2013 Classroom Law Project Civics Conference for Teachers

1. 2013 Classroom Law Project Civics Conference for Teachers Rep. Brent Barton Rep. Jessica Vega Peterson

2. 2013 Legislative Session Part 1: Overview 77th Legislative Assembly Part 2:Session Review K-12 Education Budget = $6.75 Billion PERS Reform Education Policy Transparency/Government Efficiency Jobs & Economy Health Care Part 3: Special Session The Grand Bargain Policy Review Part 4: Working for You Your Concerns

3. 77th Legislative Assembly • Convened on February 4; adjourned July 8 . • 156 days is an average length by modern standards • House of Representatives: • 34 Democrats, 26 Republicans • 12 new members = 20% of the chamber • New Speaker of the House: Tina Kotek • Senate: • 16 Democrats, 14 Republicans • Almost all returning members • Longest serving Senate President in Oregon history: Peter Courtney • House passed 1,320 bills, but only 788 bills made it through both chambers to the Governor.

4. Session Review K-12 Education Budget PERS Reform Education Policy Transparency/Government Efficiency Jobs & Economy Healthcare

5. K-12 Education Budget = $6.75 Billion • SB 5519 & Public Education Funding: • The legislature invested the equivalent of $6.75 billion for K-12 schools, a billion dollar increase from the last budget. This budget will give stability to school districts that have had cuts to the bone since 2008. • This investment should prevent additional cuts in Oregon schools. Although this expenditure represents a step in the right direction, the legislature must find a long-term solution. • If nothing else, the legislature must stabilize school funding through a rainy day fund.

6. PERS Reform • PERS Reform was by far the most controversial policy debate this session • SB 822 was the only major PERS reform enacted this session, but it was supplanted by the PERS reform in the Special Session. • The primary purpose of SB 822 was to achieve $6.75 billion for the K-12 Education budget. • SB 822 saves school districts approximately $200 million, which mirrors the amount of money currently in Oregon’s Rainy Day Fund. This fund could allow the Legislature to hold school districts harmless if the Supreme Court overturns the COLA provision in SB 822. • A larger PERS plan would increase assumed savings in this biennium, but it would also increase exposure should the Supreme Court overturn some of these reforms. Historically speaking, the Supreme Court almost always rolls back at least some changes whenever the Legislature reforms the PERS system. • The constitutionality of the COLA adjustment remains hotly debated.

7. Education Policy • HB 3232: Governor’s ODE Education Initiatives. This bill directs the Oregon Education Investment Board (OEIB) to design and implement programs that make strategic investments in education, including objectives with the 40-40-20 goal in mind. • HB 3233: Establishes Network of Quality Teaching and Learning, consisting of the Oregon Education Investment Board (OEIB), Oregon Department of Education (ODE) and various public and private entities for the purpose of creating a statewide network for professional development to advance teaching and learning in Oregon. This bill also passed, and is awaiting the Governor’s signature. • HB 2649 & 5008: Farm to School Expansion.Increased Farm to School budget by $1 million, which creates more opportunities for farmers in Clackamas County, and gives more students access to locally grown, healthy food.

8. Transparency/ Government Efficiency • HB 2002:Tax Expenditure Reviews. We set clear goals and standards for any future tax expenditures, guaranteeing that Oregonians will always get the biggest bang for every taxpayer dollar. • HB 2370: Transparency Website. In order to make government more accountable to you, we required additional information to be posted on our transparency website (www.oregon.gov/transparency). • HB 3316: TriMet Accountability Audit. Calls upon Secretary of State to conduct an unprecedented audit of TriMet’s performance. Trimet has been a hot issue in recent years for Clackamas County.

9. Jobs & Economy • HB 2667:Procuring through small and local businesses. Creates task force to study the best ways to promote public contracting with small and local businesses. • HB 2763:Oregon Low-Income Community Jobs Initiative. Expands and improves program that provides incentives for businesses to operate and invest in low-income areas. • HB 3436: Creates the Oregon Retirement Savings Investment Board, one of the best ideas of the session. It will develop recommendations for establishing an Oregon Secure Retirement Plan to offer retirement investment plans to employees in the private sector who have no retirement option through their employer. The board will report back to the legislature in 2014. • HB 2225:Oregon Business Retention and Expansion Program. Provides an upfront award to a company planning to expand or locate in Oregon based on the estimated income tax revenues generated by new hires associated with the company over a two-year period. This bill extends the successful program, which was created by the legislature in 2011.

10. Health Care • SB 5543: Tobacco Prevention Fund. Allocates $4,000,000 to the Oregon Health Authority for tobacco prevention and cessation programs. • SB 365: Autism Insurance Coverage. Requires coverage for treatment of Autism Spectrum Disorders (ASD) to be included in health benefit plans. • Cover Oregon: Much of the focus was on the implementation of the new healthcare exchange. Cover Oregon’s mission is: “Improving the health of all Oregonians by providing health coverage options, increasing access to information, and fostering quality and value in the health care system”. The site was supposed to begin operations in October, but it appears delayed for the foreseeable future. (www.coveroregon.com).

11. Special Session 2013 • House Bill 3601 – raises $244 million in new revenue. • Passed the House by a vote of 36 – 19. • House Bill 5101 – appropriates approximately $200 million to Oregon’s public schools, community colleges, universities, mental health services, senior programs, and support for low-income families. • Passed the House by a vote of 52 – 3. • Senate Bill 861 – makes additional cuts to the cost-of-living adjustments received by PERS retirees while mitigating impacts on lower-wage workers. • Passed the House by a vote of 31 – 24. • Senate Bill 862 – reforms certain policies related to the PERS system. • Passed the House unanimously. • Senate Bill 863 – preempts local bans on agricultural seed except in counties where local ordinances have already qualified for the ballot. • Passed the House by a vote of 32 – 22. “The Grand Bargain”

12. SPECIAL SESSION POLICY BRIEF HB 3601Revenue Increases and Tax Expenditures • Corporate Tax Rate Increase (Effective for 2013 Tax Year) - appliesthe top corporate tax rate of 7.6% to all corporate income above $1 million instead of $10 million Elimination of personal income exemption for certain filers (Effective for 2013 Tax Year) - makes the personal income exemption credit unavailable to single filers with income over $100,000 and joint filers with income over $200,000 (not indexed). Modify Senior Medical Deduction (Effective for 2013 Tax Year) - converts the Senior Medical Deduction to a subtraction, adds age and income restrictions, and caps the amount a taxpayer can subtract from their income taxes. Converting from a deduction to a subtraction allows many Oregonians who do not itemize their taxes to utilize this tax benefit. - also gradually increases the minimum age of eligibility for the medical expense subtraction. Increase Tobacco Taxes, Modify Moist Snuff Tax (Increase begins Jan 1, 2014) - Cigarettes are currently taxed at $1.18 per pack (one stamp required for each pack). LC 3 would increase the cigarette tax by 13 cents to $1.31 per pack in 2014, to $1.32 in 2016, and $1.33 in 2018, and includes the floor tax to capture cigarette taxes on cigarettes already in possession of distributors Small Business Tax Expenditure (Effective 1/1/15) - allows owners in partnerships, S corporations, and other pass through entities to be taxed on income from their pass-through corporation at a different rate than their personal income if they choose. Establish Oregon IC-DISC (Effective for 2013 Tax Year) - exemptsOregon IC-DISC corporations from the corporate minimum tax and would tax income distributed to shareholders through an IC-DISC at 2.5 percent rather than the C-Corporation rates (6.6 / 7.6 percent depending on income). These provisions only apply to IC-DISCS established before the effective date of the act. Expand Earned Income Tax Credit (Effective for 2014 Tax Year) - increases Oregon’s EITC from six percent of the federal credit to eight percent of the federal credit. Effective January 1, 2014, Sunsets in 2020. All Revenue Impact Estimates as of 9/27/2013, LRO Revenue Box. Updated projections forthcoming.

13. Questions? Rep. Brent Barton House District 40 Rep.BrentBarton@state.or.us Rep. Jessica Vega Peterson House District 47 Rep.JessicaVegaPeterson@state.or.us