Image for State Tax Revenues, Kicker Refunds Skyrocket
The May revenue forecast was good news for state lawmakers and even better news for Oregon income taxpayers. A projected $5.5 billion refund would be the largest in the history of the personal income tax kicker.

Lawmakers Face Challenge of How to Spend Newfound Surpluses

While predicting a record-shattering $5.5 billion personal income tax kicker refund in 2024, state economists last week provided an upbeat revenue forecast that was music to lawmaker ears – another $2.3 billion to spend in the 2023-2025 biennium and an additional $1.9 million available in the current biennium. An agency budget rebalance saved another $230 million.

Higher interest rates to combat inflation aren’t so great for families, but are a boon for state coffers. Oregon pockets nearly $30 million per month in interest earnings, with $350 million in interest earnings expected next fiscal year. Over the previous two decades, interest earned on state revenue balances averaged $20-$30 million annually.

The Senate Republican walkout continued into its third week, with 10 senators clocking 10 or more unexcused absences, which under provisions of Measure 113 makes them ineligible to seek re-election. In addition to contentious abortion, gender-affirming care and gun regulation issues, dozens of other bills, some sponsored by absent senators, have been snagged in the Senate logjam. The walkout earned a story in The New York Times.

Governor Kotek says she is taking her time to appoint a replacement secretary of state and indicated she may not select a caretaker for the position, who would stand for election in 2024. Kotek also called for withholding licenses for cannabis companies that haven’t paid their taxes.

May Revenue Forecast
The $31.6 billion budget framework released in March called for some spending cuts, which may be avoidable because of a robust revenue forecast. Governor Kotek was quick to reiterate her spending priorities for homelessness and behavioral health as well as $64 million for water infrastructure improvements in rural areas and $207 million to fight wildfires.

“If we’re going to do a few new things, let’s make sure they’re very targeted, like early literacy with very specific goals in mind because that’s how you build for the future,” Kotek said. “This should not be a spending spree on new ideas.” House Speaker Dan Rayfield, D-Corvallis, echoed Kotek’s sentiment. House Republican Leader Vikki Breese-Iverson, R-Prineville, took the opportunity to criticize the state’s corporate activity tax.

Health Care Budget Rebalance
The Joint Ways and Means Human Services Subcommittee reviewed budget rebalances for the Department of Human Services and Oregon Health Authority that will add almost $230 million back to the state General Fund. Enhanced federal funding matches and lower utilization rates for Medicaid resulted in a net reduction of $138.5 million. The Department of Human Services had $91 million left over for unspent community-based services for older and disabled persons and persons with developmental disabilities.

Senate GOP Walkout
One-third of the Senate will be ineligible to seek re-election under Measure 113 because of 10 or more unexcused absences during what has become a three-week Senate GOP walkout. The formation of a political action committee signals the senators will pursue a legal challenge to the constitutional provision adopted by voters to discourage walkouts.

Senate Republican Leader Tim Knopp, R-Bend, has said there are 20 pending bills that concern his caucus, though he apparently has failed to share a list of the bills with Democratic leaders. Knopp said Senate Republicans would return before the session ends in late June to pass “bipartisan budget bills”.

The Oregon Capital Chronicle published a list of logjammed bills pending Senate floor votes that have Republican sponsors:

  • Senate Bill 1009, which would fund $35 million for a veterans home that would provide long-term care in Roseburg.
  • Senate Bill 695, which would make $4 million available in grants to train public school staff in de-escalation and crisis interventions for students.
  • Senate Bill 658, which would start a pilot program to help seven school districts reach, shelter and educate homeless children.
  • Senate Bill 431, which appropriates $125 million to the Port of Hood River to fund the reconstruction of the aging Hood River-White Salmon Interstate Bridge, which extends over 4,400 feet across the Columbia River and connects Hood River with White Salmon, Washington.
  • House Bill 2127, which would allow Pendleton to apply to the Land Conservation and Development Commission to become part of an affordable housing pilot program.
  • House Bill 2420, which would require the Oregon Health Authority to research ways to make access to birth and death certificates equitable and fair in cost.

Measure 113 and Walkouts
Voters in the 2022 general election approved Measure 113 to punish lawmakers with unexcused absences, often related to walkouts, by denying them eligibility to seek re-election. Walkouts are disruptive because they deny the House or Senate a quorum to conduct business, including voting on bills.

The two-thirds quorum rule for both chambers is in the Oregon Constitution, so the majority party can’t simply overlook it. Measure 113 provisions are also in the Oregon Constitution, though Senate Republicans apparently plan to challenge it in court.

Climate Action Legislation Stalled – Again
Climate action legislation and legislative walkouts have a history that may continue in the 2023 legislative session. Walkouts in the 2019 and 2020 legislative sessions effectively blocked environmental measures. Climate action advocates worry inaction this session could result in the loss of millions of dollars in federal financial assistance for green energy and infrastructure projects.

“The thing that people really need to understand is how much work is at risk if we can’t get back, if we can’t get bills through the Senate,” says Rep. Pam Marsh, D-Ashland, who chairs the House Committee on Climate, Energy and the Environment “The important climate work that we’ve brought into this session, that’s on the cutting-room floor.” One of the bipartisan efforts is a group of bills focused on adapting buildings to climate change that are pending for Senate floor votes.

Cannabis Licenses and Unpaid Taxes
In the wake of the scandal engulfing former Secretary of State Shemia Fagan, Governor Kotek has ordered the Oregon Liquor and Cannabis Commission to withhold new or renewed licenses for cannabis companies in arrears on taxes. “This will help ensure that all businesses are operating under the same rules and not getting any competitive advantage if they haven’t paid their taxes,” Kotek said in a statement.

Stiffer Workplace Safety Penalties – SB 592A
The House, on a mostly party-line vote, approved legislation to increase business penalties for violating workplace safety rules. Rep. Kevin Mannix, R-Salem, was the only Republican to vote for the measure, which aligns Oregon’s penalties with those assessed by the federal Occupational Safety and Health Administration. Republican opponents warned stiffer fines would punish small businesses and expressed support for an alternate approach of ramped-up workplace inspections.

Fentanyl Education Bill Passes – SB 238
With rising drug-overdose fatalities, lawmakers have approved Senate Bill 238 that requires the Oregon Health Authority, Board of Education and Alcohol and Drug Policy Commission to develop education materials to teach schoolchildren about the dangers of opioids, as well state laws that protect people who report overdoses or seek treatment. Studies indicate that teenagers are unaware of the dangers posed by fentanyl, despite a sharp increase from deaths caused by the powerful opioid.

Growth of Film Tourism
To capitalize on the 450 TV and movies that have been filmed in Oregon, the Office of Film & Television (Oregon Film) and the Oregon Made Creative Foundation have launched the Oregon Film Trail to place signage around the state where films, such as Animal House,  have been shot. “Film tourism is a big thing in Oregon, but I don’t think a lot of people realize that,” says Tim Williams of Oregon Film. A report from the market research organization Film Market Insights cites data estimated U.S. film tourism generated $66.7 billion in 2022.

Anti-Bullying Judges Legislation – SB 807
Legislation brought by retired judges has moved to House Rules for potential fine-tuning that would address the issue of bullying judges by prosecutors filing disqualification motions. The Oregon District Attorneys Association opposes the bill, saying judges have biases and recourse to fight disqualification motions. Judges counter that disqualification motions are hard to defeat.

I-5 Bridge Replacement Punt
The Joint Transportation Committee adjourned without taking action on funding for the I-5 Columbia River Bridge replacement. Committee leaders said Senate absences and lingering disagreements on amendments made a final bill impossible. They expressed hope that funding would be included in budget legislation later this session.

The Beaver May Get New Status – HB 3464A
Legislation has advanced that would shift classification of beavers from “predatory animal” to “furbearer”, with opposition from farmers who say the change would limit their ability to remove or kill beavers on their land.

Multco Capital Gains Tax Fails
Multnomah County voters overwhelmingly rejected Measure 26-238 that would have imposed a 0.75 percent capital gains tax to pay for lawyers representing tenants facing eviction.