WORK SESSION HB 2705, HB 2186,

HB 2184, HB 2043

 

TAPE 99, 100, A-B

 

HOUSE REVENUE COMMITTEE

MARCH 27, 2003   8:30 AM   STATE CAPITOL BUILDING

 

Members Present:                        Representative Lane Shetterly, Chair

                                                Representative Joanne Verger, Vice Chair

                                                Representative Vicki Berger

                                                Representative Pat Farr

                                                Representative Mark Hass

                                                Representative Elaine Hopson

                                                Representative Max Williams           

 

Members Excused:                      Representative Wayne Scott, Vice Chair

                                                Representative Phil Barnhart

 

Witness Present:                        Tom Potiowsky, Office of Economic Analysis

                                                Senator Roger Beyer, District 9

                                                Matt Blevins, Oregon Environmental Affairs Council

                                                Dexter Johnson, Legislative Counsel

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 99, SIDE A

 

004

Chair Shetterly

Calls meeting to order at 8:43 a.m.

 

WORK SESSION ON HB 2186

 

020

Lizbeth Martin-Mahar

Provided background and described HB 2186.  Provided summary and discussed amendments: -1 (Exhibit 1); -3 (Exhibit 2, 3); -4 (Exhibit 4, 5); and -5 (Exhibit 6, 7).

 

108

Rep Hass

None of the amendments conflict with each other, is there any fiscal impact?  Is there any fiscal impact?

 

110

Martin-Mahar

Have to choose either the -1 amendment or the -3;.the -3 expands on the -1.  The -4 and the -5 do not conflict.  Since the federal law has not as yet passed, there is not a revenue impact.

 

125

Martin-Mahar

Discussed summary sheet “HB 2186 Connection to Federal Law Changes, Amendments” (Exhibit 8).  Will be examining further.

 

Questions and discussion regarding the -3 amendment acting as a sunset; disconnecting, then re-connecting.

 

170

 

 

175

Chair Shetterly

 

 

Chair Shetterly

The -3 recognizes that the preference would be connection to federal law; way of revisiting the issue in 2 years.

 

Discussed future floor vote requirements.

 

202

Chair Shetterly

MOTION:  MOVED ADOPTION OF THE –1 AMENDMENT INTO HB 2186.

 

ORDER:  HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REP. SCOTT AND BARNHART, EXCUSED)

 

206

Chair Shetterly

MOTION:  MOVED ADOPTION OF THE –3 AMENDMENT INTO HB 2186.

 

ORDER:  HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REP. SCOTT AND BARNHART, EXCUSED)

 

209

Chair Shetterly

MOTION:  MOVED ADOPTION OF THE –4 AMENDMENT INTO HB 2186.

 

ORDER:  HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REP. SCOTT AND BARNHART, EXCUSED)

 

212

Chair Shetterly

MOTION:  MOVED ADOPTION OF THE –5 AMENDMENT INTO HB 2186.

 

ORDER:  HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REP. SCOTT AND BARNHART, EXCUSED)

 

216

Rep. Williams

MOTION:  MOVED HB 2186 AS AMENDED TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION

 

220

Martin-Mahar

Discussion of language in -1 and -3 amendments.

 

228

Rep. Williams

Withdrew motion to move adoption of HB 2186 as amended to the House floor.

 

233

Chair Shetterly

The Committee has before it reconsideration of the -1 and -3 amendments.

 

236

Rep. Williams

MOTION:  MOVED WITHDRAWAL OF THE –1 AMENDMENT INTO HB 2186.

 

ORDER:  HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REP. SCOTT AND BARNHART, EXCUSED)

 

243

Chair Shetterly

The Committee has before it for consideration the -3, -4 and -5 amendments.

 

243

Rep. Williams

MOTION:  MOVED HB 2186 AS AMENDED TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION

 

256

Rep. Verger

Under most normal circumstances would not be in favor of such a bill.

 

258

Chair Shetterly

Under normal circumstances this bill wouldn’t be before us.

 

258

Rep. Verger

Under these circumstances I must be in favor of it.

 

260

 

 

 

 

 

268

 

 

 

 

 

 

Chair Shetterly

ROLL CALL:  MOTION PASSED 7-0-2

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

 

Chair Shetterly will carry the bill.

 

Closed work session on HB 2186.

 

OPENED WORK SESSION ON HB 2705

 

253

 

 

339

 

 

358

Warner

 

 

Warner

 

 

Warner

Discussed 2705-1; and SB 601-2 amendments which is described as identical, (Exhibits 9, 10).

 

Described intent of SB 601-2 amendments, to set forecast board similar to that of Washington State’s;  4 of 6 positions would be legislatively appointed.

 

Discussed addition of advisory capacity of board and approval of forecast.

 

428

Chair Shetterly

-1 and -2 are alternative approaches?

 

430

Warner

Answered affirmatively.

 

434

 

 

475

Tom Potiowsky

 

 

Potiowsky

Described current process of forming technical revenue advisory committee; discussed with Governor’s Council of Economic Advisors. 

 

Discussed forecast process.  Moving forward with formation of committee regardless of outcome of bill.  Committee to include specialists in tax law, possibly high tech; and possibly tax practitioner.

 

 

TAPE 100, SIDE A

 

020

 

 

 

040

 

Sen. Roger Beyer

 

 

 

Sen. Beyer

Had not seen the 2705-1 amendment.  Discussed his amendment to SB 601-2 as identical to HB 2705, both attempt to get the most accurate forecast possible and not politicize forecasts.  Yet to see forecast within 2%.

 

Trying to get more legislators involved in a way they can offer advice, not just receive the report.  Discussed legislators bound by Constitution and cannot be part of the process, but can offer advice and counsel.

 

053

Chair Shetterly

The Revenue Committee amendment are narrower, it eliminates Council of Revenue Forecast Advisors, as being unnecessary.  Another change is the addition of the recommendation of more than one person to serve as state economist.  Does not address the part of the bill you are amending with the make up of the forecast board.

 

062

Rep. Berger

How do you see this as lessening the political climate of this board?  Do you see this as making it less political?

 

068

 

 

 

 

 

084

 

Sen. Beyer

Answered affirmatively.  Sees it as less political because of equal number of legislators from the House and Senate and two members from each of the largest two caucuses.  Discussed meeting with a Washington State Senator at Pacific Conference who had always been in the minority party and now chairs the Ways and Means Committee.   

 

Described Washington State’s forecast vs. actual collections of revenues as nearly the same.  This committee gives advice and chooses forecast from a range of forecasts.  The committee is made up of 4 legislators, and 2 appointees of the governor.  If the committee cannot choose a forecast within a certain period of time, the economist’s forecast becomes the forecast.  This process works well and takes politics out of the process because it includes people from across the state and both parties to decide the best forecast to reflect what is happening in Washington.  In January, the Washington legislator said their economy was expected to grow at 7%, may have changed by now, Oregon had said 14%, now 10%.  California which budgets annually projected a negative group for 2003 fiscal, with slight positive growth for 2004 fiscal or 2% growth for the biennium.  Discussed the differences in the three states, felt there had to be a better way to do it and the Washington model seems to be working.

 

102

Chair Shetterly

Is Washington’s revenue system easier to forecast than Oregon’s?

 

118

Warner

The sales tax is more inelastic, would expect to see lower growth, would not say easy to forecast.  Their sales tax base includes volatile factors, but not as volatile as the income tax.

 

135

Tom Potiowsky

Spoke with Washington’s Senior economist, the graph on accuracy is based on one quarter a head forecast only.  Senior economist said it has been outside of 2% range for quite a few biennia, but narrower than our margin of error.

 

149

Chair

Closed work session on HB 2705

 

OPENED WORK SESSION ON HB 2043

 

157

Martin-Mahar

Provided background and discussed -1 amendment of HB 2043.

 

122

 

 

206

 

 

 

212

Matt Blevins

 

 

Blevins

 

 

 

Blevins

Discussed -4 amendments, includes changes from Department of Revenue, also adds carry forward to a year the company has tax liability.

 

-4 allows for sale of tax credit with Department of Revenue review, giving the flexibility if a company is not in a position to take advantage of the credit, could sell to a company that is and take the incentive it provides. 

 

In light of current budget, moved the effective date for tax credit to 2005 to 2010 biennium.

 

228

Rep. Verger

Rural Oregon pays less for insurance, no congestion, less risk, nothing would change?

 

230

Blevins

Nothing would change. The feedback was that people did not want a mandatory policy.  The goal is to set up a pilot approach.

 

239

Rep. Verger

Transit service is not an option in rural areas, what difference would that make?

 

248

Blevins

This is targeted to areas that could take advantage of program, have transit system, or may be elderly who drive rarely; they could take advantage of program.

 

251

Rep. Verger

The insurance company can do this without being offered any kind of credit?

 

252

Blevins

There is nothing that prevents a company from offering this type of program.  The intent of bill to provide initial incentive, insurance companies have been hesitant to go in this direction.

 

270

Rep. Verger

I think that rural Oregon needs to be supportive of the congestion problem that occurs in other parts of the state.

 

278

Rep. Hass

Section 4, can you explain the intention of selling credits.  For consumer how would this be sold as opposed to carrying forward?

 

285

Blevins

It is similar to the pollution control tax credit, where unused tax credits can be sold to supplement business. The insurance company would sell it, not consumer.

 

215

Rep. Hass

Is this boilerplate language for this kind of credit? 

 

230

Blevins

My understanding is it is.  OEC took the concept to Legislative Counsel, they provided the language.

 

 

303

Rep. Hass

It hits me wrong to see selling of credits to other corporations as opposed to carrying it forward.

 

312

Blevins

Because the policy is for a short time, 5 years, wanted to provide flexibility in this incentive

 

330

Chair Shetterly

Is language in Section 4 boilerplate?

 

334

Rep. Hass

To trade credits as is done with the pollution control credit.

 

326

Dexter Johnson

It is not boilerplate, there is a procedure in the Farm Worker Housing Tax Credit, would have to check on Pollution Control Tax Credit, that is not my recollection.

 

344

Chair Shetterly

Also Low Income Tax Credit.

 

355

Rep. Hass

This takes away a little incentive to carry program.  It’s a great idea to encourage people to drive less with bonus in insurance rates.  Hesitant to muddy an otherwise good bill.

 

282

Chair Shetterly

This bill also changes the revenue impact.

 

380

Chair Shetterly

Close Work Session on HB 2043.

 

OPEN WORK SESSION ON HB 2184

 

394

Chair Shetterly

Intention is not to move bill, but discuss amendments.

 

397

 

 

436

 

 

438

 

 

461

 

 

 

489

Martin-Mahar

 

 

Martin-Mahar

 

 

Martin-Mahar

 

 

Martin-Mahar

 

 

 

Martin-Mahar

Provided background (Exhibit 14), discussed -1 as clarifying the past (Exhibit 15).  Provided revenue impact (Exhibit 16).

 

Discussed issues, specifying an Oregon estate tax return is not required to be filed unless a federal estate tax return is filed. 

 

Discussed specific filing thresholds and time periods, and subsequent connection with Internal Revenue Code on December 31, 1996.

 

Discussed Department of Revenue administrative changes connections for deaths occurring before January 1, 1998 and before January 1 2003, connecting to Tax Payer Relief Act of 1997.

 

Discussed -1 allowance of administrative changes from-1997 to keep threshold at $600,000.

 

501

Chair Shetterly

For decedents dying during 2002, the threshold is $1 million.  That drops under this bill to $600,000 as of January 1, 2003.

 

509

Martin-Mahar

Answered affirmatively.

 

511

Chair Shetterly

What about before 2002 when federal threshold was $750,000?

 

032

 

 

039

Martin-Mahar

It connects with 1997 tax law, Section 5 of HB 2184 deals with deaths in 2002.

 

Question and discussion regarding 3/5 vote.

 

075

Martin-Mahar

Discussion difficulty for DOR to go back and collect taxes from confusion.

 

077

Chair Shetterly

Have concerns with this approach.

 

083

Chair Shetterly

Closed Work Session on HB 2184

 

 

 

 

 

 

086

 

Meeting adjourned at 9:50 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 2186-3”, 1 page

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

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

5.       Martin-Mahar, “HB 2186-4”, 3 page

6.       Martin-Mahar, “Staff Measure Summary HB 2186-5, 1 page

7.       Martin-Mahar, “HB 2186-5”, 2 pages

8.       Martin-Mahar, “HB 2186, Connection to Federal Law Changes, Amendments”, 1 page

9.       Warner, “HB 2705-1”, 1 page

10.   Warner, “SB 601-2”, 4 pages

11.   Martin-Mahar, “Staff Measure Summary HB 2043-1”, 1 page

12.   Martin-Mahar, “HB 2043-1”, 1 page

13.   Blevins, “HB 2043-4”, 2 pages

14.   Martin-Mahar, “Staff Measure Summary HB 2184-1”, 1 page

15.   Martin-Mahar, “2184-1”, 1 page

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