The Oregon Biz Report - Business News from Oregon

By Oregon Society of Certified Professional Accountants
News Alert 1/29/08

H&R Block is running a national advertising campaign designed to make consumers question the credibility and value of CPA services. On behalf of the profession, the AICPA is taking the lead in addressing the issue with the CEO of H&R Block. AICPA President and CEO Barry Melancon has contacted H&R Block CEO Russ Smyth regarding the severity of the CPA profession’s concerns with the campaign. AICPA has successfully worked with H&R Block in the past regarding earlier controversial advertising campaigns.

By Dr. Eric Fruits,
Econinternational

According to a report by consulting firm McKinsey & Co., the world can keep global warming in check if nations spend trillions of dollars on energy efficiency, clean power and forestry projects over the next 20+ years.  In addition to typical annual capital investments, the report concludes that beginning in 2011, additional investments of $475 billion a year would be required to keep global temperatures 2 degrees Celsius below pre-Industrial temperatures. By 2026, the cost would rise to $1.2 trillion a year.

The net present value today of the additional expenditures between 2011 and 2030 would be approximately $7.3 trillion. That is bigger than China’s economy today and equivalent to the economies of Japan and India combined.

By John Marshall
Associated Oregon Industries
Oregon’s largest business association

Even though the 2009 Legislative Session convened less than two weeks ago, already two bills proposing to increase the $10 corporate minimum tax have been introduced.   HB 2119, introduced at Governor Kulongoski’s request, imposes the new minimum tax on C-corporations only and bases it on Oregon sales.  The new minimum is bracketed as follows:

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Barran Liebman LLP Electronic Alerts
Attorneys practice labor and employment law
Electronic AlertSM, 1/27/09

A Reminder to Be Careful About Potential Retaliation Claims

The United States Supreme Court held yesterday that an employee’s statement about sexual harassment made during a company’s internal investigation warrants protection against retaliation. Crawford v. Metropolitan Government of Nashville, 555 U.S. ___ (2009). This decision is not surprising, but serves as an important reminder to employers: retaliation claims continue to increase.

Almost three years ago, in Burlington Northern and Santa Fe Ry. Co. v. White, the Court addressed what types of actions by an employer may be retaliatory. The court expanded Title VII’s anti-retaliation provision, holding that it extends beyond workplace-related retaliatory acts and covers any employer action that would have been materially adverse to a reasonable employee. Now, the Court has addressed the other side of the coinwhat actions by an employee deserve protection from retaliation.

McDonald’s announced on Monday their net profit rose 80% in 2008 and daily average customers hit 56 million.  Link.

By Ken Niezgoda, BIZ Reporter

Oregon’s plan to tax drivers based on road use contains the fundamental flaw it attempts to remove: Tax collection that is linked to gas consumption.   As more fuel efficient vehicles hit the road, Oregon’s ability to collect taxes to maintain its multi-billion dollar transportation infrastructure is eroding. Simply put, as gas sales diminish, so does gas tax revenue.

“As Oregonians drive less and demand more fuel efficient vehicles, it is increasingly important that the state find a new way, other than the gas tax, to finance our transportation system,” stated Governor Ted Kulongoski in the Jobs and Transportation Act 2009.

The National Association of Home Builders reported in their confidence survey that new multi-family and single home construction fell 15.5% in December from November, and residential construction permits fell over 10%.

By Bill Conerly, Businomics, Conerly Consulting

Non-residential construction has been a bright spot in the economy.  It dipped last summer, but recovered in the past few months.  The bad news, though, is that architectural activity suggests another round of declines for construction.  After all, the architect works before the contractor starts his job.  Here’s what the American Institute of Architects reports:

By Oregon Health Science University,

In response to these challenges, OHSU is reducing costs by $30 million to $35 million for the current financial year.

OHSU President Joe Robertson, M.D., M.B.A. today provided an update on OHSU’s efforts to respond to the global economic downturn. The downturn has impacted the university in two major ways: a decline in expected investment earnings and slower than anticipated growth in OHSU Healthcare revenues. In response to these challenges, OHSU is reducing costs by $30 million to $35 million for the current financial year.

By Dr. Eric Fruits,
EconInternational,

Oregon HB 2388 is an economists dream. It requires a city or county to obtain and review a “comprehensive economic impact study” before approving or disapproving an application to construct a retail facility larger than 75,000 square feet. It also requires that the store pay a fee of $40,000 up-front to pay for the study.

Why would an economist like that?

It means people like me, who have done numerous retail economic impact studies would have a huge increase in work.  And, we would be guaranteed to get paid! 

By Aaron Crowley,
Oregon Small Business Association

Scott Bruun is not your typical business owner or Oregon State Representative.   He is one of only a handful of citizen legislators serving in Salem who owns and operates a business enterprise.  This business experience brings a much needed perspective to the capital and the decisions affecting not only the residents of West Linn, South Lake Oswego, and Tualatin, but every business and employee in the state.

Q: What do you feel is the greatest challenge facing your company and other businesses in Oregon?

The regulatory structure in Oregon hamstrings businesses and our tax policy is one of the worst in the country.  This creates a drag on our economy because it slows the growth of businesses and makes them less competitive.

Dunn, Carney, Allen, Higgins and Tongue
Attorneys at Law, Portland
eAlerts, 1/21/09

As you may recall, the Oregon Supreme Court decided earlier this year that employees could not bring wage claims against employers for a missed rest period (click here for the article). In response, the Oregon Bureau of Labor and Industries Wage and Hour Division (“BOLI”) amended its Meal and Rest Period rules. The new rules went into effect on January 12, 2009.

Meal Periods

Although the meal period rule remains largely unchanged, the new rule clarifies that if an employee works between six and eight hours, he is entitled to a meal period of 30 continuous minutes. The rule also clarifies the exceptions available to employers and adds an undue hardship exception.

J.L. Wilson
Associated Oregon Industries

In the week prior to the start of the 2009 Oregon Legislature, AOI convened a “summit” of Oregon’s leading business associations to talk strategically about the session’s major business issues.  Coming out of that meeting was a dedication to working together under the banner of the Alliance of Oregon’s Business Associations.

The Alliance, which promises to grow in strength and participation, will maintain a focus on job creation and economic growth in 2009.  The Alliance adopted several policy positions on key issues that will unite and guide the business community as it evaluates the various legislative proposals that will emerge in 2009.

Department Of Financial Institutions Closes Bank Of Clark County In Vancouver, Wash. Umpqua Bank Will Be New Owner Bank of Clark County will reopen Tuesday — with minimal disruption of service throughout this holiday weekend — under new ownership with Umpqua Bank of Roseburg, Ore.

Department Of Financial Institutions Release -– The Washington Department of Financial Institutions (DFI) closed Bank of Clark County today, citing inadequate capital and liquidity. Immediately following the closure, the Federal Deposit Insurance Corporation (FDIC) took receivership. The FDIC entered into a purchase and assumption agreement with Umpqua Bank of Roseburg, Ore.

By Bill Conerly, Businomics, Conerly Consulting
The worst part of this forecast update is history.  The fourth quarter is still a forecast, because we won’t have official GDP data for another couple of weeks, but the monthly numbers we have are looking worse and worse.  As I mentioned recently, exports, are diving.  Then we got worse-than-expected news on December retail sales.  We knew it would be bad, but not quite this bad.

By Economist Dr. Eric Fruits,
Econinternational

Oregon’s personal exemption tax credit is the most widely claimed state income tax credit.  The most recent information from the state indicates that 93 percent of taxpayers claim the credit.  The average taxpayer has a $308 personal exemption tax credit.  Without the personal exemption tax credit, the average taxpayer would pay almost 10 percent more in state income taxes than they do now.

House Bill 2067 eliminates more than 20 different tax credits.  One of those eliminated is the personal exemption tax credit. When the credit sunsets, the average Oregon personal income taxpayer will be faced with a 10 percent increase in their state income taxes.

In addition to the personal exemption, other tax credits that are eliminated under HB 2067 include credits for:

Ken Niezgoda, BIZ Reporter

If you’re a small retail business owner looking for that hedge against the recession, you may not have to look any further than the screen that’s currently in front of your nose.  While retail sales have dropped off, ecommerce sales continue to show gains nationally.

“E-commerce sales for the third quarter of 2008, adjusted for seasonal variation, but not for price changes, was $34.4 billion, an increase of 0.3” over the previous quarter, according to The Census Bureau Quarterly Retail E-Commerce Sales Report for the 3rd Quarter 2008 (see here). During the same period, overall retail sales dropped off 1.4 percent over the previous quarter, according to the report.

By Alyssa Williams,

Below are some of the notable and high profile job losses announced during the past six months.

Hynix Semiconductor - 1,400 jobs
Hewlett-Packard - 300 jobs
Milwaukie Affiliated Computer Services – 285 jobs,
Qwest – 101 jobs
Tektronix - 150 jobs
Con-Way Inc.- 88 jobs
DHL Express – 140 jobs
Boise Inc., (St. Helens mill) – 300 jobs
OMSI - 20 jobs
Evraz Oregon Steel Pipe Mill – 130 jobs

Barran Liebman LLP Electronic Alerts
Attorneys practice labor and employment law
Electronic AlertSM,Vol.12, Issue 1, 1/12/09

In November, a final rule was announced to enforce President Bush’s Executive Order requiring most federal contractors and subcontractors to use E-Verify to confirm employment eligibility for all new hires and all existing employees who directly perform work under a federal contract. (See Barran Liebman LLP E-Alert, Vol. 11 Issue 36.) The effective date of the final rule was to be January 15, 2009, but the federal government has agreed to postpone implementation until February 20, 2009.

The government’s action was taken in response to a lawsuit filed by a coalition of business groups on December 23, 2008, in Maryland (Chamber of Commerce v. Chertoff, D. Md., No. 8:08-cv-03444-AW). The business groups are alleging that the federal government exceeded its authority by requiring participation in a program that was designed as a voluntary program and by mandating the re-verification of existing employees, which is not currently allowed.

By Bill Conerly, Businomics, Conerly Consulting

Following up on this post, I’ve posted a video explanation of the role that consumer spending will play in the recovery from the current recession.