PUBLIC HEARING AND WORK SESSION

SB 341

PUBLIC HEARING HB 2542

WORK SESSION HB 2030, 2452

BILL INTRODUCTION LC 2258, 2357

 

TAPES 62-63, A-B

 

HOUSE REVENUE COMMITTEE

MARCH 2, 2005   1:00 PM   STATE CAPITOL BUILDING

 

Members Present:                      Rep. Tom Butler, Chair

                                                Rep. Vicki Berger, Vice-Chair

                                                Rep. Mark Hass, Vice-Chair

                                                Rep. Brian Boquist

                                                Rep. Sal Esquivel

                                                Rep. Larry Galizio

                                                Rep. Betty Komp

                                                Rep. Andy Olson

                                                Rep. Chuck Riley    

 

Witnesses Present:                      Rep. Linda Flores, District 51

                                                Michelle Deister, League of Oregon Cities

                                                Dee Wescott, Mayor, Damascus

                                                John Hartsock, Mayor, ProTem, Damascus                                         

                                                Jim Craven, American Electronics Association

                                                Debra Buchanan, Dept. of Revenue

                                                James Morales, Oregon Association of County Clerks

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Economist

                                                Mary Ayala, Economist

                                                Kristi Bowman, Committee Assistant

                                               

 

TAPE 62, SIDE A

002

Chair Butler

Calls meeting to order at 1:05 p.m.

 

 

 

 

 

OPENS PUBLIC HEARING FOR SENATE BILL 341

 

 

 

 

 

007

Mary Ayala

Overview of SB 341 (Exhibits 1 and 2). This bill enables the city of Damascus to issue an 18-month anticipation bond for operating revenues. Current law states that an anticipation bond may be issued only at the beginning of the fiscal year. No impact expected because no other city has applied for this change.

 

 

 

 

 

018

Rep. Flores

Supports the bill because the City of Damascus “needs to pay its bills.” The city voters overwhelmingly approved the incorporation and tax rate in the Nov. 2, 2004 election.

 

 

 

 

 

040

Michelle Deister

Introduces witnesses from Damascus.

 

 

 

 

 

049

Dee Wescott

Testifies in support of SB 341 in order to change the statutory limit pertaining to financing the new city of Damascus. Comments that 92% of the eligible voters cast their votes in the 2004 election.

 

072

John Hartsock

Submits written testimony (Exhibit 3). Comments on strong city participation of residents to support local control and states that 65% of the voters approved the incorporation and tax base measure.

 

 

 

 

 

090

Rep. Boquist

Asks: 1) does compression affect the city tax base; 2) how helpful has METRO been to Damascus.

 

 

 

 

 

098

Hartsock

Responds: 1) compression did not affect the tax base because the tax base was under the $10 threshold for local government. 2) METRO (the governing agency for cities in the Portland metro area) has been very proactive in moving the urban growth boundary to allow city growth, and METRO also helped draft the incorporation bill.

 

 

 

 

 

CLOSES PUBLIC HEARING FOR SENATE BILL 341

 

 

 

 

 

OPENS WORK SESSION FOR SENATE BILL 341

 

 

 

 

 

108

Rep. Berger

MOTION: MOVES SB 341 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

 

 

 

 

115

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES: 8-0-1. VOTING AYE: BERGER, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BUTLER. MEMBER EXCUSED: HASS. *(Note: Tape 63 B Meter 177, Rep. Hass votes AYE. Final Vote 9-0-0).

 

 

 

 

 

CLOSES WORK SESSION FOR SENATE BILL 341

 

 

 

OPENS PUBLIC HEARING FOR HOUSE BILL 2542

 

 

129

Lizbeth Martin-Mahar

Updates information for various reconnect components of HB 2542 (Exhibits 4 and 5). Discusses changes for various reconnect components discussed in previous testimony on 02/22/05 (Exhibit 2). Refers to diagram on current law dividends discussed in previous testimony on 02/22/05 (Exhibit 7). Refers to informational handout pertaining to American Jobs Act of 2004, Foreign Earnings, Medicare Prescription Drug Act of 2003, and Military Family Tax Relief Act of 2003 (Exhibit 6). Comments that amendments are needed to make this bill conform to federal law in the future.

 

 

 

 

 

340

Chair Butler

General comments about anticipated revenue impacts due to new federal legislation such as the Military Family Tax Relief Act of 2003.

 

 

 

 

 

TAPE 63, SIDE A

 

031

Martin-Mahar

Continues with background information on HB 2542. Discusses the Working Family Childcare Credit pertaining to grandparents who pay for childcare. Refers to Major Components table (Exhibit 5, p. 2) regarding updated revenue impact figures.

 

 

 

 

 

 

 

 

 

 

 

 

 

089

Rep. Hass

Asks about reinvesting foreign earnings. Asks about current law deductions.

 

 

 

 

 

102

Martin-Mahar

Discusses the economic assumptions made about the estimates stated on the Major Components table (Exhibit 5).

 

 

 

 

 

112

Rep. Hass

Asks if Medical Savings Accounts were not reconnected to federal tax code; what repercussions would there be.

 

 

 

 

 

124

Debra Buchanan

Responds that federal reporting requirements for federal subsidies and the Medicare Modernization Act do have a “mechanical” effect on the Dept. of Revenue. It would be difficult to track those items if they are considered exclusion on the federal tax form rather than a deduction.

 

 

 

 

 

150

Chair Butler

Questions and discussion exchanged with Lizbeth Martin-Mahar regarding definitions in the bill.

 

 

 

 

 

215

Martin-Mahar

Refers to Potential Amendments handout (Exhibit 7).

 

 

 

 

 

230

Buchanan

Refers to Fiscal Impact Statement (Exhibit 8). Discussion with Chair Butler on expenditures anticipated by the Dept. of Revenue.

 

 

 

 

 

250

Martin-Mahar

Discusses potential amendment suggestions and policy issues regarding the federal reconnect.

 

 

 

 

 

300

Chair Butler

General comments about future reconnect issues.

 

 

 

 

 

320

Martin-Mahar

Additional comments on the qualifying child definition.

 

 

 

 

 

355

Chair Butler

Calls At Ease at 1:57 p.m. Reconvenes at 2:01 p.m.

 

 

 

 

 

356

Chair Butler

Asks Martin-Mahar and vice-chairs to continue to examine the policy issues discussed during the meeting for future discussion.

 

 

 

 

 

360

Jim Craven

Submits written testimony (Exhibit 9) in support of HB 2542. Urges members to look at the “bottom lines” concerning revenue impacts rather than to pick and choose individual items in the reconnect bill in order to save revenue. By remaining connected to the federal code taxpayers avoid amended tax returns and avoid uncertainty in business and individual tax planning.

 

 

 

 

 

TAPE 62, SIDE B

 

086

Rep. Hass

Comments that legislators have a duty to examine each component of the reconnect bill ensuring that taxpayers are getting the most for their tax money regarding expenditures.

 

 

 

 

 

106

Craven

Discusses the impacts of isolating certain components of the reconnect bill.

 

 

 

 

 

155

Chair Butler

Requests more information from Mr. Craven about the impact of the reconnect on the businesses he represents in Oregon.

 

 

 

 

 

173

Buchanan

Discusses another change in HB 2542 regarding tax representation before the Dept.of Revenue. Refers to page 2, lines 5-9 of the bill draft. It authorizes the Dept. to adopt rules allowing individuals to represent taxpayers before the Dept. Discusses representation scenarios that are affected by current law.

 

 

 

 

 

200

Buchanan

Discusses handout pertaining to the Working Family Childcare Credit (Exhibit 10). The definition of “qualifying child” is taken from IRS Code Section 151. Recently Congress expanded the definition of a qualifying child, and the bill does include that expanded definition.  a non-resident taxpayer would be able to claim a refund. Discusses impact of that credit.

 

 

 

 

 

245

Buchanan

Discusses another provision in the bill regarding the federal sales tax deduction. While Oregon does not have a sales tax, Washington residents file Oregon returns allowing them to claim a sales tax deduction. Discusses the impact of disallowing that credit.

 

 

 

 

 

259

Buchanan

Refers to the handout describing scenarios under current law and under HB 2542 regarding dividend deductions.

 

 

 

 

 

329

Rep. Hass

Asks if Oregon statute language should be changed.

 

 

 

 

 

331

Buchanan

Responds that proposed language to change the reconnect should be relatively simple to construct. Adds that the unintended consequence of a double deduction goes back to when Oregon connected the corporate tax to the definition of federal taxable income. Perhaps there was not enough attention paid at the time to the impact of the two deductions.

 

 

 

 

 

370

Martin-Mahar

Includes the estimates of the 85% federal deduction in her Major Components table (Exhibit 5).

 

 

 

 

 

390

Chair Butler

Further discussion with Buchanan regarding repatriation of the money for the one year duration of the new federal law.

 

 

 

 

 

439

Rep. Boquist

Comments that the federal law took effect on 10/22/04 and is in effect for one year prior to the effective date and one year after.

 

 

 

 

 

TAPE 63, SIDE B

 

010

Buchanan

Provides additional information on the DOR’s administrative rules contained in the working family child care credit handout (Exhibit 10). Several scenarios are described in the handout.

 

 

 

 

 

CLOSES PUBLIC HEARING FOR HOUSE BILL 2542

 

 

 

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 2030

 

 

 

 

 

041

Mazen Malik

Provides background information on HB 2030 previously discussed on 01/27/05. The bill requires state agencies to follow standards adopted by the State Treasurer regarding electronic funds transfer. Discusses HB 2030-1, HB 2030-2 and HB 2030-3 amendments.

 

 

 

 

 

088

James Morales

Testifies that the amendment HB 2030-3 addresses the concerns of the county clerks regarding the assessment of a penalty against a payee who is unable to receive payment by electronic funds transfer.

 

 

 

 

 

121

Rep. Boquist

Restates Chair Butler’s previous comment that the Dept. of Revenue concurs with the HB 2030-2 amendment. Asks if the Dept. agrees with the HB 2030-3 amendment. States that he and Rep. Riley reviewed the ORS statutes cited in the HB 2030-2 amendment with Debra Buchanan, and it met with the interpretation discussed in the previous committee hearing.

 

 

 

 

 

135

Chair Butler

Asks Buchanan if she would like to comment on the HB 2030-3 amendment. She declined.

 

 

 

 

 

140

Rep. Boquist

MOTION: MOVES THE ADOPTION OF THE HB 2030-2 AMENDMENT.

 

 

 

 

 

144

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. ANSWERING AYE: BERGER, HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY,BUTLER.

 

 

 

 

 

148

Rep. Riley

MOTION: MOVES THE ADOPTION OF THE HB 2030-3 AMENDMENT.

 

 

 

 

 

150

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. ANSWERING AYE: BERGER, HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BUTLER.

 

 

 

 

 

161

Chair Butler

MOTION: MOVES HB 2030 AS AMENDED TO THE HOUSE WITH A DO-PASS RECOMMENDATION..

 

 

 

 

 

164

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. ANSWERING AYE: BERGER, HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BUTLER.

 

 

CLOSES WORK SESSION FOR HOUSE BILL 2030

 

 

 

 

 

REOPENS WORK SESSION FOR SENATE BILL 341

 

 

 

 

 

 

173

Rep. Berger

Requests a suspension of the rules and reopens the work session in order for Rep. Hass to vote.

 

 

 

 

 

177

Rep. Hass

Votes Aye (See note on page 2 of this tape log).

 

 

 

 

 

178

Chair Butler

Declares a unanimous vote for SB 341 (9-0-0).

 

 

 

 

 

CLOSES WORK SESSION FOR SENATE BILL 341

 

 

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 2452

 

 

 

 

 

192

Martin-Mahar

Gives background information on HB 2452. The bill pertains to a tax change requiring pass-through entities to withhold taxes on distributive income from their non-resident owners that elect not to be part of the composite tax return.

 

 

 

 

 

215

Chair Butler

Comments that this bill conforms to the multi-state commission’s position.

 

 

 

 

 

221

Rep. Berger

MOTION: MOVES HB 2452 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

 

 

 

 

225

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. ANSWERING AYE: BERGER, HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BUTLER.

 

 

 

 

 

CLOSES WORK SESSION FOR HOUSE BILL 2452

 

 

 

 

 

OPENS WORK SESSION FOR BILL INTRODUCTION

 

 

 

 

 

239

Chair Butler

Discusses LC 2357. This is a joint resolution that proposes an amendment to the Constitution adopting a uniform statewide tax on manufacture or importation of malt beverages. Requires allocation of net tax revenues to counties.

 

 

 

 

 

274

Chair Butler

MOTION: MOVES THAT LC 2357 BE INTRODUCED AS A HOUSE REVENUE COMMITTEE BILL.

 

 

 

 

 

277

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. ANSWERING AYE: BERGER, HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BUTLER.

 

 

 

 

 

269

Paul Warner

Discusses LC 2258 is a modification to the forestland taxation reform. It establishes a late filing procedure for continuing qualification applications.

 

 

 

 

 

273

Rep. Berger

Asks for clarification of the proposed changes to the bill.

 

 

 

 

 

275

Warner

Responds that this LC just changes the time frame for the filing. It doesn’t alter the process.

 

 

 

 

 

295

Rep. Berger

MOTION: MOVES THAT LC 2258 BE INTRODUCED AS A HOUSE REVENUE COMMITTEE BILL.

 

 

 

 

 

305

Rep. Komp

Asks Warner about the late filing fee on lines 12-13 of the LC.

 

 

 

 

 

313

Warner

The fee is new language. It is the fee charged if an application is not filed by the deadline.

 

 

 

 

 

332

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. ANSWERING AYE: BERGER, HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BUTLER.

 

 

 

 

 

339

Chair Butler

Adjourns meeting at 2:53 p.m.

 

 

 

Tape Log Submitted by:

Reviewed by:

 

 

 

Kristi Bowman, Committee Assistant

Kim Taylor James, Committee Coordinator

 

Exhibit Summary:

  1. 1.      SB 341, Staff Measure Summary, Ayala, 1 pg., 02/10/05
  2. 2.      SB 341, Staff Measure Summary, Ayala, 1 pg., 02/28/05
  3. 3.      SB 341, Written Testimony, Hartsock, 2 pp., 03/02/05
  4. 4.      HB 2542, Revenue Impact Statement, Martin-Mahar, 1 pg.,  03/02/05
  5. 5.      HB 2542, Revenue Estimates Table, Martin-Mahar, 2 pp., 03/02/05
  6. 6.      HB 2542, Handout: Primary Components, Martin-Mahar, 6 pp., 03/02/05
  7. 7.      HB 2542, Handout: Potential Amendments and Policy Choices, Martin-Mahar, 1 pg., 03/02/05
  8. 8.      HB 2542, Fiscal Impact Statement, Legislative Fiscal Office, 1 pg., 02/25/02
  9. 9.      HB 2542, Written Testimony, Craven, 2 pp., 03/02/05
  10. 10.  HB 2542, Handout: Working Family Childcare Credit, Buchanan, 03/02/05
  11. 11.  HB 2542, Handout: Scenarios, Buchanan, 1 pg., 03/02/05
  12. 12.  HB 2030, Amendment HB 2030-2, Legislative Counsel, 02/14/05
  13. 13.  HB 2030, Amendment HB 2030-3, Legislative Counsel, 02/21/05
  14. 14.  LC 2357, Legislative Counsel, 2 pp., 02/28/05
  15. 15.  LC 2258, Legislative Counsel, 4 pp., 02/28/05