TAPE/#

Speaker

Comments

TAPE 64, A

003

Chair Brown

Calls the meeting to order at 8:38 a.m.  Opens the public hearing on HB 2005.  Mentions that HB 2005 has the exact same wording as HB 2007, which was heard on March 16, 2005.

HB 2005 – PUBLIC HEARING

010

Janet Adkins

Committee Administrator.  Explains HB 2005.  References the fiscal impact statement (EXHIBIT A). 

025

Chair Brown

Closes the public hearing on HB 2005 and opens the work session on HB 2005

HB 2005 – WORK SESSION

028

Rep. Kitts

MOTION:  Moves HB 2005 to the floor with a DO PASS recommendation.

032

VOTE:  6-0-1

AYE:            In a roll call vote, all members present vote Aye.

EXCUSED:  1 – Schaufler

Chair Brown

The motion CARRIES.

Note: Please see tape 64 A, page 2 of this tape log for Rep. Schaufler’s vote.

036

Rep. Esquivel

MOTION:  Moves HB 2005 be placed on the CONSENT CALENDAR.

038

VOTE:  6-0-1

EXCUSED:  1 – Schaufler

Chair Brown

Hearing no objection, declares the motion CARRIED.

Note: Please see tape 64 A, page 2 of this tape log for Rep. Schaufler’s vote.

040

Chair Brown

Closes the work session on HB 2005 and opens the work session on HB 2527.

HB 2527 – WORK SESSION

043

Janet Adkins

Committee Administrator.  Explains HB 2527. 

060

Don Miner

Oregon Manufactured Housing Association.  Speaks in support of HB 2527.  States that there are some issues with the bill that can be dealt with in the Ways and Means Committee.

070

John Brenneman

Manufactured Community Housing of Oregon.  Wants to make the move with Parks??? (Is this right?)  Comfortable with HB 2527 being moved to the committee on Ways and Means.

080

Mark Long

Administrator, Building Codes Division.  States that HB 2527 needs amendments.  Believes that there are pieces of the manufactured housing industry that has some codes that the division is not responsible for.

095

Rep. Kitts

MOTION:  Moves HB 2527 WITHOUT RECOMMENDATION as to passage and BE REFERRED to the committee on Ways and Means.

100

VOTE:  7-0-0

AYE:            In a roll call vote, all members present vote Aye.

Chair Brown

The motion CARRIES.

104

Chair Brown

Closes the work session on HB 2527 and opens the work session on HB 2005 for the purpose of allowing Rep. Schaufler to vote.

HB 2005 – WORK SESSION

109

Rep. Kitts

MOTION:  Requests unanimous consent that the rules be SUSPENDED to allow REP. SCHAUFLER to BE RECORDED as voting AYE on the motion to move HB 2005 to the floor with a DO PASS recommendation and be placed on the CONSENT CALENDAR.

112

VOTE:  7-0-0

Chair Brown

Hearing no objection, declares the motion CARRIED.

Note: Please see tape 64 A, page 1 of this tape log for the original vote on HB 2527.

115

Chair Brown

Closes the work session on HB 2005 for the purpose of allowing Rep. Schaufler to vote.  Opens the work session on HB 2117.

HB 2117 – WORK SESSION

117

Janet Adkins

Committee Administrator.  Explains HB 2117.  References – 3 amendments (EXHIBIT B) and fiscal statement (EXHIBIT C). 

135

Chair Brown

Asks if the -1 amendments are in the -3 amendments.

139

Adkins

Believes that the -1 amendments are in the -3 amendments.

139

Rep. Schaufler

States that he is o.k. with HB 2117.  Says that the genealogists were never in HB 2117.

150

Rep. Kitts

Wants to know for certain that -1 amendments are in -3 amendments. 

155

Adkins

Clarifies that the -1 amendments are not being adopted, because the -3 amendments delete the section that the -1 amendments were changing.

162

Chair Brown

States why the -1 amendments are not in the – 3 amendments.

170

Adkins

Indicates that the amendments do not change the fiscal statement.

174

Rep. Schaufler

MOTION:  Moves to ADOPT HB 2117-3 amendments dated 03/01/05.

179

VOTE:  7-0-0

Chair Brown

Hearing no objection, declares the motion CARRIED.

181

Rep. Schaufler

MOTION:  Moves HB 2117 to the floor with a DO PASS AS AMENDED recommendation.

186

VOTE:  7-0-0

AYE:            In a roll call vote, all members present vote Aye.

Chair Brown

The motion CARRIES.

REP. SCHAUFLER will lead discussion on the floor.

191

Chair Brown

Closes the work session on HB 2117 and opens the public hearing on HB 3324

HB 3324 – PUBLIC HEARING

210

Janet Adkins

Committee Administrator.  Explains HB 3324.  

235

Tim Martinez

Oregon Bankers Association (OBA).  Speaks in support of HB 3324.  Talks about the history of why local banks were not included in past limited liability company (LLC) legislation.  Says that a LLC does allow for the benefits of corporate tax advantage but a company has to pay a nine percent income tax.

269

Fred Postlewait

President, Oregon Coast Bank.  Submits and reads written testimony in support of HB 3324 (EXHIBIT D).  Talks about the history of Oregon Coast Bank.  Discusses the sale of the Lincoln Security Bank.  Notes the need for the modernization of banks. 

320

Postlewait

Continues to read from written testimony (EXHIBIT D).  Talks about people who have been involved with the Oregon Coast Bank.  Notes that the Oregon Coast Bank benefits the community.  Mentions the history of banks that are sub-S corporations. 

370

Postlewait

Continues to read from written testimony (EXHIBIT D).  Discusses what LLCs are doing on the federal level.  States that they prefer to stay a state chartered bank. 

400

Kenneth Sherman

Counsel, OBA.  Submits and reads from written testimony in support of HB 3324 (EXHIBIT E).  Talks about the history of the Oregon Bank Act.

TAPE 65, A

001

Sherman

Continues to read from written testimony (EXHIBIT E).  Talks about LLCs and other states that have a similar legislation.  References the section by section analysis of HB 3324 (EXHIBIT E, Page 2 and 3) 

026

Chair Brown

Asks if federal banks can be chartered as LLCs.

028

Sherman

States that federal banks cannot be chartered as LLCs.  Notes that it would take a change by the comptroller. 

036

Rep. Shields

Asks if Oregon banks currently pay a six percent tax and the shareholders pay tax on the income generated.

039

Martinez

Says that currently banks can pay as much as six percent for the corporate tax and the shareholders pay taxes only on their dividends.  States that this would eliminate the six percent tax and substitute it with a nine percent individual tax. 

046

Rep. Shields

Asks if LLC banks would be similar in structure to S corporations.  Asks if it could decrease the State’s revenue.

051

Martinez

Says that it is similar to an S corporation.  States that they do not expect revenue to the state to decrease.

054

Postlewait

States that the state would suffer little if anything in terms of revenue, because the Oregon Coast Bank has not paid out dividends.

062

Chair Brown

Talks about his personal experience with an LLC and says that he has to pay taxes for each fiscal tax year.  Says that a C-corporation has to pay taxes only when dividends are paid to stockholders. 

071

Rep. Schaufler

Asks if it will help small, local banks stay competitive in the market.

078

Postlewait

Talks about how few young people are hired to work at small, local banks, because those banks see their existence timeline as approximately five years.  States that it takes a lot of time to become a banker.  Discusses how opening up banks that are LLCs and S corporation will benefit small communities.  Notes that the Oregon Coast Bank has made over $100 million in loans to small businesses in their community.

107

Rep. Schaufler

States that he is concerned about the loss of revenue, but says that the revenue will get to the state eventually by helping the smaller communities. 

116

Martinez

Says that they made the amendments that the Federal Deposit Insurance Corporation (FDIC) wanted.

121

Rep. Holvey

States that it is hard for him to believe that there would be no revenue impact and hopes that the revenue statement will come forward.  Asks why they are not waiting for the IRS before moving forward.

132

Sherman

Says that the Internal Revenue Service (IRS) currently recognizes LLCs.  States that the only part that needs to be changed is the part that is based on the FDIC’s old decision.

148

Rep. Holvey

Reads from the written testimony (EXHIBIT E).  Asks why we are not waiting for the IRS to come up with a bank code so that banks can be eligible for partnership treatment.

160

Sherman

Believes that the IRS will change within the next few months, and if they wait, the legislation proposed in HB 3324 would not go through until the 2007 Legislative Session.

169

Martinez

Says that the LCC bank will be paying tax from day one.  Believes that the Revenue Office will not be able to give a good number on the revenue impact.

180

Rep. Kitts

Speaks in support of HB 3324 and explains how HB 3324 will help increase revenue by increasing income and therefore increasing income taxes that go to the state.  Commends the panel for their work on HB 3324.  Believes that HB 3324 will keep banks local and put money into small, local businesses.

198

Adkins

Talks about her conversation with the Revenue Office.  Offers to provide more information from the Revenue Office.

211

Chair Brown

Discusses stock ownership in the Bank of America’s stock and other national banks.  States that the dividends from those stocks would not be paid for the most part by Oregon residents. 

227

Rep. Shields

States that he has concerns about HB 3324.  Asks if there is anything in HB 3324 stopping a national bank from buying shares in a small local banks and then have the tax advantage of LLCs.

235

Sherman

Indicates that he does not believe that anything in the law prohibits that action.

249

Rep. Schaufler

Asks if the national bank would still be paying income tax on the profits made by the bank.

253

Sherman

Responds that all of a LLC’s profit flow to its members and all of the income generated is taxed under the parent corporation.    

262

Rep. Schaufler

Says that, as with Enron, if it is generated in the state, it stays in the state.

267

Sherman

Says that it is important to keep business local.

272

Martinez

Clarifies that the national corporation would end up paying more taxes in Oregon if they became an LLC.

274

Rep. Shields

States that his understanding of the laws means that the national bank would have to pay the income in the state where they own the shares.

280

Martinez

States that there would be no benefit for a national bank to have an LLC in Oregon.

282

Chair Brown

Asks what the difference between LLCs and Credit Unions’ members is.

294

Postlewait

Talks about how a national bank could buy an LLC, but believes that they would convert it back to a corporation.  Says that HB 3324 will help small, local banks better please their members. Notes that the shareholders are almost all from Oregon except for several whom he believes are friends of the Oregon shareholders.  States that his bank is the vehicle for many young people in their community to undertake capital-intensive ventures. 

340

Chair Brown

Reiterates question.

344

Sherman

Says that there is not a huge difference between a LLC bank and a credit union. 

355

Chair Brown

Asks about the difference between a credit union’s profits and a LLC’s profits.

363

Sherman

Responds that he is not an expert on credit union taxation law.  Says that the member is taxed on the profits.

379

Chair Brown

Closes the public hearing on HB 3324 and opens the work session on HB 3324.

HB 3324 – WORK SESSION

385

Rep. Kitts

MOTION:  Moves HB 3324 to the floor with a DO PASS recommendation.

392

Rep. Kitts

Speaks in support of HB 3324 and says that this bill will create jobs in the state of Oregon.

406

Rep. Shields

States that he would like more time to become comfortable with HB 3324.

TAPE 64, B

001

Rep. Kitts

States that Rep. Shields brings up a good point and the revenue impact is a concern of his.  Asks what more the Revenue Office can do to get information. 

011

Adkins

Says that she can seek more information from Revenue.

014

Chair Brown

Believes that HB 3324 will have a positive impact on state revenue and details how income will come into the state.

024

Rep. Kitts

States that he is going to ask the Revenue Office for more information.  

028

Chair Brown

States a conflict of interest, because he owns shares in local banks in Oregon. 

036

VOTE:  5-2-0

AYE:               5 - Esquivel, Gilman, Kitts, Schaufler, Brown

NAY:               2 - Holvey, Shields

Chair Brown

The motion CARRIES.

REP. BROWN will lead discussion on the floor.

042

Chair Brown

Closes the work session on HB 3324 and opens the public hearing on HB 2615. 

HB 2615 – PUBLIC HEARING

046

Janet Adkins

Committee Administrator.  Explains HB 2615.

062

Gordon Allen

Retirement Program Manager, Oregon Health and Science University (OHSU).  Submits and reads from written testimony in support of HB 2615 (EXHIBIT F).  Talks about the background of OHSU’s retirement plan.  Mentions how the amendments to ORS would benefit OHSU.

110

Chair Brown

Asks if OHSU teachers have the option of being in a 401K-type program in place of the Public Employee Retirement System (PERS).

114

Allen

Says that OHSU employees can choose PERS or an alternative retirement plan.

116

Rep. Kitts

Asks if there will still be no revenue and fiscal impact if HB 2615 becomes retroactive.

121

Allen

States that they see little revenue impact, because it only affects a small number of employees.

122

Rep. Kitts

States that the fiscal needs to be redone if HB 2615 has been amended.

130

Allen

Clarifies that the reason for looking at the August 29, 2003 date was because of the accrual of benefits for 2004.

138

Chair Brown

Closes the public hearing on HB 2615 and opens the public hearing on HB 2372. 

HB 2372 –PUBLIC HEARING

143

Janet Adkins

Committee Administrator.  Explains HB 2372 and references the -1 amendments and the hand-engrossed version (EXHIBIT G). 

157

John Brenneman

Recreational Vehicle Association.  Speaks in support of HB 2372 with the -1 amendments.   Talks about how HB 2670 (2003) was patterned after a national model to protect dealers.  States that they had to negotiate with some dealers who did like the way the bill was written.    

204

Shawn Miller

Oregon Recreational Vehicles Association.  Speaks in support of HB 2372 with the -1 amendments.  States the state of Oregon leads the industry when it comes to recreational vehicles.  Talks about lines eight and ten with the -1 amendments.  Talks about how HB 2372 affects the buybacks of recreational vehicles.

243

Rep. Schaufler

Asks what the dealer does with the objects that they buyback.

245

Brenneman

Says that it sits on the shelf and may be used for parts.

251

Chair Brown

Closes the public hearing on HB 2372 and opens the work session on HB 2372.

HB 2372 – WORK SESSION

257

Janet Adkins

Committee Administrator.  Says that it is amazing that this is the only amendment to HB 2670 (2003).  Praises John Brenneman and Shawn Miller for their work.

263

Rep. Schaufler

Thanks the House Business Committee for the 2001 session.

267

Rep. Kitts

MOTION:  Moves to ADOPT HB 2372-1 amendments dated 03/16/05.

270

VOTE:  7-0-0

Chair Brown

Hearing no objection, declares the motion CARRIED.

271

Rep. Kitts

MOTION:  Moves HB 2372 to the floor with a DO PASS AS AMENDED recommendation.

276

VOTE:  7-0-0

AYE:            In a roll call vote, all members present vote Aye.

Chair Brown

The motion CARRIES.

281

Rep. Kitts

MOTION:  Moves HB 2372 be placed on the CONSENT CALENDAR.

283

VOTE:  7-0-0

Chair Brown

Hearing no objection, declares the motion CARRIED.

285

Chair Brown

Closes the work session on HB 2372 and opens the work session for the introduction of committee bills.

INTRODUCTION OF COMMITTEE BILLS – WORK SESSION

295

Chair Brown

Submits LC 3484 (EXHIBIT H).

305

Rep. Esquivel

MOTION:  Moves LC 3484 BE INTRODUCED as a committee bill with the Speaker of the House’s approval.

307

VOTE:  7-0-0

AYE:            In a roll call vote, all members present vote Aye.

Chair Brown

The motion CARRIES.

320

Chair Brown

Closes the work session for the introduction of committee bills.  Adjourns the meeting at 9:57 a.m.