PUBLIC HEARING HB 2186,

PUBLIC HEARING AND WORK SESSION

 HB 2339

 

TAPES 42 A-B, 43 A

 

HOUSE REVENUE COMMITTEE

February 13, 2003, 2003   8:30 AM   STATE CAPITOL BUILDING

 

Members Present:                        Representative Lane Shetterly, Chair

                                                Representative Wayne Scott, Vice Chair

                                                Representative Joanne Verger, Vice Chair

                                                Representative Phil Barnhart

                                                Representative Vicki Berger

                                                Representative Pat Farr

                                                Representative Mark Hass

                                                Representative Elaine Hopson

                                                Representative Max Williams                                               

 

 

Witnesses Present:                        Phil Donovan, Portland Housing Authority

                                                Paul Parker, Portland Housing Authority

                                                Debra Buchanan, Department of Revenue

                                                Robert Douglas, Oregon Society of Certified Public Accountants

                                                Kim Spaulding, OSCPA

                                                Robert Carus, OSCPA

                                                Bruce Krohn, OSCPA

 

Staff Present:                            Mazen Malik, Legislative Revenue Office

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 42, SIDE A

007

Chair Shetterly

Calls meeting to order at 8:36 a.m.

 

OPENED PUBLIC HEARING HB 2339

 

012

Mazen

Provided background and history of HB 2339, Staff Measure Summary, (Exhibit 1), and discussed exemption statute, (Exhibit 2).

 

030

Phil Donovan

Testified in favor of HB 2339.  Provided background on conflicts between ORS 456.225 and ORS 307.112 and the need for referencing between the two statutes.

 

064

Chair Shetterly

Clarifies, ORS 456.225 exempts housing authorities from annual application for property tax exemption.  ORS 307.112 requires annual application for property tax exemption. Is that what the issue is?

 

078

Donovan

That’s correct.  Housing authorities across Oregon did not know this existed.

 

083

Paul Parker

Testified in favor of HB 2339, citing specific Portland Housing Authority’s experience being assessed with a $64,394 tax bill, (Exhibit 3).   Without this bill, the authority would not be able to provide affordable housing.

 

110

Chair Shetterly

The alternative would be to amend ORS 456.225 to expressly require housing authorities to file every year, which would require more work on behalf of the authority and the tax assessor’s office.

 

109

Rep. Farr

Cited experience with Eugene housing authority, the not-for-profits would claim that the housing authority board had unfair advantage in providing the service.  Does this address that?

 

129

Parker

If the State of Oregon wants to provide affordable housing to people, who could otherwise not afford it, the state could extend this to non-profits, not take it away from the housing authority.

 

133

Rep. Verger

Haven’t these referenced ORS’s been in statute for quite awhile, why would you get a bill all of a sudden, since they are not related?  What prompted the assessor to change?

 

139

Parker

We paid it because we didn’t file with the county assessor.

 

151

Chair Shetterly

Cited situation where someone reviewing the ORS picked up on possible tax liability.

 

171

Mazen

Further described ORS 307.112 deals with property that is leased or leased to be purchased.

 

175

Chair Shetterly

Closed Public Hearing on HB 2339.

 

OPENED WORK SESSION ON HB 2339

 

179

Rep. Farr

MOTION:  MOVED HB 2339 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

191

 

ROLL CALL:  MOTION PASSED 9-0-0

REPRESENTATIVES VOTING AYE:  Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair Shetterly.

 

Rep. Farr will carry the bill.

 

 

OPENED PUBLIC HEARING HB 2186

 

212

Chair Shetterly

Explains HB 2186 as a biennial reconnect bill, which provides an opportunity to look at tax law changes that have occurred in the last two years.

 

212

 

 

 

230

Lizbeth Martin-Mahar

 

 

 

Martin-Mahar

Provided background and history of HB 2186, Staff Measure Summary, (Exhibit 4). HB 2186 does not have a revenue impact, but the rolling reconnect does.

 

Describes recent federal legislation and its impact on Oregon’s income taxes, “Oregon Income Tax Reconnect Recent History”, (Exhibit 5).

 

Questions and discussion regarding Oregon general fund revenue impacts.

 

295

Martin-Mahar

Results of these impacts are translated into economic baseline forecasts.

 

302

Debra Buchanan

Provided an analysis of HB 2186, “House Revenue Committee HB 2186 Summary”, (Exhibit 6). 

 

·         Updates references to Internal Revenue Code to December 31, 2002.

·         Conforms net operating loss carryback period for tax year 2001 to the 5-year period allowed under federal law.

·         For withholding purposes, conforms treatment of distributions from state and local government deferred compensation plans to the federal treatment.

·         Clarifies type of compensation exempt from Oregon tax from nonresidents working on waterways of two states.

·         Provides clarifying and housekeeping changes to statutes.

 

388

 

Questions and discussion interspersed regarding disconnect/reconnect issues?

 

441

 

Questions and discussion interspersed regarding nonresident working on the waterways of two states.

 

 

TAPE 43, SIDE A

 

045

Rob Douglas

Began biennial panel presentation describing changes in federal tax law and its affects on Oregon Tax Code, “Analysis of Changes resulting from the:” (Exhibit 7).  Introduced panel Kim Spaulding, Robert Carus, and Bruce Krohn, all with OSPCA, referred to hereafter as “Panel”.

 

064

Kim Spaulding

Discussed OSPCA analysis of 7 acts passed since last biennium.  With three recommendations, starting with Recommendation C:

 

·         A:  Describes federal changes that fall under Oregon’s automatic reconnect, requires no action to tie to federal law. (Tab A, Exhibit 7).

·         B:  Does not apply to Oregon. (Tab B, Exhibit 7).

·         C:  Federal tax law changes that require amendment of Oregon statutes to tie to federal law. (Tab C, Exhibit 7).

 

088

 

 

106

Panel

 

 

Panel

 

 

Discussed section entitled “Recommendation C” to which Oregon does not directly tie to federal law, (Pages 30-33, Exhibit 7)

 

·         Economic Growth and Tax Relief Reconciliation Act of 2001

·         Victims of Terrorism Tax Relief Act of 2001

·         Job Creation and Worker Assistance Act of 2002

 

210

Chair Shetterly

Do you have proposed amendments to HB 2186 as relates to Recommendation C?

 

213

Spaulding

Amendments will be to wording in SB 221.

 

211

Panel

Discusses section entitled “Recommendation A”, which are automatically reconnected by Oregon statutes and require no legislative action. (Page 1-16, Exhibit 7).

 

·         FSC Repeal and Extraterritorial Income Exclusion Act of 2000. (HB 2182 would repeal this benefit).

·         Community Renewal Tax Relief Act of 2000.

·         Installment Tax Correction Act of 2000.

·         Economic Growth and Tax Relief Reconciliation Act of 2001.

 

356

 

Questions and discussion regarding carryover and stepped-up basis at death within the estate tax, gift and generation-skipping provisions.

 

400

Panel

Continued discussion:

 

·         Economic Growth and Tax Relief Reconciliation Act of 2001 continued.

 

 

TAPE 42, SIDE B

 

 

100

Panel

Continued discussion:

 

·         Victims of Terrorism Tax Relief Act of 2001.

·         Job Creation and Worker Assistance Act of 2002.

 

175

 

Questions and discussion regarding deductions for classroom materials and foster care exclusions.

 

192

Rep. Hopson

Regarding Section A, these do not require legislative action?

 

202

Spaulding

The panel believes Section A Recommendations fall within the definition of taxable income which Oregon currently ties to.

 

213

Chair Shetterly

Clarifies that the publication is not a recommendation, but a status report on changes in federal law that come under the rolling reconnect?

 

217

Spaulding

Answered affirmatively.

 

220

Rep. Barnhart

It is the position of the Society to connect, whenever possible, because it makes tax return preparation more consistent?

 

225

Spaulding

Defers to Marianne Brams, OSCPA.

 

220

Chair Shetterly

These are simply observations on policy, and not pertinent to this bill.

 

224

 

 

 

230

Marianne Brams

Current Chair of the Board of Oregon Society of CPAs.  Spoke to issue of difficulties in compliance and administration of tax laws, and the role of OSCPA as advisory.

 

Questions and discussion interspersed.

 

322

Hass

What is the distinction between automatically reconnecting and the option to reconnect?

 

333

Chair Shetterly

When it gets to deductions, credits, depreciation and exemptions, it reconnects at taxable income definition.

 

340

Bram

Answered affirmatively.

 

364

Chair Shetterly

Meeting adjourned at 9:54 a.m.

 

 

 

 

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Malik, Staff Measure Summary HB 2399, 1 page

2.       Malik, “Reference HB 2339”, ORS 456.225, 1 page

3.       Parker, “Testimony HB 2339”, 1 page

4.       Martin-Mahar, “Staff Measure Summary HB 2186, 1 page

5.       Martin-Mahar, “Oregon Income Tax Reconnect Recent History”, 1 page

6.       Buchanan, “HB 2186 Summary”, 4 pages

7.       Spaulding, Krohn, Carus, Brams, “An Analysis of Changes Resulting From The:”, 33 pages