The February revenue forecast was released last week.
The forecast brought good news to lawmakers and budget writers, as it showed more revenue for the upcoming 2023-25 biennium than was previously anticipated. The Governor’s recently-released budget was based on the expectation of $30.7 billion in General Fund/Lottery revenues and an overall ‘deficit’ of about $550 million.
With the February forecast, state economists are projecting $31.4 billion in General Fund/Lottery — an increase of about $700 million and more than enough to erase the $550 million deficit. There should now be enough anticipated revenue to cover proposed budgets. The concern about a pending recession has waned.
This past week was also the deadline for legislators to submit any final requests for legislation for the 2023 session. As expected, there was a rush of new bills last week, and more are expected to be brought forward this week. As of Monday, there were 2,347 pieces of legislation introduced for the 2023 session. The Oregon State Chamber of Commerce (OSCC) is projecting that we will see another 400-500 new bills this session.
The next major benchmark date is March 17, which is the first meaningful procedural scheduling deadline. Any bill not scheduled for a committee work session by this date will be considered dead.
The major legislative development for the upcoming week includes the potential passage of the first two major bipartisan packages. The housing package will be contained in House Bill 2001. It will include Governor Kotek’s request for $130 million in funds to build 600 shelter beds, preserve housing for 9,000 families, and help create shelter for 1,200 homeless Oregonians. Overall, the package is expected to invest around $200 million in housing and create a pathway for the goal of constructing a target of 36,000 new housing units per year.
The second potential major legislative package includes Senate Bill 4 — the incentive package for the semiconductor industry. This package is also expected to include $200 million in incentives, including forgivable loans. The most controversial part of the package, to date, would allow the Governor to make an executive decision to pull land into an urban growth boundary for a limited time to increase land supply for building manufacturing facilities.
What To Be Optimistic About
We continue to be optimistic that there will be a meaningful bipartisan effort to exempt more small businesses from filing for and being subject to the Corporate Activity Tax (CAT). Our own CEO, Tom Hoffert, other chamber leaders, and business people have testified in support of both HB 2433 and SB 127 in recent weeks, and these bills continue to be top priorities for the business community.
As further evidence of the legislature’s seriousness about this issue, there will be additional discussions on this topic in the House Revenue Committee this week.
What To Be Concerned About
Right now, we continue to have major concerns with the environmental regulatory bills we are seeing considered in the House Committee on Climate, Energy and Environment.
First, there’s HB 2396 — a job-killing bill that would authorize the Department of Environmental Quality (DEQ) to create an “indirect source” review program that would regulate projects that promote vehicle traffic or require off-road engines.
Second, there’s HB 3158, which would create a slew of new taxes and fees to fund an incentive program for non-road diesel vehicles. Among other things, the bill puts a new tax on tires and on the purchase and rental of diesel equipment. The business community stands in opposition to HB 2396 and HB 3158.
There are other bills causing concern, including:
HB 3152, which, in essence, begins the process of a statewide ban on the use of natural gas in the residential housing sector.
HB 3229 is a major DEQ fee increase on manufacturing facilities for the Title V air emissions program. The proposed fee increase is 80% and purports to save the positions of DEQ regulators at the expense of manufacturing companies throughout the state.
HB 3196 authorizes DEQ to collect fees from regulated entities to defray the “costs to the department of administering and overseeing those portions of the climate protection program related to community climate investments.” This is a concern because there is an ongoing lawsuit against the DEQ’s costly “Cap and Reduce” program that is being challenged on grounds that it had no legal authorization. HB 3196 creates concern that the program could, in effect, be authorized retroactively and make any legal challenges moot.