Click the "Hot Button" to read the latest on the 2007 Legislative Wrap up, Posted 07/14/07!

ONSA Achieves Major Victories During 2007 Session

*   Tobacco Tax
*    Bottle Bill
*    Beer Tax
*    Sales of Alcohol to Minors
*    Minor Decoy

The 2007 Oregon Legislative Session commenced on January 8th and adjourned on June 29th. While it was the shortest regular session since 1995, lawmakers still managed to introduce more than 3,000 bills and enact more than 1,800 new laws.

Throughout the session, lawmakers introduced a broad array of proposals that would have negatively impacted small storeowners. ONSA worked closely with lawmakers to explain how the proposed legislation would affect small neighborhood stores, on issues ranging from alcohol stings to the bottle bill. Though such efforts, ONSA was able to persuade lawmakers to adopt favorable amendments and to prevent many adverse proposals from moving forward. Without ONSA’s efforts, many of these adverse legislative proposals would have become law.
ONSA members are encouraged to review the summaries provided below which briefly describe ONSA’s activities. The issues described represent high priority legislation affecting small neighborhood stores, but by no means include all of the bills affecting businesses.

Tobacco Tax
Bills Introduced: HB 2201, HB 2967, HB 3558, SJR 4
One of Governor Kulongoski’s highest priorities for the 2007 Session was passage of an 84.5 cent-per-pack tobacco tax increase to pay for health insurance for all of Oregon’s uninsured children. The proposal, originally embodied in HB 2201, would also have increased Oregon’s tax on other tobacco products from 65% of the wholesale price to 95% of the wholesale price.

ONSA worked continually throughout the session informing lawmakers that the Governor’s tobacco tax increases would make Oregon’s tobacco taxes among the highest in the nation and harm small retailers. ONSA also informed lawmakers that while the Governor was saying the tobacco tax revenue would be used to fund the “Healthy Kids Program”, less than 45% of the tobacco tax revenue would have been used to provide uninsured children with health insurance and the majority of the money would go to other programs. Finally, ONSA pointed out that if the State of Oregon wanted to provide health insurance to all of Oregon’s children, then all Oregonians should pay for this program – not just smokers.

The debate over the Governor’s tobacco tax increase proved to be one of the most contentious political issues of the 2007 session. Under the Oregon Constitution, all revenue raising measures, including a tobacco tax, must be initiated in the House of Representatives and be approved by a three-fifths majority in both the House and Senate. Non-revenue raising measures only require a simple majority of 31 votes to pass. The Governor’s tobacco tax was voted on three times in the Oregon House of Representatives. Proponents of the tax were never able to obtain the necessary three-fifths majority (36 votes) in the House and the tax failed three consecutive times.
After the Governor’s cigarette tax was defeated for the third time, the Governor and proponents of the tax increase resorted to drastic measures and prepared a resolution that would place the Governor’s tax increase in the Oregon Constitution. Proponents resorted to this strategy because a constitutional amendment only requires approval of a simple majority in both houses of the legislative assembly, instead of the three-fifths majority required to approve a tax. Although many lawmakers acknowledged that it seemed highly inappropriate to place a cigarette tax in the Oregon Constitution, a majority of lawmakers agreed to send a constitutional amendment that would increase cigarette and other tobacco product taxes to voters at a special election on November 6, 2007.

Bottle Bill
Bills Introduced: SB 481, SB 634, SB 706, SB 707
Oregon’s Bottle Bill proved to be one of the most prominent issues addressed during the 2007 Session. Prompted largely by media attention from the Oregonian, lawmakers considered numerous proposals aimed at expanding the Bottle Bill in one way or another. Ideas included increasing the deposit, creating a system of redemption centers, and expanding the types of beverage containers encompassed by the act.
The debate over how to modify Oregon’s Bottle Bill continued throughout the session and culminated in the passage of SB 707. The primary effect of SB 707 is to expand the scope of the Bottle Bill to include water and flavored water containers starting on January 1, 2009. The measure also establishes a nine-member task force to study the Bottle Bill and make a report to the Legislature by November 1, 2007.

Throughout the session, ONSA worked diligently to inform lawmakers of the burden the bottle bill places on small storeowners and how increasing the deposit or expanding the types of containers subject to the act would only worsen the situation. While ONSA was not able to prevent the legislature from expanding the Bottle Bill to include water containers, ONSA did succeed in securing an amendment into SB 707 to attempt to reduce the impact on small stores. Under ONSA’s amendment, a small storeowner occupying a space of less than 5,000 square feet may refuse to accept beverage containers of a type, size and brand the dealer does not sell. The amendment also limits the number of containers a small storeowner is required to accept to 50 containers per person per day.

Beer Taxes
Bills Introduced: HB 2347, HB 2535, HB 2731, HB 3255, HB 3421, HB 3565
In late 2006, the Oregonian reported that several lawmakers failed to disclose trips to Maui paid for by the Oregon Beer and Wine Distributors Association. The stories chastised lawmakers for their ethical lapses and attempted to draw a connection between the Maui Trips and the fact that Oregon’s beer tax has not increased in more than 30 years. For this reason, many political analysts predicted lawmakers would inevitably respond to the negative media attention by increasing the state’s beer tax during the 2007 session.
The focus of beer tax discussions early in the session was on increasing the tax by 10-cents-per-drink. Proponents characterized this proposal as a “modest dime-a-drink” increase that would not be noticed by consumers, storeowners, or beer producers. ONSA responded by providing lawmakers with information demonstrating this “modest” 10 cent-per-drink tax increase would make Oregon’s beer tax one of the highest in the nation at $35.66 per barrel. ONSA argued that increasing Oregon’s beer tax by 1272% was far from “modest” and would further depress the beer sales that many small storeowners heavily depend upon. 
                                           
The proposed 10¢ per drink increase in Oregon’s beer tax represented an increase of 1272% in the beer tax.
                                           
The debate surrounding a beer tax increase continued throughout the session and different ideas emerged on the appropriate level of the tax and the purpose to which the revenue should be applied. Certain lawmakers argued that a 10-cent-per-drink tax increase was too high and that a 5-cent-per-drink tax would be more likely to gain legislative approval. Other lawmakers argued that it would be possible to obtain support for a beer tax by dedicating revenue from any new beer tax to the Oregon State Police. Still others argued that individual counties should be granted authority to impose their own taxes on beer and wine.

The proposal to allow counties to impose their own beer taxes (HB 2171) garnered significant attention in the waning days of the session. Ultimately, however, ONSA and other stakeholders succeeded in defeating all proposals to increase Oregon’s beer tax during the 2007 session.

Sales of Alcohol To Minors               HB 2151 & HB 2166
The Oregon Attorney General’s Underage Drinking Taskforce introduced a number of proposals during the 2007 Legislative Session ostensibly intended to reduce underage drinking. Unfortunately, a high percentage of the proposals introduced by the taskforce were focused on penalizing storeowners, rather than penalizing minors for attempting to illegally purchase alcohol.

Two proposals of particular concern for small storeowners were HB 2151 and HB 2166. Each of these proposals sought to change the legal standard that is applied to determine whether an OLCC licensee should have their license revoked for selling alcohol to a minor. Under existing law, the OLCC may revoke a license if it finds that a licensee “knowingly has sold alcoholic liquor to persons under 21 years of age...” Both HB 2151 and HB 2166 sought to amend existing law so that the OLCC would be authorized to revoke a license upon finding that a licensee “has sold alcoholic liquor to a person who the licensee knew or should have known was under 21 years of age.”

ONSA’s primary concern with HB 2151 and HB 2166 was that replacing the “knowingly” standard in existing law with the proposed “knew or should have known” standard would result in storeowners losing their liquor licenses in instances where the sale was completely inadvertent and all reasonable precautions were taken. Whereas a “knowingly” standard requires the OLCC to demonstrate actual knowledge on the part of a storeowner in order for a violation to be found; a “knew or should have known” standard would allow the OLCC to revoke a store owner’s liquor license in circumstances where a store owner took reasonable precautions and did not “know” they were selling to a minor, but “should have known” in the eyes of the OLCC.
                                           
Members of the House Judiciary Committee, where both HB 2151 and 2166 received several public hearings, indicated their decision not to move forward with either bill is attributable to the information provided by ONSA.
                                           

Minor Decoy Operations
HB 2150 – Passed House 51–0                                      Died in the Senate
House Bill 2150 proposed to allow the OLCC greater flexibility to use targeted minor decoy operations. ONSA’s defeat of HB 2150 was a major victory for small storeowners in urban areas.
Under existing law, the OLCC must conduct minor decoy operations on a random basis in cities with populations greater than 20,000. The law requires that “to the greatest extent possible” there must be an equal chance that any vendor will be subject to an OLCC minor decoy operation.

House Bill 2150 would have modified existing law by allowing the OLCC to break up any city with a population greater than 70,000 into smaller geographical areas with individual populations over 20,00. Under HB 2150, OLCC operations would no longer need to be completely random in cities with populations greater than 70,000 and, instead, would only need to be random within the specified geographical region. Allowing the OLCC to break-up larger cities into smaller geographical units would have provided the OLCC with greater flexibility to target retailers in specific geographical locations with minor decoy operations.

Conclusion
The 2007 Session presented many challenges beside those described above. For example, lawmakers seriously considered, but ultimately did not approve, legislation that would have guaranteed paid family leave to employees of Oregon businesses. Lawmakers also deliberated on legislation prohibiting certain discounts on tobacco products, and legislation requiring anyone selling tobacco products to obtain a license from the state. These proposals received consideration, but did not move forward, thanks largely to ONSA’s efforts.

While ONSA succeeded on a number of fronts during the 2007 Session, many of the proposals that were defeated this session are certain to resurface in subsequent legislative sessions – potentially as soon as February 2008.

In addition, voters will have the opportunity on November 6, 2007 to decide whether it is appropriate to place a cigarette tax in the Oregon Constitution. Storeowners opposing the effort to place a cigarette tax in the Oregon Constitution are encouraged to contact ONSA to learn more about how they can help defeat this unfair tax. •

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