Mar 2, 2026 | AOC Advocacy, AOC News
Thursday, Feb. 26 was the 2026 legislative session second chamber deadline. Bills that were not voted out of their second chamber policy committee on Thursday and referred to the chamber floor, Joint Committee on Ways and Means, or committees on Rules or Revenue will not move forward this session. Policy committees have largely closed for the session and focus has shifted to several big-ticket bills in the Rules and Revenue committees and finalizing the state budget. The session must adjourn sine die by Sunday, March 8.
A deficit in the state general fund caused by H.R. 1, the federal budget bill passed in late 2025, required the Legislature to rebalance the state budget during the 2026 short session. The Association of Oregon Counties (AOC) lobbied legislative budget writers in a series of meetings and written feedback urging the preservation of core services by seeking savings through the least disruptive measures and avoiding cuts that reduce funding for mandated state-county shared services or shift cost burdens to county governments.
Rebalance proposals were made public over the weekend in several budget bills – on initial review, it appears that county budgets avoided direct cuts or cost shifts. The rebalance will be achieved largely through vacancy savings and cuts to services and supplies. Our advocacy was successful this session, but AOC and counties should be prepared for several biennia of challenging budget conversations as the overall state general fund revenue paradigm continues to shift.
Senate Concurrent Resolution 204, honoring the role of counties and AOC’s 120th anniversary, passed both chambers unanimously and now awaits the governor’s signature. SCR 204 was introduced at the request of AOC by Senate President Rob Wagner and was sponsored by House Speaker Julie Fahey, and 27 bipartisan and bicameral legislators. Unanimous support for SCR 204 is a testament to the Legislature’s appreciation of AOC’s vital role and the essential services provided by counties.
AOC is tracking around 130 of the 300 total bills introduced this session for their potential impact to county budgets, services, or governance. Our team has analyzed and submitted fiscal impact statements for about 140 bills and amendments, at the request of the Legislative Fiscal Office, on behalf of counties. As always, AOC Legislative Affairs staff continue to diligently track and defend against unfunded mandates and policy proposals with a negative impact to county governments.
Please mark your calendars to attend the March 6 and 9 AOC steering committee and legislative committee meetings – these AOC day meetings will include comprehensive debriefs of AOC’s priorities and newly passed legislation impacting county budgets, services, or governance. In the meantime, please do not hesitate to reach out to your AOC Legislative Affairs team.
Below are high level updates from AOC steering committee policy portfolios.
Governance and Revenue
AOC’s primary governance and revenue goals this session are to continue making progress on County Assessment Function Funding Assistance (CAFFA)-related objectives, including securing a statewide study from the Legislative Revenue Office and protecting against Department of Revenue agency reductions that harm local government revenues. Staff have received commitments from the House and Senate Revenue chairs to get a CAFFA study produced, and members of the Joint Committee on Ways and Means legislators have been informed about the importance of keeping DOR programs that help maintain the property tax asset.
House Bill 4148, local transient lodging tax reform, is AOC’s top policy priority this session. The bill had a very successful public hearing with many county officials testifying in person and passed the House floor with 40 “yes” votes. HB 4148 awaits a work session in the Senate Committee on Finance and Revenue.
Health and Human Services
AOC’s health and human services objectives this short session are to preserve all funding for public health, developmental disabilities and behavioral health services, prevent and reduce administrative burden and liability, and maintain the local public health and local mental health authority of county governments. These objectives are well aligned with legislative leadership’s priorities to maintain or grow core community services to resolve federal court sanctions related to the Mink-Bowman lawsuit and long wait times for forensic admissions to the Oregon State Hospital. AOC is working with bill sponsors and partners to meet these policy objectives and significant progress is being made.
It appears at this time that local public health, behavioral health, and intellectual and developmental disabilities program budgets, as well as homelessness prevention and response are being held harmless. A $15.5 million reduction in Behavioral Health Resource Network funding in Senate Bill 5703-1 is simply a reconciliation of the state budget with the recent reduction in the marijuana tax revenue forecast and not a new cut.
Natural Resources
Efforts in this portfolio are focused on ensuring that natural resources state agency budget reductions do not impact county programs and budgets. Initial budget reduction proposals included potential impacts of $40 million to county programs including wildlife services, place-based water planning, invasive species, and wildfire protection. AOC’s direct advocacy for the preservation of natural resource-related programs and budgets was successful – programs and funding on which counties rely were protected and even increased. Several notable increases include direct allocation for the Land Owner Offset in the Department of Forestry Budget ($11.6 million), additional funding for the Wolf Depredation Grant Program ($1 million) and funding for the Japanese Beetle Eradication Program ($1.8 million).
Public Safety
AOC has focused on budgetary issues and protecting public safety programs from cuts – and with the release of today’s budget bills, county public safety has been held harmless. AOC has also been heavily involved in negotiations around the federal accountability agenda from the majority party. Staff worked with legislators and partners to mitigate risks and costs to counties from concepts related to employment law, law enforcement masking, county liability, and task force participation.
Transportation
AOC’s primary objective in the transportation policy portfolio this session is to ensure that the measures necessary to fill the nearly $300 million operations and maintenance budget gap at the Oregon Department of Transportation (ODOT) do not negatively impact county road department budgets. The ODOT rebalance proposal transfers unobligated State Highway Fund dollars toward agency operations and maintenance including dollars in the Connect Oregon and Safe Routes to Schools programs, redirects some federal funding, and leaves around 100 jobs vacant.
ODOT’s budget rebalance has no impact on the 50/30/20 funding formula, Local Bridge Program, or the Fund Exchange Program. AOC also thwarted earlier attempts to address ODOT’s budget gap with measures that sweep and undermine the State Highway Fund distribution.
Contributed by: Mallorie Roberts | Legislative Affairs Director
Jan 30, 2026 | AOC Advocacy, Governance, Revenue, & Economic Development
During the 2025 legislative session, Oregon local governments came closer than they have in more than two decades to modernizing how the local transient lodging tax (TLT) works. A reform bill (House Bill 3962 A), supported by a broad coalition of local government and public safety stakeholders, cleared a critical policy committee vote, advanced out of the House, but then stalled in the Senate without a floor vote due to session running out of time.
Although the outcome was disappointing, the near miss has only galvanized counties and cities to get the bill across the finish line in the 2026 short session. An effort to reform the local TLT has the potential to be one of the most consequential legislative efforts of the session for local governments in the 2026 legislative session. Passage of this legislation will mark a victory for local control, public safety investment, infrastructure resilience, and fairness for residents that remain after tourists leave their communities.
Two versions of the local TLT reform bill will be introduced: Senate Bill 1562 sponsored by Senators Weber and Neron Misslin and House Bill 4148 sponsored by Representatives Walters and Javadi. These bills are identical in language and exist primarily to offer local governments two paths to attempt to pass the bill in 2026.
2003 Rules Governing 2026 Realities
Current law ties the hands of local governments by locking in revenue ratios from post-2003 local TLT increases to a 70/30 split, with 70% of revenues statutorily required to be spent on very specific infrastructure and services that support tourism, and 30% of revenues directed toward general fund discretionary spending. While this ratio worked for the 2000s and early 2010s, these ratios no longer reflect how tourism impacts communities and local governments.
For many counties, peak tourism seasons mean populations that double, triple, or even quadruple overnight. That surge places real and measurable strain on sheriff patrols, jail capacity, search and rescue operations, EMS response times, roads and bridges, sanitation systems, and outdoor recreation infrastructure. Those costs do not disappear when visitors leave; they are borne year-round by the residents and local governments who maintain these systems.
The reintroduced bills in 2026 would not eliminate tourism promotion funding. Instead, it would allow local governments to adjust post-2003 TLT distributions so that up to 60% may be designated as general fund dollars to be used for critical local services and infrastructure, while maintaining a dedicated 40% for tourism promotion and facilities.
Why This Matters to Every County — Not Just “Tourism Counties”
It is tempting to assume that this debate primarily affects coastal or other destination communities. However, that assumption is outdated.
Tourism patterns have shifted dramatically. Short-term rentals are increasingly located outside traditional tourism cores, spreading wear and tear across county road systems, rural water districts, and unincorporated areas. At the same time, counties face mounting infrastructure backlogs, like transportation and water infrastructure needs, without meaningful growth in flexible revenue options.
Importantly, the local TLT is one of the only tools counties have to capture visitor-generated costs without shifting the burden onto permanent residents through new property taxes, levies, or bonds. Gas taxes are declining in real value, are distributed on a per-capita basis rather than road usage, and do not reflect tourism impacts. Income taxes flow to state priorities that may not align with local needs. In short, counties are being asked to absorb visitor impacts with tools designed for a very different era.
2026 Will Be a Turning Point for Local TLT Reform
The 2025 session demonstrated that this reform is viable. It moved. It gained traction. And it came within a single chamber of becoming law. What will make the difference in getting the bill passed in 2026 is that local governments are better prepared, have had more time to meet with legislators, and intend to move quickly on the bill to avoid it being left on the table at the eleventh hour of session.
If you are interested in supporting this effort in 2026, please contact Justin Low to coordinate the following opportunities:
- Providing public or written testimony in support of the bill
- Traveling to Salem to meet directly with legislators
- Drafting an op-ed for publication in your local newspaper to elevate the county perspective
County voices were essential to getting local TLT reform as far as it went in 2025, and they will be decisive in getting it across the finish line in 2026.
Contributed by Justin Low | Legislative Affairs Manager
Jan 29, 2026 | AOC Advocacy, Health & Human Services
Updates on Coordinated Care Organization (CCO) cuts to Community Mental Health Programs funding, impacts of Mink-Bowman lawsuit on local services, Rural Health Transformation grants, state-county partnership on HR 1 implementation, and the Statewide Shelter Program.
In case you missed it: Jan. 23 Local Government Advisory Committee (LGAC) on Health and Human Services (Meeting recording; Chat transcript)
CCO cuts to Community Mental Health Programs funding
Despite CCO’s ORS 414.153 obligation to maintain the mental health safety net system provided through local mental health authorities in order to meet the needs of their Oregon Health Plan (OHP) members, CCOs across the state are making significant cuts to their 2026 contracts with Oregon’s Community Mental Health Programs (CMHP). The mental health safety net, which includes court-ordered services necessary for the Oregon Health Authority (OHA) to effectively manage the Oregon State Hospital census, requires adequate OHP reimbursement for program viability.
The Association of Oregon Community Mental Health Programs described addressing this threat to Oregon’s safety net as a top priority, along with mitigating the expected loss of federal funding from HR1 and a longer term effort to close the funding gap identified in the latest cost study of required CMHP services. Many CMHPs also rely on Behavioral Health Resource Network grants which just received 14% reductions due to falling cannabis tax revenue projections.
CMHPs have been in discussion with OHA on potential solutions, including joint advocacy to the Legislature for sustainable funding for crisis stabilization centers;
prioritizing approval of CMHPs as new Certified Community Behavioral Health Clinics (CCBHCs); ensuring adequacy of CCO contract exhibit M (adequate networks/funding); and establishing a base rate for CCO reimbursement for priority populations and services set by OHA in the County Financial Assistance Agreement, such as Assertive Community Treatment, Early Assessment and Supports (EASA), Supported Employment, and WRAP.
During discussion at the Jan. 23 meeting, committee members noted that the CCO contract cuts have already resulted in loss of service to hundreds of community members, including medication management. Also on the chopping block are intensive youth services, medication assisted treatment for substance abuse, and supported employment, among others.
This issue will be a standing item on the committee agenda each month until it is adequately addressed, including the next meeting on Feb. 27.
Impacts of Mink-Bowman lawsuit on local services
Court Monitor Dr. Debra Pinals provided an update on her work with the state to address the wait times for persons in county jails to be admitted to the Oregon State Hospital (OSH) for competency restoration. Her latest update, Neutral Expert 10th Quarterly Report Regarding the Consolidated Mink and Bowman Cases, published in December, showed an average wait time of 21 days driven by an increase in court-ordered placements; the federal court-mandated maximum is seven days.
The state is accruing fines now in excess of $2 million on a per person per day basis for noncompliance with the court order. The court is making exceptions to the fine for cases where there is a delay in court orders or in transportation by county sheriffs. Those courts and sheriffs are being notified by OSH in those cases. Dr. Pinals is overseeing a workgroup which will decide how to disburse funding from the fines.
A community restoration program manual overseen by Dr. Pinals is now in draft form. She is also focusing on improvements to transitions out of OSH.
Public Consulting Group (PCG) has been contracted to provide an independent evaluation and is currently conducting a ‘deep dive’ into state budgetary allocations and expenditures for behavioral health services in order to identify what resources are needed and where to bring the state into compliance. Report recommendations are expected to come this spring.
Committee discussion noted the need for ongoing collaboration between Dr. Pinals and state and county partners on these efforts.
Rural health
OHA Policy Director Steph Jarem gave an update on Oregon’s Rural Health Transformation plan development. Oregon was awarded $197.3 million for Year 1 with an expected total over the next five years of about $1 billion. The definition of ‘rural’ is the same as used by Oregon’s Office of Rural Health. A contractor will support OHA in conducting regional conversations for the first of five initiatives within the program which focuses on regional partnerships and system transformation. OHA is still in final negotiation with the federal agency and expects to release its RFP in the spring with local award funding probably released in the summer. Director Jarem’s slides provide helpful details on federal eligibility requirements, allowable and not allowable use of funds, and Oregon’s five initiatives. Awards will prioritize ready-to-go projects and projects that are collaborative among local/regional partners.
State-county partnership on HR 1 implementation and the Statewide Shelter Program
County Health and Human Services directors brought forward a request for guidance from OHA on specific codes to use to demonstrate an individual’s exemption from new Medicaid eligibility requirements, e.g., definition of medical fragility, and noted the need for robust provider education ahead of the July 1 implementation of those new requirements. OHP Community Engagement Director Jessica Deas provided an HR1 Impacts and Strategies update. The committee will revisit this topic for new developments in February.
Oregon Housing and Community Services Department Director of Housing Stabilization Liz Weber provided an update on the implementation of the Statewide Shelter Program. Applications for new regional coordinators are now under review and will be announced “soon.” The new rules and program manual will not go into effect until those new regional coordinators are in place. Committee members recommended that new regional coordinators be required to have an active MOU with counties to ensure effective coordination.
Also presented was the state’s process and rationale for allocating the $65 million dollars directed by the 2025 Legislature to increase behavioral health residential treatment capacity and short overviews of OHA and ODHS rebalance proposals currently before the Legislature.
Contributed by: Jessica Pratt | Legislative Affairs Manager
Jan 28, 2026 | AOC Advocacy, AOC News
The Oregon State Legislature’s 35-day short session begins on Feb. 2 and must end no later than March 8. Legislators’ primary objectives during the 5-week sprint will be mitigating historic budget gaps in both the state general fund and at the Oregon Department of Transportation. The Association of Oregon Counties (AOC) Legislative Affairs team is working closely with legislators and our colleagues in Salem to protect county budgets and services during this process. AOC expects to make incremental progress on our 2025-26 legislative priorities, setting the stage for a productive interim.
AOC steering committees and the Legislative Committee will meet on Feb. 6 and 9 to review and take positions on bills impacting county services, budgets, and governance. AOC staff, alongside our steering committee co-chairs and the AOC Executive Committee, strive to ensure the association’s resources and political capital are leveraged strategically and effectively. Our processes and advocacy are strongest when commissioners, judges, and chairs from all member counties engage.
Committee meeting information is posted on the AOC website on the calendar and on each committee page accessed by the Advocacy drop-down menu.
The AOC Legislative Affairs Department looks forward to a successful and productive month advocating in the State Capitol for counties and the services they provide.
Contributed by Mallorie Roberts | Legislative Affairs Director
Dec 15, 2025 | AOC Advocacy
The 2026 legislative session will primarily focus on rebalancing the state general fund after impacts from the federal budget bill passed this summer, H.R. 1, created a significant gap in the state budget. Changes to federal tax laws, to which the Oregon tax code is tied, are projected to result in at least a $63 million dollar budget hole in the current biennium (possibly closer to $370 million), and current projections forecast an expected loss of $15 billion in federal funding for Medicaid and food assistance over the next six years.
Members and staff from the Association of Oregon Counties (AOC) met with Ways and Means Co-Chairs Senator Kate Lieber and Representative Tawna Sanchez for a special state budget briefing this month. The co-chairs provided a detailed overview of the state’s general fund challenges and options for rebalancing in 2026. The message relayed by county representatives to the co-chairs was clear – counties across Oregon are facing significant budget challenges of their own and cannot bear cost shifts or funding cuts. The Legislature should consider AOC and counties to be reliable partners with whom to collaborate on solutions for efficient delivery of critical public services to every Oregonian.
The Legislature is constitutionally required to pass a balanced biennial budget and has three basic options for addressing the gap — reduce spending, increase revenue, and access reserve accounts. To reduce spending, all state agencies were asked to submit proposals for both 2.5% and 5% budget reductions that could be adopted in the 2026 session along with a list of all programs established or expanded since 2021. Ways and Means Subcommittees received presentations on these reduction proposals during November Legislative Days, and have been subsequently holding stakeholder meetings to solicit feedback. AOC staff is meeting with legislators and providing ongoing feedback on proposals related to the delivery of essential county services.
The Department of Administrative Services published a detailed overview of the estimated impacts of H.R. 1, available here. The Legislative Revenue Office’s report on the impact of H.R. 1 on state general fund revenue is available here. This public folder includes estimated impacts by program areas.
The revenue forecast provided to the Legislature by the state economist in February will dictate exactly how much of a state general fund revenue gap the Legislature must fill during the 2026 short session. AOC will keep our members up to date as conversations about budget cuts and rebalances continue.
Contributed by: Mallorie Roberts | Legislative Affairs Director
Oct 30, 2025 | AOC Advocacy, Public Safety & Veterans
Senate Bill 97, passed by the Legislature this session, gives counties the authority to increase access to mediation services by reducing the costs to participants. It also develops a fuller picture of how these services are operated in each county, especially since rural and frontier counties do not have the volume of marriages to generate significant revenue for this mediation fund.
Counties and the Oregon Judicial Department (OJD) fund mediation services for divorce cases where children are involved. The county side is funded by an optional surcharge on marriage licenses. The intent of these mediation programs is to provide an alternative pathway for families and allow them to resolve disputes in a less formal manner and reduce stress on children in the process. Mediation services are quite expensive, between $100-200 per session, and only about half of family law cases with children are served through mediation due to limited access.
This optional fee was capped at $10 for the last 48 years, until the Legislature passed SB 97 in the 2025 session. The bill raises the cap to $35 and indexes it to inflation going forward. Counties can choose to levy any amount up to the cap as part of their normal fee schedule development resolution or ordinance. This fee would be collected by the county clerk upon issuance of the license. Currently only 12 counties levy this optional fee (Clackamas, Clatsop, Curry, Deschutes, Josephine, Lake, Lane, Lincoln, Marion, Multnomah, Umatilla, and Washington).The bill took effect May 28, upon the governor’s signature.
The bill also establishes a quarterly fiscal report, paid for out of the mediation funds, that county treasurers must submit to OJD via the presiding judge for each county. The intent of this report is to show OJD how mediation funds are being used across the state. Since these funds are administered by the counties, there isn’t a statewide picture of the funding gaps. Some counties are able to supplement these programs with general fund dollars, but most are not.
Contributed by: Tim Dooley | Legislative Affairs Manager
