“Members of the committee would like to see compromise on these goals without going to World War III.”
Sen. Mark Hass, D-Beaverton and chair of the Senate finance and revenue committee, referring to IP 28, the corporate minimum tax increase ballot measure.


Interim Legislative Days May 23-25

Oregon legislators convened this week for interim legislative days. On the agenda: Initiative Petition 28, a proposed tax increase for large corporations (more below) and the kick-off meeting for the Joint Interim Committee on Transportation Preservation and Modernization. The charge to the committee is no less than the future of our state’s transportation system. The joint committee will be tasked with holding meetings across the state this summer. The governor has committed to seeking a transportation package during the 2017 session.

The Legislature also bid adieu to several members who are not returning to their seats for 2017 session. Next session there will be three new senators and eleven new house members.

The spotlight issue

Initiative Petition 28 could have a seismic impact on Oregon’s financial landscape.

The House and Senate revenue committees heard an analysis by the Legislative Revenue Office on Initiative Petition 28, a union-backed corporate minimum tax increase proposal that would raise about $3 billion per year for the general fund while costing Oregonians about $600 a year when these corporations increase prices for goods and services. The funds generated by IP 28 would be earmarked for public education, health care and services for seniors. 

The Legislative Revenue Office presented to legislators this week, noting that IP 28 would increase state taxes by about 25 percent. The most recent change of this size to Oregon’s tax structure was Ballot Measure 5, which passed in 1996.

Who pays and how much?

• Establishes new marginal rate of 2.5% for Oregon sales in excess of $25 million.

• Applies only to C-corps. Other business entity types such as S-corps, partnerships and proprietorships are not affected.

• Exempts benefit corporations from new marginal rate.

• First applies to 2017 corporate tax year.

Key findings presented to the Legislature:

  • IP 28 is expected to generate $548 million in revenue for the 2015-17 biennium and $6.1 billion in the 2017-19 biennium.
  • IP 28 would increase Oregon state and local taxes by $600 per capita (moving the state from the 28th highest to the 20th highest) and increase the ratio of taxes-to-income from 10.1% to 11.6% (moving the state from the 26th highest to the 9th highest).
  • Our economic simulation shows that IP 28 will dampen income, employment and population growth over the next 5 years, but all three metrics remain within 1% of the current law projection.
  • The impact of IP 28 on consumer prices means that the marginal impact of the tax will be regressive. However, as a whole, Oregon’s state and local tax burden is expected to remain roughly proportional.

Business leaders are lining up in opposition to IP 28. Legislative leadership is interested in a compromise that would offer a smaller tax increase to be paid by more businesses. 

IP 28 has not officially qualified for the ballot at this time. Signatures were turned into the Secretary of State’s office last week for review. If it meets requirements, it will be on the November 8 ballot. 

House and Senate Health Care Committee hearings

1115 waiver renewal is due to the federal government

The House and Senate Committees both heard presentations from the Oregon Health Authority and the Governor’s Office on the 1115 waiver renewal. The purpose of the waiver request to the federal government is to continue Oregon’s health transformation process and take things to the next level. The plan will focus on the integration of physical, behavioral and oral health and more deeply address the social determinants of health and health equity, including housing support services. Sen. Alan Bates urged the OHA to include shared savings in the waiver plan. 

The Oregon Health Authority also presented on several other subjects including the One Enrollment system, meant to replace Cover Oregon (it’s on track)  and the high cost of drugs in Medicaid. In Oregon, 16 percent of spending goes to pharmaceutical costs and nearly one percent goes to treat Hepatitis C alone. Legislators also met Dr. Bruce Austin, the new statewide dental director for the Oregon Health Authority. 

Zeke Smith from the Oregon Health Policy Board presented before the House Health Care Committee on the role of their board. The Board is responsible for the oversight of the Oregon Health Authority as it manages and leads Oregon Health System Transformation. On an annual basis the board revises priorities for moving transformation forward. This year, the Board identified the following priority areas for 2016-17:

  • Improved outcomes in behavioral health
  • Integration of physical health system with behavioral health and oral health systems
  • Pharmacy issues and high cost drugs
  • Value based payments
  • Health equity

Additionally, the board is concerned about the high price of prescription drugs and payment reform. 

Rep. Mitch Greenlick, D-Portland, the chair of the House Health Care Committee, encouraged the board to be a strong force and go further to look at CCOs, 5-year contracts and health reform, and to submit legislative proposals for consideration.

Mental Health Presentations

The House Health Care Committee held presentations on the implementation of mental health initiatives passed in 2015. They include House Bill 2023, a bill to improve hospital discharge systems for people in mental health crises and also House Bill 2923, with would allow disclosure of protected health information between providers and the patient’s family in certain circumstances. Representatives of the National Alliance on Mental Health (NAMI) and the Oregon Association of Hospitals and Health Systems presented on transitions to care for patients. Jerry Gabay, the father of a young woman who committee suicide, and Dr. Ajit Jetmilani, the Director of the OHSU Division of Child & Adolescent Psychiatry, talked about efforts to improve communications and training programs for residents and providers to create a safe environment for patients and families. The Oregon Medical Association has developed a basic toolkit to explain the statute and are working on trainings with other organizations. 

Julie Magers, a parent advocate, and Dr. Jetmilani are also working to improve intensive case management services for transitions of care between high-risk environments such as the emergency department and intensive care unit to provide support and adequate care plans for patients.

A panel of law enforcement and county officials also presented on health care in local jails. Presenters noted the challenge of using jails as holding grounds for people with mental illness and/or substance abuse. People in communities aren’t receiving appropriate treatment. They suggested reducing the number of inmates in three ways:

  • assist counties to identify people with disorders early. Keep out of jail and ED. In WA county divert to MH care facility for urgent services;
  • ensure all inmates eligible for HC insurance. People with commercial insurance have the most problems. 
  • Increase funding for community-based MH services.

Meeting materials for the health care committees can be found here: https://olis.leg.state.or.us/liz/2015I1/Downloads/CommitteeMeetingDocument/90448 and https://olis.leg.state.or.us/liz/2015I1/Committees/HHC/2016-05-24-08-00/MeetingMaterials

For more information about the legislative process, please contact Katy King.

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