PUBLIC HEARING AND WORK SESSION: HB 2299 B

 

TAPES 129-132, A-B

 

SENATE REVENUE COMMITTEE

May 29, 2003   1:00 PM   STATE CAPITOL BUILDING

 

Members Present:                        Senator Ryan Deckert, Chair

                                                Senator Ted Ferrioli, Vice Chair

                                                Senator Tony Corcoran

                                                Senator Lenn Hannon

                                                Senator Charlie Ringo

                                                Senator Bruce Starr

 

Witnesses Present:                        Mike Burton, Oregon Economic and Community Development Dept.

                                                Michelle Deister, League of Oregon Cities

                                                Greg Sweek, Morrow County Tax Collector

                                                Rex Mather, City Manager, City of Boardman

                                                Ray Grace, Morrow County Commissioner

                                                Paul Chalmers, Director of Assessment & Taxation, Umatilla County                                                             Jim Anderson, AVISTA Corporation

                                                Tim Carlberg, AVISTA Corporation

                                                Chris Hefty, AVISTA Corporation

                                                Bob Shiprack, Oregon State Building and Construction Trades Council

                                                John Endicott, Plumbers and Steamfitters Local 290

                                                John Williams, Williams Industrial Research

                                                Jeff Carlson, International Association of Ironworkers Local 29

                                                Dick Wenger, Georgia Pacific

                                                Jack Roberts, Lane-Metro Partnership

                                                Dan O’Brian, Kern Electrical Construction Company

                                                Steve Vincent, Oregon Economic Development Association

                                                Terry Hatch, National Electrical Contractors Association

                                                Patrick Green, Oregon AFL-CIO

                                                Doug Riggs, National Electrical Contractors Association

                                                Julie Brandis, Associated Oregon Industry

                                                Jessica Harris, Associated General Contractors

                                                Rick Thomas, Independent Electrical Contractors of Oregon

                                                John Killin, Associated Builders and Contractors

                                                Jerod Broadfoot, Plumbing & Mechanical Contractors Association

 

Staff Present:                            Paul Warner, Legislative Revenue Office

                                                Mazen Malik, Legislative Revenue Office

                                                Tara Lantz, Committee Assistant

 

TAPE 129, SIDE A

 

003

Chair Deckert

Calls meeting to order at 1:15 pm.

 

OPENS PUBLIC HEARING ON HB 2299 B

 

010

Mazen Malik

Explains HB 2299 B which reduces minimum investment needed to qualify for strategic investment program property tax exemption, if located in rural area, while allowing the special districts to opt-out, and other modifications to the enterprise zone program. Gives background of economic development tools (Exhibit 1).

 

 

 

066

Sen. Ringo

Asks for clarification on the type of tax that would be exempted.

 

 

 

070

Malik

Responds that it would be property tax and adds that it is exempt for 15 years.

 

Continues discussion on economic development programs and discusses changes that were made in the house.

 

Clarifying questions and answers interspersed.

 

 

 

134

Malik

Discusses revenue impact (Exhibit 2).

 

 

 

220

Mike Burton

Gives background of the bill and discusses the rationale behind it.

 

Clarifying questions and answers interspersed.

 

 

 

276

Sen. Deckert

Asks who was in the workgroup that came up with this bill. 

 

 

 

280

Burton

Responds that he can get a list but that they felt that had full representation from the community.

 

Discusses the strategic investment program.

 

 

 

360

Sen. Deckert

Asks for the guidelines of the first source hiring requirement.

 

 

 

365

Burton

Responds that the agreement is that any firm that is going to benefit from these programs has to commit to making jobs available to local recruits.

 

 

 

370

Sen. Deckert

Asks if this is required for building.

 

 

 

374

Burton

Responds negatively.

 

 

 

376

Sen. Corcoran

Asks if any of the provisions have claw back provisions.

 

 

 

380

Burton

Responds that there are provisions that would require repayment and other penalties.

 

 

 

387

Burton

Discusses enterprise zones.

 

TAPE 130, SIDE A

 

017

Sen. Ringo

Asks if the annual competition for becoming an enterprise zone is to maintain existing enterprise zones or create new ones.

 

 

 

020

Burton

Responds that each zone has a ten year life and that at the end of the ten years the zone becomes available. States that they would have sponsored a competition had a bill passed that created 5 more enterprise zones.

 

 

 

025

Sen. Ringo

Asks if cities sponsor enterprise zones.

 

 

 

028

Burton

Responds that there is usually more than one sponsor.

 

Discusses long-term enterprise zones.

 

 

 

048

Sen. Deckert

Asks if there have been any successes in the long-term enterprise zones.

 

 

 

052

Burton

Responds that Roseburg Lumber was a success and discusses problems with the program.

 

 

 

075

Burton

Refers members to written testimony (Exhibit 3) and explains the different sections.

 

Questions and answers interspersed.

 

 

 

105

Burton

Walks through the significant points of the bill.

 

 

 

145

Sen. Ringo

Asks why electrical facilities were initially excluded.

 

 

 

147

Burton

Responds that he doesn’t know why but that the environment has changed since the initial program was developed.

 

 

 

153

Sen. Deckert

Asks why they need to provide incentives to centrally assessed facilities when there is a market for them.

 

 

 

158

Burton

Responds that many companies could locate in Washington.

 

 

 

173

Sen. Deckert

Asks if Washington has these incentives.

 

 

 

175

Burton

Responds affirmatively.

 

Discussion follows.

 

 

 

184

Sen. Ringo

Points out that high-tech facilities cost much more than manufacturing facilities and asks how reducing the investment fits that analysis.

 

 

 

192

Burton

Responds that there are not many companies that would qualify for the program and gives example of Marion County.

 

 

 

221

Sen. Ringo

Asks if the tax burden is as high on facilities other than high tech chip factories.

 

 

 

240

Burton

Responds that energy facilities are very similar to chip factories and that there aren’t very many companies that aren’t in that category.

 

 

 

255

Burton

Continues to discuss major points of the bill.

 

 

 

291

Sen. Ringo

Comments that it is hard to tell whether the bill would actually create incentives to increase productivity or modernization.

 

 

 

310

Burton

Gives examples of companies that would not have modernized without the incentives.

 

Continues discussing major points.

 

 

 

400

Michelle Deister

Discusses the construction-in-progress exemption and the problems it creates in Boardman.

 

 

 

430

Greg Sweek

Discusses agreement between Morrow County and AVISTA Corp. in which the property would be taxable until the facility was operational, and how HB 2299 changes that agreement to the detriment of Morrow County. Offers support for the –B12 amendments because it solves this problem. Refer to written testimony (Exhibit 4).

 

TAPE 129, SIDE B

 

050

Rex Mather

Testifies in support of HB 2299 with the –B12 amendment because it would maintain the agreement between the City of Boardman and AVISTA.

 

 

 

069

Sen. Deckert

Asks how much of the city of Boardman’s budget is tied up in the amendment.

 

 

 

072

Mather

Responds that 35 percent of property taxes come from the AVISTA plant.

 

 

 

075

Deister

States that this bill has brought a broader discussion on the construction-in-progress exemption and that they feel strongly that it should be removed and discusses as a separate issue. Introduces the –B12 amendments (Exhibit 5).

 

 

 

086

Ray Grace

Offers support for the –B12 amendments.

 

 

 

091

Sen. Ferrioli

States that he is very interested in the Morrow County issue and asks how the community feels about resolving this issue.

 

 

 

099

Grace

Responds that Morrow County courts have made a good faith effort to meet with the principals of AVISTA but that all parties have been unable to attend.

 

 

 

110

Sen. Ferrioli

Encourages all parties to engage in discussion and possibly a workgroup to come up with a solution. Asks if there are any other counties or cities that have issues with this bill.

 

 

 

122

Deister

Responds that she believes Umatilla has an issue and possibly Klamath County.

 

Discussion follows.

 

 

 

138

Malik

Responds that Columbia County had a problem with the bill in the House, which is why the urban renewal language was changed.

 

 

 

149

Paul Chalmers

Testifies against HB 2299B with the construction-in-progress exemption and suggests looking at the issue over the interim.

 

 

 

183

Jim Anderson

States that they should not delay the implementation of the construction-in-progress exemption to the interim and that if the state wants to be energy independent, they need this exemption to create incentives.

 

 

 

226

Tim Carlberg

Gives timeline of the AVISTA corporation project and why they have not been successful in opening the facility.  

 

 

 

336

Sen. Hannon

Asks if Enron negotiated with Morrow County.

 

 

 

341

Carlberg

Responds that he doesn’t know, but that he has never dealt with Enron.

 

 

 

348

Sen. Hannon

Asks if AVISTA utility owns all of the projects.

 

 

 

351

Carlberg

Responds that AVISTA owns 50 percent of the project and that a corporation out Atlanta, Georgia owns the other 50 percent.

 

 

 

354

Sen. Hannon

Asks if the other corporation has been in on the negotiations.

 

 

 

358

Carlberg

Responds negatively and states that his counterpart in the negotiations has not been available because of a death in the family.

 

 

 

372

Sen. Hannon

Asks if when Morrow County said that they haven’t been able to negotiate, they are just referring to AVISTA

 

 

 

375

Carlberg

Responds affirmatively and states that they have not entered into negotiation because they were waiting for another draft of the amendment.

 

 

 

378

Sen. Deckert

Asks how the negotiations have gone so far.

 

 

 

385

Carlberg

Responds that they have had very few conversations.

 

 

 

390

Sen. Deckert

States that his interest is to adopt the amendments if the city, county, and AVISTA don’t reach some agreement.

 

 

 

395

Carlberg

Responds that they would be willing to do that.

 

 

 

404

Chris Hefty

Expresses concern for the –B12 amendments because AVISTA budgeted on the expectation that they would not have to pay property taxes during construction and have made a large investment already.

 

TAPE 130, SIDE B

 

027

Sen. Hannon

Asks about the timing of the tax and bringing the company on-line.

 

 

 

033

Hefty

Responds that the way the dates were going to work, they would not have had to pay property taxes during construction.

 

 

 

049

Sen. Ferrioli

Asks what the economic life is of the plant.

 

 

 

051

Hefty

Responds that they have a lease with the Port of Morrow for 50 years and can up it to 100 years.

 

 

 

055

Sen. Deckert

Asks if Wednesday of next week is enough time for them to negotiate.

 

 

 

065

Anderson

Responds that he will try to get a meeting to take place as soon as possible and will notify staff when it happens.

 

 

 

085

Bob Shiprack

Introduces the –B14 amendments (Exhibit 6) and discusses the rationale behind them. Offers support for the –B14 amendments because it is the only way to legally ensure local hiring. Discusses projects in which very few local workers were hired.

 

 

 

145

Sen. Deckert

Asks for a number of how many workers were from out of state on the Wauna project.

 

 

 

148

Shiprack

Responds 75 percent.

 

 

 

150

John Williams

Responds that the project came up before the energy facility siting council and that they had to give those numbers and that 32 out of 137 construction workers were hired locally.

 

 

 

163

Shiprack

States that living wage requirements would ensure local hiring because the local economy cannot compete with Southern state wages and gives personal examples. Discusses unemployment rates.

 

 

 

253

Sen. Corcoran

Asks what the difference in the southern wage is.

 

 

 

265

Shiprack

Responds that he doesn’t know.

 

 

 

283

John Endicott

Responds that the going rate for welders in Oregon is around $33/hr with a $10/hr benefit package and the Wauna site was offering jobs for $15/hr and $30/day.

 

 

 

300

Shiprack

States that he holds no will for the Georgia Pacific lobbyists and that all decisions were made in Atlanta. 

 

 

 

307

John Williams

Refers members to written testimony (Exhibit 7) and testifies in support of the –B14 amendments because hiring out of state draws money out of the state rather than in. Discusses studies done on various projects that conclude that providing prevailing wages actually is more cost effective.

 

 

 

361

Jeff Carlson

Testifies in support of the –B14 amendments because construction costs have been found to be cheaper in prevailing wage law states. Refer to Prevailing Wage Myths Vs. Facts (Exhibit 8).

 

TAPE 131, SIDE A

 

011

Sen. Deckert

Asks if companies would not come to Oregon because of the prevailing wage law.

 

 

 

018

Carlson

Responds that if they actually looked at the issue it is more cost effective with prevailing wage in effect.

 

 

 

025

Shiprack

Responds that he doesn’t believe it is a factor in these decisions.

 

 

 

030

Sen. Corcoran

Asks if there is way to get the hiring data.

 

 

 

035

Williams

Responds that the only public record is required of standard energy companies.

 

Discussion follows.

 

 

 

050

Dick Wenger

States that Georgia Pacific hired 85 percent of workers locally, the exception being a small group of people working on a specific machine. Testifies against the –B14 amendments because it would be a red flag for future businesses. States that it took a lot of work to get the development in the Northwest.

 

 

 

112

Sen. Corcoran

Asks why it was so difficult to get the project in Oregon.

 

 

 

120

Wenger

Responds that it is believed in the paper industry that growth can only happen in the Southeast, labor is cheaper, and they don’t have to worry about natural disasters such as earthquakes.

 

 

 

137

Jack Roberts

Testifies in opposition to the –B14 amendments because it isn’t appropriate to require private works jobs to pay prevailing wages and would make Oregon less competitive.

 

 

 

204

Dan O’Brian

Discusses current prevailing wages and unemployment rates. Offers support for HB 2299 without the –B14 amendment because they don’t want to increase investment and construction costs for companies choosing to locate here.

 

 

 

246

Sen. Deckert

Asks if he believes providing prevailing wages is cost effective.

 

 

 

250

O’Brian

Responds that they might be, but he is not comfortable telling the private sector what they should be paying.

 

 

 

257

Sen. Deckert

Asks if any other state has a law requiring prevailing wages.

 

 

 

260

O’Brian

Responds negatively.

 

 

 

263

Steve Vincent

Testifies against the –B14 amendments because it would eliminate Oregon from businesses selection of sites. Discusses companies that without a doubt will not come to Oregon if the amendment passes.

 

 

 

315

Terry Hatch

Discusses other states in which prevailing wages are watered down. Testifies against the –B14 amendments because it would maintain the standard of living in Oregon.  

 

 

 

401

Patrick Green

Testifies in support of the –B14 amendments because Oregonians should be paid a decent wage.

 

 

 

430

Doug Riggs

Discusses Oregon unemployment rates. Refer to Unemployment Figures (Exhibit 9). Offers support for the –B14 amendments because it would create local jobs.

 

TAPE 132, SIDE A

 

038

Sen. Deckert

Asks if Riggs is concerned that companies have said that they won’t come to Oregon if this amendment passes.

 

 

 

040

Riggs

Responds that he doesn’t believe that to be true and that business managers look for quality to reduce costs.

 

 

 

054

Julie Brandis

Testifies in opposition to the –B14 amendments because it would make Oregon less competitive. Points out that costs are already higher in Oregon.

 

 

 

089

Jessica Harris

Testifies against the –B14 amendments because it blurs the line between private and public construction. Discusses additional costs that accompany prevailing wage laws.

 

 

 

135

Rick Thomas

Testifies against the –B14 amendments because it will not create more local jobs.

 

 

 

163

John Killin

Testifies in opposition to the –B14 amendments because it would not create more development in Oregon.

 

 

 

173

Jerod Broadfoot

Testifies in support of the –B14 amendments because it would create more local jobs. Refer to Prevailing Wage Laws publication (Exhibit 10).

 

CLOSES PUBLIC HEARING ON HB 2299 B

 

185

Sen. Deckert

Adjourns meeting at 3:44 pm.

 

 

 

Tape Log Submitted by,

 

 

 

Tara Lantz, Committee Assistant

 

Exhibit Summary:

  1. HB 2299 B, Mazen Malik, Staff Measure Summary, 2pp.
  2. HB 2299 B, Mazen Malik, Revenue Impact Statement, 2pp.
  3. HB 2299 B, Mike Burton, Written Testimony, 51pp.
  4. HB 2299 B, Greg Sweek, Written Testimony, 3pp.
  5. HB 2299 B, Michelle Deister, Proposed –B12 Amendments, 1p.
  6. HB 2299 B, Bob Shiprack, Proposed –B14 Amendments, 1p.
  7. HB 2299 B, John Williams, Written Testimony, 4pp.
  8. HB 2299 B, Jeff Carlson, Prevailing Wage Myths Vs. Facts, 1p.
  9. HB 2299 B, Doug Riggs, Unemployment Figures, 7pp.
  10. HB 2299 B, Jerod Broadfoot, Prevailing Wage Laws, 325 pp.
  11. HB 2299 B, Mazen Malik, Proposed –B13 Amendments, 1p.