legislative session 2

Senate Panel Guts Key Employee Bonus Bill 

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.


DEQ Pauses Burdensome Employee Commuting Rules

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 Air Quality Fee Increase Looms

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.


Alignment of State Leave Laws Progresses

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.


Legislature Weakens Important 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.


Bill Would Create Problematic 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 Tax Reform Receives Attention

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.


Bill Would Move Local Income Tax Disputes to State 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 Bill Improved, but Still Unnecessary

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.


House Passes Recycling Bill

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.