Category Archives: Advocacy with Government

Paid Family Leave Legislation

Paid Family Leave (HB 2005) is the last remaining Paid Family Leave (PFL) Bill under consideration. OSCC is still awaiting amendments for a new paid family leave bill that would implement a new 12-week paid family leave program for all businesses down to the first employee. Employers with under 25 employees would not be required to do an employer side payroll withhold, only an employee payroll withhold.  We don’t have final language on the proposal, but we can share a sheet that shows the features of the new proposal. 

Previous versions of this proposal under various bills including HB 3031 provided up 32 weeks of leave and required employers with 1 plus employees to do employer side payroll withholds and didn’t accommodate or recognize like or better plans already provided by business.  Based on feedback from business organizations including chambers (our letter to legislators), the remaining PFL bill has been revised to a more manageable size/set of requirements.

Remember, several business organizations have asked for passage of this proposal, thereby increasing the likelihood of passage. The theory was that if business did not support a paid family leave proposal in the 2019 session, we would be confronted with a ballot measure in 2020 that would propose a far more costly and unwieldy system

PERS Unfunded Liability – Legislation & Solutions

PERS cost savings legislation passes. SB 1049 passed the Senate with a bare 16-vote majority and then followed with passage in the House with a bare 31-vote majority, but only after Speaker Kotek stood ‘at ease’ on the House floor and called Democrats into her office to twist enough arms to secure the 31 votes she needed.

It was perhaps the most impressive display of political clout that we’ve seen all session. The Speaker literally marshaled all 31 votes she needed from her own caucus (no Republicans voted for the bill), and in the process infuriated her caucus’ biggest constituency and benefactor (public employee unions). It was truly impressive.

As a refresher on the substance of SB 1049:

  • Tier 1 and Tier 2 members, who are public employees who entered the PERS system before 2004, would have 2.5% of their salaries diverted from their individual retirement accounts into paying off the system’s debt.
     
  • Workers hired 2004 of later (PERS Tier 3 and Tier 4), would face a lower diversion – 0.75% of their salaries.
     
  • The biggest cost savings comes from the re-amortization of the pension debt. Over 2/3 of the savings comes from this re-financing provision.
     
  • A reduction in assumed interest rate for retirees who use the “money match” method of calculating their pension benefits.
     
  • SAIF is largely held harmless.
     
  • About $600 million in pension cost savings per biennium across state government and schools.

For more information on the PERS Unfunded liability, how we got there and possible solutions and coalition information, go to PERSSolutions.org

Oregon Legislative Update 5-21-19

Week 17 – State Legislative Update

Activity on Major Issues

  • The $2.8 billion Commercial Activity Tax (HB 3427) was signed into law by Governor Brown. Starting on January 1, 2020, all businesses doing business in Oregon will see:
     
    • A gross receipts tax rate of 0.57% on Oregon sales over $1 million;
    • A 35% deduction from taxable sales for labor OR business inputs, whichever is higher;
    • An exemption for groceries (defined as those that qualify for ‘SNAP’) and transportation fuel.
  • Cap-and-Trade (HB 2020). On Friday, HB 2020-A passed its first major milestone. After three hours of debate, the Joint Committee on Carbon Reduction adopted the -94 amendments on a party line vote and sent the bill to the Joint Committee on Ways & Means for further deliberation. Democrats voted down all other amendments that were brought forward, although it was widely acknowledged that rural Oregon would suffer job loss and economic hardship under the bill.

    As currently written, if this bill were to pass in its current form, transportation costs will increase. Natural gas costs will increase. Propane costs will increase. Local food processors and manufacturers will face a real competitive disadvantage. Small businesses and households will see increases in transportation and energy costs.
    OSCC still believes there are still opportunities to change this bill in the Ways & Means Committee.  

What happened last week?

  • The state revenue forecast added $770 million to state coffers for the upcoming 2019-2021 biennium. Just from the last forecast in March, every metric grew by eye-popping numbers due to a historic influx of revenue over the tax season.

    In addition to the influx of $770 million into the upcoming budget cycle, the kicker almost doubled in size.  It’s now projected at $1.4 billion. Net reserve funds are now nearly $3.5 billion.

    But the real impact of the historic revenue forecast is that it will tamp down on talk of additional tax revenue for the remainder of the 2019 legislative session.
  • The legislature’s attempt at PERS reform was unveiled with Senate Bill 1049. SB 1049 contains the following provisions:
     
    • Tier 1 and Tier 2 members, who are public employees who entered the PERS system before 2004, would have 2.5% of their salaries diverted from their individual retirement accounts into paying off the system’s debt.
    • Workers hired 2004 or later (PERS Tier 3 and Tier 4), would face a lower diversion – 0.75% of their salaries.
    • Public employees earning less than $30,000 a year would be exempted.
       
    • A reduction in assumed interest rate for retirees who use the “money match” method of calculating their pension benefits.
    • Most significantly, legislators seem to have abandoned efforts to raid SAIF to cover PERS liability, which is a good development for Oregon employers. 

The future of SB 1049 is uncertain. Although it is only a modest cost-saving measure, the unions oppose it in force and it is unlikely that majority Democrats can carry the issue themselves.

  • Equal Pay Technical Fixes (SB 123-A). On Tuesday, the Oregon Senate passed SB 123 unanimously. The bill includes several important technical fixes to give employers clarity in implementing Oregon’s Equal Pay Act. Oregon’s law is the most comprehensive in the country, and it has been difficult for many employers – large, small, and seasonal – to implement. We anticipate rulemaking later this year to address several other issues identified by Sen. Kathleen Taylor and Sen. Tim Knopp.

Other key issues coming up this week.

  • Prevailing wages in enterprise zones (HB 2408). We are expecting the Senate Workforce Committee to take up HB 2408 this week. In its current form, the bill requires prevailing wages to be paid on private enterprise zone projects of $20 million or more. OSCC is actively opposing and lobbying the legislation.
  • Lawsuit Damages (HB 2014). We are expecting the Senate Judiciary Committee to vote on HB 2014 this week. HB 2014 would repeal Oregon’s legal limit of $500,000 on non-economic damages in personal injury and negligence lawsuit claims. OSCC, health care groups, and business organizations are opposing this legislation because it is a significant factor in driving up health care costs and general liability costs for employers.
  • Paid Family Leave is still under discussion. The last remaining bill alive looks something like this – Details of this are being worked out now.  More like the Washington state model.  Business has asked for it as long as it more clearly mirrors the Washington model. Current scenario.  – Employer employee split 40/60, 12 weeks for serious medical conditions, birth. Same qualifying factors for OFLA, business under 25 employees, exempt, but employees have to pay in those businesses.  Only those (businesses) who pay into system are available for training grants to cover those employees on leave.  Leave requirements apply to any employee down to 1 employee, even if exempt as under 25 employees.  Employer plans we need to meet or exceed these benefits to get a waiver.  More details as we get them.

There are fewer than 45-days before session adjourns, and NOW is the time to make your voice heard.

$2B Oregon Business Tax Plan Released


We know there is widespread anticipation and concern regarding the new $2 billion business tax being promoted by legislative leadership.

Last evening, the detailed plan was finally made public.

https://olis.leg.state.or.us/liz/2019R1/Downloads/ProposedAmendment/15752

At a high level, it is a 0.49% gross receipts tax with a 25% deduction for either business inputs or labor costs, whichever is greater. The tax applies to all business entities with gross sales in excess of $1 million.

Although this is a new 25-page tax bill that undoubtedly has many complexities, our understanding is that legislative leadership intends for the process to move quickly. There may be limited opportunity for input or to amend the bill.

In another area of concern, we also believe that the Governor/Governor’s office will be presenting her PERS pension reform package today at the noon hearing for Ways & Means Capital Construction subcommittee. We have reason to believe that a raid on SAIF resources and reserves will be a part of that discussion, but the particulars are not clear. We also anticipate their will be other fund “sweeps” to help buy down escalating PERS rates, particularly for schools.

Please stay tuned to our blog, facebook and email for other business impacting legislative updates.

$5B+ In New Taxes in Biennium Possible

Week 11 Oregon State Legislative Update – Brought to you through our membership in OSCC.

We want to reiterate four major tax hikes  are being pushed by legislative leaders which total over $5B in a biennium. As of now, all four proposals are serious and viable. Please get familiar with and distribute this infographic. It is the story of the 2019 Oregon legislature.

Health Care Tax (HB 2269), aka Employer Assessment Tax ($500M). This proposal would give the Oregon Department of Consumer and Business Services (DCBS) the authority to determine what every large employer (defined as 50+ employees who work an average of 8/hrs per week) should be spending on health care for employees and authorizes the agency to levy a tax on every employer that does not meet the agency’s minimum health care spending requirements. Agency leaders testified that the bill is designed to raise $500 million per biennium in new taxes.

OSCC strongly opposes this bill and joined other business associations in written testimony. OSCC was not allowed to testify in person. The bill now resides in the House Revenue Committee.

Paid Family Leave (HB 2005) – $1.5B. Legislative leaders have now introduced this bill as the newest and most refined effort to pass a paid family and medical leave system. Bottom line: the bill gives the Employment Department the authority to levy up to a 1% payroll tax on employers and a 1% income tax on employees to implement a 26-week per year paid family leave program. The bill would apply to all employers with at least one employee, guarantees employees position upon return and non-payroll benefits must be paid while on leave. The bill raises about $1.5 billion in new taxes every biennium to fund this new state-run bureaucracy and insurance program.  See our letter to legislators on a similar bill that we sent recently.

Cap & Trade (HB 2020) ($1.1B). The newest re-write of HB 2020, the ‘Cap & Trade’ bill, did nothing to alleviate cost concerns for manufacturers or everyday Oregonians. The new version of the bill would immediately add 16 cents per gallon in fuel costs and an immediate 30% increase in natural gas costs for residential, commercial and industrial customers. Large manufacturers will see similar and immediate cost increases for electricity. All told, we are analyzing this bill as a $1.1 billion increase in costs for Oregonians each biennium. The vast majority of direct costs will be borne by manufacturers. HB 2020 will result in an immediate 30% increase in natural gas costs and a 16-cent per gallon gas price hike.

Business Tax Increase ($2B). It’s becoming clearer that leadership will lean toward selecting a Commercial Activity Tax, which is a pure gross receipts tax, as the basis for implementing a new business tax on business to add more than $2 billion in revenue each biennium into the state’s K-12 system. Most models of this tax, start at businesses with $1M or more in receipts (gross revenue), not income.  Those lower would have a flat rate applied.  There is a small direct offset to resident with reduced state income tax rates. At this point, it does not appear that PERS reform or any other government cost savings will accompany this tax proposal.

A growing coalition of business organizations, including OSCC, are now going on record as opposing a new gross receipts tax. Read their letter here

What is the total biennial cost to the all the tax increases that are now on the table? $5.67 billion.

This equates to about $1,417/resident in Oregon and when compared to the total budget of $23.8B, is a 24% increase on the total budget. 

Email me if you are concerned about any of this legislation at debi@tigardchamber.org