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Legislative Report for February 24, 2017

 

We have seen a considerable amount of collaborative and bipartisan government during the first month of the legislative session, but that is about to change as more contested issues take center stage.

 

State economists announced the forecasted tax collections for the next biennium are higher than previous estimates. The state is now expecting an additional $200 million in general fund revenues, providing a slight relief to the impending budget crisis. Oddly enough, given the debate to raise corporate taxes last fall, the revenue is primarily driven by increased corporate activity. Nevertheless, these new revenues pale in comparison to the size of the $1.8 billion budget shortfall.

 

Environmental advocates have long argued for a mechanism to tax polluters to combat global climate change and are using the budget situation as a catalyst to force the debate. Any proposal to put a fixed price on carbon emissions would come at an economic cost. Industries would be required to pay considerably more to continue doing business in the state and, similar to the arguments against Measure 97, those costs would eventually be paid by either increased costs for consumer goods or a decrease in paid wages. Oregon’s carbon footprint is only a small share of the global footprint but, being a very blue state, Oregon continues to be an incubator for the next generation of environmental proposals.

 

Gov. Kate Brown is asking the legislature to allow children who are undocumented immigrants to sign up for the Medicaid program. There are an estimated 17,000 undocumented children residing in Oregon, and the only health care services they receive are at a hospital, which is required by law to provide care to anyone regardless of their ability to pay. There is bipartisan support for the policy, but there are significant barriers to overcome. The federal government will not pay for the health benefits of a nonresident; therefore, the state would pick up all the costs for the proposed expansion. The program is estimated to cost Oregon taxpayers $55 million, which would not be a sizable request any other session.

 

The budget remains the looming question in everybody’s minds in Salem. Next week, the governor and legislative leadership are expected to announce a major financing proposal aimed to close the shortfall in the Medicaid budget. The conversations on a pathway forward regarding any Medicaid funding proposal and the larger budget situation are still in their infancy, and there are no assurances the various stakeholders will reach common ground. We are increasingly hearing about the looming possibility of lawmakers continuing the budget negotiations in a special session, most likely in the fall.

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