PUBLIC HEARING

HB 3453, 3454

WORK SESSION

HB 2197, 2089, 2776, 2511, 3359

 

TAPES 109 A-B, 110 A

 

HOUSE REVENUE COMMITTEE

APRIL 12, 2005   1:00 PM   STATE CAPITOL BUILDING

 

Members Present:                      Rep. Vicki Berger, Acting Chair

                                                Rep. Mark Hass, Vice-Chair

                                                Rep. Brian Boquist

                                                Rep. Sal Esquivel

                                                Rep. Larry Galizio

                                                Rep. Betty Komp

                                                Rep. Andy Olson

                                                Rep. Chuck Riley

 

Member Excused:                     Rep. Tom Butler

                       

Witnesses Present:                      Shawn Miller, PPM Energy

                                                Norm Ross, Pacific Corp. Energy

                                                Bill Linden, City of Klamath Falls

                                                Gil Riddell, Assn. of Oregon Counties (AOC)

                                                Mike Long, Tax Collector, Klamath County

                                                John DiLorenzo, Attorney, City of Seattle and Tacoma

                                                John Phillips, Dept. of Revenue (DOR)

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Mazen Malik, Economist

                                                Mary Ayala, Economist

                                                Kristi Bowman, Committee Assistant

                                               

 

TAPE 109, SIDE A

002

Acting Chair Berger

Calls meeting to order at 1:03 p.m.

 

 

 

OPENS PUBLIC HEARING FOR HOUSE BILL 3453

 

 

 

011

Mary Ayala

Gives overview of HB 3453 (Exhibit 1). The bill exempts from property taxation any tangible or intangible property whose use arises from contracts between qualified government entities and energy marketing companies. Refers to the revenue impact statement (Exhibit 2).

 

 

 

057

Shawn Miller

Gives background of HB 3453. HB 3453 is identical to HB 2047 and its amendment. [The amendment did not connect to the relating clause and HB 3453 was substituted for HB 2047]. The only change to HB 3453 is on page 2, line 36 defining qualified government entities. That line deletes the reference to tribal entities.

 

 

 

082

Norm Ross

Discusses the narrow scope of HB 3453 pertaining to an assessment issue affecting PPM Energy and the City of Klamath Falls. Submits written testimony (Exhibit 3). The assessment concerns a commodity, e.g., energy. It is a purchase power agreement. Testifies in support of HB 3453 because the Dept. of Revenue (DOR) does not assess similar utility companies for energy contracts. Adds that the DOR disagrees with the Oregon Tax Court decision against PPM.

 

 

 

141

Bill Linden

Gives historical perspective of HB 3453. Comments that this facility is located within an enterprise zone, and had there been notice that there would be a tax assessment, the City could have exercised tax exemption options available for enterprise zones. Comments that he believes that the bill is a reasonable compromise and supports HB 3453.

 

 

 

161

Rep. Olson

Asks if there are other public sector-private enterprise relationships like this in other states.

 

 

 

166

Ross

Responds that there are similar public sector-private enterprise relationships in other states, and he is not aware of any state agency taxing the contract rights like the Oregon DOR has done.

 

 

 

171

Rep. Berger

Asks if this is essentially the original bill

 

 

 

180

Miller

Responds that HB 3453 was originally HB 2047 with the HB 2047-1 amendment.

 

 

 

197

Gil Riddell

Testifies against HB 3453 and reads from written testimony (Exhibit 4) to support AOC’s position.

 

 

 

239

Mike Long

Testifies against HB 3453. Discusses the history of the taxation of PPM in Klamath County. When he received notice that PPM Energy was appealing the Tax Court ruling, the Tax Court advised him to put those taxes in reserve until the suit was settled. If PPM Energy wins the lawsuit, other taxing districts will have to pay an additional 12% interest on taxes paid. Comments that the state would have to make up the taxes lost to schools under the state school funding formula.

 

 

 

287

Rep. Boquist

Asks Riddell to define “unnecessary property tax expenditure.”

 

 

 

290

Riddell

Responds that he is basing that term on three standards for new property tax expenditures (as stated in Exhibit 4):

  • ·         There is a compelling statewide interest
  • ·         There is an immediate need
  • ·         There is agreement with local jurisdictions

Adds that none of these standards have been demonstrated.

 

 

 

308

Rep. Boquist

Comments to Riddell that not collecting the tax is now an expenditure. Questions and answers exchanged with Long regarding Klamath County’s taxation of PPM’s intangible property.

 

320

Long

Explains how he projected revenue from the potential of a tax assessment on intangible property.

 

 

 

378

Riddell

Comments on the DOR’s distribution of tax revenue to county assessors. Adds that one of the Klamath County Commissioners told him that they “had not had conversations about this item with the city”.

 

 

 

394

Acting Chair Berger

Asks Riddell about his belief that there is not enough self-limiting language in HB 3453. Asks if this bill would apply to any other energy company.

 

 

 

405

Riddell

Responds that the bill could apply to future situations, such as the City of Portland’s purchase of PGE and having a private company run it. However, he is not aware of any other utility company with this arrangement at this time.

 

 

 

CLOSES PUBLIC HEARING FOR HOUSE BILL 3453

 

 

 

OPENS PUBLIC HEARING FOR HOUSE BILL 3454

 

 

 

TAPE 110, SIDE A

007

Ayala

Gives background of HB 3454 (Exhibit 5). This bill exempts from property tax tangible or intangible property rights related to members of the Pacific Northwest AC Intertie. Refers to proposed amendment HB 3454-1 (Exhibit 6) that would exclude “property rights”. Refers to the revenue impact statement (Exhibit 7). 

 

 

 

044

John DiLorenzo

Testifies in support of HB 3454 and the HB 3454-1 amendment. Reads verbatim from written testimony (Exhibit 8).

 

 

 

173

Rep. Galizio

Asks for elaboration on the statement in the testimony regarding the DOR’s awareness of the Seattle and Tacoma Intertie contracts with Bonneville Power Administration (BPA) in 1995.

 

 

 

175

DiLorenzo

Responds that the DOR taxed a private party Intertie contract, and the DOR won that lawsuit in tax court because it was a private party. However, the DOR did not tax Seattle and Tacoma until 2001 when they tried to make the assessment retroactive to 1995.

 

 

 

182

Rep. Hass

Asks if there is any scenario in which DiLorenzo thinks that an entity should pay for the right to use the Intertie.

 

 

 

185

DiLorenzo

Responds that this scenario is a larger policy question than what this bill proposes. Comments that there should be uniformity in which cities are assessed.  

 

 

 

218

Riddell

Testifies in opposition to HB 3454. Submits written testimony (Exhibit 9). Discusses the differences in taxation between Washington and Oregon pertaining to tangible and intangible property.

 

245

Rep. Riley

Asks if Riddell thinks that in-state cities should be taxed on profit-making enterprises. Follow-up question: Is the Klamath Falls enterprise [with PPM Energy] a profit-making business.

 

 

 

247

Riddell

Responds that if there is profit involved, there is tax liability and would ask for clarification from the DOR.  Regarding Klamath Falls, the ownership of that facility should not be taxable.

 

 

 

280

John Phillips

Responds to questions from the committee. HB 3454 presents a straightforward policy decision regarding taxation of out-of-state entities and provides direction for the DOR. Discusses line 7 in the bill regarding public entities using properties for corporate purposes.

 

 

 

334

Rep. Boquist

Suggests that the DOR provide information to the committee regarding intangible property taxation and the cost of enforcing the tax.

 

 

 

375

Acting Chair Berger

Adds that it is the legislature’s responsibility to make policy statements to the DOR.

 

 

 

CLOSES PUBLIC HEARING FOR HOUSE BILL 3454

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 2197

 

 

 

TAPE 109, SIDE B

008

Mazen Malik

Discusses HB 2197-4 amendment (Exhibit 10) that combines references to health care facilities and non-profit groups noted in previous amendments.

 

 

 

036

Acting Chair Berger

Discusses the intent of the HB 2197-4 amendment.

 

 

 

043

Rep. Hass

MOTION: MOVES THE ADOPTION OF THE HB 2197-4 AMENDMENT.

 

 

 

049

Acting Chair Berger

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. ANSWERING AYE: HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER. EXCUSED: BUTLER

 

 

 

048

Rep. Hass

MOTION: MOVES HB 2197-4 AS AMENDED TO THE HOUSE WITH A DO-PASS RECOMMENDATION.

 

 

 

050

Acting Chair Berger

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. ANSWERING AYE: HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER. EXCUSED: BUTLER

CLOSES WORK SESSION FOR HOUSE BILL 2197.

 

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 2089.

 

060

Malik

Gives summary of HB 2089 and HB 2089-1 amendment (Exhibit  12). The bill allows the amounts for the collection of lodging tax by local governments to accumulate to $100 before transfer to the state agency involved. The amendment addresses the issue of having private entities be able to accumulate fees up to $100 before transferring the funds and have an open-ended date of remitting the tax.

 

 

 

103

Rep. Hass

MOTION: MOVES THE ADOPTION OF THE HB 2089-1 AMENDMENT.

 

 

 

105

Acting Chair Berger

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. ANSWERING AYE: HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER. EXCUSED: BUTLER

 

 

 

107

Hass

MOTION: MOVES HB 2089-1 AS AMENDED WITH A DO PASS RECOMMENDATION AND BE REFERRED TO THE WAYS AND MEANS COMMITTEE.

 

 

 

110

Acting Chair Berger

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. ANSWERING AYE: HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER. EXCUSED: BUTLER

 

 

 

CLOSES WORK SESSION FOR HOUSE BILL 2089

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 2776

 

 

 

120

Ayala

Gives summary of HB 2776 (Exhibit 13).  

 

 

 

132

Acting Chair Berger

Comments that the work group is still waiting for amendments to be drafted and carries-over the bill to a future date.

 

 

 

CLOSES WORK SESSION FOR HOUSE BILL 2776

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 2511

 

 

 

147

Ayala

Gives summary of HB 2511 (Exhibit 15). The bill adds four organizations to the list of fraternal organizations that qualify for an exemption from property tax, and changes the definition of fraternal organizations. Refers to the revenue impact statement (Exhibit 16).

 

 

 

201

Rep. Boquist

Asks if amendments have been submitted regarding adding or deleting language in certain sections of the bill.

 

 

 

211

Ayala

Responds that there are no amendments at this time.

 

 

 

220

Rep. Hass

Asks about cost recovery. The bill seems a little vague on that issue. Adds that he is willing to work on amendments to clarify the cost recovery issue.

 

 

 

CLOSES WORK SESSION FOR HOUSE BILL 2511

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 3359

 

 

 

246

Ayala

Gives summary of HB 3359 (Exhibit 17). The bill exempts property taxation on aircraft used or held by foreign-owned carriers.

 

 

 

274

Rep. Hass

MOTION: MOVES HB 3359 TO THE HOUSE WITH A DO-PASS RECOMMENDATION.

 

 

 

280

Acting Chair Berger

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 8-0-1. ANSWERING AYE: HASS, BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER. EXCUSED: BUTLER

 

 

 

CLOSES WORK SESSION FOR HOUSE BILL 3359

 

288

Acting Chair Berger

Adjourns meeting at 2:18 p.m.

 

Tape Log Submitted by:

Reviewed by:

 

 

 

Kristi Bowman, Committee Assistant

Kim Taylor James, Committee Coordinator

 

Exhibit Summary:

  • 1.      HB 3453, Staff Measure Summary, Ayala, 1 pg., 04/12/05
  • 2.      HB 3453, Revenue Impact Statement, Ayala, 1 pg., 04/12/05
  • 3.      HB 3453, Testimony, Ross, 1 pg., 04/12/05
  • 4.      HB 3453, Testimony, Riddell, 1 pg., 04/12/05
  • 5.      HB 3454, Staff Measure Summary, Ayala, 1 pg., 04/12/05
  • 6.      HB 3454, Amendment HB 3454-1, Legislative Counsel, 1 pg., 04/11/05
  • 7.      HB 3454, Revenue Impact Statement, Ayala, 1 pg., 04/12/05
  • 8.      HB 3454, Testimony, DiLorenzo, 5 pp., 04/12/05
  • 9.      HB 3454, Testimony, Riddell, 1 pg., 04/12/05
  • 10.  HB 2197, Amendment HB 2197-4, Legislative Counsel, 1 pg., 03/24/05
  • 11.  HB 2197, Fiscal Impact Statement, Hughes, 1 pg., 04/12/05
  • 12.  HB 2089, Amendment HB 2089-1, Legislative Counsel, 1 pg., 03/21/05
  • 13.  HB 2776, Staff Measure Summary, Ayala, 1 pg., 04/12/05
  • 14.  HB 2776, Revenue Impact Statement, Ayala, 1 pg., 04/12/05
  • 15.  HB 2511, Staff Measure Statement, Ayala, 1 pg., 04/12/05
  • 16.  HB 2511, Revenue Impact Statement, Ayala, 1 pg., 04/12/05
  • 17.  HB 3359, Staff Measure Statement, Ayala, 1 pg., 04/12/05