ORIENTATION MEETING

 

TAPE 28 A-B,-29 A

 

HOUSE REVENUE COMMITTEE

FEBRUARY 3, 2003   8:30 AM   STATE CAPITOL BUILDING

 

Members Present:                        Representative Lane Shetterly, Chair

                                                Representative Wayne Scott, Vice Chair

                                                Representative Joanne Verger, Vice Chair

                                                Representative Phil Barnhart

                                                Representative Vicki Berger

                                                Representative Pat Farr

                                                Representative Mark Hass

                                                Representative Elaine Hopson

                                                Representative Max Williams                                   

 

 

Witness Present:                        Craig Fisher, Research Manager, Department of Revenue

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Dick Yates, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 1, SIDE A

004

Chair Shetterly

Calls meeting to order at 8:33 a.m.

 

 

026

Craig Fisher

Gave Committee an overview of the “Tax Expenditure Report”, (Exhibit 1), as useful resource when considering the tax system.  The concept of tax expenditures applies to the tax law provisions that impart special treatment to a group of tax payers.  Income excluded from taxation, deductions, credits, or property tax exemptions are considered tax expenditures because they have a similarity to direct spending.

 

010

Fisher

Thee Budget Accountability Act of 1995 mandates this publication, submitted by the Governor to the Legislature along with the Governor’s recommended budget.  The Department of Administrative Services and the Department of Revenue assist the Governor with this report which includes federal or state exemptions.

 

033

Fisher

There are 15 tax programs, 350 total tax expenditures, 200 of which are in the Income Tax Program, and 100 in the Property Tax Program.  The report also includes information on estimated receipts and tax expenditures by program.

 

081

Fisher

Discussed income tax expenditures and explained types of exclusions available on a federal and state level.

 

159

Fisher

Information required by Act for all tax expenditures include: statutory authority, purpose, revenue loss estimates, and grouped according to programs or functions. Each expenditure is to be evaluated for effectiveness on two bases:  does expenditure accomplish its purpose and is it the most fiscally effective means for accomplishing its purpose.  Also an analysis of who benefits and sunset recommendations is required of governor.

 

170

Paul Warner

Directed the Committee to Page 7 which lists sunsets for this session that require legislative action.

 

188

Fisher

Provided Committee examples of Tax Expenditures by budget category and its distribution.  Described credits for each program.  Directed the Committee’s attention to two indexes useful in reviewing the report, “Index of Tax Expenditures by Tax Program”, (Table 1, Page 9, Exhibit 1), and “Index of Tax Expenditures by Program/Function, (Index 2, Page 17, Exhibit 1).

 

259

Fisher

Described process for evaluating tax expenditures programs.  Department of Revenue must identify changes since prior report, and provide information on new or modified tax expenditures to agencies that have program responsibility or subject matter expertise.

 

302

Fisher

Over 30 agencies perform evaluations, does it accomplish its purpose and is it the most fiscally effective means of accomplishing its purpose.  Evaluations are then reviewed by DAS and Governor’s office.

 

330

Fisher

Directed the Committee’s attention to revenue estimate issues:  interactions between expenditures which could affect revenue impact; interactions between credits; they are static estimates, and do not take into account behavioral changes that could result from elimination of expenditure.  Reports losses and shifts to property tax rolls.  Noted the Department of Revenue’s estimation methodology is reviewed by Legislative Revenue Office and the Office of Economic Analysis.

 

378

Chair Shetterly

Tax credits wouldn’t reflect current level of estimated revenues, some of the revenue impacts of these tax expenditures would be lower due to receiving less corporate income against corporate credits?

 

407

 

 

 

 

Fisher

 

 

 

 

 

The report attempts to take the December forecast into account.  Some of the credits can be taken forward, for example the pollution control credits can be taken over a 10 year period.  Unused credits are another issue, taxpayers that don’t offset all their liability in the current year can carry it forward up to 5 years. 

 

440

Fisher

In summary, the report provides detailed information about Oregon’s tax system and how the programs work.

 

 

TAPE 29, SIDE A

 

022

Rep. Hass

Should take a look at tax credits this session, but what is the most effective way to do it, rather than going through each credit?  Vic Atiyeh had recommended a task force look into them, there are a fair number of evaluations which indicate a program is not achieving its purpose or goals.

 

035

Chair Shetterly

Different from Ways and Means process of looking at every budget, every session.  Most programs listed in the Tax Expenditure Report are not voted on each session and take on a life of their own, agreed from experience in earlier sessions that they should not go through each page.

 

051

Rep. Hass

Suggested some could be pared down instead of repealed.

 

061

Chair Shetterly

Said the Committee may ask Warner to work with Legislative Fiscal to identify those tax expenditures to the budget analysts working on each of the program areas, as a way to address concerns as budgets are being built.

 

074

 

 

083

Warner

 

 

 

Told the Committee that the Fiscal Office has identified the Tax Expenditure Report as a tool they are going to use this session.

 

End of overview on Tax Expenditure Report.

 

LOTTERY OVERVIEW

 

089

Dick Yates

Presented of overview of “Oregon State Lottery”.  (Page 1, Slide Top, Exhibit 2).

 

121

Yates

Continued presentation beginning “Lottery Terminology”, (Page 1, Slide Bottom, Exhibit 2).

 

172

Yates

Continued presentation, beginning “Lottery History”, (Page 2, Slide Top, Exhibit 2).

 

202

Yates

Continued presentation, beginning “Lottery History (cont.), (Page 2, Slide Bottom, Exhibit 2).

 

Questions and discussion interspersed.

 

252

Yates

Continued presentation, beginning “Traditional Lottery Games”, (Page 3, Slide Top, Exhibit 2).

 

275

Yates

Continued presentation, beginning “Traditional Game Revenue”, (Page 3, Slide Bottom, Exhibit 2).

 

285

Yates

Continued presentation, beginning “Traditional Game Revenue”, (Page 4, Slide Top, Exhibit 2).

 

312

Yates

Continued presentation, “Video Lottery Revenue”, (Page 4, Slide Bottom, Exhibit 2).

 

327

Yates

Continued presentation, “Video Lottery Revenue”, (Page 5, Slide Top, Exhibit 2).

 

334

Yates

Continued presentation, beginning “Total Lottery Revenue”, (Page 5, Slide Bottom, Exhibit 2).

 

340

Yates

Continued “Total Lottery Revenue (Page 6, Slide Top, Exhibit 2).

 

347

Yates

Continued presentation, beginning “Lottery Transfers”, (Page 6, Slide Bottom, Exhibit 2).

 

Questions and discussion interspersed.

 

417

Yates

Continued presentation, beginning “2001-03 Lottery”, (Page 7, Slide Top, Exhibit 2).

 

 

TAPE 28, SIDE B

047

Yates

Continued presentation, beginning “Issues”, (Page 7, Slide Bottom, Exhibit 2).

 

Question and discussion interspersed.

 

077

Yates

Continued presentation, beginning “Line Games”, (Page 8, Slide Top, Exhibit 2).

 

Questions and discussion interspersed.

 

135

Yates

Continued presentation, beginning “Video Prize Percent”, (Page 8, Slide Bottom, Exhibit 2).

 

143

Yates

Continued presentation, beginning “Annual Growth:  Video”, (Page 9, Slide Top, Exhibit 2).

 

172

Yates

Continued presentation, beginning “Video Compensation Rates”, (Page 9, Slide Bottom, Exhibit 2).

 

210

Yates

Continued presentation, beginning “Retailer Compensation”, (Page 10, Slide Top, Exhibit 2).

 

Question and discussion interspersed.

 

260

Yates

Continued presentation, beginning “Lottery Expense Percents”, (Page 10, Slide Bottom, Exhibit 2).

 

332

Yates

Continued presentation, beginning “Sales – f(Advertising)”, (Page 11, Slide Top, Exhibit 2).

 

372

Yates

Continued presentation, beginning “Lottery Advertising”, (Page 11, Slide Bottom, Exhibit 2).

 

Questions and discussion interspersed.

 

383

Yates

Continued presentation, beginning “Implications,” (Page 12, Slide Top, Exhibit 2).

 

Questions and discussion interspersed.

 

443

Chair Shetterly

Meeting adjourned at 9:55 a.m.

 

 

 

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Fisher, Tax Expenditure Report, 383 pages.

2.       Yates, Oregon State Lottery, Powerpoint Presentation, 12 pages.