DJC Op-Ed: A Stormy 2019: the Oregon Legislative Session in Review

smiling bespectacled man in suit and tie

By: Mike Salsgiver
Executive Director, AGC Oregon-Columbia Chapter

Daily Journal of CommerceThis article was published by the DJC on July 30 in Buildings Bridges and Roads, and can be viewed here (subscription required).

After the 2018 elections, there was a lot of talk about what a double supermajority would mean for business. After battles over taxes, environmental regulations, workplace laws and other business issues, challenges were to be expected in 2019.

Business lobbyists knew an uphill fight was ahead. We had no idea just how uphill the fight was going to be.

After some 3,000 bills were considered during one of the most contentious sessions in recent history, the Oregon Legislature adjourned the evening of Sunday, June 30. And now, it’s time to take stock of how construction fared in 2019.

Oregon’s commercial construction industry will undoubtedly be affected by a host of bills. In many cases – particularly with the imposition of a gross receipts tax – the effects will be harmful to almost every small business owner’s bottom line.

And yet, in many ways, our industry fared quite well. Given the political landscape and dominant supermajorities, a tight focus on key priorities allowed our industry to navigate what was otherwise a very stormy legislative session.

Here is a snapshot of the bills that failed to reach the governor’s desk and those that did.

The bills that didn’t survive:

  • Potential raid of SAIF’s reserves: This proposal was taken off the table, saving businesses that rely on a strong, stable workers’ compensation system from the likely outcome of decreased worker safety and increased rates. A coalition representing a broad cross-section of Oregon’s strongest industries worked to ensure the importance of a financially sound SAIF Corporation was communicated with Oregon’s legislative members.
  • HB 3022 (changes to workers’ compensation): After months of discussions by industry stakeholders, employee representatives and the Management-Labor Advisory Committee, the proposed changes to Oregon’s workers’ compensation system were ultimately tabled this session. AGC strongly supports the workers’ compensation system that has developed since the Mahonia Hall reforms of the early 1990s. The system has worked well to provide protections and recovery programs for injured workers, and AGC will continue to take the lead in defending the integrity of this program.
  • HB 2407, HB 2408, HB 2409, HB 2414 (prevailing wage/public works): A suite of bills introduced this session would have changed the public works market. HB 2408 would have required prevailing wage on projects that receive tax subsidies, including enterprise zones, strategic investment programs, etc. This was the only bill of this suite to pass out of the House, but it died in a Senate committee. Two other bills, HB 2407 and HB 2409, would have changed the calculation formula for prevailing wage rates by reducing the number of districts and possibly eliminating the prevailing wage survey. HB 2414, if passed, would have required manufacturing facilities producing prefabricated materials used in public works pay prevailing wage.
  • SB 379, HB 2655 (marijuana accommodation in the workplace): Continuing the theme of worker and public safety, AGC opposed and was able to help defeat proposals to require Oregon’s employers to accommodate use of marijuana by their employees. These proposals would have kept employers from taking any employment action against employees for their “legal substance” use during off-duty hours. Although Oregon has legalized marijuana use for medical and recreational purposes, the federal government has not. The lack of a reliable impairment test for marijuana prevents employers from knowing whether an employee is impaired on the jobsite, if they’re allowed to use marijuana in off-duty hours. This would place workers and public safety in jeopardy.
  • HB 2020 (cap and trade): The proposed cap and trade program was “Ground Zero” in defining the political division of the session. The stated purpose of the bill was to establish a program that would curb carbon emissions from our state’s largest emitters. As proposed, the bill’s unintended consequences to everyday Oregonians proved to be its breaking point. Rural Oregon stakeholders made their opinions known, and it appears, for now, lawmakers listened.

Bills that passed:

  • HB 2415 (retainage): Changes to Oregon’s retainage law passed this session, and after many versions of the bill, what ultimately passed is a requirement that the retainage for contracts over $500,000 be placed into an interest-bearing escrow account.
  • SB 455 (apprenticeship requirements): Community and state college projects will now require contractors to be BOLI licensed training agents for projects over $8 million.
  • HB 2005 (paid family leave): Oregon’s new paid family leave program allows for 12 weeks of paid leave for employees and will be funded by a 40 percent employer and 60 percent employee paid payroll tax. This bill is preferable to several other proposals from this session, one of which would have granted 32 weeks of paid family leave. The payroll tax collection begins in 2022 and the leave is permissible starting in 2023.
  • HB 2007 (diesel): As introduced, the bill proposed a statewide regulation on all older medium and heavy duty on-road diesel trucks and stringent public contracting clean diesel requirements. After months of negotiations with the bill’s sponsors, a more limited HB 2007B passed with on-duty regulations restricted to the Portland tri-county area and with the public contracting requirements limited to state projects, only over $20 million, in the Portland tri-county area.
  • HB 3247 (taxes): Oregon’s new gross receipts tax goes into effect Jan. 1, 2020. Until then, we’ll be working on providing technical assistance to our members. This is an incredibly complex new tax that will apply to in-state revenues over $1 million. Rulemaking through Oregon’s Department of Revenue will begin later this year.

Oregon’s legislative session in 2019 was one of the most complex and politically charged in recent decades. The construction industry, and the business community as a whole, continue to be the focal points for efforts to generate revenues.

Of course, there will come a time when the well runs dry. What will happen then?

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

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