Pause for a look at the Legislature before mad dash to sine die
Sine die: without any future date being designated (as for resumption); indefinitely. (merriam-webster.com)
The last thing that the Oregon legislative chambers do each session is pass the motion to sine die. This is how the Legislature ends business. Constitutionally, there is a limit on the number of days the Legislature can be in session. This year the constitutional sine die is Monday, July 10.
The session could end before July 10. At the session’s start, legislative leadership set the target sine die for Friday, June 23, but that looks unlikely.
The Legislature still has a lot of business to do. Although it is unclear exactly how many days are left, it is safe to say that sine die is imminent. As we approach the end, OSBA is offering a look at what is left.
Revenue reform and cost control are the two most important pieces of legislation that will be settled between now and sine die. The budget has an approximate $1.4 billion gap for current service levels for the 2017-19 biennium, which begins July 1. Democrats, supported by most labor and some business groups, want a new corporate tax to raise revenue. Republicans, supported by many business groups, will not even discuss a new tax unless serious cuts to state spending are also agreed upon. Democrats have a majority in both chambers, but tax increases require a three-fifths majority. That means Democrats need at least one Republican vote in each chamber.
The devil is in the details, the subject of meetings between members in leadership from both chambers. The specific tax plan that has moved forward in House Bill 2830 is a gross receipts tax, meaning that the tax would be on a company’s total revenue, not its reported profit. This version would require all businesses to pay some tax but would hit harder those companies with over $3 million in revenue. The tax also contains a variable rate depending on the sector, with service companies (e.g., doctors, lawyers) being taxed at the highest rate and agriculture taxed at the lowest rate.
This kind of tax has been successful in a few other states, notably Ohio, and has the potential to smooth out Oregon’s roller-coaster-style funding stream. Also, it is worth noting that this is the kind of tax OSBA members discussed and endorsed, along with cost-control mechanisms, in our 2016 fall regional meetings.
The other details under discussion regard cost control. Proposals target the amount the state spends on health care and retirement benefits. Health care benefits have drawn extra attention recently, after a few studies indicated Oregon spends considerably more on health benefits than Washington or Idaho.
Other cost-control ideas include reducing the number of state employees by lowering the existing cap from 1.5 percent of the population to 1 percent, limiting the highest level of salary possible for Public Employees Retirement System calculation purposes, and possible structural changes to collective bargaining processes statewide. The details of a cost-containment bill have not been as thoroughly fleshed out as the tax bill, so there is still a lot of guessing about what will be included in the final plan.
Because the Legislature is still at a standoff about revenue reform and cost control, other major initiatives have been bound up in the talks and are now in trouble. A major transportation plan, a plan for “clean diesel” related to the federal Volkswagen lawsuit settlement, and other initiatives are on hold. If there is no agreement on revenue and cost control, those initiatives will probably die as well.
The bill funding K-12 public education, Senate Bill 5517, is scheduled for a vote in the House on Tuesday. It has already passed the Senate. SB 5517 would appropriate $8.2 billion for the State School Fund, but legislators say they will add to that if other legislation opens up more money.
The next step for legislative leadership is counting votes. Assuming all Democrats vote “yes” on any new tax plan, then at least one Republican in each chamber would have to join them to pass a tax measure. In the House, Rep. Greg Smith (R-Heppner) is a likely candidate. Although it is not OSBA custom to speculate about what any specific legislator will do, he has said that if his conditions (a low tax rate for the agricultural sector and a cost-containment plan passing) could be met, he would vote yes on the bill. The hard part legislatively is, of course, meeting those conditions.
In the Senate, no Republican has stepped forward. There is a lot of talk in the halls among lobbyists and advocates about which Senate Republican is most likely to join the Democrats – this moderate Republican or that because they do or do not owe someone a favor or because this is their last term and they do not expect to stand for another election, etc. But the talk is just speculation. All Senate Republicans have said that they will not vote for new taxes without cost containment, and this position is the one imperiling the prospects for a deal.
An informal survey of other lobbyists puts the prospects for passage of some sort of deal, or grand bargain, as not good. “70-30 against” was the common response. This is probably due to the mood in the building, which is tense.
Discussions are really just beginning. Sine die is imminent, but and there is still a lot of work to do.
- Richard Donovan