If the first two weeks of the session felt like an introductory college course, the third week bumped up to mid- and upper-level courses. Legislative committees are beginning to fill their agendas with public hearings, including some controversies that could impact the session's politics. These include discussions on increasing housing supply, expanding legal protections for tenants, creating new rules for the pharmacy supply chain, and many more.
While some topics may not drive the politics in the same ways as others, they are all part of the same ecosystem where wrangling over bills to curry votes is a staple. It's important to pay attention to the status of these issues, not because you may necessarily care, but because they could easily take center stage later in the session. In fact, some most definitely will.
Gov. Kotek Releases Recommended Budget
On Tuesday, Gov. Tina Kotek (D) released her recommended budget, titled "Mission Focused," prioritizing investments in housing and homelessness, mental health and addiction services, and childcare and public education. The $32.1 billion state budget represents a $5.3 billion (20 percent) increase from the budget lawmakers adopted during the 2021 session. It is worth noting that nothing requires the legislature to adopt the governor's recommendations or, for that matter, use them as a starting point for crafting the next biennial budget. It does, however, provide a glimpse into the policy and program areas the governor wants the legislature to prioritize and which issues she will likely engage the legislature throughout the session.
The governor's budget comes as state economists and budget specialists warn of a steep drop in state revenues amid a mild recession. In previous downturns, the legislature has turned to a combination of tax increases and spending cuts to balance its budget. Surprisingly, the recommended budget does not call for a single tax increase. Instead, the governor is asking the legislature to redirect nearly $770 million it would otherwise deposit in its reserve accounts. If the legislature decides to pursue that path, Democrats would need to convince Republicans to supply the three-fifths vote required to scrap the deposit. If history teaches us anything, the horsetrading over the votes could end up driving the session’s politics, with bills advancing or dying without rhyme or reason.
Competing Priorities: Housing vs. Semiconductors
After releasing her budget, Gov. Kotek got to work on her top priority of the session—addressing Oregon's housing and homelessness crisis. In addition to the emergency declaration and executive orders on her first day as governor, she convened a new Housing Production Advisory Council to find ways to speed up the creation of new residential dwellings. She also told caucus leaders she wants a legislative solution for increasing housing capacity, including new dedicated funds, on her desk by March 17.
It's hardly a surprise the governor and legislature want to prioritize housing and homelessness. It was a persistent theme throughout the election season and one of the few areas the parties have found common ground, albeit not on specific solutions. What does this mean for the high-profile priorities? The legislature has spent the first three weeks of the session with a precision focus on developing a package to lure semiconductor investments. It is now in the midst of flushing out specifics, which include navigating a delicate landscape of land use and tax incentives. Each of these on its own is a political hot potato.
In previous sessions, the legislature segmented its priorities to prevent lawmakers and stakeholders from holding out to establish leverage or effectuate other policies. In 2019, for example, the legislature segmented votes on controversial proposals creating new taxes on businesses, hospitals, and employee payrolls and a new cap-and-trade program. To a large degree, leadership successfully avoided comingling politics on those issues. Today, with semiconductors and housing overlaying one another, we may soon find out if the legislature can chew gum and walk at the same time.
Will State Employees Pay For Their Own Rides?
Working from home became a staple in the last few years for many employers and workers throughout the pandemic. Since the pandemic has receded, most employers have begun requiring employees to return to the office or, at the very least, work in a hybrid setting. That's not so for the State of Oregon and the thousands of people it employs. The state's pandemic-era remote work policy remains in effect and some workers are making the most of it. According to the Oregon Department of Administrative Services, roughly 500 of the state's 7,500 remote employees relocated outside of Oregon during the pandemic, with the state paying for their travel back to Oregon for meetings, trainings, and other events.
Senate Minority Leader Tim Knopp wants the legislature to end the policy of paying the costs of remote employees traveling back to the state to work. On Wednesday, he formally introduced legislation, SB 853, with every state senator and nearly half of the House signing on as a co-sponsor. It is a rare moment of alignment at a time when the camaraderie starts to fade.
What We're Reading This Week
- Willamette Week has a featured story reporting on the correlation between Portland's weirdly high tax burden and people, especially those with means, moving out of the City, taking their tax money with them.
- The Oregonian reports that nearly 25 percent of Portland area taxpayers failed to pay their local income taxes. Coincidentally, Oregon's House Revenue Committee held a hearing on the unnecessary complexities of these taxes. You can read our committee testimony here.
- The Joint Semiconductors Committee has held several hearings on workforce, tax incentives, and industrial land availability to lure new investments from the industry. During this week's meetings, it became apparent the politics of rezoning agricultural land may be the most controversial.
- The Oregonian published a helpful and easily digestible summary of the governor's spending priorities and requests to the legislature.
- Throughout the pandemic, Oregon's eviction protections were among the most controversial topics. A group of lawmakers and tenant advocates are seeking to restore some of those protections, an effort that is sure to revive those tensions.
- Oregon and Washington lawmakers are reviving a plan to replace the 105-year-old Interstate-5 Bridge connecting Portland and Vancouver. In 2013, Oregon appropriated its share of funds for a similar project, but Washington backed out over opposition to light rail and a fierce lobbying campaign by the ports of Tacoma and Seattle.
- The Oregon Department of Revenue acknowledged it accidentally sent the tax return information, including partial social security numbers, to the wrong address for 5,000 recipients. While the number is relatively low, the breach of confidential information could become an oversight interest for lawmakers.