Clackamas Ballots: Elections officials in Clackamas County have struggled not only to count ballots from the May 17 primary, but even to produce a timely plan for completion. Among the races affected by the county’s problems are three featuring candidates supported by OBI’s PAC. The asterisk indicates the PAC’s support:
- House District 38: Daniel Nguyen* is very slightly trailing Neelam Gupta in the Democratic primary while Alistair Firmin has won the uncontested Republican primary.
- House District 51: James Hieb leads Lisa Davidson* in the Republican primary while Walt Trandum has won the uncontested Democratic primary.
- Senate District 13: Aaron Woods* leads Chelsea King in the Democratic primary, and Republican John Velez has won the uncontested Republican primary.
BOLI Runoff: Christina Stephenson and Cheri Helt are headed for a November runoff to become commissioner of the Bureau of Labor and Industries, The Oregonian reports. Stephenson received the most votes for the nonpartisan position during the May primary. However, she failed to meet the 50% threshold to win outright. The OBI’s candidate PAC supported Helt.
Campaign Spending: The Oregonian’s post-primary reporting includes a story looking at the relationship between high campaign spending and results. It found that the former this spring often didn’t produce the latter.
An Expensive Loss: One recipient of generous campaign support is Carrick Flynn, who nonetheless failed to win the Democratic primary for the newly created 6th Congressional District. Flynn notably enjoyed the backing of House Majority Leader Nancy Pelosi’s PAC, which began to spend on his behalf shortly after receiving a $6 million donation from cryptocurrency billionaire Sam Bankman-Fried, The Oregonian reported.
Schrader Likely to Lose: In the 5th Congressional District, meanwhile, incumbent Kurt Schrader almost certainly has lost, according to The Oregonian.
Candidates on Bridge: The three leading candidates for governor share their views on the Interstate 5 bridge replacement project with OPB.
State Releases ‘Shocking’ Revenue Forecast
The Oregon Department of Revenue released the Quarterly Revenue Forecast May 17. Below is a high-level summary.
Massive Revenue Growth: The June forecast is incredibly strong. It continues with the trends we’ve seen in all quarterly forecasts since September, 2020. Actual results (tax revenues coming into the state) continue to exceed previously forecasted expectations substantially. With this, the baseline general fund revenue outlook has increased another $2.4 billion since the March forecast and $4.0 billion since the 2021 “close of session” forecast, which was used for the state’s two year (2021-23) budget.
Volatility: State economist Josh Lehner called the results of 2021 tax payments “nothing less than shocking.” All major revenue instruments – personal income taxes, corporate and business income taxes, capital gains taxes – have grown tremendously. Oregon’s robust revenue growth is driven largely by an “inflationary boom.” Meanwhile, “bracket creep” (also a result of inflation pushing tax rates higher for many higher-income payers) also has driven up returns. The report noted that high income filers chose to cash in a wide range of assets in 2021, but that this creates huge volatility related to future returns. With recessionary risks rising, the report noted that a steep revenue decline of the sort Oregon experienced during the technology and housing busts is increasingly likely.
State General Fund and Ending Balance: The gross general fund revenue forecasted for the 2021-23 biennium (which began on July 1, 2021) is now expected to be $27.3 billion. This well exceeds the $23.3 billion forecast in June 2021 and the $24.9 billion forecast in March. The June forecast now projects a 2021-23 ending balance of $3.12 billion and reserve funds of approximately $1.71 billion, for a total of $4.83 billion in total effective reserves.
Kicker and Future Challenges: State economists now project a personal kicker of $3.03 billion to be credited in 2024 and a corporate kicker of $931 million, which would go into state education reserve accounts. Kicker payouts in 2024 and a smoothing or reversal of the current inflationary boom will create significant downward pressure on expected revenue for the 2023-25 biennium. Also contributing to this dip is the likelihood that high-income taxpayers who chose to cash in and pay capital gains taxes in 2021 may not repeat that behavior in the near future.
Given these factors, the forecast for 2023-25 general fund revenue is $26.1 billion, a decrease of $1.2 billion from the current biennium. This, of course, makes the current reserves of $4.83 billion incredibly important as a mitigating tool.
The full forecast can be found here.
Interim Task Force and Rulemaking Update
Legislative Days: Oregon’s Legislature will convene for a “Task Force Day” on May 31 and legislative committee meetings on June 1-3. Committee agendas have started to post and are available online. Interim committee days are often a place where committee leaders or other lawmakers discuss topics that may end up being legislative concepts for the next session, which convenes in January. OBI will closely monitor presentations and discussions for those that could affect Oregon’s employers.
Legislative Concept: The attorney general’s Consumer Privacy Task Force has been meeting for several years. This year, the task force is working to develop a comprehensive consumer privacy concept that will be introduced during the 2023 legislative session. The task force has released a draft proposal, which you can read here. OBI will continue to urge that any legislation allow for the continued use of customer loyalty programs and the like. While we are tracking this for retailers, we know many businesses could be affected.
Please contact Paloma Sparks if you want to know more about this task force.
Land Use and Planning
Urban Density: The Land Conservation and Development Commission adopted a temporary version of the Department of Land Conservation and Development’s Climate Friendly and Equitable Communities proposed rule May 19 and plans to adopt permanent rules at its July 20-21 meeting. The agency extended the deadline for the public comment period and will now accept public comments through July 1. The rules establish stringent regulations in designated areas that would prohibit parking and limit auto-dependent uses. No vehicle parking, circulation, access or loading would be permitted within “climate friendly” areas, including drive-throughs. OBI has joined the list of supporters of People for an Affordable Oregon, where you can learn more about the impacts of the proposed rule. Staff with DLCD have reached out to discuss our objections to the temporary rule and we will meet with them in June.
For land use and planning questions, contact Sharla Moffett.
Tax and Fiscal Policy
2023 Policy Package: The policy team is assembling a package of growth-oriented proposals for the 2023 legislative session. The package will touch a wide range of policy areas, including taxation and regulatory reform. Among other things, it will propose a fix for the tax-sourcing problem caused by the Metro homeless services tax approved by votes in 2020. In developing rules for the tax, Metro adopted a “cost of performance” method for tax sourcing rather than the “market based” approach used by most taxing authorities across the country, including the state of Oregon. The disconnect creates significant compliance and competitiveness problems for businesses located within Metro’s boundaries. These include the risk of double-taxation. Additional information about the policy package will be available within the next month.
For tax and fiscal questions, contact Scott Bruun.
Interstate 5 Bridge: Planners with the Interstate Bridge Replacement Program have advanced a design that includes just two auxiliary lanes, which are short stretches of roadway between entrances that provide extra room for merging and improve the flow of traffic. It also includes a partial interchange at Hayden Island and light rail in combination with express bus transit. Planners had contemplated a design that includes four auxiliary lanes, but opted instead for half that number. The many policymaking bodies involved in the replacement of the bridge will consider the recommendation, which could change if there is strong support for another option. A decision on the preferred design option is expected in July. Prior to the recommendation, OBI joined many other business organizations in urging planners to maximize capacity, and we will continue to advocate to that end. We also sent the letter to the bistate legislative committee overseeing the bridge, Metro Council and Portland City Council. Construction is expected to begin in 2025. An op-ed supporting additional capacity cosigned by Angela Wilhelms; Portland Business Alliance President and CEO Andrew Hoan and Oregon Trucking Associations President Jana Jarvis appeared in The Oregonian May 25.
For transportation questions, contact Sharla Moffett.
Employment and Labor
Paid Leave: We have prepared comments on the two latest rounds of rulemaking for Paid Leave Oregon, the program formerly known as the Oregon Paid Family and Medical Leave Insurance program. We will submit comments this month for the third round of rulemaking, which involves benefits. We submitted comments May 24 for the rules advisory committee process related to the fourth batch of rules, which cover a number of areas. The program will be funded by a 1% combined payroll tax, of which 60% will be covered by employees and 40% by employers. Businesses that don’t offer equivalent plans will begin to pay into the program early in 2023, as will their employees. We are working with the department to schedule a series of webinars, beginning in June. The first three webinars, which provide an overview of the program and equivalent-plan guidance, have been scheduled. Please see the schedule below.
Heat and Smoke Rules: Oregon OSHA adopted administrative rules in early May to protect employees from excessive heat and smoke. The heat rules include requirements to provide access to shade and water. They also require employers to provide paid breaks of increasing length as heat intensifies. The smoke rules require exposure assessments, training and require employers to compel mask usage under certain conditions. The heat rules will take effect June 15, and the smoke rules will take effect July 1. If you’d like to know more, please download our summaries of the heat and smoke rules. We also intend to host two webinars on the rules. In the first, to take place June 8 at 10 a.m., state agency experts will provide an overview of the rules and answer questions. We will open registration for the webinar next week.
For employment and labor questions, contact Paloma Sparks.
Energy, Environment and Natural Resources
Employee Commute Options: DEQ has begun rulemaking to update the longstanding Employee Commute Options program, which requires employers in the Portland metro area with 100 employees or more at a worksite to do several things. Primarily, they must reduce individual vehicle commute trips by 10% over a baseline, and to that end must develop commute plans that can contain various incentives such as free transit passes, telecommuting and the elimination of employer-paid parking. The current rulemaking will tighten requirements on Portland-area employers and expand the program to similarly sized employers in cities with more than 50,000 residents. OBI’s Sharla Moffett is serving on the rules advisory committee (RAC) for this rulemaking. She has submitted comments about the expansion of the program to smaller cities and several worrisome proposals floated at the first RAC meeting on May 9. Problems range from limited public transit options in some parts of Portland Metro and especially smaller cities to the reluctance use public transit at all due rising incidence of violence.
Air Permitting: Rules advisory committee (RAC) meetings for DEQ’s air permitting rulemaking have wrapped up, and DEQ is expected to issue a proposed rule for public comment any day. OBI participated on the RAC and submitted extensive comments in the process. While some problematic proposals have been dropped from consideration, we remain extremely concerned that the proposed rule will contain major changes in the permitting program that will be far more resource-intensive for regulated business as well as DEQ. The result would be a more costly program with further delays in issuing permits for program changes that will produce extremely minimal improvements in air quality. OBI will be submitting comments on the proposed rule and is working to ensure that policymakers understand that the proposed changes will make the program less efficient and no more effective. The rules are being fast-tracked in order be adopted in November before a new governor is seated.
Clean Fuels Expansion: We are monitoring the rulemaking process to expand Oregon’s Clean Fuels Program, which reduces the “carbon intensity” of road fuels by increasing the use of low-carbon fuels and other alternatives. The rulemaking is a product of Gov. Brown’s executive order 20-04 to reduce state greenhouse gas emissions. It follows a worrisome trend in which agencies increase the stringency of regulatory programs beyond the requirements included in the executive order that triggered them. While the executive order recommends reducing the carbon intensity of fuels below 2015 levels by 25% by 2035, DEQ is recommending a 37% reduction. Business representatives have argued that the state should take a more pragmatic approach and avoid unrealistic targets, focusing instead on reasonable and achievable goals. The fourth and final rules advisory committee meeting was held May 26 to consider the fiscal impacts of the draft rule. OBI will submit comments when the proposed rule is issued.
For environment, energy and natural resources questions, contact Sharla Moffett.
Product Labeling: OBI is monitoring the Truth in Labeling Task Force established by the 2021 passage of recycling-modernization legislation. The task force is reviewing options for Oregon-specific packaging label requirements, including the potential replacement of the universal recycling “chasing arrows” symbol with labels indicating recyclability in Oregon. The task force has established a basic proposal outline that, among other things, requires packaging to indicate clearly whether it’s recyclable and, if so, whether it can be discarded in conventional bins. It also includes a consumer education component. The implementation timeline has not been determined, but OBI seeks to delay any labeling requirements until the conclusion of a similar effort in California, which represents a much larger market. The task force must submit a report to the Legislature by June 1, a copy of which can be found here. Implementation of any new requirements likely will happen over a period exceeding three years, in part due to the need to develop a comprehensive statewide recyclability list.
Recycling: The Oregon Recycling System Advisory Council, which will advise DEQ on the creation of a uniform recycling collection list, among other things, met for the first time May 11. The committee is a product of the 2021 Recycling Modernization Act, which will revamp the state’s recycling system by, in part, shifting the cost to producers and manufacturers of packaged items and paper products. The act also required the creation of a statewide recycling list and public education. The advisory council will serve as the policymaking body for the system and help set fees that ultimately will be paid by producers and manufacturers categorized as Producer Responsibility Organizations.
For retail questions, contact Paloma Sparks.
Universal Health Care: On May 19, the Task Force on Universal Health Care considered a funding proposal recommended by its Expenditures & Revenue Analysis Workgroup. Under the proposal, a universal health care program would be supported by a payroll tax with rates based on employee salary and four personal income tax brackets based on income as a percentage of federal poverty line. Combined, these funding sources are expected to raise $21.35 billion per year. Although there is disagreement within the task force about this funding mechanism, it will be presented for community input this summer. Virtual community forums will take place throughout June with each meeting focusing on a different region of Oregon. In July and August, the task force will host six specialty forums for the health care and business communities.
Bridge Health Care Task Force: The 2022 Legislature created a task force to help low-income Oregonians who would lose Medicaid coverage that is guaranteed during the recently extended federal COVID emergency. The Joint Task Force on the Bridge Health Care Program met most recently on May 24 to begin considering options and waivers. The next meeting will take place June 14.
Cost Growth Committee: In 2019, the Legislature created the Sustainable Health Care Cost Growth Target Program and established the Cost Growth Target Implementation Committee. Directed by the Oregon Health Policy Board, the committee was responsible for designing the implementation plan for the cost-growth program. It delivered its recommendations in January 2021, and these include the creation of a governance committee for the cost growth program. OBI’s Morgan Beltz has been appointed to this committee, known as the Cost Growth Target Advisory Committee. The committee will, among other things, oversee program implementation, revisit the cost growth target value for 2026-2030 (and beyond) and review cost growth trends and cost drivers. The meetings will take place on June 22, July 19, Sept. 9 and Nov. 9. All will run from 2-5 p.m.
For health care questions, contact Morgan Beltz.
Education and Workforce
‘Student Voice’ Task Force: The Joint Task Force on Student Success for Underrepresented Students in Higher Education – aka the Student Voice Task Force – is holding in-person and virtual meetings on campuses across the state through the end of July. OBI has been asked to identify businesses to participate in task force roundtable discussions A complete schedule of task force visits and meetings can be found here.
The Legislature created the task force in 2021 to develop policy and funding proposals to help students from populations with comparatively low higher-education enrollment. Major themes that have emerged during previous meetings include the need to address student debt, the need for wraparound services, the need to increase high school counseling capacity and the need to help students navigate the administrative challenges of college attendance, which include lining up housing and accessing programs for which they are eligible.
The next meeting, on May 31, will be a virtual site visit to Central Oregon Community College. The meeting agenda and a link to watch a live stream can be found here.
If you’d like to learn more or participate, please contact Morgan Beltz.