PUBLIC HEARING & WORK SESSION

SB 267, 268, 269, 270

 

TAPES 168 A-B, 169 A

 

HOUSE REVENUE COMMITTEE

MAY 23, 2005   1:00 PM   STATE CAPITOL BUILDING

 

Members Present:                      Rep. Tom Butler, Chair

                                                Rep. Vicki Berger, Vice-Chair

                                                Rep. Mark Hass, Vice-Chair

                                                Rep. Brian Boquist

                                                Rep. Sal Esquivel

                                                Rep. Larry Galizio

                                                Rep. Betty Komp

                                                Rep. Andy Olson

                                                Rep. Chuck Riley

                       

 

Witnesses Present:                      Judge Henry Breithaupt, Oregon Tax Court

                                                Rep. Jeff Kropf, District 17

                                                Douglas Ebner, Marion County Assessor

                                                Karen Gregory, Property Tax Administrator, DOR

 

 

Staff Present:                          Paul Warner, Legislative Revenue Officer                                    

                                                Mary Ayala, Economist

                                                Barbara Guardino, Committee Assistant                                            

                                                                                                                                                           

 

TAPE 168, SIDE A

010

Chair Butler

Calls meeting to order and opens public hearing on SB 267 as a subcommittee.

 

020

Paul Warner

Explains that the committee will look at four bills from the Tax Court today. SB 267 establishes jurisdiction for the tax court to determine the real market value of specially assessed property. It gives the courts additional flexibility. See staff measure summaries (EXHIBITS 1 and 2).

 

PUBLIC HEARING, SB 267

032

Chair Butler

Opens public hearing on SB 267 with a quorum.

 

034

Judge Henry Breithaupt

Submits written testimony in favor of SB 267 (EXHIBIT 3). Gives brief history of Magistrate Division of the Oregon Tax Court. It was created in 1995 to offer inexpensive ($25) dispute resolution. Over 90% of cases that come to that division are resolved there. If parties are dissatisfied, they can begin a new case in the regular Tax Court. Prior to establishment, Tax Court could find value in valuation controversies regardless of what the parties had pleaded. That statute was inadvertently repealed. This bill is a return to pre-1995 status of the law.

 

 

 

086

Chair Butler

Clarifies, tax cases move from the local level to the Magistrate to the Regular Division of the Oregon Tax Court.

104

Breithaupt

Responds with further clarification.

 

115

Chair Butler

Closes public hearing on SB 267. Opens work session.

 

WORK SESSION, SB 267

120

Vice Chair Berger

MOTION: MOVES SB 267 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

122

Chair Butler

Asks for any objection or discussion.

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS. VOTE: 9-0-0. MEMBERS VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER

 

 

 

125

Vice Chair Berger

MOTION: MOVES SB 267 TO THE CONSENT CALENDAR.

 

127

Chair Butler

Asks for any objection.

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS. VOTE: 9-0-0. MEMBERS VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER

 

129

Chair Butler

Closes work session on SB 267. Opens public hearing on SB 268.

 

PUBLIC HEARING, SB 268

133

Warner

Gives overview of SB 268 (EXHIBIT 4), which eliminates the statute that refers to the Tax Court procedure for small claims. Introduces SB 268-1 amendment (EXHIBIT 5), which deals with the timing of the appeals process for centrally assessed property. It clarifies and speeds up the present process.

 

147

Breithaupt

Testifies in favor of SB 268. Submits written testimony, paraphrased (EXHIBIT 6). Gives brief review of before the Magistrate Division was formed. Taxpayers’ first level of hearing took place at the Dept. of Revenue before coming to the Regular Division. In 1961 a small claims division was created. In 1995 the initial hearing process was moved from DOR to the court. He has found that when taxpayers are offered an opportunity to pay $25 for the Magistrate or elect small claims court at $10, they check the $10 box. Unfortunately, it’s not that easy to determine what a small claim is. The confusion has led people to the wrong court. There is no appeal in small claims.

 

201

Vice Chair Berger

Clarifies, the bill takes away the small claims option. Asks, how would a newcomer to the current system know where to go?

 

226

Breithaupt

Responds, this is a problem that the Tax Court deals with regularly. Explains the problems and process in finding which court to file in. Removing the small claims option simplifies this situation.

 

289

Rep. Jeff Kropf

Testifies in favor of SB 268-1 amendment. It is an outgrowth of conversations with Marion County Tax Assessor Doug Ebner and Karen Gregory from DOR. Norpac is the poster child of why reforms are needed. They went through a six-year property tax appeal and were successful. The result was that interest of 12% per year was granted and added to the refund and the taxing districts had to bear the cost. Discussed how to remedy this with Ebner, and came up with some solutions, including the SB 268-1 amendment.

 

349

Rep. Kropf

Explains section 13 of the SB 268-1 amendment, which streamlines the process and substantially shortens the length of litigation. Explains section 15, which consolidates various claims. Urges the committee to adopt SB 268-1 amendment.

 

385

Chair Butler

Asks, what will make certain these will occur faster than in the past?

 

393

Rep. Kropf

Responds, he has the word of the DOR that they will adopt these rules. Second, “I’m going to be looking over their shoulder.”

 

429

Vice Chair Butler

Asks, if this had been on the books 10 years ago, what would have been different in the Norpac case?

 

439

Douglas Ebner

Responds, five years ago when it came up the request was a 50% reduction. DOR at that time felt that they could defend it. Five years later they settled at 50 cents on the dollar. This bill gives the assessor some say in the process. The state spent $1.2 million in interest for Norpac.

 

TAPE 169, SIDE A

025

Ebner

Continues, with this new law Norpac could have been settled five years ago with no refund, just the value. This bill opens a door. A group will meet during the interim to come back with legislation next session.

 

030

Rep. Hass

Asks whether Norpac was current its property tax bills.

 

035

Ebner

Responds yes, but the district lost money anyway. Fire districts such as Sublimity ask why they have to pay a refund for something that has nothing to do with them. The reason is, if one district had to pay, it would have been devastated. So, it costs all taxing districts 2% because of all the appeals on refunds.

 

060

Chair Butler

Asks if this is how all counties do this.

 

065

Ebner

Responds yes, on appeals. Assessors will meet with taxing districts. We have to be communicating with taxing districts and the public. There is certain information that is confidential, so how do you communicate?

 

074

Chair Butler

Asks how local governments will be able to drive this process. Does not share Ebner’s optimism. Comments on page 1, lines 18-22. Comments on page 2, lines 23-30 and page 3, line 1. “Nowhere do I read that this is going to speed this process along,” unless DOR gets dismissed.

 

109

Ebner

Responds, he shares the Chair’s concerns, but “we have to start someplace.” They were limited in time to put this bill together. Feels good that the assessor has a say in the process. Had he had this in place five years ago, Norpac would have been settled then at 50%.

 

114

Chair Butler

Follow-up on what weight the county assessors’ input would carry.

 

129

Ebner

It comes down to trust. Voices hope for progress in the 2007 session.

Asks lawmakers to be involved in this process, along with League of Oregon Cities and Association of Oregon Counties and Board of Commissioners.

 

135

Chair Butler

Responds, this sounds like an agreement to agree, which is probably not worth a lot.

 

149

Breithaupt

Tax Court hosted the talks and participated in them. Agrees with Chair Butler that this bill does not contain mandatory language. He heard an honest discussion on how to solve the problem. Someone asked the court what it could do. These cases were all settled out of court. Judge committed that tax court will identify cases and make sure the communication system is open and people continue talking.

 

176

Chair Butler

Asks Judge Breithaupt, had he not become involved, how much longer could the Norpac case have gone on? Follows up.

 

180

Breithaupt

Responds, were the parties in agreement that they needed more time, he would have given it to them.

 

218

Karen Gregory

Testifies in regard to the interest of DOR for the bill. DOR values over 3000 accounts annually and has a limited staff. Maintaining these cases is staff intensive. DOR pays Dept. of Justice attorney costs. Also, DOR is by and large interested in settling cases, and it continues working toward settlement. Suggests tax court, magistrate, DOR and DOJ all sit at the table and get these cases through so they won’t have another case like Norpac. That’s where the amendment came in. DOR and assessors are also working on an appeal timeline. Anticipates legislation for the 2007 session to address these issues.

 

280

Chair Butler

Is troubled that this appears to be “an agreement to agree” and is unenforceable. Asks Gregory to consider follow-up legislation as a way to get cases resolved, not just an agreement to agree.

 

340

Ebner

Agrees with Butler’s assessment. A situation like Norpac is beyond a local issue, it’s national and international. Hopes to come back next session and talk about whether there is another alternative. Taxing districts need to understand how the process works. Will meet with them Thursday (May 26).

 

371

Chair Butler

Appreciates Ebner’s and Gregory’s testimonies, and looks forward to progress over the interim.

 

384

Kropf

“The intention of this agreement is to provide quick and efficient resolution to appeals. That does not mean, for the record, business as usual. It means something less than a 5- or 6-year or 12-or 15-year appeal process on a piece of property. For the record we are saying we intend everyone to work together to dramatically shorten the appeals process.”

 

420

Chair Butler

Closes public hearing on SB 268. Opens work session.

 

WORK SESSION, SB 268

430

Vice Chair Berger

MOTION: MOVES ADOPTION OF SB 268-1 AMENDMENT.

 

433

Chair Butler

Asks for any discussion.

 

434

Vice Chair Berger

Comments, does not see much requirement in the amendment, but believes a clear statement needs to be made.

 

436

Chair Butler

Asks if there are any objections to the motion.

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS. VOTE: 9-0-0. MEMBERS VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER

 

440

Vice Chair Berger

MOTION: MOVES SB 268 AS AMENDED TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

442

Chair Butler

Asks if there are any objections to the motion.

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS. VOTE: 9-0-0. MEMBERS VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER

 

448

Chair Butler

Closes work session on SB 268. Opens public hearing on SB 269.

 

TAPE 168, SIDE B

PUBLIC HEARING, SB 269

030

Warner

Explains SB 269, which eliminates statutory requirement for taxpayers appealing to the Tax Court to file certified copy of complaints and petitions (EXHIBIT 8). The process is not consistent due to taxpayers’ lack of knowledge.

 

040

Breithaupt

This is a housekeeping measure. Tried to gather statutory requirements that no longer have a purpose and sit as stumbling blocks. Opponents have not tried to take advantage of this, but he wants to be sure they don’t.

 

054

Chair Butler

Asks why there were three “no” votes on the Senate floor on this bill.

 

058

Warner

Does not know why.

 

065

Chair Butler

Closes public hearing on SB 269. Opens work session.

WORK SESSION, SB 269

067

Vice Chair Berger

MOTION: MOVES SB 269 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

070

Chair Butler

Asks if there are any objections to the motion.

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS. VOTE: 9-0-0. MEMBERS VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER

 

072

Vice Chair Berger

MOTION: MOVES SB 269 TO THE CONSENT CALENDAR.

 

074

Chair Butler

Asks if there are any objections to the motion.

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS. VOTE: 9-0-0. MEMBERS VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER

 

076

Chair Butler

Closes work session on SB 269. Opens public hearing on SB 270.

 

PUBLIC HEARING, SB 270

078

Warner

Gives overview of SB 270. Grants Tax Court authority to establish rules for selecting person to represent taxpayers before a Tax Court magistrate (EXHIBIT 10). Rules are designed to be consistent with the nature and use of the court.

 

085

Breithaupt

Some situations can’t be dealt with easily under the statutes. Gives an example of an elderly taxpayer who cannot afford an attorney or accountant. They want a son or daughter to represent them. This bill gives the court authority to provide for additional representation. Would exercise this authority to deal with family members who show the ability and have the consent of the taxpayer.

 

098

Vice Chair Berger

Describe how you’d get there, if you can’t list it in statute? Are you looking at someone who would only trust a family member?

 

101

Breithaupt

Responds, it can be listed in statute. This is only relevant with respect to the Magistrate Division, the easy access section.

 

123

Rep. Hass

Asks, wouldn’t it be more beneficial for the taxpayer to have someone who knows what they’re doing?

 

128

Breithaupt

If they had an attorney, yes, but these people won’t get an attorney. They either don’t know how to get one or can’t afford one. These are small income tax cases.

 

148

Rep. Riley

Asks, are you asking for ad hoc rulemaking authority?

 

150

Breithaupt

We are asking for authority to make rules to describe the kind of additional representatives. Will make sure they will provide protection for people and with consent of the taxpayer.

 

163

Chair Butler

Gives example of elderly people in his experience as an accountant who would prefer not to have an attorney, but a minister or friend.

 

171

Breithaupt

There would be a clear statement that the taxpayer understands that this person would speak for them.

 

175

Rep. Olson

Can see that this is a streamlining process. Judge Breithaupt must have experienced a lot of these situations.

 

194

Chair Butler

Closes public hearing on SB 270. Opens work session.

 

WORK SESSION, SB 270

196

Vice Chair Berger

MOTION: MOVES SB 270 TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

198

Chair Butler

Asks if there are any objections to the motion.

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

 

210

Vice Chair Berger

MOTION: MOVES SB 270 TO THE CONSENT CALENDAR.

 

212

Chair Butler

Asks for any objections or discussion.

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

 

215

Chair Butler

Closes work session. Adjourns meeting at 2:10 p.m.

           

 

Tape Log Submitted by:

 

 

 

 

Barbara Guardino, Committee Assistant

 

 

 

 

 

Exhibit Summary:

  1. SB 267, Staff Measure Summary, Ayala, 5/23/05, 1 pp.
  2. SB 267, Staff Measure Summary for Senate Revenue Committee, Ayala, 2/16/05, 1 pp.
  3. SB 267, testimony of Judge Henry C. Breithaupt, 5/23/05, 2 pp.
  4. SB 268, Staff Measure Summary, Warner, 1/26/05, 1 pp.
  5. SB 268, Amendment SB 268-1, 5/23/05, Legislative Counsel, 3 pp.
  6. SB 268, testimony of Judge Henry C. Breithaupt, 5/23/05, 2 pp.
  7. SB 268, testimony of Douglas Ebner, 5/23/05, 1 pp.
  8. SB 269, Staff Measure Summary, Warner, 2/7/05, 1 pp.
  9. SB 269, testimony of Judge Henry C. Breithaupt, 5/23/05, 1 pp.
  10. SB 270, Staff Measure Summary, Warner, 2/7/05, 1 pp.
  11. SB 270, testimony of Judge Henry C. Breithaupt, 5/23/05, 1 pp.