Taxpayer Association of Oregon Legislative Update
By Jim Welsh
Alert: Personal income tax, corporate tax, carbon tax, water tax, Greenhouse gas tax, health care tax and transportation taxes.
Revenue Committee Now Well Attended
It wasn’t that the business and industry lobby didn’t care about some of the revenue generating bills that were heard once earlier in the session, it was that they have been fighting for their mere existence in Oregon. The economy has challenged them if not eliminated them. Now, as the Legislative session is in the waning days what was promised earlier by the majority leadership is coming clearly in focus. The business and industry lobby all wondered what the majority meant, back in March, by a balanced approach to adjusting the 09-11 budget. There was a definite sense it wasn’t going to be pleasant. For months there has been an ongoing battle with three major pieces of legislation, the agency budgets, and the continuous mantra that there is a need for more money. All these battles, if lost, will cost the taxpayers more in increased cost of goods and services due to increased fees, surcharges, and taxes applied to our everyday needs.
Many ask; how can this be? By the end of the session and after the dust settles it will be easier to do a cost analysis on the impact of all legislation. Once again, it is reiterated, if the legislative leadership is successful in passing most or all of their agenda it will cost the individual taxpayer and corporate taxpayer in the hundreds, if not thousands, of additional fees and taxes to exist in Oregon. This is what happens when there are multiple major pieces of legislation that need funding and agency budgets that need funding, and they are all in different committees with different members attending. Many legislators don’t have time or interest to follow all the different pieces of legislation until a few days before they are required to vote on them. Furthermore, the legislative leadership has a very ambitious and aggressive agenda and a real reluctance to tighten the budget belt. As TAO lobbyist told the Revenue Committee on Wednesday May 27th, “You have a voracious appetite for spending, and it is time to tighten the budget belt.”
Personal Income Tax
The House Revenue Committee heard HB 2649 on Wednesday May 27th and TAO lobbyist was first and only entity to sign up for testimony. TAO lobbyist said that “the alternative minimum tax proposal was only going to hurt Oregon’s economic recovery.” “Taxing those in a high income bracket would likely discourage some of those who were business owners from hiring new employees, investing in capital improvements or purchasing new items from retail providers.” It was interesting that after the TAO testimony the Chair asked if there was anyone else interested in giving testimony and immediately there was a long list of those who thought the higher income individuals should be required to pay their fair share, as defined by the Chair, Rep. Phil Barnhart (D) Eugene, as being more tax liability. This tax proposal is a high priority for the leadership and the final amendments are drafted or close to being drafted.
Legislation adjusting the corporate minimum tax was heard Tuesday and Wednesday this week. HB 3405 would adjust the present $100 corporate minimum to larger minimums as corporate income increased. Of course, TAO argued that this was taxing on gross business activity before it was established whether or not there was profit made. The Revenue Committee Chair Rep. Barnhart argues along with some of his colleges that the corporate world in Oregon is not paying their way. TAO and others simply believe it is poor policy to tax before income is adjusted for cost of doing business. It has been explained by numerous business and industry representatives that in this economy a corporation is fortunate to be able to exist much less pay increased costs, such as higher corporate minimum taxes.
SB 80 is into multiple amendments with no conciliatory sign from the Governor or leadership. Our electricity providers, investor owned utilities (IOUs), consumer owned utilities (COUs) and municipal owned utilities (MOUs) are all trying to adjust to the bills requirements to reduce their carbon footprint and add renewable energy generation as required by state law. Of course, we all are supplied electricity by one or the other utility type and it should concern us, as the bottom line rate payer, how this legislation will effect future electricity rates. It was recently reiterated by the Portland Business Journal that a new economic reporting entity (RealClimateEconomics.org) was reporting that Oregon is one of the leaders in reduced carbon output, as greenhouse gas emissions for households, in the nation and world. It still seems that it is the Governor and legislative leadership that want Oregon to be a leader in Climate Change legislation even when we are already leaders. It is obvious that a legacy must be in legislative language and it doesn’t matter that Oregonians must pay extra for the legacy.
The Ways & Means Natural Resource Subcommittee is still deliberating over the fiscal report for four of the proposed water bills. SB 740 would be the most likely mechanism for establishing a statewide tax on water. The bill would require every water user whether on a municipal system, a domestic well, an irrigation district, an instream diversion, any water user and water rights holder to pay an annual fee (tax) on water. The Chair of Senate Environment and Natural Resources and CoChairs of Ways & Means have been advised of the tax implications of SB 740 and now realize maybe it won’t be a priority this session after all.
Green House Gas Taxes
The multi amended HB 2186 still remains in Ways & Means Natural Resource Subcommittee and received further deliberation on May 27th. The coalition working against this legislation is still providing information to legislators and urging them to vote “NO.” If there are further amendments the bill will need further fiscal analysis and a close vote in the House does not mean the bill will pass in the Senate. The coalition is working hard to secure the necessary votes in the Senate to kill the bill once it gets there. It helped that Washington Governor Gregorie signed an executive order which effectively stalled further legislative action and asked for more information from agencies. (RealClimateEconomics.org) is reporting that Oregon is one of the leaders in reduced carbon output, as greenhouse gas emissions for households, in the nation and world. It still seems that it is the Governor and legislative leadership that want Oregon to be a leader in Climate Change legislation even when we are already leaders. It is obvious that a legacy must be in legislative language and it doesn’t matter that Oregonians must pay extra for the legacy.
HJR 48 proposes amendment to Oregon Constitution allowing Legislative Assembly to impose taxes on carbon emissions for purpose of funding reductions in carbon emissions and carbon fuel use. This legislation refers proposed amendment to people for their approval or rejection at next regular general election. Many of us that have been fighting the climate change hyperbole were hoping HJR 48 would not even see the light of day even though TAO has reminded the Revenue Committee and other legislators that the Oregon Revenue Forecast does not see Oregon headed for recovery before second quarter of 2011, after the next general election. This seems risky for the present majority to send out to the voters but there may be enough soft headed voters that will vote for such a tax who also believe Oregon will make a big difference in the big picture with climate change proposals.
Health Care Tax
The House Revenue Committee will hear HB 2116 May 28th as it pertains to raising revenue from your medical insurance premium and mine! A health insurance provider will be required to pay, quarterly, a surcharge by percentage of the gross amount of premiums derived from health benefit plans covering direct domestic risks. The insurance provider can not offset the assessment against corporate excise taxes and can not apply any portion of the assessment to the gross amount of premium. This tax imposed on the insurer is designed to protect, you and me, as the premium payer but we know from past experience the insurance industry will, in some manner, pass the cost on to you and me. This legislation is designed to provide medical insurance coverage for children that do not have coverage. Another example of “Big Government” getting into funding programs that could and should be provided by the private sector.
HB 2001, the Governors Jobs and Transportation Package passed out of the House May 27th with a vote of 38-22. There was something for everyone to love and hate in this legislation. However, TAO provided a floor letter, after asking multiple legislators to submit one, that pointed out the gas tax and fee increases that they would be voting for. TAO also pointed out that if they wanted to vote for these increases that they should maybe realize that “All these increased fees and taxes were on the backs of many Oregonians out of work (Over 12.1% statewide unemployment)??!!” and that “All this increased revenue, and the State reported a combined ending fund balance of $4.9 Billion of which 71.5% ($3.5 Billion) is available for spending??!!” and furthermore, “Ask YOURSELF, with proposed taxation on carbon dioxide, water, insurance premiums, corporations and individuals, and numerous agency fee increases, how much is enough??!!”