House Revenue Committee hears hours of testimony on SB 1507 A to disconnect parts of state tax code from federal HR 1

Sen. Anthony Brodman, sponsor of SB 1507 A, opened the House committee's public hearing on Feb. 18 by calling the bill a "measured approach" to narrow Oregon's budget hole and to protect public services. Brodman said the A-version disconnects selected provisions of federal HR 1 — including narrow aspects of bonus depreciation, Qualified Small Business Stock (QSBS) treatment and a new vehicle loan interest exclusion — while expanding the state earned income tax credit (EITC) and creating a Grow Oregon Jobs Tax Credit.

"This is an absolutely critical affordability measure," Sen. Brodman said, arguing the proposal would reclaim a portion of the federal tax changes that he said make life more expensive for many Oregonians.

More than three dozen witnesses gave two-minute statements. Supporters — including For All Families Oregon; the Oregon Hunger Task Force; Oregon Food Bank; the Oregon Education Association; SEIU Local 503; AFT Oregon; and Tax Fairness Oregon — urged the committee to pass SB 1507 A to blunt projected cuts to childcare, SNAP, the Oregon Health Plan and education. Matt Newell Chang of Oregon Food Bank testified that HR 1 will reduce SNAP support in Oregon by about $237 million per year and said SB 1507 A is a needed step to limit harm. Patty Whitney Wise of the Oregon Hunger Task Force emphasized the bill's proposed 5% EITC increase as a direct support to low-income families.

"Senate bill 15‑07 is an important step forward," Courtney Graham of SEIU Local 503 told the committee, while home care worker Joy Willman said the bill could help protect Medicaid-funded home care that enables seniors and people with disabilities to remain at home.

Business groups and industry associations urged caution or opposed the bill as written. Anthony Smith of the National Federation of Independent Business and Derek Sangston of Oregon Business & Industry warned that disconnecting from federal bonus depreciation would raise the cost of capital and reduce near‑term incentives to invest in equipment and machinery. Sangston recommended a more limited amendment to phase reconnection or to delay state changes so businesses retain long-term certainty.

Several witnesses focused on the bill's QSBS language (commonly referenced in testimony as — 02—/Section 1202). Paul Schultz, a contractor who said his company qualifies as a small business under QSBS rules, warned that the bill as drafted could retroactively penalize firms that elected C‑corporation treatment in reliance on the state deduction. Daniel Bunn, a small‑business owner and member of the governor's Council of Economic Advisers, said section 5 looks to remove modest incentives and estimated the change would raise only $30 million over the biennium but would harm business confidence.

Other witnesses described the distributional effects analysts attribute to HR 1 and to bonus depreciation: speakers from the Oregon Center for Public Policy, Tax Fairness Oregon and labor unions argued the largest benefits flow to the highest‑income households, while business representatives said many industries — agriculture, construction, manufacturing and seed production — rely on accelerated expensing to manage cash flow and remain competitive.

Legislative Revenue Office staff answered committee questions about mechanics: John Hart explained that federal bonus depreciation would continue to exist at the federal level, and a state-level disconnect would require an addition on the Oregon return in the year the federal bonus is claimed with subtractions across later years, meaning businesses and tax administrators must track two depreciation schedules.

The committee closed the public hearing on SB 1507 A and will continue to weigh amendments and fiscal tradeoffs in subsequent work sessions.