WORK SESSION HB 2379, HB 2380, HB 2186,

 HB 2312

BILL INTRODUCTION:  LC 1724, LC 1741,

 LC 1609, LC 2324, LC 2579, LC 2580, LC 2851, LC 2852, LC 2568, LC 2911, LC 1119, LC 1510, LC 1653, LC 2322, LC 3176, LC 3253, LC 3308, LC 3309, LC 3349, LC 3349, LC 3348, LC 3348, LC 3476-1

 

TAPE 63 A, 64 A, 65 A

 

HOUSE REVENUE COMMITTEE

MARCH 3, 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                                               

 

Witness Present:                        Marge Kafoury, City of Portland

                                                Abby Solomon, SEIU Local 503 and Oregon Revenue Coalition

                                                J.L. Wilson, NFIB

                                                Joe Schweinhart, Associated Oregon Industries

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Mazen Malik, Legislative Revenue Office

                                                Dick Yates, Legislative Revenue Office

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 63, SIDE A

004

Chair Shetterly

Calls meeting to order at 8:35 a.m.

 

WORK SESSION FOR BILL INTRODUCTION

012

Chair Shetterly

MOVES INTRODUCTION OF LC 1724 (Exhibit 1), AT THE REQUEST OF OREGON MUNICIPAL FINANCE OFFICERS ASSOCIATION; LC 1741 (Exhibit 2) AT THE REQUEST OF OREGON FIRE CHIEF’S ASSOCIATION, OREGON FIRE DISTRICT DIRECTORS’ ASSOCIATION, AFSCME, OREGON STATE FIRE FIGHTERS COUNCIL; LC 1609 (Exhibit 3), LC 2324 (Exhibit 4), LC 2578* refer to Tape 66, Meter 004, LC 2579 (Exhibit 5), LC 2850 (Exhibit 6), LC 2851 (Exhibit 7), LC 2852, (Exhibit 8) AS COMMITTEE BILLS.

 

025

Chair Shetterly

Clarifies the bills are entered as Committee Bills, but does not indicate support or opposition by the members of the Committee.

 

030

Chair Shetterly

ORDER THERE BEING NO OBJECTION, THE CHAIR SO ORDERS:  Members Present:  Shetterly, Verger, Barnhart, Berger, Hass, Hopson, Williams, EXCUSED:  Hass, Williams.

 

OPENED WORK SESSION ON HB 2379

032

Mazen Malik

Provided background on HB 2379, (Exhibit 9) and -1 amendment, (Exhibit 10).  Discussed sunset provisions and program evaluation, page 226-227 (Exhibit 11), of Tax Expenditure Report. (See House Revenue Committee Minutes February 3, 2003, Exhibit 1).

 

060

Chair Shetterly

Are the amendments satisfactory and do what you intended?

 

057

Marge Kafoury

Answered affirmatively.

 

060

Rep. Verger

On February 17, the question was asked, what percentage of land is considered distressed? 

 

074

Kafoury

I think Portland can designate 20% of total land area as distressed, far from expanding to the full 20% allowed.

 

080

Rep. Verger

Concerned the person testifying in the prior hearing did not know the percentage. It is important that a city be tracking the percentage of land designated distressed, and be able answer that question.

 

084

Rep. Barnhart

What would the affect be on the development of housing in these areas if this bill were not passed?

 

095

Kafoury

The program has resulted in construction of 2000 housing units, which qualify at the 120% or less housing price.  Portland is the only jurisdiction using this program, so the tax expenditure report reflects Portland figures.

 

Questions and discussion regarding tax abatement and scope of the program.

 

130

Rep. Barnhart

These houses would not have been constructed if not for this tax abatement?

 

133

Kafoury

There would have been some, but not at current locations and levels.

 

139

Chair Shetterly

Directed the committee’s attention to written testimony from “Oregon Revenue Coalition”, (ORC), (Exhibit 12).

 

143

 

 

144

Rep. Williams

MOTION:  MOVED (-1) AMENDMENTS DATED 02/17/03 TO HB 2379 BE ADOPTED.

 

ORDER:  HEARING NO OBJECTION, THE AMENDMENT IS ADOPTED.

 

146

Rep. Williams

MOTION:  MOVED HB 2379 AS AMENDED TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

150

Chair Shetterly

Discussed local option nature of bill, agrees with allowing a local community to forego its own property tax for the purpose of meeting housing needs.

 

160

Rep. Barnhart

In reviewing ORC material, (Exhibit 12) would have liked to hear from them today regarding objections to this exemption.  Agrees with criteria for assessing tax breaks, but local communities should be able to make decision on foregoing taxes for this purpose.

 

164

Rep. Berger

Regarding ORC, (Page 2, Exhibit 12), we appear to be in line with their objectives.

 

178

Rep. Barnhart

Puzzled by comments on front page, would like to understand reasoning.

 

177

Abby Solomon

The statement is one the Coalition wants the Committee to be aware of for every tax expenditure.   ORC would like the Committee to review criteria and if an tax expenditure meets the criteria, would like it to pass in tandem with closing out an outdated tax expenditure that may not meet these criteria to remain revenue neutral in a time of financial crisis.

 

201

Chair Shetterly

That is fair commentary about new expenditures, this bill continues an expenditure that is serving its purpose.

 

203

Rep. Williams

How does HB 2379 specifically not meet the criteria when the third criteria is promote home ownership and affordable housing?

 

205

Solomon

ORC believes it meets the criteria, but wants to raise the issue about taking out another outdated tax expenditure leaving it revenue neutral.

 

208

Rep. Williams

You oppose this bill even though it meets your criteria?

 

211

Solomon

ORC does not oppose this bill, but will oppose all new tax expenditures unless moved out in tandem with closing another.

 

218

Rep. Williams

It makes the criteria and understanding what you oppose and don’t oppose almost useless from an evaluative standpoint.  If ORC provides testimony in opposition to all tax credits, even if it meets your criteria, I don’t know how to evaluate it.

 

217

Rep. Farr

Agree in principal that this is not the time to raise taxes unnecessarily.  This bill is the best reason to provide tax abatements of any property.

 

235

 

ROLL CALL:  MOTION PASSED 9-0-0

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

 

Rep. Williams will carry the bill.

 

 

OPENED WORK SESSION ON HB 2380

 

243

Chair Shetterly

Nothing has changed on HB 2380, it was just held up to move with HB 2379?

 

247

Malik

Gave background and history of HB 2380, (Exhibit 13), sunset provision (Exhibit 14).

 

252

Kafoury

Spoke in support of HB 2380 and gave description of program which sunsets in 2006.

 

287

Chair Shetterly

Described bill as providing for a local option.

 

293

Rep. Berger

MOTION:  MOVED HB 2380 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

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.

 

 

WORK SESSION ON HB 2312

 

335

Dick Yates

Gave background of HB 2312 as a housekeeping bill.

 

350

 

 

355

Scott

MOTION:  MOVED HB 2312 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

ROLL CALL:  MOTION PASSED 9-0-0

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

 

365

 

368

Rep. Barnhart

MOTION:  MOVED TO PLACE HB 2312 ON THE CONSENT CALENDAR. 

 

ORDERED:  THERE BEING NO OBJECTION SO ORDERED.  Members present:  Shetterly, Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams.

 

 

WORK SESSION ON HB 2186

 

378

Chair Shetterly

Advised Committee amendments are as yet undrafted.

 

369

 

413

Lizbeth Martin-Mahar

 

Martin-Mahar

Provided background on HB 2186 and the (-1) amendment.

 

Followed up on question from Chairman Shetterly, regarding states with rolling reconnects and discussed tax changes in connection with Federal law.  Discussed Vermont, Rhode Island, North Dakota, Colorado and Utah.

 

 

TAPE 64, SIDE A

 

037

Martin-Mahar

New amendment will retain connection with depreciation, IRAs and similar financial instruments.  A second amendment will go back to a rolling reconnect prospectively January 1, 2006.

 

043

 

Debra Buchanan

 

Discussed issues increasing difficulty include: depreciation, timing and basis.

 

084

Chair Shetterly

Is there an aspect of depreciation in current tax laws before Congress?

 

084

Martin-Mahar

Discussed 179 expensing to threshold is going up.

 

092

Rep. Hass

Depreciation, does it need to be done every year? What are the ramifications if not?

 

097

Buchanan

Discussed affects of depreciation, sale of capital assets.  One year disconnect can show on returns for many years.

 

120

Chair Shetterly

The focus of an amendment to HB 2186, will connect going forward and make a prospective reconnection retroactive to January 1, 2006, the issue can be re-addressed in the next session by a simple majority.

 

145

Rep. Barnhart

Supported and should be entertained in any tax reduction the Committee has before it.

 

157

J.L. Wilson

NFIB would oppose divorcing from rolling reconnect. This increases the regulatory burden in tax compliance and payroll affecting small business.  A date certain reconnect would ease the pain, would like to see an earlier date.

 

190

Chair Shetterly

The amendments try to provide some accommodation with the depreciation and net operating loss carry forward which are the most administratively complex areas, and with employee benefit plans.

 

194

Rep. Hass

Has to be December 31 or January 1 date for tax purposes.

 

200

Chair Shetterly

In the next session the retroactive reconnect could come as early as January 2003.

 

211

Rep. Barnhart

Are there other areas other than recordkeeping that would cause problems?

 

205

J.L. Wilson

Anything having to do with the definition of taxable income.  There are tax calculations that would have to looked at separately with disconnect.

 

211

Rep. Barnhart

Changing depreciation schedules results in multi-year re-calculations, concern is recordkeeping over many years and re-calculation each tax year, are there other aspects that fall into that kind of calculation.

 

235

J.L. Wilson

Defer to CPAs.

 

225

Joe Schweinhart

Expecting to have federal legislation complete by May 31.  AOI concerned long term solutions are being overlooked.  Job retention is a major issue that needs to be addressed.  Disconnection, reconnection leads to confusion and minimizes stimulus federal tax law changes tend to achieve.

 

287

Rep. Scott

Opposes HB 2186, but may agree with amendments.  Concerned that economic stimulus must be included.

 

299

Chair Shetterly

Want to be very accommodating to business needs, especially with compliance issues, will see stimulus going forward.

 

307

Rep. Berger

States with date certain disconnects, do you have a sense about them?

 

330

Martin-Mahar

Did not call states regarding date certain disconnect, only rolling reconnect.

 

332

Rep. Berger

We’re proposing a course, curious what states which have done it look like.

 

320

Martin-Mahar

Rhode Island, disconnected saying they could not afford any other reductions in revenues.

 

337

Rep. Barnhart

Tax rates are a small part of operating costs of business and unlikely to affect businesses issues, except in recordkeeping.  Should get bridge and highway construction, basic maintenance in order.  Expenditure side would have economic stimulus.

 

357

Rep. Farr

Would agree, but needs to be multi-faceted.

 

381

Chair Shetterly

Phil Romero from the Tax Options and School Accountability Work Group meeting in Eugene said, rates are more important in small business, less so with multi state corporation.

 

396

Schweinhart

Spoke to small business challenges, need relief with capital gains, less disincentives to existing and new business to state.

 

424

Chair Shetterly

Disconnecting from the federal tax code prospectively allows margin to make Oregon specific changes.

 

448

Chair Shetterly

Meeting recessed at 9:30 p.m.

 

 

TAPE 65, SIDE A

 

002

Vice Chair Verger

Calls meeting to order at 3:35 p.m.

 

004

Rep. Scott

*MOTION:  TO RECONSIDER THE VOTE BY WHICH LC 2578 WAS INTRODUCED AS A COMMITTEE BILL.

 

ORDER:  HEARING NO OBJECTION THE VICE-CHAIR SO ORDERS. (Members Present:  Barnhart, Hass, Hopson, Scott, Verger.  EXCUSED:  Chair Shetterly, Berger, Farr, Williams.)

 

014

Vice Chair Verger

 

MOTION:  TO INTRODUCE LC 2568 (Exhibit 15) AS A COMMITTEE BILL.

 

Clarifies the bill is entered as a Committee Bill, but does not indicate support or opposition by the members of the Committee.

 

HEARING NO OBJECTION THE VICE CHAIR SO ORDERS.

 

023

Vice Chair Verger

MOTION:  MOVES INTRODUCTION OF LC 2911 (Exhibit 16) AT THE REQUEST OF THE OREGON CABLE TELECOMMUNICATIONS ASSOCIATION AS A COMMITTEE BILL

 

Clarifies the bill is entered as a Committee Bill, but does not indicate support or opposition by the members of the Committee.

 

HEARING NO OBJECTION THE VICE CHAIR SO ORDERS. (Members Present:  Barnhart, Hass, Hopson, Scott, Verger.  EXCUSED:  Chair Shetterly, Berger, Farr, Williams).

 

027

Vice Chair Verger

MOTION:  MOVES INTRODUCTION OF LC 1199 (Exhibit 17), LC 1510 (Exhibit 18), LC 1653 (Exhibit 19), LC 2322 (Exhibit 20), LC 3176 (Exhibit 21), LC 3253 (Exhibit 22), LC 3308 (Exhibit 23), LC 3309 (Exhibit 24), LC 3349 (Exhibit 25), LC 3438 (Exhibit 26), LC 3476-A (Exhibit 27) AS COMMITTEE BILLS.

 

Clarifies the bill is entered as a Committee Bill, but does not indicate support or opposition by the members of the Committee.

 

HEARING NO OBJECTION THE VICE CHAIR SO ORDERS. (Members Present:  Barnhart, Hass, Hopson, Scott, Verger.  EXCUSED:  Chair Shetterly, Berger, Farr, Williams).

 

054

Vice Chair

Meeting adjourned at 3:50 p.m.

 

 

 

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Chair Shetterly, “LC 1724”, 15 pages

2.       Chair Shetterly, “LC 1741”, 2 pages

3.       Chair Shetterly, “LC 1609”, 17 pages

4.       Chair Shetterly, “LC 2324”, 1 page

5.       Chair Shetterly, “LC 2579”, 15 pages

6.       Chair Shetterly, “LC 2580”, 6 pages

7.       Chair Shetterly, “LC 2851”, 24 pages

8.       Chair Shetterly, “LC 2852”, 24 pages

9.       Malik, “Staff Measure Summary HB 2379-1 and Revenue Impact HB 2379-1”, 2 pages

10.   Malik, “HB 2379-1”, 2 pages

11.   Malik, “Tax Expenditure Report” select pages 226-227

12.   Solomon, “Oregon Revenue Coalition HB 2379”, 3 pages

13.   Malik, “Staff Measure Summary HB 2380 and Revenue Impact HB 2380” 2 pages

14.   Malik, “Tax Expenditure Report” select pages 229-231, 3 pages

15.   Vice Chair Verger, “LC 2568“, 16 pages

16.   Vice Chair Verger, “LC 2911“, 1 page

17.   Vice Chair Verger, “LC 1119“, 34 pages

18.   Vice Chair Verger, “LC 1510“, 33 pages

19.   Vice Chair Verger, “LC 1653“, 7 pages

20.   Vice Chair Verger, “LC 2322“, 20 pages

21.   Vice Chair Verger, “LC 3176“, 12 pages

22.   Vice Chair Verger, “LC 3253“, 144 pages

23.   Vice Chair Verger, “LC 3308“, 6 pages

24.   Vice Chair Verger, “LC 3309”, 1 pages

25.   Vice Chair Verger, “LC 3349“,  4 pages

26.   Vice Chair Verger, “LC 3348“, 2 pages

27.   Vice Chair Verger, “LC 3476-1“, 2 pages