Key House committee expanded to include small business
State Director Anthony Smith reports from Salem on the small-business agenda for the legislative and political week ending January 27
Friday, January 27, was Day 11 of the 160-day 2023 Oregon Legislative Session, and the first two weeks of session have seen a deluge of bill introductions. Just under 2,000 House and Senate bills have had their first readings in their respective chambers.
Identifying and reading all the bills that may have an impact on small business is the first major task of the year – and this is an ongoing process throughout the session, as we could see and additional 1,000 bills introduced between now and adjournment, which will occur no later than Sunday, June 25, 2023.
With each session comes opportunities to pass pro-small-business legislation, but also the threat of harmful proposals. Which bills will ultimately make it across the finish line is anyone’s guess at this point, but as the session goes on, and the picture becomes clearer, we’ll have a better idea about where to pick our battles. As these opportunities and challenges arise, we’ll be sure to keep NFIB members informed about the bills that could impact them the most – and that’s how NFIB most effectively flexes its muscle – by making sure legislators hear from you before they vote on key small business issues!
Is 2023 Finally the Year for a Cut in the Death Tax?
So far, 13 measures have been introduced in the 2023 session to make pro-small-business modifications to Oregon’s estate tax. Fourteen members of the House and seven members of the Senate have already signed on to sponsor one or more of these bills. There is a wide variety of approaches within these concepts, but the one thing they all have in common is that they acknowledge that Oregon’s estate tax exemption threshold of $1 million is too low for today’s current economic environment and something needs to be done about it soon before more and more Oregonians are caught unprepared for a tax that historically only impacted a small percentage of taxpayers.
On January 25, NFIB testified in support of SB 498, a bill chief-sponsored by Sen. Bill Hansell (R-Athena). He’s been working with Rep. Kevin Mannix (R-Salem) on this legislation for several years, even before Rep. Mannix was re-elected to the House (he’s been an attorney in private practice since his last stint in the Legislature over 20 years ago).
SB 498 would change the Natural Resources Estate Tax Credit from a $15 million credit to a $15 million exemption for family businesses engaged in agriculture, fishing, and forestry. Currently the process to qualify for the credit is arduous and cumbersome. A straight-forward exemption would make the process much simpler for both taxpayers and the Oregon Department of Revenue.
This is a good bill, but it doesn’t solve the problem for the 85% of NFIB members in Oregon who own a business that isn’t in the natural resources sector, so NFIB focused its testimony on the recent trends we’ve seen from the estate tax as a revenue source for the state:
- Over the last decade or so, estate tax revenues in Oregon have doubled and it isn’t due to a steady influx of billionaires moving to Oregon to enjoy their retirement years. It’s because during that same timeframe, the number of Oregon taxpayers subject to the tax has also nearly doubled, meaning more and more people are paying the estate tax each year – primarily because of the impact of surging real property values on the overall value of estates – and that’s true not only for small business owners, but also for Oregonians in general.
- With median home values in some parts of Oregon at $500,000 or more, many Oregonians, who have spent a lifetime making mortgage payments toward their most valuable asset, are finding themselves more than halfway there to Oregon’s lowest-in-the-nation estate tax exemption threshold of $1 million. Now imagine the average small businessperson, who in addition to their home also owns their business, and in many cases, the real property that the business sits on. And therein lies the problem….
NFIB will be watching all the estate tax bills closely, but especially HB 2259 which is a bipartisan bill chief sponsored by Rep. John Lively (D-Springfield) and Rep. E. Werner Reschke (R-Klamath Falls).
The Big Picture – the State Budget
In contrast to the pandemic years, when an influx of federal dollars provided the state with unprecedented financial resources, the most-recent quarterly revenue forecast from the state economists wasn’t very optimistic. The state still has healthy reserve funds to spend if tax revenues come up short of what’s necessary to keep spending at current service levels, but the Legislature’s appetite for tax cuts vs. tax increases will be heavily influenced by the next quarterly revenue forecast, which is scheduled be made public on Wednesday, February 22, 2023. Opportunities like estate tax reform could quickly fade away if the revenue outlook is bleak – and economic recession is more likely.
Luckily, the outcome of the 2022 General Election resulted in a more balanced Legislature. Tax increases can no longer be passed strictly on a party line vote, so we’re much better positioned to ward off new taxes and tax hikes than we have been for the last four years.
New Small Business Committee Invites Public Comment
New this year, the Oregon House of Representatives has expanded its economic development committee to specifically include small businesses. The House Committee on Economic Development and Small Business meets every Tuesday and Thursday from 1 p.m. to 2:30 p.m. So far, the committee has been receiving updates from key industry sectors but will soon begin its work on legislation.
The committee chair, Rep. Janelle Bynum (D-Clackamas), recently announced her intention to allow a public comment period at the end of each committee meeting. It will be an opportunity for small business owners to bring important issues forward for the committee’s consideration – and it should be noted that not only is Chair Bynum a small business owner herself, but almost every other member of the committee is a small business owner as well!
If you’re interested in testifying, check out the committee’s main page on OLIS (Oregon Legislative Information System), click on an upcoming meeting date, and check to see if the committee is taking public comment that day. You can also submit written comments. If you have any questions about this process, please reach out to the NFIB office in Salem, (503) 364-4450 or shoot me an email at [email protected].
Members of the newly expanded House Committee on Economic Development and Small Business convene for a hearing. Photo snip courtesy of the Oregon State Legislature website.
