After The State’s Largest Business Group Remains Neutral on Tax Increase, a Board Member Quits and Encourages Others to Join Him

The president of Freres Lumber, a large Linn County company, angrily quit the board of Oregon Business & Industry this week after lawmakers passed House Bill 3427, which will tax businesses to provide at least $1 billion a year of new money for schools.

Rob Freres, who has been a leader in the conservative wing of Oregon's Republican Party, circulated a letter to OBI's 1,600 members expressing his dissatisfaction.

In state where political and corporate communications often take the form of passive-aggressive politesse, Freres' jeremiad illustrates not only the partisan split dividing the state but it also exposes the urban-rural divide and the difficulty of trying to get Oregon's businesses to speak with one voice.

"I wanted to share with you why our family company is leaving OBI (formerly Associated Oregon Industries) after 70 years of membership," Freres wrote. "To put it simply, OBI has lost its way and the new tax is the final straw."

Although OBI opposed new corporate taxes without significant reductions in public pension costs, the organization also pushed for a different version of taxation than the corporate activities tax lawmakers adopted. OBI wanted a version of a value added tax, which would be more favorable to manufacturers than the gross receipts tax included in House Bill 3427. A gross receipts tax taxes companies on their sales, regardless of profit.

Freres railed against the group's decision to take a neutral position on HB 3427. (The OBI board had explained that position came in recognition of the super-majorities Democrats hold in both chambers. Those super-majorities—three-fifths of membership—allow Democrats to pass new taxes in the Legislature without a vote of the people.)

"What did OBI get in exchange for selling companies like ours down the river?" Freres wrote. "It's easier to explain what they didn't get. They didn't get real PERS reform, which has been a top priority for years. They didn't secure the defeat of the cap and trade bill that will make Oregon manufacturers less competitive and increases fuel and natural  gas costs for Oregon families. And they didn't defeat paid family leave legislation."

OBI is the result of a 2017 merger of Associated Oregon Industries, which traditionally represented manufacturers, forest products companies and smokestack industries, and the newer, smaller Oregon Business Association, which was more moderate and Portland-centric in its policies. The merger took a couple of years of effort because of the broad range of interests the two groups represented.

Freres nodded to the lack of unity in his letter.

"To be frank," he wrote, "we're sick of downtown Portland companies like Nike and the electric utilities shoving new taxes and regulations down the throats of small-to-medium sized manufacturers and those of us in rural Oregon."

In closing, Freres encouraged his fellow OBI members to join Oregon Manufacturers and Commerce, another business group that he helped start last year.

"If you're as angry as I am about big Portland corporations abandoning those who actually make things in Oregon—join us at OMC," Freres wrote. "We want to link arms with employers who are sick of taking the least-bad deal or being patted on the head by big corporations who don't feel the impact of taxes or regulations like we do."

A spokeswoman for OBI did not respond to a request for comment on the letter.