Small business fared well in the 32 days lawmakers met
State Director Anthony Smith reports from Salem on the small-business agenda after the March 4 adjournment of the 2022 session
The Oregon Legislative Assembly has adjourned sine die the first regular session of 2022. Lawmakers finished their work on Day 32, with just three days to spare. As required by the Oregon Constitution, legislative sessions in even-numbered years may last no more than 35 days.
With the exception of HB 4002, the agricultural overtime bill that passed and is now on its way to Gov. Brown’s desk, small business fared well in the 2022 short session. With ample financial resources available to budget writers, there was little to no pressure to raise taxes on Oregon businesses. In fact, with the passage of SB 1524 – a bill supported by NFIB this session, overall state revenues were slightly reduced. Among other provisions, this omnibus tax bill provides for a new temporary exemption from the state’s Corporate Activity Tax (CAT) for prescription drug sales at local independent pharmacies with nine or fewer locations under common ownership.
In other news, the omicron wave finally appears to be over for the West Coast – and Gov. Brown has announced that Oregon will join Washington and California in lifting the state’s indoor mask mandate on Saturday, March 12. Originally, the Oregon Health Authority was predicting that COVID-19 hospitalizations would not decrease to fewer than 400 statewide until the end of March, but case counts have plummeted in recent weeks and that metric was reached on March 4. This is very welcome news!
Below is a list of bills from the 2022 session with implications for Oregon’s small businesses – some of which successfully passed and made their way to the Governor’s desk, and others that were brought forward for consideration, but later died during the legislative process.
One thing to note about the bills that died – on occasion, a bill fails to move forward with very little effort due to a lack of interest on the part of legislative leadership, or a less-than-robust lobbying effort on the part of the bill’s advocates. However, most of the time a bill dies because of sustained and coordinated efforts on the part of the bill’s opponents. In recent years, NFIB hasn’t been able to defeat every bill it opposed, but it has managed to kill many, many bad bills.
Please see below for a short summary of each measure, NFIB’s position on the bill, and the vote count in each chamber (if the legislation made it that far). The bills are listed in numerical order.
2022 Small Business Legislation:
- SB 1518 – Reach Code/Building Efficiency Task Force (Passed)
- SB 1524 – Omnibus Tax Bill (Passed)
- SB 1565 – Cashless Business Ban (Passed)
- HB 4002 – Agricultural Overtime (Passed)
- HB 4079 – Sales Tax on “Luxury” Items (Failed)
- HB 4141 – Diesel Fuel Ban (Failed)
SB 1518 – Reach Code/Building Efficiency Task Force (Passed)
NFIB Position: Opposed
SB 1518, in its original form, was a bill that would allow local governments to adopt Oregon’s Reach code (a higher energy efficiency building code) as the base code for construction within their municipal boundaries. Under current law, the base code is voluntary for construction contractors. This bill would have made the Reach Code mandatory for new construction if local governments were to adopt the change, bifurcating Oregon’s statewide universal building code that has been so successful for so many years. Click here for the testimony in opposition to the bill from the coalition NFIB was part of.
The bill was amended in the Senate Committee on Energy and Environment to create a task force (like a legislative work group made up of stakeholders, but more formal) to identify and evaluate policies related to building codes and building decarbonization for new and existing buildings that would enable the state to meet its greenhouse gas emissions reduction goals while maximizing other benefits.
The bill passed by a vote of 19-7 in the Senate, with 1 member absent and 3 members excused. It passed by a vote of 36-21 in the House, with 3 members excused.
SB 1524 – Omnibus Tax Bill (Passed)
NFIB Position: Supported
SB 1524 was the Oregon Legislature’s 2022 omnibus tax bill, containing miscellaneous updates to the state’s tax code. Much of the bill had nothing to do with business taxes specifically, but a few provisions could have a very big impact.
Among other provisions, SB 1524 refines and clarifies the state’s Business Alternative Income Tax, a voluntary tax program that allows qualifying business owners to reduce their federal income tax liability at no cost to the state – a State and Local Tax (SALT) workaround – and instructs the Oregon Department of Revenue to adopt rules providing relief from penalties if sufficient estimated payments are made by either a pass-through entity or its members. The bill also makes changes to Oregon’s Corporate Activity Tax (CAT) which include administrative technical changes to accommodate businesses filing CAT returns using a fiscal year that differs from the calendar year and exempts sales of prescription drugs sold by local independent pharmacies with nine or fewer locations in Oregon.
Many Oregon pharmacies have experienced tremendous challenges in remaining profitable after this new tax on gross receipts took effect. It’s become such a huge problem that some pharmacies have closed, and many Oregonians are experiencing long waits for their prescriptions. NFIB remains committed to mitigating the negative impacts of the CAT on Oregon’s small business – and this was the first big chance to do that. NFIB expressed its appreciation for the Legislature’s willingness to reexamine and address the unintended consequences of taxing prescription drugs, albeit in a limited manner.
The bill passed by a vote of 22-3 in the Senate, with 2 members absent and 3 members excused. It passed by a vote of 57-1 in the House, with 2 members excused.
SB 1565 – Cashless Business Ban (Passed)
NFIB Position: Opposed
For several years now, the Oregon Legislature has proposed a bill that would ban cashless businesses in most circumstances. SB 1565 prohibits private-sector businesses from being able to accept the forms of payment that work best for their business model. NFIB’s testimony can be read here.
Under the state’s public accommodation laws, refusing a sale in cash (paper bills) or up to $100 in coins will be considered discrimination once SB 1565 goes into effect – and will be enforced by the Bureau of Labor and Industries. The bill includes a list of nearly 20 exclusions for certain businesses so that they can continue to operate on a cashless basis. These exemptions correctly acknowledge that there are legitimate business reasons why it may not be appropriate or pragmatic for a business to accept cash payments – reasons that have nothing to do with discrimination, but rather for reasons relating to efficiency, security, and overall customer experience.
A late breaking amendment was adopted in the House that will exempt membership-only retail establishments where goods and services are sold to members who pay a recurring membership fee. The bill does not include a private right of action – and this new exclusion makes it relatively easy for cashless businesses to continue to operate so long as they set up a membership fee. However, the $100-in-coins threshold is still very problematic. If a disgruntled customer shows up and tries to pay with a bucket of 10,000 pennies, a business won’t be able to refuse the sale without risking a discrimination case with BOLI. NFIB will likely need to come back and help fix this legislation in the future.
The bill passed by a vote of 22-3 in the Senate, with 3 members absent and 2 members excused. It passed by a vote of 49-11 in the House.
HB 4002 – Agricultural Overtime (Passed)
NFIB Position: Opposed
Undoubtedly the most complicated and controversial legislation of the session was HB 4002, a bill that requires, in just a few short years, agricultural employers to pay overtime for hours worked beyond 40 hours per week.
The House Committee on Business and Labor held a public hearing for over three hours on the evening of February 8. The debate was emotional, but civil. Farmers and ranchers showed up in force to express their opposition. Supporters included farmworkers, union leaders, and lawyers. NFIB’s testimony can be read here.
After passing HB 4002 out of the House Business and Labor Committee on a party line vote and sending it to the House Revenue Committee, the Oregon Legislature decided to create a new Joint Committee on Farm Worker Overtime with the sole purpose of working on this bill. In just a matter of hours, the committee was formed, held a public hearing, and then adopted an amendment that had been drafted before the public was even allowed to provide testimony. The bill passed out of the committee, again on a party line vote, and was passed by the House and the Senate in the final days of the session. Not one Republican voted for the bill, but they were joined in the Senate by one Democrat voting in opposition – Sen. Lee Beyer (D-Springfield) who is not seeking reelection this fall.
As with previous versions, the finished product moves Oregon to a rigid, 40-hour per week threshold for ag overtime and relies on tax credits to partially offset these new costs for farmers and ranchers. These tax credits won’t work in the long run because when (not if) they go away, farmers and ranchers will be left without resources necessary to maintain their operations. This is not a workable solution to keep Oregon’s ag industry viable. For more information on the bill, click here to view NFIB’s testimony. (Please note that the testimony references the -A7 amendments, but the committee adopted the -A12 amendments, which are not substantially different from the -A7’s.)
The bill passed by a vote of 37-23 in the House. It passed by a vote of 17-10 in the Senate, with 1 member absent and 2 members excused.
HB 4079 – Sales Tax on “Luxury” Items (Failed)
NFIB Position: Opposed
A new, first-of-its-kind sales tax was defeated before it even had its first public hearing. HB 4079, sponsored by Rep. Brad Witt (D-Clatskanie), would have established a sales tax on a list of specific goods sold in Oregon over a certain price to fund a new program designed to help low-income Oregonians by providing them with monthly payments of $750. The bill would have imposed the tax on things like motor vehicles, RV’s, ATV’s, snowmobiles, boats, planes, guns, clothing, handbags, electronics, and jewelry.
The bill was scheduled for a public hearing in the House Committee on Human Services on February 8, but about two hours before the hearing, Rep. Anna Williams (D-Hood River) removed the bill from the agenda, ending its chances to move forward due to the Legislature’s self-imposed bill deadlines. Because the public hearing was removed from the Oregon Legislative Information System (OLIS), all the public testimony (most of it in opposition) disappeared from the record. NFIB and our many coalition partners were well prepared to fight this bill – and will be again if it comes back in a future session.
HB 4141 – Diesel Fuel Ban (Failed)
NFIB Position: Opposed
HB 4141 would have phased-out and eventually ban the sale of petroleum diesel fuel in Oregon. The economy relies on the use and availability of diesel fuel, and although Renewable Diesel (RD) is an emerging alternative fuel that by most accounts is a good product that many Oregonians and business would like more of, RD currently (and likely into the future) faces significant cost competitiveness and supply challenges that have not yet been addressed. Our opposition was not a reflection on RD, but rather an ill-advised mandate that would ban a vast majority of diesel and put our members’ businesses and Oregon’s economic future at risk. To read the testimony of the coalition NFIB was part of in opposition this bill, click here.
The bill was referred to the Joint Committee on Transportation where it received a public hearing and a work session. The bill was amended in this committee to create a task force on Renewable Diesel and was moved to the Joint Committee on Ways and Means, where the bill died.
On a Final Note…
Please reach out to NFIB if you have any questions about any of the bills you’ve read about in this update – even if you’re just looking for more detail. And if there’s a bill you tracked that isn’t on this list, we’ll be happy to look into it for you. As a reminder, during session NFIB works on bills that affect the vast majority of our members, not every bill that could affect a single member. For those, we can help connect you with your industry-specific group, your state legislators, or both!
Thank you for your support during the 2022 Legislative session! We couldn’t do this important work without you.
Prior Legislative Reports
- March 4—Legislature Adjourns on a Couple of High Notes for Small Business
- February 25—Agricultural Overtime, Omnibus Tax Bills Advance
- February 11—Proposal Instituting a Sales Tax on Certain Good Dead for the Year