Tax Insider for June 9
Tax Insider
Unlike past sessions, when the legislature advanced a single package of tax policy and program changes, the revenue committees are divvying up their end-of-session work into three omnibus tax bills. There were many moving pieces this week on the tax omnibus packages with some final amendments to still arrive early next week.
Property Tax Omnibus: Last week, the Joint Committee on Tax Expenditures (JTAX) introduced the first omnibus measure of the session—a proposal to amend and extend the state's property exemptions. On Wednesday, the committee adopted a -3 amendment to HB 2080 and moved the bill to the floor without any controversy. The amendment is nearly identical to the -1 amendment, introduced during a public hearing last week, except it removed a new sunset date for the construction-in-process exemption and modified the provisions addressing the Re-MAV process for surviving spouses of military veterans. Notably, the revenue committees seem to have abandoned a proposal to refer a constitutional amendment to voters fixing the property tax reassessment issues for good. Perhaps the committees will address that during the short session.
Tax Credit Omnibus: JTAX also unveiled a second omnibus tax bill this week in a -5 amendment to HB 2071. The omnibus creates a few new tax credit programs for affordable housing, extends the sunset dates for expiring credits, and reorganizes (pushes out) the sunset dates on several tax programs to balance the Legislative Revenue Office's workload in future sessions.
Tax Incentives Omnibus: The only controversial omnibus proposal, at least at this point, is revolving around tax incentives. Last Friday, JTAX held a public hearing on SB 1084 and HB 2009, the legislature's dueling tax incentive proposals. The Senate proposal sought to provide a robust package of tax incentives, including a generous research and development (R&D) tax credit and a strengthening of the state's property tax incentives. Meanwhile, the House proposal included a narrow R&D tax credit for semiconductor firms and new requirements and limitations on the local tax incentives. During last Friday's hearing, the co-chairs announced they were preparing an amendment seeking to move forward with a compromise.
We spent much of the week waiting for the co-chairs to release their amendment to HB 2009, which did not publish until late on Wednesday evening for a Thursday morning hearing. The -4 amendment to HB 2009 closely follows the House tax incentives proposal, providing only a limited R&D credit and limiting the state's property tax incentives. In particular, the co-chairs' amendment requires companies participating in the Enterprise Zones and Strategic Investment Programs to pay a "fee in lieu" of school district property taxes. These taxes comprise a third of all property taxes businesses pay, so requiring payment substantially changes the property tax exemption.
JTAX hoped to have a final amendment and paperwork ready by a Thursday afternoon hearing; however, the committee did not post the -7 amendment until late into the hearing. The co-chairs also announced yet another amendment in the works and a work session on the package will not happen until next week. Notably, Co-Chair Mark Meek (D-Oregon City) announced this week the tax incentives omnibus will go to the Ways & Means Committee before heading to the floor—a highly unusual path for a tax bill.
The direction of the tax incentives omnibus is a familiar tax battle in the legislature. For most of this session, the attitudes toward tax incentives felt different—almost as if there were a universal understanding of the significant moment for the state to secure large investments from the semiconductor industry and other firms. Now, in the final weeks of the session, the legislature is doing an about-face and repurposing the momentum toward growth into an opportunity to reform some of the policies progressive tax groups have been at odds over for years. It's a trajectory we knew would eventually come but, somehow, it still feels surprising.
