SENATE COMMITTEE ON RULES

 

 

May 08, 2003                                                                                                       Hearing Room 343

3:00 pm                                                                                                                        Tapes  48 - 49

 

MEMBERS PRESENT:         Sen. Kate Brown, Co-chair

Sen.  Bev Clarno, Co-chair

Sen.  Jason Atkinson Vice-chair

Sen. Ginny Burdick Vice-chair

Sen. Roger Beyer

Sen. Tony Corcoran

 

STAFF PRESENT:                 Jim Stembridge,  Committee Administrator

Patricia Nielsen, Committee Assistant

 

MEASURE/ISSUES HEARD:           SB 706 – Work Session

SB 678 – Work Session

SB 279 – Public Hearing

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE#

Speaker

Comments

TAPE 48, A

005

Chair Brown

Calls the meeting to order at 3:05 p.m. and opens the work session on SB 706.

SB 706 – WORK SESSION

010

Jim Stembridge

Committee Administrator.  Presents overview of SB 706 which prohibits person other than person signing petition from writing information about person signing petition on signature sheet of state initiative or referendum petition or recall petition.  Discusses proposed -1 amendments dated 4-7-03 (EXHIBIT A), which provides an exemption for person with disability who requests assistance.

015

Chair Brown

Acknowledges written testimony from Kappy Eaton (EXHIBIT B).

030

Sen. Atkinson

MOTION:  Moves to ADOPT SB 706-1 amendments dated 4/7/03.

040

Sen. Burdick

Expresses approval of SB 706 and -1 amendments as a way to curb abuse of the initiative system while making provision for disabled voters.

045

Sen. Beyer

Comments the -1 amendments make the bill less restrictive.

050

 

VOTE:  6-0

 

Chair Brown

Hearing no objection, declares the motion CARRIED.

053

Sen. Atkinson`

MOTION:  Moves SB 706 to the floor with a DO PASS AS AMENDED recommendation.

055

 

VOTE:  5-1

AYE:               5 - Atkinson, Burdick, Corcoran, Brown, Clarno

NAY:               1 - Beyer


 

 

Chair Brown

The motion CARRIES.

SEN. ATKINSON will lead discussion on the floor.

060

Chair Brown

Closes work session on SB 706.  Opens the work session on SB 678.

SB 678 – WORK SESSION

062

Chair Brown

Acknowledges written testimony of Kappy Eaton (EXHIBIT B).

065

Jim Stembridge

Presents overview of SB 678, which directs circulator of election petitions, including initiative, referendum and recall petitions, to certify that circulator witnessed the signing of the petition signature sheet by each individual whose name appears on the signature sheet.

070

Sen. Atkinson

MOTION:  Moves SB 678 to the floor with a DO PASS recommendation.

075

Sen. Atkinson

VOTE:  5-1

AYE:               5 - Atkinson, Burdick, Corcoran, Brown, Clarno

NAY:               1 – Beyer

 

Chair Brown

The motion CARRIES.

SEN. DEVLIN will lead discussion on the floor.

085

Chair Brown

Closes work session on SB 678.  Opens public hearing on SB 279.

SB 279 – PUBLIC HEARING

090

Jim Stembridge

Presents overview of SB 279, which limits compensation of video lottery game retailers to 15 percent of net receipts.

O95

Rep. Diane Rosenbaum

House District 42.  Appears and testifies in support of SB 279.  Submits written testimony (EXHIBIT C).

185

Sen. Corcoran

Senate District 4. As sponsor of bill, comments that retailer profits are too high.  Advises the across-the-board 15 percent figure is negotiable.  Reminds members there is revenue of $140 million per year which should be made available to medically needy, corrections and educational programs.

235

Joseph Cortright

Consulting economist.  Testifies in support of SB 279.  Submits written testimony (EXHIBIT D).  Discusses background of video lottery programs and work of Task Force On Lottery Oversight.

380

Steve Novick

Legislative Coordinator, Department of Education.  Testifies in support of SB 279.  Submits written testimony (EXHIBIT E). 

TAPE 49, A

005

Novick

Continues, discusses studies analyzing profits from video poker machines.  Suggests SB 279 maximizes revenue to the state while allowing reasonable rate of return for retailers.

025

Sen. Burdick

Asks if there is any justification for putting current contracts aside.

030

Novick

Recommends Attorney General (AG) opinion.

040

Cortright

Recalls the Lottery Commission was to continue to review and adjust the rates, but has not done so.

045

Sen. Burdick

Asks whether lowering commissions will result in less demand for the machines.

050

Novick

Responds the evidence shows the profits would still be high enough to make it profitable.

055

Cortright

Explains Keno retailers are compensated at one-third the profit and games are still thriving.  Video lottery retailers with low volume are still making money and would continue to do so at lower profit levels.

070

Sen. Beyer

Asks how he knows the low-volume retailers are making a profit.

080

Cortright

Answers if $5000 volume were too low, the games would be turned back in, but they are still in demand, so profits must be high enough.

085

Sen. Beyer

Suggests profits also come from other retail activities at establishments with video poker.

095

Cortright

Acknowledges lottery games do attract customers.  Points out the studies only consider the profits from the games themselves, so the other benefits are above that. 

110

Chair Brown

Comments cutting all commissions the same amount does not seem fair and asks for another approach.

115

Novick

Suggests structuring the profits by volume.  Reiterates the retailers keep the games so they must be making a profit.

120

Sen. Atkinson

Inquires whether some retailers would be unreasonably penalized under a tiered structure.

125

Novick

Acknowledges, but recommends exploring what is fair in the context of maximizing revenue to the state.

140

Sen. Atkinson

Asks about cost to begin using the machine.

145

Cortright

Describes application fee and fee for telecommunication services, but no cost for the machine itself.

160

Bill Perry

Director of Government Relations, Oregon Restaurant Association.  Testifies in opposition to SB 279.  Submits written testimony (EXHIBIT F).  Discusses requirement for a reasonable rate of return.

220

Chair Brown

Clarifies lottery sales in restaurant and tavern businesses subsidize other business activities in the industry.

225

Perry

Confirms the sales money all goes toward the total income to support the entire business.

240

Sen. Burdick

Asks what a reasonable rate of return is.

245

Perry

Asserts it depends completely on the individual business.

255

Sen. Burdick

Points out the statutory requirement is to maximize revenue and provide a reasonable rate of return but there is no specific information to define a reasonable rate of return. 

270

Perry

Responds the market dictates and Oregon is the lowest in the country.

280

Sen. Atkinson

Asks what would happen to the lowest volume businesses if the payout is changed to 15 percent.

285

Perry

Predicts businesses would make cuts to make up the revenue.  Asks if opinion of the legislature would change if the profit was half as much.

305

Connie Hunt

Restaurant Owner, Portland.  Testifies in opposition to SB 279.  Submits written testimony (EXHIBIT G).  Describes disposition of lottery profits, such as, investing in the business and community. 

 

 

 

TAPE 48, B

005

Michael Mills

Attorney.  Testifies in opposition to SB 279.  Submits written testimony (EXHIBIT H).  Discusses legislative history of lottery statutes.  Describes efforts to provide input to the Lottery Commission regarding reasonable rate of return for lottery games.

060

Chair Brown

Asks about creating a public bidding process for lottery games.

070

Mills

Suggests the statutory mandate would not support a public bidding process.

090

Sen. Burdick

Refers back to the requirement for reasonable rate of return.  Suggests formula for percentage of sales to determine the rate.

110

Mills

Responds the Lottery Commission was charged to create the determination of reasonable rate of return.

120

Perry

Explains that 35 percent has been determined a reasonable rate and higher performers are only receiving 20 percent.

130

Sen. Burdick

Comments 35 percent is a very high rate of return for a business.

140

Mills

Responds the 35 percent is out of gross and costs come out of that.  Asserts that video poker players do not spend much on food and beverages.

155

Perry

Clarifies that of the money put into the machine, including payouts, the lottery and the retailers split 3.2 percent; the 35 percent is of the total profit.

170

Jacqueline Zimmer

Director, Oregon Association of Area Agencies on Aging and Disabilities.  Testifies in support of SB 279.  Asks simply that the deck be evenly stacked.  Points out that the Department of Human Services (DHS) has been asked to give up 10, 20 and 30 percent of program costs and other programs have not taken similar reductions.

230

Marcia Kelley

Women’s Rights Coalition.  Testifies in support of SB 279.  Submits written testimony (EXHIBIT I).  Urges more adequate funding for schools.  Recommends a more reasonable rate of commission.

310

Martin Taylor

Human Services Coalition of Oregon (HSCO); Oregon Nurses Association; Community Providers Association of Oregon; Oregon Law Center.  Points out it is a new situation to recommend taking money from one state program and putting it into another but that is what is happening.  Stresses the medically needy need the money more than retailers, though it is a tough choice.  Points out that 100 percent of lottery revenue is the state’s money and it is no different cutting this supply of money than cutting human services funding.

TAPE 49, B

005

Ginny Van Loo

Oregon City Elks Lodge.  Testifies in opposition to SB 279.  Submits written testimony and material (EXHIBIT J).  Discusses community services provided by Elks, a charitable non-profit organization.  Explains Lottery Commission removed her Keno machines because profits were too low.

075

Brown

Asks about minimum Keno requirements.

080

Van Loo

Explains minimum sales required for Keno.

090

Sen. Burdick

Expresses approval of investing in community by retailers.  Comments it is a difficult time for everyone and everyone must take reductions.

110

Grover Simmons

Oregon State Elks Association.  Testifies in opposition to SB 249.  Submits written materials describing the Elks organization    (EXHIBIT K).  Provides figures for committee consideration:

·         58 lodges in Oregon; 45 with video poker machines

·         Total sales for 45 lodges for one year were $3,672,667

·         Total commissions for 45 lodges were $1,271,655

·         Average commissions were $28,259.  Only three lodges earn $75,000 or more

Disputes Oregonian newspapers articles which said the average is $75,000, with 32 percent average commissions.

Discusses reduction in commissions to 15 percent as a 53 percent reduction:

·       Average income would be reduced to $13,248 per year ($255 per week)

·       Not a reasonable rate of return

Refers to contributions made by Elks:

·       $1,725,531 in cash to charitable programs

·       Non-cash of $729,000 (fire trucks, medical equipment)

·       Contributions have outweighed the commission income by $453,876

200

Chair Brown

Closes the public hearing on SB 279 and adjourns committee at        4:45 p.m.

 

 

EXHIBIT SUMMARY

 

A – SB 706, -1 amendment (4-7-03), staff, 1 p

B – SB 706 and SB 678, written testimony, Kappy Eaton, 1 p

C – SB 279, written testimony, Rep. Diane Rosenbaum, 1 p

D – SB 279, written testimony, Joseph Cortright, 4 pp

E – SB 279, written testimony, Steve Novick, 4 pp

F – SB 279, written testimony, Bill Perry, 5 pp

G – SB 279, written testimony, Connie Hunt, 2 pp

H – SB 279, written testimony, Michael Mills, 3 pp

I – SB 279, written testimony, Marcia Kelley, 2 pp

J – SB 279, written testimony, Ginny Van Loo, 13 pp

K – SB 279, written materials, Grover Simmons, 30 pp