WORK SESSIONS ON HB 2299A, HB 3610,

 HB 3278, HB 3551, HJR 18, SB 327

 

TAPE 144, 145, A-B

 

HOUSE REVENUE COMMITTEE

APRIL 28, 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 Mark Hass

                                                Representative Elaine Hopson

                                                Representative Max Williams                                               

 

Members Excused:                      Representative Pat Farr

 

Witness Present:                        Mike Burton, Economic and Community Development Department

                                                Tom Lindhares, Columbia County Assessor,

                                                            Oregon State Association of County Assessors

                                                Tony Hyde, Association of Oregon Counties

                                                            Columbia County Commissioner

                                                Paul Chalmers, Umatilla County Assessment and Taxation

                                                Representative Betsy Johnson

                                                Casina Squires, Special Districts Association of Oregon

                                                Senator Ted Ferrioli, District 30

                                                Bill Hansell, Umatilla County Commissioner

                                                Pat Shaw, Gilliam County Tax Assessor

                                                Mike McArthur, Sherman County Judge

                                                Inge Deckert, Oregon State Treasury Department

                                                Cynthia Burns, Oregon Attorney General’s Office

                                                Representative Jeff Kropf, District 17

                                                Gill Riddell, Association of Oregon Counties

                                                Dexter Johnson, Legislative Counsel

                                                Marcia Kelley

                                                Mark Kendell, Oregon Office of Energy

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Mazen Malik, Legislative Revenue Office

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 144, SIDE A

004

Chair Shetterly

Calls meeting to order at 8:35 a.m.

 

OPENED WORK SESSION ON HB 2299-A

 

012

Mazen Malik

Described –A8, and –A9 amendments.  Described difference between –A7 and –A9 amendment deals with the exemption eligibility if requirements not met for the first year. –A7 will give exemption regardless; -A9 gives exemption year per year; -A8s modify the –A6.

 

100

Mike Burton

Spoke in support of HB 2299.  Prior testimony given had not seen -6 amendments, but spoke to it thinking it was Mr. Pascone’s amendment which it was not.  Discussed -7 and -9 amendments reflect Mr. Pascone’s issues.  -6 and -8 amendments are refinements in language OECDD has negotiated with cities, counties, special districts and others.

 

082

Chair Shetterly

The Committee has not seen the -7. 

 

087

Burton

-A6 superseded by –A8.

 

091

Chair Shetterly

Does the Committee have the –A5?

 

092

Malik

Answered affirmatively and described.

 

101

Chair Shetterly

-A9 deals with Albany Millersburg issue, our approach was if not qualified this year, do not lose the exemption for all future years, just suspended for the year for which not qualified.

 

106

Burton

Answered affirmatively.  That creates an annual certification for the enterprise zone for firms that would qualify under that mechanism, requiring additional work on behalf of the Assessor.

 

157

Rep. Berger

Regarding -A9 if not qualified in first year, can qualify in subsequent of 5 years.  What if a person qualified the first two years, didn’t the third, would that person be qualified in the 4th?

 

125

Burton

Current law already allows for that circumstance, where current law is lacking is in addressing the first year circumstance.

 

126

Chair Shetterly

There already is an annual certification.

 

127

Burton

No, described current law.

 

141

Tom Lindhares

Thought current statutes allow if miss 1st year, and filing 2nd and 3rd year.  Assessors look at companies each year through annual statement of compliance.  HB 2299 institutes a claim form companies would have to file for each year of exemption, plus year following exemption.

 

205

Tony Hyde

Concerned about policy piece of section 34c, HB 2299 as it affects a delicate funding scheme in Columbia County and puts at risk development of two power plants. 

 

189

Chair Shetterly

How do you propose to fix it?

 

190

Commissioner

Tony Hyde

Propose elimination of 34c. Estimated affect on Columbia County is $5 million.

 

195

Rep. Verger

Do you know how many counties would be affected?  Coos County also has an urban renewal district enterprise zone.

 

198

Commissioner Hyde

Does not know.

 

200

Chair Shetterly

The specific issue is you have a current agreement that this would affect?

 

204

Commissioner Hyde

Answered affirmatively.

 

234

Burton

Discussed origins of 34c, driven by a company building an electrical generating facility under construction in Northeastern Oregon.

 

238

Burton

Suggested a solution for Columbia County is to have this take affect in two years.

 

241

Rep. Hass

This issue was troublesome in the previous committee. Why would we provide an incentive to someone who has made the decision to go there?

 

251

Burton

This is not the Department’s issue.  Speculation about company’s understanding of construction in progress law.

 

259

Burton

Department’s agenda is in regard to enterprise zone businesses not treated the same. The proposal would treat all enterprise zone businesses similarly.

 

269

Commissioner Hyde

Provided alternative regarding urban renewal area within the enterprise zone may address the issue.

 

281

Chair Shetterly

The affect of 34c, may not have been comprehended beyond specific project, may be remedied by another amendment.

 

290

Paul Chalmers

Discussed Cowpine Project in Hermiston issue as project problem, not problem with the planning process.

 

304

Rep. Johnson

Here supporting Columbia County Commissioner and Assessor.

 

365

Casina Squires

Discussed -8 amendments a result of concerns with leading sum language.

 

386

Rep. Verger

Who has to agree and on what?

 

390

Squires

This deals with a reimbursement fee; it is based on a negotiation that has already taken place.  Puts in statute that negotiated fee among city or county and affected taxing districts.

 

396

Rep. Verger

When you pass a bill into state law affects more than single city.

 

404

Rep. Hass

Washington County had concern over number of people in the negotiating room, if too many people some agreements might not be reached.

 

448

Squires

Discussed origination of 75% language on service fee.

 

444

Burton

Discusses 2 step negotiation.

 

480

Chair Shetterly

Closed the Work Session on HB 2299.

 

OPENED WORK SESSION ON HB 3551

TAPE 145, SIDE A

 

030

Malik

Provided description of HB 3551.

 

041

Rep. Betsy Johnson

Offered support for Commissioner Hyde and Assessor Linhares, in opposition to HB 3351.

 

048

Commissioner Hyde

Spoke in opposition to amendment, discussed delicate urban renewal plan within enterprise zone for projected power plants which are relying on current strategy.  Suggests either 10 years of 50% or 5 years of 100%, double-dipping is not acceptable.

 

070

Rep. Barnhart

There are some improvements the URD has to pay for, with this proposal, you cannot pay for them?

 

074

Commissioner Hyde

Answered affirmatively.

 

083

Tom Linhares

Described suggested amendments, allowing 5 year automatic exemption, second five years up to local jurisdiction.

 

102

Chair Shetterly

Recess Work Session on HB 3551

 

OPENED WORK SESSION ON HB 3610

 

104

Chair Shetterly

Bill on loan from Rules and Public Affairs Committee.

 

107

Sen Ted Ferriolli

Concerns with HB 3160 on how to tax and incent windpower development. Need to raise income for local communities. Discussed possibility of tax exempt bonds for transmission facilities. HB 3160 exempts wind turbine from property taxation and that puts a hole in pocket of communities that attracted industry.  Suggests bill raises question of what the future of taxation should be. Need to hold harmless communities that have already located companies.  Discussed pros and cons to proactive and retroactive action on HB 3160.

 

202

Bill Hansell

Spoke in opposition to HB 3160 as it would take away property taxes from the community. Discussed Umatilla County wind energy facilities. No problems with incentives, companies are coming based on wind production capabilities and are not requiring incentives.  Florida Power is opposed to this tax, feels property tax gives them a known figure for their budget.

 

243

Pat Shaw

Spoke in opposition to HB 3160, if passed taxing districts would suffer.  Discussed comparison of projected income received in lieu tax vs. ad valorum tax, (Exhibit 3).

 

291

Judge Mike McArthur

Spoke in opposition to HB 3160.  Discussed biggest obstacle in Sherman County wind power is transmission, cited high connection costs.  Need for larger discussion on wind energy and how to incentivize it.

 

344

Chair Shetterly

Discussed protocol for returning bill to the Rules Committee is a memorandum from Chair representing the sense of the committee.  Senses the Committee is concerned regarding the impact of this bill on local government; suggestion this bill not move forward unamended addressing impact on local governments. Asked Committee to forward memoranda and it would be attached to the memorandum.

 

365

Rep. Barnhart

Another issue is the potential for distortion in the business plan of the companies generating wind power due to change from flat tax to production tax.

 

382

Chair Shetterly

Cited need for further examination of this tax in the context of other tax incentives and credits at the federal and state level.

 

385

Rep. Hass

Supported Chair’s memorandum, would like to make it clear to the Rules Committee that this did not come over and have a thorough hearing given back with seal of approval from Revenue Committee.

 

395

Chair Shetterly

That would be the sense of my memorandum expressing these concerns. Will send memo to Committee for comments.

 

398

Rep. Hass

Why is it in the Rules Committee and not Revenue Committee?

 

403

Chair Shetterly

Closed Work Session on HB 3610.

 

 

OPENED WORK SESSION ON SB 327

 

425

Malik

Provided description and background of SB 327 alters qualification for non-urban enterprise zones, requirements for unemployment.

 

461

Rep. Verger

Oregon Revenue Coalition does not oppose this bill. ORC recognizes enterprise zones are tied to jobs and job creation.  Does affect a number of counties and needs to be a policy that stands on its own.  Does not change much except for counties that have unemployment problem if have 11.5% unemployment, need to protect the tools counties have.  There will be revenue impact because of enterprise zone offering exemptions.

 

 

TAPE 144, SIDE B

 

040

Rep. Hass

MOTION:  MOVED SB 327 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION

 

ROLL CALL:  MOTION PASSED 9-0-0

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

 

Rep. Verger will carry the bill.

 

053

Chair Shetterly

Closed the Work Session on SB 327.

 

OPENED WORK SESSION ON HJR 18

 

055

Steve Meyer

Provided description of HJR 18 and -2 amendments, (Exhibit 4).

 

097

Chair Shetterly

Discussed coordination of bill and existing constitution.

 

099

Meyer

Discussed implementing legislation requirement, submission to voters in the 2004 primary election.

 

100

Chair Shetterly

What was the vote on this last session?

 

107

Inge Deckert

The vote was 51 ayes, one no last year.

 

107

Rep. Barnhart

Discussed the difference between the -1 and -2 amendments is to consolidate the definition of capital costs for the various purposes that funds could be spent in the local schools.  Is that correct?

 

124

Cynthia Burns

Explained capital costs for purposes of bond proceeds can be used to make a grant to school districts and other monies that come into education stability fund.  Discussed more restrictive definition under Measures 5 and 50.

 

142

Rep. Barnhart

With only -1 amendment, there could be two definitions of capital costs.

 

143

Chair Shetterly

Without -2?

 

144

Rep. Barnhart

Is that a serious or minor problem, how do you clarify for the purpose of administering funds.

 

150

Burns

If did not have -2, there is no definition of capital costs for education stability fund, discussed tracking issue.  Issue in getting representations back from the school districts regarding funds used for allowable purposes.  This reduces the amount of tracking required.

 

175

Rep. Barnhart

The affect is that construction could get done, just requires more accounting in the process.

 

172

Burns

Answered affirmatively.

 

174

 

Questions and discussion regarding matching fund.

 

206

Rep. Hass

MOTION:  MOVED ADOPTION OF THE –2 AMENDMENT INTO HJR 18.

 

204

Rep. Barnhart

Discussion of opposition to the -2 for the record, based on requirement for changing the Constitution should be used for big changes.

 

225

Chair Shetterly

ORDER:  THERE BEING NO FURTHER OBJECTION, THE CHAIR SO ORDERS. (REP. FARR, EXCUSED)

 

224

Rep. Hass

MOTION:  MOVED HJR 18 AS AMENDED BY THE -2 AMENDMENTS TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION, AND THE SUBSEQUENT REFERRAL TO WAYS AND MEANS COMMITTEE BE RESCINDED.

 

242

Rep. Verger

For the record, voiced her opposition to the -2 amendment and the bill, as historically communities have been responsible for building and maintaining schools, cited need for funding of actual programs before capital costs.

 

268

Rep. Scott

Agreed with Rep Verger, needs to be more a local issue.  Until proper funding, opposed to going out on statewide basis.

 

270

Rep. Hass

Respectfully disagreed with Rep Verger as to larger districts being able to build more schools easier. Problem not keeping up with amount of growth.

 

295

Rep. Barnhart

Need to do all of the above, need to raise $1 billion for education not now in the basic school budget. Agreed with Rep. Verger, have to find more funds for regular operating budget.

 

323

Chair Shetterly

Agreed with Rep. Scott and Rep. Verger.  There are two issues one is funding schools, the other is the state’s participation in capital funding.  Do not see HJR 18 as opposed to basic funding of schools.  On the issue of local participation it is a matter for implementing legislation and rule making.

 

350

 

ROLL CALL:  MOTION PASSED 6-2-1

REPRESENTATIVES VOTING AYE:  Barnhart, Berger, Farr, Hass, Hopson, Williams, Chair Shetterly.  VOTING NO:  Scott, Verger.  EXCUSED:  Farr.

 

Chair Shetterly will carry the bill.

 

359

Chair Shetterly

Closed the Work Session on HJR 18.

 

 

OPENED WORK SESSION ON HB 3278

 

392

Lizbeth Martin-Mahar

Provided description of HB 3278, (Exhibit 5), governor’s letter, (Exhibit 6) discussed -1, (Exhibit 7) and -2 amendments (Exhibit 8).  Discussed revenue impact (Exhibit 9).

 

 

OPENED WORK SESSION ON HB 3551

TAPE 145, SIDE B

 

025

Rep. Jeff Kropf

Asked Committee to ignore HB 3278, the companion to HB 3551, at this time.  Discussed agreement with Governor’s office to allow inclusion of biofuels, bio-oils language in the current pollution control tax credit.

 

071

Rep. Kropf

Discussed major flaw in the relating clause of HB 3551 that is corrected with -2 (Exhibit 10), biofuels, means biodiesel, bio-oils which does not fit within the relating clause.  Will be looking for another vehicle for the amendment.

 

088

 

 

105

 

 

130

 

Rep. Kropf

 

 

Rep. Kropf

 

 

Rep. Kropf

Discussed work group meeting following initial hearing focused on how expansion can be allowed within enterprise zone and ethanol statutes. 

 

Wants to ensure 10 year program where company could use enterprise zone statute, expanded ethanol statutes. 

 

Discussed agreements with local governments using enterprise zone and ethanol statutes together, .negotiation of additional years.

 

149

Rep. Kropf

Created mechanism for Economic Community Development Department to extend 5 year period of exemption if a majority of the taxing districts approved.

 

170

Chair Shetterly

Intent is for extended period to be a local option.

 

172

Rep. Kropf

Answered affirmatively.

 

175

 

Questions and discussion regarding makeup of local taxing districts.

 

179

Chair Shetterly

Consensus among a majority is that current language on local options?  It seems awkward.  Why not agree with 51%.

 

164

Casina Squires

May need an amendment to include “The County” and “a majority of the other taxing districts”.  Discussed real life scenario in Columbia County.

 

207

Gil Riddell

AOC has not seen -2 amendment, agreed may need amendment to include “The County plus a majority of other special districts”. Discussed ambiguities affecting the current agreement with Columbia County.

 

220

Chair Shetterly

Regarding HB 3278 clarified will amend language into HB 2652, HB 3551 will go into another bill.

 

202

Dexter Johnson

Regarding consensus language?

 

235

Chair Shetterly

Is that standard language with other local option, property tax issues? Why not just a majority?

 

239

Johnson

Not standard, there isn’t standard language for local option.  This is OEDDC decision, not local government decision.  The Department is not required to grant an extension, think there would be a problem if it were required, based solely on consensus.

 

255

Johnson

They have to independently determine it will promote economic development.  Can’t have one local taxing district tell another, what local taxes should be.

 

266

 

Question and discussions regarding the definition of consensus.

 

300

Marcia Kelley

Provided information that City of Salem, Marion County and the Transit District, have in the past had property tax plan that they get together and adopt and may be used as a model, rather than consensus.

 

313

Mark Kendell

On behalf of Director Michael Grainey, spoke regarding HB 3551, ethanol and biodiesel markets are merging as principle fuels experiencing volatility and competition.  Discussed developing need, competition for stocks of biofuels.

 

356

Chair Shetterly

Closed Work Session HB 3278 and HB 3551

 

 

 

364

Chair Sheterly

Meeting adjourned at 10:25 a.m.

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant

 

Exhibit Summary:

1.       Malik, “HB 2299-A8 Amendment”, 1 page

2.       Malik, “HB 2299-A9 Amendment”, 2 pages

3.       Shaw, “Condon  Wind Power, LLC”, 2 pages

4.       Meyer, “Draft Fiscal Analysis of HJR 18, 1 page

5.       Martin-Mahar, “Staff Measure Summary HB 3278

6.       Martin-Mahar, “Letter Governor’s Office Pollution Control Tax Credit:  House Bills 3278 and 2652

7.       Martin-Mahar, “HB 3278-1 Amendment”, 3 pages

8.       Martin-Mahar, “HB 3278-2 Amendment”, 4 pages

9.       Martin-Mahar, “Revenue Impact HB 3278”, 1 page

10.   Rep. Kropf, “HB 3551-2 Amendment”, 4 pages

11.   Oregon Revenue Coalition, “Testimony HB 2299”, 3 pages

12.   ORC, “Testimony HB 3551”, 2 pages

13.   ORC, “Testimony HB 3278”, 2 pages

14.   League of Women Voters of Oregon, “Testimony HB 3278”, 1 page