Chapter 816 Oregon Laws 2001

AN ACT

HB 2162

Relating to taxation; creating new provisions; amending ORS 321.307, 321.353, 321.356, 321.720, 321.811 and 321.814; appropriating money; and prescribing an effective date.

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

SECTION 1. ORS 321.307 is amended to read:

321.307. (1) The revenue from the taxes imposed by ORS 321.273 shall be remitted by the Department of Revenue to the State Treasurer who shall deposit it in a suspense account, separate and distinct from the General Fund, established under the provisions of ORS 293.445 which shall be known as the Western Oregon Timber Tax Account. Interest earned on cash balances invested by the State Treasurer shall be credited to this account. Moneys are appropriated continuously from the Western Oregon Timber Tax Account for use in reimbursing the General Fund for expenses incurred in the collection of taxes imposed by ORS 321.273 and other expenses associated with forest taxation, and for costs incurred by the State Forestry Department in carrying out ORS 315.104 and 321.705 to 321.765 [for the period beginning July 1, 1999, and ending July 1, 2001] for the period beginning July 1, 2001, and ending July 1, 2003.

(2) Notwithstanding the provisions of ORS 291.238, the amount of moneys necessary to pay refunds of the taxes imposed by ORS 321.273 is appropriated continuously to the department and shall be used by the department for the payment of all refunds of taxes imposed by ORS 321.273 which have been audited and approved by the department. This appropriation shall be from the Western Oregon Timber Tax Account. Any penalties, interest and taxes due from the taxpayer on account of taxes imposed by ORS 321.273 shall be applied in that order in computing any refund, and only the balance due the taxpayer, if any, shall be refunded.

(3) Moneys remaining in the Western Oregon Timber Tax Account following the appropriations described in subsections (1) and (2) of this section shall be distributed as follows:

(a) Sixty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.353 (6) to (9) shall be distributed as follows:

(A) Ninety-three percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the State School Fund for the purposes for which State School Fund moneys may be spent.

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(b) Thirty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.353 (6) to (9) shall be distributed to county general funds of western Oregon counties.

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(4)(a) Moneys that are to be distributed to western Oregon counties under subsection (3)(b) of this section shall be distributed to each western Oregon county in the proportion that the assessed value of forestland in the county for the preceding fiscal year bears to the total assessed value of forestland for the preceding fiscal year.

(b) The Department of Revenue may adopt rules to further implement the distribution calculation described in this subsection.

(5) All moneys distributed to counties pursuant to subsection (4) of this section are continuously appropriated to the counties to which the moneys are distributed. On or before August 31 of each fiscal year, the department shall determine the amount distributable to counties from the Western Oregon Timber Tax Account as of May 15 of the preceding fiscal year, and shall remit to the counties the amounts so determined. The department shall certify to the county assessor the amount remitted to the county under this subsection.

(6) The amount of Western Oregon Timber Tax Account moneys to be transferred for a fiscal year under subsection (3)(a) and (c) of this section shall be determined as of May 15 of the fiscal year and transferred on or before May 31 of the fiscal year in which the distribution is being made.

(7) A working balance may be retained in the Western Oregon Timber Tax Account for the payment of administrative expenses described in subsection (1) of this section.

SECTION 2. (1) The State Forestry Department shall convene a working group to review state tax policies affecting family and nonindustrial small tract forestland in Oregon. In the course of the review conducted by the working group, the working group shall consider:

(a) The interest of the state in encouraging diverse management and uses of family and nonindustrial small tract forestland;

(b) The contribution of family and nonindustrial small tract forestland to a healthy ecosystem;

(c) Special issues associated with family and nonindustrial small tract forestland ownership; and

(d) Any other values or principles the working group finds relevant to the development of state tax policy concerning family and nonindustrial small tract forestland in this state.

(2) The working group shall consist of representatives of family and nonindustrial small tract forestland owners from eastern Oregon and western Oregon, the conservation community, county assessors, the Department of Revenue and the State Forestry Department.

(3) The working group shall report the results of the group’s review of state tax policies affecting family and nonindustrial small tract forestland, including any recommendations for changes in those policies, to those committees of the Seventy-second Legislative Assembly having jurisdiction over revenue matters.

(4) As used in this section, “family and nonindustrial small tract forestland” refers to forestland held in common ownership of less than 5,000 acres.

SECTION 3. ORS 321.353, as amended by section 14, chapter 1078, Oregon Laws 1999, is amended to read:

321.353. (1) The assessed value of forestland in western Oregon shall be determined as provided in subsection (8) of this section.

(2) Notwithstanding ORS 308.205, 308.232 or 321.352 or other law and subject to subsection (3) of this section, forestland in western Oregon shall be considered to have a specially assessed value per acre in accordance with the following schedule:

______________________________________________________________________________

Land Class Value Per Acre

FA......................... $720

FB......................... $619

FC......................... $396

FD......................... $299

FE......................... $171

FF........................... $42

FG............................. $7

FX............................. $1

______________________________________________________________________________

(3)(a)(A) For tax years beginning on or after July 1, 1995, and before July 1, 2001, the values per acre of forestland as determined under subsection (2) of this section shall be adjusted according to the change calculated under this paragraph.

(B) The Department of Revenue shall determine the assessed values of forestland by multiplying the assessed values of the forestland for the previous year by the value index calculated by the department and certified to the appropriate county assessors under subsection (4) of this section. For the tax year beginning July 1, 1995, the “assessed values of the forestland for the previous year” means the values set forth in subsection (2) of this section.

(C) As used in this paragraph, “value index” means the number 1.0 plus the decimal equivalent of 50 percent of the change, whether positive or negative, in the Average Western Oregon Log Value, as defined in ORS 321.257 (1997 Edition) for:

(i) The current and seven preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1995;

(ii) The current and nine preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1996;

(iii) The current and 11 preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1997; and

(iv) The current and 13 preceding six-month periods when compared with a similar calculation made one year previously for all tax years beginning on or after July 1, 1998.

(D) As used in this paragraph, “current” means the six-month period last ending before the calculation is made.

(E) For purposes of determining forestland values under this paragraph, forestland in western Oregon shall be divided into those land market areas as the department shall establish by rule.

(b)(A) For the tax year beginning July 1, 2001, and for each tax year thereafter, the values per acre of forestland shall be determined by the department by multiplying the values per acre for the previous tax year by the value index calculated by the department and certified to the appropriate county assessor under subsection (4) of this section.

(B) As used in this paragraph, “value index” means the number 1.0 plus the decimal equivalent of one-half of the percentage change, whether positive or negative, in the average of the Average Pacific Northwest Coast Lumber Price Index values over the seven preceding one-year (calendar) periods when compared with the corresponding average calculated with respect to the previous year.

(4) Prior to July 1 of each tax year, the department shall determine and certify to the appropriate county assessor the values of forestland in western Oregon. Except as provided in ORS 321.352 (6), the county assessor shall use the value so certified in the preparation of the assessment and tax rolls of the county each tax year.

(5) ORS 321.352 (5) to (7) apply to the forestland values determined under this section.

(6) For the tax year beginning July 1, 1995, and for each tax year thereafter that begins before July 1, 2003, forestland in western Oregon that is not assessed under ORS 321.354 shall be subject to ad valorem taxation at the same rates as nonforestland similarly situated. However, the assessed value for taxation of such forestland shall not exceed 20 percent of its value determined under ORS 321.352 to 321.381.

(7) For each land class described in subsection (2) of this section, the forestland maximum assessed value per acre of forestland assessed under this section shall equal 103 percent of the forestland maximum assessed value per acre for the preceding assessment year.

(8) The assessor shall compute the assessed value of forestland by taking the lesser of the value established under subsection (6) of this section or subsection (7) of this section and multiplying the value by the acreage of the forestland.

(9) For the first assessment year for which property is designated as forestland, the forestland’s assessed value shall be determined as provided in subsection (8) of this section.

SECTION 4. ORS 321.356 is amended to read:

321.356. (1) For the tax year beginning July 1, 2003, forestland subject to assessment under ORS 321.353 (6) to (9) for the previous tax year shall be disqualified from such assessment. For the tax year beginning July 1, 2003, and for each tax year thereafter, the forestland described in this [subsection] section shall be assessed as provided in ORS 321.354.

[(2) Notwithstanding subsection (1) of this section, an owner of forestland that is held in common ownership of less than 5,000 acres may elect to have all of the forestland owned by the owner be assessed under ORS 321.353 (6) to (9).]

[(3) The election under subsection (2) of this section shall be made by filing an election form with the Department of Revenue. The form shall contain any information required by the department, including a list of the tax lots or account numbers of forestland owned or held in common ownership by the owner. The form shall contain an affirmation that the statements made on the form are true.]

[(4)(a) An election shall be filed with the department on or before April 1 preceding the first tax year for which the election is to be in effect.]

[(b) Notwithstanding paragraph (a) of this section, an election may be filed under this section on or before December 31 of the first tax year for which the election is to be in effect, if accompanied by a late filing fee equal to the greater of $200 or one-tenth of one percent of the assessed value of the forestland immediately prior to the filing of the election.]

[(5) An election shall first apply to the determination of privilege taxes imposed under ORS 321.273 for the calendar year in which the election is made.]

[(6) Forestland assessed under ORS 321.354 shall continue to be assessed under ORS 321.354 following a change in ownership to an owner that owns forestland that is assessed under ORS 321.353 (6) to (9). Following the change in ownership, the new owner may file an additional election under subsection (2) of this section. The election applies to all forestland owned or held in common ownership by the owner.]

[(7)] (2) Additional taxes may not be imposed as a result of a disqualification under this section.

[(8)] (3) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification under this section.

[(9) The provisions of ORS 321.354 (5)(b) apply to this section.]

SECTION 5. ORS 321.720 is amended to read:

321.720. (1) The assessed value of forestland classified under ORS 321.705 to 321.765 shall be determined as provided in subsection (7) of this section for tax years beginning before July 1, 2003.

(2) Notwithstanding ORS 308.205 or any other provision of law forestland in western Oregon classified under the provisions of ORS 321.705 to 321.765 shall be considered to have a value per acre for a site class equal to the value per acre the forestland would have under ORS 321.353 if the forestland were subject to ORS 321.257 to 321.390.

(3) The values determined under subsection (2) of this section shall first apply to the July 1 assessment date for which the application for classification of the land is made with the State Forester under ORS 321.730. The site class used in subsection (2) of this section shall be the average site class certified for the land by the State Forester.

(4) Conversion of average site class to forestland class for the purpose of determining the value per acre that the forestland would have under ORS 321.353 if the forestland were subject to ORS 321.257 to 321.390 shall be made in accordance with the following schedule:

______________________________________________________________________________

Site Class Land Class

I FA

II FC

III FD

IV FF

V FG

______________________________________________________________________________

(5) Timber on forestland classified under ORS 321.705 to 321.765 shall be exempt from separate ad valorem taxation.

(6) Forestland classified under ORS 321.705 to 321.765 shall have a maximum assessed value per acre equal to 103 percent of the forestland’s maximum assessed value per acre for the preceding assessment year.

(7) The assessor shall compute the assessed value of forestland classified under ORS 321.705 to 321.765 by taking the lesser of the value established per acre under subsection (2) of this section or subsection (6) of this section for the applicable site class for the forestland and multiplying the value by the acreage of the forestland.

(8) For the first assessment year for which property is classified under ORS 321.705 to 321.765, the forestland’s assessed value shall be determined as provided in subsection (7) of this section.

SECTION 6. Section 7 of this 2001 Act is added to and made a part of ORS 321.705 to 321.765.

SECTION 7. (1) For the tax year beginning July 1, 2003, forestland classified under ORS 321.705 to 321.765 shall be declassified from such classification. For the tax year beginning July 1, 2003, and for each tax year thereafter, the forestland described in this section shall be assessed as provided in ORS 321.354.

(2) Additional taxes may not be imposed as a result of a declassification under this section.

(3) The notification requirements and other procedures that the State Forester and county assessor must follow in declassifying forestland do not apply to a declassification under this section.

(4) A declassification of forestland classified under ORS 321.705 to 321.765 constitutes a disqualification for purposes of section 11, Article XI of the Oregon Constitution.

SECTION 8. ORS 321.811, as amended by section 46, chapter 1078, Oregon Laws 1999, is amended to read:

321.811. (1) The assessed value of forestland in eastern Oregon shall be determined as provided in subsection (10) of this section.

(2) Notwithstanding ORS 308.205 and 308.235, and for purposes of ORS 308.232, the specially assessed value of forestland shall be determined under subsections (2) to (8) of this section. Land that has been designated as forestland under ORS 321.805 to 321.825 shall be valued as forestland under subsections (2) to (7) of this section and shall be noted on the assessment and tax roll as being forestland potentially subject to additional taxes under ORS 308A.700 to 308A.733.

(3) Subject to subsection (4) of this section, for tax years beginning on or after July 1, 1995, forestland shall be considered, for purposes of ORS 321.805 to 321.825, to have a value of $42 per acre.

(4) Each tax year beginning on or after July 1, 1995, the value of forestland shall be determined by multiplying the value of the forestland for the previous tax year by the value index calculated by the Department of Revenue and certified to the appropriate county assessors under subsection (5) of this section.

(5) The Department of Revenue shall calculate, and certify to each county assessor on or before August 15 of each tax year the value index to be used in the calculation of the value of forestland as of the assessment date immediately preceding. Except as provided in ORS 321.810 (6), the county assessor shall use the index so certified in the preparation of the assessment and tax roll.

(6) As used in subsections (2) to (7) of this section, “ value index” means the number 1.0 plus the decimal equivalent of one-half of the percentage change, whether positive or negative, in the average of the Average Pacific Northwest Inland Lumber Price Index values over the five preceding one-year (calendar) periods when compared with the corresponding average calculated with respect to the previous year.

(7) ORS 321.810 (5) to (7) apply to the forestland values determined under subsections (2) to (7) of this section.

(8) For the tax year beginning July 1, 1995, and for each tax year thereafter that begins before July 1, 2003, forestland that is not assessed under ORS 321.812 shall be subject to ad valorem property taxation at the same rates as nonforestland similarly situated. However, the assessed value for taxation of such forestland shall not exceed 20 percent of its value determined under subsections (2) to (7) of this section.

(9) Forestland assessed under this section shall have a maximum assessed value per acre equal to 103 percent of the forestland’s maximum assessed value per acre for the preceding assessment year.

(10) The assessor shall compute the assessed value of forestland by taking the lesser of the value established under subsection (8) of this section or subsection (9) of this section and multiplying the value by the acreage of the forestland.

(11) For the first assessment year for which property is designated as forestland, the forestland’s assessed value shall be determined as provided in subsection (10) of this section.

SECTION 9. ORS 321.814 is amended to read:

321.814. (1) For the tax year beginning July 1, 2003, forestland subject to assessment under ORS 321.811 (8) to (11) for the previous tax year shall be disqualified from such assessment, and shall be assessed as provided in ORS 321.812.

[(4)(a) An election shall be filed with the department on or before April 1 preceding the first tax year for which the election is to be in effect.]

[(5) An election shall first apply to the determination of privilege taxes imposed under ORS 321.421 for the calendar year in which the election is made.]

[(6) Forestland assessed under ORS 321.812 shall continue to be assessed under ORS 321.812 following a change in ownership to an owner that owns forestland that is assessed under ORS 321.811 (8) to (11). Following the change in ownership, the new owner may file an additional election under subsection (2) of this section. The election applies to all forestland owned or held in common ownership by the owner.]

[(7)] (2) Additional taxes may not be imposed as a result of a disqualification under this section.

[(8)] (3) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification under this section.

[(9) The provisions of ORS 321.812 (5)(b) apply to this section.]

SECTION 10. In addition to and not in lieu of any other appropriation, there is appropriated to the State Forestry Department, for the biennium beginning July 1, 2001, out of the General Fund, the amount of $50,000 for the purpose of paying the expenses of the working group established under section 2 of this 2001 Act.

SECTION 11. Notwithstanding ORS 321.307 (3) and 321.485 (3), moneys are appropriated continuously from the Western Oregon Timber Tax Account and the Eastern Oregon Timber Tax Account for use in reimbursing the General Fund for amounts appropriated to the State Forestry Department for the purpose of paying the expenses of the working group established under section 2 of this 2001 Act.

SECTION 12. This 2001 Act takes effect on the 91st day after the date on which the regular session of the Seventy-first Legislative Assembly adjourns sine die.

Approved by the Governor July 20, 2001

Filed in the office of Secretary of State July 20, 2001

Effective date October 6, 2001

__________