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Dear friends,
I hope you enjoyed a happy and healthy Thanksgiving together with family and friends. Between my work as a state senator and "day job" as a municipal prosecutor, the season has kept me busy, including multiple trips to Salem for legislative meetings as my colleagues and I prepare for the 2024 "short" session.
As a member of the Joint Interim Committee Addiction and Community Safety Response, I have been focused on how best to address the national fentanyl epidemic in Oregon and the unintended consequences of voter-approved Ballot Measure 110. Clearly, Measure 110 is not working as intended and steps must be taken to address these issues in February during the 2024 Legislative Session.
Even though the committee is still working on specifics, I expect the Legislature will take meaningful steps to stop open drug markets and public use of controlled substances. Current law prohibits drinking alcohol and use of marijuana in public spaces; it should be the same for controlled substances. At the same time, we must build infrastructure within our behavior health system to ensure Oregonians have access to addiction treatment service across the state. I expect to have more specifics to share in my January e-bulletin.
Below you will find information on:
- December Revenue Forecast
- 2023 Session Accomplishments: Environment & Wildfire
- OHCS Awards $56 million to Small Developments & Veteran Housing
- New Website Enhances Capitol Visitor Experience
- Lane County Program Receives State Community Development Block Grant
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. Please stay healthy and safe this holiday season. Remember to check ODOT's TripCheck.com for road conditions and traffic information if you're traveling around our beautiful state.
December Revenue Forecast
Another robust economic and revenue forecast was released at a joint meeting of the Senate and House Revenue Committees last month by the Oregon Office of Economic Analysis (OEA). Below is a summary of the forecast.
Revenue Outlook
2023-25 Net General Fund resources are up $335.4 million from the September 2023 forecast. The 2023-25 General Fund ending balance is now $1.2 million versus September's projected ending balance of $880 million. Lottery revenue for the 2023-25 biennium is up $8.1 million from the September 2023 forecast.
Reserve accounts are currently at $750 million (Education Stability Fund) and $1.4 million (Rainy Day Fund). The projected ending balances for the 2023-25 biennium reserve account are as follows: Education Stability Fund ($1 million) and Rainy Day Fund: $1.8 million). The Rainy Day Fund is projected to receive $271 million following the end of the 2023-2025 Biennium.
Kicker Outlook
No personal kicker is projected for 2025-2027 at this time. Corporate tax revenue of $418.3 million is projected to be dedicated to K-12 education spending in 2025-2027.
OEA Economic Outlook
The economy is rebalancing. Inflation remains above the Federal Reserve's target. Inflationary pressures have eased as stronger productivity gains and an increase in the number of Americans looking for work means the labor market is no longer overheated. As wage growth slows, so too will overall inflation in the year ahead. As a result, the Federal Reserve is now looking to make rate cuts. As inflation continues toward target, the Fed can "ease off the brakes," allowing the economy to coast. Most forecasters, including the Fed itself, expect a couple of small interest rate cuts in the second half of 2024, however the rebalancing labor market and cooler inflation readings may allow the Fed to cut sooner than expected. Lower rates will spur more activity, ensuring the economic expansion continues.
Oregon's baseline economic outlook continues to call for a "soft landing" and remains effectively unchanged from the prior forecast. Local economic growth is driven by a return to full employment, combined with stronger business investment and productivity gains. Recently released Census data confirm that the economic recovery from the pandemic has been inclusive and broad-based. Looking forward, a modest rebound in migration in the years ahead will allow local businesses to hire and expand at a faster pace than the nation. However, should migration not return as expected, Oregon's economy will not crater, but rather will grow at a slower rate than in the baseline.
Oregon's state revenue outlook appears to have stabilized. Aside from persistently strong corporate income taxes and large insurance tax payments, collections in recent months have tracked closely with the September forecast. In particular, personal income tax collections have finally started to weaken. General Fund revenue collections are expected to decline significantly in the months ahead as corporate profits and business income return to trend, and a record personal income tax kicker credit is issued. The revenue boom seen during tax year 2021 is unlikely to be repeated, with collections expected to revert to their long-term trends. Traditional gains in General Fund collections are expected to resume in the 2025-27 biennium and beyond. Longer term, revenue growth in Oregon and other states will face considerable downward pressure over the 10-year extended forecast horizon.
OEA's Corporate Activity Tax (CAT) Projections
In 2019, the Legislature enacted the corporate activity tax (CAT), a tax on gross receipts that went into effect January 2020. A full snapshot of 2021 tax returns is due to be available by the end of this year.
Estimated payments for the 2023 tax year are coming in below expectations. This has resulted in a modest decline in the forecast throughout the forecast horizon. Available resources for the current biennium are down $11.3 million, while the projected ending balance in the Fund for Student Success had dropped by $23.4 million due to a revision in the distribution to the State School Fund.
In terms the macroeconomic effects of a major new tax, the Office of Economic Analysis starts with the Legislative Revenue Office's impact statement and any Oregon Tax Incidence Model (OTIM) results that were found. At the top line, OTIM results find minimal macroeconomic impacts across Oregon due to the new tax. Personal income, employment, population, investment and the like are less than one-tenth of a percent different under the new tax relative to the baseline.
The model results also show that price levels (inflation) will increase above the baseline as some of the CAT is pushed forward onto consumers. These top line, statewide numbers mask the varying experiences that individual firms and different industries will experience.
2023 Session Accomplishments: Environment & Wildfire
Following the 2023 Legislative Session, I'm sharing in-depth summaries of bills passed by subject area. Below is a comprehensive listing of accomplishments related to environment & wildfire — by Senate/House bill and in numerical order:
Senate Bills
SB 80 - Wildfire Hazard Map and Landscape Resiliency: This legislation follows up on the work of SB 762 (2021) to expand wildfire protection in Oregon. SB 80 makes changes to the statewide wildfire hazard map and community engagement process and specifies the purpose of the map is to assist in prioritizing fire adaptation and mitigation resources for the most vulnerable communities and identify where defensible space standards and home hardening codes will apply. The bill also establishes the Landscape Resiliency Fund for ODF to support defensible space efforts and the Wildfire Home Preparedness Program with $10 million for the Department of the State Fire Marshal and Department of Consumer & Business Services to retrofit homes to be resilient to wildfire.
SB 82 - State Wildfire Risk Map and Home Insurance Policies: In 2021, the Legislature passed SB 762, investing in a variety of programs and initiatives for wildfire recovery and response. One provision directed the Oregon Department of Forestry and Oregon State University to create a comprehensive statewide wildfire risk map at the property-ownership level. This legislation requires insurers to provide notice to homeowner insurance policy holders regarding changes in the policy materially related to wildfire. It also expands timelines for rebuilding or repairing after a wildfire and prohibits insurers from using the statewide wildfire risk map.
SB 85 - Confined Animal Feeding Operations (CAFOs): This legislation prohibits the Oregon Department of Environmental Quality (DEQ) and Department of Agriculture (ODA) from issuing a general National Pollutant Discharge Elimination System (NPDES) or water pollution control facility permit to a new large CAFO that is located in a groundwater management area and that applies manure, litter, wastewater, or processed waste in a groundwater management area. New and expanding CAFOs will be required to participate in a preliminary consultation, meet new notice requirements for the public comment period, and include a water supply plan in their application. CAFOs are prohibited from bringing animals onsite until ODA inspects the operation and waste management system. SB 80 creates a nutrient application permit. It establishes a 12,000 gallon per day cap for the stock watering exemption to ground water rights for new CAFOs until September 15, 2027. CAFOs will need to obtain a land use compatibility statement from the city or county. DEQ is directed to report to the legislature on the U.S. EPA National Air Emissions Monitoring Study.
SB 123 - Smart Labeling for Recycling: The Legislature passed SB 582, the Plastic Pollution and Recycling Modernization Act, in 2021, establishing producer responsibility organizations (PROs) for coordinating recycling and the Truth in Labeling Task Force. The task force studied smart labeling technologies that help individuals understand how to recycle materials. This legislation requires PROs to include digital labeling recommendations in their producer responsibility program plans that they are required to submit to DEQ by December 31, 2027. The bill sunsets January 2, 2033.
SB 488 - Municipal Waste Incinerator Emissions Monitoring: Building on the work of the Cleaner Air Oregon program (SB 1541 from 2018), this legislation requires municipal solid waste incinerators to develop a plan to continuously monitor or sample for certain toxic air emissions. The plan must include monitoring or sampling for 12 consecutive months and make data available to the Department of Environmental Quality and the public. SB 488 also limits how much hospital, medical, or infectious waste a municipal solid waste incinerator may combust to 18,000 tons per calendar year. DEQ is directed to report any recommendations developed based on results of the 12 months of data within three months of when the data is complete.
SB 543 - To-Go Food Waste Reduction - Polystyrene Ban: Polystyrene is a plastic that is often used in food containers and packaging materials. It is not readily recyclable throughout Oregon and the foam easily breaks down, contaminating the environment and threatening the health of humans and animals. This legislation prohibits food vendors from using polystyrene containers for food and drinks. It also prohibits containers with PFAS substances and polystyrene packaging peanuts from being sold or distributed in Oregon.
SB 545 - To-Go Food Waste Reduction - Personal Containers: Reducing waste is important for conserving resources and the environment. This legislation directs the Oregon Health Authority to adopt rules allowing a restaurant to allow a customer to fill their own personal container with food, instead of using a single-use container.
SB 546 - Toxic-Free Cosmetics: SB 546 bans certain harmful chemicals from cosmetic products in Oregon and directs OHA to adopt a list of high priority chemicals of concern used in cosmetic products. It prohibits manufacturers from selling, offering, or distributing cosmetic products with specified chemicals, requires manufacturers to post notices on their website, and allows OHA to impose civil penalties.
SB 864 - Civil Immunity for Volunteers Fighting Fires on Private Forestland: During the 2020 Labor Day fires in Oregon, federal and state firefighting resources were stretched thin and private companies and individuals stepped up to aid Oregon communities. This legislation grants civil immunity to a person who voluntarily fights wildfire on private forestland for injury to another person or to property resulting from good faith performance of firefighting efforts on uncontrolled fires. SB 864 builds on protections in SB 290 (2019), which provided civil immunity for volunteers fighting wildfire on private cropland, pasture, or rangeland.
House Bills
HB 2522 - Rural Structural Fire Protection Review Committee: This legislation directs the State Fire Marshal to conduct a full overview of rural fire protection-related laws to modernize and streamline our processes and programs. It has been more than 65 years since Oregon's rural fire protection codes have been reviewed for modernization.
HB 2530 - Renewable Hydrogen and Green Electrolytic Hydrogen: This legislation requires the Oregon Department of Energy (ODOE) to support the state in transitioning to clean energy by accelerating the production, distribution, and end use of renewable hydrogen and green electrolytic hydrogen fuels. ODOE is directed to seek and apply for federal funds to support the development of renewable and green hydrogen, and provide education for tribes, local governments, state agencies, private entities, higher education, labor unions, and environmental justice communities.
HB 2914 - Abandoned and Derelict Vessel Program: This legislation establishes the Oregon Abandoned and Derelict Vessel Program in the Department of State Lands and requires the program to address abandoned and derelict vessels in the public interests for fisheries, navigation, commerce, and recreation. The program will develop a policy framework for implementation and report to the legislature by February 15, 2024.
HB 2929 - Injunctive Water Relief: When an individual uses water without an official water right, the Oregon Water Resources Department (WRD) may issue a regulatory order, measurement device, or headgate notice, before pursuing formal enforcement. This legislation allows WRD to also apply to the Marion County Circuit Court, or the county court where a violation took place, for a temporary or permanent injunction if WRD has information that a person engaged in an activity that violates water right permitting, unlawful use of groundwater, or unauthorized use of wastewater. WRD may seek an injunction that requires the person to refrain from the activity and take action to remedy the violation or any threat to water supplies, public health, or public safety. WRD will report to the legislature on the department's use of injunctive authority by September 15, 2028.
HB 2982 - Insurance Coverage Without Inventory in Major Disaster: Oregonians impacted by historic wildfires continue to encounter barriers in processing insurance claims. This legislation reduces barriers by requiring insurers to offer 70 percent of coverage that the insured person has previously purchased without requiring inventory documentation if the loss is the result of a major disaster. Insurers are required to notify the insured that additional benefits may be available if they submit inventory documentation. The bill becomes operative on January 1, 2024.
HB 3043 - Strengthening Oregon's Toxic Free Kids Act: This legislation allows the Oregon Health Authority (OHA) to include classes of chemicals on the list of high-priority chemicals of concern when used in children's products and to add more than five chemicals to the high-priority list during each three-year revision period. HB 3043 improves transparency for consumers by requiring manufacturers selling a product with a chemical of concern to include the brand name and model of the children's product in lists reported to OHA.
HB 3229 - DEQ Clean Air Act Title V Program Fees: This legislation increases the federal operating program fees for the Clean Air Act Title V program and directs DEQ to research alternative fee structures. It also allows DEQ to increase fees annually for the asbestos abatement program.
HB 3464 - Beavers: This legislation removes beavers from the definition of "predatory animal" and allows taking a beaver if it causes damage or imminently threatens infrastructure or agricultural crops. The bill directs ODFW to adopt rules for taking beavers.
OHCS Awards $56 million to Small Developments & Veteran Housing
The Oregon Housing Stability Council approved $56.7 million in Small Projects and Veterans funding to 11 affordable housing developments across the state. These investments from Oregon Housing and Community Services (OHCS) will provide 261 homes in smaller developments for veterans, seniors, agricultural workers, people experiencing homelessness, and wildfire survivors.
OHCS defines smaller developments as those having 40 homes or fewer in one complex. Five developments selected for funding awards are in rural areas (42 percent of total homes) and six are in urban areas (58 percent of total homes).
Eleven projects were approved for funding at the November Housing Stability Council meeting, including The Springfield Apartments, which received $7.9 million.
This was a competitive application process. OHCS received a total of 17 applications, amounting to over $94 million in funding requests. OHCS is grateful to the internal and external scoring committees for their diligent evaluation of the applications. For more detailed information about each project, click here.
New Website Enhances Capitol Visitor Experience
If you venture to the Oregon Capitol Visitor webpage this week, you may notice a difference: It no longer directs you to the visitor side of the Oregon Legislative website. Now, https://www.oregoncapitol.com is its own domain, with visitor-specific information and resources, all in one place.
While the Legislative website — https://www.oregonlegislature.gov — will remain your destination for tracking bills, streaming committee meetings and floor sessions, and contacting legislators, this new, dedicated visitor site will be your one-stop shop for trip planning.
Read about Capitol history, tour the Capitol virtually, browse the Capitol store, and learn about Capitol events, exhibits, and more!
Lane County Program Receives State Community Development Block Grant
Congratulations to the Lane County Regional Housing Rehabilitation Program on receiving a $500,000 grant from the Oregon Community Development Block Grant program! This program, administered by Business Oregon Infrastructure Finance Authority, provides grant funds to cities and counties to upgrade public infrastructure, develop community facilities and provide essential services to the workforce and your citizens. Congratulations again on the successful application!
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