Referendum 101

Oil Train Rule Rollback May Spark Legislative Response

The Trump administration decision to roll back an Obama-era rule requiring electronically controlled pneumatic brakes on oil trains is likely to revive legislative attention in Oregon to require railroads to carry “worst-case” insurance and create spill-prevention plans in light of the 2016 derailment in Mosier.

The Trump administration decision to roll back an Obama-era rule requiring electronically controlled pneumatic brakes on oil trains is likely to revive legislative attention in Oregon to require railroads to carry “worst-case” insurance and create spill-prevention plans in light of the 2016 derailment in Mosier.

When they reconvene next February, Oregon lawmakers may revisit legislation to require railroads to carry “worst-case” insurance following a Trump administration decision to roll back a decision to require electronically controlled pneumatic (ECP) brakes on oil trains.

Railroads opposed the rule issued by the Obama administration in 2015 in response to explosive oil train derailments, claiming the cost of ECP brakes exceeds their safety benefits. The Trump administration cited a National Academy of Sciences study that backed up railroad industry claims.

The decision sparked an angry response from Northwest officials, environmental organizations and Columbia River Gorge residents in light of the June 2016 derailment of an oil train in Mosier that spilled 42,000 gallons of crude oil and igniting a fire. Union Pacific blamed the derailment on a faulty rail fastener, not the train’s braking system. Environmental activists insist ECP brakes would help because they control all train car brakes simultaneously.

Brown Oil Train Rule Reaction[1].jpg

The rule rollback is the kind of flash-point issue that can explode into legislative action, possibly in both Oregon and Washington. Governor Brown and Governor Jay Inslee issued a joint statement calling the rollback “reckless and dangerous.” Friends of the Columbia River Gorge said the Trump administration decision points to the need for “strong legislation” requiring railroads to carry worst-case insurance and create spill prevention and crisis response plans. Similar legislation was proposed in the 2017 Oregon legislative session, but failed to pass.

States have very limited jurisdiction to regulate railroads. For example, states lack the ability to ban oil trains. Brown did sign a bill in 2015 that requires railroads to notify states of oil train movements.

Majority Democrats who control the Oregon House and Senate already have a major environmental issue on their plate in the short 2018 session – a cap-and-invest proposal designed to ratchet down industrial greenhouse gas emissions while generating $1.4 billion in new revenue. California already has an emissions credit system in place, which presumably Oregon would join. Business interests are opposing the legislation.

The main event for the 2018 Oregon legislative session will be responding to a potential voter rejection of a pair of hospital and health insurance assessments to sustain the Oregon Health Plan. Defeat of Referendum 101 could blow a big hole in the state’s budget.

By February, Oregon lawmakers should know the fate of GOP-backed tax-cut legislation, including a provision to eliminate state income taxes as a deduction on federal tax returns that would disproportionately harm states such as Oregon that rely heavily on income tax revenues.

It’s Taxing Time in Oregon

As Congress works on a federal tax cut measure that could significantly impact Oregon income taxpayers, Oregon voters face a decision in January on how to pay for the state’s Medicaid program. And along the way, Oregonians owe their property taxes, too.

As Congress works on a federal tax cut measure that could significantly impact Oregon income taxpayers, Oregon voters face a decision in January on how to pay for the state’s Medicaid program. And along the way, Oregonians owe their property taxes, too.

It’s official. Oregonians will vote in a special election January 23 to ratify or reject tax proposals approved by the 2017 Oregon legislature to sustain the state’s basic and expanded Medicaid program. From all early appearances, this will be a bare-knuckles fight.

Major parties have already lined up for and against Referendum 101. Health care providers, doctors, organized labor, minority groups and social equity organizations are urging a “yes” vote. Taxpayer groups, the Oregon Family Council, small business representatives and the Oregon Firearms Association oppose the taxes.

The stakes are high. As reported by the Portland Business Journal, if the taxes are rejected by voters, the State of Oregon stands to lose between $840 million and $1.3 billion in state and federal funds, depending how courts interpret the wording of the referendum. That would plunge Oregon lawmakers back into a deep budget hole with few escape ladders in the short 2018 legislative session that begins in February.

Defenders of the taxes on health insurance and hospitals say that is the only viable economic way to maintain Medicaid spending levels and avoid forcing more people out of coverage and into emergency rooms for care. Supporters of the referendum say there are other ways to maintain Medicaid without resorting to what Rep. Julie Parrish, R-West Linn, calls a “sales tax on health care.”

The challenge of voting on tax measures is that subtleties are usually lost in the shuffle. Calling anything in Oregon a “sales tax” is usually a kiss of death. [The City of Ontario, perched on Oregon’s far eastern border, enacted a 1 percent sales tax, which is also being referred to voters next May.] Trying to explain the exigencies of a pair of taxes to attract federal matching funds is a hard message to squeeze onto a bumpersticker.

The decision by legislative Democrats to force a special election in January before the short legislative session has created its own political reverberations. Referendum backers have called it a rigged political scheme. Democrats counter that it makes sense to know the outcome before the February session so lawmakers can pursue other options. That argument could come back to haunt Democrats who privately say they really aren’t any viable options to sustain Medicaid at its current spending levels.

Little wonder Senator Richard Devlin, co-chair of the Joint Ways and Means Committee, accepted a paying job as a gubernatorial appointee to the Northwest Power Council. Senate Republican Leader Ted Ferrioli is probably glad he is the other appointee and can skip the 2018 legislative session. Senate President Peter Courtney may appoint himself to replace Devlin, at least temporarily, in the 2018 session – and any special sessions that are needed to deal with the financial shortfall if the health care taxes are rejected.

The aftermath of Referendum 101 may be the headliner issue in the 2018 session, but the issue sucking all the oxygen out the room remains how to strike a grand bargain that involves spending restraint and additional state general fund tax revenue. Political leaders have by and large punted this bigger-scale issue until the 2019 legislative session, after the 2018 elections. Governor Brown is seeking re-election to a full four-year term and legislative Democrats want to cement super-majorities in both the House and Senate so they can pass tax measures with or without GOP votes.

This stalemate is a political hangover from the 2016 election when pro-business interests overwhelmed union-backed forces and defeated an initiative to raise corporate taxes. While the opportunity seemed to exist to bring the parties to a table to start negotiating some kind of compromise, the opportunity was never seized. Brown shied away from any discussion of cuts to the Public Employees Retirement System, which gave little incentive to business groups to sit down to discuss raising their taxes.

The upshot is that Oregonians can expect to hear a lot about taxes between now and Christmas. The GOP-led federal tax cut appears on a path to be considered by then, at the behest of Trump who refers to the tax cuts as a Christmas present to Americans. The uncertainty of whether the tax cuts will be real and durable for middle-class taxpayers could overlap into their voting views on Referendum 101. Confusion and taxes is never a good mixture.

And for good measure, Oregon property owners must pony up their 2017 property taxes next week and make end-of-year decisions that can impact their state and federal income taxes.