Rayfield on May 9 said he believes Rep. Brian Stout should resign following a judge’s decision to uphold a restraining order against the Columbia City Republican. The five-year restraining order was sought by a former campaign volunteer who alleges Stout sexually assaulted and threatened her, the Oregon Capital Chronicle reports.


June 1 Webinar to focus on Regional, Community Banking

Regional banks have dominated business headlines in recent weeks as the valuations of institutions like California-based PacWest, Tennessee-based First Horizon and Arizona-based Western Alliance have experienced wide swings. What’s behind the phenomenon, what’s happening in Oregon, and what should businesses served by regional and community banks know?

Join the CEOs of three Oregon-based regional banks June 1 for a panel discussion, “Banking in the News: What Does this Mean for Community Banking in Your Area?” The discussion will be moderated by Linda Navarro, president and CEO of the Oregon Bankers Association.

The panel will include:

The webinar, presented in partnership with the Oregon Bankers Association, will run from 10 a.m. to 11 a.m. and include time for questions and answers.

Go here to register.


CompSAFE Webinar: Heat and Smoke Rules, One Year In

Oregon’s workplace heat-exposure rules went into effect on June 15, 2022. Companion rules governing exposure to wildfire smoke went into effect weeks later.

Join experts from Oregon Occupational Safety and Health on Thursday, May 18 to learn how the first year under the rules went and hear about potential adjustments. The online webinar will provide a brief refresher on rule requirements, a look back at 2022 and a look ahead to 2023. State experts also will field questions from webinar participants.

The webinar is made possible by OBI’s CompSAFE program, which allows qualifying members to save on workers’ compensation insurance through OBI’s partnership with SAIF, Oregon’s not-for-profit workers’ compensation insurance provider.

The webinar will run from 10-11 a.m. and is open only to OBI members and to invited guests.

OBI members can register here.