2017 legislative wrap up
The 2017 legislative session adjourned sine die on Friday, July 7, 2017. The session began with two major issues to tackle: addressing the state’s $1.6 billion budget deficit and passing a transportation package. With higher-than-expected revenues in the May revenue forecast, the number on which the budget is based, the deficit decreased to $1.4 billion. Though there were exceptions, for most of the session both chambers were reluctant to move controversial bills that could make bipartisan efforts related to the big issues more difficult.The 2017 legislative session adjourned sine die on Friday, July 7, 2017. The session began with two major issues to tackle: addressing the state’s $1.6 billion budget deficit and passing a transportation package. With higher-than-expected revenues in the May revenue forecast, the number on which the budget is based, the deficit decreased to $1.4 billion. Though there were exceptions, for most of the session both chambers were reluctant to move controversial bills that could make bipartisan efforts related to the big issues more difficult.
State budget: The Alliance’s top priority for the session was the state budget. The Alliance was a key participant in Brighter Oregon, the Oregon Business Plan coalition, that was formed to advocate for a solution to the state budget that includes: 1) growing the economy, 2) controlling unsustainable growth in costs related to PERS and public employee healthcare benefits, and 3) new revenue to cover the Medicaid shortfall, as well as additional, based on the current tax structure, for targeted outcomes in early education, K-12 graduation rates and higher education. Over the course of the legislative session, Brighter Oregon offered specific plans for both cost containment and new revenues, activated constituents to generate more than 5,000 of emails and calls to legislators urging them to address runaway costs, and spoke with editorial boards throughout Oregon generating commentary that was close to 100 percent in agreement with the Brighter Oregon fiscal vision. On June 22, Governor Brown, Senate President Courtney and House Speaker Kotek announced they would not move forward with structural spending reforms or new revenue this legislative session, rejecting the specific plans brought forward by Brighter Oregon to address the state’s $1.4 billion budget deficit and put Oregon on a long-term path to fiscal stability.
Prior to the announcement from leadership, the focus of the Legislature, led by Senator Mark Hass, had been on enacting a gross receipts tax to replace the corporate income tax. That effort failed due to lack of progress on cost containment and widespread business opposition. During that same time, Brighter Oregon testified before the Joint Committee on Tax Reform about the need for meaningful cost containment and laid out a framework to raise $500 million in additional business tax revenue through changes to the existing tax structure to raise revenue for new investments if structural cost reform was achieved. Brighter Oregon joined partners in the business community to oppose passage of a gross receipts tax this year, arguing that an in depth conversation about tax reform, with all options on the table, should occur in the 2017-19 legislative interim. Brighter Oregon also joined partners to oppose HB 2060, which would have rolled back the tax credit for small pass-through businesses. This tax break was first enacted in 2013 as part of the “grand bargain” on PERS and corporate taxes. Brighter Oregon believed a “slimming down” of the tax break was appropriate, but HB 2060 went much too far and adversely impacted small business. The House passed HB 2060 on a party line vote, but it did not move forward in the Senate.
Brighter Oregon also testified before the Ways and Means Capital Construction Subcommittee on specific cost control measures contained in HB 1067, which the legislature passed. While that bill does contain some valid cost management measures, it does not go far enough to achieve meaningful reform, particularly in the areas of PERS and public employee health care benefits, which cost as much as 50 percent more than the national average. A bill that contained proposals to rein in the growing Public Employee Retirement System costs never received a hearing.
Meanwhile, legislation passed to address the portion of the state’s budget deficit caused by the Medicaid program, including a 1.5 percent premium tax on health care insurance, much of which will ultimately be paid for by businesses. Brighter Oregon was open to a discussion about a premium tax, but believed 1.5 percent is much too high. A referral to the voters of this tax increase is expected and the legislature passed a bill that makes changes to the referral process and timeline such that a successful referral effort would be before voters in a special January election.
Although Brighter Oregon was not successful in seeing its fiscal vision moved through to legislative adoption, we did successfully change the conversation. Because of our analysis and outreach, there is a greater awareness of the impact rising PERS and public employee health care benefit costs have on state, local and school district government budgets, not just now but for many years into the future. In fact, PERS costs are expected to rise form 17 percent of payroll to more than 30 percent, and that number could be even larger if the PERS board adjust the expected rate of return on PERS accounts to reflect more realistic conditions. The coalition will continue working together and will seek other opportunities to move its vision forward. The Alliance will stay engaged.
Transportation package: The legislature passed HB 2017, a $5.3 billion transportation package. Though the package is smaller than what was originally proposed, it does include new revenues from title and registration fees, increased gas taxes, an excise tax on new cars, a flat fee on new adult bicycle purchases and a one-tenth of 1 percent employee-paid payroll tax for transit. The increased revenues will be used to fund maintenance and preservation, congestion relief projects in the Portland area, transit, electric vehicle, bicycle and pedestrian projects, as well as other non-road transportation investments. In the final bill, 90 percent of the employee-paid payroll tax generated in the TriMet district will stay in the district. The Alliance advocated for that level. Additionally, the bill calls for a study of congestion pricing in the Portland-metro area and it amends the Clean Fuel Standard to protect consumers.
Workplace rules: The Alliance worked closely with statewide business organizations on workplace related bills. Below is a summary of the bills the Alliance was involved in.
- The legislature passed, and the Governor signed, HB 2005 that requires pay equity. The law prohibits pay discrimination for protected classes, as well as prohibits screening of job candidates based on past compensation. It does allow variances in compensation for a bona fide factor related to the position in question. The bill also includes a provision intended to mitigate employer exposure if the employer completes a pay equity analysis and eliminated pay differentials. The bill is effective January 1, 2019.
- With the passage of SB 828, Oregon became the first state in the nation to require employers in food service, retail and hospitality with more than 500 employees to provide predictable schedules to employees. Beginning July 1, 2018, employers must give employees seven days’ notice of their schedule; that notice period goes up to 14 days July 2020. The bill includes a preemption on local ordinances on this topic.
- SB 984, which would have reinstated long-standing guidance related to calculating overtime for manufacturers, passed the Senate and was referred to the House Rules committee. It had not moved out of committee at sine die.
- Paid family leave did not move forward as it lacked the needed supermajority support for the bill.
Industrial lands: SB 333 was passed by the legislature and signed by the Governor. The bill makes improvements to the industrial site readiness program that the Alliance supported in previous legislative sessions. The improvements are intended to make the program more user friendly and ensure investments result in growing jobs. The Special Public Works Fund that helps fund industrial site readiness among other programs received $20 million for recapitalization.
Education: Measure 98 received $170 million for its implementation; this is short of full funding for the voter-approved measure targeting high school graduation rates, but is fairly significant given the budget realities. The University of Oregon Knight Campus received $50 million in bond proceeds, half of the money they requested.
Housing: HB 2004, which would have made changes to statutes regarding rent control and no cause evictions, did not move forward this legislative session. The Alliance supported legislation that will make it easier to make relatively minor adjustments to the urban growth boundary, outside the formal process, for affordable housing. The Right to Rest bill, which would authorize camping in public spaces, did not receive a hearing.
With respect to funding for housing programs, Oregon Housing and Community Services’ Local Innovation and Fast Track (LIFT) Housing program received $80 million and the housing preservation program, which funds upgrades to maintain low-income housing, received $25 million. Each of these allocations were short of the budget request from the agency.