Policy Update - 5.31.17

Legislature: With a little more than a month to go in Oregon’s 2017 legislative session, it’s budget writing time in Oregon’s State Capitol. The legislature’s first job, above all others, is to pass a balanced state budget for the next two years. That’s a daunting challenge due to this year’s $1.4 billion difference in the cost of maintaining state services and anticipated state revenue during the same time period. With such a large budget deficit, any program that costs money is potentially on the chopping block—that includes Residential Energy Tax Credit (RETC) and even critical state programs like education and healthcare.

Renewing the RETC (HB 2681) remains OSEIA’s top priority this session. Since the prospects for winning on RETC are very much entwined with the question of how the legislature will address the budget deficit, OSEIA has been following the budget deficit discussion closely.

Oregon’s budget deficit is structural in nature, meaning that the state’s taxes and other revenue sources routinely fail to generate sufficient funding to cover the cost of state services. Without reform to Oregon’s tax policies, large deficits will continue to impact Oregon policy-making in future sessions and threaten state programs.

To address this structural deficit, legislative leaders in both chambers are developing plans that would significantly reform state tax policy. Their plans would lower the personal income tax and replace the corporate income tax with a new Corporate Activities Tax, which would tax a broader base of businesses at a lower tax rate. The result, they say, will be a more stable tax base over time and more overall net revenue. Depending on an eventual revenue package’s overall size, it could be a systemic fix that also prevents future year’s budget deficits.

It remains unclear whether the legislature will be able to pass any such new revenue package, since bills to raise new taxes require a three-fifths majority vote (rather than the usual simple majority). Without a new revenue package, legislators will face an even larger budget deficit in the 2019 session and will have to resolve this year’s budget deficit through a combination of smaller increases in taxes, fees, and other sources of revenues and large spending cuts. Given all of that, the prospects of extending RETC without a new revenue package this year is much smaller than with one.

OSEIA has never weighed in with legislature on revenue issues before. But the need for the RETC may require us to do that. Last week we conducted a poll of our members to gauge how potential policy positions on these issues could affect members’ work and company. OSEIA’s Board of Directors will be meeting this week to consider the results of that poll and whether OSEIA will enter into the budget and revenue discussions.

We will be also asking for OSEIA members to contact legislators very soon to support RETC. We’ll need to do this no matter how the legislature ultimately resolves the budget. We know OSEIA members are ready to help deliver the message of RETC’s importance to our state. The time to help is coming quickly so stay tuned!

In other news, last week, the House Revenue committee held a successful hearing on another OSEIA priority, HB 2670, which would extend Oregon’s property tax exemption for solar and other net-metered alternative energy devices. The committee will vote this Wednesday, May 31, and we expect the bill to move on to a full House vote soon after. There is no opposition to that bill and we will be making sure the bill works its way through the process.

Public Utility Commission: There has been a lot of activity around the community solar rule-making docket (AR 603) lately. OSEIA and other allied interests have been meeting with staff and submitting comments on the proposed rules. OSEIA filed comments with the Coalition for Community Solar Access (CCSA), the national trade group of community solar developers and companies. You can read OSEIA/CCSA’s comments here. If you would like to read all of the comments submitted, you can go here. A second round of comments are due on Friday, June 2 and the PUC is scheduled to have a public meeting on June 27 in time to have the rules in place by July 1.

Even after the rules are adopted, there is still a lot of work to do. Parties will be immediately continuing the work to implement the rules. One of OSEIA’s main messages has been “keep moving forward to be able to make offerings to customers as soon as possible.” We’ll continue to make sure that happens.