In the lightning fast 2018 legislative session, county governance issues were in play from beginning to end, with no rest for the wicked or weary. Overall, things worked out well in this AOC policy arena. A full tracking report is posted on the AOC Governance Steering Committee’s web page.
Below are some of the highlights, listed in alphabetical order by topic.
1. Building Code Programs
Even before session started, the State Building Codes Division and the Oregon Department of Justice had rung alarm bells regarding local governments that contract out building code or inspection services to third-party contractors. A disagreement between the State and AOC/LOC arose regarding when, and under what circumstances, the use of such third-party contractors becomes an unlawful delegation of government power. House Bill 4086 was introduced to address that issue, but the legal disagreement continued, with a written opinion from Legislative Counsel and another written opinion from the Oregon Department of Justice laying out the position of the State. The bill was amended to require that the municipal building official and head inspector for each local program be government employees, purportedly to follow the advice of the written opinions mentioned above. As amended, the bill was opposed by both AOC and LOC. The bill passed the House, but died in the Senate. It is therefore likely that the legal disagreement will need to be resolved in court.
2. Drugs
A. Cannabis
The Legislature passed an important omnibus marijuana bill in this short session. Largely crafted by AOC’s Legal Counsel, Senate Bill 1544 cleans up a few glitches from prior legislation, as well as addressing a number of significant concerns expressed by federal authorities. A one-page summary of the bill can be found in the floor letter used by the carrier of the bill on the Senate floor. Here are a few important provisions in the bill that have already received some media attention, as they address current federal concerns:
- The bill creates the Illegal Marijuana Market Enforcement Grant Program with the Criminal Justice Commission to assist local governments with costs incurred by local law enforcement agencies in addressing unlawful marijuana cultivation and distribution. The grant program will be started with $1.5 million per year, until at least 2024. The amount of funding is not nearly as much as AOC was pushing for, through efforts such as the Southern Oregon Marijuana Initiative, but it is a start. The legislation prioritizes grants to rural areas of the state with high production and little law enforcement. Next week, AOC Legal Counsel, who also serves on the Criminal Justice Commission, will begin work on draft administrative rules for the grant program.
- The bill allows the Oregon Health Authority to set limits on the number of medical seedlings that can be possessed. There is currently no limit.
- The bill also clarifies that high THC industrial hemp consumer products (above .3 percent THC) can only be sold through retail shops licensed by the Oregon Liquor Control Commission, and cannot be exported from the state.
The Legislature also passed a comprehensive rewrite of Oregon’s industrial hemp laws. Three years in the making, the bill did not pass last session, but in the form of House Bill 4089 passed just in the nick of time before the 2018 legislative session ended just before 5:00 p.m. on Saturday, March 3. There are still more reforms to Oregon’s hemp laws that AOC is seeking, such as shipment manifests like those in the marijuana sector, but AOC supported HB 4089, which contains numerous fixes and improvements.
B. Opioid Epidemic
The Governor’s Opioid Epidemic Task Force met throughout 2017 to discuss and explore options for improving Oregon’s response to the continuously growing epidemic of opiate abuse, in the form of both prescription pain pills and heroin. Ultimately, the Governor introduced House Bill 4143, which was passed by the Legislature. Among other things, the bill:
- Creates a pilot project in Coos, Jackson, Marion and Multnomah counties to determine the effectiveness of establishing immediate access to evidence-based treatment for those who suffer an opioid overdose. The Oregon Health Authority was appropriated $2 million dollars to fund the pilot project.
- Requires prescribers to be registered with the Prescription Drug Monitoring Program (PDMP).
AOC’s Legal Counsel, who participated with the Task Force, urged the Task Force to push further, for example by requiring that prescribers actually query the PDMP before prescribing opioids for non-cancer chronic pain, as is required in many other states. However, AOC supported the bill, which takes a number of important steps forward.
3. MERS
It was déjà vu all over again from the 2017 legislative session. A bill was introduced in 2018 that would have terminated pending litigation brought by 12 Oregon counties against the Mortgage Electronic Registration System (MERS) and the banks that have recorded trust deeds that show MERS as the beneficiary. The Oregon Supreme Court has determined that MERS is not the beneficiary of those trust deeds, so indexing them as such in county deed records is an unlawful fraud and damages the public record. A prior lawsuit brought by Multnomah County for the same cause of action settled, resulting in Multnomah County no longer having to index MERS, and the payment of $9,573,500 in damages to Multnomah County ($9,000,000 of which was paid by MERS). The bill this session, Senate Bill 1556, was amended to allow the current litigation to proceed, but preclude any subsequent litigation by counties. Thus, the situation would theoretically have been locked down as follows:
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- Multnomah County would have their MERS remedy.
- Twelve Oregon counties would retain a possible path to a MERS remedy.
- Twenty-three Oregon counties would be precluded from any MERS remedy.
In addition, by precluding any future lawsuit for a similar fraud and violation of Oregon law, the legislation would functionally permit any future shell company to operate just like MERS in violation of Oregon law. AOC was strongly opposed to the bill. The amended bill passed the Senate, but died in the House. There is little doubt another MERS bill will be introduced in 2019. In the meantime, the Chair of the Senate Judiciary Committee intends to convene a stakeholder work group to discuss possible solutions.
4. PERS
Last year, the Governor appointed a Task Force to examine the large and looming Unfunded Actuarial Liability (UAL) of the Public Employee Retirement System (PERS), which is driving significant increases in PERS employer rates, and threatening the loss of public services. The Task Force issued an extensive report, some parts of which ended up in Senate Bill 1566, which the Legislature passed with bi-partisan support. The bill primarily attacks the UAL through increasing deposits into PERS employer side accounts. Those side accounts not only help PERS employers defray some of their own rate increases, but also reduce the overall UAL, thus potentially reducing overall system rate increases. Last session, AOC secured a fix to the side account statute to make those accounts more usable. The bill this session funds increases in side account deposits primarily through two mechanisms, the second of which is directly relevant to counties:
- The bill skims revenues greater than anticipated from a number of state funds and deposits the skim into the side accounts of school districts, community colleges, and public universities.
- The bill creates the Employer Incentive Fund from which PERS employer side account contributions can be matched up to 25 percent. The Fund is being capitalized with 18 percent of the state capture of income tax revenues from disconnecting Oregon income tax law from the recent federal income tax legislation. This should amount to roughly $25 million in initial capitalization.
AOC supported the bill and encourages AOC members to look closely at the potential opportunities created by the Employer Incentive Fund.
Contributed by: Rob Bovett | AOC Legal Counsel