In the past week, we didn’t see any legislation of note being considered that would have significant impacts on businesses. However, we are expecting an increase in activity from both lawmakers and the governor’s office very soon.

Most notably, Governor Tina Kotek’s first recommended budget is due by Wednesday, February 1. The release of the Governor’s Recommended Budget, though not a binding document from a legislative perspective, will provide the most insightful look yet at Governor Kotek’s priorities over the next biennium.

In addition, we’ll be looking for the introduction of state agency policy bills alongside the release of the budget over the next few weeks, information that will help us determine potential impacts on local small businesses.

Here are a few other notes from recent activity:

Budget Backdrop
It is important to note we’ll likely see a modest revenue shortfall this session. Currently, there is a projected $560 million current service level budget deficit on a $30 billion General Fund. Although this is only about a 1.5% budget deficit, it marks a significant departure from the previous three to four years in which the legislature had a massive surplus of cash coming from the Federal government.

Revenue Needs
The state’s revenue needs will make the budget environment even more challenging. First and foremost, Oregon needs to commit $1 billion to the Interstate Bridge Replacement proposal that would seek to rebuild the I-5 Bridge that connects Oregon with Washington. Second, there will likely be a significant shortfall in the state’s Medicaid budget that will require more cash. Finally, there is disagreement about the level of funding needed for the state’s K-12 system. While analysts believe the system needs $9.5 billion to remain whole, some education advocates $10.3 billion is a more realistic number.

Additionally, $300 million is intended to lure semi-conductor manufacturers to conduct their operations in Oregon.

Right now, it is believed that legislative leaders will look to tap into the state’s “Rainy Day Fund” to balance the budget. This will require Republican votes, however, as it requires a “supermajority” of legislators to approve this action.

It appears that the $3.7 billion “kicker” is off the table. Tapping into the “kicker” would also require Republican votes. Currently, there appears to be no Republican support for this.

Early Legislative Priorities
A legislative priority, which was announced last week, is the Governor’s $130 million budget package to address homelessness issues. The political desire is to get this funding package approved very early in the session.

Another initiative getting significant early action is the incentive package being considered by the Joint Committee on Semiconductors. Legislative leadership is looking for early approval of a package of incentives to leverage Federal monies to encourage semiconductor manufacturing in Oregon. Outside of cash incentives, it remains to be seen whether the legislature will grapple with the harder policy decisions, including tax incentives or land use changes, that would make more land available for manufacturing activity.

Session Timelines
The session deadlines for 2023 are more aggressive than we’ve seen in past sessions, which means we’ll likely see fewer bills actually make it through the legislature.

· Wednesday, February 1 is the deadline for bills to be introduced to implement the Governor’s budget.

· February 21 is the deadline for legislators to submit any requests for legislation.

· March 17 is the first meaningful procedural scheduling deadline. Any bill not scheduled for a committee ‘work session’ by this date is considered dead.

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