INFORMATIONAL MEETING

PUBLIC HEARING, SB 11

 

TAPES 15-16 A-B

 

SENATE REVENUE COMMITTEE

JANUARY 27, 2005  9:00 AM  STATE CAPITOL BUILDING

 

Members Present:                  Senator Ryan Deckert, Chair

                                                Senator Charles Starr, Vice Chair

                                                Senator Gary George

                                                Senator Floyd Prozanski

                                                                       

Members Excused:                 Senator Rick Metsger

 

Witnesses Present:                Senator David Nelson, District 29                 

                                                Catherine Britain, Oregon Telecommunications Coordinating

                                                            Council

                                                Bill Penhollow, Association of Oregon Counties

                                                Christopher Tamarin, Oregon Economic & Community

                                                            Development Department

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Economist

                                                Barbara Guardino, Committee Assistant

 

 

TAPE 15, SIDE A

004

Chair Deckert

Calls meeting to order at 9:07 a.m.

 

PUBLIC HEARING, SENATE BILL 11

016

Paul Warner

Introduces Senate Bill 11. Proposes modification of SB 622. Increases the annual cap on costs of telecommunications facilities.

 

020

Sen. David Nelson

Testifies in support of SB 11. Begins with history of bill beginning with SB 622. Explains Oregon schematic of Oregon’s original telecommunication infrastructure (EXHIBIT 1). Brings high-speed broadband telecommunications access throughout Oregon. Adds carry-forward provisions to complete the process.

 

066

Sen. Nelson

Notes, SB 11 is one of a series of bills drafted during interim session. Oregon Telecommunications Coordinating Council consumer group was created to deal with this issue and created this bill and several other bills.

 

098

Sen. George

Asks if this bill is part of the governor’s “connect Oregon” infrastructure?

 

104

Sen. Nelson

Responds, high-speed telecom is a major part of the infrastructure.

 

125

Chair Deckert

Asks, what has been your experience been in outlying areas with SB 622?

 

130

Sen. Nelson

Responds, this has been a success story for the state.

 

143

Sen. Nelson

Discusses connectivity with Public Utilities Commission.

185

Catherine Britain

Testifies in support of SB 11. See written testimony (EXHIBIT 2). This bill allows for a company to receive a tax credit for investment of up to $50 million in a telecom facility. It is a one-time credit. Also, if the investing company has this investment in a long-term plan, it cannot request the tax credit. Finally, it can only be used by providers who meet minimum requirements.

 

241

Britain

Gives an example of why this tax credit is important.

 

280

Bill Penhollow

Testifies in support of SB 11. See written testimony, verbatim (EXHIBIT 3).

 

340

Penhollow

Explains that broadband is important to business and government, including health care, public safety and consumer information.

 

387

Christopher Tamarin

Testifies in support of bill. See written testimony, verbatim (EXHIBIT 4). Highlights telecom policy framework built over the past few years.

Discusses current advanced telecommunications infrastructure tax credit program.

 

TAPE 16, SIDE A

020

Tamarin

Continues verbatim testimony. Discusses intent of the bill, major impacts and fiscal impacts.

 

058

Sen. Prozanski

Asks for clarification on Tamarin’s statement that no one has actually applied or used any of the tax credits to date. Follow-up questions.

 

065

Tamarin

Responds, that is correct.

 

103

Sen. Prozanski

Requests a list of all tax credit bills that will come through the committee this session.

 

108

Chair Deckert

Committee will attempt to hear all of the credit and incentive bills at once.

 

118

Sen. George

Question Mr. Tamarin on the fiscal impact statement portion of his testimony.

 

136

Tamarin

Agrees, telecom infrastructure is important in attracting business.

 

149

Sen. George

Legislature has moral obligation to provide this kind of service to outlying communities that have lost jobs.

 

159

Chair Deckert

Are telecom providers across the state aware of the current program? Follow-up questions.

 

173

Tamarin

Yes.

 

177

Britain

Notes, one thing the council wants this money to be used for is things that are not currently be provided, things companies would normally turn away from.

 

198

Chair Deckert

Asks providers in audience if they are aware of the program. They nod “yes.”

 

208

Sen. Prozanski

Asks who determines whether a company was planning on working a project as compared to one that will do it only because of the tax credit.

 

213

Tamarin

Explains application process.

 

249

Sen. George

Asks, is the state encouraging rapid deployment of broadband communications?

 

255

Tamarin

State has made tremendous strides in providing broadband over the past three years. No carrier is excluded from applying for the tax credit.

 

290

Britain

Will supply any additional information that the committee might require.

 

301

Tamarin

Concludes, though the state has made significant progress, all infrastructure is a work in progress. This bill encourages additional development.

 

323

Chair Deckert

Closes public hearing on SB 11. Opens informational meeting on corporate income taxes.

 

 

 

INFORMATIONAL MEETING

346

Lizbeth Martin-Mahar

Begins slide presentation, Oregon Income Taxes, Corporate Excise Tax (EXHIBIT 5). Introduces Oregon Corporate Excise and Income Tax booklet (EXHIBIT 6).

Slide 2: Corporate Income and Excise Tax Payments. Industries that are struggling include manufacturing and information. Retail trade is doing well.

 

449

Sen. Prozanski

Asks for an example of management of companies.

 

459

Martin-Mahar

Responds, those are holding companies.

 

TAPE 15, SIDE B

030

Martin-Mahar

Continues slide presentation on corporate income taxes.

 Slide 3: Business Income Tax Returns

 

066

Martin-Mahar

Slide 4: Business Income By Business Type 1990 and 2002

 

090

Martin-Mahar

Slide 5: Business Income Statement – Gross Receipts

 

120

Martin-Mahar

Slide 6: Business Income Statement – Federal Taxable Income

 

189

Martin-Mahar

Slide 7: States Corporate Top Tax Rates (%) – Tax Year 2004

 

208

Martin-Mahar

Slide 8: Trends in Oregon Corporate Credits Used and the Corporate Base Tax Amount – 1990-2002

 

249

Martin-Mahar

Slide 9: Trends in C Corporations Utilization of Major Tax Credits – 1998-2002

 

259

Chair Deckert

Asks about an agreement reached on pollution control tax credit in 2001 legislation.

 

265

Martin-Mahar

Responds, maximum amount is 35% of cost of the investment. Credit sunsets in 2008.

 

306

Martin-Mahar

Slide 10: Corporate Tax Credits Used

 

336

Martin-Mahar

Slide 11: Trends in C Corporations’ Unused Tax Credits ($millions) 2000-2002. There are twice as many unused credits as used.

 

388

Warner

Comments, one of the provisions for the telecommunications credit is it may not be carried forward. SB 11 would change this.

 

416

Sen. George

Would it be possible or legal to remove the carry-overs from some of the recipients who have not used them?

 

423

Martin-Mahar

No.

 

433

Sen. Prozanski

If a 5-year carry-over expires do they lose it? Follow-up questions.

 

440

Martin-Mahar

Yes.

 

450

Martin-Mahar

Continues answering questions concerning expiring credits.

 

TAPE 16, SIDE B

045

Martin-Mahar

Slide 12: Corporate Excise Tax

 

075

Chair Deckert

Asks how many corporations pay minimum excise tax of $10.

 

080

Martin-Mahar

Jumps ahead to slide 16 in response.

 

090

Martin-Mahar

Slide 15: Top 50 Corporate Taxpayers

 

107

Martin-Mahar

Slide 17: Breakdown of C-Corporate Net Tax by Income

 

111

Martin-Mahar

Slide 19: Oregon’s Multi-State Corp. Apportionment Formula

 

125

Martin-Mahar

Slide 20: Multi-state Income Apportionment

 

138

Martin-Mahar

Slide 21: State Apportionment Formulas – 2004

 

144

Martin-Mahar

Slide 24: Throwback Sales by Industry Sector – 2002

 

159

Sen. George

Asks for clarification on sales factor.

 

165

Martin-Mahar

Responds, products had to originate in Oregon. Gives example.

 

199

Chair Deckert

Asks for input on whether to continue committee’s start time at 9:00 a.m. or begin at 8:30 a.m. Committee will continue 9:00 a.m. start time at least through next week.

 

222

Chair Deckert

Adjourns meeting at 10:45 a.m.

 

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant                               Reviewed by Kim Taylor James

 

Exhibit Summary:

1.      SB 11, Qwest SB 622 Rings map, Nelson, 1 pp.

2.      SB 11, Oregon Telecommunications Coordinating Council, Britain, 1 pp.

3.      SB 11, Testimony in Support of Senate Bill 11, Penhollow, 2 pp.

4.      SB 11, Testimony of Mr. Christopher Tamarin, Tamarin, 3 pp.

5.      Oregon Income Taxes, Corporate Excise Tax, Martin-Mahar, 12 pp.

6.      Oregon Corporate Excise and Income Tax, Martin-Mahar, 41 pp.