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Oregon lawmakers set to begin session focused on housing, homelessness, semiconductors, behavioral health and education

Oregon lawmakers will return to Salem on Tuesday to begin a nearly six-month session that Democratic legislative leaders and Gov. Tina Kotek hope will set the state on a path to build more housing, reduce homelessness, boost the semiconductor industry and improve mental health and addiction services.

Lawmakers will also consider if it’s time to increase funding for schools serving high-poverty areas and whether to mandate more accountability for how schools spend roughly $1 billion-a-year from a business tax passed in 2019.

House Majority Leader Julie Fahey, a Democrat from Eugene, said lawmakers are headed into the session with “a very clear sense of what issues Oregonians care the most about.” House Speaker Dan Rayfield, a Corvallis Democrat, said he and Fahey want to focus on “making sure that government delivers.”

He said there are clear problems that lawmakers have yet to adequately address, including catastrophic failures in the state’s public defense system, which have led to dozens of people being jailed without lawyers and charges being dropped in cases that involve violent crimes.

Rayfield said lawmakers will consider a proposal to increase the public defense budget and bring more accountability to the program. He expects lawmakers to also work to improve operation of the state mental hospital.

Democrats also want to take up additional gun control proposals, including raising the age to purchase most firearms from 18 to 21, and approve funding to cover the cost of a new permit-to-purchase requirement that voters narrowly approved in November, said Danny Moran , a spokesperson for Rayfield. He cited information from Everytown for Gun Safety that 18- to 20-year-olds commit homicides at triple the rate of people ages 21 and older. The permit requirement is currently on hold due to pending lawsuits.

Moran said Democrats also hope to expand abortion access in rural areas of the state where residents seeking care would have previously gone to nearby Idaho but no longer can because that state has banned the procedure. And they want to look for ways to protect health care providers and patients who might face criminal or civil liability from states that have passed laws to crack down on residents’ ability to cross state lines to obtain abortions.

Republicans, who grew their numbers in November but failed to pick up a majority of seats in either chamber, plan to push for tax cuts, an early income tax rebate and changes to the state’s new law that agricultural workers be paid overtime starting this year.

“The most important thing we need to do is help Oregonians with cost-of-living increases and inflation they’ve been enduring,” said Senate Republican Leader Tim Knopp of Bend. He plans to introduce a proposal to send Oregon taxpayers their “kicker” income tax rebate — currently projected to be $3.7 trillion — as a check this year, instead of issuing it as a credit to be used when people file their tax returns in 2024.

Knopp, who is the executive vice president of the Central Oregon Builders Association, said he also wants to find ways to speed up approval of housing plans. “The governor is right that we need to have more housing units built,” Knopp said, referring to Kotek’s executive order setting an annual goal of building 36,000 new housing units statewide. “But you have to streamline the process to make it happen faster.”

Knopp also wants lawmakers to pass legislation to “freeze property tax increases for seniors.” Last year, three Republican lawmakers filed a proposed initiative that they are trying to get on the 2024 ballot, but Knopp said it would be better for lawmakers to craft the change.

Taxes will also come up this session as part of the Legislature’s ongoing consideration of ways to improve the state’s mental health and addiction treatment systems, collectively known as behavioral health. Oregon lawmakers could consider a new cell phone fee to help fund the state’s 988 suicide prevention hotline, which would require support from Republicans to meet the state’s three-fifths supermajority requirement to raise taxes, said Rep. Rob Nosse, a Portland Democrat who chairs the House Behavioral Health and Health Care Committee.

Lawmakers approved pay increases for mental health care providers in 2021 and 2022. Nosse said he expects legislators to focus this session on ways to open more residential treatment facilities around the state. He said lawmakers might also take up proposals to improve the state’s addiction treatment system, after the botched rollout of services as part of the vote-approved decriminalization of small amounts of hard drugs.

But Nosse said that would only happen if various groups with an interest in the issue can unite. “If we can reach some consensus, you’ll see some bills,” Nosse said.

Oregon lawmakers want to allocate as much as $300 million to lure semiconductor manufacturers. Kotek says she’s on board, and US Commerce Secretary Gina Raimondo is due to visit Oregon in the next few weeks to discuss the state’s efforts and the state’s potential share of billions in federal funding. It could be among Oregon’s largest economic initiatives in years, handily exceeding the $200 million Future Ready Oregon workforce development program lawmakers approved last year.

But new tax breaks and changes in state land-use policy, two of the chip industry’s top priorities, are bound to be controversial, and it’s far from clear that any large chipmakers will expand in Oregon, even with new programs in place to attract them .

Rep. Janelle Bynum, a Happy Valley Democrat who is co-chair of the Joint Committee on Semiconductors, said Oregon cannot offer the same level of cash incentives as “big budget” states like Texas and New York, “but we’re going to use everything to our advantage.”

“The goal is to help Oregon become the global leader in research and innovation, that’s my North Star,” Bynum said. “It’s the people’s money we’re talking about and the people’s resources and I don’t take that lightly. We’re going to be careful with our resources.”

At the same time lawmakers contemplate expanding tax incentives for one part of the tech industry, they may consider ratcheting back giveaways for another.

Oregon has some of the nation’s most generous tax breaks for data centers, and Amazon saves millions of dollars more annually through local incentives for its warehouses. The program that provides most of those incentives is up for renewal during this session and tax watchdogs – along with some prominent lawmakers – want to limit data center tax breaks to rural areas and eliminate tax breaks for warehouses altogether. Lawmakers have proposed a separate bill that would make data centers subject to Oregon’s new clean energy standards, levying huge fines and withholding the tax breaks if they don’t comply.

On housing, Kotek will ask lawmakers to approve $130 million early in the session aimed at adding 600 shelter beds across Oregon, preventing eviction for 8,000 households and getting 1,200 people experiencing homelessness off the streets and into housing within a year.

Fahey, the House majority leader, said she is open to, if a bit skeptical of, helping fund Portland Mayor Ted Wheeler’s plan to build mass encampments in the city. In the past, lawmakers prohibited spending state funds on such a use.

“We have a responsibility to taxpayers to make sure we’re not just sort of shoveling money out the door to address a problem if there’s not an actual plan to spend the money effectively,” Fahey said.

Indeed, lawmakers targeting big spending priorities will have to keep a close eye on the state’s tax revenue projections. State economists now expect Oregon to enter a mild recession this year. That is part of the reason fiscal analysts expect a $560 million budget gap between the amount of money necessary just to maintain current programs and service levels — $30.7 billion for the next two years – and how much taxes the state will bring in.

The legislative conversation about schools always centers on money.

Experts in Oregon’s chief financial office calculated it would take $9.52 billion for schools to offer the same level of programs and services they offer now in the 2023-2024 and 2024-2025 school years. That’s a 2.36% increase from the current two-year budget. Tax officials attribute that relatively slim bump in part to their projection that student enrollment will stay flat. But it’s a figure that Jim Green, the longtime director of the Oregon School Boards Association, has already summarily dismissed as “woefully inadequate.”

Schools advocates are countering that protecting students requires $10.3 billion, given the rise in inflation. School districts need to cover the cost of fuel, food for school meals and employee salaries that ideally will keep pace with the cost of living, they say.

Kotek is due to release her proposed budget by Feb. 1. The final number for schools agreed upon by lawmakers will — if history is a guide — likely fall somewhere in between those two numbers.

But how that funding reaches districts could look different this year. Rayfield, the House speaker, told The Oregonian/OregonLive editorial board that there’s interest in revisiting aspects of the state’s current funding formula. He said lawmakers might consider whether, for example, the extra funding school districts receive for high poverty students should be raised further. That’s an idea that was shut down as recently as 2021given the clout of lawmakers in districts that would have seen their share of funding drop.

Beyond the money chase, lawmakers and schools advocates say that they’ll focus on programs aimed at training, recruiting and retaining school employees, from bus drivers and cafeteria workers to paraeducators, special education teachers and bilingual educators.

One percolating conversation, Rayfield said, surrounds “disparities of wage levels between states,” a particular issue in the Portland metro area where Washington state’s comparatively well-funded schools are just a short drive away.

Another emerging, and perennial, theme: accountability. Oregon’s 197 school districts have wide leeway in how they spend state dollars. Impinging on that tradition would present political minefields. But the pandemic and the prolonged online learning it spawned left many students struggling far below grade level in core subjects like math and reading. Lawmakers will need to decide how prescriptive to be on strategies designed to help kids catch up, from extended summer learning programs to frequent, small group tutoring.

Early literacy is one policy area that has momentum, Fahey said, after a budget request to spend $20 million to pay for phonics and phonemic awareness training for teachers in high-needs schools died in 2021. But to what extent lawmakers can afford to support programs like this will come down to the state’s revenue forecast in February, she said.

Business reporter Mike Rogoway and education reporter Julia Silverman contributed to this report.

—Hillary Borrud; hborrud@oregonian.com

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