SALEM — A contentious overhaul of the state’s business tax system is moving toward center stage in the Legislature this week.

House Bill 2830, called the Revenue Reform and Education Stability Act, would replace the corporate income tax with a commercial activity tax. The rates have brackets based on industry, ranging from 0.15 percent to 0.75 percent of sales above $3 million.

Supporters say the change would generate $900 million, helping close the state’s $1.4 billion deficit in its two-year budget. Opponents say the bill is essentially a warmed-over version of the gross receipts tax at the heart of Measure 97, which voters rejected in November. The bill would bring in about one-third of the revenue that Measure 97 would have generated. Proponents say a business tax with a low rate but wider reach is necessary to make a dent in the deficit.

Sen. Mark Hass, D-Beaverton, the co-chairman of the Joint Committee on Tax Reform, has overseen a half-dozen major revisions and hopes the committee will approve the latest plan when it meets Monday. If it does, the battle over the bill will move to the House and Senate floors.

The next version of the bill is likely to include additional exemptions for agricultural businesses. In part, it is a nod to the reality that tax bills require a three-fifths majority to pass. Democrats are one vote short in both the House and Senate, requiring at least one Republican to join all Democrats in the vote if it’s to pass.

Many Republicans represent districts in the more rural eastern and central parts of the state. The Oregon Farm Bureau Federation has come out against the bill. Democrats hope the as-yet-unspecified exemptions might be enough to gain the one or two necessary Republican votes to win.

Rep. Knute Buehler, R-Bend, who sits on the tax reform committee, won’t be switching sides.

“I am really concerned the effect this tax would have on small businesses,” said Buehler.

Rep. Phil Barnhart, D-Eugene, said the bill would wind back the clock to 2013 tax rates.

“It’s really a restoration,” Barnhart said.

Sen. Brian Boquist, R-Dallas, said the current tax plan was enacted in part to keep Nike from building a new facility out of state. After the tax overhaul, Nike built a plant in Washington County, which today employs 2,900 workers.

Boquist said he supported tax breaks for Nike and Intel, but wasn’t going to “throw the small businesses underneath the bus.”

Paul Warner, the nonpartisan Legislative Revenue Officer who advises lawmakers on the fiscal impacts of their legislative proposals, supplied context to the debate.

Warner said the property tax cut ballot initiatives passed in the 1990s had started “a shift toward fees in funding state and local government in Oregon, a noticeable change.”

All states have to come up with ways to generate revenue — money to spend. Oregon is in the bottom 10 of states in reliance on taxes to pay for government. But it is in the top 10 in reliance on fees, the largest of which is tuition to state universities.

When asked to prepare the next version of the bill in two different drafts — one with agricultural business exemptions and one without — Warner joked, “That could affect our copying budget, given the size of the amendment.”

Barnhart gave lawmakers an admonition heard often around the Capitol, yet rarely heeded.

“Colleagues, given the schedule, we really need to move on this matter and get it out to the floors very quickly.”

— Reporter: 541-525-5280, gwarner@bendbulletin.com

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