SALEM — Though Oregon’s upcoming legislative session will only last five weeks, lawmakers are expected to revive climate legislation in 2020 after the failure of last year’s controversial proposal.
A carbon “cap-and-trade” bill passed the House in 2019 but stirred up powerful resistance in the farm and timber communities, ultimately failing to get a vote in the Senate.
Due to ballot initiatives planned for the November election that propose to phase out Oregon’s carbon emissions entirely, lawmakers in the House and Senate are feeling pressure to resubmit a climate proposal, said Jenny Dresler, a lobbyist for the Oregon Farm Bureau.
Under a cap-and-trade system, carbon emissions are capped at a certain level and companies can earn credits for reducing their output below that threshold. The credits can then be sold to other firms that exceed it.
An early legislative concept being floated in the Senate would initially limit that scheme as it pertains to fuels to the Portland metropolitan area, then roll it out to other cities, Dresler said. The idea is to mitigate the adverse economic effects on rural residents who face longer commutes, which was a major sticking point with the last proposal.
“There is some momentum being made to address the concerns of the opposition,” Dresler said.
However, the idea is still problematic for mainstream agriculture groups such as the Oregon Farm Bureau and Oregonians for Food and Shelter, which worry that it would increase the cost of natural gas for manufacturers of food and wood products that are important to crop and timber producers.
Aside from negotiating over climate legislation, agriculture representatives will be working to carve out exemptions for the farm industry to the statewide “corporate activity tax” that was passed last year.
Under that legislation, companies bringing in more than $1 million in Oregon will have to pay $250 plus 0.57% of those “excess” revenues in tax.
While crops and other commodities sold out-of-state aren’t subject to the tax, the system is nonetheless burdensome for farmers who deliver to wholesalers, said Jonathan Sandau, public policy specialist with the Farm Bureau.
For example, once grain is delivered to the elevator, it becomes overly complicated to determine how much of it ultimately was exported to other states and countries versus how much stayed in Oregon, Sandau said.
The Farm Bureau will be trying to identify more technical fixes to the tax legislation, but it’s also going to push for a broader exemption that applies to all agricultural production, he said.
A law that shields junior water right holders from enforcement by state regulators is also likely to come under attack this year, said Mary Anne Cooper, vice president of public policy for the Farm Bureau.
Currently, when regulators demand that an irrigator stop diverting water to protect flows for senior water right holders, that order is suspended if he or she files an administrative appeal or lawsuit challenging it.
Opponents of that legal provision believe it undermines the water rights of senior irrigators and tribes, which hold time immemorial water rights, and they want it stricken from Oregon statutes.
“I think it might be one of the bigger issues the House Water Committee tackles,” Cooper said.
A proposal to create a commodity commission for Oregon’s fast-growing hemp crop is likely to be resurrected in 2020 after failing to pass must during two previous legislative sessions.
Hemp farmers would pay an assessment on their crop production, with the money going toward research and promotions for the industry. Much is still unknown about the most efficient methods of growing hemp, which was highlighted by problems experienced by growers last year.
The concept is likely to fare better in 2020 than during previous sessions because the USDA has enacted interim rules for hemp, clearing up some of the uncertainty about previous commission proposals, Sandau said. “It won’t be weighed down by those other aspects.”
Washington: Low-carbon fuel on agenda
OLYMPIA — Gov. Jay Inslee’s agenda for the 2020 legislative session includes a low-carbon fuel standard, which effectively taxes fossil fuels and subsidizes renewable fuels such as ethanol and biodiesel.
California adopted the policy in 2010, and it has increased the price of gasoline and diesel, according to the state’s nonpartisan Legislative Analyst’s Office. The standard would not apply to fuel burned by farm equipment, but Washington farm groups warn that growers’ transportation costs would still rise.
“You can’t download food over the internet,” Washington State Tree Fruit Association President Jon DeVaney said.
The Legislature will convene Jan. 13 for a 60-day session, a follow-up to the longer 2019 session. Lawmakers will adjust the two-year spending plans they passed last year, and consider new bills and holdover proposals.
The low-carbon fuel standard is a holdover. The House passed a bill last year, but the Senate did not. Inslee said lawmakers should approve it this year and get more ambitious about cutting carbon emissions.
“The fact is, despite our significant efforts we are well, well short of doing what is necessary to protect Washingtonians from the scourge of climate change,” Inslee said. “The clean-fuel standard is one of the most important tools in our tool box in defeating climate change.”
In addition to California, Oregon and British Columbia have adopted low-carbon fuel standards. Fuel suppliers are required to gradually cut the “carbon intensity” of their fuel. Regulators rate carbon intensity by the greenhouse gases emitted during the fuel’s production, storage, transportation and combustion.
California has the oldest program and provides the model for Oregon and Washington. California’s Air Resources Board estimated last year that the standard will cut greenhouse gas emissions by a total of 97 million metric tons between 2019 and 2030. California emitted 424.1 million metric tons in 2017.
The Legislative Analyst’s Office estimated that the low-carbon standard raised the cost of gasoline in 2018 by 13 cents a gallon. The policy will take full effect in 2030. By then, the standard, if unchanged, would add 46 cents to a gallon, according to the analysis.
The bill passed by Washington’s House last year would have the same final low-carbon standard as California’s, though not until 2035.
“In an industry that cannot adjust their prices to match increases in input costs, a change like this would be crippling,” said Bre Elsey, associate director of government relations for the Washington Farm Bureau.
According to the bill passed by the House, fuel suppliers could meet their low-carbon obligations by paying an “alternative assessment.” The assessment could increase state government revenue by $48 million to $193 million during the policy’s first full year, according to the Department of Revenue.
Democrats will again control both chambers. The House will have a new speaker. Rep. Laurie Jinkins, D-Tacoma, has been designated by Democrats to replace Seattle legislator Frank Chopp.
Last year’s session was marked by a proposal to tax farmers who hire seasonal foreign workers and a bill that implied Washington farmers could be guilty of slavery.
The tax proposal led to a task force on farm labor that’s still meeting and won’t have recommendations for the 2020 session.
If lawmakers are concerned about forced labor, they should broaden their view to other industries, DeVaney said. “It’s something we should be watching for and doing something to interrupt and prevent, but it’s not exclusively tied to agriculture.”
Idaho: Tight budget year ahead
BOISE — Slower economic growth and tight budgets portend a 2020 Idaho Legislature that will be light on new spending.
Nevertheless, lawmakers likely will entertain bills or discussions on water rights, hemp, transportation, property taxes, depredation and streamlined administrative rules.
“I am hearing a lot of things floating around,” said Russ Hendricks, the Idaho Farm Bureau’s governmental affairs director. “Whether (legislative) sponsors will take them up, we don’t know.”
The typically 3 1/2-month legislative session starts Jan. 6 with Gov. Brad Little’s State of the State and Budget Address, which will include spending recommendations for the fiscal year that starts July 1. Earlier, the Republican rancher from Emmett urged agency heads to trim their budgets.
“The governor has asked the germane committees to hold the line on any legislation that would affect revenues — to hold any legislation that would create new spending or new-dollar needs,” said Rep. Rick Youngblood, R-Nampa, co-chairman of the Joint Finance-Appropriations Committee.
Personal and corporate state income taxes feed the General Fund, to which the governor’s Division of Financial Management applies a forecast rate of growth. Initially, it was 8.1% but budget writers used 7%. In August, it was reduced to 5.2%.
Division Administrator Alex Adams said 5.2% forecast growth “still places Idaho in the top-10 states nationally based on where we are to date. We are tracking ahead of the forecast we put out in August” in revenue collection.
“Based on where we are with the forecast total, if everything stays the same, we would end the FY20 budget with an $81 million surplus,” he said Dec. 20.
Youngblood said the surplus is reduced by about $45 million in supplementals, which are necessary additional expenses paid this fiscal year — to Medicaid and the Department of Correction, for example — but which the 2019 legislature did not appropriate. The remaining $35 million-plus is about about two-thirds of usual surplus.
As the 2020 legislature sets budgets for FY21, “even though we are growing at a good pace, you will continue to see us hold the line and be fairly conservative,” Adams said.
“We expect revenue growth to continue, though at a slower pace than previously anticipated,” the governor wrote. “The time to prepare for the inevitable economic slowdown is now — when times are good.”
Rising property taxes in urban and suburban areas have drawn increased concerns recently. A legislative working group in 2019 heard proposals including raising the homeowner exemption and re-incorporating a home-price index that was eliminated in 2016. Farmers and others worry that their tax bills will increase to offset any breaks given to homeowners.
“We will be vigorously opposing any bills that would shift property taxes from one class of property to another,” the Farm Bureau’s Hendricks said.
The Farm Bureau also plans to support any proposal to lower wolf numbers to populations agreed upon during mid-1990s reintroduction, any efforts to restore property rights, and any proposal to reform the state’s voter-initiative process “to ensure rural voices have equal say with urban voices,” he said.
Whether hemp legislation is needed remains to be seen in light of USDA’s interim final rules issued in October, said Rep. Judy Boyle, R-Midvale, chairwoman of the House Agricultural Affairs Committee. Any Idaho bill likely would have to remove hemp from the state’s list of banned substances, which drew state police concern and derailed 2019 legislation.
Lawmakers last year did not reauthorize the state’s administrative rules. Little responded by keeping them in effect and directing agencies to streamline them and receive comments.
“Many rules that apply to dairy are in place to ensure the general public that things are being done right,” Idaho Dairymen’s Association CEO Rick Naerebout said. “That spans from food safety to environmental compliance. For the industry, we want to make sure those rules are based on science, and actually are able to achieve the goals they set out to achieve.”
Boyle said the governor’s staff and agencies were effective at revising rules so they were less cumbersome. She expects many 2020 legislative committees to spend considerable time on rules.
Paul Arrington, head of the Idaho Water Users Association, has said he expects legislation to create a water rights adjudication for the Bear River Basin, and a bill to allow the Department of Environmental Quality to start emergency cleanup without first obtaining a water right.
Lawmakers may also propose changing Idaho Potato Commission statutes so grower-commissioner representation more closely reflects current production volumes by region, and to clarify referendum language.