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Dear OSCC Members & Colleagues –
We are now in the home stretch of the 2025 session – only a maximum of three weeks remain. Budget bills have been decided and are moving quickly. Rumors are the Joint Ways & Means Subcommittees will be shutting down at the end of this week, leaving on the Capital Construction subcommittee as the lone operating subcommittee from which to run final budgets and leadership-approved policy bills.
So far, as budgets advance, we are seeing the impact of the projected state revenue shortfall. Skinny budgets, some cuts, and legislators trying desperately to keep programs and services in place.
With respect to policy work, there has been no real progress on the two major policy issues that are now keeping legislators in Salem – Transportation and Wildfire Funding.
Given the pace of the session, it would not surprise us in the least that the legislature fills every available day until the Constitutionally-set deadline of Sunday, June 29th.
OSCC SEES FOUR SIGNIFICANT DEVELOPMENTS THIS WEEK:
1. TRANSIENT LODGING TAXES (HB 3962)
As discussed on our Friday call, this is the major remaining issue for OSCC members. The outcome on this bill still hangs very much in the balance.
OSCC opposes HB 3962 as Oregon and our local communities are in no position to start compromising on tourism promotion – once those TLT dollars are diverted they will never go back to their intended use.
We are expecting to see a new amendment, the -13 Amendment (yet to be released), which would abandon the effort to allow diversions of TLT funds and instead implement a new revenue split – 60% to local government and 40% for tourism promotion – on local TLT taxes passed after 2003.
This is a very significant departure from the current split of 70% tourism and 30% local government. Local government’s share would double.
We continue to ask OSCC members to weigh in with your own legislators and also expand the net to the following “swing” legislators:
Rep. Dave Gomberg (D-Lincoln City)
Rep.DavidGomberg@oregonlegislature.gov
Rep. Court Boice (R-Gold Beach)
Rep.CourtBoice@oregonlegislature.gov
Rep. Annessa Hartman (D-Oregon City)
Rep.AnnessaHartman@oregonlegislature.gov
Rep. Greg Smith (R-Heppner)
Rep.GregSmith@oregonlegislature.gov
Rep. Shannon Isadore (D-Portland)
Rep.ShannonIsadore@oregonlegislature.gov
Rep. Mark Owens (R-Crane)
Rep.MarkOwens@oregonlegislature.gov
Rep. Mari Watanabe (D-Portland)
Rep.MariWatanabe@oregonlegislature.gov
Rep. Daniel Nguyen (D-Lake Oswego)
Rep.DanielNguyen@oregonlegislature.gov
Rep. Emerson Levy (D-Bend)
Rep.EmersonLevy@oregonlegislature.gov
Rep. Pam Marsh (D-Ashland)
Rep.PamMarsh@oregonlegislature.gov
Rep. John Lively (D-Springfield)
Rep.JohnLively@oregonlegislature.gov
Rep. Sue Rieke Smith (D-Wilsonville)
Rep.SueRiekeSmith@oregonlegislature.gov
2. CAT TAX EXEMPTION – PRESCRIPTION DRUG SALES (SB 123)
OSCC is very pleased to see this bill gain momentum this week. SB 123 exempts pharmacy sales from the CAT tax. OSCC strongly supports this bill as we believe we need to address the remaining industry-specific difficulties with the CAT tax before we are going to credibly have the opportunity to seek an increase in the CAT Tax exemption for all small business.
The first remaining industries that is being hamstrung by the CAT tax are local pharmacies. Unfortunately, pharmacies pay the CAT tax from their wholesalers, and since drugs are paid at contracted rates with insurance companies, the pharmacies are not able to collect the CAT tax from their own customers.
SB 123 is a real opportunity to right a wrong for local pharmacies. OSCC urges members to let their local legislators know the importance of this bill to local business communities.
3. CAT TAX EXEMPTION – MEDICAID SERVICE PROVIDERS (SB 125)
OSCC was also very pleased to see this bill gain traction this week. SB 125 exempts health care providers who provide Medicare/Medicaid services from the CAT tax.
This is the second remaining industry that remains unfairly taxes by the CAT tax. Unfortunately, Medicaid health care providers pay the CAT tax on their services and from their suppliers, but are not able to collect the CAT tax from their own customers since taxpayer-funded health care services are delivered at contracted rates that don’t account for the CAT tax.
OSCC believes this is the final industry inequity that must be fixed. OSCC urges members to let their local legislators know the importance of this bill to local business communities.
4. TRANSPORTATION PACKAGE (HB 2025)
This week, Democrats will roll out their transportation package. Notably, the package does not appear to have any of the elements that may attract Republican support.
The details of HB 2025 include an immediate 10-cent gas tax, followed by an additional 5-cents in 2028.
Other taxes include a 2% sales tax on new vehicles, a 1% sales tax on used vehicles; increased registration and title fees; a VMT tax for electric vehicles; and an additional income tax increase from the current 0.1% (currently dedicated to mass transit) up to 0.3%.
It does not appear that the package has bipartisan support – in fact, it looks like an initial attempt from Democrats to try and push a package through on their own – as the potential bipartisan discussion about including a repeal of the DEQ’s ‘Climate Protection Plan’ appear nowhere in the bill.
This week will tell us a lot about next steps, but it looks very likely that this initial iteration of the transportation package will have the effect of effectively blocking any chance of passage this session and kicking the discussion into the interim.
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