PUBLIC HEARING HB 2186

INTRODUCTION LC 99, LC 145, LC 146,

 LC 2278, LC 2833

 

TAPE 48

 

HOUSE REVENUE COMMITTEE

FEBRUARY 18, 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:                        Debra Buchanan

                                                Joe Schweinhart, Associated Oregon Industries

                                                Rob Douglas, Oregon Society of Certified Public Accountants

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 48, SIDE A

004

Chair Shetterly

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

 

OPENED WORK SESSION ON HB 2186

 

017

 

 

 

036

 

 

 

044

 

 

122

 

Lizbeth Martin-Mahar

 

 

 

Martin-Mahar

 

 

 

Martin-Mahar

Presented and described the -1 amendment and elimination of the rolling reconnect to federal law changes pertaining to taxable income.  Establishes a date certain for all federal tax changes, (Exhibit 1).

 

The amendment does not have a revenue impact because there were no law changes effective December 31, 2002, that changes taxable income, (Exhibit 2).  There is a minimal fiscal impact, (Exhibit 3).

 

Discussed “Preliminary Revenue Impact from Connecting to the 2003 Proposed Bush Economic Plan”, (Exhibit 4).

 

Discussion regarding the rolling reconnect and the preliminary nature of the proposed plan.

 

127

 

 

140

 

 

 

171

Martin-Mahar

 

 

Martin-Mahar

Discussed “Federation of Tax administrator’s bulletin”, (Exhibit 5), a tool used in the development of a preliminary revenue impact.

 

Provided survey “Table 3. State Relationships to the Federal Tax Code Starting Points and Automatic or Date-Certain Conformity”, (Exhibit 6), as frame of reference for where Oregon in relationship to other states.

 

Discussion regarding “date-certain” conformity, and instances where 3/5 majority vote is required.

 

190

Hass

Would it be your intent to have different legislation after this to disconnect from some provisions passed by the federal government?

 

194

Chair Shetterly

My intent would not be to disconnect from anything in current law, but to make this disconnect as we go forward.  This session probably would not deal with elements of the federal plan.  This bill would lock Oregon into December 31, 2002.  Committee members may want to have bills later that address elements of connection points to federal law.

 

200

Hass

Does -1 amendment disconnect?

 

205

Chair Shetterly

Answered affirmatively.

 

207

Lizbeth

The -1 amendment disconnects you from future changes.  Next session, if the Bush plan passed, decisions will be made whether to disconnect with each component of the plan.

 

220

Hass

Next session it would require simple majority to vote on the components?

 

223

Chair Shetterly

Answered affirmatively.  Concern arises when Congress goes into deficit spending strategies, vs. management of Oregon’s priorities within biennial budget.

 

243

Hass

Where does this put the estate tax issue?

 

245

 

 

 

252

Lizbeth

This does not address the estate tax issue at all.  That would be a different bill, we do not automatically connect with federal law changes pertaining to estate taxes.

 

Questions and discussion regarding estate taxation.

 

266

Debra Buchanan

Spoke to the administrative aspect of -1 amendment, does increase workload for the Revenue Department, but won’t be asking for money or more positions.

 

280

Joe Schweinhart

Would not like to see disconnection from potential economic incentives, but understands situation the legislature is in. 

 

295

Rob Douglas

This changes things, but would go back to the prior commitment and describe changes in federal tax code through hearings process to help make future policy choices.

 

320

 

 

Discussion regarding uncertainty of federal tax law changes and affect on Oregon revenues.

 

310

Chair

No intent to move amendment today, purpose to introduce and invite discussion.

 

345

Berger

Is there indication of timing on federal issues?

 

350

Lizbeth

Discussed with Joint Committee on Taxation, timing uncertain.

 

355

Scott

Regarding estimates, how do they come to these numbers which may or not be factual?  Are there scenarios of reduction from where the federal government is?

 

368

Martin-Mahar

Dynamic analysis done through OTIM on bonus depreciation and  feedback affects.  Have not done analysis with this proposal. When estimates are firmer, will be able to look at capturing some of the feedback affects.

 

383

 

Discussion regarding affects of tax law changes on state of Oregon.

 

407

 

 

 

 

425

Paul Warner

Important to keep in mind, the forecast is done through a national forecast service which evaluates how tax policy, approved by Congress, will affect the national economy.  Oregon will pick it up through forecast process.  OTIM tells what kinds of changes would change Oregon’s relative position.

 

Questions and discussion regarding disconnection and Oregon’s position relative to other states and nature of biennial sessions.

 

 

TAPE 49, SIDE A

 

033

 

Questions and discussion regarding economic stimulus and affects on national and state economies.

 

075

Warner

Discussed history of federal disconnect and reconnect situations in 1980s, and 1990s.

 

Questions and discussion interspersed.

 

114

Chair

Federal government can stimulate economy using deficit spending, and state cannot.

 

Discussion on length of time required for economic stimulus to take effect.

 

135

Warner

Even under date specific policy in -1 amendment, Oregon will still be affected by federal policy.  Changes in tax rates have a significant impact, federal investment tax credits help economic growth without reducing tax base.  In the 1990s federal decision to reduce capital gains increased Oregon general fund revenue by over $100 million.

 

153

Barnhart

A fixed date in the -1 amendment makes sense, it reduces the complexity in the Oregon’s forecasting.

 

172

Chair

If Federal government doesn’t take action before sine die, the forecast which is based on current law, wouldn’t be included in these revenue impacts?

 

179

Warner

Explained national forecast process and links between Oregon and national tax policy.

 

208

Chair Shetterly

Would be curious to know group of states in the group with Oregon (Exhibit 6), are they in session, and what action is pending or are they taking.

 

223

Chair Shetterly

Close the work session on 2186.

 

224

Chair

MOTION:  MOVES INTRODUCTION OF LC 99, 145, 146, 2278, 2833. AS COMMITTEE BILLS (Exhibits 7-11).

 

Clarifies the bill is entered as Committee Bills, but does not signify support or opposition by the members of the Committee.

 

ORDER:  THERE BEING NO OBJECTION, THE CHAIR SO ORDERS.  Members present:  Chair Shetterly, Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams.

 

 

Chair Shetterly

Meeting adjourned at 9:25 a.m.

 

 

 

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Martin-Mahar, “HB 2186-1”, 1 page

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

3.       Martin-Mahar, “Fiscal Impact HB 2186-1”, 1 page

4.       Martin-Mahar, “Preliminary Revenue Impact from Connecting to the 2003 Proposed Bush Economic Plan”, 1 page

5.       Martin-Mahar, FTA Bulletin, February 12, 2003, 8 pages

6.       Martin-Mahar, “Table 3. State Relationships to the Federal Tax Code Starting Points and Automatic or Date-Certain Conformity”, 1 page

7.       Chair Shetterly, “LC 99”, 4 pages

8.       Chair Shetterly, “LC 145”, 2 pages

9.       Chair Shetterly, “LC 146”, 4 pages

10.   Chair Shetterly, “LC 2278”, 5 pages

11.   Chair Shetterly, “LC 2833”, 3 pages