PUBLIC HEARING: HB 2133, HB 2134, HB 2135, HB 2136

 

TAPE 38, 39, A-B

 

HOUSE REVENUE COMMITTEE

FEBRUARY 11, 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:                        Edie Kessel, Oregon State Treasury

                                                Darren Bond, Oregon State Treasury

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Dick Yates, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 38, SIDE A

004

Chair Shetterly

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

 

OPENED PUBLIC HEARING ON HB 2133

 

002

Edie Kessel

Explained that the bill was a housekeeping measure that proposes revisions to three separate statutes the changes are intended to:

 

·         Clarify existing statutes.

·         Make a technical change to an administrative task responsibility.

·         Add specific language resulting in more cost effective management of fiscal agent contacts.

 

053

Chair Shetterly

In Section 3, could you enlighten the Committee on interfund borrowing, the background, and the impact of repealing that section on the interest rate?

 

061

Kessel

Interfund borrowing is used by an agency if it is having cash flow issues,.  Described procedure for interfund borrowing and Treasury analysis.

 

068

Williams

Can you give agency sample where this comes up on a frequent basis?

 

072

Kessel

Currently, there is one loan outstanding with the Department of Forestry which will be reimbursed with federal funds after an extensive reimbursement process.  They will have the money, but cannot currently meet obligations; Treasury has a loan with the department allowing them to meet current obligations.

 

082

Chair Shetterly

Currently under statute, do you have to calculate what the blended rate of return is in the Oregon Short Term Fund, and that is the rate that the agency is supposed to repay the fund?

 

088

Kessel

The section that we’re repealing is not used when extending interfund loans.  What the net result is, we look at treasuries that have the same maturity date and see what that rate is and go 50 basis points above that to cover what risks have been incurred in lending the money.

 

98

Chair

If language is repealed in the statute, is it somewhere else in statute, or is it practice that provides that Treasury charges interest and gets a return on the money borrowed?  Where else does that occur, what statute?

 

103

Kessel

Section 4 of this bill addresses ORS 293.220, and will be amended to include ORS 293.214 as an entire statute.  Section 4 will be eliminated, with the reference to 293.220 added.

 

108

Chair Shetterly

That’s the bolded language?

 

109

Kessel

Yes, to be consistent.

 

112

Chair Shetterly

Closed Public Hearing on HB 2123.

 

 

OPENED WORK SESSION ON HB 2123

 

113

Yates

Legislative Fiscal Office, LFO, has expressed an interest in adding an amendment requiring Treasurer to notify the LFO when they do make these fund transfers.  As yet there is no drafted language.

 

118

Chair Shetterly

Asks Darren Bond, did you know about that?

 

119

Darren Bond

Responds he contacted LFO, as is required by ORS 293.210, which is the interfund borrowing statute the Treasurer uses because of the interest discrepancy.  Treasury suggested LFO review, as the section is open.  LFO has not yet responded.

 

125

Hass

Is that something that needs to be a law?  It would seem for practical purposes that would occur.

 

124

Bond

I will notify LFO because of 293.210.

 

130

Chair Shetterly

My inclination is to move this thing along.  An amendment could be put it in the Senate version.

 

136

Rep. Verger

LFO wants it somewhere in the bill that LFO would be notified?

 

140

Chair Shetterly

But they have not offered any amendments.

 

144

Rep. Williams

MOTION:  MOVES HB 2133 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

147

 

ROLL CALL VOTE:  MOTION PASSED 9-0-0

REPRESENTATIVES VOTING AYE:  Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair Shetterly.

 

Rep. Williams will carry the bill.

 

 

 

 

OPENED PUBLIC HEARING ON HB 2134

 

156

Bond

Advised the Committee, HB 2134 is a housekeeping bill, clarifying existing language in ORS 291.001 dealing with checks, warrants and electronics funds transfers. No new functionality or flexibility is provided by the language.

 

174

Chair Shetterly

Closed public hearing on HB 2134.

 

OPENED WORK SESSION ON HB 2134

 

176

Rep. Scott

MOTION:  MOVED HB 2134 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

180

 

ROLL CALL VOTE:  MOTION PASSED 9-0-0

REPRESENTATIVES VOTING AYE:  Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair Shetterly.

 

 

 

Rep. Berger will carry the bill.

 

OPENED PUBLIC HEARING ON HB 2135

 

194

 

Bond

Provides background on HB 2135, it is the result of  Department of Justice review of statutes regarding tax anticipation notes to address negative and declining cash balances the state pays in the middle of the biennium.

 

204

 

 

 

 

 

 

 

 

220

 

 

Bond

 

 

 

 

 

 

 

 

Bond

Describes four elements to bill:

 

·         Defining the General Fund

·         Determining if the statues dealing with the General Fund cash flow issues are adequate.

·         Clarifying when the Treasurer can pay money.

·         Determining if the Treasurer can direct an agency to stop issuing payment obligations.

 

The area of special concern includes the statutes that deal with specific state responses to a General Fund that becomes exhausted.

 

226

Bond

Provides background on an area of the bill that undergoes significant revision, 293.170(7) which deals with the registration of warrants.

 

Questions and discussion regarding warrants and their issuance.

 

322

Bond

Testifies the statute is being modernized and clarified to make it workable.  After reviewing the statutes it was found that it would be difficult to implement the way the law is currently.  The bill tries to put a workable process in place to support the state if the General Fund is exhausted.

 

335

Chair Shetterly

How do warrants relate to state debt limitation? Can you have warrants extending beyond biennium?

 

355

Bond

I believe they would need to be cleaned up during biennium, paid for by moneys accrued to that biennium.

 

Questions and discussion regarding methodology for warrant repayment.

 

370

Bond

The current language recognizes that there are restricted accounts in the general fund for limited purposes, but does not provide for continued payment of warrants drawn against restricted funds if the state should be in a registration of warrants environment.

 

400

Chair Shetterly

By registration of warrants, is that when you convert a warrant to a note?

 

404

 

 

 

 

Bond

 

 

 

 

Testified regarding general fund restricted accounts and payment of warrants. 

 

Questions and discussion regarding honoring restricted fund warrants.

 

441

Bond

Testified regarding procedures for registering of warrants.

 

 

TAPE 39, SIDE A

 

040

Barnhart

If that situation arises, the purpose is to handle it in the most efficient way.  That’s what I understand this proposal is about?

 

047

 

052

 

 

 

 

072

 

 

 

 

100

Bond

 

Bond

 

 

 

 

Bond

 

 

 

 

Bond

Answered affirmatively.

 

The other substantive change in this section eliminates the need for all three of the constitutional officers – Governor, Treasurer, Secretary of State, to agree that warrants need to be registered, and replaces that with any two of the officers.

 

The decision is not whether to return the warrants unpaid, it is whether to do so in an orderly manner that provides for interest on the instruments and provides holder with liquidity through the development of a secondary market to sell them in.

 

Questions and discussion regarding checks and balances and credit implications of not being able to reach a consensus between three constitutional officers.

 

130

Bond

Change would establish joint responsibility between the Treasurer and the Agency for ensuring an item is authorized by law.  Currently the Treasurer is responsible for both authorization and ensuring sufficient funds to pay.  This bill provides certification that agency officers are making these payments lawfully.

 

Questions and discussion as to bill payments and who is authorized to sign checks and ensure fund availability.

 

180

 

 

185

Bond

 

 

Bond

 

 

Testified regarding provision for revoking an agency’s ability to issue a payment item.

 

Testified regarding a provision in the bill for transfers to prevent overdrafts of agency accounts.

 

190

Bonds

Testified regarding moving trust funds to the general fund.

 

200

Bond

Testified regarding repeal of statutes that 1915 that is outdated.

.

210

Berger

Continued discussion regarding registration of warrants.  Why is it advantageous?  Why wouldn’t you want all three to sign, Governor, Secretary of State, and Treasurer.

 

220

Bond

The preference is for all three to agree, but in a crisis situation if the three cannot reach agreement, it could take the treasury further in debt. The Treasurer would not be willing to take General Fund further into hole. The intent is to create order to the process instead of returning items unpaid for non-sufficient funds.

 

240

Scott

Why do we use warrants instead of checks and there is not cause for alarm?

 

260

Bond

Advised the Committee, warrants are a standard payment method and always used for paying budgetary items.  State is advantaged by having a warrant enabling the state to continue paying obligations even though it is deferred.

 

293

Rep. Williams

Commented regarding the issue with constitutional officers, requiring 100% majority in a highly charged environment. The return of items unpaid would create such a crisis you have to allow for the possibility of someone not acting rationally in that critical moment.

 

310

Chair Shetterly

Especially in light of consequences of not proceeding to registration in the dishonoring of the warrants.

 

338

Rep. Farr

Regarding section 8, currently it is the treasurer’s responsibility to make sure it’s a legal bill, this shifts to signing officer?

 

335

Bond

Answered affirmatively.

 

350

Rep. Farr

Are we confident enough that the people in the field are trained enough to know what is and isn’t legal?

 

355

Bond

Answered affirmatively.

 

370

Chair

Closed hearing on HB 2195. 

 

375

Yates

The referral to Ways and Means may be coming off.

 

 

OPENED PUBLIC HEARING ON HB 2136

 

398

Bond

Testified HB 2136 clarifies conflicting language relative to maturity date restrictions on local government investments.

 

426

Chair Shetterly

Closed public hearing on HB 2136

 

 

OPENED WORK SESSION ON HB 2136

 

426

Rep. Verger

MOTION:  MOVED HB 2136 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

440

 

ROLL CALL VOTE:  MOTION PASSED 9-0-0

REPRESENTATIVES VOTING AYE:  Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair Shetterly.

 

Rep. Verger  will carry the bill.

 

443

Chair Shetterly

Committee stands at recess at 9:27 a.m. and reconvenes at 9:37 a.m.

 

 

OPENED WORK SESSION ON HB 2135

 

446

 

For the record, Mr. Warner has confirmed with the Speaker’s office that the Committee may remove the subsequent referral to Ways and Means and pass this bill directly to the floor.  It has been determined to have no fiscal impact.

 

450

Williams

MOTION:  MOVED TO RESCIND THE SUBSEQUENT REFERRAL TO WAYS AND MEANS AND REFER THE BILL TO THE FLOOR WITH A DO PASS RECOMMENDATION.

 

467

 

ROLL CALL VOTE:  MOTION PASSED 9-0-0

REPRESENTATIVES VOTING AYE:  Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair Shetterly.

 

Chair Shetterly will carry the bill.

 

 

 

Meeting adjourned at 9:40 a.m.

 

 

 

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Kessel, “Testimony in support of HB 2133”, 3 pages

2.       Yates, Staff Measure Summary HB 2133, 1 page

3.       Bond, “Testimony on HB 2134”, 1 page

4.       Yates, Staff Measure Summary HB 2134, 1 page

5.       Bond, “Testimony in support of HB 2135”, 8 pages

6.       Yates, Staff Measure Summary HB 2135, 2 pages

7.       Bond, “Testimony on HB 2136”, 2 pages

8.       Yates, Staff Measure Summary HB 2136, 1 page