PUBLIC HEARING AND WORK SESSION

SB 469-A; WORK SESSION SB 362-A

TAPE 248, A

HOUSE REVENUE COMMITTEE

AUGUST 25, 2003 3:00 PM 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: Mike Marsh, Oregon Department of Transportation, (ODOT)

Bob Russell, Oregon Trucking Association

John Marks, Portland

Ray Lewis, Portland

Staff Present: Paul Warner, Legislative Revenue Officer

Richard Yates, Legislative Revenue Office

Lizbeth Martin-Mahar, Legislative Revenue Office

Kathy Tooley, Committee Assistant

TAPE 248, SIDE A

004

Chair Shetterly

Calls meeting to order at 3:17 p.m.

OPENED PUBLIC HEARING ON SB 469-A

014	Mike Marsh	Spoke in support of SB 469-A –1 amendments, as it changes truck credentialing fees to align statutes with the passage of HB 2041 (Exhibit 1). The bill fixes a problem in the fee structure created by HB 2041. The amendment assures that fees are applied equitably to in state and out of state vehicles, and cost responsibility between trucks and cars.
045	Bob Russell	This bill fixes a problem discovered after the passage of HB 2041. Described the amendment as cost responsible.
055	Marsh	Discussed additional information on reductions in operating expenditures for ODOT by shifting to cities and counties. The amendment ensures the funds are consolidated at ODOT and are used on statewide maintenance and preservation projects that can seek limitations on later, deletes portion of bill that sends additional money to cities and counties.
066	Chair Shetterly	Will this be distributed through the Area Commission on Transportation Process (ACTP)?
067	Marsh	The amount discussed be discussed as part of the.ACTP, but the main thrust is for maintenance and preservation, not through the area commissions.
070	Chair Shetterly	Will there be input from cities and counties on expenditures?
071	Marsh	It will be used in local areas.
075	Chair Shetterly	Closed public hearing on SB 469.

OPENED WORK SESSION ON SB 469-A

076	Chair Shetterly	MOTION: MOVED ADOPTION OF THE –A4 AMENDMENT (Exhibit 2), INTO SB 469-A. ORDER: HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT).
078	Chair Shetterly	MOTION: MOVED SB 469-A, AS AMENDED, TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.
081	Rep. Verger	This involves the payroll tax?
082	Chair Shetterly	No, that amendment is not before the Committee.
083		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.
092	Chair Shetterly Chair Shetterly	Closed the work session on SB 469. Recessed the meeting for 5 minutes.

OPENED WORK SESSION SB 362-A

093	Chair Shetterly	Discussed the –A11 amendment.
112	John Marks	This bill would discontinue the estate tax?
115	Chair Shetterly	It does not. It raises the filing threshold to $2 million over time.
119	Marks	Opposed raising the exemption. Discussed personal experience with estate tax, which he found supportive. Said the estate tax is a way of ensuring there is not a hereditary plutocracy in this country. It is also a way of paying back for the privilege of living in Oregon, and a country in where wealth can be accumulated. Described the estate tax as a way of paying back to the community that has rewarded enterprise.
140	Ray Lewis	Concurred with Marks’ comments. Oregon does not need to lose a source of income. As a small businessperson, does not mind paying the increase of income taxes recently passed in order to have good schools; but would mind paying the increase if the estate tax was discontinued. Challenged the level of exemption changing to $2 million as a person able to have an estate of that size would probably have the ability to plan ahead to eliminate or reduce their estate taxes.
174	Martin-Mahar	Provided background and description of the –A11 amendments, similar to -A5 amendments. Clarifies the past and forgives a tax that would have been owed due to the filing threshold being at $600,000 currently.
180	Chair Shetterly	Told the Committee that this was the most critical part to be done in this session, forgiving the unintended tax liability accrued since 1997.
184	Martin-Mahar	Establishes a date on which the estate tax connects to the Internal Revenue Code for decedents dying on or after December 31, 2002; explained revenue neutrality of bill for 2003 05 biennium (Exhibit 4). Discussed revenue loss of $27 million for 2005-07 biennium, (Exhibit 5).
211	Martin-Mahar	Discussed conceptual amendments needed for –A11 amendments. On page 8, line 18, delete $1,525,800 and replace with $780,800; and on page 8, line 27, delete $3.5 million and replace with $2 million. –A11 deletes sunset in the –A5 amendments in 2010, keeps the estate tax going beyond 2010 and disconnects from future changes. Clarified Oregon no longer has a rolling reconnect to federal tax and should there be changes in federal tax law, the legislature would have to decide if it will connect. Currently connected to $2 million filing threshold.
236	Chair Shetterly	What year did we go to $2 million?
237	Martin-Mahar	2006.
238	Chair Shetterly	That stays in federal law until 2009?
239	Martin-Mahar	Answered affirmatively.
240	Chair Shetterly	Told the Committee of negotiations with the Governor’s office, the chair had wanted a $3.5 million threshold, the Governor is disinclined to do that. Want to protect estates from unintended tax liabilities, and is will forego the battle over the 2009 issue as federal law will be change and can be revisited in the next sessions. Right now the legislature can give estate planners a $2 million threshold.
263	Chair Shetterly	Looked to Margaret Hallock of the Governor’s office for affirmation that he described correctly.
265	Margaret Hallock	Nodded affirmation.
257	Rep. Barnhart	Asked if -10 amendments deals with problem of prior tax returns where the law is ambiguous, and does it go forward with a cap of $1 million?
270	Martin-Mahar	The HB 2704-10 amendments, brought forward by Rep. Merkley, is capped at $1 million and disconnected from future estate tax increases with add backs in 2003, and 2004. In 2005, there are no multipliers with a revenue loss of $10 million which is less due to having a $1 million threshhold.
299	Rep. Barnhart	The revenue impact is less in that proposal?
300	Chair Shetterly	Yes, because the tax impact is higher.
301	Rep. Barnhart	Commented that Congress was precipitous in its action on estate tax and is too high, had hoped for a smaller threshold.
313	Chair Shetterly	MOTION: MOVED ADOPTION OF CONCEPTUAL AMENDMENTS TO THE –A11 AMENDMENTS. DELETE $1,525,800 ON LINE 18, PAGE 8 AND INSERTING $780,800. ON LINE 27, PAGE 8, DELETE $3.5 AND INSERT $2.0.
327	Rep. Scott	Why conceptually change those, why not leave them where they are?
329	Chair Shetterly	Explained the Governor’s office will go to $2 million, but not $3.5 in 2009, this amendment was crafted contemplating increasing that threshold in 2009, that’s something future legislatures can address.
		ORDER: HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT.)
340	Chair Shetterly	MOTION: MOVED ADOPTION OF THE –A11 AMENDMENTS, AS CONCEPTUALLY AMENDED, INTO SB 362-A. ORDER: HEARING NO OBJECTION, THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT.)
346	Chair Shetterly	MOTION: MOVED SB 362-A TO THE HOUSE FLOOR, AS AMENDED INCLUDING CONCEPTUAL AMENDMENTS, WITH A DO PASS RECOMMENDATION.
348	Rep. Barnhart	This deletes the original bill?
349	Chair Shetterly	Answered affirmatively.
350		ROLL CALL: MOTION PASSED 7-2-0 REPRESENTATIVES VOTING AYE: Berger, Farr, Hopson, Scott, Verger, Williams, Chair Shetterly. VOTING NO: Barnhart, Hass. Rep. Chair Shetterly will carry the bill.

367

Chair Shetterly

Meeting adjourned at 4:00 p.m.

Tape Log Submitted by,

Kathy Tooley, Committee Assistant

Exhibit Summary:

1. Marsh, testimony “Senate Bill 469 and -1 amendments”, 1 page

2. Chair Shetterly, “SB 469-A4 amendments”, 1 page

3. Chair Shetterly, “SB 362-A11 amendments”, 10 pages

4. Martin-Mahar, “Comparison of Estate Tax Proposals” 1 page

5. Martin-Mahar, “Revenue Impact SB 362”, 1 page

6. Chair Shetterly, “SB 362-7”, 9 pages

7. Chair Shetterly, “SB 362-A9”, 1 page

8. Yates, “SB 469-A”, 1 page