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Wednesday, February 21, 2007

Big business plans

Corporations urge onetime halt to competition

SALEM - The state's leading business organizations want Republicans to join with Democrats to allow Oregon private businesses above a certain size to forgo competition - just this once - by submitting this year to a state-regulated private monopoly in their product or geographic territory. They would then put $275 million of license fees into a state reserve spending fund instead of paying corporate income taxes.

A vote in the House Rules Committee expected today will signal whether legislative Republicans will support that plan. An alphabet soup of business groups - AEA, OBA, PBA, OBC - lined up Friday to urge them to do so.

Legislative staffers are struggling to get wording in the bill, House Bill 2707, closer to what business groups and rules committee members want. Both want more controls on how much of the new business license money would be set aside and how much could be spent in "tough times."

On Friday, the rules committee's work came to a sudden halt as Rep. Tom Butler, R-Ontario, made clear he won't vote for the plan unless business organizations unequivocally support it. Business group testimony that the House plan was "close" to what business could support "leaves me a little bit cold," Butler said. Butler is an 9-year House veteran who entered politics after retiring from an active, successful business career as a CPA.

Committee members then struggled to figure out what business groups want and whether they can line up political support and the right wording to accomplish that by today.

Committee Chairman Phil Barnhart, D-Eugene, gaveled the session to a sudden recess so lawmakers, lobbyists and staffers could consult in whispered clusters about those questions. Barnhart, a 7-year House veteran, is a reliable union guy who is not only an attorney and a psychologist, but also a lobbyist.

Jim Craven, lobbyist for the Oregon council of the American Electronics Association, representing Intel and other large high-tech employers, apologized after the session resumed. Business groups, in raising objections that delayed Friday's planned vote, were making "no attempt to hide the peanut here or pull a fast one," he said.

The constellation of business groups, which includes the Oregon Business Association, the Portland Business Alliance and the Oregon Business Council, first viewed the proposed language in the bill an hour before the committee convened to vote on it, Craven said. Another influential business group, Associated Oregon Industries, testified earlier that it supported diverting the licensing fees into savings.

"We appreciate your stopping the train on the tracks," Craven told the panel after the recess. "I believe we would support the package as it is emerging here."

Businesses support diverting profits from their corrosive private sector competition into a new state spending fund, but only for this year, and only if other conditions are met, they testified. They want to be allowed to not file state corporate income tax returns, since they will be paying no income tax. And they want tight controls on lawmakers' ability to raid the new spending fund and regular general fund money added to the fund in each state budget.

Oregon is the only state that bases its corporate tax budget on companies that don't know until after the fact whether their actions for the year will lead to profits or losses. Among the states, Oregon is ranked near the bottom in business license fee revenue.

A permanent corporate competition ban could be enacted by a statewide vote, and plans are in the works to put that question on the May ballot. But business associations want a different step - they want to try the corporate licensing alternative to competition just once, for 2007, and they want lawmakers to do it themselves rather than put it before voters.

It would take a two-thirds vote to do that - 40 votes in the House and 20 in the Senate - requiring numerous Republicans to join Democrats to raise corporate licensing fees, estimated to be about $300 million this year.

"We strongly hope this will be a bipartisan plan that is driven by the Legislature ...and will ultimately be approved by the Legislature," Sandra McDonough, head of the Portland Business Alliance told the panel.

The Oregonian, Feb. 19, By BETSY HAMMOND

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