LOC News
Omnibus Tax Bill Advances
HB 2164, an omnibus tax bill, advanced this week out of the Joint Tax Expenditures Committee. The bill includes several new income tax credits and credit extensions, property tax exemption modifications and sunset extensions, and changes to the new corporate activity tax (CAT) that passed earlier this session as HB 3427.
The LOC advocated to change the food processing machinery and equipment property tax exemption from a mandated exemption to a local option property tax exemption. Sections 42-47 of the bill extend the sunset of the exemption, but allow cities to: opt-out of the exemption all together; change the percentage of the exemption; or reduce the number of years for the exemption (capped at 5 years). Cities may pass an ordinance making the change, and these can occur during the 2020 property tax year. Allowing this local control of critical revenues has been a priority for the LOC Finance and Tax Committee.
The LOC also advocated to clarify the preemption provision in the Student Success funding package that imposed a new corporate activity tax of .57% on certain businesses with an excess of $1 million of commercial activity. Cities are still preempted from passing a new tax akin to the state CAT, but the preemption was clarified to not apply to the imposition of privilege taxes not measured by commercial activity, franchise fees or right-of-way fees. Cities may continue to impose those (see section 55).
Also of key significance to cities is the extension of the low income rental property tax exemption for 10 years. This is a local option exemption that incentivizes low income housing and ensures predictability. Lastly, the historic property special assessment property tax program is extended for two years in the bill. The program was not extended for a lengthier time as an interim work group will be reviewing the program with the Oregon State Historic Preservation Office (SHPO) and making reform recommendations to the legislature to fine-tune the exemption and reduce the revenue impact.
Contact: Wendy Johnson, Intergovernmental Relations Associate – wjohnson@orcities.org
Last Updated 6-21-19