The League of Oregon Cities believes the 35-day legislative session beginning Feb. 5 will feature fewer bills than normal but be noteworthy for the “depth of policy debate” that will ensue.
Issues will include the plagued Public Employee Retirement System and its funding, tax reform as it relates to education, the lack of affordable housing throughout the state and carbon cap and trading, among other issues
The legislature will have an array of new faces in both the Senate and the House, and Democrats still control both chambers.
The League of Oregon Cities (LOC) believes tax reform will likely be a focus next year.
“There is neither the time nor the political will to work on significant state and local tax reform during the short 2018 session,” an LOC report reads.
However, a new Joint Committee on Student Success will focus on school funding needs and solutions, including a statewide “listening tour” following the legislative session.
“Because the source of the school budget deficit is linked to problems associated with measures 5 and 50, the league hopes proposed school revenue solutions will include property tax reform,” the report reads. “The league will continue to advocate to include property tax reform as part of any comprehensive tax reform package … and specific recommendations for a revenue reform package.”
The LOC said Public Employee Retirement System (PERS) will again be in the news, as cities and counties might easily see rate hikes of 30 percent or higher by 2023, the league noted.
“Rather than major changes in 2018, the league anticipates some structural changes to allow further reform in 2019,” the report reads. “The most significant will be establishing an incentive fund to match local government contributions to their PERS side accounts.”
Determining the revenue source for the fund, however remains “a work in progress,” the report reads.
The new committee will also have to address pension liabilities, as schools generally pay higher PERS rates than cities, and it is unlikely school finance reform will be successful without addressing this cost.
A number of legislative efforts are underway to address the ongoing housing shortage.
The primary focus for the league and some legislators is developing financial assistance to complete housing plan analyses and funding technical assistance to cities and counties working on housing development projects.
Other proposals include a new tax credit for housing that would increase affordable housing funds by increasing the document recording fee and creating a first-time home-buyer savings plan. Another bill would revise the constitution to allow municipalities to seek municipal bonds to development housing that would eventually be owned or operated by a private entity.
A Carbon Cap and Invest Proposal (CCIP) was Introduced late in the 2017 session as a Senate bill and intended to be the beginning of a process to create a program later.
Workgroups began meeting last fall to draft similar legislation for the 2018 session.
It proposes to update greenhouse gas emission reduction targets, set a cap on carbon emissions for entities that emit more than 25,000 metric tons of carbon dioxide annually, establish a market to issue emission allowances within the cap, and create an offset market as a compliance tool.
Money generated by auctioning emission allowances would go to the state’s Highway Trust Fund, ratepayer energy relief, assistance for disadvantaged communities and other programs.
“The league has heard varying positions on cap and invest from cities across the state, but does not have a position on the legislation,” the report reads. It plans to update members so cities can provide feedback to the legislature.
The league is an advocate of HB 4120, which redefines “transient lodging intermediary” to ensure all businesses that help sell lodging are required to collect and pay state and local lodging taxes.
Presently, some intermediaries do not pay the tax, or only pay cities with which they have an agreement. The legislation would also clarify the authority of cities to conduct proper audits of lodging providers and intermediaries, using subpoena power if necessary. This will ensure that cities can track what properties are being rented and ensure city regulations are enforced.
•The League will advocate to lift confidentiality requirements of local marijuana tax receipts. Beginning in January of 2017, the state began collecting local marijuana taxes for cities and counties. The terms of the IGA require cities and counties to keep tax information confidential, but disclosure of individual taxpayer information — or a small pool of taxpayers — is a felony.
However, cities need to be able to disclose marijuana tax revenue received each quarter from the state to make budgetary decisions and comply with municipal budget laws.
•Due to the tight state budget and the failure to pass a revenue package, the legislature spent only $1 million in their omnibus tax credit bill last legislative session, meaning many tax credits will sunset.
•The league has been developing a brownfield remediation tax credit to clean up and redevelop brownfields, which typically have very low property values and are a burden on communities throughout Oregon.
•An issue the league plans to fight is the authorization of special “Children’s Districts” which, if implemented, would have property tax authority and count toward Measure 5 local government caps. Such districts would cause or exacerbate property tax compression for cities, counties and other special districts, the report reads.
They would also create geographic tax inequities, depending on the borders of the new district. The league noted, too, that programs and services to be provided by such districts can already be done by school districts, cities and counties.
“Comprehensive property tax reform is needed before this type of district should be authorized,” the report reads.