WORK SESSION HB 2041-A  

 

TAPE 186 AB, 187 A

 

HOUSE REVENUE COMMITTEE

JUNE 12, 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                                               

 

Other Legislators Present:            Representative Alan Brown

                                                Representative John Mabrey

                                                Representative George Gilman

                                                Representative Mitch Greenlick

                                                Representative Terry Beyer

 

 

Witness Present:                        Jim Torrey, League of Oregon Cities Transportation Committee, and

                                                            Eugene Mayor

                                                Andrea Forgue, League of Oregon Cities

                                                Susan Schneider, City of Portland, Government Relations

                                                Ralph Groener, American Federation of State, County,

                                                            and Municipal Employees

                                                Judge Laura Pryor, Judge Gilliam County and

                                                            Transportation Committee, Association of Oregon Counties.

                                                Bill Penhollow, Association of Oregon Counties

                                                Darrell Fuller, Oregon Highway Users Alliance, (OHUA)

                                                Kate Richardson, Oregon State Treasury

                                                Jacob Brostoff, 1000 Friends of Oregon

                                                Matt Blevins, Oregon Environmental Council

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Richard Yates, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 186, SIDE A

 

114

Chair Shetterly

Calls meeting to order at 9:40 a.m.

 

OPENED WORK SESSION ON HB 2041-A

 

138

 

 

 

 

 

 

156

Richard Yates

 

 

 

 

 

 

Yates

Provided slide presentation (Exhibit 1); Staff Measure Summary HB 2041-A, (Exhibit 2); Revenue Impact Statement HB 2041-A; letter from ODOT in response to questions asked during orientation regarding triple trailers, (Exhibit 3); agreement between Multnomah County and the Cities on how the plan to spend moneys, (Exhibit 4); HB 2041-A10, (Exhibit 5); and HB 2041-A11 Amendments, (Exhibit 6).

 

Provided slide presentation of “HB 2041 Major Provisions”, (Page 1, Top Slide, Exhibit 1).

 

157

Yates

Discussed “Overview”, (Page 1, Center, Exhibit 1).

 

183

Yates

Discussed “Net Proceeds of Bonds”, (Page 1, Bottom, Exhibit 1).

 

204

Yates

Discussed “Annual Taxes and Fees”, (Page 2, Top, Exhibit 1).

 

212

Rep. Hass

Per year or per biennium?

 

214

Yates

Annual.

 

224

Yates

Referred to “HB 2041-7 (HB 2367 Fees)”, (Page 8, Exhibit 1).

 

260

Yates

Referred to “Transportation Plan Goals and Results”, (Page 7, Exhibit 1).

 

362

Yates

Discussed “Distribution of New Revenue, (Page 2, Center, Exhibit 1).  Noted taxes did not include fee increases of $3.6 million from travel trailers, motor homes and campers that are dedicated to parks. The original bill required that money go to the Lewis and Clark Bicentennial, though there are no restrictions.  If there is wedge money for the counties, at least one-half of Multnomah County’s portion is to be used for bridges, the balance spent according to agreement reached between the cities and counties (Exhibit 4).

 

409

Yates

Discussed “Income Tax Capture”, (Page 2, Bottom, Exhibit 1).

 

429

Rep. Verger

Asked for clarification on Department of Administrative Services (DAS) estimates.

 

430

Yates

DAS will start with projects funded by net proceeds of the bonds, private sector work will be generated by the projects, and personal income taxes will be paid as a result.  Those are identified revenues and must be included in the Governor’s budget; it requires the Legislature to appropriate those amounts to the Transportation Reinvestment Fund (TRF). It provides money that is not dedicated to the highways because it is general fund money.

 

452

Chair Shetterly

There’s a cap on different components of the TRF?

 

455

Yates

Answered affirmatively.

 

459

Yates

Referred to “HB 2041-7: 2005-07 Biennium Annualized, (Page 5, Exhibit 1).  Described uncertainty as to what the bond issues would be. Discussed bond issuance date of 2010 as an error, suspects issuance will be further out.

 

 

TAPE 187, SIDE A

 

040

 

042

 

 

050

Yates

 

Yates

 

 

Yates

Continued discussion regarding TRF distribution. 

 

Discussed provisions for mass transit vehicle replacement; capacity utilization; and truck engine tax credit.

 

Called the schedule over-aggressive; first biennium is a little short in revenue generation; there is a surplus in later biennia which reverts back to the general fund.

 

055

 

Questions and discussion regarding mass transit replacement.

 

069

Rep. Verger

Senior and disabled transit was not eliminated in the amendment?

 

070

Yates

Answered no.  Before it was noted as senior and disabled transit for any purpose.  Now it is vehicle replacement.

 

073

Rep. Berger

72% contracts and 58% wages, where do you get those?

 

078

Yates

Described process used to come close to the figures ODOT had in assessing job impact from expenditures.

 

088

Rep. Barnhart

What does term “contract factor” mean?

 

089

Yates

Defined “contract factor” as a percentage of the amount ODOT spends that results in private sector contracts.

 

094

Yates

Described “Use of Income Tax Revenue”, (Page 3, Top, Exhibit 1).

 

125

Chair Shetterly

Are these engines that would qualify under the pollution control tax credit criteria since there is a reduction?

 

130

Yates

Not sure, they are engines that will be required to meet or exceed EPA’s higher standards proposed for the future.  This assists them in substantial expenditures.  The tax credit is non-refundable so if the trucking firm does not make a profit, it does not get a check from the state.

 

144

Yates

Described “Project Selection”, (Page 3, Center, Exhibit 1).

 

167

Rep. Hass

Is there language giving preference to projects that are already in the planning stage, or should there be?

 

173

Yates

Believes Sections 10 and 39 of the bill require the use of revenues from bonds for select projects to maximize the creation of new jobs and use the private sector to the greatest extent possible. Modernization projects get priority over projects ready for construction.

 

175

Yates

ODOT shall select projects to maximize new jobs.

 

181

Chair Shetterly

That language is on page 11, lines 43-45.

 

183

Rep. Hass

Do you have the -16 amendments?

 

184

Chair Shetterly

I have those, they have not been distributed.

 

190

Rep. Farr

Is there language giving consideration or priority to Oregon-based companies?

 

192

 

195

Yates

Did not know what existed in current law; the bill did not address that issue.

 

Discussion providing example ensued.

 

198

 

Discussion regarding engine credit.

 

204

Yates

Discussed “Fees for Local Governments”, (Page 3, Bottom, Exhibit 1).  Referred Committee to worksheet entitled “HB 2041-7 (HB 2367 Fees), (Page 8, Exhibit 1).

 

217

Yates

Described “Other Provisions”, (Page 4, Top, Exhibit 1).

 

247

Yates

Described “Issues”, (Page 4, Center, Exhibit 1).

 

271

Yates

Discussed flat fees and a lawsuit by American Trucking Association (ATA) to have the weight mile tax declared unlawful.

 

290

Yates

Discussed revenue neutrality of flat fees.

 

310

Mayor Jim Torrey

Spoke in support of HB 2041-A as extremely important. Oregon cites are ready to perform maintenance on city streets immediately.  Said bridge issue was extremely important for Eugene and Oregon.

 

333

Rep. Hass

Technical question regarding a “well-intended amendment” offered by the Speaker. Learned there may be an unintended technical problem with Lake Oswego and Maywood Park. Is that true?

 

343

Torrey

Deferred to staff from LOC; was under the impression that the issues had been resolved.

 

335

Andrea Forgue

Understood issue had been resolved, not aware of any unintended consequences.

 

357

Rep. Hass

Saw the letter, (Exhibit 5) signed by Troutdale, Wood Village, Portland and all the cities and the county involved; but there are portions of Lake Oswego and Beaverton in Multnomah County that would be affected and were not party to that.

 

362

Forgue

Spoke with Cities of Lake Oswego, Beaverton, and Maywood Park. Those cities were apprised of the meetings and discussions with Multnomah County and east county cities and the City of Portland.  Her understanding is the intention of the Speaker was for the conversation to take place specifically with the cities that signed the letter of agreement.

 

376

Rep. Hass

Is there a reason to keep that language in this bill?

 

379

Forgue

Her understanding was that it had been resolved. Said it is the legislator’s decision; LOC supports the bill and the package moving forward.

 

412

Susan Schneider

Spoke in support of HB 2041. The Speaker had concerns about a 20 year-old existing agreement between City of Portland and Multnomah County resulting in the proposed language and how it might affect other cities in Multnomah County. Lake Oswego and Beaverton were part of early discussions; Maywood Park was invited, but could not participate.  Have met with other cities, result is the letter before the Committee, (Exhibit 5).

 

423

Rep. Hass

Does that make the language of the bill moot?  Is it your recommendation that it be removed or should it remain?

 

426

Schneider

Believed the language is moot, said it is within the Committee’s discretion whether it is left in or taken out.

 

432

Rep. Hass

Not having heard from Lake Oswego, concerned that there are technical issues which should be taken under consideration.

 

434

Rep. Verger

Would like to discuss removal of the language; concerned with setting precedent in a statewide package with counties involved in local issues.

 

450

Ralph Groener

Spoke in support of HB 2041. It is what is lost if this package doesn’t pass that is the problem.  Referred Committee to Exhibits from ODOT and the economist, the bridge problem could cost the state economy $123 billion in lost production and jobs in the next 25 years.  Cited state needs for major corridors to open the economy, produce jobs and move commerce.

 

 

TAPE 186, SIDE B

 

078

Rep. Farr

Would you agree that projects such as a West Eugene parkway that is being stalled, not necessarily by a lack of funds and litigation, would allow a free flow of commerce?

 

080

Groener

Answered affirmatively, as an advocate of increasing income tax to provide opportunities to increase jobs.

 

090

Laura Pryor

Spoke in support of HB 2041, (Exhibit 7), Multnomah County is supports the package, discussed neutrality on the -10 amendments. Called transportation package “bridge triage”, needed because of deregulation, which allowed heavier trucks on roads/bridges not constructed to accommodate the heavier loads. AOC supports a multi-session transportation funding strategy.  Need to deal with system as a whole and address road needs.

 

131

Chair Shetterly

Cited OTIA funding in the last session.

 

136

Rep. Mabrey

The -10 amendment, was this proposed by Laura Pryor?

 

138

Bill Penhollow

Answered affirmatively. This amendment corrects a problem discovered in the special county based allocation provisions.

 

154

Chair Shetterly

Asked if Penhollow had reviewed amendments with the Governor’s office and stakeholders and if they were accepted as technical amendments with no opposition?

 

156

Penhollow

Answered affirmatively.

 

160

Darrell Fuller

OHUA has endorsed the package, group primarily interested with getting pavement on roads, cited economic development from transportation projects. Ordinarily OHUA is an information group, and does not take positions on legislation.  Spoke in support of 2041 to fix the bridge problem, and is a second step in dealing with Oregon’s transportation infrastructure.

 

187

Kate Richardson.

Paraphrased written testimony on behalf of Randall Edwards, (Exhibit 9), Treasurer.

 

258

Rep. Brown

Edwards approves of the goals of sequestering the dollars, but doesn’t approve of the way they are funded?

 

284

Richardson

Edwards is not taking a position on the goals, although not opposed to them.  Concerned regarding the policy of “capturing income tax” when there are other means to address through the appropriation process.

 

268

Rep. Brown

If not for this bill and the activity created, those funds would not be there.

 

271

Richardson

Income tax would be coming into the general fund, but the Legislature can choose to appropriate to fund programs from those same income taxes.

 

276

Rep. Brown

Assume the other reference is to baseball proposal?

 

278

Richardson

That is an identification and a grant of income taxes, similar to this proposal.  There are other proposals out there; concerned about the trend being set.

 

278

Chair Shetterly

The Treasurer’s concern is that this bypasses the appropriations process.

 

290

Richardson

The rating agencies have identified our appropriations process as being very flexible.  Alabama is dedicating their general fund to certain purposes, reducing their flexibility to respond to changing conditions.  That would be our concern about the trend.

 

306

Rep. Verger

Appreciates Treasurer’s comments, also has serious concerns on precedent, changing policy and the inflexibility. It changes the process, while the goals may be there, would prefer to see it follow the traditional process.

 

318

Chair Shetterly

Said he was not without concerns as well. There is flexibility in that future legislatures could repeal the tax credit?

 

310

Richardson

Answered affirmatively.  There are still ways to address it.  There is a standard process in place.  The Treasurer strongly supports the package, this is a small issue, but a policy issue Treasury feels compelled to raise.

 

328

Chair Shetterly.

The credit rating agencies have concerns about this trend.  Is this likely not to raise concern all by itself?

 

333

Richardson

“It’s probably difficult to identify exactly when you started down hill, at what point you started slipping down that slope.”  Could not be sure if the credit agencies would identify this as a concern.

 

352

Jacob Brostoff

Supports the -16 amendments, (Exhibit 10), to ensure funding created for transportation projects be used for projects that are ready to move forward. Secondly, strongly object to income tax sequestration as it affects funding for passenger rail, rural transit and medical transportation for the elderly and disabled to fund a tax credit with dubious environmental benefits.

 

387

Rep. Verger

Have you been involved in the process?

 

408

Brostoff

No, the process has been closed and opaque.

 

423

Brown

Asked if Brostoff or Randy were at a meeting in which amendments were reviewed and discussed for several hours?

 

427

Brostoff

Answered affirmatively. That was the first meeting attended.  Clarified he was refering to the process prior to the meeting Rep Brown mentioned.

 

435

Chair Shetterly

They weren’t included until they were included.

 

436

Brostoff

That’s a fair statement.

 

442

Matt Blevins

Not opposed to the package, but wanted to raise some concerns over the tax credit for diesel engines. Would like to see cleaner diesel engines which the EPA is requiring next year.  Questioned the need for a tax credit when in a fiscal crunch, when these engines are already required under law.

 

 

 

 

 

488

Chair Shetterly

Meeting adjourned at 10:55 a.m.

 

 

 

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant

 

Exhibit Summary:

1.       Yates, “HB 2041-A Provisions” 8 pages

2.       Yates, “Staff Measure Summary HB 2041-A”, 2 pages

3.       Yates, “Revenue Impact HB 2041-A”, 2 pages

4.       Yates, “ODOT Memorandum from Joan Plank: Triple Trailer Trucks”, 3 pages

5.       Yates, “Agreement regarding HB 2041-A by Cities of Portland”, 1 page

6.       Yates, “HB 2041-A10 Amendments”, 1 page

7.       Yates, “HB 2041-A14 Amendments”, 1 page

8.       Pryor, “Testimony HB 2041”, 1 page

9.       Richardson, “Testimony of Randall Edwards, Treasurer”, 2 pages

10.   Brostoff, “HB 2041-A16 Amendments”, 1 page