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About The daily Astorian. (Astoria, Or.) 1961-current | View Entire Issue (June 26, 2017)
3A THE DAILY ASTORIAN • MONDAY, JUNE 26, 2017 Oregon House advances controversial revenue bill By CLAIRE WITHYCOMBE Capital Bureau SALEM — The state House of Representatives Friday nar- rowly passed legislation that would make it harder for busi- nesses to qualify for tax breaks passed in 2013 as part of the so-called “grand bargain.” The bill, which now heads to the Senate, puts new lim- its on a tax cut for certain busi- ness owners, and should it pass, is expected to raise nearly $196 million in the next two years. It’s a far cry from the major tax overhaul many Oregon Democrats called for this ses- sion, but after a stalemate over proposals to switch the basis for taxing businesses from income to sales two weeks before leg- islators must close the books, it now appears to be the session’s big tax vote. After a nearly three-hour debate the measure passed with 31 Democrats voting in favor. All House Republicans and three Democrats voted against it: state Rep. Brad Witt, of Clatskanie; Rep. Teresa Alonso Leon, of Woodburn; and Rep. Caddy McKeown, of Coos Bay. A fourth Democrat, Rep. Deborah Boone, of Cannon Beach, was excused. Under current law, own- ers of S-corporations, limited liability companies or part- nerships can choose to have income “passed through” to them from the business taxed at a lower rate, as long as the income they earn from the business is “nonpassive,” the business employs at least one nonowner, and the nonowner employee or employees do at least 1,200 hours of work in a year. By taking the lower rate, owners give up other deductions. The bill the House approved Friday would limit eligibility for the lower income rate to seven sectors, including agri- culture, mining and manufac- turing. To qualify under the new bill, businesses would also need to have at least 10 non- owner employees, instead of one. In short, the bill means fewer owners would be eligi- ble to pay the lower rate, and so some of those removed from eligibility under the bill would pay higher income taxes. By tweaking the cut as the By MATEUSZ PERKOWSKI Capital Bureau A judge has ruled that counties can’t sue the state for financial damages, poten- tially undermining a $1.4 billion class action lawsuit over state logging practices. Linn County Circuit Court Judge Daniel Murphy has reversed an earlier ruling in the case, which held that Oregon’s sovereign immu- nity doesn’t bar counties from seeking such damages. In his most recent deci- sion Tuesday, Murphy has agreed with Oregon’s attor- neys that counties — as sub- divisions of the state — can- not sue the state government for money. Murphy said he’s “well aware this interpretation contradicts” his earlier opin- ion, but he will provide the plaintiff counties with “the opportunity to re-plead their case in such a manner that is supported by the law if they can.” “Like peeling a very large onion this case con- tains complex layers of legal issues and theory that can take time to unravel,” he said. The judge has left open the possibility for the plain- tiffs to seek an “equitable” remedy, such as an injunc- tion or order that requires the state government to take certain actions without pay- ing financial damages. However, the counties ing A dog so strapp Some in favor Many Democrats who spoke in favor of the bill Friday portrayed the 4-year-old policy as hastily compiled and fail- ing to meet its policy objective, which was to help the state’s small businesses create jobs. Instead, they argued, the break benefited “scrubs and suits” — doctors and lawyers. “We created yet another giveaway to the very wealthy,” said the bill’s carrier, Rep. Phil Barnhart, a Democrat from Eugene. Democrats point to fig- ures from the Legislative Rev- enue Office, which found that have repeatedly said they’re not aiming for Oregon to change its logging practices, but instead seek compensa- tion for insufficient timber revenues. The class action lawsuit was filed on behalf of 14 counties that donated forest- land to the state government in exchange for a portion of logging proceeds. The counties argue that a 1998 rule change empha- sizes environmental and rec- reational values over timber harvest, thereby violating a contract that required log- ging to be maximized. John DiLorenzo, attorney for the counties, said his cli- ents may decide to rechar- acterize their complaint or seek clarification from an appellate court regarding sovereign immunity and other issues. In the long term, such an opinion would provide a “road map” for the litigation, DiLorenzo said. “Maybe we’re better off having clear declarations from the appellate courts on what the law is,” he said. The EO Media Group/ Pamplin Media Group Cap- ital Bureau was unable to reach an attorney represent- ing Oregon in the case. Ralph Bloemers, an envi- ronment attorney with the Crag Law Center, said that Murphy’s latest ruling has effectively “torpedoed” the counties’ lawsuit. “In essence, he’s grant- ing the motion to dismiss for sovereign immunity,” Bloemers said, adding that he expected the state’s attor- neys to refile a motion for the complaint to be thrown out. Comments accepted about parking lot expansion plans By KATIE FRANKOWICZ The Daily Astorian The Warrenton Kia car dealership has applied for a fish passage exemption in a project to expand its park- ing lot. The Oregon Department of Fish and Wildlife says the unnamed tributary this proj- ect effects eventually drains into the Columbia River via Youngs Bay, but is not important to fish passage. No fish appear to use the site, a department analysis states. Fish and Wildlife is seek- ing public comment on the proposed exemption. Unless the department receives new information that would give them pause, the exemption request will be approved and Warrenton Kia’s plans to expand the parking lot will proceed, state officials say. The state issues few such exemptions, said Greg Apke, the Fish and Wildlife’s fish-passage program coor- dinator. And when the state does issue them, the exemp- tions are rarely popular. “Nobody likes these exemptions and I get that completely,” Apke said. But, he added, they are completely legal and viable when site conditions are appropriate. The state rules are clear, he said. To qualify for the exemption, Warrenton Kia has to show that native fish wouldn’t benefit even if the stream was open to fish passage. “The proposed project at the Warrenton Kia site undoubtedly meets this cri- y e w e D you’ve got a lot of constituents that are going to be damaged by this.” For a period, the debate over the bill took a detour as legisla- tors debated whether it required a simple majority or a three- fifths majority. The distinction, trivial at first glance, is actually essential when it comes to the Legisla- ture’s efforts to raise new taxes this session. Under the Oregon Constitu- tion, measures raising revenue require a three-fifths majority approval in both the House and Senate. Democrats have a simple majority in both chambers, but are one seat shy of that three- fifths majority in both. So, assuming all Democrats vote for a revenue-raising policy, in order to pass, it needs at least one Republican signing on. At issue Friday was whether the partial repeal of the tax cut qualified as “raising revenue.” The debate over that question quickly turned philosophical. “They call a tax rate cut an expenditure,” said House Minority Leader Mike McLane, R-Powell Butte, “As if somehow the premise is that the government owns your money.” But a legislative coun- sel opinion Thursday says otherwise. “ … We view (the bill) as adjusting the parameters of a tax benefit rather than enacting a new tax,” Legislative Counsel Dexter Johnson wrote in a let- ter addressed to House Speaker Tina Kotek of Portland. And some Democrats sug- gested it was fiscally irre- sponsible to maintain what a spokesman for the House Dem- ocratic Caucus called a “run- away tax break,” or money that would otherwise be taxed and an amount that is projected to continue growing. Kotek, in a speech toward the end of Friday’s floor ses- sion, said the policy did not have the “targeted effect” of incentivizing small businesses to hire more people. “We’re not eliminating this break,” Kotek said. “We’re try- ing to fix it and make it more targeted.” The Capital Bureau is a col- laboration between EO Media Group and Pamplin Media Group. terion,” an analysis by Fish and Wildlife concludes, “due to the developed nature of the area, poor habitat and lack of fish at the project site, and no habitat available upstream.” The stream affected by Warrenton Kia’s plans may have once been a tidal stream or channel, years before the area was developed. Now it is essentially a drainage ditch, choked with weeds and algae, that dips under roads and eventually hits a tide gate. If fish were inter- ested in the stream, that tide gate completely blocks entry 90 percent of the time any- way, Apke said. The water in it now comes from runoff; it is not fed by stream channels. “Habitat conditions are very poor, especially in the summer with very little or no flow,” the analysis states. “… Winter conditions would offer slightly better water quality, but habitat condi- tions overall would still be poor.” Any proposed exemption must also pass muster with the state’s Fish Passage Task Force, which makes recom- mendations on whether the department should or should not approve a request for exemption. For more information and for the department’s bene- fit analysis, visit www.dfw. state.or.us/fish/passage. People will have until July 14 to submit written comments on the proposed plan. Comments or requests for additional information can be sent to Greg Apke, ODFW Fish Passage Pro- gram leader, 4034 Fairview Industrial Drive SE, Salem, OR 97303; or by email to Greg.D.Apke@state.or.us; or by calling (503) 947-6228. Oregon Department of Fish and Wildlife The culvert exit and ditch to be filled adjacent to Warren- ton Kia was found to have poor water quality and habitat conditions. W A NTED Alder and Maple Saw Logs & Standing Timber N orth w es t H a rdw oods • Lon gview , W A Contact: John Anderson • 360-269-2500 ll Ca ime yt n A Fre e as Est F ima t t es Jeff Hale P ainting • Residential • Commercial •Cedar Roof Treatments • Interior & Exterior Over 20 years local experience 503-440-2169 Jeff Hale, Contractor LICENSED BONDED INSURED CCB#179131 I got screened. Now it’s your turn. Gretchen Darnell to love. l u f r e d n o w d n a g lovin and young, fun- Seaside, Oregon Colorectal cancer is the #2 cancer killer. But screening can prevent it or catch it early when it’s highly treatable. This is our sweet Dewey while out for a ride last weekend! We’re really hoping his next ride is with a new family, and his destination is toward a loving home! Please call the Clatsop County Animal Shelter to learn more about this amazing boy, or come meet Dewey in person! 503-861-7387 503-861-0737 www.dogsncats.org in 2015, over 90 percent of beneficiaries made more than $200,000 per year, and that more than 70 percent made at least $500,000. Rep. Janelle Bynum, D-Happy Valley, said Oregon’s economy was thriving before the tax break was passed in 2013. “Why is small business thriving?” Bynum said. “It’s not because of this tax break.” Conversely, many Repub- licans cast the legislation as a broken promise to the state’s small businesspeople. Rep. Sherrie Sprenger, a Republican from Scio, said the law could advance the state’s “urban-rural divide,” and said the state would be hard-pressed to find a small agricultural busi- ness that employed at least 10 people year-round. Rep. Carl Wilson, R-Grants Pass, appealed to legislators’ self-interest and said the tax would not be popular among voters. “This is not going to play well in your district, you know it won’t,” Wilson said. “ … I’m talking from Brooks to Port- land, and from Grants Pass to Roseburg and Cottage Grove, Warrenton Kia applies for pass on fish passage Judge reverses key ruling in $1.4 billion timber class action Counties can’t seek financial damages bill outlines, the state would collect about $196 million more in taxes in the next two- year budget. That’s a significant figure in light of a projected gap of about $1.4 billion between revenues and expenses in the upcoming state budget. That figure was partially closed by an assessment on health care providers passed by the legislature Wednesday, which is projected to narrow the gap by at least $600 million, according to impact estimates. Open 12-4 pm, Tues-Sat 1315 SE 19th St., Warrenton Talk to your doctor today about getting screened. 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