2020 Legislative Report – Week 1

[The following is an excerpt from the Oregon State Chamber of Commerce’s (OSCC) Legislative Report. Any opinions expressed or implied are those of OSCC and do not necessarily reflect those of the Springfield Chamber or its representatives.]

The 2020 legislative session is now underway in Oregon. 

The 2020 Legislature will consider about 250 bills. On Friday, the OSCC Government Affairs Committee and Board convened by conference call to vet the bills that have been introduced and develop the OSCC legislative priorities for 2020. You can see the OSCC Legislative Priorities here.

We don’t yet have a clear sense of what legislative leadership will push. Although there is a clear sense that Democrats want to pass the ‘Cap & Trade’ bill (SB 1530), we’ve noticed a number of Democrat senators start to lower expectations because they want to keep Senate Republicans in the capitol for a constructive session. Senate Republicans have made clear they will deny Democrats the ability to pass a ‘Cap & Trade’ law by leaving the capitol if the bill comes to the Senate floor for a vote.

Other than Cap & Trade, though, the priorities are murkier.

On the budget side, there is $500-$600 million in additional revenue that is available for spending. Actually, there is closer to $1 billion, but budget writers have no intention of spending that much.

On the policy side, there’s not a lot that can’t wait until the 2021 long session. As with all short sessions, it is hard to pass a bill with substantive opposition. Legislators are relatively risk averse in short sessions. 
However, it should be noted that legislative leadership has been known to muscle through key controversial objectives during short sessions as short sessions provide the perfect opportunity to move with speed, limit public hearings and amendments, and tamp down on the ability of opponents to respond.

Here’s a rundown of early action on OSCC priorities:

• Technical Assistance for Employers (HB 4087). On Monday, the House Committee on Business and Labor will host a public hearing on HB 4087. This bill would transfer civil penalty reserves (approx. $100,000/ year) to fund technical assistance for employers in Eastern Oregon and the free online publication of BOLI technical assistance and compliance manuals. OSCC worked with Commissioner Hoyle on the -1 amendment, which removes the authorization to propose legislation that would increase civil penalties for Oregon employers. We support this effort to increase the availability of technical assistance through BOLI.

• Statewide Lodging Tax legislation (HB 4047) will make permanent the 1.8% statewide lodging tax rate that was passed in 2016. The rate was scheduled to be reduced to 1.5% this year, but in order to lock in the higher rate for statewide tourism promotion instead of other unrelated objectives, the Oregon Restaurant & Lodging Association agreed to keep the rate at 1.8% so long as the money is dedicated to tourism promotion. OSCC will support the legislation. It’s being heard on Tuesday evening, February 4th, in the House Revenue Committee.
   
• CAT tax “fix” bill (HB 4009) will be heard in House Revenue Committee on Wednesday, February 5th. OSCC will be watching this bill closely. Our objective is to give Department of Revenue flexibility in enforcement as companies figure out their tax burdens and administration during 2020. We are also hoping to prevent additional hiccups as many school districts and local governments are experiencing increases in construction costs directly attributable to the tax that were not budgeted for.
   
• Interfering with Non-Competes (SB 1527). On Tuesday, the Senate Committee on Labor and Business will hold a hearing on SB 1527, which interferes with noncompete agreements. Our biggest concern is the dramatic shift in enforceability of an agreement from 18 months under existing law to only 6 months. OSCC is concerned that six months may not be long enough to protect the investment the employer made in the former employee or to protect intellectual property.
   
• Opportunity Zone Repeal (HB 4010) will be heard in House Revenue Committee on Thursday, February 6th. OSCC opposes this bill as we’veheard from many of our local chambers about the importance of maintaining Opportunity Zones as a tool to support local economic development.
   
• Aviation fuel tax/local airport investments (HB 4036) is a priority of OSCC. The legislation is intended to remove the sunset on a 2-cent aviation fuel tax that was passed in 2015. The bill will help leverage up to $18 million in additional FAA grants to support development and safety improvements at Oregon’s 98 public use airports. HB 4036 will be considered in the Joint Transportation Committee on the evening of Tuesday, February 11th.

 But by far and away, all eyes will be on the ‘Cap & Trade’ legislation which will dominate the early days of the 2020 session.

• Cap-and-Trade (SB 1530). The Senate President’s office introduced SB 1530, which includes several changes from the failed HB 2020 from the 2019 session. First, it attempts (although unsuccessfully) to phase in the fuels tax, initially in the Portland Metro area and then in cities that store 10 million or more gallons of fuel. It’s a surprisingly large number of cities. Second, the bill gives trade exposed natural gas users (certain manufacturers and farmers) 100% rate relief for the first three years of the program. After 2025, these manufacturers must conduct an energy system management audit and make any state-required energy efficiency investments in order to qualify for bill credits. Homes that use natural gas will see a 7% increase in their rates in 2022, and most propane users receive no protection from rate impacts due to cap-and-trade.

We anticipate a new set of amendments on Monday or Tuesday, and these amendments will include several changes. In the meantime, mark your calendars for a series of public hearings this week. The Senate Committee on Environment & Natural Resources plans to hold three public hearings on SB 1530: February 4(3:00 – 7:30 PM), February 6 (3:00 PM), and February 8 (10:00 AM – 1:00 PM). If OSCC members plan to testify, please ask them to show up one hour early to sign up. Alternatively, written testimony can be emailed to: SENR.exhibits@oregonlegislature.gov by February 8.