INFORMATIONAL MEETING

 

TAPES 12-13, A-B

 

SENATE REVENUE COMMITTEE

JANUARY 29, 2003†† 1:00 PM†† STATE CAPITOL BUILDING

 

Members Present:††††††††††† ††††††††††† Senator Ryan Deckert, Chair

††††††††††††††††††††††† ††††††††††† ††††††††††† Senator Ted Ferrioli, Vice Chair

††††††††††††††††††††††† ††††††††††† ††††††††††† Senator Tony Corcoran

††††††††††††††††††††††† ††††††††††† ††††††††††† Senator Charlie Ringo

††††††††††††††††††††††† ††††††††††† ††††††††††† Senator Bruce Starr

 

Members Excused:††††††††† ††††††††††† Senator Lenn Hannon

 

Invited Witnesses Present:††††††††††† Gweneth Van Frank Carlson, Support Oregon Services Alliance

††††††††††††††††††††††† ††††††††††† ††††††††††† Deborah Buchanan, Department of Revenue

††††††††††††††††††††††† ††††††††††† ††††††††††† Tim Nesbitt, President, Oregon AFL-CIO

††††††††††††††††††††††† ††††††††††† ††††††††††† Chuck Sheketoff, Executive Director, Oregon Center for Public Policy

††††††††††††††††††††††† ††††††††††† ††††††††††† Joe Swinehart, Associated Oregon Industries

††††††††††††††††††††††† ††††††††††† ††††††††††† J.L. Wilson, National Federation of Independent Business

††††††††††††††††††††††† ††††††††††† ††††††††††† Richard Butrick, Associated Oregon Industries

††††††††††††††††††††††† †††††††††††††††††††††††

††††††††††††††††††††††† †††††††††††††††††††††††

 

Staff Present:††† ††††††††††† ††††††††††† Paul Warner, Legislative Revenue Office

††††††††††††††††††††††† ††††††††††† ††††††††††† Lizbeth Martin-Mahar, Legislative Revenue Office

††††††††††††††††††††††† ††††††††††† ††††††††††† Tara Lantz, Committee Assistant

 

 

TAPE 12, SIDE A

 

003

Chair Deckert

Calls meeting to order at 1:20 pm

 

 

012

Gweneth Van Frank Carlson

Gives testimony in opposition to cuts due to the failure of Measure 28 and urges legislature to raise more revenue for human services.

 

 

 

060

Lizbeth Martin-Mahar

Gives brief overview of unofficial results from measure 28. Exhibit 1.

 

 

 

101

Martin-Mahar

Refers members to National Association of State Budget Officers (NASBO) fiscal survey of states and discusses major tax changes throughout the U.S. for fiscal year 2003. Exhibit 2.

 

 

 

172

Paul Warner

Adds to discussion on major tax changes in other states.

 

Questions and answers follow.

 

 

 

188

Deborah Buchanan

Briefly discusses state employer withholding tax tables. Exhibit 3.

 

 

 

217

Tim Nesbitt

Refers members to document, Action Plan For Good Jobs and Better Government. Exhibit 4.

 

 

 

238

Nesbitt

Discusses shift in tax burden from businesses to working families.

 

 

 

259

Nesbitt

Compares Oregon state and local taxes to other states. Exhibit 5.

 

Questions and answers interspersed.

 

 

 

360

 

Nesbitt

Discusses equalizing corporate income tax and personal income tax rates.

 

Clarifying questions and answers interspersed.

 

 

 

391

Sen. Deckert

Asks if reforming the corporate income tax would be a disadvantage for attracting new business.

 

 

 

399

Nesbitt

Responds that there are other reasons businesses consider when choosing a location that are more important.

 

TAPE 13, SIDE A

 

019

Nesbitt

Cautions against major tax reform, such as a sales tax, claiming it will not be any more stable than the current system and will be more regressive.

 

 

 

051

Nesbitt

Recommends disconnecting from the federal tax code, equalizing corporate income tax with personal income tax rates, and to look at a statewide property tax.

 

 

 

080

Chuck Sheketoff

Briefly discusses mission of the Oregon Center for Public Policy.

 

 

 

115

Sheketoff

Briefly discusses Oregonís past and present economic situation.

 

 

 

132

Sheketoff

Refers members to report, Boom, Bust, and Beyond: The State of Working Oregon 2002. Exhibit 6.

 

 

 

144

Sheketoff

Refers members to report, Things Donít Look Different Here. Exhibit 7.

 

 

 

160

Sheketoff

Refers members to report, Oregon State and Local Taxes in 2002. Exhibit 8.

 

 

 

173

Sheketoff

Recommends repealing rolling reconnect.

 

 

 

205

Sen. Ringo

Asks Warner whether a bill regarding a disconnect from the federal tax system has to start in the house.

 

 

 

207

Warner

Responds that counsel has advised them to start it on the house side because of intent to raise revenue.

 

 

 

211

Sheketoff

Advises legislature to preserve inheritance tax.

 

 

 

240

Sheketoff

Advises against capital gains cuts.

 

 

 

254

Sheketoff

Advises legislature to expand and fix Oregonís earned income credit.

 

 

 

284

Sheketoff

Advises legislature to fix Oregonís corporate minimum tax.

 

Clarifying questions and answers interspersed.

 

 

 

309

Sheketoff

Advises legislature to adopt corporate tax disclosure law.

 

 

 

349

Sen. Deckert

Asks how corporate tax disclosure laws would effect the decision of businesses to locate in Oregon.

 

 

 

352

Sheketoff

Responds that it would not effect corporate locations because there are several reasons why corporations choose locations. Adds that one example is a corporation that recently moved to Oregon but then laid off workers.

 

 

 

364

Sen. Deckert

Argues that he is familiar with the company and sees their potential growth and potential jobs for Oregonians as an advantage.

 

 

 

381

Sheketoff

Continues with his argument for a corporate tax disclosure laws.

 

Clarifying questions and answers interspersed.

 

TAPE 12, SIDE B

 

040

Sen. Deckert

Asks if it is not in Oregonís best interest to have a corporate tax structure that would attract businesses to Oregon.

 

 

 

055

Sheketoff

Responds that Oregon is only 1 percent of the national economy and that Oregon is at the whim of it, and that decisions made at the national level are the only ones that are going to affect the economy.

 

 

 

063

Nesbitt

Responds that in the past Oregon managed to use targeted tax breaks to negotiate with specific companies and that if the legislature does across the board cuts Oregon will end up giving away money without getting anything in return.

 

Clarifying questions and answers interspersed.

 

 

 

088

Joe Swinehart

Discusses current economic state of Oregon.

 

 

 

118

Swinehart

Reads recent news headlines regarding Oregon business.

 

 

 

140

Swinehart

Makes recommendations to reform PERS and Oregon Health Plan to make them more affordable, to enact government accountability, to regulate energy prices, to improve funding to school, to reduce capital gains, to create more business tax credits, and to improve roads.

 

 

 

179

JL Wilson

Refers to written testimony. Exhibit 11. Discusses Oregonís small business problem.

 

 

 

218

Wilson

Discusses Oregonís current tax system and stresses that reliance on income tax is not bad.

 

 

 

245

Wilson

Recommends capital gains reductions and elimination of estate tax at the federal and state level.

 

Clarifying questions and answers interspersed

 

 

 

322

Sen. Corcoran

Asks Swinehart about specific numbers regarding ESDs, motor pools, and contracting out management of prisons.

 

 

 

360

Swinehart

Responds that he doesnít have the answers.

 

 

 

378

Sen. Deckert

Asks how Oregon can make necessary investments on retention of current business and recruitment and investments in higher education that will be important in ability to compete in a knowledge based economy.

 

 

 

396

Swinehart

Responds that AOI has found that taxes are the lead motivator for business and that Oregon needs to respond to that motivator.

 

 

 

421

Sen. Starr

Asks about additional incentives for business, economic development, and urban growth boundary expansions.

 

TAPE 13, SIDE B

 

039

Swinehart

Responds in agreement to Starrís position.

 

 

 

080

Sen. Corcoran

Asks what all of AOIís proposed tax cuts would amount to.

 

 

 

089

Swinehart

Responds that it would amount to a lot of money but that AOI sees economic development as the only solution to pull out of the recession.

 

 

 

095

Sen. Corcoran

Asks how it is beneficial to be in the national news about how poor the schools are in Oregon.

 

 

 

097

Swinehart

Responds that it is not an advantage but there are several other disadvantages as well.

 

 

 

099

Richard Butrick

Responds to previous questions regarding ESDís, motor pools, and contracting management of prisons.

 

 

 

194

Sen. Corcoran

Comments that AOIís ideas for eliminating wasteful spending, such as eliminating the Covered Bridge Association, which gets no General Fund dollars, is hard to deal with when the state is in such dire straits.

 

 

 

219

Butrick

Responds that AOI put the suggestions out there just to get the legislators to think and that if the legislature had acted on some of the suggestions years ago Oregon would not be in its current state.

 

 

 

235

Sen. Ringo

States that AOIís publication has done a great disservice to the state in propagating a misconception that there is a lot of quick fixes that can raise a lot of money.

 

 

 

240

Butrick

Responds that it has gotten a lot of attention and repeats his assertion that a lot of money could have been saved had the legislators taken up the suggestions years ago.

 

 

 

244

Sen. Deckert

Adjourns meeting at 3:00 pm.

 

 

 

 

 

 

 

 

Tape Log Submitted by,

 

 

 

 

 

Tara Lantz, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.      Lizbeth Martin-Mahar, Measure 28 Unofficial Vote Count, 1p.

2.      Lizbeth Martin-Mahar, NASBO Fiscal Survey of States: November 2002, 9pp.

3.      Deborah Buchanan, Important Notice About the State Employer Withholding Tax Tables, 1p.

4.      Tim Nesbitt, An Action Plan for Good Jobs and Better Government, 16pp.

5.      Tim Nesbitt, 2003 Competitiveness Redbook, 2pp.

6.      Chuck Sheketoff, Boom, Bust, and Beyond: The State of Working Oregon 2002, 118pp.

7.      Chuck Sheketoff, Things Donít Look Different Here, 15pp.

8.      Chuck Sheketoff, Oregon State and Local Taxes in 2002, 2pp.

9.      Chuck Sheketoff, Empty Promises and False Hopes, 15pp.

10.  Chuck Sheketoff, Cutting Capital Gains Taxes Will Hurt, Not Help, Oregonís Economy, 15pp.

11.  J.L. Wilson, NFIB Written Testimony, 2pp.