The 2019 Oregon Legislature established a “Fund for Student Success” and adopted the corporate activity tax to pay for it.
The aim was to raise about $1 billion a year for education initiatives, with at least half going directly to school districts through enrollment-based grants.
Businesses that have taxable commercial activity of more than $1 million in Oregon after taking out specified costs and exemptions pay a tax rate of 0.57% plus $250. From the beginning, legislators were determined that the CAT provide additional education funding that couldn’t be pulled off for other General Fund purposes.
But that doesn’t mean various interests haven’t tried. Since 2019, OSBA has been vigilant for bills that would reduce the available funds for the Student Success Act by carving out more exemptions. OSBA doesn’t take a position on the worthiness of various exemptions. Instead, our position is always that good causes shouldn’t come at the expense of our children.
Three of them received a hearing Monday in the Senate Finance and Revenue Committee. I testified Monday, Feb. 24, against Senate Bill 125, and I plan to testify against Senate Bills 382 and 707, which are scheduled for Wednesday, March 5.
SB 125 would add CAT exemptions for Medicare, Public Employees’ Benefit Board, Oregon Educators Benefit Board, Children’s Health Insurance Program and TRICARE expenses. More than two-thirds of health care commercial activity is currently exempt from the CAT, but this bill would add more exemptions. In 2020, those programs were responsible for over $20 billion in health care spending.
SB 382 would exclude receipts from the sale of prescription drugs by licensed retail pharmacies. Currently, retail sales receipts from prescription drug sales are exempt from pharmacies with nine or fewer locations. This would expand it to all locations, including places such as CVS and Walgreens.
SB 707 would exclude receipts from the sale of prescription drugs by critical access retail pharmacies. A critical access retail pharmacy is a pharmacy where the residents have limited access to other pharmacies, usually in rural areas and more than 10 miles from other pharmacies.
The Oregon Education Association also testified against these bills, and I really appreciate the unified front our organizations have in advocating for more, not less, funding for education.
OSBA recognizes the importance of having access to pharmacies, especially in our rural areas and receiving adequate care. We want healthy communities, and we support all sorts of health initiatives linked to schools.
We just don’t want to see health care supports come at the expense of students’ education. If legislators want to use CAT exemptions to give selected businesses a boost, they should raise the CAT rate so the overall investment in education stays the same.
OSBA contends that no matter how good the exemption intentions, the CAT money is meant for kids.
– Adrienne Anderson
OSBA Government Relations Counsel
