This report provides a summary of recent actions and proposals on a wide range of issues, including revenue reform, a comprehensive transportation package, and the sale of the Elliott Forest. It also provides a rundown of some key bills under consideration as the legislature nears another deadline for committee consideration of bills.

The Mega Issues

Legislators are making slow but continuing progress as they cobble together the various “mega issues” that need to be resolved before the legislature hits its July 10 sine die deadline. The patchwork of issues includes a transportation package; PERS reform; health care reform, including a health provider tax; housing affordability; and, hardest of all, a balanced budget that includes both tax reform and budget reductions that address the structural costs that continue to place upward pressure on state budgets from biennium to biennium. All of these issues must come together in a coordinated manner that will attract the necessary votes to gain passage.

The last two weeks have shown progress in two areas – creation of a statewide transportation package and the unveiling of two competing tax reform proposals. Both issues have attracted a fair amount of media attention, which can be found below.

Transportation Package: Lawmakers presented a comprehensive proposal for addressing a range of challenges to Oregon’s transportation infrastructure. The proposals include efforts to reduce congestion in the Portland metro area, improve the backlog of deferred maintenance, and increase sagging revenues from the gas tax as cars become more fuel-efficient and non-reliant on fuels subject to the gasoline tax.

See a PowerPoint regarding the challenges and solutions presented to the Joint Transportation Committee here. Most notable for those in the Corvallis area is the listing of the single lane Van Buren Bridge as a “Possible Secondary Future Project,” which would require local approval for inclusion on the list.

For press reports on the proposal:

• The Oregonian
• Willamette Week

Issues that have attracted considerable attention include a proposed sales tax on bicycles to help pay for bikeways, possible toll roads in the Portland metro area, a payroll tax, increased registration fees and a tax on new vehicle sales.

Revenue Reform: In late April, Senate President Peter Courtney and House Speaker Tina Kotek announced the formation of a Joint Committee on Tax Reform responsible for developing proposals to raise revenues to fill an estimated $1.6 billion gap in the state’s budget. The legislature undertakes this effort in unison with other legislative efforts to reign in the factors that are contributing to upward pressures on the state budget, including the state Public Employee Retirement System (PERS) and state public employee health benefits (PEBB).

For helpful materials and articles on revenue reform:

• What’s next after Measure 97? via The Oregonian
• Corporate activities tax could being in $3.1 billion – or a lot less via The Oregonian
• Comparison of Business Tax Base Options

Ultimately, if legislators adopt a Commercial Activity or Gross Receipts Tax, they will need to weigh the issue of how many businesses–and what kinds–it will affect, whether to eliminate or reduce other business taxes, steps that can ameliorate the effects on low-income Oregonians, and a host of other issues. There are many complex issues to resolve over the final two months of the legislative session.

It is too early to predict what, if any, proposal will be able to attract the necessary bi-partisan super-majority vote in each chamber needed to pass a comprehensive tax plan. In both the House and Senate, at least one Republican member would have to break with party ranks to join all of the Democrats (assuming that party’s ranks are unified) to vote for a tax package. Tax packages in the Senate require 18 votes, while the membership is made up of 17 Democrats and 13 Republicans. In the House, with a membership of 35 Democrats and 25 Republicans, 36 votes are required to pass a tax bill. A simple majority of legislators can refer a measure to the voters for consideration.

Cost Containment: The Legislative Cost Containment Work Group recommended a number of strategies for agency budget reductions, PERS reform, health care cost containment, and overall budget principles. The work group broke the recommendations down by short-term solutions (solving this biennium’s shortfall) and long-term solutions (permanent). The Legislative Fiscal Office has not yet analyzed how each of the recommendations will actually result in savings. Notable among the recommendations are proposals to enact a statewide hiring freeze for nonessential positions (this would not necessarily apply to universities although most are looking at possible hiring “chills” or other actions), increase current and future employees’ contributions to PERS, and combine the PEBB and the OEBB.

 

The Elliott Forest

The Elliott State Forest is 82,000-acres of publicly owned forest in Oregon’s Coast Range north of Coos Bay. Over the last several weeks, the Governor and State Treasurer sought to engage OSU in discussions regarding ways in which the College of Forestry could provide research relevant to the management of the Elliott State Forest. These discussions have included consideration of an option five years from now that would enable OSU to purchase the forest to serve as a research and demonstration site.

Over the last year, due to legal efforts to ensure that the assets of the forest contribute to the State Common School Fund, as required by the Oregon Constitution, the State Land Board has conducted a process to sell the forest for a minimum of about $220 million based on its appraised value. The Land Board consists of the Governor, State Treasurer, and Secretary of State, and is responsible for the oversight and management of the Common School Fund.

Last year, the Lone Rock Timber Company and the Cow Creek Band of Umpqua Tribe made a joint bid of $220.8 million to purchase the Elliott Forest, a move that the College of Forestry supported. In February, by a vote of 2-1, over the Governor’s objections, the Land Board accepted that bid. Subsequently, the Governor and Treasurer indicated they opposed the sale, and they each embarked on efforts that would retain the public ownership of the forest and seek a financial instrument to provide a stream of payments to the Common School Fund to avert a suit by the Oregon School Boards Association.

On May 9, in response to efforts to retain the forest in public ownership, the Land Board unanimously rejected the sale proposal and embarked on a process by which the state would finance a $100 million bond to provide approximately $4 million in annual payments to the Common School Fund. The Board also considered a plan put forward by State Treasurer Tobias Read that would involve the College of Forestry in research within the Elliott State Forest. The plan includes a possible option that would enable–not obligate–OSU to purchase the forest after a period of five years, as guided by the research and federal efforts to establish a Habitat Conservation Plan (HCP) under the Endangered Species Act.

In discussions involving the Elliott, OSU has been clear on three points:

• First, the university has no interest in contributing to the disruption of a sale that received a majority of votes by the Land Board. The university became actively involved in discussions regarding alternative plans only when it became clear, as a result of actions taken by the Governor and State Treasurer, that the sale would not take place.
• Second, because actions involving the Elliott Forest may involve the use of state bonding capacity, OSU’s potential involvement in any actions taken regarding the Elliott Forest should not detract from our long-standing priority to secure bonding to finance the full expansion of the OSU-Cascades campus in Bend.
• Third, the state needs to fund the research contemplated over the next five years. If separate funding is not secured, this research cannot be conducted.

The College of Forestry does present the State with an opportunity to engage in comprehensive, sustained research and data collection to better inform the relationship between active forest management and conservation of listed species. OSU research could provide a scientific basis to help guide the development of an HCP and future management of the forest. The university would not engage in management of the forest now, but would retain an option to purchase the forest at a future date if or when an HCP is in place.  The HCP would provide greater certainty regarding the forest’s management and support a well-defined and financially sustainable business plan. Executing an option to purchase would clearly be subject to review and approval by the OSU Board of Trustees.

 

Tuition Increases at Other Universities

Last week, the Higher Education Coordinating Commission (HECC) approved requests for resident, undergraduate tuition increases above 5% for Western Oregon University, Oregon Tech, and Southern Oregon University. HECC did not approve requests from Portland State University and the University of Oregon. Those universities are in conversation with HECC staff and the Commission about reconsidering the votes by which HECC denied those requests. If at least five of the voting Commissioners agree to provide approval, the HECC will convene a meeting within the next two weeks to reconsider the votes. The Oregon Student Association (OSA) had a strong presence at the HECC meeting and disrupted the meeting briefly during Commission deliberations. OSA has signaled that it would continue to oppose requests for tuition increases but that their focus will generally shift to the Legislature and the need for increased revenue. To that end, OSA is planning on phone banking on May 17 and holding lobby days on May 24 and June 6 with SEIU and other partners.

 

Legislative Bills, Hearings, and Issues

Revenue Forecast: This Tuesday, May 16, the state economist will issue the economic and revenue forecast that will guide legislators in constructing the state budget. Previous forecasts have shown continued growth in revenues, but recent changes in economic indicators may signal slackened growth. The forecast may also indicate that revenues will exceed the May 2015 economic forecast by more than two percent, which would involve Oregon’s unique kicker. When the State Office of Economic Analysis releases its forecast, you can find it here.

Credit Transfer and Articulation: SB 207 would require universities and community colleges to automatically accept college credit for students who achieve a score of 3 on advanced placement tests. Although the bill sailed through the Senate on a 29-0 vote, educational institutions are opposing the bill as it is considered by the House Higher Education Committee. We have raised concerns that it disrupts existing and functional faculty led efforts to review and establish course equivalency requirements that fit each institution’s curriculum. The provosts from all seven public universities submitted testimony in opposition to the bill.

Regardless of the bill’s fate, credit transfer and articulation will continue to attract attention from legislators and the Higher Education Coordinating Commission (HECC) who cite statistics that indicate that students who transfer from community colleges to universities must take significantly more credits than the 180 required in order to attain an undergraduate degree.

Financial Aid Information: Community colleges and universities have also sought changes to SB 253, which would require them to notify students individually of their debt load on a yearly basis. The institutions indicate that they already provide this information to students, that they cannot meet the requirements of the bill because they don’t have access to information about what private debt students may be using to finance their education, and because the cost of generating customized profiles would need to be included in state funding for the institutions. The institutions are seeking amendments that would make the bill less expensive to implement.

OSU-Cascades Expansion: On Wednesday, May 24, the Senate Business & Transportation Committee will receive a presentation from advocates for the expansion of the OSU-Cascades campus in Central Oregon. The presentation will focus on the linkage between the campus and the region’s economic growth and potential.

Remaining Ways & Means Reviews: Over the next two to three weeks, the Joint Ways & Means Education Subcommittee will conduct information hearings on a number of remaining issues, including:

• Outdoor School: Legislators are weighing options for how much to fund the roughly $40 million biennial investment in Outdoor School approved by voters with the passage of Ballot Measure 99 last November. Under the measure, the OSU Extension Service is responsible for administering the grant program and developing the curriculum for this program.
• Oregon Promise: Legislators are also weighing the extent to which funding for the Oregon Promise—“Free Community College”—flows to students from families that demonstrate little to no financial need.
• State Programs: Legislators are interested in the outputs of specific state-funded programs at the universities and have asked for time to review a number of these programs. (This does not involve the OSU Statewide Public Service Programs.)

 

Capital Funding

On Friday, May 12, OSU supporters and faculty testified in support of a number of capital projects under consideration by the Joint Ways & Means Subcommittee on Capital Construction. Advocates from Bend drove the 120 plus miles to deliver the allowed three minutes of testimony in support of the expansion of OSU-Cascades. Others supported the investment in the OSU Quality Food & Beverage initiative on the Corvallis Campus. Faculty member Virginia Weiss testified in support of the capital renewal of Cordley Hall on the OSU Campus.

 

The Beaver Caucus

On Tuesday May 23, the Beaver Caucus will be holding a “two minute drill” with legislators in support of OSU’s legislative agenda. For further information:  http://thebeavercaucus.org/beaver-caucus-two-minute-drill-may-23/