Chapter 114 Oregon Laws 2001

AN ACT

HB 2777

Relating to Oregon tax law; creating new provisions; amending ORS 273.563, 305.220, 305.740, 305.794, 307.110, 307.120, 307.182, 307.242, 307.537, 308.815, 308A.703, 309.110, 310.055, 310.165, 310.630, 311.160, 311.223, 311.390, 311.506, 314.518, 315.262, 315.266, 316.099, 316.109, 316.127, 317.356, 317.850, 318.031, 321.267, 321.415, 321.487, 323.320, 323.455, 341.085, 456.661 and 527.710 and section 4, chapter 405, Oregon Laws 1981, section 3, chapter 337, Oregon Laws 1995, section 6, chapter 299, Oregon Laws 1997, and section 14, chapter 1000, Oregon Laws 1999; and repealing ORS 307.550, 307.560, 308.522, 308.670 and 321.731.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 273.563 is amended to read:

273.563. As used in ORS 273.563 to 273.591 [and 307.550 and 307.560], unless the context requires otherwise:

(1) “Agency” means a local, state or federal agency, board, commission or department.

(2) “Board” means the State Land Board.

(3) “Candidate natural area” means a natural resource area that may be considered for registration or dedication.

(4) “Commodity” means timber, minerals, livestock, agricultural products or any other product of the land which is an important economic resource.

(5) “Council” means the Natural Heritage Advisory Council established in ORS 273.571.

(6) “Data bank” means the Natural Heritage Program element inventory of element classification, data analysis, priority setting, owner and other data provided in ORS 273.576 (1)(a).

(7) “Dedicate” means the formal recognition and protection of a natural area for natural heritage conservation purposes.

(8) “Elements” means both the natural heritage resources and the special species.

(9) “Instrument” means any written document intended to convey an interest in real property under ORS 93.710, or an agreement between parties according to the Natural Heritage Program or the Oregon Natural Heritage Plan.

(10) “Natural area” means a unit of land or water or both that may be considered for dedication under ORS 273.563 to 273.591 and that has substantially retained its natural character, or, if altered in character, shall in addition to its natural heritage resource values, be valuable as habitat for plant and animal species or for the study and appreciation of the natural features.

(11) “Natural heritage conservation area” means an area dedicated under the provisions of ORS 273.586.

(12) “Natural heritage resources” means the terrestrial ecosystem types, aquatic ecosystem types and unique geologic types as defined in the Oregon Natural Heritage Plan or a unit of land or water that contains a natural resource.

(13) “Plan” means the Oregon Natural Heritage Plan established under ORS 273.576, which governs the Natural Heritage Program in selecting areas for natural heritage conservation.

(14) “Program” means the Natural Heritage Program as established in ORS 273.566.

(15) “Register” means the Oregon Register of Natural Heritage Areas established under ORS 273.581.

(16) “Special species” means those species of plants and animals determined by the council to be significant in value in a natural heritage conservation area and defined in the Oregon Natural Heritage Plan.

NOTE: Deletes references to repealed provisions. (See section 16 of this 2001 Act.)

SECTION 2. ORS 305.220 is amended to read:

305.220. (1) Unless specifically provided otherwise by statute or by rule of the Director of the Department of Revenue adopted pursuant to subsection (3) of this section, every deficiency or delinquency arising under any law administered by the Department of Revenue shall bear simple interest at the rate of five-sixths of one percent per month or fraction thereof.

(2) Unless specifically provided otherwise by statute or by rule of the director adopted pursuant to subsection (3) of this section, every refund arising under any law administered by the department [of Revenue] shall:

[(a) Bear interest at the rate of one percent per month, or fraction thereof, for interest periods beginning prior to June 1, 1983.]

[(b)] (a) Bear simple interest at the rate of one and one-half percent per month, or fraction thereof, for interest periods beginning [on or after June 1, 1983, and] prior to January 1, 1988, unless an adjustment was made under subsection (3) of this section in which case the adjusted interest rate shall be used for the period for which the adjustment was made.

[(c)] (b) Subject to subsections (3) and (5) of this section and ORS 305.222, bear simple interest at the rate of five-sixths of one percent per month, or fraction thereof, for interest periods beginning on or after January 1, 1988.

(3)(a) If the director determines that the rates of interest for deficiencies, delinquencies and refunds established in subsections (1) and (2) of this section are at least one percentage point more or less than the prevailing rates of interest established by the Internal Revenue Service for underpayments arising under the federal tax laws to which one percentage point has been added, the director may adopt, by rule, adjusted interest rates. The director shall not adopt adjusted interest rates more than once in a calendar year. Notice of intent to adopt adjusted interest rates shall be given in the manner provided in ORS 183.335, not less than three months before the proposed effective date of the adjusted rates.

(b) In establishing the adjusted interest rates to be adopted under this subsection:

(A) The director shall take into consideration the current interest rates established by the Internal Revenue Service for underpayments arising under the federal tax laws.

(B) To any interest amount determined by taking into consideration the current interest rates established by the Internal Revenue Service for underpayments under subparagraph (A) of this paragraph, which interest amount shall be expressed at a rate per month or fraction thereof, there shall be added one-twelfth of one percent.

(4)[(a) If the director adopts an adjusted interest rate for deficiencies and delinquencies for any interest period beginning prior to June 1, 1983, the director shall adopt an adjusted interest rate for refunds that is six percentage points below the adjusted interest rate for deficiencies and delinquencies for the same period.]

[(b)] If the director adopts an adjusted interest rate for deficiencies and delinquencies [for an interest period beginning on or after June 1, 1983], the director shall adopt an adjusted interest rate for refunds that is equal to the adjusted interest rate for deficiencies and delinquencies.

(5) Any change in the rate of interest applicable to deficiencies, delinquencies or refunds resulting from the adoption of adjusted interest rates by the director under this section shall apply to deficiencies, delinquencies and refunds outstanding on the effective date of the rule, or arising on or after that date, but only with respect to interest periods beginning on or after that date.

(6) If the rate of interest on a deficiency, a delinquency or a refund is governed by this section, and if a fraction of a month is involved in making the computation of interest on the deficiency, delinquency or refund, then for the fractional month, the simple interest otherwise provided shall be computed on a daily basis.

NOTE: Eliminates obsolete language; makes terminology consistent.

SECTION 3. The amendments to ORS 305.220 by section 2 of this 2001 Act apply to interest periods beginning on or after June 1, 1983.

NOTE: See section 2 of this 2001 Act.

SECTION 4. ORS 305.220, as amended by section 2 of this 2001 Act, is amended to read:

[(a) Bear simple interest at the rate of one and one-half percent per month, or fraction thereof, for interest periods beginning prior to January 1, 1988, unless an adjustment was made under subsection (3) of this section in which case the adjusted interest rate shall be used for the period for which the adjustment was made.]

[(b)] subject to subsections (3) and (5) of this section and ORS 305.222, bear simple interest at the rate of five-sixths of one percent per month, or fraction thereof[, for interest periods beginning on or after January 1, 1988].

(b) In establishing the adjusted interest rates to be adopted under this subsection:

(A) The director shall take into consideration the current interest rates established by the Internal Revenue Service for underpayments arising under the federal tax laws.

(4) If the director adopts an adjusted interest rate for deficiencies and delinquencies, the director shall adopt an adjusted interest rate for refunds that is equal to the adjusted interest rate for deficiencies and delinquencies.

NOTE: Eliminates obsolete language.

SECTION 5. The amendments to ORS 305.220 by section 4 of this 2001 Act apply to interest periods beginning on or after January 1, 1988.

NOTE: See section 4 of this 2001 Act.

SECTION 6. ORS 305.740 is amended to read:

305.740. (1) Prior to the end of 1990 and prior to the end of each even-numbered calendar year thereafter, and subject to subsection (2) of this section, the Oregon Charitable Checkoff Commission shall examine the list of entities included on the Oregon personal income tax return for the tax year beginning in the calendar year immediately preceding and shall determine if each entity listed is qualified under ORS 305.710 and 305.720 to be listed on the [Oregon individual income tax] return to receive contributions by means of checkoff for the ensuing biennial years.

(2)(a) The Department of Revenue shall determine for each tax year if each entity listed for checkoff on the [Oregon tax] return for the preceding tax year meets the criteria under ORS 305.720 (5) and shall notify the commission, if and when appropriate. In determining the amount received in contributions from checkoffs for an entity for a particular tax year:

(A) For purposes of meeting the $50,000 minimum contribution, the amount received in contributions from checkoffs in the amount shown in the department’s financial statement for the fiscal year shall be counted.

(B) The amount of receipts shall not be reduced by the amount of administrative expense referred to in ORS 305.747.

(b) The determination of the department made under paragraph (a) of this subsection is final and may not be appealed. Notwithstanding subsection (1) of this section, an entity that has not met the criteria of ORS 305.720 (5) shall not be listed on the [Oregon tax] return for checkoff.

(3)(a) If the commission, for any reason other than that contributions by means of checkoff did not reach the amount required under ORS 305.720 (5), determines that an entity included on the list certified under ORS 305.715 (2) for the prior biennial years is not qualified to be included, or that an entity making application is not qualified to be included, or is not included because of determinations under ORS 305.710, on the list for the ensuing biennial years, the commission shall so order.

(b) The commission shall serve upon the entity, either by personal service or by certified mail, return receipt requested, the order issued under paragraph (a) of this subsection. The order shall comply with the applicable notice requirements of ORS 183.415.

(c) The entity or person or persons to whom the order is directed shall have 20 days from the date of personal service or mailing of the notice in which to make written application to the commission for a contested case hearing to be held in accordance with ORS 183.415 to 183.500 before the commission or the designee of the commission. In any hearing before the designee of the commission, the designee is authorized to issue the final order in the matter.

(d) Upon failure to request a contested case hearing within the time specified, the order shall become final.

(e) Appeal may be taken from a final order as specified under ORS 183.480 to 183.497.

(f) A final order issued by the commission, the designee of the commission, the Court of Appeals or the Oregon Supreme Court determining that an entity be included on the list certified under ORS 305.715 (2) may require only that the entity be included on the list next certified after the effective date of the final order.

NOTE: Makes terminology consistent.

SECTION 7. ORS 305.794 is amended to read:

305.794. In addition to and not in lieu of any other appropriation, amounts certified by the Department of Revenue to the State Treasurer under ORS 305.792 are appropriated from the General Fund to the State School Fund for the purposes for which State School Fund moneys may be used.

NOTE: Clarifies reference.

SECTION 8. ORS 307.110 is amended to read:

307.110. (1) Except as provided in ORS 307.120, all real and personal property of this state or any institution or department thereof or of any county or city, town or other municipal corporation or political subdivision of this state, held under a lease or other interest or estate less than a fee simple, by any person whose real property, if any, is taxable, except employees of the state, municipality or political subdivision as an incident to such employment, shall be subject to assessment and taxation for the assessed or specially assessed value thereof uniformly with real property of nonexempt ownerships.

(2) Each leased or rented premises not exempt under ORS 307.120 and subject to assessment and taxation under this section which is located on property used as an airport and owned by and serving a municipality or port shall be separately assessed and taxed.

(3) Nothing contained in this section shall be construed as subjecting to assessment and taxation any publicly owned property described in subsection (1) of this section that is:

(a) Leased for student housing by a school or college to students attending such a school or college.

(b) Leased to or rented by persons, other than sublessees or subrenters, for agricultural or grazing purposes and for other than a cash rental or a percentage of the crop.

(c) Utilized by persons under a land use permit issued by the Department of Transportation for which the department’s use restrictions are such that only an administrative processing fee is able to be charged.

(d) County fairgrounds and the buildings thereon, in a county holding annual county fairs, managed by the county fair board under ORS 565.230, if utilized, in addition to county fair use, for any of the purposes described in ORS 565.230 (2), or for horse stalls or storage for recreational vehicles or farm machinery or equipment.

(e) The properties and grounds managed and operated by the Oregon State Fair and Exposition Center under ORS 565.015, if utilized, in addition to the purpose of holding the Oregon State Fair, for horse stalls or for storage for recreational vehicles or farm machinery or equipment.

(f) For tax years beginning on or after July 1, 1969, and before July 1, 2002, state property that is used by the State System of Higher Education or the Oregon Health Sciences University to provide parking for employees or students.

(g) Property of a housing authority created under ORS chapter 456 which is leased or rented to persons of lower income for housing pursuant to the public and governmental purposes of the housing authority. For purposes of this paragraph, “persons of lower income” has the meaning given the phrase under ORS 456.055.

[(h) Property within a shipyard capable of dry-docking ocean-going vessels of 200,000 deadweight tons or more and utilized or leased by a sole contractor for the purpose of ship repair, layup, conversion or construction. The public shipyard owner shall notify the county assessor of the date of the lease or other possessory interest agreement with the sole shipyard contractor. Property subleased by the sole shipyard contractor, or utilized by another person pursuant to a possessory interest agreement with the sole shipyard contractor, is not exempt under this paragraph.]

[(i)] (h) Property of a health district if:

(A) The property is leased or rented for the purpose of providing facilities for health care practitioners practicing within the county; and

(B) The county is a frontier rural practice county under rules adopted by the Office of Rural Health.

(4) Property determined to be an eligible project for tax exemption under ORS 285B.383 and 307.123 that was acquired with revenue bonds issued under ORS 285B.320 to 285B.377 and that is leased by this state, any institution or department thereof or any county, city, town or other municipal corporation or political subdivision of this state to an eligible applicant shall be assessed and taxed in accordance with ORS 307.123.

(5) The provisions of law for liens and the payment and collection of taxes levied against real property of nonexempt ownerships shall apply to all real property subject to the provisions of this section. Taxes remaining unpaid upon the termination of a lease or other interest or estate less than a fee simple, shall remain a lien against the real or personal property.

(6) If the state enters into a lease of property with, or grants an interest or other estate less than a fee simple in property to, a person whose real property, if any, is taxable, then within 30 days after the date of the lease, or within 30 days after the date the interest or estate less than a fee simple is created, the state shall file a copy of the lease or other instrument creating or evidencing the interest or estate with the county assessor. This section applies notwithstanding that the property may otherwise be entitled to an exemption under this section, ORS 307.120 or as otherwise provided by law.

NOTE: Removes temporary provisions from permanent law. (See sections 9 to 11 of this 2001 Act.)

SECTION 9. ORS 307.120 is amended to read:

307.120. (1) Real property owned or leased by any municipality and real and personal property owned or leased by any dock commission of any city or by any port organized under the laws of this state is exempt from taxation to the extent to which such property is:

(a) Leased, subleased, rented or preferentially assigned for the purpose of the berthing of ships, barges or other watercraft (exclusive of property leased, subleased, rented or preferentially assigned primarily for the purpose of the berthing of floating homes, as defined in ORS 830.700), the discharging, loading or handling of cargo therefrom or for storage of such cargo directly incidental to transshipment, or the cleaning or decontaminating of agricultural commodity cargo, to the extent the property does not further alter or process an agricultural commodity;

(b) Held under lease or rental agreement executed for any purpose prior to July 5, 1947, except that this exemption shall continue only during the term of the lease or rental agreement in effect on that date; or

(c) Used as an airport owned by and serving a municipality or port of less than 300,000 inhabitants as determined by the latest decennial census. Property owned or leased by the municipality or port, located within or contiguous to the airport is “used as an airport” within the meaning of this subsection if the proceeds of the lease, sublease or rental are used by the municipality or port exclusively for purposes of the maintenance and operation of the airport.

(2) Those persons having on January 1 of any year a lease, sublease, rent or preferential assignment or other possessory interest in property exempt from taxation under subsection (1)(a) of this section, except dock area property [or property described under ORS 307.110 (3)(h)], shall make payments in lieu of taxes to any school district in which the exempt property is located as provided in subsection (3) of this section. The annual payment in lieu of taxes shall be one quarter of one percent (.0025) of the assessed value of the exempt property and the payment shall be made to the county treasurer on or before May 1 of each year.

(3)(a) On or before December 31 preceding any year for which a lease, sublease, rental or preferential assignment or other possessory interest in property is to be held, or within 30 days after acquisition of such an interest, whichever is later, any person described in subsection (2) of this section shall file with the county assessor a request for computation of the payment in lieu of tax for the exempt property in which the person has a possessory interest. The person shall also provide any information necessary to complete the computation that may be requested by the assessor. The request shall be made on a form prescribed by the Department of Revenue.

(b) On or before April 1 of each assessment year the county assessor shall compute the in lieu tax for the property subject to subsection (2) of this section for which a request for computation has been filed under paragraph (a) of this subsection and shall notify each person who has filed such a request:

(A) That the person is required to pay the amount in lieu of taxes to the county treasurer on behalf of the school district;

(B) Of the assessed value of the property subject to the payment in lieu of taxes; and

(C) Of the amount due, the due date of the payment in lieu of taxes and of the consequences of late payment or nonpayment.

(c) On or before July 15 of each tax year the county treasurer shall distribute to the school districts the amounts received for the respective districts under subsection (2) of this section. If the exempt property is located in more than one school district, the amount received shall be apportioned to the school districts on the basis of the ratio that each school district’s permanent limit on the rate of ad valorem property taxes bears to the total permanent limit on the rate of ad valorem property taxes applicable to all of the school districts in which the property is located.

(4) If a person described in subsection (2) of this section fails to request a computation or make a payment in lieu of taxes as provided in this section, the property shall not be exempt for the tax year but shall be assessed and taxed as other property similarly situated is assessed and taxed.

(5) Upon granting of a lease, sublease, rental, preferential assignment or other possessory interest in property described in subsection (1)(a) of this section, except dock area property, the municipality, dock commission or port shall provide the county assessor with the name and address of the lessee, sublessee, renter, preferential assignee or person granted the possessory interest.

(6)(a) Not later than 15 days prior to the date that a request is required to be made under subsection (3)(a) of this section, the municipality, dock commission or port granting a lease, sublease, rental, preferential assignment or other possessory interest in its exempt property for which in lieu tax payments are imposed under subsection (2) of this section, shall notify the person granted the interest:

(A) Of the obligation to file with the county assessor a request for appraisal and computation of in lieu tax no later than December 31 or within 30 days after the interest is granted, whichever is later.

(B) Of the obligation to pay the in lieu tax, in the amount of one-quarter of one percent (.0025) of the assessed value of the exempt property held, to the county treasurer before May 1 following the date of the request.

(C) That, if the request is not made within the time prescribed, or if the in lieu tax is not paid, or both, that the property shall not be exempt from taxation but shall be assessed and taxed in the same manner as other property similarly situated is assessed and taxed.

(b) Failure of a municipality, dock commission or port to give the notice as prescribed under this subsection shall not relieve any person from the requirements of this section.

(7) As used in this section:

(a) “Dock” means a structure extended from the shore or area adjacent to deep water for the purpose of permitting the mooring of ships, barges or other watercraft.

(b) “Dock area” means that part of the dock situated immediately adjacent to the mooring berth of ships, barges or other watercraft which is used primarily for the loading and unloading of waterborne cargo, but which shall not encompass any area other than that area from which cargo is hoisted or moved aboard a vessel, or to which cargo is set down when unloaded from a vessel when utilizing shipboard or dockside machinery.

(c) “Dock area property” means all real property situated in the dock area, and includes all structures, machinery or equipment affixed to that property.

(d) “School district” means a common or union high school district, but does not include a county education bond district, an education service district, a community college service district or a community college district.

NOTE: Removes temporary provisions from permanent law. (See sections 8, 10 and 11 of this 2001 Act.)

SECTION 10. (1) Property within a shipyard capable of dry-docking oceangoing vessels of 200,000 deadweight tons or more and utilized or leased by a sole contractor for the purpose of ship repair, layup, conversion or construction is exempt from ad valorem property taxation.

(2) The public shipyard owner shall notify the county assessor of the date of the lease or other possessory interest agreement with the sole shipyard contractor.

(3) Property subleased by the sole shipyard contractor, or utilized by another person pursuant to a possessory interest agreement with the sole shipyard contractor, is not exempt under this section.

(4) Persons having on January 1 of any year a lease, sublease, rent or preferential assignment or other possessory interest in property that is exempt from taxation under this section are not required to make the payments in lieu of taxes described in ORS 307.120 (2).

NOTE: Places temporary provisions into separate section. (See sections 8, 9 and 11 of this 2001 Act.)

SECTION 11. Section 3, chapter 337, Oregon Laws 1995, is amended to read:

Sec. 3. [The amendments to ORS 307.110 and 307.120 by sections 1 and 2 of this Act apply] Section 10 of this 2001 Act applies to property tax years beginning on or after July 1, 1995, and before July 1, 2010.

NOTE: Applies timelines to provisions now separated from permanent law. (See sections 8 to 10 of this 2001 Act.)

SECTION 12. ORS 307.182 is amended to read:

307.182. Notwithstanding ORS 307.060, there shall be exempt from property taxation real property used and occupied by commercial recreation facility operators under permits issued pursuant to the Acts of June 4, 1897 (16 U.S.C. 551)[,] and March 4, 1915 (16 U.S.C. 497), as amended, [and March 30, 1948 (48 U.S.C. 341),] but the improvements thereon are subject to ad valorem taxation as provided in ORS 307.030.

NOTE: Eliminates reference to federal law that applies only to Alaska.

SECTION 13. Section 4, chapter 405, Oregon Laws 1981, as amended by section 1, chapter 169, Oregon Laws 1985, and section 4, chapter 748, Oregon Laws 1995, is amended to read:

Sec. 4. ORS 307.182[, the amendments to ORS 307.060 by section 2, chapter 405, Oregon Laws 1981, and the repeal of section 2, chapter 656, Oregon Laws 1975, by section 3, chapter 405, Oregon Laws 1981, apply for] applies to tax years beginning on or after July 1, 1981, and prior to July 1, 2002.

NOTE: Corrects applicability provision statutory references.

SECTION 14. ORS 307.242 is amended to read:

307.242. (1) Upon compliance with this section, whenever a corporation, as defined in ORS 307.375, is receiving or has received any federal or state financial assistance, such as a loan, mortgage insurance, aid to construction, rent supplement or otherwise, under the following federal or state laws, the property owned or being purchased by that corporation in actual use for corporate purposes or in the process of construction for use for corporate purposes on January 1 of the assessment year is exempt from ad valorem taxation:

(a) Section 202 of Title II of the National Housing Act (12 U.S.C. 1701q).

(b) Section 236 of the National Housing Act (12 U.S.C. [1715z (1)] 1715z-1).

(d) Section 101 of Title I of the National Housing Act (12 U.S.C. 1701s) or section 8 of Title II of the National Housing Act (42 U.S.C. 1437f), providing rent supplement or housing assistance payments.

(e) ORS 456.515 to 456.725 and 458.505 to 458.515.

(2) A corporation claiming the exemption under subsection (1) of this section shall file with the county assessor, on forms prescribed by the Department of Revenue and supplied by the assessor, a written claim therefor in duplicate on or before April 1 of each assessment year for which the exemption is claimed. If the claim for any year is not filed within the time specified, except as provided under ORS 307.475 and subsection (3) of this section, the exemption shall not be allowed on the assessment roll for that year. In addition to any other matters prescribed by the Department of Revenue to be contained in or accompany the claim, the claim shall:

(a) Declare or be accompanied by a declaration that the corporation meets the requirements of ORS 307.375 and that the property meets the requirements of ORS 307.243 (1);

(b) Describe or be accompanied by a description of the federal financial assistance the corporation is receiving or has received;

(c) Contain or be accompanied by a statement showing in detail the sources and amounts of all income received by the corporation and the basis for rental amounts charged for occupancy of the facilities; and

(d) Be signed by the taxpayer subject to the penalties for false swearing.

(3) Notwithstanding subsection (2) of this section:

(a) If the property qualifies for exemption on or after March 1 and before July 1, the claim may be filed within 30 days after the date of qualification.

(b) A statement may be filed under this section at any time prior to December 31 of the assessment year for which exemption is first desired. However, any statement filed after the time for filing the statement specified in subsection (2) of this section, unless filed under paragraph (a) of this subsection, must be accompanied by a late filing fee of the greater of $200 or one-tenth of one percent of the real market value of the property to which the statement pertains, as determined as of January 1 of the assessment year by the assessor for this purpose. If the statement is not accompanied by the late filing fee or if the late filing fee is not otherwise paid, no exemption shall be allowed for the year based upon a statement filed pursuant to this subsection. A statement may be filed under this section notwithstanding that there are no grounds for hardship as required for late filing under ORS 307.475. The value of the property used to determine the late filing fee under this section is appealable in the same manner as other acts of the county assessor. Any filing fee collected under this section shall be deposited to the county general fund to be made available for county general governmental expenses.

(4) The assessor shall act upon the claim and shall approve or reject it, noting the action of the assessor upon both the original and the duplicate copies. The duplicate copy therefor shall be returned to the claimant.

(5) The Department of Revenue shall furnish to a county assessor, upon the request of the county assessor, a statement certifying the qualification or nonqualification of a corporation under ORS 307.375 and this section based upon the corporation’s claim under this section.

(6) Residents of a facility of a corporation exempt from taxation under this section shall not be entitled to the tax benefits of ORS 307.370 to 307.385.

NOTE: Corrects citation to federal law.

SECTION 15. ORS 307.537 is amended to read:

307.537. [(1) ORS 307.517 applies to applications for exemption filed after January 1, 1990, in years beginning on or after January 1, 1990.]

[(2) ORS 307.518 applies to applications for exemption filed on or after July 1, 1992, in tax years beginning on or after July 1, 1992.]

[(3)] The amendments to ORS 307.521 (1) by section 5, chapter 930, Oregon Laws 1991, changing the period of the exemption provided under ORS 307.515 to 307.523 from 10 to 20 years, apply to property granted exemption pursuant to [application] applications filed on or after September 29, 1991.

NOTE: Deletes outdated provisions.

SECTION 16. ORS 307.550 and 307.560 are repealed.

NOTE: Repeals outdated provisions.

SECTION 17. ORS 308.522 is repealed.

NOTE: Repeals outdated provision.

SECTION 18. ORS 308.670 is repealed.

NOTE: Repeals outdated provision.

SECTION 19. ORS 308.815 is amended to read:

308.815. (1) The Department of Revenue shall examine and determine as to the correctness of the return and taxes on the association’s gross revenue forwarded pursuant to ORS 308.810 and if found correct shall thereupon remit the tax so received to the treasurers of the counties in which the association has electric transmission and distribution lines in proportion to the number of wire miles in each of such counties.

(2) If the taxes so received by the treasurers of the respective counties are measured by gross revenue they shall be credited as follows:

(a) For payments due July 1, 1992:

(A) 60 percent to the county school fund.

(B) 40 percent to the general fund of the county.

(b) For payments due July 1, 1993:

(A) 55.6 percent to the county school fund.

(B) 44.4 percent to the general fund of the county.

(A) 50 percent to the county school fund.

(B) 50 percent to the general fund of the county.

(d) For payments due July 1, 1995:

(A) 42.9 percent to the county school fund.

(B) 57.1 percent to the general fund of the county.

(e) For payments due July 1, 1996, and thereafter:

(A) 33.3 percent to the county school fund.

(B) [67.7] 66.7 percent to the general fund of the county.

(3) If the amount of the taxes was determined under ORS 308.807 (2) they shall be deposited in the unsegregated tax collections account and distributed according to the percentage distribution schedule in ORS 311.390.

(4) If the return or taxes are found to be incorrect, the department shall notify the association of the error, and refund any overpayment or demand payment of any deficiency.

NOTE: Corrects formula.

SECTION 20. ORS 308A.300 to 308A.330 and 308A.350 to 308A.383 are added to and made a part of ORS chapter 308A.

NOTE: Adds series to appropriate chapter.

SECTION 21. ORS 308A.703 is amended to read:

308A.703. (1) This section applies to land upon the land’s disqualification from special assessment under any of the following sections:

(a) Exclusive farm use zone farmland under ORS 308A.113;

(b) Nonexclusive farm use zone farmland under ORS 308A.116;

(d) Eastern Oregon designated forestland under ORS 321.820;

(e) Western Oregon Small Tract Optional Tax classification under ORS 321.760; or

(f) Wildlife habitat open space use assessment under ORS 215.808.

(2) Following a disqualification listed in subsection (1) of this section, an additional tax shall be added to the tax extended against the land on the next assessment and tax roll, to be collected and distributed in the same manner as other ad valorem property tax moneys. The additional tax shall be equal to the difference between the taxes assessed against the land and the taxes that would otherwise have been assessed against the land, for each of the number of years determined under subsection (3) of this section.

(3) The number of years for which additional taxes shall be calculated shall equal the lesser of the number of consecutive years the land had qualified for the special assessment program for which disqualification has occurred or:

(a) Ten years, in the case of exclusive farm use zone farmland, but only if the land, immediately following disqualification, remains outside an urban growth boundary;

(b) Ten years, in the case of wildlife habitat open space use assessment land within an exclusive farm use zone, but only if the land, immediately following disqualification, remains outside an urban growth boundary; or

(A) Nonexclusive farm use zone farmland;

(B) Western Oregon designated forestland;

(D) Western Oregon Small Tract Optional Tax classified forestland;

(E) Exclusive farm use zone farmland that is not described in paragraph (a) of this subsection; or

(F) Wildlife habitat open space use special assessment land that is not described in paragraph (b) of this subsection.

(4) The additional taxes described in this section shall be deemed assessed and imposed in the year to which the additional taxes relate.

(5) If the disqualification of the land is the result of the sale or transfer of the land to an ownership making the land exempt from ad valorem property taxation, the lien for additional taxes shall attach as of the day preceding the sale or transfer.

(6) The amount determined to be due under this section may be paid to the tax collector prior to the time of the next general property tax roll, pursuant to the provisions of ORS 311.370.

(7) If additional taxes are imposed under this section as a result of the [disqualification] declassification of Western Oregon Small Tract Optional Tax classified forestland, the following amounts shall be added to and considered a part of the additional taxes otherwise due under this section, to be collected in the same manner in which additional taxes are collected:

(a) The amount of privilege taxes that would have been payable under ORS 321.257 to 321.322, during the five years immediately preceding the extension of additional taxes on the tax roll; and

(b) Interest on the amounts of taxes added pursuant to paragraph (a) of this subsection at the rate of six percent a year from the date at which such increased taxes would have been payable if the forestland had been valued without regard to ORS 321.720.

(8) The Department of Revenue shall provide the amounts described in subsection (7) of this section to the county assessor.

NOTE: Clarifies terminology.

SECTION 22. ORS 309.110 is amended to read:

309.110. (1) The disposition of every petition before a board of property tax appeals and the board’s determination thereon shall be recorded by formal order and entered in the record of the board. A copy of the order as to each petition shall be sent, by mail, to the petitioner at the post-office address given in the petition. When a copy of a board’s order is personally delivered to the petitioner, the requirement to mail a copy of the order is waived. A copy of each order shall be delivered to the assessor and the officer in charge of the roll on the same day that the order is mailed or delivered to the petitioner. The orders of a board shall specify what changes shall be made in the tax roll, if any, and shall direct the officer in charge of the roll to make them. The district attorney shall be available to aid a board in the preparation of its orders.

(2) Notwithstanding subsection (1) of this section, if a petition is filed with the board that is resolved by stipulation under ORS 308.242 prior to the date the board convenes, the stipulation shall be entered into the record of the board. The requirements for mailing and delivery under subsection (1) of this section do not apply to a stipulation entered into the record under this subsection.

(3)(a) A board may issue amended orders to correct clerical errors or errors of jurisdiction appearing in its original orders.

(b) A board may authorize a board member or clerk of the board to amend board orders on behalf of the board for the purpose of correcting clerical errors.

[(c) As used in this subsection:]

[(A) “Clerical error” means an error in the order that either arises from an error in the minutes of a board or that is a failure to correctly reflect the minutes of a board, and that, had it been discovered prior to the order being issued would have been corrected as a matter of course, and the information necessary to make the correction is contained in the minutes of a board. Such errors include, but are not limited to, arithmetic and copying errors and omission or misstatement of identification of property.]

[(B) “Error of jurisdiction” means an error in the order resulting from the board’s failure to correctly apply the board’s authority as granted under ORS 309.026.]

(4) Amended orders correcting an error of jurisdiction may be issued only during a board’s session, or by call of the chairperson.

(5) An amended order correcting a clerical error or an error of jurisdiction must be made on or before June 30 of the year in which the original order was issued by the board.

(6) The provisions of subsection (1) of this section shall apply to amended orders, unless the context requires otherwise. Amended orders shall be mailed to the petitioner and delivered to the assessor and the officer in charge of the roll not later than five days after the adjournment of a board’s meetings or five days after the date the order is amended, whichever is later.

(7) The order of a board, other than an order relating to an application to excuse liability for the penalty imposed under ORS 308.295, may be appealed to the magistrate division of the Oregon Tax Court.

(8) As used in this section:

(a) “Clerical error” means an error in an order that either arises from an error in the minutes of a board or is a failure to correctly reflect the minutes of a board and that, had it been discovered prior to the order being issued, would have been corrected as a matter of course. In order to be a clerical error, the information necessary to make the correction must be contained in the minutes of the board. Such errors include, but are not limited to, arithmetic and copying errors and omission or misstatement of identification of property.

(b) “Error of jurisdiction” means an error in an order resulting from a board’s failure to correctly apply the board’s authority as granted under ORS 309.026.

NOTE: Applies definitions to entire section; corrects syntax.

SECTION 23. ORS 310.055 is amended to read:

310.055. (1) As used in the property tax laws of this state, “operating taxes” means ad valorem property taxes that are subject to a permanent rate limit under section 11, Article XI of the Oregon Constitution, or statutory rate limit under ORS 310.236 (4) or 310.237, if applicable.

(2) For the tax year beginning July 1, 1997, operating taxes consist of the sum of the following (or such lesser amount as is certified to the assessor under ORS 310.206 (4)(b):

(a) The total amount of ad valorem property taxes as provided in ORS 310.200 to 310.242, except that the amount under this paragraph does not include:

(A) Local option taxes;

(B) Ad valorem property taxes used to repay taxing district bond or pension and disability plan obligations described in section 11 (5), Article XI of the Oregon Constitution;

(C) Ad valorem property taxes that would otherwise be subject to this paragraph, except that the taxes are of a taxing district other than a city, county or school district, and are used to support a hospital facility;

(D) Ad valorem property taxes that would otherwise be subject to this paragraph, except that the levy of the taxes was approved by voters prior to December 5, 1996, that met the voter participation requirements in section 11 (8), Article XI of the Oregon Constitution, and that are first imposed in the tax year beginning July 1, 1996, or July 1, 1997;

(E) Serial or one-year levies described in ORS 280.040 to 280.140 (1995 Edition) that replace levies that were imposed in the tax year beginning July 1, 1996, that were approved by voters in an election held after December 4, 1996, and that are first imposed for the tax year beginning July 1, 1997, if the rate or the amount of the levy is not greater than the rate or the amount of the replaced levy;

(F) Taxes imposed to pay principal and interest on exempt bonded indebtedness; and

(G) Urban renewal increment taxes; and

(b) The total amount of the following ad valorem property taxes, without reduction under ORS 310.200 to 310.242:

(A) Ad valorem property taxes of a taxing district other than a city, county or school district that are used to support a hospital facility;

(B) Ad valorem property taxes approved by voters prior to December 5, 1996, that met the voter participation requirements in section 11 (8), Article XI of the Oregon Constitution, and that are first imposed in the tax year beginning July 1, 1996, or July 1, 1997; and

(C) Serial or one-year levies described in ORS 280.040 to 280.140 (1995 Edition) that replace levies that were imposed in the tax year beginning July 1, 1996, that were approved by voters after December 4, 1996, and that are first imposed for the tax year beginning July 1, 1997, if the rate or the amount of the levy is not greater than the rate or the amount of the replaced levy.

(3) For tax years beginning on or after July 1, 1998, each taxing district is authorized to levy the full amount of the operating taxes of the district on all taxable property within the boundaries of the district. Operating taxes consist of:

(a) Ad valorem property taxes imposed at the rate established as the permanent rate limit or statutory rate limit, if applicable, for the taxing district or such lesser rate as the taxing district certifies to the assessor under ORS 310.060; or

(b) If the district is imposing operating property taxes for the first time, ad valorem property taxes imposed at the rate established in the manner provided for by law as the permanent rate limit for the district or such lesser rate as the taxing district may determine.

SECTION 24. ORS 310.165 is amended to read:

310.165. (1) For any unit of property partially exempt from tax under ORS 307.250, 307.370, 308.459[, 308.670] or 358.485 or any other law, the assessor shall determine the maximum amount of taxes on property to be imposed on such property under ORS 310.150, by using the lesser of the real market value or the taxable value of the property after the exemption has been applied.

(2) For any land that is specially assessed for ad valorem tax purposes under ORS [308.670,] 308A.050 to 308A.128, 308A.250 to 308A.259, 308A.315, 321.257 to 321.390, 321.705 to 321.765 or 321.805 to 321.825, the assessor shall determine the maximum amount of taxes on property to be imposed on such property under ORS 310.150 by using the lesser of the real market value or the specially assessed value of the property.

(3) In the case of any unit of property of which a part of the unit is exempt from taxation, and that part may be identified both as to value and physical description, the real market value of the unit shall not include the value of the exempt part of the unit.

(4) If any unit of property described in subsection (1) or (2) of this section for which the maximum amount of taxes imposed has been determined under this section is subject to imposition of additional taxes due to disqualification from special assessment or partial exemption, the determination of the maximum amount of additional taxes that may be imposed due to disqualification shall be made on the basis of the real market value of the property for the year to which the additional taxes relate.

NOTE: Deletes references to repealed provision. (See section 18 of this 2001 Act.)

SECTION 25. ORS 310.630 is amended to read:

310.630. As used in ORS 310.630 to 310.706:

(1) “Contract rent” means rental paid to the landlord for the right to occupy a homestead, including the right to use the personal property located therein. “Contract rent” does not include rental paid for the right to occupy a homestead that is exempt from taxation, unless payments in lieu of taxes of 10 percent or more of the rental exclusive of fuel and utilities are made on behalf of the homestead. “Contract rent” does not include advanced rental payments for another period and rental deposits, whether or not expressly set out in the rental agreement, or payments made to a nonprofit home for the elderly described in ORS 307.375. If a landlord and tenant have not dealt with each other at arm’s length, and the Department of Revenue is satisfied that the contract rent charged was excessive, it may adjust the contract rent to a reasonable amount for purposes of ORS 310.630 to 310.706.

[(1)] (2) “Department” means the Department of Revenue.

[(2)] (3) “Fuel and utility payments” [include] includes payments for heat, lights, water, sewer and garbage made solely to secure those commodities or services for the homestead of the taxpayer. [“Payments for heat” mean those payments made to secure the commodities or services to be used as the principal source of heat for the homestead of the taxpayer and includes payments for natural gas, oil, firewood, coal, sawdust, electricity, steam or other materials that are capable of use as a primary source of heat for the homestead.] “Fuel and utility payments” [do] does not include telephone service.

[(3)] (4) “Gross rent” means contract rent paid plus the fuel and utility payments made for the homestead in addition to the contract rent, during the calendar year for which the claim is filed.

[(4)] (5) “Homestead” means the taxable principal dwelling located in Oregon, either real or personal property, rented by the taxpayer, and the taxable land area of the tax lot upon which it is built.

[(5)] (6) “Household” means the taxpayer, the spouse of the taxpayer and all other persons residing in the homestead during any part of the calendar year for which a claim is filed.

[(6)] (7) “Household income” means the aggregate income of the taxpayer and the spouse of the taxpayer who reside in the household, that was received during the calendar year for which the claim is filed. “Household income” includes payments received by the taxpayer or the spouse of the taxpayer under the federal Social Security Act for the benefit of a minor child or minor children who are members of the household.

[(7)] (8) “Income” means “adjusted gross income” as defined in the federal Internal Revenue Code, as amended and in effect on December 31, 1998, even where the amendments take effect or become operative after that date, relating to the measurement of taxable income of individuals, estates and trusts, with the following modifications:

(a) There shall be added to adjusted gross income the following items of otherwise exempt income:

(A) The gross amount of any otherwise exempt pension less return of investment, if any.

(B) Child support received by the taxpayer.

(D) Gifts and grants, the sum of which are in excess of $500 per year.

(E) Amounts received by a taxpayer or spouse of a taxpayer for support from a parent who is not a member of the taxpayer’s household.

(F) Life insurance proceeds.

(G) Accident and health insurance proceeds, except reimbursement of incurred medical expenses.

(H) Personal injury damages.

(I) Sick pay which is not included in federal adjusted gross income.

(J) Strike benefits excluded from federal gross income.

(K) Worker’s compensation, except for reimbursement of medical expense.

(L) Military pay and benefits.

(M) Veteran’s benefits.

(N) Payments received under the federal Social Security Act which are excluded from federal gross income.

(O) Welfare payments, except as follows:

(i) Payments for medical care, drugs and medical supplies, if the payments are not made directly to the welfare recipient;

(ii) In-home services authorized and approved by the Department of Human Services, or by any of its divisions; and

(iii) Direct or indirect reimbursement of expenses paid or incurred for participation in work or training programs.

(P) Nontaxable dividends.

(Q) Nontaxable interest not included in federal adjusted gross income.

(R) Rental allowance paid to a minister that is excluded from federal gross income.

(S) Income from sources without the United States that is excluded from federal gross income.

(b) Adjusted gross income shall be increased due to the disallowance of the following deductions:

(A) The amount of the net loss, in excess of $1,000, from all dispositions of tangible or intangible properties.

(B) The amount of the net loss, in excess of $1,000, from the operation of a farm or farms.

(C) The amount of the net loss, in excess of $1,000, from all operations of a trade or business, profession or other activity entered into for the production or collection of income.

(D) The amount of the net loss, in excess of $1,000, from tangible or intangible property held for the production of rents, royalties or other income.

(E) The amount of any net operating loss carryovers or carrybacks included in federal adjusted gross income.

(F) The amount, in excess of $5,000, of the combined deductions or other allowances for depreciation, amortization or depletion.

(G) The amount added or subtracted, as required within the context of this section, for adjustments made under ORS 316.680 (2)(d) and 316.707 to 316.737.

(A) Any governmental grant which must be used by the taxpayer for rehabilitation of the homestead of the taxpayer.

(B) The amount of any payments made pursuant to ORS 310.630 to 310.706.

[(8) “Contract rent” means rental paid to the landlord for the right to occupy a homestead, including the right to use the personal property located therein. “Contract rent” does not include rental paid for the right to occupy a homestead that is exempt from taxation, unless payments in lieu of taxes of 10 percent or more of the rental exclusive of fuel and utilities are made on behalf of the homestead. “Contract rent” does not include advanced rental payments for another period and rental deposits, whether or not expressly set out in the rental agreement, or payments made to a nonprofit home for the elderly described in ORS 307.375. If a landlord and tenant have not dealt with each other at arm’s length, and the department is satisfied that the contract rent charged was excessive, it may adjust the contract rent to a reasonable amount for purposes of ORS 310.630 to 310.706.]

(9) “Payments for heat” means those payments made to secure the commodities or services to be used as the principal source of heat for the homestead of the taxpayer and includes payments for natural gas, oil, firewood, coal, sawdust, electricity, steam or other materials that are capable of use as a primary source of heat for the homestead.

[(9)] (10) “Statement of gross rent” means a declaration by the applicant, under penalties of false swearing, that the amount of contract rent and fuel and utility payments designated is the actual amount both incurred and paid during the year for which elderly rental assistance is claimed.

[(10)] (11) “Taxpayer” means an individual who is a resident of this state on December 31 of the year for which elderly rental assistance is claimed and whose homestead, as of the same December 31 and during all or a portion of the year ending on the same December 31, is rented and while rented is the subject, directly or indirectly, of property tax levied by this state or a political subdivision or of payments made in lieu of taxes.

NOTE: Alphabetizes definitions to conform with legislative form and style; corrects syntax.

SECTION 26. ORS 311.160 is amended to read:

311.160. (1)(a) Where a final order is entered in any appeal described in ORS 308.020 (1) or the expiration of the appeal period has occurred, the officer or officers in possession of the assessment and tax rolls shall make the corrections stated in the decision of the court. Any additional taxes collected because the final total value is greater than that entered in the rolls under ORS 308.020 (1) shall be deposited in a special account with the county treasurer. The county treasurer shall notify the county assessor of the amount in the special account for each property described in ORS 308.020 (1), and the assessor shall apportion the amount among the taxing districts in the code area in which the property is located on the basis of their tax rates as compared to the total of such tax rates for the tax year for which the amount, or portion of the amount, is attributable. The treasurer shall pay each district the district’s apportioned amount.

(b)(A) Where a final order is entered in any appeal described in ORS 308.020 (2) or the expiration of the appeal period has occurred, the officer or officers in possession of the assessment and tax rolls shall make the corrections stated in the decision of the court.

(B) Subject to subparagraph (C) of this paragraph, at the option of the county treasurer, any additional taxes, or portion thereof, collected because the final total value for the initial tax year or for a tax year occurring during the appeal period is greater than that entered in the rolls under ORS 308.020 (2) shall be deposited[, distributed and offset] and distributed as provided under paragraph (a) of this subsection or deposited in a refund reserve account maintained under ORS 311.807.

(C) If, at the time of collection, the amount of the additional taxes exceeds the amount of anticipated annual refunds for the fiscal year of collection, the excess amount shall be deposited and distributed [and offset] as provided under paragraph (a) of this subsection.

(2) Interest shall accrue on the additional taxes collected pursuant to subsection (1) of this section as if the property had been properly assessed in the year that any portion of the value was placed on the tax roll in the manner and at the interest rates provided in ORS 311.505.

(3) If the owner of the property, the value of which is subject to ORS 308.020, so desires, the owner may tender to the county treasurer an estimate of the additional taxes which may ultimately be assessed against the property. The county treasurer shall provide a special account for such deposits and shall invest the deposits during the time the matter is in litigation. The interest earned on the account shall be credited to it.

(4) Upon the termination of the controversy, the principal amount in the account necessary to pay the taxes as provided in subsection (1) of this section shall be retained together with its portion of the interest earned on the investment of the moneys during the period held by the county treasurer and shall be distributed as provided in subsection (1) of this section. Moneys in the account in excess of that required to be retained shall be refunded to the owner. Notwithstanding ORS 311.812, the owner of the property shall not be entitled to any interest in excess of that earned on the sum of the principal which is refunded to the owner during the time the money was held by the county treasurer.

(5) This section does not apply to appeals arising from tax years beginning on or after July 1, 1997.

NOTE: Deletes outdated language.

SECTION 27. ORS 311.223 is amended to read:

311.223. (1) If the person or party notified as provided in ORS 311.219 does not appear or if the person or party appears and fails to show any good and sufficient cause why the assessment shall not be made, the assessor shall proceed to correct the assessment or tax roll or rolls from which the property was omitted. The assessor shall add the property thereto, with the proper valuation, and extend thereon taxes at the consolidated rate under ORS 310.147 that is applicable in the code area in which the property was located for each year as to which it was omitted. To carry out the correction of a tax roll or rolls the assessor shall send a written statement to the tax collector instructing the tax collector to make the necessary changes on the tax roll. The statement shall contain all of the information needed by the tax collector to make the changes in the roll and it shall be dated and signed by the assessor or the deputy of the assessor. The tax collector shall then correct the tax roll.

(2) Immediately after the assessor corrects the assessment or tax roll the assessor shall file in the office of the assessor a statement of the facts or evidence on which the assessor based the correction and notify the taxpayer by written notice, sent by certified mail to the taxpayer’s last-known address, of the date and amount of the correction.

(3) To enable the assessor to comply with this [subsection] section, the assessor is invested with all the powers of the county clerk under the law in force during the years for which correction may be made under ORS 311.216 to 311.232 and thereafter.

(4) Any person aggrieved by an assessment made under ORS 311.216 to 311.232 may appeal to the tax court within 90 days after the correction of the roll by giving notice to the assessor or the Department of Revenue, whichever is applicable, and otherwise proceeding in the manner provided for appeals from the board of property tax appeals. No appeal of the value assigned under this section may be made to the board of property tax appeals under ORS 309.100.

NOTE: Corrects terminology.

SECTION 28. ORS 311.390 is amended to read:

311.390. (1) When the tax collector receives the assessor’s certificate pursuant to ORS 311.115, the tax collector shall prepare and file with the county treasurer a percentage schedule of the ratio of taxes on property, as defined in ORS 310.140, and other amounts to be collected, after reductions necessary to comply with section 11b, Article XI of the Oregon Constitution, after making adjustments in accordance with ORS 311.105 (1)(c), for each governmental unit as shown in such certificate, compared to the total of each of those amounts. Such schedule shall be approved by the county accountant, if one exists in the county, or by the county clerk before filing. Except as provided in [subsection (2)] subsections (2) and (3) of this section, the distribution of collections by the tax collector shall be made on the basis of the ratios computed pursuant to this section. The ratios computed pursuant to this section for a given fiscal year shall be used for the distribution of all taxes on property or penalties imposed, collected and received for that fiscal year regardless of the actual date of receipt. Interest earned on moneys in the unsegregated tax collections account shall be distributed according to the ratio applicable to the year in which the moneys are distributed.

(2) If, after the ratios are computed pursuant to this section, the amount of a levy or other tax on property is changed, or a levy or other tax on property is filed with the assessor pursuant to ORS 310.060 [which] that had not been included in the tax distribution schedule for that year, the tax collector[:]

[(a)] shall revise the percentages provided in subsection (1) of this section to reflect the corrected or added levy or tax[,] and shall adjust the amounts previously distributed and to be distributed thereafter to reflect the revision in percentages. [; or]

[(b)] (3) If, in the opinion of the tax collector, it is not feasible to make [such revision] the revisions described in subsection (2) of this section, the tax collector shall treat the amount of the change in levy or tax or the additional levy or tax as a separate tax collection and segregate the moneys collected for the particular district or districts in the periodic statement of tax collections given to the county treasurer pursuant to ORS 311.395.

[(3)] (4) If the percentage schedule is revised, a copy shall be filed with the county treasurer after approval by the county accountant, if one exists in the county, or by the county clerk.

[(4)] (5) If, after the ratios are computed under this section, a levy or tax is changed or a levy or tax is filed with the assessor pursuant to ORS 310.060, that was not included in the tax distribution schedule for that year, future distributions of interest shall be based on the revised percentages that reflect the corrected or added levy or tax. No adjustments shall be made for previously distributed interest.

NOTE: Conforms structure to legislative form and style; corrects grammar.

SECTION 29. ORS 311.506 is amended to read:

311.506. During each biennial regular session, the Legislative Assembly shall review the rate of interest, as specified under ORS 311.505 (2) [or section 10, chapter 796, Oregon Laws 1989,] that is charged and collected on property taxes that are due and unpaid.

NOTE: Eliminates reference to repealed law.

SECTION 30. ORS 314.518 is amended to read:

314.518. (1) A corporation required to make a payment of estimated tax under ORS 314.505 to 314.525 shall make the payment by means of electronic funds transfer if:

(a) For payment periods beginning on or after July 1, 1999, and before July 1, 2000, the corporation’s annual total amount of estimated tax liability exceeds $1 million.

(b) For payment periods beginning on or after July 1, 2000, and before July 1, 2001, the corporation’s annual total amount of estimated tax liability exceeds $200,000.

(c) For payment periods beginning on or after July 1, 2001, and before July 1, 2002, the corporation’s annual total amount of estimated tax liability exceeds $50,000.

(d) For [the payment period] payment periods beginning on or after July 1, 2002, the corporation is required to make federal estimated tax payments electronically.

(2) The Department of Revenue may accept electronically filed payments voluntarily submitted by a corporation that is not required to pay by means of electronic funds transfer.

(3) As used in this section, “electronic funds transfer” has the meaning given that term in ORS 293.525.

NOTE: Corrects applicability provision.

SECTION 31. ORS 315.167 is added to and made a part of ORS chapter 315.

NOTE: Adds statute to appropriate chapter.

SECTION 32. ORS 315.262 is amended to read:

315.262. (1) As used in this section:

(a) “Child care” means care provided to a qualifying child of the taxpayer for the purpose of allowing the taxpayer to be gainfully employed, to seek employment or to attend school on a full-time or part-time basis, except that the term does not include care provided by:

(A) The child’s parent or guardian, unless the care is provided by the parent in a licensed or registered child care facility; or

(B) A child of the taxpayer who has not yet attained 19 years of age at the close of the tax year.

(b) “Child care expenses” means the costs associated with providing child care to a qualifying child of a qualified taxpayer.

(d) “Qualified taxpayer” means a taxpayer:

(A) With at least $6,000 of earned income for the tax year;

(B) With federal adjusted gross income for the tax year that does not exceed 250 percent of the federal poverty level; and

(C) Who does not have more than the maximum amount of disqualified income under section 32(i) of the Internal Revenue Code that is allowed to a taxpayer entitled to the earned income tax credit for federal tax purposes.

(e) “Qualifying child” means a child of the taxpayer who is under 13 years of age, or who is a disabled child, as that term is defined in ORS 316.099.

(2) A qualified taxpayer shall be allowed a credit against the taxes otherwise due under ORS chapter 316 equal to the applicable percentage of the qualified taxpayer’s child care expenses (rounded to the nearest $50).

(3) The applicable percentage to be used in calculating the amount of the credit provided in this section shall be determined in accordance with the following table:

______________________________________________________________________________

Applicable Federal Adjusted

Percentage Gross Income as Percent

of Federal Poverty Level

40 200 or less

36 Greater than 200 and less than

or equal to 210

32 Greater than 210 and less than

or equal to 220

24 Greater than 220 and less than

or equal to 230

16 Greater than 230 and less than

or equal to 240

8 Greater than 240 and less than

or equal to 250

0 Greater than 250 percent

of federal poverty level

______________________________________________________________________________

(4) The credit shall be claimed on such form and containing such information as may be prescribed by the Department of Revenue.

(5) In the case of a credit allowed under this section:

(a) A nonresident shall be allowed the credit under this section in the proportion provided in ORS 316.117.

(b) If a change in the status of a taxpayer from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with ORS 316.117.

(c) If a change in the taxable year of a taxpayer occurs as described in ORS 314.085, or if the Department of Revenue terminates the taxpayer’s taxable year under ORS 314.440, the credit allowed under this section shall be prorated or computed in a manner consistent with ORS 314.085.

(d) In the case of a qualified taxpayer who is married, a credit shall be allowed under this section only if:

(A) The taxpayer files a joint return;

(B) The taxpayer files a separate return and is legally separated or subject to a separate maintenance agreement; or

(C) The taxpayer files a separate return and the taxpayer and the taxpayer’s spouse reside in separate households on the last day of the tax year with the intent of remaining in separate households in the future.

(6) The credit allowed under this section [shall] may not exceed the tax liability of the taxpayer and may not be carried forward to a succeeding tax year.

(7)(a) For tax years beginning on or after January 1, 1999, the minimum amount of earned income a taxpayer must earn in order to be a qualified taxpayer shall be adjusted by multiplying $6,000 by the ratio of the U.S. City Average Consumer Price Index for the average of the monthly indexes for the second quarter of the calendar year over the average of the monthly indexes of the second quarter of the calendar year 1998.

(b) As used in this subsection, “U.S. City Average Consumer Price Index” means the U.S. City Average Consumer Price Index for All Urban Consumers (All Items) as published by the Bureau of Labor Statistics of the United States Department of Labor.

(c) If any adjustment determined under paragraph (a) of this subsection is not a multiple of $50, the adjustment shall be rounded to the nearest multiple of $50.

NOTE: Corrects grammar.

SECTION 33. ORS 315.266 is amended to read:

315.266. (1) In addition to any other credit available for purposes of ORS chapter 316, an eligible resident individual shall be allowed a credit against the tax otherwise due under ORS chapter 316 for the tax year in an amount equal to five percent of the earned income credit allowable to the individual for the same tax year under section 32 of the Internal Revenue Code.

(2) An eligible nonresident individual shall be allowed the credit computed in the same manner and subject to the same limitations as the credit allowed a resident by subsection (1) of this section. However, the credit shall be prorated using the proportion provided in ORS 316.117.

(3) If a change in the taxable year of a taxpayer occurs as described in ORS 314.085, or if the Department of Revenue terminates the taxpayer’s taxable year under ORS 314.440, the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085.

(4) If a change in the status of a taxpayer from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with ORS 316.117.

(5) The credit allowed under this section [shall] may not exceed the tax liability of the taxpayer and may not be carried forward to a succeeding tax year.

(6) The Department of Revenue may adopt rules for purposes of this section, including but not limited to rules relating to proof of eligibility and the furnishing of information regarding the federal earned income credit claimed by the taxpayer for the tax year.

(7) Refunds attributable to the earned income credit allowed under this section shall not bear interest.

NOTE: Corrects grammar.

SECTION 34. Section 14, chapter 1000, Oregon Laws 1999, is amended to read:

Sec. 14. (1) Notwithstanding [section 10 of this 1999 Act] ORS 316.848, if the Legislative Revenue [Office] Officer reports under section 13 (2), chapter 1000, Oregon Laws 1999, [of this 1999 Act] that the revenue impact of tax deductions under [section 10 (1) of this 1999 Act] ORS 316.848 (1) for the biennium ending June 30, 2001, is likely to exceed $250,000, a deduction [shall] may not be allowed under [section 10 of this 1999 Act] ORS 316.848 for any deposits made on or after January 1, 2001, and on or before December 31, 2002.

(2) Notwithstanding [section 12 of this 1999 Act] ORS 315.271, if the Legislative Revenue [Office] Officer reports under section 13 (3), chapter 1000, Oregon Laws 1999, [of this 1999 Act] that the revenue impact of tax credits under [section 12 (1) of this 1999 Act] ORS 315.271 for the biennium ending June 30, 2001, is likely to exceed $500,000, a credit [shall] may not be allowed under [section 12 of this 1999 Act] ORS 315.271 for donations made on or after January 1, 2001, and on or before December 31, 2002.

NOTE: Corrects name reference; corrects grammar.

SECTION 35. ORS 316.099 is amended to read:

316.099. (1) As used in this section, unless the context requires otherwise:

(a) “Early intervention services” means programs of treatment and habilitation designed to address a child’s developmental deficits in sensory, motor, communication, self-help and socialization areas.

(b) “Disabled child” means a child from the age of identification of the disability to the age of 18 who has been determined eligible for early intervention services or is diagnosed for the purposes of special education as being [autistic,] mentally retarded, multidisabled, visually impaired, hearing impaired, deaf-blind, orthopedically impaired or other health impaired or as having autism, emotional disturbance or traumatic brain injury, in accordance with State Board of Education rules.

(c) “Special education” means specially designed instruction to meet the unique needs of a disabled child, including regular classroom instruction, instruction in physical education, home instruction and instruction in hospitals, institutions and special schools.

(2) The State Board of Education shall adopt rules further defining “disabled child” for purposes of this section. A diagnosis obtained for the purposes of entitlement to special education or early intervention services shall serve as the basis for a claim for the additional credit allowed under subsection (3) of this section.

(3) In addition to the personal exemption credit allowed by this chapter for state personal income tax purposes for a dependent child of the taxpayer, there shall be allowed an additional personal exemption credit for a disabled child if the child is a disabled child at the close of the tax year. The amount of the credit shall be equal to the amount allowed as the personal exemption credit for the dependent child for state personal income tax purposes for the tax year.

(4) Each taxpayer qualifying for the additional personal exemption credit allowed by this section may claim the credit on the personal income tax return. However, the claim shall be substantiated by any proof of entitlement to the credit as may be required by the state board by rule.

NOTE: Changes terms to reflect modern usage.

SECTION 36. ORS 316.109 is amended to read:

316.109. (1) [For taxable years beginning on and after January 1, 1979,] If gain on the sale of residential property is taxed under this chapter, the adjusted basis of the property for purposes of this chapter shall be the same as its adjusted basis for federal income tax purposes.

(2) A credit against the tax otherwise due under this chapter shall be allowed to the taxpayer for the amount of any taxes imposed on the taxpayer by another state of the United States, a foreign country or the District of Columbia which tax is attributable to gain [which] that is subject to tax as described in subsection (1) of this section.

(3) The amount of the credit allowed under subsection (2) of this section [shall] may not exceed the amount of the gain taxed by the other taxing jurisdiction multiplied by eight percent.

(4) The Department of Revenue shall provide by rule the procedure for obtaining credit provided by subsection (2) of this section and the proof required. The requirement of proof may be waived partially, conditionally or absolutely, as provided under ORS 315.063.

(5) [No] Any credit allowed under subsection (2) of this section [shall] may not be applied in calculating tax due under this chapter if the tax upon which the credit is based has been claimed as a deduction for Oregon personal income tax purposes, unless the tax is restored to income on the Oregon return.

NOTE: Eliminates obsolete date; conforms grammar to legislative form and style.

SECTION 37. ORS 316.127 is amended to read:

316.127. (1) The adjusted gross income of a nonresident derived from sources within this state is the sum of the following:

(a) The net amount of items of income, gain, loss and deduction entering into the nonresident’s federal adjusted gross income that are derived from or connected with sources in this state including (A) any distributive share of partnership income and deductions and (B) any share of estate or trust income and deductions; and

(b) The portion of the modifications, additions or subtractions to federal taxable income provided in this chapter and other laws of this state that relate to adjusted gross income derived from sources in this state for personal income tax purposes, including any modifications attributable to the nonresident as a partner.

(2) Items of income, gain, loss and deduction derived from or connected with sources within this state are those items attributable to:

(a) The ownership or disposition of any interest in real or tangible personal property in this state;

(b) A business, trade, profession or occupation carried on in this state; and

(c) A taxable lottery prize awarded by the Oregon State Lottery, including a taxable lottery prize awarded by a multistate lottery association of which the Oregon State Lottery is a member if the ticket upon which the prize is awarded was sold in this state.

(3) Income from intangible personal property, including annuities, dividends, interest and gains from the disposition of intangible personal property, constitutes income derived from sources within this state only to the extent that such income is from property employed in a business, trade, profession or occupation carried on in this state.

(4) Deductions with respect to capital losses, net long-term capital gains, and net operating losses shall be based solely on income, gains, losses and deductions derived from or connected with sources in this state, under regulations to be prescribed by the Department of Revenue, but otherwise shall be determined in the same manner as the corresponding federal deductions.

(5) Notwithstanding subsection (3) of this section[,]:

(a) The income of an S corporation for federal income tax purposes derived from or connected with sources in this state [does constitute] constitutes income derived from sources within this state for a nonresident individual who is a shareholder of [such a] the S corporation[,]; and

(b) A net operating loss of [such] an S corporation derived from or connected with sources in this state [does constitute] constitutes a loss or deduction connected with sources in this state for [such] a nonresident individual who is a shareholder of the S corporation.

(6) If a business, trade, profession or occupation is carried on partly within and partly without this state, the determination of net income derived from or connected with sources within this state shall be made by apportionment and allocation under ORS 314.605 to 314.675.

(7) Compensation paid by the United States for service in the Armed Forces of the United States performed by a nonresident does not constitute income derived from sources within this state.

(8) Compensation paid by the United States to a nonresident for services performed by the nonresident as an employee of the United States at a hydroelectric facility does not constitute income derived from sources within this state if the hydroelectric facility:

(a) Is owned by the United States;

(b) Is located on the Columbia River; and

(9)(a) Retirement income received by a nonresident does not constitute income derived from sources within this state unless the individual is domiciled in this state.

(b) As used in this section, “retirement income” means retirement income as that term is defined in [section 114, Title 4 of the United States Code] 4 U.S.C. 114, as amended and in effect for the tax period.

NOTE: Reorganizes subsection structure to clarify meaning; corrects grammar; conforms citation to legislative form and style.

SECTION 38. ORS 316.146 is added to and made a part of ORS chapter 316.

NOTE: Adds statute to appropriate chapter.

SECTION 39. Section 6, chapter 299, Oregon Laws 1997, is amended to read:

Sec. 6. [Sections 1 to 4 of this Act and the amendments to ORS 314.505 by section 5 of this Act shall] ORS 314.505, 314.518 and 316.198 do not alter the authority under ORS 293.525 of a state agency to require by rule that certain payments be made by electronic funds transfer.

NOTE: Conforms provisions to legislative form and style.

SECTION 40. ORS 317.057 is added to and made a part of ORS chapter 317.

NOTE: Adds statute to appropriate chapter.

SECTION 41. ORS 317.356 is amended to read:

317.356. (1) Upon the taxable sale, exchange or disposition of any asset [in a tax year beginning on or after January 1, 1983], federal taxable income shall be increased or decreased by an amount [which] that will reflect one or more of the following:

(a) The difference in basis [which] that results from the difference in depreciation, depletion or other cost recovery, or expense claimed under section 179 of the Internal Revenue Code, allowed or allowable on the Oregon return and that allowed or allowable on the federal return for that asset;

(b) The difference in basis [which] that results when a taxpayer has taken a federal credit[, which] that requires as a condition of the use of the federal credit the reduction of the basis of an asset, and the federal credit is not allowable for Oregon purposes;

(c) The difference in basis as a result of any deferral of gain [which] that has been granted under federal tax law but not under Oregon law or granted under Oregon law but not granted under federal law;

(d) The difference in basis under federal and Oregon tax law at the time the asset was acquired; or

(e) For certain health care service contractors for which federal tax exempt status was denied by section 501(m) of the Internal Revenue Code, any adjustment to the basis of an asset for purposes of calculating federal taxable gain or loss on sale, exchange or other disposition as permitted by the Tax Reform Act of 1986.

(2) There shall be added to or subtracted from federal taxable income any amount necessary to carry out the purposes of subsection (1) of this section.

NOTE: Eliminates obsolete date; corrects grammar.

SECTION 42. ORS 317.850 is amended to read:

317.850. [(1)] The net revenue from the tax imposed by this chapter, after deduction of refunds, shall be paid over to the State Treasurer and held in the General Fund as miscellaneous receipts available generally to meet any expense or obligation of the State of Oregon lawfully incurred. A working balance of unreceipted revenue from the tax imposed by this chapter may be retained for the payment of refunds, but such working balance shall not at the close of any fiscal year exceed the sum of $500,000.

[(2) The amendment of this section by the Forty-seventh Legislative Assembly shall first apply to the state levy of taxes for the fiscal year 1953-54.]

NOTE: Eliminates obsolete date.

SECTION 43. ORS 318.031 is amended to read:

318.031. It being the intention of the Legislative Assembly that this chapter and the Corporation Excise Tax Law of 1929 shall be administered as uniformly as possible (allowance being made for the difference in imposition of the taxes and the operative date of this chapter), [the provisions of] ORS 305.140 and 305.150,[and] ORS chapter 314 and [of] the following sections [of ORS chapter 315 or 317, as amended on or before August 3, 1955, and as they may thereafter be amended,] are incorporated into [this chapter by this reference] and made a part [hereof] of this chapter: ORS 315.104, 315.134, 315.156, 315.204, 315.208, 315.234, 315.254, 315.304, 315.504 and 315.604 (all only to the extent applicable for a corporation) and ORS 317.010, 317.013, 317.018 to 317.022, 317.030, 317.035, 317.038, 317.080, 317.152 to 317.154, 317.259 to 317.303, 317.310 to 317.386, 317.476 to 317.485, 317.510 to 317.635 and 317.705 to 317.725 and section 40, chapter 835, Oregon Laws 1997, and section 4, chapter 358, Oregon Laws 1999.

NOTE: Clarifies citation.

SECTION 44. ORS 321.267 is amended to read:

321.267. (1) The following timber and forestland are not subject to ORS 321.257 to 321.390:

(a) Timber and forestland assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665, 308.805 to 308.820 and 308.990.

(b) Except as provided in ORS 321.347, timber and land classified under ORS 321.705 to 321.765.

(d) Except as provided in ORS 321.347, land and Christmas trees which are grown or growing on that land which has been prepared by intensive cultivation and tilling and on which all unwanted plant growth is controlled continuously for the exclusive purpose of growing such Christmas trees.

(e) Except as provided in ORS 321.274, land and hardwood timber, including but not limited to hybrid cottonwood, which are:

(A) Grown or growing on land which has been prepared by intensive cultivation methods and which is cleared of competing vegetation for at least three years after tree planting;

(B) Of a species marketable as fiber for inclusion in the “furnish” for manufacturing paper products;

(D) Subject to intensive agricultural practices such as fertilization, insect and disease control, cultivation and irrigation.

(f)(A) Timber on land that, at the time of harvest, is assessed under ORS 308.146 (1) to (3) or specially assessed under ORS [308.370] 308A.050 to 308A.128 or 308A.300 to 308A.330, if the land was assessed under ORS 308.146 (1) to (3) or 308.232 or was specially assessed under ORS [308.370] 308A.050 to 308A.128 or 308A.300 to 308A.330 for at least five property tax years preceding the date the timber was harvested from the land.

(B) For purposes of this paragraph and ORS 321.273 (3) and (4), land that has been forestland assessed under ORS 321.354 for any of the five property tax years preceding the date the timber was harvested from the land shall be considered to be forestland assessed under ORS 321.354.

(2) The tax imposed by ORS 321.273 shall be in addition to that levied by ORS 321.005 to 321.185 and 321.560 to 321.600.

(3) Nothing contained in ORS 321.257 to 321.390 shall prevent:

(a) The collection of ad valorem property taxes which became a lien prior to January 1, 1978.

(b) The collection of taxes levied by ORS 321.005 to 321.185 and 321.560 to 321.600.

(c) Except as provided in section 45, chapter 892, Oregon Laws 1977, the collection of amounts payable upon declassification described under ORS 321.705 to 321.765.

NOTE: Corrects references to repealed provision.

SECTION 45. ORS 321.415 is amended to read:

321.415. (1) Lands assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665 or 308.805 to 308.820 and the timber thereon shall not be subject to the provisions of ORS 321.405 to 321.515.

(2) The tax imposed under the provisions of ORS 321.405 to 321.515 shall be additional to that levied under the provisions of ORS 321.005 to 321.185 and 321.560 to 321.600.

(3) Timber on timberland which is exempt from the ad valorem real property tax shall be exempt from the privilege tax imposed by ORS 321.405 to 321.515.

(4) Land used exclusively for growing cultured Christmas trees, and the cultured Christmas trees growing thereon, as defined in ORS 215.203, shall not be subject to the provisions of ORS 321.405 to 321.515 and 321.805 to 321.825.

(5) Except as provided in ORS 321.426, land and hardwood timber, including but not limited to hybrid cottonwood, shall not be subject to the provisions of ORS 321.405 to 321.515 and 321.805 to 321.825 if the land and timber are:

(a) Grown or growing on land which has been prepared by intensive cultivation methods and which is cleared of competing vegetation for at least three years after tree planting;

(b) Of a species marketable as fiber for inclusion in the “furnish” for manufacturing paper products;

(d) Subject to intensive agricultural practices such as fertilization, insect and disease control, cultivation and irrigation.

(6)(a) Timber on land that, at the time of harvest, is assessed under ORS 308.146 (1) to (3) or specially assessed under ORS [308.370] 308A.050 to 308A.128 or 308A.300 to 308A.330, if the land was assessed under ORS 308.146 (1) to (3) or 308.232 or was specially assessed under ORS [308.370] 308A.050 to 308A.128 or 308A.300 to 308A.330 for at least five property tax years preceding the date the timber was harvested from the land, shall not be subject to the provisions of ORS 321.405 to 321.515.

(b) For purposes of this subsection and ORS 321.421 (4), land that has been forestland assessed under ORS 321.812 for any of the five property tax years preceding the date the timber was harvested from the land shall be considered to be forestland assessed under ORS 321.812.

(7) Nothing contained in ORS 321.405 to 321.515 shall prevent:

(a) The collection of ad valorem property taxes which became a lien against timber prior to July 1, 1962.

(b) The collection of taxes, charges or assessments made pursuant to law for protection.

NOTE: Corrects references to repealed provision.

SECTION 46. ORS 321.487 is amended to read:

321.487. Each year when extending the operating [levies] levy of the county upon the assessment rolls, the county assessor shall offset against the levy submitted by the county the amount of revenue distributed to the county pursuant to ORS 321.485 (3)(b) and correspondingly reduce the amount of the levy to be collected through extension on the tax roll for the current fiscal year.

NOTE: Corrects terminology.

SECTION 47. ORS 321.731 is repealed.

NOTE: Repeals outdated provisions.

SECTION 48. ORS 323.320 is amended to read:

323.320. (1) The Department of Revenue shall, pursuant to rule, refund or credit to a distributor the denominated values, less the discount given on their purchase, of:

(a) Any unused or damaged stamps; or

(b) Stamps affixed to packages of cigarettes that, prior to or after distribution, have become unfit for use[,] or unsalable[,] or have been destroyed, returned for credit or replaced, [and] if the department has proof of the cigarettes not being used for smoking in the State of Oregon.

(2) Interest shall be computed, allowed and paid with respect to a refund made under this section, at the rate established under ORS 305.220 for each month or fraction of a month during a period beginning 45 days after the receipt by the department of a claim for refund.

NOTE: Corrects word choice.

SECTION 49. ORS 323.455 is amended to read:

323.455. (1) All moneys received by the Department of Revenue from the tax imposed by ORS 323.030 (1) shall be paid over to the State Treasurer to be held in a suspense account established under ORS 293.445. After the payment of refunds, 89.65 percent shall be [appropriated] credited to the General Fund, 3.45 percent [shall be] is appropriated to the cities of this state, 3.45 percent [shall be] is appropriated to the counties of this state and 3.45 percent [shall be] is continuously appropriated to the Department of Transportation for the purpose of financing and improving transportation services for elderly and disabled individuals as provided in ORS 391.800 to 391.830.

(2) The moneys so appropriated to cities and counties shall be paid on a monthly basis within 35 days after the end of the month for which a distribution is made. Each city shall receive such share of the money appropriated to all cities as its population, as determined under ORS 190.510 to 190.590 last preceding such apportionment, bears to the total population of the cities of the state, and each county shall receive such share of the money as its population, determined under ORS 190.510 to 190.590 last preceding such apportionment, bears to the total population of the state.

(3) The moneys appropriated to the Department of Transportation under subsection (1) of this section shall be distributed and transferred to the Elderly and Disabled Special Transportation Fund established by ORS 391.800 at the same time as the cigarette tax moneys are distributed to cities and counties under this section.

(4) Of the moneys [appropriated] credited to the General Fund under this section 51.92 percent shall be dedicated to funding the maintenance and expansion of the number of persons eligible for medical assistance under the Oregon Health Plan, or to funding the maintenance of the benefits available under the Oregon Health Plan, or both, and 5.77 percent shall be credited to the Tobacco Use Reduction Account established under ORS 431.832.

NOTE: Corrects terminology.

SECTION 50. ORS 341.085 is amended to read:

341.085. (1) An election for the purpose of presenting the question of formation of a district and establishing a permanent rate limit for operating taxes and the boundaries of the zones, if the zones were recommended by the State Board of Education, shall be held to submit the question to the electors registered in the proposed district designated in the recommendation of the state board. The election shall be held not sooner than the 90th day after the effective date of the appropriation required by ORS 341.102. The election date shall be uniform throughout the proposed district, and shall be set by the state board on a date specified in ORS 255.345. However, if the question of establishing a [new tax base] permanent rate limit for operating taxes is to be submitted, the election must be held on the same date as the next biennial primary election or the next general election, as determined by the state board.

(2) ORS chapter 255 and ORS 250.035 and 250.036 govern the notice and conduct of an election under this section. The state board shall be the district elections authority for an election conducted under this section. Notwithstanding ORS 255.305, the state board shall pay the expenses incurred for the election.

(3) An elector registered in a precinct or in the portion of a precinct which is located within the boundaries of the proposed district may vote on any matter arising at the election under subsection (1) of this section.

NOTE: Corrects terminology.

SECTION 51. ORS 456.661 is amended to read:

456.661. (1) The aggregate principal amount of bonds issued under ORS 456.645 that may be outstanding is $2 billion, excluding bonds issued under and within the limits provided in ORS 456.515 to 456.725 and any bonds that have been refunded under ORS 456.650 or advance refunded under ORS 288.605 to 288.690. The amount of $30 million of the total $2 billion of bonds authorized under this section or proceeds from the sale of the bonds shall be made exclusively available for making or participating in making residential loans for single-family homes in cities with a population of 300,000 or more in the manner specified in ORS 456.593. No more than $10 million of the bonds authorized under this section or proceeds from the sale of the bonds shall be made available for residential loans for home improvements.

(2) For the purpose of determining the aggregate principal amount of bonds issued or outstanding, the value of bonds shall be calculated as follows:

(a) If, upon sale, the initial reoffering price is equal to or more than 98 percent of the maturity value of the bonds, the value of the bonds shall be the maturity value on the date of the calculation.

(b) If, upon sale, the initial reoffering price is an amount less than 98 percent of the maturity value of the bonds, the value of the bonds shall be the price on any date of the calculation that would result in a yield-to-maturity equal to the yield-to-maturity at the time the bonds were sold by the state.

(3) For the purposes of the limitation contained in subsection (1) of this section, the aggregate principal amount of bonds outstanding shall be determined for any date of calculation by subtracting the aggregate value of bonds that would have matured or would have been redeemed through mandatory sinking fund payments from the aggregate value of bonds issued.

(4) The Legislative Assembly finds that section 103A of the Internal Revenue Code, as enacted by the 96th Congress of the United States:

(a) Defines qualified mortgage bonds, which are treated as exempt from federal income taxes under the code;

(b) Establishes limitations on the purposes and aggregate amount or the state ceiling of qualified mortgage bonds that may be issued within a state during any calendar year; and

(c) Authorizes the state to allocate the amount of qualified mortgage bonds within the state ceiling among the units of government having authority to issue those bonds.

(5) The Legislative Assembly further finds that:

(a) Pursuant to ORS 456.515 to 456.725, the Housing and Community Services Department has served as the sole department or instrumentality of the state authorized to coordinate and establish statewide priorities for housing programs and to provide planning and technical assistance to sponsors of housing for persons and families of lower income throughout the state.

(b) The department’s activities have been instrumental in alleviating the serious shortage of decent, safe and sanitary housing for lower income persons.

(c) Continuation of the department’s programs for financing owner-occupied residential housing to the fullest extent practicable under section 103A of the Internal Revenue Code is a matter of paramount concern to the state.

(d) Cities have issued qualified mortgage bonds to finance the rehabilitation of housing as part of urban renewal or community development plans under home rule powers or authority granted under ORS [457.010 to 457.460] chapter 457. Further, some cities now have authority to issue bonds under ORS 280.417 to 280.485. Those bonds may be considered qualified mortgage bonds under section 103A of the Internal Revenue Code when issued to finance owned units in multiunit structures.

(6) For purposes of section 103A of the Internal Revenue Code, the department shall allocate the state ceiling of qualified mortgage bonds. The department shall determine the allocations to cities as may be necessary for bonds issued as provided in subsection (7) of this section and any balance of that state ceiling shall be allocated to the department. This determination shall be made for each calendar year and shall be set forth in a Certificate of Determination signed by the director of the department and filed with the State Treasurer. The Certificate of Determination shall cover the allocation during the year or any portion thereof.

(7) The department shall allocate to cities the portions of the state ceiling as shall be necessary for bond programs specified in subsection (5)(d) of this section. Before each January 1, any city may notify the department of its intention to issue qualified mortgage bonds and of the amount of the bonds intended to be issued during the ensuing calendar year. Promptly upon determining the applicable state ceiling for that calendar year and the applicable limit for that city provided in paragraph (3) of subsection (g) of section 103A of the Internal Revenue Code, the department shall allocate to the city the lesser of the amount of that limit or the amount intended to be issued by the city. Upon request of the city, the department may increase or decrease the allocation at any time in the discretion of the director and amend the Certificate of Determination accordingly.

(8) The department shall be responsible for the designation of areas of chronic economic distress within the state for approval as provided in section 103A of the Internal Revenue Code.

NOTE: Corrects statutory reference.

SECTION 52. ORS 527.710 is amended to read:

527.710. (1) In carrying out the purposes of ORS 527.610 to 527.770, 527.990 (1) and 527.992, the State Board of Forestry shall adopt, in accordance with applicable provisions of ORS 183.310 to 183.550, rules to be administered by the State Forester establishing standards for forest practices in each region or subregion.

(2) The rules shall ensure the continuous growing and harvesting of forest tree species. Consistent with ORS 527.630, the rules shall provide for the overall maintenance of the following resources:

(a) Air quality;

(b) Water resources, including but not limited to sources of domestic drinking water;

(d) Fish and wildlife.

(3)(a) In addition to its rulemaking responsibilities under subsection (2) of this section, the board shall collect and analyze the best available information and establish inventories of the following resource sites needing protection:

(A) Threatened and endangered fish and wildlife species identified on lists that are adopted, by rule, by the State Fish and Wildlife Commission or are federally listed under the Endangered Species Act of 1973 as amended;

(B) Sensitive bird nesting, roosting and watering sites;

(D) Significant wetlands.

(b) The board shall determine whether forest practices would conflict with resource sites in the inventories required by paragraph (a) of this subsection. If the board determines that one or more forest practices would conflict with resource sites in the inventory, the board shall consider the consequences of the conflicting uses and determine appropriate levels of protection.

(c) Based upon the analysis required by paragraph (b) of this subsection, and consistent with the policies of ORS 527.630, the board shall adopt rules appropriate to protect resource sites in the inventories required by paragraph (a) of this subsection.

(4) Before adopting rules under subsection (1) of this section, the board shall consult with other agencies of this state or any of its political subdivisions that have functions with respect to the purposes specified in ORS 527.630 or programs affected by forest operations. Agencies and programs subject to consultation under this subsection include, but are not limited to:

(a) Air and water pollution programs administered by the Department of Environmental Quality under ORS chapters 468A and 468B and ORS 477.013 and 477.515 to 477.532;

(b) Mining operation programs administered by the Department of Geology and Mineral Industries under ORS 516.010 to 516.130 and ORS chapter 517;

(c) Game fish and wildlife, commercial fishing, licensing, wildlife and bird refuge and fish habitat improvement tax incentive programs administered by the State Department of Fish and Wildlife under ORS 272.060, 315.134 and ORS chapters 496, 498, 501, 506 and 509;

(d) Park land, Willamette River Greenway, scenic waterway and recreation trail programs administered by the State Parks and Recreation Department under ORS 358.475 to 358.565, 390.310 to 390.368, 390.805 to 390.925, 390.950 to 390.989 and 390.121;

(e) The programs administered by the Columbia River Gorge Commission under Public Law 99-663 and ORS 196.110 and 196.150;

(f) Removal and fill, natural heritage conservation and natural heritage conservation tax incentive programs administered by the State Land Board and the Division of State Lands under ORS 196.800 to 196.900, 273.553 to 273.591[, 307.550, 307.560] and 541.700 to 541.990;

(g) Federal Safe Drinking Water Act programs administered by the Health Division under ORS 448.273 to 448.990;

(h) Natural heritage conservation programs administered by the Natural Heritage Advisory Council under ORS 273.553 to 273.591[, 307.550 and 307.560];

(i) Open space land tax incentive programs administered by cities and counties under ORS 308A.300 to 308A.330;

(j) Water resources programs administered by the Water Resources Department under ORS 536.220 to 536.540; and

(k) Pesticide control programs administered by the State Department of Agriculture under ORS chapter 634.

(5) In carrying out the provisions of subsection (4) of this section, the board shall consider and accommodate the rules and programs of other agencies to the extent deemed by the board to be appropriate and consistent with the purposes of ORS 527.630.

(6) The board shall adopt rules to meet the purposes of another agency’s regulatory program where it is the intent of the board to administer the other agency’s program on forestland and where the other agency concurs by rule. An operation performed in compliance with the board’s rules shall be deemed to comply with the other agency’s program.

(7)(a) The board may enter into cooperative agreements or contracts necessary in carrying out the purposes specified in ORS 527.630, including but not limited to stewardship agreements as described in ORS 527.662.

(b) The State Forestry Department shall enter into agreements with appropriate state agencies for joint monitoring of the effectiveness of forest practice rules in protecting forest resources and water quality.

(8) If based upon the analysis required in section 15 (2)(f), chapter 919, Oregon Laws 1991, and as the results become available, the board determines that additional rules are necessary to protect forest resources pursuant to ORS 527.630, the board shall adopt forest practice rules that reduce to the degree practicable the adverse impacts of cumulative effects of forest practices on air and water quality, soil productivity, fish and wildlife resources and watersheds. Such rules shall include a process for determining areas where adverse impacts from cumulative effects have occurred or are likely to occur, and may require that a written plan be submitted for harvests in such areas.

(9)(a) The State Forester, in cooperation with the State Department of Fish and Wildlife, shall identify streams for which restoration of habitat would be environmentally beneficial. The State Forester shall select as a priority those streams where restoration efforts will provide the greatest benefits to fish and wildlife, and to streambank and streambed stability.

(b) For those streams identified in paragraph (a) of this subsection, the State Forester shall encourage landowners to enter into cooperative agreements with appropriate state agencies for conduct of restoration activities.

(c) The board, in consultation with appropriate state agencies, shall study and identify methods for restoring or enhancing fish and wildlife populations through restoration and rehabilitation of sites beneficial to fish and wildlife.

(d) The board shall adopt rules to implement the findings of this subsection.

(10) The board shall adopt rules that provide the State Forester with authority to condition the approval of plans required under ORS 527.670 (2) and (3) when the State Forester makes a determination that there is evidence of a potential threat to resources protected under this section by controlling method, timing and extent of harvest when the forester determines such limitations are necessary to achieve the objectives of ORS 527.630.

(11) In addition to its responsibilities under subsections (1) to (3) of this section, the board shall adopt rules to reduce the risk of serious bodily injury or death caused by a rapidly moving landslide directly related to forest practices. The rules shall consider the exposure of the public to these safety risks and shall include appropriate practices designed to reduce the occurrence, timing or effects of rapidly moving landslides. As used in this subsection, “rapidly moving landslide” has the meaning given that term in ORS 195.250.

NOTE: Deletes references to repealed provisions. (See section 16 of this 2001 Act.)

Approved by the Governor April 23, 2001

Filed in the office of Secretary of State April 23, 2001

Effective date January 1, 2002

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