PUBLIC HEARING

HB 2368

 

TAPES 73-74, A

 

HOUSE REVENUE COMMITTEE

MARCH 10, 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. Chuck Riley

                       

 

Members Excused:                     Rep. Andy Olson

 

           

Witnesses Present:                      Rep. Gene Whisnant, District 53

                                                Joe Schweinhart, Associated Oregon Industries

 

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Economist

                                                Kristi Bowman, Committee Assistant

                                               

 

TAPE 73, SIDE A

002

Chair Butler

Opens meeting at 1:04 p.m.

 

 

 

OPENS PUBLIC HEARING FOR HOUSE BILL 2368

 

 

 

010

Lizbeth Martin-Mahar

Gives overview of HB 2368 (Exhibit 1) which increases the corporate excise and income tax credit limits for qualified research and development (R & D). Refers to handouts on State Survey of Research and Investment Credits 2004 (Exhibit 2) and the 2002 Corporate Tax Returns for Corporations Claiming the Research and Development Tax Credit (Exhibit 3). Gives background of the R & D credits and previous legislation pertaining to these credits.

 

 

 

060

Chair Butler

Questions and answers exchanged with Martin-Mahar about overview information presented.

 

 

 

084

Rep. Hass

Asks Martin-Mahar for clarification of credits claimed and amount of credits used as stated on Exhibit 3.

 

 

 

090

Martin-Mahar

Responds that companies are required to report the total number of credits for which they are eligible, but the companies may not use all of their credits.

 

 

 

115

Martin-Mahar

Discusses carry-forward tax credit time period change proposed in HB 2368.

 

 

 

139

Rep. Whisnant

Testifies in support of HB 2368. Reads from written testimony (Exhibit 4). Rep. Whisnant is the sponsor of HB 2368 at the request of Associated Oregon Industries. Comments about R & D that the timber industry and agriculture businesses have done recently.

 

 

 

203

Joe Schweinhart

Testifies in support of HB 2368. Reads from written testimony (Exhibit 5). Discusses the cyclical movement of R & D companies. The tax credits increase the state’s ability to protect existing R & D industries in OR and attract new companies to OR.

 

 

 

268

Rep. Hass

Comments on 20 years of carry-forward and expresses concern about the length of that time.

 

 

 

273

Schweinhart

Responds that no other state has that length of carry-forward time, but believes it is necessary. Perhaps 10 years is a more reasonable number.

 

 

 

292

Rep. Galizio

Asks Schweinhart what he believes will be the revenue impact.

 

 

 

300

Schweinhart

Responds that he estimates the impact would be about $4 M for the current biennium.

 

 

 

339

Chair Butler

Clarification with Schweinhart about his estimate of revenue impact.

 

 

 

349

Chair Butler

Asks what is the performance measure used to assess the success of the $3 M tax credit for R & D companies. How does the tax credit benefit Oregon?

 

 

 

367

Schweinhart

By expanding the credit, it allows more companies to use it. This would help small companies already here to grow and provide additional employment.

 

 

 

385

Chair Butler

Further discussion with Schweinhart regarding the benefits of the     R & D tax credit to the state.

 

 

 

TAPE 74, SIDE A

045

Rep. Riley

Asks Martin-Mahar about an estimate of credits taken by industry sector companies and manufacturing. Asks for specifics about what other states are giving in R & D credits.

 

 

 

060

Martin-Mahar

Responds that the percentage of industry sector companies claiming the   R & D credit is stated in the last paragraph in the Staff Measure Summary (Exhibit 1). Martin-Mahar will provide other state tax credit percentage information to Rep. Riley.

 

 

 

067

Rep. Boquist

Asks Schweinhart about a 10-year window for carry-forward instead of 20 years as proposed in HB 2368.

 

 

 

071

Schweinhart

Responds that with a 10-year window the companies will have a longer time to use the credits due to the cyclical nature of R & D.

085

Chair Butler

Discusses committee business with Paul Warner.

 

 

 

CLOSES PUBLIC HEARING FOR HOUSE BILL 2368.

 

 

 

107

Chair Butler

Adjourns meeting at 1:40 p.m.

 

 

 

Tape Log Submitted by:

Reviewed by:

 

 

 

Kristi Bowman, Committee Assistant

Kim Taylor James, Committee Coordinator

 

Exhibit Summary:

  1. 1.      HB 2368, Staff Measure Summary, Martin-Mahar, 1 pg., 03/10/05
  2. 2.      HB 2368, Handout: State Survey of Research and Investment Tax Credits, 2004, Martin-Mahar, 1 pg., 03/10/05
  3. 3.      HB 2368, Handout: 2002 Corporate Tax Returns for Corporations Claiming the Research and Development Tax Credit, Martin-Mahar, 03/10/05
  4. 4.      HB 2368, Testimony, Whisnant, 2 pp., 03/10/05
  5. 5.      HB 2368, Testimony, Schweinhart, 1 pg., 03/10/05