Contractors sort through tax increase hit
POSTED: Wednesday, January 27, 2010 at 10:07 AM PT
Daily Journal of Commerce
BY: Justin Carinci
Tags: Measure 66, Measure 67
After the passage of Measures 66 and 67 on Tuesday, contractors are sorting out the effects the tax increases will have on business. Those could include laying off employees, leaving the state or closing up shop.
Larry Sitz, president of Emerick Construction Co., said that leaving Oregon for a state without income taxes is looking better and better. “We haven’t made a hard decision about moving to Washington, but that’s definitely in the back of our mind,” he said.
“From a businessman’s point of view, why not?”
Piling more taxes on contractors could slow the industry’s recovery, Sitz said. “It seems silly to be hurting the businesses that Oregon actually needs to pull out of this.
“Someone has to be making money for a tax base to exist.”
It’s hard to know how much the tax increases will affect contractors, said John Killin, president of the Associated Builders and Contractors Pacific Northwest chapter. But with the economy already hurting, even a small hit could put contractors out of business.
“This is, unfortunately, going to deal an additional blow to the economy and the construction industry,” Killin said.
“A lot of my guys are looking at closing their doors permanently.”
Hoffman Construction Vice President Bart Eberwein said he hadn’t studied the financial effect the measures would have on the company, and he declined comment on how much more the company might pay. There might be an upside of higher taxes for contractors who do a lot of government work, he said.
“At every level, going forward with a large capital project has a lot to do with mood,” Eberwein said. “If it puts the state in a better mood, we might see projects move into more intense planning.”
Brent Parry, president of Bremik Construction, said he hoped that an increase in jobs would balance out the higher income taxes. “There are certainly some negative effects, but also, being in the construction industry, there could be some positive effects.”
Bremik often does work for school districts, Parry said. While districts typically build new schools using bond money, which wouldn’t change under the new tax system, there is still plenty of other work that districts have postponed.
“This will help create a more balanced budget for those districts,” Parry said. “We could do some of the terribly deferred maintenance.
“There’s a lot of things to do, but there’s been not a dime to do it.”
Even with the tax increases, state officials will need to figure out to how to stabilize Oregon’s long-term budget, said Pat McCormick, spokesman for the campaign against the ballot measures. “The business community has always recognized the need for better long-term fiscal planning on the state’s end so we don’t let ourselves go through the roller-coaster cycles in good times and bad,” he said.
“We’re assessing what this will mean, and for a significant number of companies, it means they’re going to have to be addressing unanticipated costs for the 2009 tax year as well as future years.”
http://djcoregon.com/news/2010/01/27...67-pass-bldgc/
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