PUBLIC HEARING AND WORK SESSION

SB 847, 996 A

PUBLIC HEARING

SB 31, HB 2775

WORK SESSION

HB 2514

 

TAPES 180-181 A-B

 

HOUSE REVENUE COMMITTEE

JUNE 1, 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. Gary Hansen, District 44

                                                Marge Kafoury, City of Portland

                                                Brian Morisky, City of Portland

                                                John Miller, Homeowner Advisory Committee (HOAC)

                                                Kevin O’Reilly, Oregon Paralyzed Veterans of America

                                                Mark Nelson, Oregon Housing Alliance

                                                Bill Van Vliet, Network for Oregon Affordable Housing (NOAH)

                                                Rick Crager, Oregon Housing & Community Services

                                                Bob Russell, Oregon Trucking Assn.

                                                Gary Eichman, Oregon Transfer Co.

                                                Debra Buchanan, Dept. of Revenue

                                                Sen. Frank Morse, District 8

                                                Sen. Betsy Johnson, District 16

                                                Danelle Romain, Housing Alliance

 

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Mary Ayala, Economist

                                                Lizbeth Martin-Mahar, Economist                                         

                                                Kristi Bowman, Committee Assistant                                

                                                                                               

                                                                                   

 

TAPE 180, SIDE A

002

Chair Butler

Calls meeting to order at 1:12 p.m.

 

 

 

OPENS PUBLIC HEARING FOR SENATE BILL 847

 

 

 

015

Mary Ayala

Gives summary of SB 847 (Exhibit 1). The bill reactivates a property tax exemption for newly constructed single-unit housing in distressed urban areas. The bill permits condominiums to be eligible for the tax

 

exemption. Refers to the SB 847-1 amendment that adds a sunset provision (Exhibit 2).

 

 

 

039

Chair Butler

Comments on the fair market prices and income levels of the program.

 

 

 

044

Rep. Gary Hansen

Testifies in support of SB 847. By using this program with non-profit housing corporations, several hundred new homes were created in northeast Portland. Discusses the benefits of the program. It is one more tool for affordable housing and community renewal.

 

 

 

090

Chair Butler

Discusses the revenue impact (Exhibit 3) with Rep. Hansen.

 

 

 

103

Rep. Komp

Asks if there are other distressed areas outside of Portland.

 

 

 

112

Marge Kafoury

Responds that Portland is the only jurisdiction currently using the program. It is a local option program, so any community can activate the program with a 51% approval of the taxing jurisdictions. In response to Rep. Butler’s question about limits, the limit on the house price is $170,000, and the income maximum is $67,900 for a family of four.

 

 

 

127

Rep. Berger

Asks how often does Portland review the distressed areas designation.

 

 

 

138

Brian Morisky

Responds that the distressed area map is reviewed every three years and explains the review process. Submits written testimony (Exhibit 4).

 

 

 

150

John Miller

Relates an anecdote of a woman who has used this program at a development in Portland.

 

 

 

166

Chair Butler

Comments on the mechanics of the program with witnesses.

 

 

 

184

Kafoury

Clarifies that the tax abatement is on the improvements, not on the land. Discusses the mechanics of the program with Chair Butler.

 

 

 

200

Miller

Adds that the program is for new construction only. Discussion with Chair Butler.

 

 

 

215

Morisky

Discusses the application process and the outreach advertising to eligible home buyers.

 

 

 

CLOSES PUBLIC HEARING FOR SENATE BILL 847

 

 

 

OPENS WORK SESSION FOR SENATE BILL 847   

 

 

 

233

Rep. Berger

MOTION: MOVES THE ADOPTION OF THE SB 847-1 AMENDMENT.

 

 

 

238

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. VOTING AYE: ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER. EXCUSED: BOQUIST.

 

 

 

242

Rep. Berger

MOTION: MOVES SB 847 AS AMENDED TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

 

 

249

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. VOTING AYE: ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER. EXCUSED: BOQUIST.

 

 

 

CLOSES WORK SESSION FOR SENATE BILL 847

 

 

 

OPENS PUBLIC HEARING FOR SENATE BILL 996  A

 

 

 

266

Lizbeth Martin-Mahar

Gives summary of SB 996 A (Exhibit 9). The bill increases the cap of the affordable housing certified by the Housing Dept. Discusses the SB 996 A-2 amendment that extends the sunset on the affordable tax credit (Exhibit 10). Refers to the revenue impact (Exhibit 11).

 

 

 

302

Kevin O’Reilly

Testifies in support of SB 996 A. The bill will help low-income and disabled persons to find affordable housing. Discusses housing programs in Lane Co. that he has been involved with.

 

 

 

337

Rep. Berger

Clarifies that the amendment extends the sunset date, and the bill only raises the cap.

 

 

 

349

Mark Nelson

Comments that HB 2775 is a mirror of this bill.

 

 

 

360

Bill Van Vliet

Comments that all the benefits go to the tenants, not to the banks or to the developers. The program generates a lot of leverage of private sector investment for affordable housing projects statewide. NOAH has used the program extensively.

 

 

 

374

Rep. Berger

Asks how long the program has been around.

 

 

 

376

Van Vliet

Responds that the program came into being in the early 1990’s.

 

 

 

385

Chair Butler

Discusses affordable housing issues with Van Vliet.

 

 

 

426

Nelson

In response to Chair Butler’s concerns, the Dept. of Housing has information regarding home ownership percentages in Oregon.

 

 

 

TAPE 181, SIDE A

021

Rick Crager

Discusses ownership programs for low-income persons sponsored by the Dept. of Housing. Ownership percentage in Oregon is between 60-68%.

 

 

 

030

Nelson

Clarifies that the tax credit in SB 996 A only pertains to rental housing. Explains how the program works.

 

 

 

040

Chair Butler

Comments on a concern from one of his constituents that the legislature is not only extending credits to banks and developers.

 

 

 

053

Rep. Esquivel

Comments that some people just don’t want to own a house because of the responsibility. Is very supportive of affordable housing and discusses a plan involving a trust account.

 

 

 

CLOSES PUBLIC HEARING FOR SENATE BILL 996

 

 

 

OPENS WORK SESSION FOR SENATE BILL 996

 

 

 

037

Rep. Berger

MOTION: MOVES THE ADOPTION OF THE SB 996 A-2 AMENDMENT.

 

 

 

038

Rep. Berger

Comments that the program has a sufficient history and it works. This program helps people save money for a down payment to eventually purchase a home.

 

 

 

053

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. VOTING AYE: ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER. EXCUSED: BOQUIST.

 

 

 

056

Rep. Berger

MOTION: MOVES SB 996 A AS AMENDED TO THE HOUSE FLOOR WITH A DO-PASS RECOMMENDATION.

 

 

 

062

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. VOTING AYE: ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER. EXCUSED: BOQUIST.

 

 

 

CLOSES WORK SESSION FOR SENATE BILL 996 A

 

 

 

OPENS PUBLIC HEARING FOR SENATE BILL 31

 

 

 

070

Martin-Mahar

Gives summary of SB 31 (Exhibit 12). The bill extends the Dept. of Revenue’s authority to bring a lawsuit against any office or employee who may be liable for not withholding personal income taxes from an employees’ wages. Discusses the SB 31-6 amendment (Exhibit 13). Explains the “throwback” exemption for corporate sales. Refers to the revenue impact statement for the SB 31-6 amendment (Exhibit 14).

 

 

 

175

Chair Butler

Discusses the intent of a public warehouse with Martin-Mahar.

 

 

 

191

Rep. Riley

Clarifies “throwback” exemption with Martin-Mahar.

 

 

 

229

Bob Russell

Testifies in support of the SB 31-6 amendment. Defers to Gary Eichman for a real-life story regarding the impact of SB 31.

 

 

 

237

Gary Eichman

Testifies in support of SB 31. Relates his personal experience as a public warehouse entity and how his company is affected by the throwback tax issue.

 

 

 

292

Rep. Riley

Discusses the throwback tax issue with Russell.

 

 

 

310

Russell

Comments that he is not asking for an exemption from income tax, but rather an exemption from the throw-back tax.

 

 

 

318

Rep. Hass

Asks what the original policy reason was for having the throwback tax when other states do not have an income tax.

 

 

 

320

Martin-Mahar

Responds that the sales were going untaxed. The sales are taxed in the state of origin, not the state of destination.

 

 

 

334

Chair Butler

Discusses the throwback tax with committee members.

 

 

 

348

Rep. Riley

Asks about Oregon companies that use public warehouses in Oregon to sell products to other states.

 

 

 

350

Eichman

Responds that in-state companies are being taxed appropriately because they have nexus in Oregon.

 

 

 

355

Martin-Mahar

Discussion with Rep. Riley on throwback sales.

 

 

 

375

Russell

Discussion with Martin-Mahar about the throwback tax and public warehouses.

 

 

 

400

Chair Butler

General comments about an Oregon company using a public warehouse.

 

 

 

407

Debra Buchanan

Concurs with Martin-Mahar’s analysis. Discusses the Dept. of Revenue’s position on the intent of the amendment.  Discussion with Chair Butler regarding the taxing mechanism under the SB 31-6 amendment. Submits Executive Summary for SB 31 (Exhibit 15).

 

 

 

TAPE 180, SIDE B

031

Buchanan

Discusses the original policy decisions regarding the throwback tax rule with Chair Butler. 

 

 

 

055

Chair Butler

Comments on the SB 31-7 amendment (Exhibit 16). Discusses Oregon public warehousing with Martin-Mahar.

 

 

 

095

Sen. Frank Morse

Discusses the intent of the SB 31-8 amendment (Exhibit 17) and submits written testimony (Exhibit 18).  The intent of the amendment is to provide funding for the intellectual concepts and technologies developed in Oregon’s universities and allow commercialization of those concepts. Discusses the funding mechanization. Describes the tax credit for donors. This bill would accelerate an untapped resource.

 

 

 

177

Chair Butler

Discusses the mechanics of the program with Sen. Morse.

 

 

 

197

Sen. Betsy Johnson

Comments that the fund-raising capabilities for this new credit exist in current university foundations.

 

 

 

224

Rep. Galizio

Asks how the program would benefit faculty recruitment.

 

 

 

251

Sen. Morse

Responds that knowing there would be a fund that a faculty member could tap to commercialize their research would be a retention and recruitment incentive.

 

 

 

257

Sen. Johnson

Discusses a current situation at Oregon Health and Science University involving a research scientist and his work on a drug for breast cancer. This program would be a more institutionalized funding source to take research from the Petri dish to commercialization.

 

 

 

273

Rep. Galizio

Asks about the origin of the 20% tax credit as stated in the amendment.

 

 

 

275

Sen. Morse

Responds that this percentage is the same amount that the Oregon Cultural Trust uses.

 

 

 

288

Rep. Riley

Asks about the typical percentage going back to a university of inventions.

 

 

 

294

Sen. Johnson

Responds that this type of credit does not have a long history and states she does not have a specific answer for Rep. Riley’s question. The state has not provided our [higher education] institutions with the tools to cash in on a researcher’s intellectual property. It is important to keep and develop the inventions in the state and “have the citizens of the state profit from the financial rewards of our scientists and clinicians.”

 

 

 

341

Chair Butler

Comments that the SB 31-8 amendment is a replication of SB 853 and there is concern about the cost of administering the tax credit.

 

 

 

357

Rep. Hass

Asks about coordinating this program with the current Oregon Growth Account.

 

 

 

360

Sen. Morse

Responds that the Fund proposed in the amendment are grants instead of investments.

 

 

 

383

Sen. Johnson

General comments on the Oregon Growth Account. Expresses concern about the rates of return on the Account.

 

TAPE 181, SIDE B

001

Chair Butler

General comments about the SB 31-9 amendment (Exhibit 19).

 

 

 

011

Martin-Mahar

Discusses the SB 31-9 amendment which provides a personal income tax exemption for a senior executive manager of a venture capitalist firm. Refers to the revenue impact statement (Exhibit 20).

 

 

 

050

Chair Butler

General comments about the challenges of attracting new venture capital firms to Oregon.

 

 

 

066

Rep. Riley

Discussion with Chair Butler about venture capital companies with a nexus in Oregon.

 

 

 

101

Sen. Johnson

Discusses the SB 31-9 amendment and expresses concern about specific sections of the bill and the amendments. Expresses concern about the involvement of the Dept. of Economic Development (OECDD) for certification.

 

 

 

150

Chair Butler

Concurs with Sen. Johnson about her assessment of OECDD.

 

 

 

167

Sen. Morse

Suggests having this program put into the Treasurer’s Dept. because of their involvement with the Oregon Growth Fund.

 

 

 

177

Rep. Hass

Comments that there are venture capital firms in Oregon. Asks if this bill is passed, would they qualify. Asks if there is any data to support the policy decisions behind this bill.

 

 

 

195

Chair Butler

General comments about new venture capital firms.

 

 

 

CLOSES PUBLIC HEARING ON SENATE BILL 31

 

 

 

OPENS PUBLIC HEARING ON HOUSE BILL 2775  

 

 

 

240

Martin-Mahar

Gives summary of HB 2775 (Exhibit 23).  Refers to the HB 2775-2 amendment (Exhibit 24) that sets a cap on the affordable housing credits and extends the sunset date.  

 

 

 

272

Danelle Romain

Testifies that this is another vehicle for affordable housing tax credits.

 

 

 

CLOSES PUBLIC HEARING ON HOUSE BILL 2775

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 2514

 

 

 

290

Martin-Mahar

Gives summary of HB 2514. This bill adds psychologists to the eligible medical practitioners who can claim the tax credit for rural practitioners. Discusses revenue loss beginning in 2009.

 

 

 

330

Rep. Hass

Comments that while this is a good idea, there has been no analysis to prioritize the tax credits. Asks why this one is better.

 

 

 

349

Chair Butler

Agrees that there needs to be work done about a measuring device for these tax credits, and the Office of Rural Health will be asked to provide input during the interim session.

 

 

 

361

Rep. Boquist

For the record, comments that he is very interested in addressing rural health tax credits during the interim.

 

 

 

366

Chair Butler

Calls for roll-call vote.

 

 

 

376

Chair Butler

THE MOTION HAVING RECEIVED THE REQUIRED MAJORITY IS DECLARED PASSED. VOTE: 8-1-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, BUTLER. VOTING NO: HASS.

 

 

 

380

Chair Butler

CLOSES WORK SESSION FOR HOUSE BILL 2514

 

 

 

389

Chair Butler

Adjourns meeting at 3:00 p.m.

 

 

Tape Log Submitted by:

Reviewed by:

 

 

 

Kristi Bowman, Committee Assistant

Kim Taylor James, Committee Coordinator

 

Exhibit Summary:

  1. 1.      SB 847, Staff Measure Summary, Ayala, 1 pg., 05/26/05
  2. 2.      SB 847, Amendment SB 847-1, Leg. Counsel, 1 pg., 06/01/05
  3. 3.      SB 847, Revenue Impact Statement, Ayala, 1 pg., 05/26/05
  4. 4.      SB 847, Testimony, Morisky, 3 pp., 06/01/05
  5. 5.      SB 847, Staff Measure Summary 847-1, Ayala, 1 pg., 06/01/05
  6. 6.      SB 847, Staff Measure Summary, Callens, 1 pg., 05/02/05
  7. 7.      SB 847, Staff Measure Summary, Ayala, 1 pg., 04/05/05
  8. 8.      SB 847, Revenue Impact Statement, Ayala, 1 pg., 04/05/05
  9. 9.      SB 996, Staff Measure Summary, Martin-Mahar, 1 pg., 05/31/05
  10. 10.  SB 996, Amendment SB 996 A-2, Leg. Counsel, 1 pg., 04/25/05
  11. 11.  SB 996, Revenue Impact Statement, Martin-Mahar, 1 pg., 05/31/05
  12. 12.  SB 31, Staff Measure Summary, Martin-Mahar, 2 pp., 06/01/05
  13. 13.  SB 31, Amendment SB 31-6, Leg. Counsel, 3 pp., 05/27/05
  14. 14.  SB 31, Revenue Impact Statement, Martin-Mahar, 1 pg., 06/01/05
  15. 15.  SB 31, Handout: Executive Summary, Buchanan, 1 pg., 06/01/05
  16. 16.  SB 31, Amendment SB 31-7, Leg. Counsel, 5 pp., 05/27/05
  17. 17.  SB 31, Amendment SB 31-8, Leg. Counsel, 4 pp., 06/01/05
  18. 18.  SB 31, Handout: A-Engrossed SB 853, Sen. Morse, 1 pg., 06/01/05
  19. 19.  SB 31, Amendment SB 31-9, Leg. Counsel, 8 pp., 06/01/05
  20. 20.  SB 31, Revenue Impact Statement, Martin-Mahar, 2 pp., 06/01/05
  21. 21.  SB 31, Staff Measure Summary, Martin-Mahar, 1 pg., 02/07/05
  22. 22.  SB 31, Revenue Impact Statement, Martin-Mahar, 1 pg., 02/07/05
  23. 23.  HB 2775, Staff Measure Summary, Martin-Mahar, 1 pg., 05/31/05
  24. 24.  HB 2775, Amendment HB 2775-2, Leg. Counsel, 1 pg., 05/09/05
  25. 25.  HB 2775, Revenue Impact Statement, Martin-Mahar, 1 pg., 05/31/05