The Joint Ways & Means Committee statewide tour was completed. And no surprise, as confirmed by a key member of the committee, the messages around the state were consistent: Do not cut programs (particular those related to human health and services); raise corporate taxes instead.
The revenue committees are busy meeting formally to brief their members on corporate tax options to consider instead of the current corporate income tax, which is complex, has an exceedingly narrow base, and high tax rates. Meanwhile, a few members of those committees are meeting informally to design a constitutional framework for a gross receipts business privilege tax, with a very broad base and wee tax rate. AOC and other local governments who rely so heavily on the property tax remain present to assure public finance reform deals with the entire system.
A report will be provided at the April AOC Day (April 10th) on tentative work products.
With introduction of Senate Bill 787 (distressed county to withhold up to two percent of property tax collections of other local taxing districts; Senator Jeff Kruse) and SB 391 (certain income taxes redirected to counties; Sen. Ted Ferrioli), the Senate Finance & Revenue Committee held a hearing March 7. AOC took advantage of the opportunity to inform the committee about the
causes of county fiscal distress, current statutes that address the problem, and the unfulfilled promise of the Assessment & Taxation (A&T) Funding program (CAFFAA – County Assessment Function Funding Assistance Account), which promised to provide a 35 percent share of county costs of local A&T work, but has settled in at a 20 percent share.
On February 28th, AOC, special districts, and cities testified in the Senate Finance Committee against Senate Bill 123, a very appropriate bill number for the concept of authorization of a new kind of special district, – a “children’s service district.” The points were straight forward: the district was unnecessary given services that are – or can be – provided by schools, cities, park & recreation districts, library districts, and health districts. Another type of public entity also raises the risk of further compression under Measure 5 (1990). The committee took no action on the bill.
March 1st, the House Revenue Committee discussed Deferred Billing Credits (DBC), which permits an assessor to issue DBCs when a taxpayer appeals an assessment and the amount in dispute is over $1 million. The DBC mitigates the risk of payout of later refunds at 12 percent interest. The issue under discussion, however, is that the taxpayer with taxes due after the appeal may pay the amount due without interest and with application of the three percent discount for prompt payment. The extended appeals taken by Comcast raised the realization that the DBC gives no incentive for a wealthy taxpayer to move to closure; that otherwise payable tax money can be invested for extended appeals. No action has been taken by the committee on House Bill 2407, but amendments will provide that either the taxpayer pay the undisputed amount and any additional taxes owing after appeals with interest; or that the disputed sum be put into an interest-bearing account until resolution.
The House Revenue Committee began March 6th what promises to be a series of hearings on non-profit, property-tax-exempt hospitals and clinics (House Bills 2047 and 2115). At stake are hundreds of thousands of tax dollars for public services. What standards to use; do they provide the “bright line” the county assessors need to determine taxability; what levels of “community benefits” and charity care should be required? AOC will keep you posted on progress.
Contributed by: Gil Riddell | AOC Policy Director