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Capital Chatter: Special session rumors abound

Republicans and Democrats have questions about Gov. Brown's business tax proposal.

State Rep. Greg Smith was polite but straightforward in describing Gov. Kate Brown's tax-break proposal that the Oregon Legislature will consider in a special session on Monday: "This legislation makes no sense."

Smith, a Republican from Heppner, is a member of the Legislature's special Joint Interim Committee on Sole Proprietors. The 10 legislators held their first hearing Wednesday on the proposed tax break for small businesses that operate as sole proprietors.

It was an unusual public hearing, as if people were dutifully playing their roles, and there wasn't much of the public.

During regular legislative sessions, committee rooms generally are crowded for tax-legislation hearings. On Wednesday, only a couple dozen people were present. The hearing did not begin with legislative staff explaining the bill, as usually is done. The only people testifying besides the governor and legislators were eight lobbyists. Beforehand, House Speaker Tina Kotek told committee members not to ask questions of the public who testified — the lobbyists.

That did not sit well with Sen. Brian Boquist, R-Dallas, a committee member. In a lengthy letter to Republican senators on Thursday, he wrote: "The committee is a farce, in fact, the worst attempt I have experienced at a public process that is nothing more than the use of public funds and media access for the re-election of Kate Brown. Oddly, the Democrat legislative leadership seems to be no more enthused than Republican[s] but they hold the gavels."

Who said what: Brown testified in favor of the bill, reiterating her reasons for calling the special session. State Sen. Herman Baertschiger Jr., R-Grants Pass, testified that the bill would have little impact. He said next year's Legislature should consider true tax reform for businesses.

Reps. David Gomberg, D-Otis, and Rep. Alissa Keny-Guyer, D-Portland, said the proposed tax break should be revised to not cost the state any money. So did the lobbyists.

• Changes coming: Gomberg, Keny-Guyer and Boquist are among legislators expected to propose amendments to Brown's bill.

Kotek made clear that the tax bill will be the only subject for Monday's special session, despite calls from interest groups and Bend Republican gubernatorial candidate Rep. Knute Buehler to include more pressing issues.

Kotek, D-Portland, and Senate President Peter Courtney, D-Salem, chair the special committee, which will hold another public hearing on Monday.

• One lawmaker's ideas: Under Brown's proposal, the tax break would be restricted to sole proprietors with at least one employee who works 30 or more hours a week. Gomberg urged the committee to remove the 30-hour requirement, which he said could make seasonal businesses — farming, fishing and tourism — ineligible for the tax break.

Gomberg proposed including employers with seasonal or part-time employees and limiting the tax break to the first $750,000 of taxable income.

Before the hearing, he sent out a thoughtful newsletter explaining tax law and how the special session came about. In it, he highlighted what I think is a longtime weakness of the Oregon Legislature: Lawmakers write tax law but too few have owned or operated a business.

Gomberg wrote: "These are not easy conversations. Few in the Capitol have ever risked creating a business, understand the responsibility of meeting a payroll, or as I often observe, simply own a cash register."

• Political shenanigans?: Rumors persist as to whether the tax break is a disguised tax increase, whether Brown has the votes to pass the bill, or whether the one-day special session will last multiple days.

Another recurring rumor, as I mentioned in last week's column, is whether liberal Democrats will try to oust Courtney as Senate president. Senate Democratic Leader Ginny Burdick, D-Portland, said Senate Democrats are not behind that rumor.

• Leadership baptism under fire: Legislators and lobbyists this week were congratulating Chris Allanach on being promoted to legislative revenue officer following a national search. But they wryly noted that he's immediately dealing with a controversial special legislative session.

Paul Warner, who was highly regarded as head of the nonpartisan Legislative Revenue Office, retired last fall. Allanach has been filling the role on an interim basis. He joined the LRO in 2006 after 10 years at the Oregon Department of Revenue.

The Legislature's revenue committees, as well as individual lawmakers from both political parties, depend on the LRO for analysis of proposed tax legislation and other public-finance issues.

Allanach's hiring must be formally approved by the Senate and House revenue committees next week.

The Legislature's tax, budget and policy analysts are nonpartisan. Lawmakers count on them heavily for analysis and ideas. A former legislative revenue officer, Rich Munn, was an architect of Oregon's income tax "kicker."

• Brown in Colorado: Gov. Brown gave the commencement address this month at her undergraduate alma mater, the University of Colorado in Boulder. Parts of her speech, delivered to more than 25,000 people in the football stadium, echoed ones she has given in Oregon.

One anecdote in the speech gave me insight into how Brown developed her passion for hands-on learning, such as career-technical education in public schools. That happened at CU, where she switched from studying political science to environmental conservation.

"What really set the [environmental conservation] program apart were the hands-on learning opportunities. We got outside to take what we learned in the classroom and apply it to the real world.

"One summer, I spent six weeks in the mountains outside Gerlach, Nevada, studying the behavior of feral horses," she said, quipping, "It turns out it was useful training for being in the Oregon Legislature."

Dick Hughes, who writes the weekly Capital Chatter column, has been covering the Oregon political scene since 1976. Contact him at TheHughesisms@Gmail.com, Hughesisms.com/Facebook, YouTube.com/c/DickHughes or @DickHughes on Twitter.