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PUBLIC
HEARING, WORK SESSION SB 231 WORK
SESSION 362A-A |
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TAPES 244 A,
AB |
AUGUST 23,
2003 9:00 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, Department of
Revenue, (DOR)
Representative
Tom Butler, House District 60
Mike
Grainey, Department of Energy
Marge
Kafoury, City of Portland
Dave
Fiskum, Providence Health System; Pace Program
Brett
Salmon, Oregon Healthcare Association (OHA)
Mike
Dewey, Fully Capitated Heatlh Insurance Plans (FCHIPS)
Representative
Jeff Merkley, District 47
Laurie
Wimmer Whelan, Oregon Education Association
Tim
Nesbitt, Oregon AFL-CIO
Staff Present: Paul
Warner, Legislative Revenue Officer
Mazen
Malik, Legislative Revenue Office
Lizbeth
Martin-Mahar, Legislative Revenue Office
Kathy
Tooley, Committee Assistant
TAPE 244, SIDE A
|
004 |
Chair Shetterly |
Calls meeting to order at 9:00
a.m. |
OPENED PUBLIC HEARING ON SB 231-A
|
010 |
Mazen Malik |
Provided overview of SB 231, (Exhibit 1). Provided “Revenue Impact SB 231-A9, A16”, (Exhibit 2). |
|
024 |
Debra Buchanan |
Spoke in support of SB 231. The
bill allows DOR to waive interest and penalties on a finding of good and
sufficient cause. DOR is in the process of adopting an administrative rule to
provide for a waiver of first time offense for a taxpayer. Attorneys have advised that DOR may not be
able to allow a waiver as there is no
good and sufficient cause for missing a deadline. DOR is asking for authority to adopt such rules. |
|
034 |
Chair Shetterly |
The intent of this meeting is to begin hearing proposed amendments to
SB 231. SB 231 will be the vehicle for items needed to complete the session. |
|
054 |
Rep. Tom Butler |
Spoke in support of –A12 amendment (Exhibit 3), as it allows inclusion
of existing hydroelectric generating facilities larger than 1 megawatt of
installed capacity to be eligible for the renewable resource (tax credit). |
|
068 |
Mike Grainey |
This amends the business energy tax credit program and removes the
limit of 1 megawatt on hydroelectric facilities where there is an existing impoundment
or dam. This restriction is not included in other incentive programs such as
the low interest loan program. The
importance of the business energy tax credit is that there are private
developers interested in adding generation or replacing and upgrading their
facilities and makes sense from an energy point of view. Facilities are required to meet DEQ
(Department of Environmental Quality) and Fish and Wildlife
requirements. It does not change the
amount of the business tax credit, this amendment just changes eligibility requirements
for the program. |
|
089 |
Chair Shetterly |
It doesn’t change the amount of the credit, but in terms of changing
eligibility, is there a revenue impact. |
|
090 |
Malik |
Had not seen the amendment. |
|
092 |
Grainey |
Believes it would have a small impact as typically only see 1 or 2
facilities every couple of years. The
facility would be in the range of $5 million, the tax credit over 5 years
would be 5 to 10 percent annually. |
|
098 |
Rep. Verger |
This includes wind power? |
|
100 |
Grainey |
That’s in existing statute. This program covers all renewable
resources as well as energy conservation for businesses. The only size restriction
is on hydro. |
|
110 |
Marge Kafoury |
Spoke in support of the -9 amendments (Exhibit 4), formerly heard and
passed by the Committee as HB 2379. Provided history of the bill’s
progression through the House and Senate this session. Now before the committee as the -9
amendment in its original form. |
|
124 |
Dave Fiskum |
Spoke in support of the -13 amendments, (Exhibit 5), as it solves an
inadvertent problem in HB 2152 affecting a new tax on managed health care
entities. It taxes the Pace program
without benefit; which was dealt with on its own in HB 2182. The -13 amendment corrects the language in
HB 2152. |
|
149 |
Brett Salmon |
It was the intent of OHA that Pace remain its own program as it is
funded differently than other fully capitated health plan. The -13 amendments solve that problem. |
|
154 |
Chair Shetterly |
That was the intention. |
|
155 |
Mike Dewey |
FCHIPS agreed to tax themselves to leverage federal dollars. With
bill moving quickly through the Senate and House, did not have an opportunity
to review the amendments. The -13 amendments would provide for a date change
from 30 days to 75 days which helps administratively to queue payment FCHIPS
makes and its reimbursement; eliminates floating additional revenue to the
department, evens out the payment. The Department is agreeable. |
|
170 |
Rep. Barnhart |
Has this been vetted with the people working on federal issues? |
|
172 |
Fiskum |
Believes the answer is affirmative; these issues as well as others may
be in another consensus vehicle.
Presently both sides of the aisle and administration are on board. |
|
179 |
Rep. Barnhart |
Just want to make sure Oregon does not get afoul of federal
regulators and lose the program as a result.
You have said that is not a problem? |
|
180 |
Fiskum |
Believe the answer is affirmative. This has been vetted with the
federal attorneys from the Department of Justice as well as Legislative
Counsel. This piece does not run afoul
of federal rule or law. |
|
189 |
Malik |
The -14 amendments, (Exhibit 6), requested as a technical fix for HB
2152 by the Department of Human Services (DHS), allows for the audit of
records for a period of 5 years. |
|
196 |
Chair Shetterly |
This relates to what part of HB 2152? Is this the provider tax? |
|
197 |
Malik |
Answered affirmatively. |
|
199 |
Malik |
Discussed the -15 amendments (Exhibit 7), requested as a technical
fix by DOR adds ORS references into HB 2152 and specifies the date for S corporations
to file as the same as a federal return. |
|
212 |
Malik |
The -16 amendments, (Exhibit 8) deals with an issue resulting from
the activation of the National Guard and Reserves for mobilization to the
war. Explained federal and state laws
regarding taxation on earnings when deployed by the federal government when
outside the state. However, the 1249th Engineering Battalion is deployed
in state in the Umatilla rather than to the Middle East, therefore the
batallion gains federal income in Oregon and is subject to Oregon tax. The -16 amendments would exempt that income
for a period of two years. |
|
247 |
Chair Shetterly |
Requested a sunset of two years be placed on this as affects a specific
group of National Guard Reserves. |
|
266 |
Chair Shetterly |
Closed the public hearing SB 231 and recessed the meeting. |
|
267 |
Rep. Verger |
Would like to know the fiscal impact on any other amendments. |
|
269 |
Chair Shetterly |
So far we don’t have a revenue impact? |
|
270 |
Chair Shetterly |
The energy amendment potentially. |
|
271 |
Malik |
The -16 amendments are $60,000 for three years. |
|
272 |
Rep. Verger |
What is the $5 million? |
|
273 |
Chair Shetterly |
That’s the local option property tax impact, that’s not a state
general fund. |
|
277 |
Malik |
It’s the City of Portland. |
|
279 |
Chair Shetterly |
Recessed meeting at 9:20 |
TAPE 245, SIDE A
|
001 |
Chair Shetterly |
Reconvened meeting at 2:35 p.m. |
OPENED WORK SESSION ON SB 231-A
|
004 |
Chair Shetterly |
The –A9 amendment restores language from HB 2379. |
|
005 |
Chair Shetterly |
MOTION: MOVED ADOPTION OF THE
–A9 AMENDMENTS INTO SB 231-A. ORDER: HEARING NO OBJECTION,
THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REPS. BARNHART AND VERGER,
EXCUSED). |
|
034 |
Chair Shetterly |
There is no revenue impact to the Providence and Pace
technical fix -13 amendments. |
|
035 |
Chair Shetterly |
MOTION: MOVED ADOPTION OF THE
–13 AMENDMENTS INTO SB 231-A. ORDER: HEARING NO OBJECTION,
THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REPS. BARNHART AND REPS.
VERGER, EXCUSED). |
|
040 |
Chair Shetterly |
There is no revenue impact to the -14 amendments; it
provides technical amendments to the medical provider tax. |
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041 |
Chair Shetterly |
MOTION: MOVED ADOPTION OF THE
–14 AMENDMENTS INTO SB 231-A. ORDER: HEARING NO OBJECTION,
THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REPS. BARNHART AND VERGER,
EXCUSED). |
|
045 |
Chair Shetterly |
There is no revenue impact to the -15 amendments; it
provides a technical fix to HB 2152 relating to filing date for S Corporation
returns. |
|
049 |
Chair Shetterly |
MOTION: MOVED ADOPTION OF THE
–X15 AMENDMENTS INTO SB 231-A. ORDER: HEARING NO OBJECTION,
THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REPS. BARNHART AND VERGER,
EXCUSED). |
|
051 |
Malik |
The –A16 amendments were included with the –A9
amendments heard in an earlier meeting. |
|
052 |
Chair Shetterly |
The $60,000? |
|
055 |
Malik |
Answered affirmatively. |
|
056 |
Rep. Scott |
Asked if –A9 amendments had a revenue impact? |
|
057 |
Chair Shetterly |
The –A9 amendments do not have a general fund revenue
impact, it is a local property tax option. |
|
058 |
Rep. Scott |
This revenue impact study doesn’t really refer to –A9
amendments? |
|
061 |
Malik |
The $4.5 million in the revenue impact statement is
the local City of Portland, Multnomah County impact. |
|
064 |
Malik |
The.-A16 is the smaller figure at the bottom, it shows a general fund
loss of $60,000 for the 2003-05 biennium. |
|
065 |
Rep. Scott |
So it does have an impact of $60,000? |
|
073 |
Chair Shetterly |
The –A16 amendments have a $60,000 revenue impact. |
|
077 |
Rep. Hass |
Who is seeking this amendment? |
|
080 |
Rep. Williams |
Col. Caldwell from the National Guard. There is a group currently on
active duty that was going to be deployed to Fort Lewis or overseas. Instead it
was assigned to Umatilla. They are not with their families and not in a
position to perform regular activities because they are on active duty. They
are deployed in Oregon and don’t receive benefit of the tax break other
people in the unit receive. The intent was to lessen the burden for this
group in active service. |
|
093 |
Rep. Williams |
MOTION: MOVED ADOPTION OF THE
–16 AMENDMENT INTO SB 231-A. ORDER: HEARING NO OBJECTION,
THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REPS. BARNHART AND VERGER,
EXCUSED). |
|
097 |
Malik |
Provided revenue impact on -A12 amendments (Exhibit 9), with a net
negative impact of $3.3 million. |
|
121 |
Chair Shetterly |
$3.3-$3.5 million is a little steep at the end (of session) without
some accommodation in other budget or revenue. |
|
130 |
Chair Shetterly |
The -9, -13, -14, -15, and -16 amendments are already in the bill? |
|
131 |
Malik |
Answered affirmatively. |
|
136 |
Chair Shetterly |
MOTION: MOVED SB 231-A, AS
AMENDED, TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION ROLL CALL: MOTION PASSED 6-1-2 REPRESENTATIVES VOTING AYE:
Barnhart, Berger, Farr, Hass, Hopson, Verger, Williams, Chair
Shetterly. VOTING NO: Scott.
EXCUSED: Barnhart and Verger. |
|
144 |
Chair Shetterly |
Recessed at 2:50 p.m. |
|
001 |
Chair Shetterly |
Reconvened the meeting at 4:05. |
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TAPE 247, SIDE A
OPENED WORK SESSION ON SB 362
|
007 |
Lizbeth Martin-Mahar |
Described SB 362 as the venture capitalist exemption bill. The –A5 amendment, (Exhibit 10) deals with
the estate tax; it clarifies past and future dates on which Oregon state
taxes are connected to the Internal Revenue Code for decedents. The -5 amendments would put into law the
current tax table for decedents after January 1, 2010. Discussed “Estate Taxes” and “Oregon
Estate Taxes”, (Exhibit 11).
Discussed Revenue Impact. “362-5”, (Exhibit 12). |
|
095 |
Martin-Mahar |
Discussed multiplier effect in tax table through 2010. Beginning in
2010 the estate tax in Oregon is not imposed. |
|
105 |
Chair Shetterly |
The conundrum is to do this on a revenue neutral basis for the
2003-05 biennium. Discussed application of multiplier on larger estates and
exempting the estates previously believed to be exempt. |
|
120 |
Rep. Jeff Merkley |
Spoke in support of HB 2704 -10 amendments, (Exhibit 13). Described the estate tax issue as an issue
of gravity as baby boomers begin to die and will continue to escalate. Important to understand in the context of
long-term tax policy perspective. |
|
160 |
Rep. Merkley |
Discussed historical context of estate tax as a substitute for capital
gains. |
|
178 |
Rep. Merkley |
Warren Buffett said society benefits from infrastructure paid for by
others, and it should not be possible for those that benefit the most to not
participate when it comes time to pay capital gains. Asked the committee to consider the
alternative of sunsetting this legislation effective with the end of this
biennium and the next legislature can discuss the appropriate path to go
forward so as not to get caught in 3/5 majority rule. |
|
202 |
Rep. Merkley |
Another option is to use the HB 2704 –A10 amendments, written as a
gut and stuff, which would replace estate tax components in SB 362. Allows raising the exemption limit to $1
million from $600,000. Two parent
family exemption would be $2 million. This clause mimics the federal clause. |
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233 |
Rep. Merkley |
Discussed clause which allows a disconnection from federal
legislation. On page 4 of HB 2704 -10
amendments, in case of decedents, discussed credit calculation mimicking
federal clause. Discussed weights and
multipliers included in the model. |
|
283 |
Rep. Merkley |
Asked what the weight was in the Chair’s model. |
|
281 |
Martin-Mahar |
1.34 in 2003, 1.38 for 2004. |
|
287 |
Rep. Merkley |
Said either option was fine, but believed in the $1 million dollar
option, felt it would be appropriate to give back to a community that
provided the infrastructure to prosper. |
|
312 |
Chair Shetterly |
Asked if it were possible to get a comparable schedule of impacts on Rep.
Merkley’s amendment |
|
314 |
Martin-Mahar |
In 2003-05 there is no revenue impact and the plan includes
multipliers. It begins in 2005
because there is no multiplier. The
impact is $5 million going from $600,000 to the $1 million. |
|
318 |
Rep. Hopson |
Are you saying the sunset would go through if the -5 amendments were
introduced rather than HB 2074 -10. |
|
327 |
Rep. Merkley |
Suggest a sunset in the context of the Chair’s amendment to continue
the conversation tied to Economic Growth and Tax Relief Act (EGTRA) and not
be trapped into an ascending schedule.
Also supported $1 million under the HB 2074-10 amendment and inclusion
of a sunset. Would support melding the two.
Discussed advantages. |
|
362 |
Rep. Hass |
What are exemption levels in Washington and California? |
|
365 |
Chair Shetterly |
$700,000 in Washington. |
|
367 |
Martin-Mahar |
Washington is connected to the 1997 law and will go to $1 million.
Uncertain regarding California’s exemption level. |
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363 |
Laurie Wimmer Whelan |
OEA is concerned about the impacts of the -5 amendments with respect
to estate tax and venture capital changes being contemplated. It is the position of OEA that technical
fixes are rational and necessary as well as the $1 million threshold, but
opposes $3.5 million and connection to federal tax law; also opposes the
venture capital piece. |
|
384 |
Tim Nesbitt |
In Oregon even an unemployed family pays some income tax. Support
estate tax, estimates working families will pay $700 million additional taxes
in the next 3 years and will be done in a progressive way which AFLCIO
supports. All projections indicate
that money will be required to fund services until a stable and fair tax
reform is developed. |
|
441 |
Wimmer Whelan |
Problem with venture capital; is not a lack of venture capital, but a
lack of projects. If that is the case, this is not the right solution for the
problem. |
|
456 |
Chair Shetterly |
Discussed conundrum in maintaining revenue neutrality, in a shift
from estate’s under $1 million to estates over $1 million. |
|
479 |
Chair Shetterly |
Already have $1 million problem because Oregon is not connected to
the current tax law. |
TAPE 247, SIDE A
|
030 |
Warner |
Provided background and description of the -A6 amendments, formerly SB
313. The amendment establishes a credit
program to fund the Oregon Production Investment Fund, where tax credits
would be sold to corporations and defraying up to 10% of the costs of film
production in Oregon. The –A6
amendments have two changes dealing with dates, the act would apply to tax
years beginning 2005. Tax credits
cannot be taken until after July 1 2005.
The bill retains the $1 million limit. Discussed revenue impact as $0 for 2003-05, $2 million in
2005-07. Film production would be
eligible for expenses for production after January 1, 2005 for up to 10% of
costs. |
|
065 |
Rep. Verger |
What is the motivation to buy tax credits? Is there some kind of plus
to buying these tax credits? |
|
072 |
Warner |
The credit is similar a child care credit set up in 2001 and modified
in 2003, key to it being attractive is the deductibility on the federal
return, plus receiving a state credit. |
|
083 |
Rep. Verger |
Where is the fiscal impact statement on this? |
|
084 |
Warner |
An impact statement has not been prepared, but the fiscal impact of
this piece of the bill would be $0 for 2003-05, $2 million for 2005-07
biennium. |
|
092 |
Rep. Barnhart |
Expressed concern regarding the need for discussion of the original
bill. |
|
093 |
Chair Shetterly |
Answered affirmatively. |
|
099 |
Chair Shetterly |
Closed Work Session on SB 362.
Meeting adjourned at 4:50 p.m. |
Tape Log Submitted by,
Kathy Tooley, Committee
Assistant
Exhibit Summary:
1.
Malik,
“Staff Measure Summary SB 321-A”, 1 page
2.
Malik,
“Revenue Impact SB 231-A9, A16”, 2 pages
3.
Rep.
Butler, “SB 231-A12 Amendments”, 3 pages
4.
Kafoury,
“SB 231-A9 Amendments”, 11 pages
5.
Fiskum,
“SB 231-A13 Amenments”, 2 pages
6.
Malik,
“SB 231-A14 Amendments”, 1 page
7.
Malik,
“SB 231-A15 Amendments”, 5 pages
8.
Malik,
“SB 231-A16 Amendments”, 1 page
9.
Malik,
“Revenue Impact SB231-A9, 16, 12”, 1 page
10.
Martin-Mahar,
“SB 362-A5 Amendments”, 8 pages
11.
Martin-Mahar,
“Estate Taxes”, 2 pages
12.
Martin-Mahar,
“Revenue Impact SB 362-5”, 2 pages
13.
Rep.
Merkley, “HB 2704-10 Amendments”, 7 pages
14.
Warner,
“SB 362-A6 Amendments”, 6 pages