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That's a Wrap

The Oregon Legislature ends its regular session—without passing a revenue-creating bill that would have changed the rules for taxation on some Oregon businesses



The 2017 Oregon Legislative Session came to an end on July 7. With adjournment, literally hundreds of pieces of legislation were left on the floor, so to speak. Some bills never found their way out of committee, others made it out and were voted on by one chamber of the legislature, passed to the other chamber where they received no further action, and, in the vernacular of the Legislature, died. There were nearly 3,000 bills introduced this session with only a small percentage of those ultimately becoming law. This process repeats itself session after session, with winners and losers each time.

What determines which bills succeed and which bills don't? A variety of factors play into it, not the least of which is the input and participation of citizens, organizations and groups of people throughout the state. One example of a piece of legislation which failed to get across the finish line, despite significant push from individuals and members of the legislative body itself (including the Speaker of the House), is House Bill 2060 A.

HB 2060 A would have limited the eligibility for a business to use what is referred to as a PTE (pass-thru entity) tax rate. The PTE was created in the 2013 special session and gave certain businesses the option of having the income from those entities taxed at a lower marginal rate. The goal was to provide a more favorable tax structure for certain types of businesses, generally in the category of a small business. The primary changes would have limited eligible businesses to specific types and increased the requisite number of non-owner employees from one to 10. These changes came through an amendment to the original bill which was introduced by the Speaker of the House, Tina Kotek.

The motivation behind this legislation was the revenue deficit facing the Legislature this session. The Legislative Revenue Office estimated that during the 2017-2019 biennium, the changes could result in an additional $196 million coming into the state. Information provided by the Oregon Legislative Revenue Office also showed that in 2015, the rate had been used by approximately 13,000 taxpayers, costing a loss of nearly $70 million in revenue for the state.

After passing out of the House Revenue Committee, HB 2060 A narrowly passed out of the House to the Senate by a vote of 31 in favor and 28 opposed on June 23. The bill did not get this far without opposition, and the close vote was indicative of the concern about the potential impact on small businesses in particular. The Oregon State Chamber of Commerce, the National Federation of Independent Businesses (NFIB), Oregon Dairy Farmers and the Oregon Farm Bureau were among those in opposition, making a case for maintaining the 2013 law as-is. Once the House passed the bill the alarm bells went off from these organizations and others, for fear that the bill might have real momentum.

Locally, the Bend Chamber of Commerce sent out a "Legislative Alert" on June 27 to its members, seeking their help in asking state senators to oppose further progress on this legislation. Jamie Christman, vice president for community affairs at the Bend Chamber, told me that the primary objective was to underscore that the voice of individual members of the business community does matter.

Christman said she had heard both directly and anecdotally that several members had contacted senator's offices. I asked if she felt these efforts had been effective. She indicated that it didn't appear that the bill was moving, so she saw it as proof that member efforts were worth it—that by collectively taking this active step, they had a voice. My conversation with Christman took place several hours before the Legislature adjourned the 2017 session. At that point, HB 2060 A remained where it had been since passing out of the House—on the Senate President's desk awaiting referral. The bill died without any action in the Senate.

For those both in and out of the Legislature who supported HB 2060 A, this likely plays as a loss. For those opposed, a win. The truth is that whether the efforts are viewed as a win or a loss, legislation can always be brought back to life in another session to live another day. Perhaps the real lesson to be learned is that voices can make a difference.

Judy Stiegler is an attorney, a former Oregon state representative and teaches political science at Central Oregon Community College.

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