WORK SESSION SB 228-A,

INFORMATIONAL PRESENTATION  

 

TAPE 179, 180 A

 

HOUSE REVENUE COMMITTEE

JUNE 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:                        Debra Buchanan, Oregon Department of Revenue

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Mazen Malik, Legislative Revenue Office

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 179, SIDE A

 

004

Chair Shetterly

Calls meeting to order at 9:33 a.m.

 

OPENED WORK SESSION ON SB 228

 

005

Chair Shetterly

Explained SB 228 returned from the House floor to Committee for amendment.

 

009

Mazen Malik

Described the -A7 amendments, (Exhibit 1) is a compilation of three amendments.  Provided background on the bill, (Exhibit 2).

 

029

Chair Shetterly

Questions and discussion with Debra Buchanan, as to whether the –A7 amendments work administratively, providing the information Multnomah County needs while protecting confidentiality?

 

037

Chair Shetterly

MOTION:  MOVED ADOPTION OF THE –7 AMENDMENTS INTO SB 228.

 

ORDER:  HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT).

 

040

Chair Shetterly

MOTION:  MOVED SB 228, AS AMENDED, 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. Barnhart will carry the bill.

 

046

Chair Shetterly

Closed the Work Session on SB 228.

 

 

INFORMATIONAL PRESENTATION

 

060

 

 

062

Lizbeth Martin-Mahar

 

 

Martin-Mahar

 

Provided presentation on “State Revenue Impact from Federal Law Changes in 2003, H.R. 2”, (Page 1, Exhibit 3). 

 

Described “Reduction in Capital Gains and Dividends Federal Tax Rate”, (Page 1, Exhibit 3).  Will not cause Oregon to have a negative loss in revenue, as it is not an exclusion from the taxable income.

 

098

Rep. Hass

Does anyone know why they did 10% for one year?

 

100

Chair Shetterly

Because they were limited to what they agreed it was going to cost, The sunsets are in to limit the costs.

 

104

Martin-Mahar

Discussed sunsets on taxable rates and dividends.

 

107

Martin-Mahar

Discussed “Accelerate Some Previously Enacted Tax Reduction in 2001”, Page 1, Exhibit 3).

 

171

Martin-Mahar

Discussed “Depreciation Incentive for Businesses”, (Page 1, Exhibit 3)

 

210

Martin-Mahar

Discussed “State Fiscal Relief Fund of $20 billion”, (Page 1, Exhibit 3).  Oregon will receive about 1%.

 

218

Martin-Mahar

Described “Breakdown of Oregon Feedback effects from Federal Stimulus Package”. (Page 2, Exhibit 3)

 

270

Rep. Barnhart

Primary effect on Oregon income tax is a result of the federal tax deduction in Oregon’s income decreasing which increases the Oregon net income which results in more Oregon taxes being paid.  Are there other effects?

 

281

Martin-Mahar

That’s all that is captured here, will be discussing further in presentation.

 

292

Martin-Mahar

Described “Oregon Tax Impact from Federal Jobs and Growth Tax Relief Act of 2003 (H.R. 2), (Page 3, Exhibit 3).  Discussed static effects.

 

323

Martin-Mahar

Discussed, “OTIM Dynamic Feedback Effects”, (Page 3, Exhibit 3).

 

339

Martin-Mahar

Discussed, “Total Static and Dynamic Impact”, (Page 3, Exhibit 3)

 

342

Martin-Mahar

Discussed, “Total Depreciation Impact by Biennium”, (Page 3, Exhibit 3).

 

357

Martin-Mahar

Discussed, “Reduction in Federal Tax Liability”, (Page 3, Exhibit 3).

 

370

Martin-Mahar

Discussed, “Total Depreciation Impact and Positive Feedback Effects”, (Page 3, Exhibit 3).

 

370

Rep. Verger

The window of opportunity on the depreciation schedule without the bonus is very short for business 2003-05 is it?

 

394

Martin-Mahar

Answered affirmatively, but extends an additional year from current law.

 

400

Rep. Hass

Did you do a feedback on the dividends and capital gains?

 

404

Martin-Mahar

Answered affirmatively, that was part of the components.  Section 2 and Section 1 together became the total personal income tax reductions.

 

410

Martin-Mahar

Discussed “Revenue Impact on State Income Tax Revenue from the New Multnomah County Local Tax” (Exhibit 4).

 

440

Martin-Mahar

Multnomah will not be added back as local income tax.

 

468

Martin-Mahar

Discussed “Oregon Income Tax Reduction Due to Multnomah County Income Tax Deduction”, (Exhibit 4), and revenue lost to Oregon income taxes. These are estimates that will be incorporated into current law.

 

501

Rep. Hass

Can you refresh as to why there are tax reductions here.  Is that because of the total taxes paid?

 

504

Martin-Mahar

As far as Multnomah county?

 

505

Rep. Hass

Answered affirmatively.

 

506

Martin-Mahar

It’s our connection to the federal tax code, which allows local income taxes to be deducted on federal returns and Oregon conforms to that code.

 

 

TAPE 180, SIDE A

 

043

Rep. Verger

For clarification, thought it was added back into state taxes.

 

045

Martin-Mahar

Oregon ads back state income taxes, but law does not say “all income taxes in Oregon”, not clear legally that all state income taxes would be added back. According to Legislative Counsel, that would not include Multnomah County income tax.  Additional legislation would be needed to include.

 

053

Rep. Barnhart

It may be time for another amendment to the Oregon tax code.

 

060

Paul Warner

These numbers mean the close of session forecast is down $52 million down from May 15 forecast.  These numbers will go into the final budget as a -$52.

 

068

Rep. Hass

Where are you getting $52?

 

067

Warner

That would be summing up -$38.5 from the federal package and -$13.9 for Multnomah County deduction.

 

 

 

075

Vice Chair Verger

Meeting adjourned at 10:10 a.m.

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant

 

Exhibit Summary:

1.       Malik, “SB 228-A7 Amendment”, 1 page

2.       Malik, “Staff Measure Summary SB 228-A7”, 1 page

3.       Martin-Mahar, “State Revenue Impact from Federal Law Changes in 2003, H.R. 2”, 3 pages

4.       Martin-Mahar, “Revenue Impact on State Income Tax Revenue from the New Multnomah County Local Tax” (Exhibit 4), 1 page