71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 983
 
                           A-Engrossed
 
                         House Bill 2162
                   Ordered by the House May 7
             Including House Amendments dated May 7
 
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of Governor John A. Kitzhaber,
  M.D., for State Forestry Department)
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
 
    { - Eliminates - }   { + Extends + } sunset date for funding
to State Forestry Department for administration of reforestation
tax program and Western Oregon Small Tract Optional Tax program.
 { +  Requires department to convene working group to review tax
policy for family and nonindustrial small tract forestland.
Eliminates optional property tax program for small tract
forestland beginning July 1, 2003. + }
  Takes effect 91 days after date Seventy-first Legislative
Assembly adjourns sine die.
 
                        A BILL FOR AN ACT
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.
  (c) The balance of the account 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.
  (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:
_________________________________________________________________
 
____NOTE_TO_GOPHER_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
 Land ClValue Per Acre
 
____NOTE_TO_GOPHER_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
     FA...........$720
     FB...........$619
     FC...........$396
     FD...........$299
     FE...........$171
     FF............$42
     FG.............$7
     FX.............$1
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
_________________________________________________________________
  (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:
_________________________________________________________________
 
____NOTE_TO_GOPHER_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
  Site ClassLand Class
 
____NOTE_TO_GOPHER_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
 
     I          FA
     II         FC
     III        FD
     IV         FF
     V          FG
_________________________________________________________________
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
  (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.
    { - (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 321.811 (8) to (11). - }
    { - (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 321.421 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. + }
                         ----------