Session Underway: Transportation Package Clears House
A bill that would raise more than $4.3 billion over the next 10 years is set to become law within the next day or two. HB 3991 is the subject of a special session called by Gov. Kotek. Aiming to fund transportation, the bill would raise gas taxes, vehicle registration fees, vehicle title fees and a statewide employee-paid payroll tax. The bill also contains policy language about management at ODOT. Fortunately, the bill also would take steps to remedy a longstanding imbalance between freight and passenger revenue that violates the state Constitution.
OBI has expressed support repeatedly for adequately funded transportation infrastructure, which is necessary to move people and goods safely and efficiently. However, OBI opposes HB 3991, largely because it seeks to raise taxes on working Oregonians (literally – through a doubling of the employee-paid tax on wages) at precisely the wrong time. You can read OBI’s testimony here.
While the bill is poised to pass the state Senate, the last few days have not been entirely smooth. Below is a little background on the process that unfolded between Friday (convening) and this newsletter.
Convening: The special session convened on Friday, but no action was taken that day. The Senate convened quickly, saw a failed vote to adopt operating rules for the special session and then recessed until yesterday (Monday). The House organized, but delays throughout the day as members worked to get a quorum ultimately caused a committee hearing scheduled for Friday to be delayed. All legislative action was moved to Sunday.
Committee: On Sunday, the Joint Committee on Transportation Funding convened and received testimony on the proposed bill, HB 3991. (This bill had previously been reported on as LC 2 in some news stories as it did not receive a bill number until session. LC 2 had been the subject of a hearing on the prior Monday, but that did not count as being part of the official legislative process.) As with the hearing on LC 2 on Aug. 27, written testimony submitted by Oregonians was overwhelmingly opposed. In-person testimony was relatively balanced between support and opposition.
Amendments: In committee, Republicans introduced 13 amendments to avoid tax increases, add accountability and redirect the policy and taxation proposals in the Democrats’ bill. None were adopted. Speaker of the House Julie Fahey, D-Eugene, submitted two amendments. They were combined and added to the bill.
The resulting amendment specifies that the Department of Administrative Services (DAS) may lower the state fuel tax only when balancing usage under the highway cost allocation process. DAS may not increase taxes. The original version of the bill allowed for raising the gas tax by rule, which would have created a significant lack of accountability and was, likely, unconstitutional as only the Legislature may raise taxes. The amendment also added a sunset to the doubling of the employee-paid payroll tax. Thus, on Jan. 1, 2028, that tax will revert to the current .01%. However, it’s worth noting that legislators indicated intent to take action between now and then to ensure the higher level does not revert.
Votes: The bill passed out of the committee on a party-line vote, as did a companion budget bill, HB 3992. Both bills then passed the House on Monday after substantial debate. All Democrats but one (Rep. Annessa Hartman, D-Clackamas) voted for the bill, as did one Republican, Rep. Cyrus Javadi, R-Tillamook.
What’s next: The bill is now in the Senate for consideration. Due to legislative procedural rules, the bill is likely to receive a vote on Wednesday.
Revenue Forecast Shows Continued Economic Sluggishness
What happened: On Aug. 27, the Oregon Office of Economic Analysis (OEA) presented the much-anticipated September Economic and Revenue Forecast. This is the first forecast after the close of the 2025 legislative session and includes the most recent data about Oregon’s economy and revenue picture after the passage of substantial changes to federal tax law.
State Economist Carl Riccadonna noted that the risk of an economywide, national recession has decreased to 35% (40% prior). However, he noted that the risk for recession in Oregon has slightly increased to 27% (25% prior). Notably, Oregon’s economy has shed more jobs than previously anticipated. Oregon continues to underperform the national economy. During the last four reported quarters, GDP growth in Oregon has trailed nationwide GDP growth by an average of 0.6%. Oregon, in other words, is growing at only 70% of the national rate (1.4% vs. 2.0%).
Employment in Oregon: Perhaps the most striking news from the forecast is that Oregon’s employment picture is much grimmer than was anticipated during prior forecasts (OBI has been warning the Legislature about this for some time). The only sectors that experienced year-over-year employment growth were the private education and health services sector and the leisure and hospitality sector, which, respectively, added 8,500 and 2,000 jobs from July 2024 to July 2025. Meanwhile, the industry-specific manufacturing and construction recessions have grown. Year-over-year employment has decreased in those industries in Oregon by 9,400 and 5,800 jobs, respectively. In all, Oregon lost 24,600 jobs between July 2024 to July 2025.
Bottom line: When Oregon’s leaders take in this information and simply deflect responsibility, particularly when Oregon is underperforming national statistics, they are doing a disservice to Oregonians.
What needs to happen: With Oregon’s economy significantly underperforming the national economy, state policymakers – especially the governor and the Legislature – must acknowledge the contribution of state policy to this weakness. Oregon’s own tax and regulatory burdens soared long before recent changes to federal trade policy and tax law. Oregon’s economic outlook reflects the consequences. Policymakers also must acknowledge that Oregon’s shortage of meaningful economic-development tools – especially in a competitive national environment – is an additional hinderance.
In these precarious times, OBI will continue to push for policies that encourage growth, allow the private sector to thrive and generate economic development (read more in the Oregon Competitiveness Agenda). It is more essential now than at any time in recent memory for policymakers to work to support and grow Oregon’s private sector, which creates jobs and generates revenue for state and local services.
In light of the Aug. 27 forecast, policymakers should tread carefully when considering policies that would increase the tax burden on Oregonians or further erode Oregon’s economic competitiveness. This includes increasing taxes imposed on wages, attempting to disconnect from federal tax law and disregarding pro-growth policies recommended by OBI and others.
You can read the full OEA report here. Below are some key takeaways.
- Population growth: Oregon continues to grow more slowly than the United States and is expected to grow by an average of 0.4% through 2035.
The 2023-25 biennium, which ended on June 30: A personal kicker of $1.41 billion will be paid back to Oregonians when they file their 2026 taxes, and a corporate kicker of $921 million will be used to fund state education programs. - The 2025-27 biennium, which began on July 1: Even with changes to federal tax law, net General Fund and Lottery revenue will soar to $38.7 billion, an increase of approximately $1.6 billion (or 5.1%) from the 2023-25 biennium.
- Reserves: State economists project that Oregon’s reserve accounts – the Education Stability Fund and the Rainy Day Fund – will have a combined balance of $3.4 billion, representing 9.8% of the state’s General Fund.
Join the 2025 Manufacturing & Innovation Roadshow
OBI’s Manufacturing & Innovation Roadshow is back for its fourth year. On Oct. 6 and 7, the Roadshow will visit seven manufacturers and host two roundtable discussions in the Willamette Valley and southern Oregon.
The Roadshow, which coincides with National Manufacturing Week, will make stops in Marion, Linn, Lane, Douglas and Jackson counties. Participants will tour industry leaders Garmin, ATI, PakTech, Richardson Sports, Con-Vey, Carestream and Harry & David. They’ll also participate in a pair of roundtable luncheons at the University of Oregon and Rogue Community College’s Table Rock campus.
Check OBI’s Manufacturing & Innovation Roadshow web page for updates as the itinerary is finalized and short profiles of participating manufacturers are posted. Go here to register for as many stops as you would like.
Baker Tilly Event to Examine Federal Tax Law Impact
Ready for what’s next? Navigate policy shifts with confidence. Join leaders from Baker Tilly, Oregon Business & Industry, and the Portland Metro Chamber at Baker Tilly’s free Sept. 30 event, “Oregon Tax Outlook: Big Beautiful Bill and Local Impact,” as they cut through the noise to explain what’s changing under the One Big Beautiful Bill Act (OBBBA) as well as state and local developments, and what it means for your business and personal planning.
The panel of professionals will provide an in-depth look at the latest developments shaping the financial and business landscape along with implications for the Oregon economy, and the Portland business community.
Key topics include:
- How federal tax credit and deduction changes affect Oregon businesses’ bottom lines
- How workforce, sustainability and infrastructure provisions in the bill may affect your business strategy
- State and local tax updates specific to Portland and Oregon.
The event will take place on Sept. 30 and run from 8:30 a.m. to 10:30 a.m. at Baker Tilly’s Portland office (805 SW Broadway Suite 1400).
Go here to register or contact John McHale (john.mchale@bakertilly.com) with any questions.
Don’t Miss OBI’s 2025 Vision Oregon Event
Don’t miss OBI’s 2025 Vision Oregon Event, which will take place Oct. 22 at the Portland Art Museum.
Vision Oregon will kick off at 3:30 with an hourlong networking reception, followed by this year’s program:
Entrepreneurship in Oregon: Celebrating Vision and Supporting Growth
Keynote address and a panel discussion on Oregon’s entrepreneurial ecosystem
Visionary Award presentations
This year’s Oregon Visionary Award honorees are Daimler Truck North America and NIC Industries. Learn more here.
Announcement of the winner of the 2025 Coolest Thing Made in Oregon contest
Follow the progress of this year’s contest here
Go here to register for Vision Oregon.
New Podcast Episodes Focus on Oregon’s Pear, Nursery Businesses
Oregon Business Matters has released two episodes since the last edition of Capitol Connect.
In late June, host Angela Wilhelms talked with Oregon Association of Nurseries CEO Jeff Stone about the state’s nursery and greenhouse industry, which is Oregon’s largest agricultural sector. Oregon is the third largest nursery state in the country, trailing only California and Florida.
In this episode, Angela and Jeff discuss the reasons for Oregon’s nursery prowess, the importance of migrant workers and the recently completed Farwest Show, OAN’s annual trade event.
In July, Angela talked with Sara Duckwall and Ed Weathers of Duckwall Fruit, which packs and ships more than 2 million cartons of premium pears every year from its facility in the heart of the Hood River Valley. They discussed Oregon pears, running a century-old family business and more.
Oregon Business Matters focuses on insights, issues and initiatives that affect Oregonians’ shared prosperity and the state’s economy.
Episodes can be found on OBI’s website here and on major podcast platforms, including Apple, Spotify and YouTube.
Labor and Employment Seminar to Happen Sept. 10 in Portland
Join Ballard Spahr’s highly anticipated “Best Practices for Best Employers” Labor and Employment Seminar. Ballard Spahr will be hosting the seminar in Portland on Sept. 10 and in Seattle on Oct. 15.
The comprehensive annual seminar, now in its 43rd year, helps bring employers up to speed on developments that affect their businesses. Register here. The registration fee of $265 is discounted for OBI members. Get $50 off by using the OBI discount code, OBI50. Continuing education credits are pending for SHRM, HRCI and CLE in Oregon and Washington.
The seminar will feature interactive sessions covering:
- Top 10 Pressing Issues Employers Need to Know Now to Outplay, Outwit, and Outlast Your Next Legal Challenge
- From the Oval Office to the Break Room: Whirlwind Tour of Key Changes from the New Administration
- Let’s Take Leaves and Accommodations for $1,000: Learn About Key Decisions Changing the Landscape and What Employers Can Do to Avoid Disputes
- Deal Or No Deal: Workforce Management in Our New Algorithmic World
- A Special Video Presentation and Roundtable Discussion Starring Ballard Spahr’s “Not Ready for Prime Time Players”
- What to Do When You Meet an Eligible Candidate Who Might Be the Employee of Your Dreams: Pitfalls for Hiring and Onboarding – and How You Can Avoid Them
- Survey Says: Navigating Sensitive Investigations Is Hard! How to Empathetically and Effectively Address, Investigate, and Resolve Challenging Complaints
- And lots more!
Questions? Please contact the Ballard Spahr Events Team at events@ballardspahr.com.
Notable News
Transportation spending: Despite ODOT’s underfunding claims, Oregon’s transportation spending is typical of western states (Oregon Journalism Project).
Oregon’s economic state: This is a tale of two progressive states. Oregon hasn’t had a business executive as governor since Republican Vic Atiyeh left office in 1987. For the past 14 years, Colorado has been led by Democratic businessmen, and it shows (Oregon Capital Insider).
Hospital woes: New data from the Oregon Health Authority show that hospitals across the state lost nearly $300 million in the first three months of 2025, their second straight quarter in the red (The Oregonian).
Nike layoffs: Nike on Aug. 28 said the company will again be organized around sports, effectively finalizing a yearlong corporate overhaul. The company expects to lay off less than 1% of its “corporate team” as part of the reorganization. A 1% layoff would mean the elimination of roughly 100 jobs in Oregon (The Oregonian).
Knife manufacturing: Portland’s tight-knit knife industry dates back decades. Some of the industry’s top leaders and companies are pushing for wider recognition among their national competitors — and among Portland locals (The Oregonian).
Media purchase: Nexstar Media Group is buying broadcast rival Tegna for $6.2 billion, bringing together two major players in U.S. television and the country’s local news landscape. Nexstar oversees more than 200 owned and partner stations in 116 markets nationwide today, including KOIN in Portland, and also runs networks like The CW and NewsNation. Meanwhile, Tegna owns 64 news stations across 51 markets, including KGW in Portland (The Associated Press).
Downtown Portland: As big box stores flee, Portland shopkeepers feel pressure to fuel downtown Portland renaissance (The Oregonian).
Forestry jobs: Oregon’s forestry sector, once the state’s driving industry, has scaled back dramatically, the result of modernization and reduced harvests since the 1990s. Yet the industry is still adding workers and looking to replace retirees — now with a growing demand for technical expertise (The Oregonian).
Kroger layoffs: Kroger, the parent company of regional grocery chains Fred Meyer and QFC, said it will lay off a “meaningful” number of employees at its corporate offices, including 100 in Portland (The Oregonian).
Intel investment: The news that the Trump administration will pour $9 billion into Intel’s coffers doesn’t solve the underlying issues that have plagued Intel for several years. But it could give the company more time to get things right before resorting to drastic measures (The Oregonian).
Vigor collaboration: Portland-based Vigor Marine Group announced one collaboration and another tantalizing possibility as part of the “Make American Shipbuilding Great Again” initiative growing out of a South Korea-U.S. tariff deal (Portland Business Journal).
Distiller appeal: Hood River Distillers is urging the U.S. Supreme Court to reverse an appeals court ruling against the company stemming from an unfair labor practices dispute (Portland Business Journal).
EV fees: A new proposal under Gov. Tina Kotek’s transportation bill would require EV and plug-in hybrid drivers to enroll in a program that would charge them a per-mile fee for driving on any Oregon road. But environmental groups — and people who already have EVs — say the governor’s proposal could deter people from driving these vehicles and could significantly slow down emission reductions from the transportation sector (Oregon Public Broadcasting).
Portland task force: A group charged with enhancing Portland’s Central City has crafted 20 action items designed to improve the region’s economic prospects (Portland Business Journal).
Check Out OBI’s Member Benefits
OBI offers members a range of programs that can save money or help small businesses offer benefits normally available only to much larger companies. Benefit programs include:
- HealthChoice: Helps businesses with fewer than 100 employees offer comprehensive health-care benefits through our partnership with Regence BlueCross BlueShield of Oregon.
- CompSAFE: Helps eligible companies enjoy workers’ compensation discounts through SAIF Corporation.
- Fuel Program: Helps members save fuel costs through our partnership with Ed Staub & Sons.
- ODP Business Solutions: Helps OBI members save money on office furniture, supplies and other services.
- LegalPLUS: OBI members receive 15 minutes of free legal consulting per month from Innova Legal Advisors.
Go here to learn about all of OBI’s member benefits.