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Dear friends,
The 2019 Legislative Session has entered its home stretch with fewer than four weeks before our constitutional adjournment deadline. While continuing to work, the Capitol community mourns the loss of Sen. Jackie Winters, who passed away from lung cancer on May 29. Senator Winters represented the best of us and I was proud to work side-by-side with her on SB 1008, achieving overdue reforms to the juvenile justice system in Oregon. SB 1008 passed the House on May 23 and adds to Sen. Winters' legacy of compassionate policy-making.
While some major bills have been tabled, including SB 978 (gun safety), after a deal was struck between the Governor and Senate Republicans, other important policies have advanced. On the education and PERS fronts, HB 3427 and SB 1049, respectively, have both passed the legislative process and HB 3427 was signed into law by the Governor on May 16. The Governor is expected to sign SB 1049 in the near future. Please see below for more information on those measures.
During a recent conference call of the Oregon Homeland Security Council, of which I'm a legislative member, the Oregon Office of Emergency Management provided an update on deployment of FEMA resources following the storm disaster declaration for Douglas and Lane Counties. We understand that centralized operations are currently being established in Salem and that mobile centers are expected to follow in Douglas and Lane Counties. I'll provide an update once details are provided.
Kids will be starting summer break in the next couple of weeks. Please be cautious when driving in and around neighborhoods and youth recreation centers. Also, please be careful with outdoor fires. You can expect temperatures to rise and vegetation to dry out in the coming weeks. We must be vigilant to reduce forest and grassland fires so as to keep Oregon green!
Below you will find information on:
- Student Success Act (HB 3427)
- PERS Reform (SB 1049)
- June Revenue Forecast
- My Session Bills: Kaylee's Law (SB 576)
- Scam Alert: "One Ring" Robocalling
- Trooper Cederberg Receives Public Safety Officer Metal of Valor
I hope this information is helpful and informative for you or someone you know. As always, feel free to share your comments, questions or concerns with me by phone, mail or e-mail.
Student Success Act (HB 3427)
It's been well publicized that Oregon has one of the worst high school graduation rates in the country. This is a result of a pattern of lowering statewide investment in education that began with Ballot Measure 5 (1990) and Measure 50 (1997). A 2017 Legislative Revenue Office report shows that absent those two measures, schools would be receiving over $4 billion more in funding for the 2017-19 biennium. The lack of investment is visible — we must do better.
HB 3427, the Student Success Act, affects large businesses in our state. Of the 460,000 businesses in Oregon, only 40,000 — 8.7 percent — would be affected. Small businesses with gross revenue of $1 million or less pay nothing. Those with revenue over $1 million pay $250 for the first million and a 0.57-percent tax on income in excess of $1 million. It should be noted that the tax under HB 3427 applies only to sales a company makes in Oregon. Further, a business will pay the tax only on its sales in Oregon that exceed $1 million, and a business gets to subtract 35 percent of either its cost inputs or labor inputs from its sales in Oregon.
The funding will be dedicated specifically to education funding for early childhood and K-12 education. (It won't go to the General Fund). It won't go to pay down PERS. It will be invested in our schools.
The bill also removes some burden on low- and middle-income Oregonians by lowering their taxes. Individuals already shoulder 94 percent of the burden of funding public services and education in our state. Oregon's businesses are currently subject to the lowest business taxes in the United States, ranking 43rd by the Council of State Taxation. The revenue reform contained in HB 3427 is expected to raise Oregon's ranking to 34th, so the state's business taxes still would be the 16th-lowest in the nation. This means that businesses — which benefit significantly from having an educated workforce — would shoulder a little more of the burden to make sure their employees' children and their future workforce are competitive.
This is far more than a tax plan; it's a formula for fixing what's going wrong in our schools and making ubiquitous the successful endeavors statewide. It includes ensuring kids are fed and ready to learn. It will ensure that our schools are getting the counseling and behavioral support professionals they need and that kids get the help they need. It also gives local school districts the opportunity to implement community-specific programming. Those programs will be funded by grants and there will be tight accountability through audits and legislative reports to make sure every penny is invested wisely. One-size-fits all measures don't work with children, and they don't always fit every community. As such, we're ensuring that the universal fixes are statewide, allowing local communities and school districts to meet their own unique needs to best serve their children.
PERS Reform (HB 1049)
HB 1049 was one of the hardest votes of my time in office. As a tier Tier I public employee who vested while serving as an assistant district attorney in Lane County in the early 1990s, my "yes" vote for SB 1049 was not an easy one but I believe it was necessary to deal with the crisis that occurred because of the Great Recession (2007-2009). Prior to then, Oregon's PERS system was 110 percent funded. Unfortunately, due to the international financial crisis, its reserves were wiped out. Now, its unfunded liabilities continue to increase. This has resulted in local governments (cities, counties and school districts) having to direct more money into their PERS contribution accounts instead of providing adequate levels of services and programs.
Failure to enact SB 1049 would cause local government contribution rates to increase to over 35 cents of every dollar. The bill will assist in lowering the employer contribution rate and those public employers from needing to reduce staffing levels, vital services or essential programs.
While I opposed previous PERS reform legislation that I deemed unconstitutional and punitive, I now find myself needing to take affirmative steps to protect public employees from loss of employment due to the inability of public employers to maintain services and programs. It should be noted that the Legislature will place at least $100 million into an employer incentive funds account. Many of us who voted for this bill are advocating to direct an additional $400 million into that account before the end of session. These incentive funds will encourage local governments to pay down their PERS unfunded liabilities. Also, all the proceeds realized by the state in a new sports betting program will be dedicated to help address the ongoing PERS financial issues.
Further, it's very unfortunate that we cannot pass an additional revenue bill to address these PERS issues. This reality is due to not having a super majority of Legislators to support such efforts as well as the continued threat of corporate-funded ballot measures to overturn such legislation. We have also seen those groups unjustly attack public employees. In fact, there are multiple pending proposed ballot measure that would cause many public employees to lose their jobs because of its draconian approach to dealing with the PERS crisis.
In addition, Sen. Betsy Johnson (D-Scappoose) said that if SB 1049 failed to pass, she planned to lead an onslaught effort to overturn HB 3427, which directs $2 billion into the K-12 budget. (Sen. Johnson was our necessary 18th vote to pass HB 3427, the Student Success Act.) If HB 3427 was overturned, our schools would be back to "square one!"
As I mentioned, this was not an easy vote but based on all the factors presented to us, it was a necessary one to ensure that there would not be more devastating impacts on public employees or services to the public. I look forward to the Legislature providing additional compensation to those workers to offset their redirected contribution rates.
My Session Bills: Kaylee's Law (SB 576)
In the summer of 2016, the Sawyer family of Bend, Oregon, lost their daughter, Kaylee, when she was killed by a Central Oregon Community College security guard — a man whose job it was to protect her. Since that time, the Sawyer family has been on a journey to make sure this doesn't happen to anyone else. Following a work group that I participated in, I was honored to introduce SB 576, known as "Kaylee’s Law," along with Sen. Tim Knopp (R-Bend). The bill received an emotional hearing and action in the Senate Judiciary Committee, which I chair, and passed the Senate on a SB 576 on a 29-0 vote. I was honored to co-carry the bill along with Sen. Knopp.
SB 576 will clarify the policing limits of college security officers; require that uniforms and vehicles look less like those of traditional law enforcement officers; and that all campus security vehicles be equipped with GPS, video recording devices or have dispatchers monitor the security officers' whereabouts. The bill calls for nationwide background checks on all private security or special campus safety officers and removes stop-and-frisk authority. Cars operated by campus security officers also must not possess ramming bumpers, red-and-blue light bars, internal cages or other features of standard police vehicles. SB 576 was signed into law by the Governor on May 24.
June Revenue Forecast
The June 2019 Economic and Revenue Forecast was released at a joint meeting of the Senate and House Revenue Committees. The forecast, summarized below, shows that Oregon's job growth slowed but remained slightly above March 2019 forecast projections. The state's labor market is tightening, but unemployment remains at a historic low.
Revenue Outlook
The projected ending balance for the 2017-19 biennium is up $869.7 million from the March 2019 forecast. The projected ending balance is also up $2.12 billion from the 2017 close-of-session estimate.
The Rainy Day Fund is projected to receive $199.4 million following the end of the 2017-19 Biennium. Projected 2017-19 Lottery resources are also up $13.9 million since March.
The projected ending balances for the reserve accounts for the 2017-19 biennium are as follows: Education Stability Fund ($620.1 million), Rainy Day Fund ($595.3) million and General Fund ($2.32 billion). This totals $3.54 billion in reserves.
Kicker Outlook
This data indicates that both the personal and corporate kickers will be triggered. A personal kicker of $1.41 billion is projected for 2019-21. Corporate tax revenue totaling $615.9 million is projected to be dedicated to K-12 education spending in in the 2019-21 biennium. There is currently discussion about directing some of the $1.4 billion to one-time obligations such as the PERS unfunded liability.
Economic Outlook
Though Oregon is no longer significantly outpacing the nation, our state continues to see healthy growth in employment, income and GDP. Personal income growth is rising faster than national averages. Job gains remain in line with national averages. Oregon's median household income is currently in line with the U.S. median household income. Average wages in Oregon are at their highest point since the mills closed in the early 1980s. Although Oregon's economic growth is slowing, the economic outlook calls for continued expansion.
Oregon's Labor Market
Oregon's unemployment rate has risen some since Summer 2018, from around 4 percent to 4.4 percent so far in 2019. Despite this increase, our unemployment rate remains under what would historically be considered full employment. Large service sector industries have been leading job growth. This growth has been taking place in professional and business services, health services, and leisure and hospitality industries.
Forecast Risks
The Oregon Office of Economic Analysis has identified multiple risks to monitor regarding Oregon's economic and revenue outlook, including housing affordability, federal fiscal policy, global spillover, environmental climate and disasters, commodity price inflation, federal timber policy, ballot measures and the state of the U.S. economy at large.
Scam Alert: "One Ring" Robocalling
Oregon's Attorney General is warning consumers to avoid returning unknown phone calls. Consumers have reported waves of "One Ring" or "Wangiri" scam robocalls targeting specific area codes in bursts, often calling multiple times in the middle of the night. These calls are likely trying to prompt you to call the number back, often resulting in per minute toll charges similar to a 900 number.
Recent reports indicate these calls are using the "222" country code of the West African nation of Mauritania. Robocallers can spoof their phone numbers to make them appear as if they're coming from anywhere in the U.S. or overseas. Advances in technology allow massive amounts of calls to be made cheaply and easily. In addition, spoofing tools make it easy for scammers to mask their identity.
If you think you have fallen victim to a One Ring scam, consider contacting the Oregon Department of Justice online at www.oregonconsumer.gov or call 1-877-877-9392.
Trooper Cederberg Receives Public Safety Officer Medal of Valor
On May 22, Oregon State Police (OSP) Trooper Nic Cederberg was awarded the National Public Safety Officer Medal of Valor at the White House. While patrolling alone on Christmas morning, 2016, Trooper Cederberg attempted to arrest a murder suspect. The suspect engaged Nic in a close quarters gun battle. Nic sustained a dozen gunshot wounds. Trooper Cederberg, who has been recovering, truly typifies the grit and perseverance of an OSP Trooper! The suspect is deceased.
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