House vote cancels '07 corporate tax kicker.
SALEM - It wasn't easy, but the Oregon House on Thursday passed a bill creating a savings account to shelter public services from the next economic downturn.
The 48-9 vote to cancel this year's corporate "kicker" tax rebates and use the money instead to create a $290 million rainy-day fund belied the political difficulties facing Democratic and Republican leaders in clinching the deal.
The votes came only after they lopped off a side deal of sweeteners for both parties - a boost in the minimum tax paid by corporations and a relaxed estate tax.
But the political high jinks in the Senate, which got under way even before the House had completed its work, made clear that the rainy-day fund legislation was by no means a slam dunk in that chamber.
Senate Republicans exercised a little-used maneuver: they fled the Capitol to deny the Senate the minimum number of members in attendance needed to conduct business.
Despite this surprise wrinkle in the politics of the fund debate, House Majority Leader Dave Hunt, D-Gladstone, said the heaviest lifting was finally behind the Legislature.
"This was the critical hurdle to get over," he said after the House vote for the rainy-day fund legislation, House Bill 2707.
It was a more sparse plan than the one lawmakers had been working on. In order to win back enough Republicans who had backed away from a pledge to support the package, the House retooled it by:
Removing from the plan an agreement to set higher corporate minimum tax rates to replace the $10 tax that's been on the books since 1931. This move was made after Republicans backed off their support for a new version upping it to $25 up to $50,000, depending on the size and sales volume of each corporation.
Eliminating a companion tax deal: an increase from $1 million to $2 million the amount that can be inherited before the estate tax kicks in.
Preserving an agreement that corporate tax credits will be kept in place for smaller businesses - those with annual Oregon sales of $5 million or less. This will result in $25 million less for the reserve account.
No sooner did the House wrap up its work than the politics on the same bill heated up in the Senate with the GOP walkout. Gov. Ted Kulongoski eventually dispatched Oregon State Police troopers to track down the truant lawmakers - reportedly nabbing Sens. Frank Morse of Albany and Roger Beyer of Molalla at an Oregon State University baseball game. But the only Republican to return to the chamber was Senate Republican Leader Ted Ferrioli of John Day. That allowed the chamber to go through the parliamentary steps of moving the rainy-day fund bill along the calendar for a committee hearing Monday.
During the nearly two-hour wait for Republicans to return to the Senate, Democrats speculated that they were trying to slow down the rainy-day fund bill in order to prevent its passage until after the state Elections Division's March 16 deadline for separate legislation to get on the May ballot. That legislation was a parallel measure that would allow voters to permanently repeal the corporate kicker, so that companies' unanticipatedly high tax payments can go into a state reserve instead of back to businesses in the form of tax credits.
But Ferrioli said despite appearances, that wasn't the case. "All we're after is a discussion," the Republican leader said, explaining that his caucus' 11 members felt left out of the negotiations that led to the various versions of the rainy-day fund deal that have floated through the Capitol in the past two weeks.
"This is all about sending a message," Ferrioli said. "We have really wanted to sit down among Senate members, Democrats and Republicans, and have a conversation about creating a rainy-day fund that all of us could support together."
Ferrioli said his decision to return to the Capitol came after speaking on the phone with Senate President Peter Courtney, D-Salem, and receiving assurances that "his door is always open" to such a discussion.
Ferrioli said Republicans wanted to bring back the estate tax plan, but that it wasn't a condition of their willingness to support the rainy-day fund plan.
House Revenue Committee Chairman Phil Barnhart, a Eugene Democrat who took part in negotiating the final deal and moving it through his panel, said he hoped to revive the Legislature's work later this session on the corporate minimum tax - a similar sentiment expressed by the Republicans who had pushed to ease Oregon's inheritance tax.
Despite the marathon negotiating, political breakdowns and delays in getting the rainy-day bill through the House, Barnhart said he was satisfied with the result.
"A savings account for Oregon is what we wanted to do when we started this process," he said. "And that's what we ended up doing."