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Senate OKs tax bill in face of veto threat By PETER WONG SALEM -- The Legislature completed action Monday on a bill that would give some of Oregon's largest businesses a multimillion-dollar break on property taxes. But House Bill 2050, which the Senate passed 19-11, faces a veto by Gov. John Kitzhaber. He vetoed a similar bill in 1997 and has said he would veto most tax breaks approved by the Legislature this time. The bill would exempt airlines, railroads and utilities from paying property taxes on the value of such intangible property as stocks, bonds, software and customer lists. The break would start in mid-2000 and be phased in over three years. Oregon taxes "intangibles," but California, Washington and Idaho do not. Supporters say that if the Legislature does not approve an exemption, utilities have indicated they will sue the state. Despite Kitzhaber's veto of the 1997 bill, his administration made arrangements that cleared the way for United States Cellular to choose Medford as the location of a service center. The company sought assurances in advance that its license from the Federal Communications Commission would not be subject to property taxes. Sen. Lee Beyer, D-Springfield, said taxation made sense when those businesses were regulated, but not in an era of deregulation. The property of those companies is assessed by the state Department of Revenue, not county assessors. "It is really an issue of fairness," he said. But Sen. Cliff Trow, D-Corvallis, said the real losers are local governments and schools. "There also is an issue of fairness to local governments and schools having adequate resources to meet our needs," he said. "I am not sure how unfair this tax has been over the years." Estimates of property tax losses vary widely. The state Department of Revenue estimated a loss of $13.5 million statewide when the tax break takes full effect. Utilities estimate a far greater loss of $29.2 million, based on a broader definition of "intangible'' personal property. The Legislature's own experts estimate losses of $8 million to $16 million annually. According to state figures, local governments in Jackson County would lose $42,251 the first year, $136,431 the second year, and $306,046 the third year. According to industry figures, those losses would be $107,445 the first year, $284,224 the second year, and $543,160 the third year. School losses are estimated at a third of those totals. In Josephine County, the third-year loss to all local governments is estimated by the state at $64,390, and by industry at $107,905. Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA