Tension Ramps Up as Legislative Session Winds Down

By Oregon Business &Industry

Tension Ramps Up as Legislative Session Winds Down

Less than a week remains in the 2025 legislative session, which cannot extend past Sunday, June 29. Rumors have swirled in the Capitol about a targeted adjournment on Wednesday, June 25.

As the clock winds down, tension is building.

Friday, June 20 was a good example (see item below). Advancing the proposed 10-year, $15 billion transportation package to the House floor involved an unusually contentious process featuring confusion, the hasty adoption of amendments and even the sidelining of a resistant committee member.

Apart from transportation, several other bills remain alive and up for consideration in this final week. Bills to improve rulemaking processes and transparency or to make small but significant progress in land use and economic development could be moved if leadership were so inclined. The team also is closely watching several worrisome bills involving the expansion of project labor agreements to manufacturing, the creation of state-level labor standards boards with policy-setting powers, disconnection from the federal tax code, and other policies that would further set Oregon apart as a difficult place to do business.

Contentious Transportation Package Moves to House Vote

The 2025 transportation package, which would generate nearly $15 billion over the next decade through new and higher taxes and fees, advanced to the House floor last week following multiple tense and contentious meetings.

An informational hearing was held Tuesday, June 17 on the package, HB 2025, during which Legislative Counsel walked through the -13 amendment. Predictably, ODOT, the Association of Oregon Counties and the League of Oregon Cities emphasized the need for the package. A committee work session (a meeting to vote) was scheduled for the following day. It was subsequently delayed to Thursday, June 19 … and then to the next day.

Just before the June 20 meeting began, Senate President Rob Wagner, D-Lake Oswego, dismissed Sen. Mark Meek, D-Gladstone, from the committee, appointing himself to the seat instead. Why? Earlier in the week, Meek had indicated he was a “no” on the bill. Without Wagner’s switch, there would not have been enough “yes” votes for the bill to advance. Meek had highlighted concerns about how quickly action was being requested and how little time had been available to negotiate.

When the meeting finally began, committee Co-Chair Rep. Susan McLain, D-Forest Grove, created confusion. Soon after stating that there would be time to review amendments and have questions answered over the weekend (implying the vote would be further delayed), she said that a vote would occur that day on a -23 amendment. She called that new amendment a compromise. However, the -23 differs little from the -13 amendment, and many legislators took exception to the “compromise” characterization. A handful of Republican amendments were offered and defeated.

Republicans and Sen. Meek expressed intense frustration with the partisan process, lack of collaboration, late posting of critical information (like the revenue estimates) and the eleventh-hour amendment. Ultimately, the committee adopted the -23 amendment and approved the bill. It now heads to the House for a floor vote, likely on June 24. It’s unclear if HB 2025 has enough votes to pass. Several Democrats have expressed opposition, and more have expressed concern. As a tax-raising measure, this bill requires a three-fifths vote in both chambers.

So, what’s in the bill? As amended, HB 2025 would raise an estimated $14.6 billion over the next 10 years and dedicate it to a variety of uses, some of which are believed to be unconstitutional diversions. More on the distributions is here. The $14.6 billion in new revenue (which many think is underestimated) comes from a variety of sources, including:

• A 37.5% increase in the gas tax (currently $.40, going to $.50 in 2026 and then $.55 in 2028)
• Automatic indexing for the gas tax based on CPI
• Increases in vehicle registration fees of 262% (vehicles), 250% (mopeds and motorcycles) and 205% for certain classes of vehicles and trailers
• A tripling of the payroll tax paid by workers in Oregon (from .1% to .3%)
• A new sales tax on cars, cleverly called a “vehicle transfer tax” (2% on used cars over $10,000 and 1% on new cars)
• An increase in the existing “vehicle privilege tax” from 0.5% to 1.0% at the time of sale
• A near doubling of title fees (net, after certain other reductions are taken into account)
• Enactment of a road user charge (RUC) program for electric and other high-mileage (such as hybrid) vehicles, including a separate RUC program for commercial vehicles
• Increases to 32 various permits and fees and the establishment of two new fees, with increases ranging from 140% to 500%
• Changes to the weight-mile rates paid by freight and heavy-duty trucks
• Fee increases for RVs and trailer transactions along with revenue derived from the state’s sale of abandoned RVs

Several business stakeholders, including OBI, oppose the bill and likely will lobby against its passage. This package is a far cry from the “back to basics” plan leaders promised. It would increase costs dramatically for Oregonians and businesses. It does not contain nearly enough accountability or oversight, particularly given ODOT’s recent track record of not completing projects. And the lack of transparency, information and detail provided as this came to a head was remarkable. You can read OBI’s submitted testimony here.

The bill’s fate is uncertain. It is a massive tax and fee increase that does not align with what Oregonians want or appear to have enough votes on the House or Senate floors. Nevertheless, proponents and legislative leaders are surely applying pressure to ensure its passage. And, as reported before, there is a group of people already working on a possible referendum, sending it to voters for direct acceptance or rejection. (More on that in the session updates section.)

Legislative and Rulemaking Updates

Ballot title maneuver: As the fate of the transportation package remains unclear, lawmakers are preparing for a possible referendum by advancing legislation that would allow them to write the ballot title, bypassing the standard attorney general-led process outlined in statute. It’s a rare maneuver that has proven controversial in prior years, usually with the minority party accusing the majority of abusing power to manipulate the process and draft more politically palatable ballot titles. Again, it’s rare and usually applies to one-off measures. However, HB 3390 applies to any measure referred by the Legislature or resulting from a citizen referendum. This is a sweeping, permanent change to longstanding electoral law, allowing the legislative majority to exercise this power without any conversation or debate on the issue at hand. The bill narrowly passed the House on June 20, with Republicans Cyrus Javadi and Mark Owens siding with Democrats. OBI believes it is a conflict of interest for the Legislature to draft its own ballot titles and certainly believes any attempt to do so should be addressed as a one-off matter. If the measure receives consideration in the Senate, OBI will testify in opposition.

Preschool program controversy: On June 18, Gov. Kotek sent Multnomah County Chair Jessica Vega Pederson a letter chiding the county for its direction with the Preschool for All program, particularly the lack of urgency the county seems to have for review and improvement. The governor notes the “unsustainable trend” resulting from a tax structure that drives businesses and high-wage earners away, as well as the program’s scope and transparency. Read a related article here. On June 18, meanwhile, the Senate Finance and Revenue Committee held an informational hearing on the impact of local income taxes on local and state revenue. Legislators are taking note – and considering taking action – as various tax schemes add up to be more than Oregonians are willing to pay. There is no time for anything to happen this session, but OBI will continue to talk with legislators about possible state-level action to address wealth, and therefore tax revenue, flight.

Prevailing wage expansion: Despite opposition from OBI, local governments and contractors, HB 2688 is quickly advancing through the end-of-session process. The bill would require prevailing wage for items that are manufactured for a project that is subject to prevailing wage. It is unclear how BOLI would enforce prevailing wage standards in manufacturing facilities, and OBI has heard contradictory information about whether BOLI could enforce standards for facilities located outside of Oregon. The bill still has significant drafting issues despite a last-minute amendment in the capital construction subcommittee of the Joint Committee on Ways and Means. The bill moved out of Ways and Means on June 20 and now moves to the House floor for a vote.

Litigation against insurers: SB 174, one of the more worrisome bills of session, would expose insurers to litigation by people who believed their claims were not properly handled. That could lead to frequent litigation and likely would increase insurance costs for Oregonians and state businesses. This bill and others like it have been priorities for the Oregon Trial Lawyers Association for several years. Notably, SB 174 contains no exemption for workers’ compensation insurance. The bill had been in limbo since April 8 because it lacked the votes to pass. It was then scheduled suddenly for a floor vote in the Senate, which passed it June 18 with a 16-12 vote. Democratic senators Lisa Reynolds, of Portland, and Janeen Sollman, of Hillsboro, joined most Republicans in voting against the measure. Sen. Fred Girod, R-Silverton, voted for the measure. It is scheduled for a public hearing in the House Committee on Rules on June 23. OBI and a broad coalition of industry stakeholders continue to oppose this bill and will work to kill it in the House.

CHIPs funds: HB 2322, which OBI supports, would create the Fostering Innovation Strength at Home (FISH) fund to accompany Oregon CHIPs Act fund created by SB 4 in 2023. The FISH fund would use a portion of unallocated CHIPS funds to support several targeted industries, including manufacturing. Because these funds were allocated in 2023, they are not new resources. Of the $40 million available, FISH initially would have received $25 million, leaving $15 million for the semiconductor industry. On June 20, an amendment was adopted reducing the $25 million to $15 million. The full Joint Committee on Ways and Means then passed the bill.  OBI is working to learn how the remaining CHIPS funds will be used.

BOLI budget: The Joint Committee on Ways and Means has advanced the BOLI budget, HB 5015. BOLI has been asking for a significant increase in funding to expand staffing, modernize databases and improve pay. HB 5015 reflects a 31% increase over the 2023-25 budget ($60.5 million to $79.2 million), and the agency will expand positions from 183 to 217. Most of the new funding comes from a one-time transfer of approximately $15 million from OSHA’s Worker Benefit Fund. Most of this expansion is temporary, and OBI expects to engage in conversations about permanent funding during the interim.

SALT cap workaround: SB 111, which the Senate passed unanimously, would have expanded the SALT cap workaround program to businesses that are organized as trusts and allow individual members of pass-through businesses to opt out of the program. It would have, that is, until June 20, when the House Committee on Revenue stripped these expansions from the bill and simply extended the program until 2028. There was no public testimony supporting this action, and the bill had no fiscal impact. Whatever the reason for its decision, the committee has eliminated an opportunity to reduce the tax burden of thousands of Oregon businesses without costing the state any revenue. The expanded policy would have been particularly helpful to Oregon’s construction, manufacturing and agricultural industries, which together have lost more than 10,000 jobs over the past year. OBI will continue to fight for expansion so that Oregon’s policy matches what is found in other states.

Transient lodging taxes: There are two bills at play here, both of which are worrisome. First, on June 19, the Oregon House voted 31-23 to pass HB 3962, which would generally reduce the percent of local transient lodging tax (TLT) revenue that must be used for tourism promotion or tourism-related facilities to 40% from the 70% required by current law. The very next day, the House voted 36-15 to pass HB 2977, which would increase the statewide TLT by a full 50% (from 1.5% to 2.75%), directing that new revenue to wildlife preservation. The redirection of TLT funds away from a key piece of community economic development (tourism promotion) violates a longstanding agreement between the state and the hospitality industry. This breach of trust will make it harder for any industry to trust any commitment involving revenue-raising schemes. The transient lodging tax has long spurred substantial economic growth throughout the state, particularly in some of Oregon’s most rural and tourism-dependent communities. OBI will continue to support the hospitality industry, as well as local chambers and tourism offices, in efforts to kill these bills in the Senate. If you are interested in engaging, please contact Derek Sangston ([email protected]).

Super-siting surprise: HB 2005 was introduced on June 12 as a “study bill,” consisting of a single paragraph directing the Oregon Health Authority to study behavioral health. Following a June 17 “gut and stuff” maneuver, the bill is now a 78-page measure focused on involuntary commitment statutes and other mental health policies. These are not issues on which OBI would typically engage. Buried deep in the amended bill, however, is language relating to  “super-siting” authority allowing local governments to supersede Oregon’s land use planning laws to locate mental health facilities on certain residential, commercial and industrial land. This provision was so obscure that it wasn’t mentioned in a legislative staff summary, and one senator even attempted to correct Sen. Mike McLane, R-Powell Butte, when he raised the issue, believing that he was talking about the wrong bill. OBI recognizes the need for substantial action to improve Oregon’s mental health and substance abuse treatment systems. The problem with HB 2005 is that Oregon also faces a shortage of industrial land. Even key energy and infrastructure projects cannot get through Oregon’s cumbersome and outdated land use system. Yet no significant discussion of land use needs for industry were entertained this session, including limited, targeted super-siting for economic development. The HB 2005 provision will reduce industrial land supply and availability. Quietly tucking it into a last-minute gut-and-stuff without any public discussion is disappointing, to say the least. This matter should have been handled separately and within a land use context. While OBI is working to bring the land use component to legislators’ attention, the bill seems to be moving quickly.

Private security bill: Both the House and Senate have passed SB 300. This OBI bill would exempt retailers and other entities from stringent regulations governing private security firms, correcting unintended overreach in HB 2527 (2021). That bill applied licensure requirements meant for contract security firms to businesses with in-house security staff. These in-house professionals are already certified by the Department of Public Safety Standards and Training, making additional licensure redundant and costly. The bill now heads to the governor for her signature. OBI worked as part of a large and diverse coalition that included grocers, schools and restaurants to advance this bill this session.

Campaign finance reform: You likely recall that lawmakers passed a landmark campaign finance reform bill in 2024, establishing new campaign contribution limits and transparency regulations. Those limits and rules are scheduled to take effect Jan. 1, 2027. When HB 4024 was enacted last year, OBI knew that technical fixes would be needed as rulemaking and implementation got underway. The hope was to get those done this session via an amendment to HB 3392 (a placeholder bill). Unfortunately, despite weeks of back-and-forth among stakeholders over language, lawmakers have yet to post an amendment or clarify whether the bill will advance this session. Meanwhile, the rulemaking and implementation have begun through the secretary of state’s HB 4024 Implementation Rules Advisory Committee, of which OBI is a member. OBI will continue to support campaign finance efforts (whether new rules, technical fixes or implementation guidance) that provide clarity, consistency and a level playing field.