NEIGHBORHOOD STORE ASSOCIATION
Summer 2009
Vol. 11 No. 1
With the latest economic forecast in hand, Oregon’s Legislative Assembly is ready to focus on wrapping up the 2009 session. After making adjustments for certain new laws affecting expenditures and revenue increases, the economic forecast for the current 2007-2009 biennium leaves lawmakers starting the new biennium with a deficit of $351.3 million. The revenue decrease during the current biennium is primarily attributed to declining personal and corporate income taxes as a result of the overall economic downturn; however, declines were also noted in cigarette taxes.
The most significant bills of the session will certainly be the revenue-raising measures and they will be among the last to move. Passage of these measures is virtually guaranteed as a result of the supermajority held by the Democrats. The major health care measure, which will expand coverage to more of Oregon’s uninsured adults and children, is to be funded with an increased hospital tax and a one percent tax on the commercial insurance premiums collected by health plans and insurers.
The other primary revenue raising measures will affect both corporate income taxes and personal income taxes. HB 3405 proposes to raise the corporate minimum tax from $10 to $100 and, as currently drafted, HB 3405 would impose a gross receipts tax of 0.15 percent on corporate income exceeding $500,000 for C-corporations, and tax income from S-corporations exceeding $250,000 at 8.2 percent. While members of the business lobby originally agreed to the idea of a temporary, three-year surcharge on corporate income taxes, the business sector is opposed to the idea of permanent increases and it is rumored that such an increase, if approved, might be referred to voters by one or more of the anti-tax organizations.
HB 2649, the other significant revenue-raising measure under consideration, would increase personal income tax rates for the wealthier taxpayers by establishing new tax rates of 10.8 percent for individuals making more than $125,000 ($250,000 for married couples filing jointly) and a higher rate of 11 percent for the single taxpayer with income exceeding $250,000 ($500,000 for married couples filing jointly).
Other Tax Increases
While increases in the beer and cigarette taxes have been under discussion since the start of session, it is unclear at this point in time, which of the various proposals will be selected to move forward.
In spite of heavy opposition from Oregon’s craft beer industry, the idea of increasing the beer tax is not dead. HB 2461, sponsored by Rep. Ben Cannon (D- Portland), Senator Jackie Dingfelder (D-Portland) and Senator Bill Morrisette (D-Springfield), proposes to add a “prevention, treatment and recovery tax” of $49.61 per barrel of malt beverage. This would increase the current beer tax of $2.60 per barrel to $52.21 per barrel, which is roughly equal to 15 cents per 12-ounce beer. The new revenue from this tax increase would be distributed to alcohol and drug abuse prevention, treatment and recovery services.
HB 2122 is the Governor’s tobacco tax proposal, which as originally drafted includes an increase on cigarette taxes from the current $1.18 per pack to $1.78 per pack. In addition, the tax on “other tobacco products” would increase from 65% of the wholesale price to 90%. The House Health Care Committee held public hearings on HB 2122 earlier in the session. Although no specific action was taken on the bill, in order to keep the measure alive after the legislative cutoff date, it was forwarded to House Revenue without any recommendation as to passage.
One other cigarette tax proposal, HB 2379, takes a more targeted approach by increasing the cigarette tax an additional seven cents per pack, effective on or after Jan. 1, 2010 and specifies the additional tax revenue would be distributed as follows: 84.28 percent to the Department of Transportation for transportation services of elderly and disabled individuals, 0.45 percent each to cities, counties, and Tobacco Use Reduction, 11.44 percent to Oregon Health Plan, and 2.93 percent to General Fund. Again, HB 2379 was forwarded, without a recommendation on passage, to House Revenue Committee in order to keep the proposal alive for possible action before session adjourns.
Most of the committees are being shut down, except for the Rules and Revenue committees in the House and Senate and the Joint Committee on Ways & Means. It appears the 2009 Session is on target to adjourn by the end of June. The big question is how soon will it be before the economic situation brings Legislators back to Salem for a Special Session.Inside:
ONSA-PAC Tournament Moves to Langdon Farms
Nutritional Info in Fast Food Restaurants
FET Increase effective April 1st – Floor Tax Due by August 1st