Voters Defeat Salem Payroll Tax by Large Margin
On Nov. 7, Salem voters defeated an employee payroll tax narrowly adopted by the City Council in July. The defeat was overwhelming, as more than 80% of voters opposed the tax.
The tax would have collected nearly 1% of wages for work performed in the city, costing the average Salem worker about $500 per year.
Soon after the City Council adopted the tax, OBI led a signature-gathering effort to place it before voters. While OBI recognizes that Salem faces budget difficulties, the tax would have placed a significant burden on employees during a time of elevated inflation. It also suffered from several other flaws, including:
- Because the tax would have applied to any work performed within city limits, it would have placed an unreasonable tracking and compliance burden on employers regardless of where those employers were located. Imagine running a regional plumbing business that does work occasionally within the city.
- There was no cap on the tax. The City Council could increase the rate at any time with a simple majority vote.
- Enforcement of the tax would have cost the city millions. An untold amount of the tax’s revenue would have been redirected from community safety services to administer and enforce this very complicated tax.
- The tax would have applied not only to large businesses, but also to self-employed people, imposing a tracking burden many people are ill-equipped to shoulder.
- It would have set a bad precedent, and other cities facing budgetary pressure might have been tempted to follow suit, further exacerbating the state’s growing patchwork of unique, complicated local and regional taxes.
“This result is not at all surprising. It’s just unfortunate that it had to play out this way,” said OBI Political Affairs Director Preston Mann. “The opposition to this campaign was emphatic and immediate. Complex, costly and unique taxes that address local shortfalls create significant problems for employers and employees. Voters agreed.”
Vision Oregon Event Leaves Attendees Inspired
Joined by many state and local elected officials, hundreds of business leaders converged on the Portland Art Museum Oct. 25 for OBI’s annual Vision Oregon Event.
In a memorable keynote address, futurist Steve Brown discussed the capacity of artificial intelligence to both disrupt and improve the workplace. Brown’s address was both fascinating and, to many, sobering for observations like this: Your job won’t be taken by AI. It will be taken by someone who uses AI.
This year’s Oregon Visionary Award recipients were honored as well. They are the Families First Childcare Center and the Oregon Manufacturing Innovation Center (OMIC R&D). If you weren’t able to attend, check out the videos about these two organizations by following the links below.
The evening concluded by recognizing Freres Engineered Wood’s Mass Ply panels as the winner of the inaugural Coolest Thing Made in Oregon competition. In the final round of this bracket-style contest, Freres defeated A-dec’s 500 Dental Chair. Learn more about Mass Ply panels here.
Thanks to all of the sponsors that made Vision Oregon such a success this year. We look forward to doing it again next year, recognizing more visionary Oregonians and crowning a new Coolest Thing Made in Oregon.
Watch Families First Childcare Center video here.
Watch OMIC R&D Video here.
OBI Launches Inaugural Oregon Civics Bee
The Oregon Business & Industry Research and Education Foundation is proud to launch the inaugural Oregon Civics Bee. This competition will give middle school students a chance to share their ideas for improving their communities and show their enthusiasm for civics. Participants will have a chance to win cash prizes ranging from $500 to $1,000.
The Oregon Civics Bee is part of U.S. Chamber of Commerce Foundation’s National Civics Bee. The winner of the Oregon Civics Bee will be invited to participate in the national round of the competition in Washington, D.C. Participants in the national competition will have a chance to win cash prizes ranging from $5,000 to $10,000.
Any 6th, 7th or 8th grader who’d like to participate in the Oregon Civics Bee will identify a problem in their community and write a 500-word essay about how they could address it. The essay must be submitted by means of a portal on the Oregon Civics Bee website. The portal will open on Nov. 13, and all entries must be submitted before Jan. 9, 2024.
A panel of judges will review the essays and select 20 students to participate in the Oregon Civics Bee finale in Salem in May 2024 (specific date and location TBA). The live competition will include a quiz-style round and, for three finalists, a chance to make the case for their essay in front of a panel of judges.
Kicker in Crosshairs Despite Huge Revenue Growth
When they file their 2023 income taxes, Oregonians can expect to receive a record $5.61 billion income tax kicker. That’s a lot of money, and there are those who’d like the Legislature to retain and spend at least some of it.
One of these is Sen. Jeff Golden, D-Ashland, who in October proposed that lawmakers direct 30% of the kicker to a wildfire-prevention trust fund.
Others believe the individual kicker should be directed to education (the corporate kicker already is). On Nov. 1, coincidentally, Portland Public Schools leaders demanded more money from the state amid a strike by district teachers. They may or may not succeed. But, to her credit, Gov. Tina Kotek said that money shouldn’t come from the kicker.
“I think a lot of Oregonians are hurting,” she said. “Inflation has really impacted people. We are seeing numbers that people are dipping into their savings more and that personal income tax relief that will come in next year’s taxes is really important to Oregonians.”
Two additional pieces of context deserve mention amid any debate about the kicker and education funding.
First, as the graph below shows, the state general fund, much of which is used to pay for K-12 education, has grown rapidly for years and is expected to continue the trend. The general fund more than doubled from the 2011-13 biennium to the 2021-23 biennium. Revenue is expected to increase by roughly $20 billion over the next decade.
Second, the Legislature supercharged K-12 education funding in 2019 by adopting the corporate activity tax. The tax was intended to generate $2 billion per biennium. As the graph below shows, realized and anticipated collections far exceed the Legislature’s goal.
With this growth, it’s tough to make a case that legislators should take individuals’ kicker refunds, or that the state’s individual and business taxpayers provide insufficient revenue for education or anything else.
Policy and Rulemaking Updates
2025 Transportation Package: Leaders of the Joint Committee on Transportation (Co-Chairs Sen. Chris Gorsek, D-Gresham, and Rep. Susan McLain, D-Hillsboro, and Co-Vice Chairs Sen. Brian Boquist, I-Dallas, and Rep. Shelly Boshart Davis, R-Albany) will join OBI’s Transportation Steering Committee Nov. 29 from 9:30 to 10:30 a.m. to discuss plans for the next transportation funding package, which is expected to move in the 2025 legislative session. Contact sharlamoffett@oregonbusinessindustry.com if you would like to attend.
Daylight Saving and Worker Pay: Daylight saving time ended at 2 a.m. on Nov 5, when clocks fell back one hour. While many enjoyed an extra hour of sleep, the time shift may affect certain employers’ obligations under Oregon’s minimum wage, overtime, and meal and rest break laws. Oregon employment law generally tracks with federal law requiring overtime pay after 40 hours in a week, but employers with manufacturing and cannery operations should note their employees who work over 10 hours in one day should receive overtime pay. Those workers also may not work more than 13 hours in one day or 55 hours in one work week. Employers with hospitality operations should additionally pay close attention to their workers’ hours from the past weekend to ensure they do not underpay their workers.
NLRB Murkiness: A decision from the National Labor Relations Board (NLRB) that takes effect on Dec. 26 will consider two entities joint employers if they share or co-determine an employee’s essential employment terms, even if one entity has only indirect control over those terms. This decision removes the clarity provided by a 2020 rule that required direct and immediate control for a joint employer relationship to exist. By doing so, it increases legal confusion that likely will harm both employers and workers. Once a joint employer relationship is established, both entities are potentially subject to greater economic pressures and increased lawsuits. Several organizations are preparing to challenge this new rule in federal court.
CAT-Return Extension: Small victories are still victories. The Oregon Department of Revenue (DOR) is poised to change a proposed rule to align with OBI’s recommendations. DOR recently released proposed rule changes for aspects of the corporate activity tax (CAT). These include an amendment to OAR 150-317-1330, which provides guidance to taxpayers regarding requests for CAT return filing extensions. DOR proposed an automatic six-month extension for CAT returns when a taxpayer has been granted an extension for federal income tax purposes. That’s a good start, but OBI argued that a seven-month extension would be more appropriate because CAT filings often require information from federal tax returns and Oregon corporate excise tax returns. The additional month would improve the accuracy of CAT filings and align the CAT extension date with the due date for excise tax returns. We were pleased to receive notice from DOR in late October that the department agreed with our request and will amend the rule to allow for an automatic seven-month extension.
Enhanced Air Regulation: The Department of Environmental Quality has initiated a cumulative health risk pilot program that was authorized by Cleaner Air Oregon legislation (SB 1541) in 2018. The pilot’s purpose is to evaluate the cumulative impacts of industrial air emissions on sensitive populations and determine whether emissions should be reduced. Unlike programs that evaluate emissions from individual facilities, DEQ will assess the cumulative risk from all stationary sources within an area 2.5 miles in diameter. This approach could involve additional regulation on individual facilities within these areas that are not exceeding emissions benchmarks. DEQ is determining the pilot area, which must be in either Multnomah or Washington County and consider environmental justice factors. DEQ is expected to recommend a pilot area to the Environmental Quality Commission in January, then initiate modeling and community engagement. We will follow this process closely.
Notable News
Portland Teacher Strike: After months of fruitless negotiations, Portland public school teachers went on strike Nov. 1, Oregon Public Broadcasting reports. It is the first strike in the district’s history.
Fixing Portland: Portland Mayor Ted Wheeler announced that the city will begin to enforce its daylight ban on camping on public property Nov. 13, Oregon Public Broadcasting reports. Wheeler and Commissioner Carmen Rubio, meanwhile, have requested a meeting with small business owners who’d complained recently about conditions downtown, according to the Portland Business Journal. On Monday, Gov. Kotek said she’ll ask the Legislature to provide funding to revitalize the city, the Oregon Capital Chronicle reports.
Multnomah Preschool: Multnomah County’s Preschool for All program has underspent its budget and failed to increase preschool capacity by a meaningful number, Willamette Week reports. The program is funded by an income tax on high-earners.
Realtor Ruling: A federal court in Kansas City, Missouri, ruled Oct. 31 that the National Association of Realtors and residential brokerages conspired to artificially inflate commissions for home sales, Reuters reports. The jury awarded damages of $1.78 billion, which can be tripled under federal antitrust law. The decision could have far-reaching consequences for the way homes are sold.
Bank Deposits: Deposits in state banks fell 9.5% last year, the steepest rate in a decade, The Oregonian reports. Some are concerned that this trend might predict an economic downturn.
Housing Proposals: Gov. Tina Kotek’s Housing Production Advisory Council has released a couple dozen draft proposals to increase supply, The (Eugene) Register-Guard reports. Among them: streamlining the building permit approval process, making urban expansion easier, using state-owned land to build housing and cracking down on local tree codes. Meanwhile, one of Oregon’s most expensive cities, Bend, is on track to adopt a tree code by April, The Bulletin reports.
Blumenauer Retiring: Longtime Rep. Earl Blumenauer has announced that he won’t seek re-election, The Oregonian reports. In response, Multnomah County Commissioner Susheela Jayapal submitted her resignation and announced that she’d seek the Democratic nomination for the 3rd Congressional District seat, Willamette Week reports. Gresham City Councilor Eddy Morales, a Democrat, quickly followed suit, according to Willamette Week. Additional candidates either being recruited or seeking support include Multnomah County Chair Deborah Kafoury and state Rep. Travis Nelson, D-Portland.
Legislative Elections: Rep. Christine Goodwin has announced that she’ll seek the seat currently held by Sen. Art Robinson, whose participation in this year’s walkout may disqualify him for re-election. If Robinson is disqualified, Goodwin may face off against his son, the Oregon Capital Chronicle reports. Meanwhile, Sen. Lynn Findley, R-Vale, announced Nov. 8 that he won’t seek re-election. Former House member and chamber Republican leader Mike McLane says he’ll seek to fill the seat, Oregon Public Broadcasting reports. Rep. Vikki Breese-Iverson, R-Prineville, is said to be interested in Findley’s seat as well, according to OPB.
Oregon Companies Continue to Lead on Clean Energy
A trio of Oregon companies – and OBI members – have received attention recently for clean-energy innovations:
- Daimler Truck North America’s electric box truck is now in production at the company’s Portland facility, the Portland Business Journal reports.
- City of Roses Disposal and Recycling and Portland General Electric this month unveiled the state’s first electric garbage truck. The truck, funded mostly through PGE’s Drive Change Fund, can hold a charge for two days’ worth of residential garbage pickups, Oregon Public Broadcasting reports.