72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
 
SA to A-Eng. HB 2186 (A to RC)
 
LC 645/HB 2186-A8
 
                      SENATE AMENDMENTS TO
                   A-ENGROSSED HOUSE BILL 2186
           (INCLUDING AMENDMENTS TO RESOLVE CONFLICTS)
 
                     By COMMITTEE ON REVENUE
 
                             May 12
 
  On page 4 of the printed A-engrossed bill, delete lines 6
through 45 and delete pages 5 and 6.
  On page 7, delete lines 1 through 35 and insert:
  '  { +  SECTION 6. + } ORS 310.140, as amended by section 24,
chapter 46, Oregon Laws 2003 (Enrolled House Bill 2424), is
amended to read:
  ' 310.140. The Legislative Assembly finds that section 11b,
Article XI of the Oregon Constitution, was drafted by citizens
and placed before the voters of the State of Oregon by initiative
petition. Section 11b, Article XI of the Oregon Constitution,
uses terms that do not have established legal meanings and
require definition by the Legislative Assembly. Section 11b,
Article XI of the Oregon Constitution, was amended by section 11
(11), Article XI of the Oregon Constitution. This section is
intended to interpret the terms of section 11b, Article XI of the
Oregon Constitution, as originally adopted and as amended by
section 11 (11), Article XI of the Oregon Constitution,
consistent with the intent of the people in adopting these
provisions, so that the provisions of section 11b, Article XI of
the Oregon Constitution, may be given effect uniformly throughout
the State of Oregon, with minimal confusion and misunderstanding
by citizens and affected units of government. As used in the
revenue and tax laws of this state, and for purposes of section
11b, Article XI of the Oregon Constitution:
  ' (1) 'Actual cost' means all direct or indirect costs incurred
by a government unit in order to deliver goods or services or to
undertake a capital construction project. The ' actual cost' of
providing goods or services to a property or property owner
includes the average cost or an allocated portion of the total
amount of the actual cost of making a good or service available
to the property or property owner, whether stated as a minimum,
fixed or variable amount. 'Actual cost' includes, but is not
limited to, the costs of labor, materials, supplies, equipment
rental, property acquisition, permits, engineering, financing,
reasonable program delinquencies, return on investment, required
fees, insurance, administration, accounting, depreciation,
amortization, operation, maintenance, repair or replacement and
debt service, including debt service payments or payments into
reserve accounts for debt service and payment of amounts
necessary to meet debt service coverage requirements.
  ' (2) 'Assessment for local improvement' means any tax, fee,
charge or assessment that does not exceed the actual cost
incurred by a unit of government for design, construction and
financing of a local improvement.
  ' (3) 'Bonded indebtedness' means any formally executed written
agreement representing a promise by a unit of government to pay
to another a specified sum of money, at a specified date or dates
at least one year in the future.
  ' (4) 'Capital construction':
  ' (a) For bonded indebtedness issued prior to December 5, 1996,
and for the proceeds of any bonded indebtedness approved by
electors prior to December 5, 1996, that were spent or
contractually obligated to be spent prior to June 20, 1997, means
the construction, modification, replacement, repair, remodeling
or renovation of a structure, or addition to a structure, that is
expected to have a useful life of more than one year, and
includes, but is not limited to:
  ' (A) Acquisition of land, or a legal interest in land, in
conjunction with the capital construction of a structure.
  ' (B) Acquisition, installation of machinery or equipment,
furnishings or materials that will become an integral part of a
structure.
  ' (C) Activities related to the capital construction, such as
planning, design, acquisition of interim or permanent financing,
research, land use and environmental impact studies, acquisition
of permits or licenses or other services connected with the
construction.
  ' (D) Acquisition of existing structures, or legal interests in
structures, in conjunction with the capital construction.
  ' (b) For bonded indebtedness issued on or after December 5,
1996, except for the proceeds of any bonded indebtedness approved
by electors prior to December 5, 1996, that were spent or
contractually obligated to be spent before June 20, 1997, has the
meaning given that term in paragraph (a) of this subsection,
except that 'capital construction':
  ' (A) Includes public safety and law enforcement vehicles with
a projected useful life of five years or more; and
  ' (B) Does not include:
  ' (i) Maintenance and repairs, the need for which could be
reasonably anticipated;
  ' (ii) Supplies and equipment that are not intrinsic to the
structure; or
  ' (iii) Furnishings, unless the furnishings are acquired in
connection with the acquisition, construction, remodeling or
renovation of a structure, or the repair of a structure that is
required because of damage or destruction of the structure.
  ' (5) 'Capital improvements':
  ' (a) For bonded indebtedness issued prior to December 5, 1996,
and for the proceeds of any bonded indebtedness approved by
electors before December 5, 1996, that were spent or
contractually obligated to be spent before June 20, 1997, means
land, structures, facilities, as that term is defined in ORS
288.805, machinery, equipment or furnishings having a useful life
longer than one year.
  ' (b) For bonded indebtedness issued on or after December 5,
1996, except for the proceeds of any bonded indebtedness approved
by electors prior to December 5, 1996, that were spent or
contractually obligated to be spent before June 20, 1997, has the
meaning given that term in paragraph (a) of this subsection,
except that 'capital improvements':
  ' (A) Includes public safety and law enforcement vehicles with
a projected useful life of five years or more; and
  ' (B) Does not include:
  ' (i) Maintenance and repairs, the need for which could be
reasonably anticipated;
  ' (ii) Supplies and equipment that are not intrinsic to the
structure; or
  ' (iii) Furnishings, unless the furnishings are acquired in
connection with the acquisition, construction, remodeling or
renovation of a structure, or the repair of a structure that is
required because of damage or destruction of the structure.
  ' (6) 'Direct consequence of ownership' means that the
obligation of the owner of property to pay a tax arises solely
because that person is the owner of the property, and the
obligation to pay the tax arises as an immediate and necessary
result of that ownership without respect to any other intervening
transaction, condition or event.
  ' (7)(a) 'Exempt bonded indebtedness' means:
  ' (A) Bonded indebtedness authorized by a specific provision of
the Oregon Constitution;
  ' (B) Bonded indebtedness incurred or to be incurred for
capital construction or capital improvements that was issued as a
general obligation of the issuing governmental unit on or before
November 6, 1990;
  ' (C) Bonded indebtedness incurred or to be incurred for
capital construction or capital improvements that was issued as a
general obligation of the issuing governmental unit after
November 6, 1990, with the approval of the electors of the
issuing governmental unit; or
  ' (D) Bonded indebtedness incurred or to be incurred for
capital construction or capital improvements, if the issuance of
the bonds is approved by voters on or after December 5, 1996, in
an election that is in compliance with the voter participation
requirements of section 11 (8), Article XI of the Oregon
Constitution.
  ' (b) 'Exempt bonded indebtedness' includes bonded indebtedness
issued to refund or refinance any bonded indebtedness described
in paragraph (a) of this subsection.
  ' (8)(a) 'Incurred charge' means a charge imposed by a unit of
government on property or upon a property owner that does not
exceed the actual cost of providing goods or services and that
can be controlled or avoided by the property owner because:
  ' (A) The charge is based on the quantity of the goods or
services used, and the owner has direct control over the
quantity;
  ' (B) The goods or services are provided only on the specific
request of the property owner; or
  ' (C) The goods or services are provided by the government unit
only after the individual property owner has failed to meet
routine obligations of ownership of the affected property, and
such action is deemed necessary by an appropriate government unit
to enforce regulations pertaining to health or safety.
  ' (b) For purposes of this subsection, an owner of property may
control or avoid an incurred charge if the owner is capable of
taking action to affect the amount of a charge that is or will be
imposed or to avoid imposition of a charge even if the owner must
incur expense in so doing.
  ' (c) For purposes of paragraph (a)(A) of this subsection, an
owner of property has direct control over the quantity of goods
or services if the owner of property has the ability, whether or
not that ability is exercised, to determine the quantity of goods
or services provided or to be provided.
  ' (9)(a) 'Local improvement' means a capital construction
project, or part thereof, undertaken by a governmental unit,
pursuant to ORS 223.387 to 223.399, or pursuant to a local
ordinance or resolution prescribing the procedure to be followed
in making local assessments for benefits from a local improvement
upon the lots that have been benefited by all or a part of the
improvement:
  ' (A) That provides a special benefit only to specific
properties or rectifies a problem caused by specific properties;
  ' (B) The costs of which are assessed against those properties
in a single assessment upon the completion of the project; and
  ' (C) For which the property owner may elect to make payment of
the assessment plus appropriate interest over a period of at
least 10 years.
  ' (b) For purposes of paragraph (a) of this subsection, the
status of a capital construction project as a local improvement
is not affected by the accrual of a general benefit to property
other than the property receiving the special benefit.
 
  ' (10) 'Maintenance and repairs, the need for which could be
reasonably anticipated':
  ' (a) Means activities, the type of which may be deducted as an
expense under the provisions of the federal Internal Revenue
Code, as amended and in effect on December 31,   { - 2000 - }
 { +  2002 + }, that keep the property in ordinarily efficient
operating condition and that do not add materially to the value
of the property nor appreciably prolong the life of the property;
  ' (b) Does not include maintenance and repair of property that
is required by damage, destruction or defect in design, or that
was otherwise not reasonably expected at the time the property
was constructed or acquired, or the addition of material that is
in the nature of the replacement of property and that arrests the
deterioration or appreciably prolongs the useful life of the
property; and
  ' (c) Does not include street and highway construction, overlay
and reconstruction.
  ' (11) 'Projected useful life' means the useful life, as
reasonably estimated by the unit of government undertaking the
capital construction or capital improvement project, beginning
with the date the property was acquired, constructed or
reconstructed and based on the property's condition at the time
the property was acquired, constructed or reconstructed.
  ' (12) 'Routine obligations of ownership' means a standard of
operation, maintenance, use or care of property established by
law, or if established by custom or common law, a standard that
is reasonable for the type of property affected.
  ' (13) 'Single assessment' means the complete assessment
process, including preassessment, assessment or reassessment, for
any local improvement authorized by ORS 223.387 to 223.399, or a
local ordinance or resolution that provides the procedure to be
followed in making local assessments for benefits from a local
improvement upon lots that have been benefited by all or part of
the improvement.
  ' (14) 'Special benefit only to specific properties' shall have
the same meaning as 'special and peculiar benefit' as that term
is used in ORS 223.389.
  ' (15) 'Specific request' means:
  ' (a) An affirmative act by a property owner to seek or obtain
delivery of goods or services;
  ' (b) An affirmative act by a property owner, the legal
consequence of which is to cause the delivery of goods or
services to the property owner; or
  ' (c) Failure of an owner of property to change a request for
goods or services made by a prior owner of the property.
  ' (16) 'Structure' means any temporary or permanent building or
improvement to real property of any kind that is constructed on
or attached to real property, whether above, on or beneath the
surface.
  ' (17) 'Supplies and equipment intrinsic to a structure ' means
the supplies and equipment that are necessary to permit a
structure to perform the functions for which the structure was
constructed, or that will, upon installation, constitute fixtures
considered to be part of the real property that is comprised, in
whole or part, of the structure and land supporting the
structure.
  ' (18) 'Tax on property' means any tax, fee, charge or
assessment imposed by any government unit upon property or upon a
property owner as a direct consequence of ownership of that
property, but does not include incurred charges or assessments
for local improvements. As used in this subsection, 'property'
means real or tangible personal property, and intangible property
that is part of a unit of real or tangible personal property to
the extent that such intangible property is subject to a tax on
property.'.
  On page 12, delete lines 4 through 21 and insert:
  ' (b) Except where the Legislative Assembly has provided
otherwise, a reference to the laws of the United States or to the
Internal Revenue Code refers to the laws of the United States or
to the Internal Revenue Code as they are amended and in effect:
  ' (A) On December 31, 2002; or
  ' (B) If related to the definition of taxable income and
attributable to a change in the laws of the United States or in
the Internal Revenue Code that is enacted after December 31,
2005, as applicable to the tax year of the taxpayer.
  ' (c) A reference to the laws of the United States or to the
Internal Revenue Code refers to the laws of the United States or
to the Internal Revenue Code as they are amended and in effect
and applicable for the tax year of the taxpayer, if the reference
relates to:
  ' (A) Pension, profit-sharing or stock bonus plans, deferred
compensation plans, employee stock ownership plans, individual
retirement accounts (including Roth individual retirement
accounts), medical savings accounts, education IRAs, qualified
tuition savings programs or other tax-deferred or tax-exempt
savings programs benefiting individuals; or
  ' (B) The allowance and amount of a deduction under section 167
or 168 or another provision of the Internal Revenue Code, to the
allowance and amount of a deduction for expensing depreciable
assets under section 179 of the Internal Revenue Code or to the
adjusted basis of an asset that is depreciated or expensed for
federal tax purposes.'.
  On page 16, line 1, after the period delete the rest of the
line and delete lines 2 through 25 and insert 'Except where the
Legislative Assembly has provided otherwise, any reference in
this chapter to the laws of the United States or to the Internal
Revenue Code:
  ' (1) Refers to the laws of the United States or to the
Internal Revenue Code as they are amended and in effect:
  ' (a) On December 31, 2002; or
  ' (b) If related to the definition of taxable income and
attributable to a change in the laws of the United States or in
the Internal Revenue Code that is enacted after December 31,
2005, as applicable to the tax year of the taxpayer.
  ' (2) Refers to the laws of the United States or to the
Internal Revenue Code as they are amended and in effect and
applicable for the tax year of the taxpayer, if the reference
relates to:
  ' (a) Pension, profit-sharing or stock bonus plans, deferred
compensation plans, employee stock ownership plans, individual
retirement accounts (including Roth individual retirement
accounts), medical savings accounts, education IRAs, qualified
tuition savings programs or other tax-deferred or tax-exempt
savings programs benefiting individuals; or
  ' (b) The allowance and amount of a deduction under section 167
or 168 or another provision of the Internal Revenue Code, to the
allowance and amount of a deduction for expensing depreciable
assets under section 179 of the Internal Revenue Code or to the
adjusted basis of an asset that is depreciated or expensed for
federal tax purposes.'.
  On page 19, delete lines 33 through 45 and insert:
  ' (7) 'Internal Revenue Code,' except where the Legislative
Assembly has provided otherwise:
  ' (a) Refers to the laws of the United States or to the
Internal Revenue Code as they are amended and in effect:
  ' (A) On December 31, 2002; or
  ' (B) If related to the definition of taxable income and
attributable to a change in the laws of the United States or in
the Internal Revenue Code that is enacted after December 31,
2005, as applicable to the tax year of the taxpayer.
  ' (b) Refers to the laws of the United States or to the
Internal Revenue Code as they are amended and in effect and
applicable for the tax year of the taxpayer, if the reference
relates to:
  ' (A) Pension, profit-sharing or stock bonus plans, deferred
compensation plans, employee stock ownership plans, individual
retirement accounts (including Roth individual retirement
accounts), medical savings accounts, education IRAs, qualified
tuition savings programs or other tax-deferred or tax-exempt
savings programs benefiting individuals; or
  ' (B) The allowance and amount of a deduction under section 167
or 168 or another provision of the Internal Revenue Code, to the
allowance and amount of a deduction for expensing depreciable
assets under section 179 of the Internal Revenue Code or to the
adjusted basis of an asset that is depreciated or expensed for
federal tax purposes.'.
  On page 20, delete lines 1 through 12.
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