Oregon entered this year’s session at the bottom of a deep economic and competitive hole created by a succession of policy choices made over a period of several years. The session began Feb. 2 with a promise to focus on job growth, which has trailed the national average in recent years as the state’s business climate has eroded. In an op-ed published in late November, Sen. Kate Lieber and Rep. Tawna Sanchez (both D-Portland), co-chairs of the budget-writing committee, wrote that the state’s “long-term solutions must include strategies to grow private sector jobs that stimulate our broader economy and provide good wages to hardworking Oregonians.”
In an op-ed published one day later, Sen. Anthony Broadman, D-Bend, chair of the Senate Finance & Revenue Committee, argued that Oregon’s “best path forward” must involve “private sector job growth with good, high-paying jobs.” And the majority caucuses both referenced the need for growing jobs in respective communications (Senate Democrats’ home page, House Democrats’ pre-session communication).
Additionally, just over three months ago, Gov. Tina Kotek unveiled her Oregon Prosperity Roadmap. And in late January, she announced the members of a new Prosperity Council and filled a new chief prosperity officer role, all supposedly to improve the state’s business climate, competitiveness and economy.
There was cause for optimism. Broadly speaking, the 2026 session was an opportunity for legislators to demonstrate the leadership needed to start building a ladder to climb out of the hole, as we noted in our own pre-session op-ed.
Unfortunately for Oregonians, they failed and dug the hole deeper. It would be even deeper without the work of OBI’s government affairs team and allied stakeholders, which were remarkably effective in helping to kill harmful bills and mitigate the damage caused by others.
Bad bills, good defense: The hole could have been much deeper. That it isn’t is a testament to the defensive work of the OBI government affairs team. Legislators introduced and gave serious consideration to a barrage of bills – tax bills, employment bills, environmental bills, you name it – that promised to do significant additional harm to the state’s employers and its economy. In many cases, the OBI team negotiated amendments that mitigated harm. In others, they helped kill bad bills outright. The list below includes a handful of notable bills. The formal end of session report, which will be released in a few weeks, will include more.
Valuable partners: While OBI’s policy team played effective defense this session, it did not do so alone. OBI appreciates the work many stakeholders and partner organizations did this year to improve the state’s economy and competitiveness.
Good bills, mixed results: The Legislature did consider a handful of modestly beneficial economic development bills, including one introduced at the request of the governor (see list below). In the face of pressure from various advocacy groups, however, legislators trimmed or removed important components of these bills, further limiting their usefulness. Adopting policies that improve Oregon’s business climate and its economic outlook will require leadership and courage that largely weren’t in evidence this year.
Competitiveness killer: One bill included in the list below deserves special mention because of the effect its passage will have on Oregon’s business climate. SB 1507 partially disconnects Oregon from the federal tax code and denies Oregonians and state businesses the full benefits of H.R. 1. The most significant change involves bonus depreciation, which now will not be available for state tax purposes, thereby limiting a tax incentive designed to help businesses grow and invest. It is exactly the wrong thing to do if job creation and economic growth are priorities.
Trump everywhere: The elected official who exerted more influence on this year’s session than anyone else calls 1600 Pennsylvania Ave. home. Many bills introduced this session were intended to counter federal practice and policy, largely related to immigration enforcement and fiscal policy. SB 1507 is a notable example. Oregon’s general fund is expected to have an ending balance this biennium even adjusting for the changes effected by H.R. 1. Meanwhile, general fund revenue is expected to increase by double-digit percentages through 2035. There was little need for the tax disruptions SB 1507 will create, yet selling the bill as a necessary response to federal tax policy eased its journey to the governor’s desk.
Activity in key areas:
Economic development: To her credit, the governor requested the introduction of a bill (HB 4084) that would have taken small steps to improve Oregon’s economic competitiveness. But key components were removed or watered down both before introduction and during the legislative process. The result is a bill that contains a few helpful provisions ̶ fast track permitting in limited circumstances, funding for industrial site readiness and enterprise zone program improvements ̶ but that, unfortunately, will do little to help Oregon’s economy escape its hole overall.
Symptomatic of the Legislature’s failure to focus seriously on economic development is the fate of the JOBS Act (SB 1586), which OBI helped develop. As introduced, it would have brought 1,700 acres of land into Hillsboro’s UGB for advanced manufacturing and semiconductor development. It also would have expanded eligibility for Oregon’s R&D tax credit and created an optional local property tax waiver for new machinery and equipment in advanced manufacturing. The bill represented a modest, but important, response to Oregon’s multiyear manufacturing recession. Unfortunately, it was trimmed substantially through amendments before dying.
On the other hand, the Legislature did approve an important bill (SB 1501) that will direct income tax revenue paid by the Portland Trail Blazers and select other groups to Moda Center renovations. These improvements will be critical in the effort to keep the Trail Blazers – and the team’s economic impact – in Portland.
Taxation: The most consequential bill to pass this session (SB 1507) carries a tax impact for Oregonians and state businesses in excess of $300 million. Proponents of SB 1507 tried to include a pro-business tax credit for job creation, but the credit was largely too bureaucratic and meager to carry meaningful impact … and that was before those same legislators then “quietly narrowed” that very tool in a separate bill (HB 4084). Meanwhile, the Legislature violated a longstanding agreement with the state’s hotel industry by directing transient lodging tax revenue away from economic development and tourism promotion (HB 4134). The bill also increased the tax substantially.
Through another notable bill (HB 4027), legislators agreed to give a state agency director authority to set and adjust a tax rate to raise funds from employers and workers to support BOLI operations. While OBI supports the underlying idea of a cost-shared revenue stream to support BOLI’s work, this bill attempts to do so without following constitutional requirements. In 1996, Oregonians passed Measure 25, which requires that revenue-raising measures receive a three-fifths majority in both the House and Senate. The bill passed without meeting that standard.
Another bill that violates Measure 25 (because it didn’t originate in the House, as revenue-raising measures must) is HB 1511, which would have increased the estate tax rate. Fortunately it died, as did a pair of bills aimed at reducing kicker payments (HB 4125 and SJR 201).
Liability: Another example of the Legislature’s penchant this session for adopting (at best) imperfect solutions to pressing problems is its response to the liability crisis affecting Oregon’s outdoor recreation industry. With two fixes to choose between, it picked by far the lesser one. The crisis is the result of a state Supreme Court decision making liability waivers for ski areas and similar businesses unenforceable, thereby increasing liability, insurance costs and ultimately consumer prices — if not causing the closure of certain (or many) recreational sites. The bill the Legislature passed, SB 1517, generally makes liability waivers enforceable but contains several exemptions that limit its protection. In choosing to support this bill, the Legislature turned down an industry-supported fix, SB 1593, that would have aligned Oregon with other western states.
Again, the strong defensive effort mounted by OBI, stakeholders and aligned groups consistently paid off. This effort was instrumental in killing a bill (HB 4098) that would have regulated insurance under the Unlawful Trade Practices Act.
Employment: The Legislature considered but did not pass a harmful bill (HB 4093) that would have made meetings between employers and employees to discuss reasonable accommodations adversarial. OBI and others negotiated significant changes to a bill (HB 4094) that as introduced would have required employers to pay out all accrued vacation upon the termination of employment regardless of company policy. OBI also pushed successfully for amendments to a bill (HB 4147) that would have created a “Medicaid shame list.” Though the bill died, the version that passed the House made important improvements to a fundamentally flawed premise. The Legislature declined to pass a harmful bill (SB 1505) that would have created a Community-Based Services Workforce Standards Board, delegating important policy-setting authority. Finally, the defensive effort of OBI and allies helped narrow a bill (HB 4089) that as introduced threatened employers with criminal penalties relating to wage claims. The final version largely reiterated current law while adding some new language relating to construction labor contractors that repeatedly use unlicensed labor contractors.
Regulatory burdens and reform: The Legislature failed to pass a timely and sensible bill (HB 4030) that would have served as a vehicle to delay the state’s complex and potentially unconstitutional extended producer responsibility recycling program while the program awaits trial in federal court this summer. The Legislature also declined to improve Oregon’s regulatory climate through a bill that would have implemented common sense best practices (HB 4073). This failure, ironically, happened despite ostensible concern by legislators about oversight of executive branch agencies.
On the other hand, the Legislature did pass a handful of bills that make changes consistent with OBI’s Oregon Competitiveness Agenda. One of these (HB 4102) allows expedited regulatory review conducted by DEQ-authorized third parties. Another (HB 4021) requires agencies to provide notice of regulatory changes that allow businesses additional time to adapt. Another (HB 4040) contains a provision establishing a Health Insurance Mandate Review Advisory Committee – a longtime OBI priority.
Good (and bad) government: The Legislature passed a bill (HCR 202) tied to a broader effort by former Gov. John Kithzaber to improve health care accessibility and affordability without resorting to a ruinously expensive universal health care model. The Legislature also passed a bill (HB 4018) that makes important technical fixes to Oregon’s recently adopted campaign finance law.
Finally – and very unfortunately – the Legislature passed SB 1599, which changes the date of the transportation referendum vote brought about by the collection of voter signatures. The bill moves the vote from the November ballot to the May ballot and, the reason OBI formally opposed the bill, includes language that denies Oregonians a fundamental right to appeal procedural steps involving the development of a ballot title. This is an established practice, and the Legislature simply overrode it.
Looking to 2027: The 2026 session did provide quite a bit of insight into likely priorities for the 2027 legislative session, which will unfold during the year’s first six months. The 2026 session provided no tax relief for individuals or businesses and instead hinted – or directly named – a number of revenue-raising schemes that will emerge during the 2027 session. The Legislature’s appetite for increased spending (and, therefore, higher taxes) has consistently created challenges in past years and likely would do so again in any case. But the eagerness of many legislators to blame federal policy – and particularly the president – for state and local conditions was instrumental in passing SB 1507, among other policies, this year and is likely to continue. The reluctance of lawmakers to take serious steps, or even small ones, toward regulatory relief, economic development, land use and private sector job creation also points to further challenges in 2027. By that point, Oregon will be one more year removed from its former days of tax and business climate competitiveness.
In the meantime, OBI will continue to develop thoughtful policy solutions based on data and national best practices, building on our current Oregon Competitiveness Agenda as we seek to drive a healthier, more prosperous and more competitive economy.
Stay tuned: OBI will release a formal end of session report within a few weeks.
About Oregon Business & Industry: OBI was founded in 2017 with the merger of Oregon’s two most significant statewide business organizations, Associated Oregon Industries and the Oregon Business Association. The result is Oregon’s largest and most effective statewide business advocacy group.
OBI strives to strengthen Oregon’s economy in order to achieve a healthy, prosperous and competitive state for the benefit of present and future generations. A strong private sector is necessary to ensure that all Oregonians have access to good jobs that support thriving families. A strong private sector is also necessary to generate adequate funding for critical public services such as schools, transportation, and public safety. OBI values equity and support efforts to end historic injustices.
Based in Salem, OBI has more than 1,600 members in every region of Oregon. They include both small and large businesses, represent virtually every industry and sector, and employ more than 250,000 Oregonians. These businesses come together as Oregon Business & Industry because they are committed to building a stronger Oregon.
Our organization is recognized statewide as a leader in policy development, and our team works tirelessly to ensure our members’ voices are heard in policy discussions that will affect their businesses. We also create opportunities for members to meet each other, to grow their businesses, and to learn about policy developments important to their Oregon operations.
OBI builds upon a long and successful history as the voice for business in our state. Associated Oregon Industries (AOI) was founded in Salem in 1895 and grew to become the most influential business organization in the state. AOI worked on the belief that free market principles, predictable regulations, and efficient use of tax dollars would allow Oregon’s economy to thrive. The Oregon Business Association (OBA) was founded in Portland in 2000 as a nonpartisan voice for business committed to collaboration and problem-solving. The core beliefs of those two organizations remain guideposts for OBI’s work today.