Stakeholders Meeting on Corporate Activities Tax
A small stakeholders meeting was hosted by Oregon Business & Industries (OBI) on Thursday, October 16 at their Salem office. Attending the meeting was: Mike Stober, OBI; Shawn Miller, NW Grocers; Danelle Romain, NW Food Processors; Jonathon Sandau, Oregon Farm Bureau; Tammy Dennee, Oregon Dairy Farmers; Katie Fast, Oregonians for Food and Shelter; JL Wilson for Jenny Dressler, Oregon Farm Bureau; and Anne Johnson, Oregon Seed Association.
Mike Stober began the meeting with an update of the recent Dept. of Revenue (ODOR) state meetings on the corporate tax. There were many questions that ODOR was unable to answer, especially around the wholesale certification process which would certify that products were intended to be sold out of state. There were questions regarding the commingling of products and products that are sold several times before being shipped out of state. In addition, there were concerns over liability if the wholesale certifications turned out to not be correct (i.e., if products identified as to be sold out of state later were kept in state).
ODOR has announced that they will be issuing temporary rules in three phases in 2020, beginning January 1, and subsequent drafts released on February 1 and March 1. Permanent rules are to be published at a later time.
Shawn Miller reported that at a meeting in Portland there had been discussion on a possible fix where the taxes would be estimated based on the prior year’s percentage of sales. He said the crafter of the tax receipts portion of the bill, Senator Hass, had been open to that discussion. The department seemed interested in looking closer at this concept.
Rep. Findley is drafting a bill for a complete AG exemption due to the complexity of applying the tax to the industry. Senator Hass has said in private meetings that they are not interested in industry exemptions, but the exemption bill will be introduced in hopes that it will be heard in committee.
Rep. Clem has warned that any bill or technical fix needs to have bipartisan support if it is to move in a short session where the bills only have a week to get out of their chamber of origin committee.
- AG Lobby meeting with ODOR on Oct. 21
- Technical fix language to be submitted with AG Lobby input
- Rep. Findley legislation for an AG exemption
- Stakeholder meeting prior to November legislative days
On Monday, October 21, Ag Lobby held a meeting with policy analyst from the Department of Revenue. The meeting had two intentions, one was to allow the agency to hear all the various business models in the Ag industry and also for the analyst to answer questions that they currently have the answers to regarding the drafting of rules. There remain many unanswered questions.
Various examples of sales transactions were given to the agency, from the commingling of products to questions regarding the levels that ag commodities will go through in the process before being sold and/or exported. The agency was very interested in hearing all the different business models and challenges presented and asked that we reach out to the industry at large and have them submit business models and questions to: firstname.lastname@example.org.
What We Know:
- Draft rules are being triaged in level of urgency. They will be released January 1, February 1 and March 1
- The first set of rules will come out as a draft in December
- Senator Hass will introduce a committee bill that will include technical fixes brought to him by the agency and the industry
- Any changes to the COG (Cost of Goods) will need a legislative fix
- COG definitions are coming from the IRS Tax Codes
- The terms “delivery” and “wholesale” will be defined in the Rules.
- The definitions of in-state and out of state for purposes of taxable income will be based on the place of delivery
As noted above, the agency is currently hosting conference calls for those who missed the statewide roadshow. It is unclear how many of these calls will be scheduled. To participate, email CATTAX.QUESTIONS@oregon.gov to receive the current schedule, phone number and access code for the conference call.
Legislative Report for July 1, 2019
Oregon lawmakers adjourned their session on Sunday with only hours to spare before the constitutional deadline for adjournment at midnight. After returning to the capitol from a nine-day walkout in protest of the controversial cap-and-trade legislation, Senate Republicans finally provided the quorum necessary for the chamber to return to its regular order of business. Saying the Senate came back in a sprint would be an understatement for the ages as the chamber spent the entire day and much of the evening voting on 105 bills, possibly a single-day record for the chamber. Strategically, the chamber advanced most of the noncontroversial legislation on Saturday to make way for a day of high negotiations on Sunday.
Without the cap-and-trade legislation looming over every other bill and with the Senate Republicans back in the building, the legislature took swift action on advancing other priorities. In addition to the rent control, health care funding, and business tax increases passed earlier in the session, the legislature gave final approval to a whole host of other bills. These include ending the practice of exclusive single-family residential zoning, a payroll tax to support a paid family medical leave policy mandate, campaign finance reform, extending and creating new tax credits, technical corrections to the new business tax on gross receipts, and paying for postage on ballots, among many others.
Perhaps one of the biggest surprises in the weekend rush to adjournment was an about-face by Republicans on a bill referring a $2 increase of the state’s tobacco tax to voters. Republicans and the tobacco lobby have long fought against tobacco taxes and were adamantly opposed to the proposal. While the Republican walkout was largely about the public perception of defeating the climate bill, their return to the capitol was an orchestrated effort around the tobacco tax. With only two days remaining of session, Democrats would need to rely on Republicans releasing the votes to suspend the rules and allow the tobacco tax referral to progress for a final vote. This gave Republicans an insurance policy for their legislative priorities and any pork destined for their districts. In the final minutes of the session, Republicans granted the rules suspension so the bill could pass on a party-line vote.
The return of the Senate Republicans on Saturday relieved some, but certainly not all, of the pent-up tension in the building. Sen. Brian Boquist (R-Dallas), who received substantial media attention during the walkout for threats made against the Oregon State Police if they attempted to arrest and return him to the capitol, had decided to return to the building. Leadership had asked him not to participate in floor activities after multiple members expressed concerns about his behavior and their safety in the building. These circumstances quickly became political after a small group of Senate Democrats began requesting a conduct committee consider available actions, including expulsion, that could be taken against him. Ultimately, it was decided that a special committee on conduct would meet after the session adjourned to review the case against the senator and recommend further action.
The legislature now closes the book on a contentious and prolific session. There is room to argue the legislature accomplished more this session than all those of the last decade combined, but those accomplishments come at a hefty price. The legislature became more partisan, and the responsibility for that falls on both parties. It is perhaps a reflection on the direction of our national and global politics, and the Magic 8-Ball suggests the paradigm will not shift as we approach the 2020 session and the presidential election cycle. For better or for worse, this is the world we live in now.
Legislative Report for June 21, 2019
Politics in the Oregon State Capitol reached a breaking point this week and, perhaps, broke. Senate Republicans fled the capitol for a second time in six weeks to deny the quorum needed to advance bills. The media have attributed the walkout to the cap-and-trade legislation, which is fair and true, but the decision to leave is emblematic of years of the deepening tensions between Oregon’s urban and rural communities.
Urban communities, almost exclusively represented by liberals in the legislature, have advanced an aggressive environmental agenda over the past several decades. These policies have stung many rural communities and their more conservative-minded legislators have fought back to force moderation. This has generally toned-down regulations emerging from Salem, but this year’s session has been different as the balance of power profoundly shifted into the hands of urbanites.
Senate Republicans, representing nearly the full range of Oregon’s rural communities, feel as if their constituents have been backed into a corner and have lost control of their own destiny. While the cap-and-trade legislation is largely targeted at industrial polluters, regardless of their urban or rural setting, the political debate has provided them a way to channel their frustrations in an extreme fashion—by leaving.
Oddly enough, the opposition to the cap-and-trade legislation is not a partisan issue. Word throughout the capitol this week had indicated at least three majority-party legislators, Sens. Betsy Johnson (D-Scappoose), Arnie Roblan (D-Coos Bay) and Laurie Monnes Anderson (D-Gresham), had informed leadership they would be voting against the bill on the floor. These commitments alone, if all true in the end, would have outright killed the legislation.
In the negotiations preceding the walkout, Democrats and Republicans debated the process for amending the bill to secure the support needed for its passage. Republicans demanded the bill be returned to a committee for an amendment removing a clause prohibiting their rural and industrial constituents from referring the bill to voters. Environmental advocates and their allies in the liberal faction of the legislature refused to allow the bill to be sent to a committee without first exposing those unfaithful votes on the floor.
This posturing is simply a fight over blame and credit. The liberal faction wanted to expose those standing in the way of landmark legislation. Meanwhile, Republicans wanted credit for killing a prized portion of the majority party’s ambitious agenda. It appeared those negotiations had collapsed late into Wednesday evening with the bill being scheduled for its final floor vote. Republicans, feeling boxed into a corner, fled overnight in defiance of their loss.
The state constitution requires lawmakers to adjourn their session in only nine days, and this game of political hide-and-seek is only increasing the contentious temperature in the building. Governor Brown has sent the Oregon State Police to search for absent legislators and has ordered officers to return them to the building. Republicans, anticipating this action, have dispersed outside the state and some are hiding in remote locations across multiple western states.
There remains substantial action awaiting final approval by the legislature, including proposals on paid family medical leave, referring a tobacco tax increase to voters, issuing drivers licenses to undocumented migrants and ending the exclusive practice of single-family residential zoning. This is not to mention the dozens of agency operating budgets and other appropriation bills needing to be adopted before the legislature closes its doors. The governor has announced she will call the legislature into an overtime special session on July 2 in the event the absent members do not return to Salem. These games seem to have no end in sight.
OTC Delays Decision of Intermodal Facilities
A long awaited decision on two intermodal facilities was expected Thursday, June 20 at the Oregon Transportation Commission (OTC) meeting in Salem but after a report from the consulting firm, The Tioga Group, the commissioners voted to delay the decision until the July 18 meeting. The sponsors of the projects were given until July 12 to respond with more information regarding rail and shipping costs.
On the line is a $26 million project in eastern Oregon and $25 million for either Millersburg or Brooks in the mid-valley.
Project sponsors were allowed to speak to the Commission and explained that rail and shipping data had been difficult to provide due to proprietary business information and the competitive business environment of the railroads.
To read more about the OTC decision delay go here>>https://democratherald.com/news/intermodal-funding-decision-delayed-until-july/article_324c587c-8a27-5509-a55f-c6927b6b6ee1.html
SB 885 Stalled by Walk-out
SB 885, which is the bill that would continue the 500-acre limit on canola production in the Willamette Valley, was scheduled for a floor vote on the Senate floor on Thursday. The same agenda had a controversial climate bill, HB 2020, scheduled. The Senate Republicans walked out of the Capitol on Thursday in protest of HB 2020. With this walk-out, a quorum was absent for the Senate to vote on Thursday’s agenda. If a quorum becomes present, SB 885 will be on the first agenda for the Senate floor. If the walk-out continues, then the Governor has said she will issue a special session in July to move the remaining budget bills along with important policy bills. The legislature has a constitutional requirement to end session by June 30. Stay tuned.
ODA Rulemaking Extension on Willamette Valley Production District/Canola Production
Note: ODA is extending the comment period from June 21, 2019 at 5:00 pm until June 28, 2019 at 5:00 pm for the permanent rules for Brassicaceae general production and restricted Willamette Valley Protected District.
ODA Proposed Rulemaking—
Proposed Rules attached and here> https://www.oregon.gov/ODA/agriculture/Documents/ProposedRulemakingBrassicaceaeProduction.pdf
Last day to offer public comment on the proposed rule changes: June 28, 2019 at 5:00 pm.
Email written testimony to: email@example.com
Legislative Report for June 14, 2019
The Oregon Legislature may be in the final days of its marathon session, but the road to adjournment remains out-of-sight. Our reports to you over the past several weeks and months have been dominated by the new political dynamics in the building as it relates to the dual supermajorities, which still remains the dominating force in the building, but the overarching dynamic this week was time.
The opening day of the session began two weeks earlier than previous sessions. In 2018, the legislature adopted a measure the change the start date of session from February 4 to January 22 to ensure session would end before Independence Day. All the major deadlines of session were adjusted based on this new legislative calendar except for one important milestone: the revenue forecast.
The spring revenue forecast is a turning point of the session. It serves as a reminder to the political establishment about the constitutional duty of the legislature—to craft the biennial budget—and signals the end of most policymaking. The release date of the forecast did not move to an earlier date in the rewriting of the legislative calendar and is a factor weighing on lawmakers as adjournment nears. Now, the budget writers have two fewer weeks to close out the session with a balanced budget as they scramble to the finish line.
There is additional pressure on the legislature to finalize major policy proposals before those budgets are completed. In this week alone, the legislature began advancing measures enacting a cap-and-trade program, creating a new statewide paid family medical leave policy, increasing tobacco taxes, and ending the practice of exclusive single-family residential zoning. These are the major issues remaining for the session, among a few others, and are bound to keep legislators occupied while budgets are finalized.
With all that said, the dual supermajority dynamic is continuing to shape the politics of the building. Political leadership essentially negotiated their usual “end-of-session” deal among the parties to end Republicans’ delay tactics on the House floor. Now, however, rank-and-file members are realizing they have enormous clout as their vote could be the deciding factor on major tax bills. Lawmakers are required to adjourn by June 30, but the end-game dynamic is fundamentally different from previous sessions, requiring leadership to negotiate the terms of the end-of-session with their own members rather than among the warring parties, and it does not seem to be anywhere close to ending.
Legislative Report for June 7, 2019
The Oregon Constitution requires the legislature to adjourn by June 30, but, after battling over many contentious policy proposals over the past several months, leadership is signaling they are almost ready to be done. In many ways, this week seemed to be a turning point of the session as leadership allowed two contentious bills to die on the floor without the votes needed to pass and gave no effort to revive them.
One of the most hotly fought issues in the capitol over the past several decades has been tort reform. Trial lawyers and their client advocacy groups have argued the state’s financial limits on awards in civil proceedings for noneconomic damages, for claims such as pain and suffering, were both unfair and unconstitutional. Meanwhile, healthcare providers and the insurance industry have argued the limits were an important tool in controlling the costs of care. This issue has been fiercely debated both in the halls of the capitol and on the campaign trail, without any resolution in the legislature. The debate was finally called for a vote on the Senate floor, with or without the votes needed to pass it, after more than three weeks of delays and consuming much of the remaining energy in the chamber. Another perennial bill in the House, a proposal to allow a new local government service district to provide after-school programs for children, faced a similar defeat after local governments raised concerns the proposal would tap into their scarce property tax revenues. The willingness to allow these bills to die in the daylight of the public is a rare event in our politics, especially given the variety of ways a bill can be kept on life support, and indicates the legislature is close to being finished with the games and is simply ready to go home.
The remaining focus of the legislature is shifting to the Ways & Means Committee to finalize agency budgets and appropriate funds for policy bills advanced by other committees. Among those bills is the controversial cap-and-trade legislation, which had been scheduled for a final committee vote this morning, was removed from the agenda after a series of controversies. Republicans in both chambers have been releasing legal opinions suggesting constitutional issues with the planned revenues. Sen. Betsy Johnson (D-Scappoose), co-chair of the committee, released a 19-page amendment on Thursday afternoon suggesting substantial changes to the program, drawing questions over the current vote count for the bill. The committee will also need to address the coming release of a proposed payroll tax supporting a state paid family medical leave program, among other issues still awaiting final consideration. The end of session may be nearing, but the gears of the legislature take time to unwind, and that time increases the potential for surprises.
Legislative Report for May 31, 2019
Republicans in the Oregon House have used the state constitution and parliamentary procedures to essentially bottleneck the chamber floor in an attempt to gain leverage over session negotiations. Unlike their counterparts in the Oregon Senate, House Republicans did not flee the capitol or deny quorum but instead required the clerk to read aloud every single word of every bill that has appeared on the floor. The delay tactic is one of the only tools the superminority can employ to slow down the legislative process, and Republicans banded together with astounding unity—until this week.
Leadership from both partisan caucuses have been meeting over the past several weeks to negotiate the terms of a truce allowing only the abbreviated summaries of bills to be read before final passage. These negotiations seemed to be going nowhere and the backlog of bills on the House floor had reached epic proportions, requiring days of floor time to be dedicated simply to reading the bills. Unable to find common ground, the House Speaker scheduled extended afternoon and evening floor sessions (and even weekend floor sessions) simply to catch up on bill readings. Initially, Republicans appeared to not balk at the threat.
To the surprise of many on Wednesday, however, Reps. Bill Post (R-Keizer) and Mike Nearman (R-Independence) broke with their own party and worked alongside Democratic leadership to allow the full reading of bills to come to an end. Rumors in the building suggest these members had revolted against their own caucus in protest of Republicans releasing the votes on earlier legislation ending a constitutional sentencing requirement for juvenile offenders to be treated as adults. Democrats seized the opportunity to read only the bill summaries and stayed late into the night working through the backlog.
Despite the internal caucus drama of the previous day, Democrats and Republicans continued negotiating the terms of a legislative ceasefire. Republicans agreed to suspend the full reading of bills in exchange for keeping the floor schedule to regular business days and shifting the focus toward adjournment. This allowed the chamber to work through more than 50 bills over the course of the day, the most it has completed all session, including a controversial bill to contain the costs of the state pension system.
Like most other states, Oregon’s unfunded pension system is a driving force in politics as the legacy benefit costs far outweigh returns in the investment account. Oregon is one of only two states that does not require current employees to contribute to their pension benefits, and the need to tackle the ballooning pension costs reached a breaking point this session in the debate over the new business tax to fund public schools—if the legislature neglected to enact cost containment, the new funding would likely be diverted out of classrooms and into the pension account. Containing these costs is not an easy vote for most Democrats as it pits them between two of their most valued constituencies: government employees and schools. This legislation was called for a vote on Thursday, but not without one last bout of drama. Republicans, still maddened over the betrayal of the previous day, refused to release any votes for the pension bill and required the Speaker to wrestle votes from her own caucus to ensure the bill’s passage.
The Oregon Senate calmed this week as the chamber spent the last two days in mourning, observing the passing of Sen. Jackie Winters (R-Salem). First elected in 1999, Sen. Winters was highly regarded by both sides of the political aisle. She was a political firebrand and a champion for racial equity, fiscal conservatism, and reforms to the public safety and human services areas of government. Even while battling lung cancer, Sen. Winters continued her pursuit of criminal justice reform this session. She successfully lobbied her Republican colleagues to support a historic reform of the juvenile sentencing system and spoke passionately during her floor speech on the bill. She will be remembered as a thoughtful stateswoman and friend who made a resounding impact on our state.
Legislative Report for May 24, 2019
The tides have turned in the battle to slow down the Oregon Legislature. Senate Republicans, as part of the terms for their return to the capitol, are regularly waiving the rule requiring bills be read in full to allow the chamber to swiftly move bills through the floor. House Republicans, on the other hand, have denied the same courtesy as a stall tactic in hopes of getting an upper edge in negotiations where they otherwise do not have any leverage. It appears these tactics have only stalled the progression of innocuous bills so far, and leadership has shown no hesitation in scheduling evening and weekend floor sessions to catch up. Meanwhile, committees are continuing to advance high-profile measures in the legislature’s sprint to the finish line.
On Tuesday, the Ways & Means Committee approved a bill designed to tackle the growing costs of the public pension system. State actuaries have suggested roughly 32 percent of the total payroll cost of public employers would need to be dedicated to pension benefits in the absence of legislative action. This measure, introduced by leadership, proposes benefit changes for current employees and dedicating resources to paying down the unfunded liability, reducing the overall percentage paid for by state and local governments. These changes do not come without intense scrutiny, however, as lawmakers on both sides of the aisle have criticized the proposal as being both too harsh and not going far enough. No matter the discontent from some factions of the legislature, the Senate mustered the votes on Thursday to make the measure’s passage a special order of business and send it to the House on a narrow 16-12 vote.
The carbon pricing proposal, known as cap-and-trade or cap-and-invest, cleared a critical first step in becoming law. During the afternoon of Friday, May 17, the Joint Committee on Carbon Reduction adopted a 182-page amendment and sent the bill to the Ways & Means Committee to address needed appropriations. The program would set ambitious standards requiring industrial polluters to purchase credits if their emissions exceed 25,000 metric tons of carbon dioxide. This requirement would also impact the transportation sector and a recent analysis by the Legislative Revenue Office suggests the program would reduce gas tax revenues by $18.55 billion over a 30-year period as market incentives shift drivers toward electric vehicles. This issue and others are sure to generate hot debates in committee and on the floors during the remaining weeks of session.
In addition to these divisive debates, the legislature still has considerable work remaining before lawmakers adjourn. The budgets for most larger agencies remain awaiting final action in the Ways & Means Committee while the committee focuses its attention on contentious policy matters. As well, leadership is preparing to release a new statewide payroll tax to fund a paid family medical leave program to get ahead of a contentious ballot measure from being referred to voters. It may feel as if the legislature is nearing its conclusion for the year, but their work is still cut out for them.
Oregon Department of Agriculture budget approved for the next biennium
The budget of the Oregon Department of Agriculture (ODA) was approved this morning in the full Joint Committee on Ways and Means.
As outlined, their budget will include:
- $126,823,393 all funds
- 505 positions or 381 FTE
- 6% funding increase
- 5 million in one-time funding for Japanese Beetle
During discussion, Rep. Paul Holvey (D-Eugene) put on record he was concerned that ODA had not made determinations on the use of the pesticide chlorpyrifos although acknowledged they may be doing a study on the pesticide as proposed in HB 3058 (which currently is in Ways and Means but not yet assigned to a subcommittee). He also noted that he has concerns on cross pollination and said he felt the department should be developing best practices for cross contamination issues and that those have not been adequately addressed since the discussion in 2012-13. Rep. Susan McLain (D-Hillsboro) echoed his comments and added she understood these are all difficult issues, but they need to be addressed.
ODA rules hearing set on canola district
ODA will hold a public hearing on their recently proposed rules that will develop an isolation area in the Willamette Valley as well as a canola production area.
Proposed ODA Rules attached and here: https://www.oregon.gov/ODA/agriculture/Documents/ProposedRulemakingBrassicaceaeProduction.pdf
May 29, 2019 at 4:00 p.m.
Oregon Department of Agriculture
Basement Hearing Room
635 Capitol St SE, Salem
Last day to offer public comment on the proposed rule changes: June 21, 2019 at 5:00 p.m.
Email written testimony to: firstname.lastname@example.org
Legislative Report for May 17, 2019
This legislative session has moved at a blistering pace and there is still much more to come. Over the past few months, the legislature has moved swiftly on a first-in-the-nation statewide rent control policy and the extension of assessments on hospitals and insurance companies to fund the state’s Medicaid program. We have also seen workplace harassment complaints and threats to remove leadership from their posts. Each of these alone would be the dominant issue in a normal session but, as we have said before, this is not a normal session and this week was no exception.
Over the weekend, the governor convened with Senate Republicans in an effort to negotiate the terms of their return to the capitol after fleeing the building in a denial of quorum over a business tax that whose passage had become all but inevitable. It had become clear that Republicans needed to return to the capitol with some sort of legislative victory, and leadership was unwilling to sacrifice their top priorities to reward bad behavior. The governor, however, did not face the same constraints and was willing to offer concessions in exchange for allowing the legislature to advance an education funding package she will leave behind as her political legacy. It became clear on Monday that a deal had been struck, the proposals to enact strict gun control and vaccine requirements would not progress this session and the tax would advance without further obstruction. The bill arrived on the governor’s desk within hours of the deal being reached.
Despite the denial of some lawmakers, it has become clear the legislature must act on the looming fiscal crisis for the state’s public pension system. Any investment in public schools would likely drown in the cascading costs, and votes on the tax were secured only if leadership committed to advancing meaningful pension reforms. Leadership wasted no time in moving forward on a pension reform plan. On Tuesday, the House Speaker and Senate President outlined a series of modest pension reform proposals that include a mix of structural changes and one-time funds designed to limit the percentage of payroll dedicated to pension costs. After their substantial victory over the new business tax, however, the public employee unions were unwilling to accept these concessions and threatened litigation against the state if the legislature adopted any reforms that reduced employee compensation or benefit.
On Wednesday, the state economists released a revenue forecast that was, in their own words, nothing short of historic. Oregon has experienced an unprecedented tax collection season, due in large part to the changes from the 2017 federal tax law, and will see $2 billion more in tax collections than anticipated. These collections will result in the largest personal income tax refund being issued to taxpayers in the state’s history. On Thursday, however, House Speaker Tina Kotek introduced legislation that would recoup half of those funds and redirect them to replacing the I-205 bridge, a program to assist freight carriers replace diesel engines and set up a new fund to aid the state transition to electric vehicles. In a rare public signal of dissatisfaction, the governor told reporters she would only accept a recoupment of the taxpayer funds if it were to be used to pay down pension debts. Recouping this money will be no easy task as the state constitution requires a two-thirds vote in both chambers to retain those funds and the relationship between the partisan caucuses has been strained, to say the least.
We may be entering the final weeks of session, but the laundry list of issues remaining to be debated is enough to fill an entire session on its own. In the days and weeks ahead, the legislature is poised to debate a controversial cap-and-trade proposal, tort and medical malpractice reforms, and a new employer and employee payroll tax to fund a paid family medical leave program, among the many other policies and budgets remaining in the process. It may feel like the end of session, but we still have a lot of session ahead of us.
Intermodal facilities update at OTC
On Thursday, the Oregon Transportation Commission (OTC) held its monthly meeting in Salem. As part of the agenda, Eric Havig with the Oregon Department of Transportation gave an update on the remaining intermodal facilities being considered by the commission. Mr. Havig reported that all sponsors had answered the April questionnaire that included rail questions to the Brooks site. The Tiago Group, which has acted as a third-party consultant on the process, will give revisions to the OTC by June. It was suggested that each sponsor be able to speak to the commission for their final bid. The remaining sites include Brooks, Millersburg, and Treasure Valley. Mr. Havig also reported that a step approach will be initiated once a site sponsor enters into an agreement. This approach will include check-ins with the commission for regular checks and balances. The OTC will be announcing the selected sites shortly after receiving the final revisions.
Legislative Report for May 10, 2019
In the weeks following the last election, a prominent Republican in the legislature was quoted as saying the new supermajority control would render his party less than a “legislative speedbump.” This statement has proven to be accurate. Democratic leadership has advanced major legislation with relative ease and generally without negotiating any terms with the minority party, creating a mounting frustration for minority leadership that seemed almost destined to burst. On the whole, there are only two tools the minority party can use make themselves relevant: requiring all the bills be read before their final chamber votes and denying their presence to provide the quorum necessary to conduct regular business. Republicans in the Oregon Senate decided to pull the trigger on the latter this week—they fled.
Since Monday, Republicans have been absent from their official legislative duties and are rumored to have left Salem altogether. Sen. Tim Knopp (R-Bend) has decided to remain in the capitol for the time being, not in defiance of his own partisan caucus but in support of their actions. Over the past several days, Sen. Knopp has been the unofficial spokesperson for his colleagues in the building. This legislative walkout has been organized in protest of the final vote on the Student Success Act, the gross receipts tax proposed to stabilize education funding, that was originally planned for Tuesday. With Republicans nowhere to be found that day or any other day this week, the chamber continues to wait to take on the debate for the Student Success Act.
So, where does the session go from here? Republicans have issued a series of demands to Senate President Peter Courtney and Democratic leadership as terms of their return. These terms include the demise of the cap-and-trade legislation and a controversial bill proposing to eliminate the limits on civil lawsuits seeking compensation for pain and suffering, in addition to sending the Student Success Act back to committee. Democratic leadership is unlikely to reward their behavior, especially as it relates to their highest priorities of the session, but the majority party’s willingness to entice their return with concessions remains unknown.
The gears of the legislature continued to move despite the lull in activity in the Senate. On Monday, the House approved a high-profile measure to prohibit parents of schoolchildren from opting out of vaccinations on philosophical grounds. On Wednesday, thousands of teachers across the state walked out of their classrooms to rally in support of the education funding bill—calling for Republicans to return to the capitol to “do their job.” Meanwhile, both chambers of the legislature continued to hold hearings and work sessions (votes) to advance measures in anticipation of the second chamber deadline.
Today marks the second major deadline of the session. If a bill has not been scheduled for a work session in its current policy committee by the end of today and if it is not approved by the committee or referred elsewhere by Friday, May 24, the bill will become effectively dead. This leaves committees with only two weeks to complete their work for this session before shutting down and is expected to result in a large volume of bills on the chamber floors. In the Senate, the long list of measures already accruing could result in extended afternoon and evening floor sessions following the return of the Republicans, which could eat away at the time available for policy committees to race to meet the deadline.
Chlorpyrifos ban receives hearing in House Rules; work session Monday
A bill that will prohibit the sale, purchase, or use of pesticide products containing chlorpyrifos in Oregon was heard in House Rules on May 8.
Rep. Ken Helm (D-Washington County) started the hearing explaining why he had signed on to the bill late as a sponsor after the bill was heard in two committees he serves on earlier in session. He told the committee he thought the current amendment (-3), which will allow a phaseout, was a compromise due to human health effects. He cited the EPA ruling of a previous ban currently in the Ninth Circuit Court of Appeals. Rep. Diego Hernandez (D-Portland) testified in support of the amendment but did acknowledge he understood that this will mean cost and change for farmers. Rep. Sherrie Sprenger (R-Scio) questioned this panel as to why the Oregon Department of Agriculture (ODA) had not acted on this, to which Rep. Helm said he believed ODA would follow the EPA and the federal requirements and be waiting on the court ruling.
Testifying against the bill was Rep. Shelly Boshart Davis (R-Albany), who testified that by banning chlorpyrifos it would take away a critical tool for agriculture and could set a precedence to regulate pesticides on a product-by-product basis. She supported HB 3058 in Ways and Means that directs ODA to do a study on chlorpyrifos and to use their current statutory authority to regulate where needed. She urged the committee to consider that a session is not long enough to make these changes for Oregon Agriculture.
Also in opposition was Katie Fast with Oregonians for Food and Shelter (OFS) and Jenny Dressler with Oregon Farm Bureau (OFB). Katie Fast explained to the committee that many crops have no other options at hand currently for controlling pests. She also explained the process with EPA and believes that the EPA results could be challenged and take years to conclude; Oregon could be jumping the gun with a ban. OFS also would support an ODA study, she said.
Jenny Dressler (OFB) also testified in opposition to HB 2619-A3. She stressed that chlorpyrifos is not used often and only when needed. She added that Oregon only has two options on crops, such as the seed industry, that need to manage a broad range of pests. She also spoke to the committee about the phytosanitary requirements to ship to foreign countries and this ban could affect Oregon trade.
Chair Paul Holvey (D-Eugene) closed the hearing without a work session, but the bill is scheduled on the May 13 agenda for a work session, meaning it will make the deadline today to be scheduled to move out of committee.
If passed, HB 2882 will task ODA to write rules protecting GMO contamination
HB 2882 began as the patent liability bill to patent holders for GMO contamination from pollen drift. The bill has amendments; one will move the liability to the grower and the other request that Oregon Department of Agriculture (ODA) write rules regulating GMO drift contamination.
Sen. Jeff Golden (D-Ashland) and Rep. Marty Wilde (D-Central Lane and Linn Counties), who are sponsors of the bill, opened a hearing testifying that when the state preempted counties from regulating GMO contamination, it left GMO crops unregulated with a risk to farmers of specialty seeds and organic farmers. Sen. Golden explained that currently he believes only section two, which tasks ODA with writing rules, should be passed and the section with the liabilities to growers be left off the bill as it confuses the bill at this time. Sen. Golden testified that GMO-free labeling is the newest trend and the lack of being able to qualify for GMO-free labeling can cost organic growers millions in lost revenue.
Dan Reynolds, a farmer from Malheur County, testified against the bill, saying that during the recent bent grass issue it was regulatory agencies, farmers, and the counties working together that solved the problem.
Amy Wong with Cultivate Oregon and Friends of Family Farmers also testified about Oregon’s lack of regulating GM contamination and suggested to the committee that if the state were to allow more canola in the valley, they will need ODA rules since she believes much of canola is genetically modified. Wong said that specialty seed growers need protection from genetically engineered contamination.
Because there was such a large group to testify, Chair Paul Holvey (D-Eugene) carried the hearing over to Monday, May 13.
Legislative Report for May 3, 2019
Democrats are wasting no time in advancing their landmark business tax and education investment package, called the Student Success Act, after receiving a signal of acceptance from the state’s largest business association. On Monday, in a surprise pivot, Oregon Business & Industry (OBI) nodded in neutrality as the Joint Committee on Student Success released its final amendment on a low-rate, broad-based gross receipts tax to fund a $2 billion investment in public schools.
For years, OBI had resisted efforts from the legislature to enact a gross receipts tax, arguing these taxes as regressive and an unfair tax policy instrument for businesses with low profit margins. They had persistently threatened to refer any tax to voters. Late last week, however, the business group turned to Rep. Brian Clem (D-Salem) for help. The group was dissatisfied with the policy option favored by the committee, a basic low-rate gross receipts tax, believing the burden of the tax would fall too much on low-margin businesses.
In a leap of faith, believing the group was being genuine in its efforts to find an equitable proposal, Rep. Clem withheld his vote to buy the group more time to negotiate with House Speaker Tina Kotek (D-Portland). The result of these negotiations was a higher rate tax with a more favorable subtraction (deduction) for either business-to-business purchases or labor expenses. The tax would be imposed at a rate of 0.57 percent (previously 0.49 percent) on business sales in Oregon exceeding $1 million and would allow a subtraction of 35 percent (previously 25 percent). In addition to these terms on the business tax proposal, the negotiators also reached an agreement on a paid family medical leave proposal that would be more favorable to employers; however, the final terms of the policy are still undefined. With the business group publicly acknowledging its neutrality and signaling it would not pursue or fund a referral of the tax to voters, the committee swiftly moved it out of committee.
These negotiations have deepened the fractures in the business and political communities. Other business groups, such as Oregon Manufacturers and Commerce and the Oregon State Chamber of Commerce, are perpetuating the threat of referring the tax to voters. Likewise, Republicans made their frustrations known after being removed entirely from the negotiations. After a floor debate spanning more than six hours on Wednesday, House Minority Leader Carl Wilson concluded saying, “The next time people get together and want to get some deals made, remember the Republican caucus. We would appreciate it.” The bill was approved by the House along party lines.
Looking ahead, the Student Success Act is expected to consume another full day of legislative activity in the coming days, possibly as early as Tuesday. Meanwhile, the legislature is slowly beginning to attend to the other high-profile issues of session, such as the cap-and-trade, vaccine exemption, and tort reform proposals. The next legislative deadline is also only a week away. The second chamber scheduling deadline, requiring all bills remaining in policy committees be scheduled for a work session (vote), will signal a thinning of the proposals remaining for the session as we near adjournment. Onward ho!
Legislative Report for April 26, 2019
With only two months remaining in their legislative session, Oregon lawmakers are beginning to narrow their focus to some of the most controversial issues of session: the gross receipts tax, cap-and-trade, gun control, and a handful of others. We expected the temperature in the building to be vastly different from previous sessions because of the supermajorities in both chambers. Despite this control, however, there will always be a limit to the number of votes some members will be willing to give on taxes.
The negotiations between legislative leadership, the business community, public employee unions, and members of both parties over the proposed gross receipts tax are ongoing and, for many lawmakers, remain the dominant bargaining chip. Leadership had set an ambitious timeline for moving forward on the new business tax legislation by the end of the week and potentially sending the bill to Governor Brown before the end of the month. Ultimately, leadership was unable to reach an accord by their deadline but are expected to continue throughout the weekend and into next week.
The high-stakes negotiation over the tax proposal is having a downstream impact on other priorities, such as the proposal to increase the tobacco tax by $2 per pack and set Oregon apart from other states by also taxing e-cigarette (vaping) products. This proposal has been billed as a critical component to addressing the state’s Medicaid funding shortfall as the state’s financial responsibility for the program increases. Given the implicit limit on supermajority votes and entwining of issues in the session negotiations, it appears the best the legislature may be able to do this session is refer the tobacco tax to voters at some point next year. This is only one example of some of the softening around ambitious policy proposals and is by no means a rare example.
On the topic of Cap and Invest, however, negotiations have not watered down or scaled back the bill. To the contrary, the bill has grown in both size and scope. Democratic leadership continues to add new elements in an effort to satisfy an array of concerns through greater specificity on where and how dollars raised will be reinvested.
The second major deadline of session is just two weeks away. If a bill has not been scheduled for a work session (vote) in its second chamber committee by May 10, the bill will become procedurally dead. Likewise, any bill that is scheduled for a vote by May 24 but is not ready to move will also become effectively dead. The deadline marks the true countdown to the end of session as most policy committees close for the year and the focus shifts to the biennial operating budget in the Ways & Means Committee. Needless to say, the work in Salem is far from being finished.
Legislative Report for April 19, 2019
Oregon lawmakers may have more than two months remaining for their scheduled adjournment, but the focus in Salem is already beginning to shift toward the end-game negotiations. The supermajority control in the building has so far had only a modest influence on policy outcomes. The debates earlier in the session over rent control and Medicaid funding were undeniably contested, but those issues were among the most likely to advance regardless of the balance of power. Now, however, the political momentum is beginning to circle around the one issue that only a supermajority can tackle—business taxes.
The perennial debate over tax increases in the legislature has been inexorably tied to the ballooning liabilities owed to the Public Employees Retirement System (PERS). With an unfunded pension liability now exceeding $27 billion and rate hikes expected to total 24 to 29 percent for public employers in the next budget cycle, the looming fear from many is the pension woes will eat away new investments made by the legislature. In recent weeks, the greater business community has released ballot initiatives proposing structural benefit reforms to guard new revenue from being dedicated toward these obligations. Likewise, the governor and legislative leadership are convening their own workgroups to propose solutions this session to address the coming fiscal calamity.
Despite these discussions around pension reform, or possibly because of them, the legislature is continuing its efforts to advance a substantial education investment plan, called the “Student Success Act.” This week, the special committee forming the plan outlined the mechanics of its proposed business receipts tax. The tax is imposed at a rate of 0.49 percent on business receipts exceeding $1 million and would raise more than $2 billion for public schools. The policy differs significantly from the gross receipts tax proposed in Measure 97 (2016) by applying the tax to a very broad base of businesses (any business making sales in the state) and currently allows a partial deduction for either purchases from other firms or labor. In testimony to the committee, funding advocates and the business community seemed to agree on merits of investing in public schools but the larger business groups drew a hard line on there being an equal need for structural pension reforms and called to question the cumulative impact of all the taxes proposed by the legislature.
With everything on the line, leadership is making a play to pass this new tax and investment plan at a rapid pace. The co-chairs of the committee have said they intend to move the bill out of the committee as early as next week, giving only a few short days to make changes to the underlying policy. Some in leadership have also signaled that if the committee is successful in advancing the plan and if they are successful in gathering the votes needed to enact it, the timeline to adjournment could approach much faster than previously expected. Leadership has summoned the Ways & Means Committee to begin moving agency budgets through the appropriations process and signaled that committee chairs need to begin moving policy bills to the floor in anticipation of such an expedited session timeline.
We would not be surprised if some of the more substantial policy debates of session, such as cap-and-trade or tort reform legislation, fall by the wayside or become watered-down as these negotiations continue. In fact, the special committee formed to consider the cap-and-trade legislation has cancelled all its hearings since April 5 and does not currently have another hearing scheduled. Equally important, however, is that we need to be watchful for any problematic bills remaining in the legislature as dead bills have a tendency to come back to life as deals are cut. These high stakes negotiations over taxes and spending are bound to ruffle feathers in the building, one way or another.
Legislative Report for April 12, 2019
Normally, the legislature all but comes to a stop in the days following the chamber of origin deadlines to give members a chance to return to their districts and regroup before the second half of session begins. However, this is not a normal session. Following the work session deadline on Tuesday, lawmakers returned to the capitol to begin rolling out proposals and hearings on some of the most contentious issues poised for the session.
In a couple of weeks, on May 8, teachers from around the state intend to walk out of classrooms in protest of the legislature not adequately funding public schools. Oregon has long ranked among the worst states in graduation rates and educational outcomes, and many attribute those rankings to lackluster funding of the primary and secondary education programs. We have seen ballot measures and legislative proposals over the past several years trying different approaches to address this issue, but none have come to fruition. We have long said the supermajority control of the legislature would drastically change the trajectory of session and we are seeing that today as Democrats begin to put their political weight behind the hallmark tax legislation of session.
The Joint Committee on Student Success, the special committee formed to tackle the decades-long issue of inadequately funding schools, released a long-awaited document containing the components of a new business tax last night. The document, in the form of an amendment, was derived from months of discussions of a subcommittee formed specifically to discuss the design of the tax. Its first iteration comes in the form of a modified gross receipts tax, a tax on business sales in excess of $1 million, at a rate of 0.49 percent for all businesses. Unlike gross receipts taxes we have seen previously in the legislature and on the ballot, this proposal also allows a business to deduct a portion of its expenses for either: materials, supplies and services; or the costs of labor. If enacted, the tax would raise $1 billion annually or $2 billion for each budget cycle.
The politics around this tax proposal are weighing on virtually every issue remaining in the legislature in some way, shape, or form as leadership appears willing to negotiate the demise of other bills, including some of their other top priorities, to secure the votes needed to pass this new business tax. With that said, the timelines for the tax to move forward in the legislature are not entirely clear. Some lawmakers wish to expedite the review and eventual vote on the tax proposal to circumvent the wrath of maddened parents; however, other lawmakers are demanding a judicious review of the policy before any additional movement.
Separate from these deliberations around a business consumption tax are other contentious debates over a substantial increase of Oregon’s tobacco tax and imposing a new tax on businesses relying on Medicaid to provide healthcare to their employees. These proposals come to the legislature based on the recommendation of a workgroup formed by the governor to find a longer term solution to the Medicaid funding debates in the legislature. It is not clear today if these proposals will be swept into the negotiations of the broader business tax discussion or if they will instead be referred to voters. Regardless, it is fair to say the legislature is in the midst of its own tax frenzy right now.
Update on Pesticide Bills
SB 853 dead in Senate Committee
SB 853, a bill that would prohibit the sale, purchase, or use of pesticide chlorpyrifos and require the Oregon Department of Agriculture (ODA) to place pesticide products containing neonicotinoid on the list of restricted-use pesticides, has died in committee.
SB 853 received a public hearing in March, but a work session was not held prior to the April 9 deadline, so the bill is dead. It is noteworthy that a bill mirrored after SB 853 has been amended to a pesticide study by ODA in the House and is now in Ways and Means.
The House Committee on Agriculture and Land Use seeks pesticide study ahead of court ruling
Chair Brian Clem (D-Salem) began the work session on HB 3058, the bill to ban chlorpyrifos, saying that he is against bans that have not been reviewed by a state agency and that the Oregon Department of Agriculture (ODA) had not been asked to review or take a position on chlorpyrifos. He said the -5 amendments would direct ODA to review the safety of chlorpyrifos products and report back to the legislature by January 1, 2020. He added that there is a case in the 9th Circuit Court that could rule on chlorpyrifos prior to that. He also noted that chlorpyrifos is still used in home products and by veterinarians and that the proponents of the ban had not met with him after the hearing.
Rep. Ken Helm (D-Washington County) noted that the bill is challenging and reminded the committee that earlier in session, the legislature had adopted the Governor’s bill directing OHA, ODA, and DEQ to support clean air and clean water and to look at federal regulations and specifically if any rollbacks would affect Oregonians. He said moving into the future, ODA needs to seriously look at products that the EPA has found to be harmful and that are widely used and depended upon in the ag industry. He noted this is not an argument over science but rather jurisdiction and that we are now waiting on the ruling of the chlorpyrifos ban. In the meantime, Rep. Helm said, there is abundant science saying chlorpyrifos is harmful to children and nursing mothers. He told Chair Clem though he supports his intent with a study, he will not support the bill.
Chair Clem said the original bill would be the strictest ban of chlorpyrifos in the nation and if the intent is to protect children, we should think of products that children use—flea collars would not be one of those. Rep. Anna Williams (D-Hood River) said she was thankful to see the study in the bill because it puts pressure on the manufacturers without putting people out of business in markets that we serve.
HB 3058 moved to Ways and Means with Rep. Helm voting no.
Controversial pesticide bill is amended and moved to Rules Committee on deadline
The House Committee on Energy and Environment held a last-minute public hearing and work session on HB 2619 on the bill deadline day, April 9. The bill was last on the agenda at the final hour. The original bill aimed to prohibit sale, offering for sale, purchase, or use of pesticide products containing neonicotinoid.
Chair Ken Helm (D-Washington County) commented that the bill had been on the docket since the beginning of session but was held as another bill, HB 3058, was being worked in the House Agriculture and Land Use committee. In an unprecedented move, Chair Helm introduced -1 amendments to the bill that removed neonicotinoids from the bill and added a ban on chlorpyrifos.
Rep. Lynn Findley (R-Vale) commented that he did not believe the House Energy and Environment Committee should be hearing the bill and it should remain in the House Agriculture and Land Use Committee where these issues are routinely dealt with. Chair Helm said he held the bill off for that reason but explained that the state is in a hard position as the EPA has found chlorpyrifos to be harmful but a ban was reversed at the federal level. It is now held up in the 9th Circuit Court, not on the science, but on matters of procedure and jurisdiction. He said those safety concerns are why he brought the amendment and planned to send HB 2619 to Rules. The amendment was adopted.
Rep. Anna Williams (D-Hood River) noted the vote was a hard vote for her, stating that she understands pesticides are toxic, but they need to be toxic in order to kill pests. She feels these bans pit one group against anther, adding she would give it a courtesy vote to move it to the Rules Committee. Rep. Janeen Sollman (D-Hillsboro) also gave a vote explanation, agreeing with Rep. Williams and saying she understands why the treatments are needed and she wishes pesticides could be regulated at a federal level rather than state by state because it puts our ag industry at a disadvantage. She added she agreed the bill should be in the House Agriculture and Land Use Committee.
In conclusion, Rep. Findley urged the committee not to take a vote on the bill and said he would remain a no vote. The bill moved to the Rules Committee with three members voting in opposition: Rep. Findley, Rep. E. Werner Reschke (R-Klamath Falls), and Rep. Jack Zika (R-Redmond).
The Rules Committee is open for the duration of session, giving the bill an added opportunity to move to the House floor. Stay tuned.
Legislative Report for April 5, 2019
Oregon lawmakers have reached the halfway point of their regular session and are currently in a sprint to move bills out of their original policy committees. We have seen some committee agendas with more than 30 bills scheduled for a hearing in a single day, resulting in long delays for bills to be heard and moved out of the committee. It makes for some long days in Salem and the natural lag and rush style of politicking that is common in the state capitol.
In the judiciary committees of both chambers of the legislature, lawmakers discussed a variety of gun control measures that drew hundreds of citizen advocates to the capitol. In the Senate, an omnibus bill includes an array of new provisions: “safe storage” and minor supervision requirements, including strict liability for gun owners who fail to secure their firearms or report loss or theft; allowing, but not requiring, retailers to set the minimum purchase age at 21; limitations on so-called “ghost guns” (i.e., untraceable or undetectable firearms); and other miscellaneous provisions. In the House, a bill aims to tighten existing limitations on those with court protective orders. For the first time in recent memory, capitol security separated proponents and opponents into different overflow hearing rooms in an attempt to cool down some of the vitriol between the two groups. Additional hearings have been scheduled for next week to move these bills forward in the legislative process.
The choreographing of the hallmark issues of this session—the cap-and-trade and business consumption tax proposals—appeared to hit a snag this week. Early in the session, leadership had moved swiftly to advance high-profile issues, such as the housing and health care financing bills, to make way for these proposals to move without being drawn into the traditional horse trading. Likewise, the plan was to advance the cap-and-trade legislation early into session so it would not become a bargaining chip in the tax debate. The drafting of both bills, however, have taken longer than previously expected and there is an increasing likelihood they will each compete for the attention of lawmakers and the lobby during the second half of session. With that said, there is no reason to suspect the legislature will advance one and not the other as both are high priorities for core constituency groups of the Democratic majority.
You should expect the legislative calendar to become even more busy in the week ahead. There are dozens of bills remaining on most committee agendas and many more are spilling over from this week. Committees will have until Tuesday, April 9 to act on measures before the end of the current deadline period, which could result in additional evening hearings for some committees. The committees not subject to these legislative deadlines, including the special committees for the cap-and-trade and tax proposals, are also expected to meet next week to release additional details. Needless to say, be ready for a lot of activity next week.
Update on AG Bills
Many bills died last week without getting scheduled for a work session. Bills that are moving through the process must be voted out of their committee by April 9 or they too will die. Bills referred to Rules and Ways and Means will not be on the same deadline as those committees do not close during session.
Canola bill has hearing
SB 885, the bill to remove the sunset and continue the 500-acre limit on the production of canola in the Willamette Valley Protective District, passed out of the Senate Environment and Natural Resources Committee on April 4 on a 3-2 vote. Sen. Cliff Bentz (R-Ontario) and Sen. Alan Olsen (R-Canby) both voted in opposition. Sen. Bentz said he believed that the regulations on canola should be done through the Oregon Department of Agriculture (ODA), adding that he wanted to send a signal that the legislature being used as the backstop was “understandable but unfortunate.”
A subsequent referral to Ways and Means was added, so the bill will be referred to a subcommittee on Ways and Means for requested budgeting by ODA. Sen. Floyd Prozanski (D-South Lane and Douglas Counties) raised a question after the vote on the need for the bill to go to Ways and Means simply to continue the status quo. The committee assistant explained that ODA thought they may need funding for continued rulemaking that has been ongoing for several months.
The bill will now be scheduled in a subcommittee of Ways and Means for budgeting. Ways and Means is open for the duration of session and bills coming out of Ways and Means will go directly to floor votes, so SB 885 will not move through a House committee.
GMO patent bill moves to Rules
HB 2882, the bill that will allow a cause of action against a patent holder or licensed manufacturer for GMO present on land without the permission of a land owner, will stay alive. It was voted out of the House Judiciary Committee unanimously with a referral to the House Rules Committee. The Committee on Rules will be open for the duration of session, so stay tuned.
Pesticide bills stay alive
HB 2619, HB 3058, and SB 853 all are bills relating to the restricted use or ban of pesticides. HB 3058 and SB 853 will ban chlorpyrifos and add neonics as restricted use pesticides (RUP), and HB 2619 will ban all products containing neonics. All three of these bills are scheduled to have work sessions on or before the April 9 deadline.
Next week will mark the start of the second half of the legislative session. Fewer bills will be in play, but there are still many bills left to pay careful attention to. We will keep you informed as we move through the last half of the session.
Legislative Report for March 29, 2019
Lawmakers in Oregon are now racing against the clock to schedule the bills remaining in policy committees for work sessions (committee votes) before the chamber of origin deadline for posting bills at midnight tonight. Once the posting deadline has passed, any bill not scheduled to receive a work session before April 9 will be considered dead. Any bill that does not receive an affirmative committee vote before April 9 will also be considered dead. After those two deadlines pass, we expect the number of active bills will be substantially reduced by somewhere between one-third to one half of the total number of bills introduced at the beginning of session. However, it is important to know that Revenue Committees, Rules Committees, and Joint Committees are not bound by the chamber of origin deadline. As a result, some bills that are in substantive policy committees will be granted a temporary reprieve by being referred to one of these committees, in order to buy some additional time to work out amendments, but such reprieves are short lived and not always successful in the end. Session is already at the halfway point, and all bills need time to navigate the second chamber. The reality is every day a bill stays in its originating chamber is another day it is not advancing through the second chamber, and no committee in either chamber can work beyond adjournment sine die.
On Monday, the House Business & Labor Committee held its first hearing on a proposal to enact a new payroll tax on both employers and employees to fund a new insurance pool providing workers with a state-sanctioned paid family medical leave benefit. The bill would allow an employee to take 12 weeks of leave during the year and an additional 14 weeks for maternity or paternity leave (and another six weeks if there are complications with the birth). This bill is becoming one of the hallmark labor bills of session and one (of many) areas of consternation between lawmakers and small businesses. The hearing featured labor advocates and chambers of commerce arguing the merits of the new requirement and the substantial burden of small businesses trying to comply with a new payroll tax. Despite the controversy circling this bill, the benefit program is among the top priorities of leadership this session and will surely receive more attention by lawmakers.
On Thursday, the House Health Care Committee unveiled amendments to a placeholder bill creating a new tax on employers providing no or insufficient health care benefits to their employees. The idea behind the new assessment is to collect funds from employers who are largely relying on public assistance programs, such as Medicaid, to provide benefits to employees. Proponents of the legislation argue the new tax creates an incentive for employers to provide these benefits to their low-wage workers or else assume a financial stake in the state programs those workers rely on. Opponents, including some of the largest business groups in the state, are condemning the proposal as millions of dollars in new taxes on Oregon’s small- and medium-size employers. There are substantial political ramifications for this bill. The revenue generated from the new tax is one of several ideas currently on the table for balancing the remaining portion of the Medicaid budget. However, there is an increasing likelihood a new tax on employers could be referred to voters or receive a substantial challenge in the courts. Needless to say, the future of the bill remains uncertain right now.
The Joint Committee on Carbon Reduction, the committee assigned to designing the new cap-and-trade program, has also released amendments rewriting the legislation previously introduced. Earlier this session, the committee had released an outline for the program that included special exemptions for specific businesses and sectors. The new amendments are generally more restrictive and replace many of these exemptions with a longer phase-in period for businesses to comply with the new law. This phase-in period would allow a business emitting more than 25,000 metric tons of carbon dioxide to claim free allowances for 95 percent of its emissions for the first three years of the program and continue to claim those allowances afterward if they are able to prove the business is using the best available technology to reduce emissions. Nonetheless, this legislation is among the most controversial bills (alongside the debate over a new business consumption tax) and will receive substantial attention in the weeks and months ahead.
Looking forward, next week is likely to see substantial activity in policy committees. We are already seeing some committees with a dozen or more bills scheduled for a vote on any given day, and some committee chairs are planning to schedule additional evening work sessions to be able to power through their overloaded schedule. As we indicated previously, it is worth watching not only the activity in committees but also the direction of bills moving out of them. If a bill is not ready for a floor vote or if leadership wants to keep an idea alive for the final horse trading at the end of session, the bill may be assigned to the Revenue, Rules, or joint budget committees for further consideration. With high-profile negotiations occurring over the business tax and other major issues of session, we are expecting to see a good number of bills fall into those committees and loom there for the remainder of session.
Pesticide Bills have a packed house this week
This week, public hearings were held on SB 853 and HB 3058 in their respective chambers. These “companion bills” (mirror images of each other) seek to ban chlorpyrifos and to regulate use of neonicotinoids through creation of a new license.
The hearings drew widespread opposition from seed producers and farmers, who testified that chlorpyrifos are effective in warding off pests, especially in the fields of eastern Oregon where pests can destroy entire crops in a matter of days. Seed farmers testified that neonicotinoids are used to protect vulnerable seedlings from pests and diseases. They also noted that ODA already has the statutory authority to restrict the use of dangerous pesticides.
Roger Batt, Executive Director for the Eastern Oregon/Idaho Seed Association and Pacific Seed Association, testified that losing access to chlorpyrifos could lead to significant loss to seed farmers and would put Oregon seed producers at a significant disadvantage in competing against producers in others states that do not have a ban on chlorpyrifos.
Chair Michael Dembrow (D-Portland) asked what would have happened if the EPA had banned chlorpyrifos as recommended by the previous federal administration? Batt explained that such a ban was estimated to cause a 30-60 percent loss in crop yield and that other options are currently in development.
The proponents of the bills included Dr. Meagan Horton, Professor of Environmental Medicine from Mount Sanai; many local organic farming groups; and wildlife protection groups. Proponents cited EPA studies on the effects of chlorpyrifos to pregnant woman and children, such ADHD, delayed educational development, and increased behavior problems. Oregon Wild testified that pesticide labels instruct people to wash their clothes worn while applying pesticides separately from other clothes, not taking into consideration that trace elements can contaminate waterways and poison fish and other wildlife. Proponents blamed the Trump administration for not imposing the ban, and claimed a lawsuit is currently underway in the Ninth Circuit Court in San Francisco. They urged the committee to make Oregon join other states in banning chlorpyrifos and restricting the use of products containing neonicotinoids to licensed users prior to the court’s ruling.
Chair Dembrow said he will be talking to his committee members about the best path forward, adding that the initial goal was to keep these chemicals in the hands of professionals who were educated and trained in their use and away from household public use. He said they may need to look at the bill to clarify this in regard to neonicotinoids.
Rep. Shelly Boshart Davis (R-Albany) testified that the regulation of pesticides should be left to state agencies and the EPA, and not to a citizen legislative body. Katie Fast with Oregonians for Food and Shelter testified that there are no alternative products for specialty seed growers and that neonicotinoids are an important part of integrated pest management used by many farmers and seed producers. The Oregon Seed Association submitted written testimony that a ban on chlorpyrifos could leave seed producers at an economic disadvantage.
Jonathan Manton representing the Oregon Organic Coalition said they are working on amendments with opponents such as nurseries and believe that they can come to a responsible use agreement.
Chair Dembrow noted that there was an equal number of opponents and proponents at the Capitol to testify and thanked both sides for their participation on an important bill. It is expected that if the bills advance from committee, it will be after adopting subsequent amendments.
At the time of this report HB 3058 has been scheduled for a work session in the House Ag and Land Use committee on April 9. Also, HB 2619 has been scheduled for it’s first public hearing and a possible work session on April 9. HB 2619 would ban the sale of products containing neonicotinoids. Bills must be scheduled in their chamber of origin by midnight tonight.
Watch the Senate hearing on SB 853 HERE.
Watch the House hearing on HB 3058 HERE.
Legislative Report for March 22
We never said that governing under dual supermajorities in the legislature would make politicking any easier for leadership. In previous sessions, legislative leadership has been required to negotiate the general trajectory of session with Republicans to navigate the major tax bills through each chamber. This session, however, leadership must negotiate the terms of the featured acts of session with members of their own party, each of whom believes he or she is the deciding vote and wants something in return.
There remains a good amount of dissonance in the majority party despite one-party rule. We are beginning to hear demands from the more progressive groups for leadership to use its power to raise substantial new revenue in amounts far exceeding the new revenue target of $2 billion established by the governor and leadership. There have always been threats of ballot measures made during session—it seems to be a normal course of business in politics these days—but rumors are quickly emerging that some progressive groups are ready to prepare another tax ballot measure during the next general election if the legislature does not harness its control of the process to raise business taxes. Given the politics of this session and the dynamics of the next presidential election, the stars may be aligning for these groups to get their wish if the legislature does not act on tax reform.
Elsewhere in the tax conversation, the co-chairs of the special committee formed to draft those business taxes sent a letter to the leadership of the business community asking if they are willing to support any of the options being considered by the committee. The Oregon Business Plan, a consortium of the largest business groups in the state, had suggested a modified gross receipts tax allowing a deduction for purchases between businesses as an alternative to a traditional gross receipts tax. In their letter, the co-chairs asked if the group was willing to publicly endorse its own proposal. In lieu of taking a position on the proposal, however, the group responded with demands for the legislature to move forward on a series of pension reforms before coming to the table on a business tax increase.
We now find ourselves in familiar territory. The business community, in partnership with former labor leader Tim Nesbitt, has launched a new group to advocate for pension reforms. Unfortunately, there does not seem to be momentum in the building amassing around this issue. The reforms from the 2003 and 2013 legislative sessions effectively stopped the fiscal bleeding, but the contractual obligations to pensioners who were promised substantial benefits continue to add to the ballooning deficit in the program. Most Democrats, including the governor, ran on a platform of protecting pension benefits for public employees and raising business taxes to pay for investments in public education, and now see their victories as a mandate by voters to protect the benefits promised to retirees.
Pay close attention to the destination of bills as the legislature races against the clock to meet the first chamber-of-origin deadline. This is the deadline by which bills must move out of the House or Senate committee in which the bill originated. We are beginning to see many of the high-profile bills move to the rules, budget and revenue committees, which are not subject to the deadline. These referrals are often an effort to keep controversial legislation in the exclusive reach of leadership, giving them the opportunity to trade those bills in order to secure the votes needed to move forward on the featured issues of session—including taxes, cap-and-trade, labor laws, healthcare, and criminal justice reform. All these issues circle around the tax conversation and are, in part, an effort to fend off another divisive ballot measure.
Ag Committees will have a full calendar of hearings next week
By March 29, all bills must have been scheduled for a hearing and work session in their originating chamber. This rush to move bills has landed a host of Ag-related bills on the calendar for next week.
HB 2020, the Cap-and-Trade bill, is scheduled for two work sessions in the Joint Carbon Reduction Committee on March 25 and March 29. A side note is listed on the work session schedule that these are informational hearings for the committee to look at newly proposed amendments and a vote will not be taking place. After traveling the state and getting feedback from the stakeholders and public, the committee chairs have been drafting new amendments to the controversial legislation. These amendments will be made public at these upcoming work sessions.
HB 3044 will have a public hearing at 8 a.m. on March 26 in the House Committee on Natural Resources. This is the bill regarding the reporting of the aerial application of pesticides. Submit written testimony to: email@example.com
On March 26 there will be two hearings on bills to ban chlorpyrifos and classify neonicotinoids as restricted use pesticides:
As a final note, HB 2264 will have a work session at 8:30 a.m. on March 28 in the House Revenue Committee. This is the property tax exemption bill on machinery, tools, and fixtures used in agriculture and horticulture. This bill is expected to pass out for committee for a vote on the House floor.
Legislative Report for March 15, 2019
There are now only two weeks remaining before the first major deadline of session. If a bill has not been scheduled for a work session or vote in its initial policy committee by March 29, the bill will become effectively dead in committee. This self-imposed deadline by the legislature is one of the tools to narrow the focus of lawmakers to legislation capable of garnering the support needed to move forward in the process. For lawmakers and lobbyists with bills still in committee, the deadline creates a scramble to convince committee chairs and leadership to schedule a bill for a hearing or to move it to a non-policy committee (i.e., rules, budget or revenue), which are not subject to the deadline. We saw that rush this week.
One of the driving issues in the healthcare space this session is an attempt to eliminate Oregon’s non-medical exemption for childhood vaccinations. Oregon is one of only a select few states allowing a parent to opt their child out of vaccination requirements on philosophical grounds. The proposal to change the exemption is by no means a new policy idea in the legislature as lawmakers have attempted to narrow its use in previous sessions. However, the recent outbreak of measles in the Portland-Vancouver region has drawn increased scrutiny over the practice as public health officials try to contain the spread of the preventable disease. On Thursday, the House Health Care Committee approved the bill and referred it to the Ways & Means Committee after a series of intense hearings drawing hundreds of families and medical professionals on both sides to Salem.
The legislature is also considering limits to the widely-used home mortgage interest deduction. Oregon allows homeowners to deduct the interest paid against their mortgage on their state income taxes in the same manner allowed for federal taxes. The bill would create a new means-tested approach to allowing the deduction, phasing out the availability of the deduction for homeowners with income exceeding $200,000, and would eliminate the deduction for vacation homes. During a hearing of the House Human Services and Housing Committee, proponents of the change argued the deduction is predominately a tax break for the wealthy who have the means to own a home and comes at the expense of lower-income renters. Opponents, including the Oregon Association of Realtors, argued the new approach to the deduction would undermine the housing market and result in many homeowners paying hundreds or thousands of dollars more in state income taxes.
On Thursday, Senate President Peter Courtney briefly returned from his medical leave of absence to vote on a resolution supporting survivors of sexual assault. Courtney had taken a 10-day leave from the capitol at the recommendation of his doctor after experiencing issues with his eyes but some in the building had suggested the leave may have also been tied to the growing animosity in his caucus over his past handling of workplace conduct complaints. During the floor session on Friday, Courtney publicly apologized for the legislature’s handling of complaints, saying the legislature and leadership must do better to protect everyone in the capitol. He also dispelled some of the rumors suggesting he would step down because of the animosity and intends to return to the capitol next week.
Finally, the budget writing subcommittees got to work this week after receiving their marching orders from the co-chairs last week. The budget framework released by the committee leadership outlined a five-percent reduction across most program areas to better control the growing costs of current service levels and to increase the amount of money held in reserves for the next recession. The five-percent reduction target in all other areas has been met with significant angst by lawmakers and interest groups, and many have already begun calling for higher taxes to be able to preserve cherished programs. With that said, there does not appear to be much of an appetite for broad changes in the tax system to preserve these programs as the committee considering a business consumption tax has committed new funds to the public education system. This means that budget writers and program advocates may need to look elsewhere to find the resources needed to save their programs.
Senate Workforce hears changes to Retirement Savings Plan
On Thursday, the Senate Workforce Committee heard the -3 amendment to SB 164, a bill that makes employers’ failure to comply with requirements of the Oregon Retirement Savings Plan an unlawful practice. The bill will allow an employee to file a complaint with the Commissioner of the Bureau of Labor and Industries (BOLI). The Oregon Retirement Savings Board will then request that BOLI investigate an employer’s compliance with the retirement savings program that was passed in 2015.
If adopted, the -3 amendments will represent the work of opponents of the bill with the Department of Treasury since the initiation of the program.
Ryan Mann with the Oregon Department of Treasury testified and presented the changes to the committee. He said the date of compliance will change to two years and that during rulemaking, they looked at four goals that would ensure that every worker would have access to retirement savings as set forth by the mandate. Mann also said the system could work for every business regardless of size.
Mann said the four areas of focus in rulemaking were: 1) a timeline grace period 2) A cap on fines 3) language to ensure communication before penalties and 4) aligning bill with current BOLI statutes. Mann said the Department of Treasury is comfortable with the changes and the work done through the last year with opponents of the initial bill.
Erin Seiler with BOLI testified on the technical changes and told the committee that BOLI would have no issues complying with the amendments. Jenny Dressler with the Oregon State Chamber of Commerce thanked the Department of Treasury and BOLI for their work on the bill.
Chair Kathleen Taylor (D-Milwaukie) told the panel she is pleased when people can come together and bring solutions to the process. She said she plans to hold a work session on the -3 amendments to SB 164 next Thursday.
Cap-and-Trade amendments due next week
All those involved in Oregon’s high-stakes cap-and-trade negotiations are waiting with bated breath for the latest amendments to HB 2020, the Clean Energy Jobs bill that is almost certain to pass this session.
Leadership has promised a final series of amendments to the bill sometime next week. No one knows exactly what will be in this latest version, let alone the final bill. Policymakers have said that the time for public testimony, including the statewide “road show,” is now concluded. Pac/West will provide a detailed analysis of the new proposal once it is released. Stay tuned.
Legislative Report for March 8, 2019
The issue of workplace conduct is continuing to be a dominating focus in Salem and, in some ways, is becoming a distraction from the policy work in the building. It needs to be said there remain issues needing to be addressed in the capitol, but we are beginning to see the true political toll of recent revelations on the inner workings of the legislature. In an agreement signed on Tuesday, the legislature settled many of the complaints featured in news stories and will pay more than $1.1 million to eight women who were sexually harassed in the Capitol by members and staff. The settlement does not seem to be the end of the story, however, with continued pressure being applied to Senate President Peter Courtney from forces inside and outside his own caucus.
On Monday, the chair of the Democratic Party of Oregon sent a letter to Oregon Senate Democrats, urging them to “take whatever steps are necessary” to clean house and eradicate harassment issues in the building. Publicly, the letter has been received as another rebuke of the Senate President and his handling of misconduct reports. On Tuesday, the Senate President sent an email to members of his chamber saying he had been instructed by his doctors to take a 10-day medical leave of absence due to a flu that has been going around the capitol. Many in the building and some reporters have tied the medical leave of absence to the heightened focus on the workplace conduct issues and some have even suggested it may signal a changeup in the leadership ranks in Salem.
There is little room to argue that a shakeup in leadership would fundamentally change the course of session. In recent years, the Senate President has aligned his actions with centrist forces to moderate some of the policies moving through the building. Conventional wisdom suggests that without Senator Courtney, the ambitious liberal agenda in Salem would be able to move without efforts to moderate the environmental, employment, and general business policies proposed this session. It is still unclear which direction this story will turn next, but it is becoming abundantly clear this overarching theme is bound to be one of the defining stories from the 2019 legislative session.
Despite the political drama, the legislature is beginning to move forward on the major issues of session. The budget co-chairs released their fiscal framework for the Ways & Means Committee to begin following as subcommittees craft agency budgets for the next biennium. The framework calls for $360 million in spending reductions from the previous budget cycle without cuts to public schools and the Medicaid system, both of which are priorities for most lawmakers. Nevertheless, the calls for higher taxes from advocates immediately followed the release of the spending plan and will certainly be a main area of focus for lawmakers in the weeks and months ahead.
With deadlines quickly approaching, Oregon lawmakers are racing to introduce their final bills of session and to move bills out of their original policy committees. The chambers released hundreds of bills this week on a wide range of issues. Many of those bills may be released too far into the process to move forward because bills will generally need to be scheduled for a vote in their policy committee before the end of the month if they are to continue moving through the process. Nonetheless, the race is certainly on in the legislature.
This week, the Co-Chairs released their 2019-21 Co-Chair Balanced Budget. It was noted that the budget was crafted with the existing resources within existing law and not upon assumptions of new revenue being discussed, although the majority party is expected to pass new revenue measures this session. The budget provided the framework and direction from the Co-Chairs to their respective subcommittees as they prepare to work and pass agency budgets.
Highlights from this Co-Chair budget include:
- Health Care—Full funding of the Oregon Health Plan without cuts to eligibility or benefits.
- Education—The State School Fund will be spared from cuts. In addition, $100 million will be added above the current service level (CSL). Supplemental funding may be forthcoming if the Joint Committee on Student Success passes new revenue measures.
- Reductions—5% approximate General Fund reduction across varying program areas.
- Tax Credits—Costs for tax credits will be capped within $40 million.
- Bonding—Reduction in General Obligations Bonds issued to lower the amount of debt service costs in future biennia.
In addition to the framework mentioned above, the budget outlines guiding principles and factors to the subcommittees of the Joint Ways and Means Committee as they evaluate agency budgets to reach the target 5% General Fund reduction.
More agencies’ budget hearings will begin to move forward into Phase II and finally Phase III.
Legislative Report for March 1, 2019
We are seeing the legislature move with impressive speed on major pieces of legislation this session. In less than six weeks, lawmakers have already sent a series of assessments designed to fund the Medicaid program and a first-in-the-nation statewide rent control measure to the governor’s desk for signing. Both issues are traditionally mid-to-late session votes because they become part of the horse trading over other priorities in the building. The statewide rent control bill, which has died in the past as a result of such trading, was able to move with relative ease because of the highly coordinated schedule of session. It is also an opportunity for leadership to put Oregon on the national stage as tenant activists are already pointing to Oregon as an example for other states to follow on limiting evictions and rent increases.
The trials and tribulations of the workplace conduct saga are continuing in the capitol. Earlier this week, Sen. Brian Boquist (R-Dallas) filed a resolution to censure and remove Senate President Peter Courtney from chamber leadership. The resolution followed a series of articles, first published by the Willamette Week, revealing criticisms by former students at Western Oregon University that Courtney did not properly address sexual harassment issues as the assistant president for the university. The criticisms are combined with several lawsuits filed by former legislative staffers against leadership for not addressing similar issues in the building. The resolution was met with mixed reactions. There is a contingent in the Senate Democratic Caucus that has been fighting the president’s continued tenure over these issues while others, including Sen. Elizabeth Steiner Hayward (D-NW Portland), have publicly praised him for his response to the issues. Needless to say, this narrative is not going to be leaving the building anytime soon.
It is with deep regret that we share with you the solemn news that Secretary of State Dennis Richardson passed away earlier this week after a long fight with brain cancer. Richardson was a combat helicopter pilot during the Vietnam War and spent much of his later life in public service. The legislature is preparing for a state funeral for Richardson on Wednesday. Norma Paulus, a former Secretary of State, passed away yesterday. Paulus was a pioneer in Oregon politics, a champion of state land-use laws and Oregon’s vote-by-mail system. A public memorial for Paulus has been scheduled for April 27 at Willamette University in Salem.
With the passing of Richardson, Gov. Kate Brown will appoint a successor. She is required to appoint a Republican, but technically, she could appoint anyone as long as he or she is registered as a Republican on the day of the appointment. The governor has already said she will appoint someone with no interest in running for re-election in 2020. If that’s the case, Democrats will a better chance of reclaiming all statewide elected offices in the next General Election.
The race for Secretary of State is often undervalued because the position is primarily the state’s election official and audit officer; however, the next Secretary of State will likely play a pivotal role in the redistricting of legislative districts if the legislature cannot strike an accord on new maps. Simultaneously, there is an effort underway to divert control over redistricting from the legislature to an independent redistricting commission similar to other West Coast states. The change in redistricting would need to be approved by voters as a constitutional amendment, making the 2020 election even more important. The next election might seem far away but in fact it is right around the corner.
Taxation on farm equipment has a hearing
HB 2264 received a hearing in the House Revenue Committee this week. This is the bill that aims to add clarity to how county assessors assess farm equipment for taxation. Jonathon Sandau with the Oregon Farm Bureau testified that some confusion has come from recent court cases and the bill will add some clarity to the statutes. Commissioners from both Marion and Linn Counties supported the bill, as did Roger Beyer from Oregon Seed Council. Beyer told the committee that currently, growers are taxed on a piece of equipment that the farm down the road is not being taxed on, which is a problem.
The issue occurs when you define that a crop has moved into the processing stage and has added value. He told the committee that until grass seed is cleaned, it has no real value, so cleaning equipment would be exempt. But when it goes on the line to be processed and bagged, then it becomes taxable because now it has added value.
The Legislative Revenue Office (LRO) testified that though the proponents of the bill had been working with LRO, the language of the bill was broad. Rep. Barbara Smith Warner (D-Portland) said she is not comfortable diluting the counties’ tax rolls. Because the bill could have unintended consequences, the proponents and attorneys will be meeting with LRO next week to continue working on the bill. Stay tuned.
Legislative Report for February 22, 2019
The gears of the legislature traditionally move at a painstakingly slow pace as bills are traded for other priorities and deals are struck. This is not a normal session for a variety of reasons. There are less than five weeks remaining before the first major deadline of session, and we are already seeing major pieces of legislation heading to the governor’s desk. The speed in the building is being driven by a combination of the dual supermajorities and the aggressive agenda set by leadership, and it is fair to expect it will not slow down until the legislature adjourns.
On Wednesday, the House Human Services & Housing Committee approved the landmark rent control bill. SB 608, a bill that prohibits no-cause evictions after 12 months and limits rent increases to seven percent plus inflation, has already been approved by the Oregon Senate and is scheduled for a final vote in the Oregon House early next week. The strategy for this bill, and several others, appears to be to send controversial measures to the governor early in session to prevent them being traded for politically polarizing issues later in session, such as the cap-and-trade legislation and a business entity tax.
Similarly, the Oregon House moved swiftly this week on passing portions of the governor’s plans for funding the Medicaid program. HB 2010, a bill that increases the existing Medicaid assessments and creates a new insurance assessment on stop-loss reinsurance plans, would shore up 40 percent of a funding strategy derived by the governor’s Medicaid funding task force. The bill was approved by the chamber with bipartisan support, with some Republicans objecting over frustrations that amendments were never seriously considered. The remaining 60 percent of the Medicaid funding proposal—a significant increase to the tobacco tax and a new surcharge on employers not providing enough health care benefits to their workers—will not be as easy. It remains unknown if moderates in the building are willing to support an increase of the tobacco tax out of concerns over its disproportionate impact on the working poor. The employer surcharge also faces an uncertain future because the terms of the assessment are still being worked out and may result in significant administrative hurdles for the agencies responsible for overseeing it. We expect these issues to come to the forefront later in session.
There may not be a bigger political issue this session than the effort underway to revamp the state’s business tax structure. After the failure of Measure 97, the legislature has been considering options for replacing the business income tax with a business consumption tax. The Joint Committee on Student Success Subcommittee on Revenue has been reviewing the tax systems deployed in other states and potential options for replacing ours. Over the past several weeks, Oregon Business & Industry and the Coalition for a Common Good have testified to the committee offering a variety of options for consideration. These options include several forms of a gross receipts tax and a modified gross receipts tax that allows for some deductions. Each has its advantages and disadvantages that will be weighed by the committee before a recommendation is made to the full committee in a couple of weeks.
One of the overarching issues in the building has been workplace conduct. After the accusations were made against Sen. Jeff Kruse (R-Roseburg) in 2018 that led to his resignation, there have been several investigations into sexual harassment, unlawful discrimination, and other problems revolving around the conduct of members, staff, and the lobby. The heightened focus on these issues is leading to action by leadership. On Tuesday, Rep. Mitch Greenlick (D-Portland), the longtime chair of the House Health Care Committee, ridiculed a lobbyist and his client during a committee hearing on pharmaceutical transparency. A colleague on the committee later raised criticisms about his behavior in the context of workplace conduct and bullying, referring to the whole host of issues the capitol is trying to address. Rep. Greenlick responded saying his colleague was “showboating” and tried to immediately end the hearing. The following day, Speaker Kotek announced she had removed his chairmanship and also removed Rep. Bill Post (R-Keizer) from the House Judiciary Committee over distasteful comments made on social media regarding a rally organized by gun control advocates.
The issues of workplace conduct will continue to be a major focus of the legislative session. Recently, two former legislative staffers have filed a lawsuit against leadership and legislative lawyers for not promptly addressing issues after they were reported. We expect these lawsuits to continue being a factor in the legislative session, and more may be coming. There are rumors going around the capitol that additional lawsuits are being considered and reporters are beginning to dig into those stories, some involving powerful lawmakers that could substantially reshape the balance of power in the building.
Intermodal projects have final review at OTC; Millersburg and Treasure Valley favored
The Oregon Transportation Commission (OTC) met Thursday, February 21 in Salem to hear the last presentations by the three intermodal site candidates and the review of consultants from the Tioga Group who were hired to take an independent look at each project.
Dan Smith and Frank Harder presented for the Tioga Group telling the commission that they would support both the Treasure Valley Reload Center in Nyssa and The Millersburg Reload facility in the Willamette Valley. Tony Hyde with the “Dedicated Projects Final Review Committee” said he would agree with the Tioga Group and had submitted his committee’s findings to the OTC. Hyde said that if Millersburg could not answer some strategic questions, then no funding should go to a reload facility in the Willamette Valley. He said the distance to Portland is too close for a reload facility in Brooks.
Union Pacific Railroad testified that they would be the Class I rail line for both the Nyssa project and the Millersburg project and that it would take approximately 12 months to get the rail lines operable. UP’s Cindy Robert said that the agricultural community had been unable to determine what volume they would ship, which made it impossible for UP to determine price. Phill Lindgren with the Oregon Seed Association testified in support of the Millersburg project, indicating that seed dealers would like the option of moving seed by rail. In the report of the Tioga Group, they cited that trucking prices could go down to remain competitive. It was estimated about 70 percent of the agricultural commodities would continue to truck.
Kevin Mannix with the Brooks site testified that the Tioga Group did not have all the information in reaching their conclusion and that they had been working with Portland & Western Railroad and could secure transportation into the Port of Coos Bay. Greg Smith, spokesman for the Linn Economic Development Group representing Millersburg, told the committee he had met with P&W this past week and was in communication with the Port of Coos Bay as well.
The OTC made no decision at the meeting and will take time to review the materials presented. Their next meeting is scheduled for March 21.
Legislative Report for February 15, 2019
Oregon lawmakers are wasting no time moving high-profile measures this session. On Tuesday, the Oregon Senate voted nearly along party lines (17-11; two Republicans were excused) to adopt a first-in-the-nation statewide rent control law. The measure bans no-cause evictions after a tenant has been living in the residence for more than 12 months and limits future rent increases to seven percent plus annual inflation. In previous sessions, rent control has been one of the most contentious political fights but is moving with relative ease in Salem this year. In fact, the bill has already been scheduled for a public hearing in the House on Monday, the minimum amount of time needed to move forward on a bill according to chamber rules. The swiftness of the process is emblematic of the seriousness of leadership to advance their aggressive agenda for session and to clear the way for more controversial issues later into the session.
Similarly, the Ways & Means Committee has already approved a series of health care assessments intended to balance the Medicaid budget. In previous sessions, these funding packages often become tied up in the legislative process for several weeks and months as deals are struck on other controversial issues to garner votes from Republican members. This session, however, the legislature is already advancing its funding plan—comprised of an increase to the hospital provider and insurance assessments and the creation of a new assessment on the stop-loss reinsurance policies paid by self-insurers—with bipartisan support. The governor and legislative leadership had committed at the beginning of the session to addressing the funding for the Medicaid program in the first eight weeks, and it appears they will meet their timeline early.
We are now six weeks out from the first major deadline of session. This means legislative committees will begin ramping up the speed at which they are holding hearings and votes on measures. Over the next several weeks, we are anticipating a rush of activity in committees trying to work bills or send them to the rules committees to put them on life support. Additionally, we are expecting to see activity around the cap-and-trade and tax reform proposals begin to take centerstage. The Joint Carbon Reduction Committee has announced it will be holding meetings around the state to hear from local communities on the impacts of proposed climate legislation. For tax reform, we are nearing the release of the initial modeling on several proposed options for a business entity consumption tax. Together, these two issues will become the most important and politically controversial issues of session. It’s no wonder leadership has made it a priority to get some of those other bills out of the way before these issues dominate the conversation.
Cap and Trade Policy—A Snapshot of Testimonies
This week the Joint Committee on Carbon Reduction heard invited testimonies from Transportation, Natural Resources and Industry Stakeholders on HB 2020, the bill aiming to enact a cap-and-trade policy that would decrease greenhouse gas emissions to a level 80 percent below 1990 emissions by 2050 in Oregon.
Testifying for the agricultural sector was Brenda Frketich with Oregon Farm Bureau who explained to the committee that the challenge with farming is that pricing of crops are not determined until they are sold leaving margins unknown throughout the year. She said farms must absorb the complete cost of fuel and natural gas. She noted that agriculture already sequesters carbon, yet the industry is not given credit in HB 2020. Ms. Frketich said despite spending months in 2018 working with the Governors Carbon Policy task force crafting language for the bill it does not exist in the bills current form. She added that an ag fuel exemption that was expected in HB 2020 was also notably absent.
Jana Jarvis, President, Oregon Trucking Association gave detailed testimony in opposition to HB 2020 for the trucking industry testifying that the trucking industry in Oregon pays the highest fees in the nation and that to add a cap and trade policy on top of the already implemented carbon reduction policy of 2016 will put the Oregon trucking industry at an unfair advantage. She also testified that currently the industry transports 80 percent of Oregon tonnage. Ms. Jarvis encouraged the committee to consider a diesel tax option instead that would be revenue neutral and protect the Highway Trust Fund.
There was additional testimony regarding the potential increase price of fuel and that bordering areas of the state will simply see consumers going to Idaho where gas will be up to $2 a gallon cheaper by 2030 if the cap and trade policy is enacted.
Testifying on the industry panel was Peter Saba, Senior Vice President of Schnitzer Steel. Mr Saba also testified in opposition to the carbon reduction bill, telling the committee that their Cascade steel plant in McMinnville produces steel from recycled scrap metal. He added that 90 of the mill’s electricity comes from non-carbon sources and they also use natural gas. He said that even though steel mills are included in the EITE’s (emissions-intensive trade-exposed) they would still begin incurring raising costs in the first year. He also questioned the ambiguity of the bills language and said he would like the bills specifics spelled out in statute and not left to rule making.
Schedule of Hearings
The Committee announced they will be taking the committee on the road with hearings around the state including:
- Springfield: Friday, Feb. 22 – Springfield City Hall, Council Chamber (12 pm – 3 pm)
- Medford: Saturday, Feb. 23 – City Council Chambers, Medford City Hall (9 am – 12 pm)
- Remote: Monday, Feb. 25 – Remote testimony (live video feed from Newport and Baker City), Oregon State Capitol (TBD)
- The Dalles: Friday, March 1 – The Dalles Civic Auditorium, Community Room (12 pm – 3 pm)
- Bend: Saturday, March 2 – Central Oregon Community College, Cascade Hall, Room 246-248 (9 am – 12 pm)
To watch the full hearing go here> http://oregon.granicus.com/MediaPlayer.php?clip_id=25756
Legislative Report for February 8, 2019
Like many other states, Oregon lawmakers have been grappling with workplace harassment concerns for more than a year now after revelations by Sen. Sara Gelser (D-Corvallis) about inappropriate conduct by male colleagues, which was followed by an outpouring of similar stories from other women lawmakers, staff, and lobbyists. The heavy microscope on these issues, combined with a scandalous report from the Bureau of Labor and Industries at the end of Commissioner Brad Avakian’s term, has increased scrutiny on the handling by legislative leadership and human resources of sexual harassment concerns. Leadership is working to correct some of the systemic issues in the Capitol and began this week by beefing up a training for members and staff on appropriate workplace conduct. Unfortunately, the training has appeared to heighten, rather than alleviate, tensions after a hired trainer failed to address critical issues and protocols for handling them. House Speaker Tina Kotek (D-Portland) responded swiftly to these concerns by firing the trainer, who was scheduled to give additional seminars next week. It appears the controversy regarding these issues will continue for the foreseeable future.
Many committee hearings were not scheduled this week because of the workplace training seminars, leaving the remaining committee activities focusing on niche issues. With that said, there were several major proposals that began moving forward in the legislature.
- On Monday, the Senate Housing Committee advanced, along party lines, a proposal to impose the first-in-the-nation statewide rent control policy. SB 608 would prohibit landlords from evicting tenants without cause after renting for a year and limit rent increases to seven percent plus inflation.
- On Thursday, the House Health Care Committee advanced a much-awaited package of health care assessments designed to balance the Medicaid budget. HB 2010 consists of an increase to the existing hospital and insurance premium assessments, as well as a new assessment on stop-loss reinsurance. The bill will now move to the Joint Ways & Means Subcommittee on Human Services for further review.
Separately, the legislature will consider an increase of $2.00 to the tobacco tax and a surcharge on employers that do not provide a sufficient level of health care benefits to their employees.
- Also on Thursday, the state’s largest business association provided a high-level overview of a proposal to raise taxes on Oregon businesses. The concept, a counter to the repeated attempts to enact a gross receipts tax, suggests taxing businesses based on their gross receipts minus their purchases from other firms. The plan is designed to address the concerns of pyramiding in a gross receipts tax, where the tax is compounded and ultimately paid for by the consumer at rates several times higher than the statutory rate. The association said multiple times it is unsure if its members would support the concept being suggested but want to be part of the ensuing tax reform debate. In addition to the concept, the association tied substantial spending reforms, such as public pensions, and tax relief as a precondition for their support to any broad business consumption tax. It is unclear, however, if the Democratic supermajorities will have the appetite to incorporate such reforms as part of their end-of-session package.
Looking ahead to next week, leadership is likely to cancel the workplace conduct trainings. Additionally, the weather may be a factor in deciding the tempo of the building next week. Forecasts predict snowfall in Northwest Oregon over the weekend and throughout the week, and if the past is prologue, the legislature could grind to a halt at the first signs of inclement weather.
Oregon Department of Agriculture holds budget hearings
Alexis Taylor, director of the Oregon Department of Agriculture, spent three days in front of the Ways and Means Subcommittee of Natural Resources presenting the department’s budget (HB 5002) fee structure (HB 5003).
Director Taylor presented four areas of the department’s budget: 1) Administrative and Support Services; 2) Food Safety and Consumer Protection Programs; 3) Natural Resource Programs; and 4) Market Access, Development, and Certification Programs.
There was public support given to the agency’s budget on Wednesday, including a letter of support from Katie Fast of Oregonians for Food and Shelter, who was joined by 12 other agriculture groups supporting the budget with amendments. You can view the support letter here.
Sen. Lew Frederick (D-Portland) voiced concerns regarding the use of M44 in the Predator Control Program and asked about their use in relationship to the budget. Rep. David Brock Smith (R-Port Orford) asked Director Taylor questions regarding the fee-for-services increase in the previous budget for the Kentucky 31 investigation. Director Taylor told the committee that the use of M44 was through county funding and supplied a list of the counties contributing to the APHIS Program. She also told Rep. Brock Smith that the K31 investigations had been dense and had required more paperwork than recently anticipated but that the investigation would be concluding soon.
For a complete look at the ODA 2019-2021 budget, click here.
Carbon Reduction Committee update
This week, the Carbon Reduction Committee began discussions through invited testimony on the newest bill language regarding the Oregon Cap and Trade bill, also known as Cap and Invest, the Clean Energy Jobs Bill, or Oregon Climate Action Program, depending on who you ask. Much of this week’s discussion focused on the gas tax proposals, which would be on top of the gas tax increases passed as part of the 2017 Transportation Package. Concerns for the legislation’s potential for disproportionate negative impact on rural Oregon is already increasing. Over the next two weeks, the committee will be hearing from invited testimony regarding the bill concepts. It was announced that the Joint Carbon Reduction Committee will be arranging public hearings throughout the state on the legislation. The locations and times are currently being finalized and will be announced soon.
The Joint Ways and Means (state budget) Subcommittees continued their Phase I budget reviews. Traditionally, the budget review process is taken in three stages. Phase I includes agency overview presentations and recaps on the current budget. Phase II contains discussions on budgetary issues, drivers, and related topics. Phase III is the finalization and passage of the new biennium budgets. Public hearings with invited testimony are usually included in each phase. This week, the various subcommittees held budget discussions related to the following agencies and boards: Board of Dentistry, Board of Licensed Social Workers, Board of Chiropractic Examiners, Health Related Licensing Boards, Mental Health Regulatory Agency, Long-Term Care Ombudsman, DHS – Intellectual and Developmental Disabilities, Overview of the Medicaid Provider Tax Programs, Department of Agriculture, Department of Consumer and Business Services, Department of Administrative Services, Employment Relations Boards, Criminal Justice Commission, and Board of Parole and Post-Prison Supervision.
Legislative Report for Friday, February 1, 2019
Lawmakers have settled into the Capitol and have the gears of the legislature running on all cylinders. The committees have mostly completed their agency and policy orientations, and are preparing to schedule hearings on hundreds of bills poised for consideration. Among those bills are billions of dollars’ worth of appropriation requests for the legislature to consider. In fact, Sen. Betsy Johnson (D-Scappoose) penned an opinion article in the Portland Tribune from her vantage point as one of the co-chairs of the Ways & Means Committee. She writes that in one day she received more than $750 million in funding requests from various interest groups and that commitments from the past, like pensions, always include a price tag. “There’s a lesson here for lawmakers,” she writes. “Be careful which laws you pass. Your constituents will be forced to live with—and pay for—the consequences.”
Finding the funds to pay for those appropriations will be one of the central debates of the legislative session. It has not taken long for the legislative work on taxes to get underway. The Joint Committee on Student Success was created in 2018 to design a plan to improve outcomes in the public schools systems and devise ways to adequately fund those investments. The Joint Committee has spent the past year traveling around the state fielding input from local communities on needed investments in their schools. The committee has returned to Salem with not only that input but a menu of investment options for lawmakers to consider. As part of the bicameral process to tackle these issues, leadership has created several subcommittees to tackle the major policy questions needing to be answered before an investment plan can be outlined. Among those subcommittees, and possibly the most important one, is a group that will exclusively consider a business entity consumption tax as the funding mechanism for those investments. The subcommittee began its work this week with a high-level briefing on the variety of business taxes considered.
The Joint Committee on Carbon Reduction has been working on designing a state cap-and-trade program. The committee held meetings throughout the interim to engage with economists and environmental scientists about design options and considerations for implementing a carbon pricing regime. After months of these discussions, the committee held a hearing this afternoon to release its initial draft of the enabling legislation. Well before the hearing, however, Republican lawmakers criticized Democratic leadership in the committee for cutting them out of the drafting of the bill. This is only the beginning of the rhetoric we will soon be hearing as the political fight deepens. There will be a presentation on the economic impacts of the proposal on Friday, February 8.
The legislature is preparing for a busy week ahead. In the House Health Care Committee on Thursday, lawmakers will be briefed on a proposal to fully fund the Oregon Health Plan. Currently, this funding package will propose increasing the current hospital and insurance assessments. In addition to those existing taxes, there will be a new tax on the reinsurance policies of self-insured plans and an assessment on employers not providing a certain level of health care benefits to their employees. Leadership has set an ambitious goal of moving the funding package through the legislature in the first eight weeks of session. Separately, there will be legislation introduced to increase the tobacco tax by at least $2 to fill the gap in Medicaid funding.
It will take some time for the legislature to figure out how to operate under the dual supermajorities. If every member voted as a rank-and-file member of their caucus, Democrats would have the votes needed to pass any and all taxes proposed for this session. In the past, Republican support was needed to move controversial tax measures and those votes would be use as leverage to control other measures in the legislature. This year, however, that negotiating power is largely in the hands of centrist Democrats who see themselves as the decisive votes on major legislation.
Legislative Report for January 25, 2019
Oregon lawmakers commenced their annual legislative session this week, two weeks earlier than the previous session. In 2018, the legislature passed a bill allowing lawmakers to begin the session immediately following their organizational days to prevent the final days of the five-month session from overlapping with the Independence Day holiday. Despite the earlier start date of the legislature, the chambers maintained their usual schedule for releasing legislation, cutting out the customary two-week review period of bills before activity in the Capitol begins.
The committee activity in the Capitol this week mostly revolved around orientations and agency introductions. Unlike sessions of the past, committees are giving their members a more detailed crash course on the policy topics they will be discussing. This change in the start of session is likely a reflection of the high amount of turnover in the legislature and wanting to make sure the new members have an opportunity to learn the people and the issues. Will this actually result in more informed policy? Time will only tell, but these briefings will provide at least a baseline understanding of the issues throughout session.
The calm in the building will not last long. Over the next several weeks, lawmakers are poised to begin discussing some of the most complex and controversial policies in recent memory. Several liberal advocacy groups have set their sights on a robust policy agenda for session to take the dual supermajorities for a test drive on a whole host of issues. Democratic leadership has been trying to temper some of those expectations, understanding the trading that will need to occur to maintain the peace among their rank and file members. Meanwhile, the Republican caucuses have largely lost their ability to meaningfully influence the legislative process by denying critical votes on tax issues. With that said, there some members who are warming to the idea of working alongside the supermajority in the hopes the goodwill will allow them to advance their priorities for their districts. Democrats may not need Republicans to move forward on their ambitious agenda, but there continues to be immense political value in courting bipartisanship to stave away potential ballot measure threats on issues such as a revenue package, a tobacco tax increase, and a Medicaid funding plan. As your lobbyist, our strategy for this session will largely revolve around working with moderates in both chambers and caucuses who are focused on passing substantive policies that move the state forward and encouraging them to fight for your interests in Salem.
Gov. Kate Brown’s first public testimony: campaign finance reform
On the first day of committee hearings in the new Senate “Campaign Finance Committee,” Gov. Kate Brown testified on her campaign promise to get big money out of politics by enacting campaign finance reforms. She testified to the committee that her goal is for incresed transparency in reporting and a contribution cap. The committee, chaired by Sen. Jeff Golden (D-Ashland) and Vice-Chair Tim Knopp (R-Bend), will spend the session looking for a path forward to reform campaign finances.
It is unusual for a governor to testify often in committee hearings, but as an integral part of her campaign goals, Gov. Brown told the committee that this reform is at the top of her priorities to ensure that every Oregonian has a voice. She said that can start with paid postage on ballots so that every mailbox is a ballot box.
Gov. Brown acknowledged that her last race for Oregon Governor was the most expensive candidate race in Oregon’s history and that she alone had raised six times more than any of her Democratic predecessors. She said Oregon needs to follow other states in initiating a cap on contributions.
She noted to the committee that “dark money” coming into Oregon needs to be reported with real-time technology and not with 30-day gaps so that Oregonians can “follow the money.” She said that “dark money”—referring to money by third-party donors or nonprofits who don’t have to report where money comes from or how it is spent—makes our current system comparable to the “Wild, Wild West.”
Gov. Brown said she is frustrated at the interpretation of Oregon’s Constitution that has not allowed previous attempts at reform and is optimistic to work with the committee and legal experts on the best path forward. She said that any reform to campaign finances will need to go to the voters in 2020 as a Constitutional Amendment.
Matt Garrett resigns as Director of ODOT
It was a resignation that came as a surprise to many when Matt Garrett, Director of the Oregon Department of Transportation (ODOT), turned in his resignation letter last week to the Governor. Garrett began his career at ODOT in 2005 after working for U.S. Senator Mark Hatfield. He has served under three governors during his tenure at ODOT. In 2017, he led the agency in their work with the legislature in passing a historic transportation package of which Gov. Brown said Oregonians will see the benefits for decades to come.
What does the departure of Garrett mean to the Oregon Department of Transportation? It’s hard to know. One would expect a nationwide search will ensue and expect there to be changes at the top of the agency staffing positions. ODOT could very well be the agency most important to Oregonians as not only does it ensure a vital and safe transportation infrastructure so important to the trucking and exporting of Oregon agricultural products, but it is also the agency that creates the most jobs for Oregon’s workforce. Garrett will stay on as Director through most of the 2019 session. Stay tuned for more as the Governor begins the search for his replacement.
Legislative Report for Friday, December 14
Lawmakers convened in Salem for the final round of interim hearings for the year and the first since the election. In November, Democrats gained supermajorities in both chambers of the legislature, the Holy Grail of political power for those who wield it. Since the Oregon Constitution requires a three-fifths majority to enact any new taxes or raise the rates of existing taxes, Democrats may not need to negotiate with Republicans in order to act on some of their most aggressive policies for the upcoming session, such as a multibillion-dollar revenue package and a tax on carbon emissions. Despite this newfound control of the legislative process, however, the conversation about these demanding issues appeared to stay out of focus for the most part.
Much of the attention in Salem focused on the political dramas consuming the halls of the capitol. In particular, there is a brewing conflict between certain legislators and legislative leadership over the implementation of a pay equity bill adopted by the legislature in 2017. The legislation expanded protections against pay discrimination for public and private employers and made employers liable for disparities regardless of intention. The new law, which goes into effect on January 1, will also affect the pay of capitol staff. Without clear direction from leadership or state regulators, some legislators have begun to share their frustrations with the media. In fact, Sen. Brian Boquist (R-Dallas) included the capitol press in a hotly worded email exchange with the Senate President, to which he received a cease and desist directive in response.
Besides receiving updates from state agency officials regarding ongoing issues and upcoming initiatives, the level of activity in the capitol this week was noticeably low. This may be partly because of the coming holiday and the legislature waiting until the new members are sworn in to begin the heavy lifting of session. The more likely reason for the abnormal silence, however, is that Democratic leadership is needing to manage the varied interests of their caucus to hold the moderate and liberal wings together—the most trying task in politics.
We are beginning to see committees introduce their legislation for the upcoming session. These bills include taxes on businesses large and small, rewinding property tax limits from the 1990s, a new tax on plastic bags, mandated paid leave policies for employers, and new requirements on employee scheduling. You should expect to hear from your account leads in the coming days and weeks alerting you of legislative measures and helping identify strategies for accomplishing your goals in the 2019 session.
2018 General Election Report
Midterm elections are often thought to be a referendum on the president and his party. In fact, in most recent elections the party in control of the White House has lost seats in both congressional chambers during midterm elections. After two years of pent-up anticipation, Democrats were able to harness the animosity towards the current administration and redirect it towards suburban districts to reclaim the U.S. House of Representatives, ending one-party rule in Washington, D.C. Despite their successes in ending one-party rule and restoring checks and balances, however, the so-called “blue wave” forecasted by political pundits never came as Republicans added to their majority in the U.S. Senate.
The rhetoric from President Trump in the final weeks of the election—focused on issues such as late term abortions and birthright citizenship—motivated the president’s base in regions of the country that strongly supported his agenda. On the other hand, the same rhetoric motivated Democratic messages of “resistance” in their persuasion efforts in suburban battleground districts. These factors, high turnout in suburban and rural regions combined with a friendly map for Republicans, produced a government that could not be more divided.
There will be some who will try to argue the blue wave landed in Oregon, but we disagree. Democrats performed exceedingly well in the urban and suburban areas of the state, propelling Gov. Kate Brown to a second gubernatorial term and adding to their majorities in the legislature. These races are not an outlier to the national trend; in fact, they fall precisely within it. The suburban battleground districts featured Republicans running not only against their Democratic opponents but also against the president. Given the strength of Democrats across the country running against the president in these suburban districts, it is no surprise that Oregonians in these areas sided heavily with Democrats.
Governor Kate Brown Defies Polls, Secures Re-Election Bid Quickly
After months of polling that consistently showed the race as a dead heat, most political pundits expected ballots would be counted for hours or even days before the winner would be determined. Both the Brown and the Buehler campaigns were shocked when Governor Kate Brown was declared the victor only several minutes after polls closed at 8 p.m. That said, by 1 p.m. the next day, Governor Brown had still only captured a plurality of the vote at 49.6 percent to Knute Buehler’s 44.2 percent.
This was not the first time Kate Brown and Knute Buehler faced off in a statewide contest. In 2012, Knute Buehler entered Oregon’s political scene with a splash by challenging then-Secretary of State Brown’s re-election bid. This was seen as a bold move, however, Buehler ultimately lost by 8.1 percent (51.3 percent to 43.2 percent). Since then, Buehler successfully ran for State Representative, twice securing a district with a substantial double-digit Democratic registration advantage. As a state representative, Buehler built a reputation as an impressive fundraiser, at times outpacing even Democratic leadership, which as a rank and file member of the minority party, is nothing short of remarkable.
Fast forward four years and Knute Buehler had built the political resume, the necessary relationships, and the fundraising prowess to re-enter the statewide arena. Buehler’s strategy was to spend money early when TV ads were cheapest, in an effort to move poll numbers early and attract additional investment. This fundraising strategy proved successful, banking nearly $17 million in 2018 alone, more than any gubernatorial candidate in the history of the state. Brown also raised an impressive $14.7 million this year but spent most of her money in the final weeks of the election. To put this amount of money into perspective, Knute Buehler spent $22.50 per vote and Kate Brown spent $17.34 per vote, which in either case is more than any candidate has ever spent previously per voter.
In the end, turning out money is no match to turning out voters. The Democratic Get Out The Vote (GOTV) ground game Republicans often call “the machine,” was amplified by the infusion of dollars from Brown’s campaign. The Democrat’s GOTV efforts were concentrated in urban and suburban neighborhoods for maximizing down-ballot benefits in legislative battlegrounds. Since the last midterm election (2014), Democrats increased turnout in Multnomah County by 6.3 percent and Washington County by 5.3 percent which destroyed the polling models for which pundits had based their predictions—delivering a decisive win to Brown.
Democrats Gain Supermajority Control of Both Chambers
The state legislative campaigns in Oregon followed a similar trend as congressional races across the nation. Democrats competing in urban and suburban districts performed exceedingly well. In the Oregon Senate, Democrats maintained all of their current seats and added a new district from Medford. Senator Chuck Thomsen, an incumbent entrenched in his district and the legislature, was feared to have lost last night after initial reports showed him more than 100 votes behind his opponent. However, during the early morning hours, he regained the lead. The closeness of this race was a surprise for many given the candidate’s approval and familiarity in the district, but his candidacy was being challenged by a trifecta of outside factors—a contested congressional campaign, a competitive legislative race for the Oregon House and the general anti-Republican temperament of moderate voters. Assuming that Democrats only pick up the one seat it will mean their caucus will have supermajority control of their chamber and potentially the votes needed to raise taxes without negotiating with Republicans. We say “potentially” because Senator Betsy Johnson, one of the last remaining moderate Democrats, will become an important check and balance in the legislative process.
The Oregon House Democratic Caucus, often the driver of a more liberal agenda in the legislature, was without question the most successful caucus of the night. Democrats not only protected every single incumbent but added three more districts to their caucus. These wins come from Hood River, West Linn, and Scholls.
- Rep. Jeff Helfrich (R-Hood River), an incumbent appointed to the seat earlier this year, was embattled in a campaign to maintain the seat in his party’s control. Without much of a voting record and multiple stumbles along the campaign trail, the candidate was one of the few expected losses for Republicans. Anna Williams, his Democratic opponent, outspent and outworked his campaign and leveraged the resources of neighboring campaigns.
- Rep. Julie Parrish (R-West Linn), an entrenched incumbent, who was thought to be invincible in her district ran against Rachel Prusak, a nurse. There was almost an exclusive focus on health care by her opponent. As a nurse, she compared Rep. Parrish’s recent efforts to repeal the Medicaid assessments in Oregon to the congressional efforts to repeal the Affordable Care Act.
- Rep. Rich Vial (R-Scholls) was among the many legislators not running a competitive campaign. His opponent dropped out of the race in August and a replacement, Courtney Neron, was appointed by the county party. Everyone assumed he would be a shoo-in for the race and did not need a robust campaign infrastructure. In fact, the race was ignored so much that both caucuses decided polling would be unnecessary and Rep. Vial was redirecting his campaign funds to support Republicans in other races. Given there was no real campaign for either Rep. Vial or his opponent, this race may be indicative of the down-ballot effect of national politics in Oregon.
Like the Oregon Senate, the Oregon House will be controlled by a supermajority. The supermajorities in the legislature are expected to result in a renewed focus on higher taxes, new environmental regulations and additional restrictions on industry.
Oregonians Reject Slate of Conservative Ballot Measures
In addition to the host of state and local candidates featured in last night’s election, Oregonians decided the fate of several highly contested ballot measures.
- Measure 102 (Allowing public bonds for privately owned housing): Passed
Measure 102 was referred to voters by the legislature and would allow cities and counties to use their bonding authority to finance privately-owned affordable housing projects. The idea behind the measure was that private owners are eligible for federal grants and tax credits that could be leveraged to put taxpayer dollars to best use. The measure was approved 56 percent to 44 percent.
- Measure 103 (Ban on grocery taxes): Defeated
Measure 103 would have created a constitutional prohibition for any consumption tax on the sale of groceries in Oregon. The measure was presented to voters as a protection for households on fixed budgets by proponents and as a backdoor ban on soda taxes by opponents. The measure was defeated 57 percent to 43 percent.
- Measure 104 (Supermajority requirements): Defeated
Measure 104 would have amended the state constitution to expand the three-fifths vote requirement by the legislature to raise revenue. Currently, the state constitution requires a three-fifths majority of the legislature to pass legislation creating a new or raising an existing tax rate. The measure would have required any bill bringing in new revenue (such as eliminating tax credits, ending deductions or raising fees) to be subject to the requirement. The measure was defeated 65 percent to 35 percent. Most notably, this was the only state-wide measure in recent years where results were similar in both urban and rural areas. 35 of the 36 counties voted no.
- Measure 105 (Repeal of Oregon’s sanctuary state law): Defeated
The measure to repeal Oregon’s Sanctuary Law fell by a margin of 25 percent, even though there was concern regarding the federal administration’s amped up attacks on immigration. The opposition campaign pushed late fundraising efforts, and voters fell in line with up-ballot trends for Democrats. The measure was defeated 63 percent to 37 percent.
- Measure 106 (Prohibiting the use of public funds for abortion services): Defeated
Measure 106 was the last measure added to the November ballot in early summer, taking many pro-choice groups by surprise that the necessary number of signatures was gathered for the November ballot. Measure 106 was defeated by a margin of 30 percent and we can expect to see this coalition working on the FAMLI Act for Paid Family and Medical Leave in 2019.
There will be some people out there who will try to convince you the election represents a landslide or a wave for Democrats. As we have argued, we do not see this as either but rather a realignment of our politics. We are seeing areas of the country that were once heavily contested become safe and others that have long been thought to be safe come back into play. We can attribute much of this to President Trump and the new political coalition that forms his base. In areas of the country with heightened diversity, such as urban and suburban neighborhoods, we are seeing the tides shift toward more liberal candidates and causes and the opposite in more homogenous areas of the country. This is nothing new; however, the emergence of President Trump and his tearing up of the traditional playbook has accelerated already fractured politics.
Looking ahead, Republicans hold an advantage in the U.S. Senate map for the 2020 election. Republicans will be defending seats in 21 states with a strong voter registration advantage. This means that Republicans may have control over the federal appointments for the foreseeable future, making a lasting impression on the workings of government for years to come.
We anticipate the 2019 session to be structurally different from sessions in recent memory. The Democratic supermajorities in both chambers, coupled with the resounding defeat of the anti-tax ballot measures, may present a perceived mandate to leadership as they work to address a mounting budget deficit. The supermajorities may also add pressure for leadership to push harder for previously abandoned efforts, such as strict gun control laws, new environmental mandates and major medical malpractice reforms. While the votes on paper may make these liberal priorities seem easily achievable, there will still be a mounting pressure from legislative coalitions to protect their interests. Additionally, Democrats in Oregon have historically broken into factions after winning strong majorities in the legislature. These factions pit moderates against the more progressive members of the caucus. With the balance of power shifting even further in favor of one party, our relationships with allied legislators have never been more important.