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Lawmakers scramble to pass minimum wage tax credits


The tax credits would help keep small businesses, farmers, afloat with increased costs.

PARIS ACHEN - Rep. John Davis, R-Wilsonville, on Feb. 24, 2016, outside the House of RepresentativesA bipartisan duo in the House of Representatives is working to forge an 11th hour deal to offset the cost of minimum wage increases to small businesses, nonprofits and employers in natural resources industries.

Reps. Brian Clem, D-Salem, and John Davis, R-Wilsonville, have proposed giving tax credits to certain employers who are most likely to struggle financially to meet the requirements of a new three-tier minimum wage plan.

“Clearly, based on the vote in the House and Senate, the only bipartisan thing about the minimum wage bill was bipartisan opposition to it,” said Davis, who represents Sherwood, Wilsonville, Bull Mountain, Scholls and part of Aloha in the House's District 26. “Even among those who voted for it, there was a lot of consternation and reluctance. As part of that, there also were assurances from leadership that we would be able to work on the proposals further. After the bill passed, more folks realized the devastating effects the bill is going to have on small businesses.”

PARIS ACHEN - Rep. Brian Clem, D-Salem, on Feb. 24, 2016, in the House of Representatives.Clem, who voted for the bill, said he was concerned that small employers would have to lay off workers due to the cost of the increased minimum wage while larger employers would easily be able to absorb the cost.

“We decided, 'Let’s try to get this right,'” Clem said.

The lawmaker said he has seen the narrow profit margins at his family’s farm near in Parkdale.

“We want to make sure employees aren’t losing their jobs because somebody sells to larger firms or starts to automate,” Clem said.

Gov. Kate Brown has expressed support for tax credits to offset small businesses’ costs.

“I certainly support the concept,” Brown said Wednesday. Tax credits for businesses were “on the table that we negotiated around before the Legislature met,” she said.

House Speaker Tina Kotek, D-Portland, has been supportive of pursuing negotiations to come up with a tax credit proposal.

“She’s open to a conversation about ways to provide targeted support for small employers, but she hasn’t seen a final proposal yet,” said Lindsey O’Brien, Kotek’s communications director.

The details of the still-evolving draft plan were still unclear late Wednesday afternoon. At that point, the proposal had called for giving tax credits to small businesses, nonprofits, and businesses engaged in farming, forestry, fishing, other natural resources production and traded sector manufacturing, starting in July 2017. Lawmakers were still trying to determine the number of employees that would make an employer eligible. The limit could be as many as 25 employees and as little as 10, Clem said.

The tax credit would reduce the effective wage rate for those employers. The amount would gradually climb in tandem with the minimum wage, reaching up to $2 per hour per employee in July 2022. The proposal could be attached to existing bills that already have passed one of the legislative chambers.

Clem and Davis said their original concept also would have set smaller increases in minimum wage and lifted a ban against setting higher wages in Portland. Both of those proposals were too complex to push through the waning days of the Legislature’s 35-day session.

The minimum wage plan, approved earlier this month by both legislative chambers, hikes minimum wages over a period of six years. The amount differs in each of three regions and is set according to a county’s median income and cost of living. In Portland, minimum wage will reach $14.75 in the Portland area, $12.50 in rural and coastal counties with struggling economies and $13.50 in the rest of the state by 2022.

Brown said the customized minimum wage plan sparked interest at the National Governors Association's winter meeting Feb. 19-22. Sen. Michael Dembrow, D-Portland, who spearheaded the three-tier plan, said the state ‘s minimum wage plan is a first in the nation.

“The folks also were very excited, frankly, about our three-tier minimum wage that addresses regional economic differences,” Brown said Wednesday. “I think there is some discussion about whether this might be a model for other states to replicate that have regional differences like we do in Oregon.”

By Paris Achen
Portland Tribune Capital Bureau Reporter
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