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WORK
SESSION SB 226, SB 221, SB 225, HB 2368-A, WORK SESSION HB 3449, HB 2166 |
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TAPE 142 AB,
143 A |
APRIL 24,
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: John Phillips, Department of Revenue
(DOR)
Debra
Buchanan, DOR
Lynn
Partin, Housing and Community Services Department
Matt
McCauley, Oregon Department of Justice
Tobacco Compliance Task Force
Don
O’Meara, DOR
Jim
Gardner, Gardner and Gardner for Phillip Morris
Bill
Cross, Council of Independent Tobacco Manufacturers
Bob
Russell, Oregon Trucking Association
Patti
O’Sullivan, Portland Public School District
Brian
Reeder, Department of Education
Staff Present: Paul
Warner, Legislative Revenue Officer
Mazen
Malik, Legislative Revenue Office
Lizbeth
Martin-Mahar, Legislative Revenue Office
Steve
Meyer, Legislative Revenue Office
Kathy
Tooley, Committee Assistant
TAPE 144, SIDE A
|
004 |
Chair Shetterly |
Calls meeting to order at 8:40 a.m. |
|
016 |
Mazen Malik |
Provided background and description of SB 226 (Exhibit 1). Discussed -1 amendment (Exhibit 2). No fiscal impact. |
|
049 |
Chair Shetterly |
The revenue impact is indeterminate? |
|
051 |
Malik |
Answered affirmatively. |
|
044 |
John Phillips |
Worked with the treasurer on amendment, discussed time frame changes,
(Exhibit 3). |
|
063 |
Rep. Barnhart |
Why can’t this be done by rule, rather than statute? |
|
071 |
Phillips |
Could be, it has been there since 1979. |
|
076 |
Chair Shetterly |
Would agree. Department may
want to ask for broader rule making authority next biennium for issues that
don’t need legislative oversight. |
|
080 |
Chair Shetterly |
Closed Public Hearing SB 226. |
OPENED WORK SESSION ON SB 226
|
086 090 |
Rep. Hass Rep. Hass |
MOTION: MOVED SB 226 TO THE
HOUSE FLOOR WITH A DO PASS RECOMMENDATION AMENDED MOTION: MOVED
ADOPTION OF THE –1 AMENDMENT INTO SB 226 ORDER: HEARING NO OBJECTION,
THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT EXCEPT REP. WILLIAMS, EXCUSED) |
|
093 096 |
Rep. Hass |
MOTION: MOVED SB 226, AS
AMENDED, TO THE HOUSE FLOOR FOR PLACEMENT ON THE CONSENT CALENDAR WITH A DO
PASS RECOMMENDATION. ROLL CALL: MOTION PASSED 9-0-0 REPRESENTATIVES VOTING AYE:
Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair
Shetterly. |
PUBLIC HEARING ON SB 221
|
118 |
Lizbeth Martin Mahar |
Provided description of SB 221, (Exhibit 4), act is consistent with
the Federal Victims of Terrorism Tax Relief Act of 2001 allowing IRS
postponement of deadlines. Does not
have revenue or fiscal impact. |
|
141 |
Debra Buchanan |
Reiterated Martin-Mahar’s testimony. Summarized SB 221, (Exhibit 5). |
|
149 |
Chair Shetterly |
Authority predicated on two events: IRS action, or state declared
emergency? |
|
152 |
Buchanan |
Answered affirmatively. Gave
examples of other deadlines that might occur. |
|
162 |
Chair Shetterly |
Is there some other process for declaring a state emergency, is a
Governor’s proclamation? |
|
164 |
Buchanan |
I believe it is by the Governor. |
|
167 |
Chair Shetterly |
Closed the Public Hearing on SB 221. |
OPENED WORK SESSION ON SB 221
|
169 171 |
Rep. Scott |
MOTION: MOVED SB 221 TO THE
HOUSE FLOOR WITH A DO PASS RECOMMENDATION ROLL CALL: MOTION PASSED 9-0-0 REPRESENTATIVES VOTING AYE:
Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair
Shetterly. Rep. Barnhart will carry the
bill. |
|
187 |
Chair Shetterly |
Closed the Work Session on SB 221. |
OPENED PUBLIC HEARING ON SB 225
|
192 |
Malik |
Provided description of SB 225 as Measure 50 housekeeping, (Exhibit
6). Discussed -1 amendment, (Exhibit
7). Discussed revenue impact (Exhibit 8). |
|
289 |
Phillips |
Described SB 225 as a reconciliation and catch-up on issues from
implementation of Measure 50, (Exhibit 9). Described -1 amendment regarding surviving spouses, addressed with
Sen. Dukes and Dexter Johnson of Legislative Counsel, (Exhibit 10). |
|
347 |
Chair Shetterly |
You worked this out with Sen. Dukes? |
|
348 |
Phillips |
Answered affirmatively. |
|
359 |
Chair Shetterly |
Closed public hearing on SB 225. |
OPENED WORK SESSION ON SB 225
|
362 366 |
Rep. Verger |
MOTION: MOVED ADOPTION OF THE
–1 AMENDMENT INTO SB 225. ORDER: HEARING NO OBJECTION,
THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT). |
|
375 381 384 |
Rep. Verger Rep. Verger |
MOTION: MOVED SB 225, AS
AMENDED, TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION. AMENDED MOTION: MOVED SB 225,
AS AMENDED, TO THE HOUSE FLOOR FOR PLACEMENT ON THE CONSENT CALENDAR WITH A
DO PASS RECOMMENDATION ROLL CALL: MOTION PASSED 9-0-0 REPRESENTATIVES VOTING AYE:
Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair
Shetterly. |
OPENED WORK SESSION ON 2166
|
400 |
Martin-Mahar |
Described -4 amendments (Exhibit 11). Provided background (Exhibit 12), and revenue impact (Exhibit
13). |
|
479 |
Chair Shetterly |
This bill did two things, added acquisition costs to the credit;
increased the amount that could be assigned from 80% to 100%. The increase from 80% to 100% had the
revenue impact. The Chair requested -A4s
for the purpose of keeping the bill alive; move it to the Senate as possible
to accommodate revenue impact in the current biennium and have it available
to the Senate to make those amendments.
In the worst case delay the revenue impact of increasing the 80% to
100% until the next biennium. |
|
509 |
Rep. Verger |
Is there any revenue impact in 2003-05? |
TAPE 143, SIDE A
|
040 |
Lynn Partin |
No. All other changes are
taking place in 2004; the only thing moving out is the bill with the revenue
impact of 80% to 100% transferability. |
|
047 |
Chair Shetterly |
May be able to amend and add back in, in the Senate |
|
048 |
Partin |
Approved bill as is. |
|
052 |
Rep. Hass |
Requested a real world example of selling or transferring credit to a
taxpayer subject to taxation. |
|
055 |
Partin |
Described big community based projects are usually built by
non-profits who can’t take the credits.
To get equity into the project, credits are sold for community
investment credits and additional value received. |
|
070 |
Rep. Farr |
MOTION: MOVED ADOPTION OF THE
–A4 AMENDMENTS INTO HB 2166. ORDER: HEARING NO OBJECTION,
THE CHAIR SO ORDERS. (ALL MEMBERS PRESENT.) |
|
075 080 |
Rep. Farr |
MOTION: MOVED HB 2166, AS
AMENDED, TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION ROLL CALL: MOTION PASSED 9-0-0 REPRESENTATIVES VOTING AYE:
Barnhart, Berger, Farr, Hass, Hopson, Scott, Verger, Williams, Chair
Shetterly. Rep. Farr will carry the bill. |
|
082 |
Chair Shetterly |
Closed Work Session on HB 2166 |
OPENED PUBLIC HEARING ON HB 2368
|
100 |
Richard Yates |
Provided background and description of HB 2368, (Exhibit 14). Provided –A5, (Exhibit 15); and –A6 amendments, (Exhibit 16). |
|
120 126 |
Matt McCauley McCauley |
Described history of Tobacco Compliance Task Force. Discussed non-compliance crime issue and
effectiveness of current statutes. Discussed “Cigarette Tax”, (Exhibit 17) Historical Tobacco
Distribution, (Page 2, Exhibit 17), and “Current Tobacco Distribution”, (Page
3, Exhibit 17). Intent to get best
enforcement structure. Tobacco world divided into two categories: Cigarettes
and other tobacco. Lack of enforcement power for licensing requirement has
led to non-compliance with the tax.
Discussed sponsors and input on the bill. Burden on business from this bill relate to requirements in “other
tobacco products sales invoice”. Compliance problems and solutions addressed
by HB 2368. |
|
200 |
Don O’Meara |
Impact of tax non-compliance is in “other tobacco products” area. Auditor
discovered $2 million in unpaid taxes in 15 month period. Executed search
warrants on illegal operator, legitimate distributors reported business
increased 30%. |
|
247 |
Rep. Barnhart |
Concern regarding interstate issues, and extraterritorial
jurisdiction. |
|
250 |
McCaulley |
Discussed federal cooperation. Amendments address threshold out of
state business can establish nexus to allow criminal and/or civil
enforcement. |
|
262 |
Rep. Barnhart |
What is the criminal penalty for violating delivery sales permit
requirements? |
|
270 |
McCauley |
Provided background, Phillip Morris drafted delivery sales provisions. Attorney General’s office supports the
general concept of delivery sales provisions, but needs adjustment. |
|
280 |
McCauley |
Penalty is an A Misdemeanor for violation with criminal penalties;
and civil penalties would include a fine. |
|
286 |
Rep. Barnhart |
Questions and discussion regarding cigarette giveaway and taxation. |
|
302 |
Rep. Verger |
Are Russian companies required to get a permit for delivery sale in
Oregon? |
|
307 |
McCauley |
Depends on how cigarettes come into the country, if for mass
distribution, would need customs and Alcohol, Tobacco and Firearms licensing
for distribution with duty paid on import. Russian cigarettes sent via mail/UPS,
directly to the consumer would not be known; Manufacturer would not have to
be licensed to do that. Described
transnational tax avoidance problem. Described federal law requirements. Sent letters to 600 internet distributors,
none have responded as to who they are mailing cigarettes to. |
|
349 |
Rep. Verger |
Of global businesses, are they going to add a tax, where is the
liability? |
|
360 |
McCauley |
Current law on cigarettes puts the ultimate tax liability is on
consumer. |
|
381 |
Rep. Verger |
Part of bill is aimed at underage smoking, observed now enticing
movie stars to smoke; don’t know how you plug that up, but it bears watching. |
|
391 |
McCauley |
Tobacco industry sells a very addictive substance, every time state
plugs holes, ingenious people find way around. Bill tries to provide a legal
structure that allows flexibility to change with the times and make penalties
enough to deter non-compliance. |
|
438 |
Rep. Verger |
Where law suit against Phillip Morris is successful, are you worried
the money could dwindle if they go out of business? |
|
427 |
McCauley |
Discussed concerns. Discussed HB 2094 non-participating
manufacturer’s aspect of MSA, discussed task force active role in
enforcements of that law and hundreds of tobacco companies located
offshore. |
|
496 |
Chair Shetterly |
Amendments? Do you need time? |
TAPE 142, SIDE B
|
040 |
McCauley |
Difficulty with delivery sales aspect of the amendment, scheduled a task
force work group and Pete Shepherd will communicate to the Committee. |
|
048 |
O’Meara |
There is another issue that needs time, regarding Ways and Means
funding for task force and another amendment which is not ready as yet. |
|
060 |
Jim Gardner |
Discussed delivery sales amendments. -A6 adds tools for the state for
police enforcement. To Rep. Barnhart’s question a recent 2nd
Circuit decision upheld the constitutionality regarding internet sales of
cigarettes. |
|
074 |
Gardner |
Discussed enforceability issue in -A6 amendment, asks manufacturers
to enforce, in addition to Attorney General, against contraband sales. |
|
087 |
Gardner |
Estimates untaxed sales of Gray/Black market at +30%. Discussed
companion bills. |
|
097 |
Gardner |
Work group will look at UPS/Fedex concerns about shipping documents
and NPMs. |
|
104 |
Bill Cross |
Discussed concerns about additional regulations on compliant NPMs that
no other state requires. Recently retained by the coalition. |
|
131 |
Rep. Verger |
Do you have reasons to oppose licensing requirements in the bill? |
|
135 |
Cross |
Know it is an issue, not comfortable discussing other than no other
state has the requirement. |
|
145 |
Bob Russell |
Concerns with HB 2368-A, and one set of amendments relating to
transport. Provided history meetings
with DOR to work through concerns. DOR
asked cigarette transporters inside and outside the United States to provide
notification when transporting cigarettes destined for Oregon. Doesn’t comport with current practices. Trucking companies pick up package, but
don’t know its contents; -5 amendments fixed that problem. |
|
176 |
Russell |
Delivery service requirement to verify cigarettes have stamps has
been partially addressed in -6 amendments. Issue with -6 says in complying
with notice seller puts on shipping document, modern shipping done
electronically, with no bill of lading. Current industry practices make it
difficult to comply with requests and difficult to customize for delivery to
Oregon only. Discussed public and
private delivery issues. |
|
220 |
Rep. Barnhart |
Trucking company may haul packages without knowing the contents? |
|
222 |
Russell |
True for package delivery services.
Transporter defined in delivery sales. |
|
238 |
Chair Shetterly |
Hoping for consensus amendments.
If the work group cannot agree, would request alternative amendments
and the Committee will make choices. |
|
248 |
Chair Shetterly |
Closed Public Hearing HB 2368. |
OPENED WORK SESSION ON HB 3449
|
255 |
Meyer |
Discussed -4 amendments, (Exhibit 18), clarifies language applies
only to Portland School Districts. |
|
275 |
Chair Shetterly |
Ozzie Rose and his interests are happy with these amendments? |
|
275 |
Patti O’Sullivan |
Answered affirmatively. |
|
279 |
Meyer |
Second change is new language in the event Portland pays off their
gap bond. Change is either “A” or “B”
not both at the same time. Balance of
language deals with amending temporary and permanent statute changes. |
|
304 |
O’Sullivan |
Concur with changes, makes major technical changes; attempt to ensure
it doesn’t inadvertently make changes at the same time. Adding this bill to a
Senate bill allowing look at entire school funding package at the same time. |
|
332 |
Chair Shetterly |
Discussing the amendments. This doesn’t disadvantage any school
district. |
|
335 |
O’Sullivan |
Answered affirmatively. This
is not a formula bill. |
|
340 |
|
Questions and discussion regarding desegregation dollars and combining
this bill with SB 550 and SB 819. |
|
354 |
Rep. Verger |
One of the reasons I have been supportive of this bill is because it
was Portland’s decision made about Portland Schools. Will that complicate that position if
folded into another bill? |
|
364 |
O’Sullivan |
Does not believe so, the bill has had a hearing if SB 819 is not
supported, it can go on its own. |
|
373 |
Chair Shetterly |
These bills will still be discrete in their impact. |
|
362 |
Brian Reeder |
Discussed gap bond rate and permanent rate. It applies only to Portland, question is why does that make
sense other than Portland needs more money, but so does every other school
district in this state? |
|
407 |
Chair Shetterly |
Is this a discussion for the Committee? |
|
408 |
O’Sullivan |
Responded no. |
|
413 |
Chair Shetterly |
Closed Work Session HB 3449. |
|
415 |
Chair Shetterly |
Meeting adjourned at 10:00 a.m. |
Tape Log Submitted by,
Kathy Tooley, Committee
Assistant
Exhibit Summary:
1.
Malik,
“Staff Measure Summaries, Revenue Impact SB 226”, 3 pages
2.
Malik,
“SB 226-1 Amendment”, 2 pages
3.
Phillips,
“Testimony SB 226 and the -1 Amendment”, 1 page
4.
Martin-Mahar,
“Staff Measure Summaries SB 221”, 2 pages
5.
Buchanan,
“Testimony SB 221”, 1 page
6.
Malik,
“Staff Measure Summaries, Revenue Impact SB 225”, 3 pages
7.
Malik,
“SB 225-1 amendment”, 3 pages
8.
Malik,
“Revenue Impact SB 225”, 1 page
9.
Phillips,
“Testimony SB 225 Reconciliation of 2001 Legislation”, 2 pages
10.
Phillips,
“Testimony SB 225-1 Amendment”, 2 pages
11.
Martin-Mahar,
“HB 2166-A4 amendment”, 23 pages
12.
Martin-Mahar,
“Staff Measure Summary HB 2166A-A4, 1 page
13.
Martin-Mahar,
“Revenue Impact HB 2166A-A4”, 1 page
14.
Yates,
“Staff Measure Summary HB 2368”, 1 page
15.
Yates,
“HB 2368-A5 Amendment”, 1 page
16.
Yates,
“HB 2368-A6 Amendment”, 6 pages
17.
McCauley,
“Cigarette Tax”, 3 pages
18.
Meyer,
“HB 3449-4 Amendment”, 16 pages