WORK SESSION

HB 3460, 2234 B, 3143 A

 

TAPES 172-173 A-B, 174 A

 

HOUSE REVENUE COMMITTEE

MAY 25, 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:                      Debra Buchanan, Dept. of Revenue

                                                Art Fish, OR Economic & Community Development Dept. (OECDD)

                                                Hasina Squires, Special Districts Assn.

                                                Cindy Hunt, Legislative Counsel

                                                Laurie Wimmer Whelan, Oregon Education Assn. (OEA)                           

 

 

Staff Present:                          Paul Warner, Legislative Revenue Officer                                    

                                                Mary Ayala, Economist

                                                Lizbeth Martin-Mahar, Economist

                                                Kristi Bowman, Committee Assistant                                            

                                                                                               

                                                                                   

 

TAPE 172, SIDE A

002

Chair Butler

Calls meeting to order at 1:06 p.m.

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 2234 B

 

 

 

012

Mary Ayala

Gives update on HB 2234 B. Discusses summary sheet for the bill and the amendments (Exhibit 1).

 

 

 

040

Chair Butler

Comments on the various deletions and additions to the bill provided by the amendments. Discussion with Ayala.

 

 

 

070

Ayala

Discusses the revenue impact (Exhibit 2) of the property tax and corporate income tax credits with Chair Butler.

 

 

 

095

Rep. Hass

Asks about the offset for the revenue impact.

 

 

 

097

Ayala

Responds that there will be offsets due to the hiring of employees and investing in facilities.

 

 

 

 

 

116

Chair Butler

Asks Rep. Esquivel about his experience with the revenue effects of personal income tax as a result of enterprise zone projects. Asks about the average employment numbers in enterprise and e-commerce zones.

 

 

 

127

Rep. Esquivel

Discusses the specifics of job creation and retention in the 32 Medford area enterprise zones.

 

 

 

147

Chair Butler

Asks about the length of time a company can claim the property tax credit in an enterprise zone.

 

 

 

157

Rep. Riley

Responds that the credit is for three years with a two year extension.

 

 

 

164

Debra Buchanan

Provides handout (Exhibit 3) and discusses the impact of the HB 2234 B-6 amendment relating to the Long Term Enterprise Zone Credit (LTEZ). The amendment provides clarifying language to the current law. Discussion with Chair Butler.

 

 

 

198

Rep. Berger

MOTION: MOVES THE ADOPTION OF THE HB 2234-B6 AMENDMENT.

 

 

 

208

Chair Butler

ORDER: HEARING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER.

 

 

 

216

Rep. Berger

Asks about the differences between the HB 2234-B7 amendment and the original A-engrossed bill.

 

 

 

220

Ayala

Responds that the A-engrossed bill removes the restrictions on the number of e-commerce zones that can be created. The HB 2234-B7 amendment increases the number of existing e-commerce zones from six to ten and aligns the sunset dates of all enterprise zones.

 

 

 

238

Chair Butler

Restates the components of the HB 2234-B7 amendment.

 

 

 

260

Rep. Berger

MOTION: MOVES THE ADOPTION OF THE HB 2234-B7 AMENDMENT.

 

 

 

270

Chair Butler

ORDER: HEARING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER.

 

 

 

274

Rep. Galizio

Asks about voice-over-internet technology. Would voice-over-internet qualify for e-commerce?

 

 

 

290

Art Fish

Responds that if the internet is being used as a platform, it wouldn’t matter if the information is printed on a screen or voice-over-internet. The requirement for e-commerce is doing transactions on a computer whether it is voice or text. As long as the e-commerce business is more than 50% internet-based, then it will satisfy the requirements of an e-commerce business. Discussion with Rep. Galizio.

 

 

 

342

Fish

Adds that to use the e-commerce program, there must be an  increase of employment by one job or 10%, whichever is greater.  A business must qualify for the property tax credit in the beginning in order to be eligible. Discussion with Rep. Galizio.

 

 

 

364

Rep. Galizio

Asks if it would be feasible to add jobs in other areas in addition to jobs in the e-commerce zone.

 

 

 

384

Fish

Responds that many of the e-commerce companies are global. They could increase jobs in the enterprise zone and also have employees in other states or countries.

 

 

 

400

Chair Butler

Clarifies that the credit is only extended to companies located in the e-commerce zones, and the credit will only apply to the operations in the enterprise zone. Discussion with Fish.

 

 

 

TAPE 173, SIDE A

015

Rep. Hass

Asks if the definitions used pertaining to the 50% requirement is stated in rule.

 

 

 

016

Fish

Cites the Oregon Revised Statute (ORS) references pertaining to the 50% requirement, the tax credit, and e-commerce zones.

 

 

 

026

Fish

States that the OECDD supports the HB 2234 B-7 amendment. The amendment returns the bill back to the original bill that proposed the additional enterprise zones.

 

 

 

040

Chair Butler

Asks Fish about competition among enterprise zones.

 

 

 

048

Fish

Responds that a company cannot  move jobs into an enterprise zone from more than 30 miles away, and it would cancel the property tax credit requirement.

 

 

 

063

Rep. Berger

MOTION: MOVES HB 2234 B AS AMENDED TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

 

 

070

Chair Butler

ORDER: HEARING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER.

 

 

 

CLOSES WORK SESSION FOR HOUSE BILL 2234 B

 

 

 

OPENS WORK SESSION FOR HOUSE BILL 3143 A

 

 

 

084

Ayala

Gives overview of HB 3143 A (Exhibit 6). The bill authorizes OECDD to approve up to ten new enterprise zones.  The opt-out provision concerning special districts would only apply to the new zones.

095

Chair Butler

General comments about the background of the bill and summarizes the amendments.

 

 

 

140

Rep. Riley

Comments on previous testimony in the Trade and Economic Development Committee regarding the opt-out provision (date of hearing not specified). Discusses a similar situation concerning vertical housing. If special districts come on board voluntarily, it is a much better situation.

 

 

 

163

Chair Butler

Agrees with Rep. Riley’s assessment of the opt-out provision and discusses his reasons. A greater level of communication would occur and makes the HB 3143  A-7 and A-8 amendments unnecessary.

 

 

 

182

Rep. Komp

Comments that she prefers a pilot program to try out the opt-out program with fewer new zones. Discussion with Chair Butler.

 

 

 

201

Rep. Riley

Comments that the opt-out provision gives counties and cities another option. Discusses an example of a fire department that exercises the opt-out provision.

 

 

 

211

Rep. Hass

General comments about the opt-out provision. It seems like it takes away the ease of recruiting new businesses in an enterprise zone. Discussion with Chair Butler.

 

 

 

257

Rep. Berger

MOTION: MOVES THE ADOPTION OF THE HB 3143 A-9 AMENDMENT.

 

 

 

264

Rep. Esquivel

Expresses concern about the opt-out issue. Will this issue carry over into urban renewal zones and other similar programs? Discussion with Rep. Riley.

 

 

 

290

Hasina Squires

Defines special districts and cites the ORS reference. Special districts do not include schools, cities, or counties.

 

 

 

308

Chair Butler

Asks for roll-call vote.

 

 

 

316

Chair Butler

THE MOTION HAVING RECEIVED THE REQUIRED MAJORITY IS DECLARED PASSED. THE VOTE: 9-0-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER.

 

 

 

320

Rep. Berger

MOTION: MOVES HB 3143 A AS AMENDED TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

 

 

336

Chair Butler

THE MOTION HAVING RECEIVED THE REQUIRED MAJORITY IS DECLARED PASSED. THE VOTE: 9-0-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER.

 

 

 

CLOSES WORK SESSION FOR HOUSE BILL 3143 A

OPENS WORK SESSION FOR HOUSE BILL 3460

 

 

 

340

Chair Butler

General comments about the bill.

 

 

 

352

Paul Warner

Discusses the HB 3460-4 amendment (Exhibit 10) and refers to the summary sheet regarding the amendment changes to the original bill (Exhibit 11).  

 

 

 

TAPE 172, SIDE B

038

Warner

Discusses the Trend Projection and the Cyclical Projection Table handout (Exhibit 12).

 

 

 

116

Chair Butler

Comments on the background and intent of the HB 3460-4 amendment.

 

 

 

128

Warner

Discussion with Chair Butler on the history of personal income tax growth and decline. A 4% growth rate in the personal income tax rate would be a severe recession. Comments on the property tax revenue impacts.

 

 

 

154

Rep. Galizio

Comments on Section 1 of the HB 3460-4 amendment regarding legislative review.

 

 

 

165

Warner

Responds that the amendment would require the legislature to review this funding process every four years and make adjustments accordingly.

 

 

 

175

Chair Butler

Discusses the parameters of school funding and the concept of “hold harmless” of personal income tax dedication to K-12 funding.

 

 

 

203

Rep. Galizio

Asks if the legislative review component undercut the plan to prevent legislative “bickering” about school funding

 

 

 

213

Chair Butler

Responds that there needs to be a statutory requirement for the legislature to address school funding issues.

 

 

 

234

Rep. Berger

General comments about Rep. Galizio’s comments.  Asks Warner to explain Sections 9 and 10 of the HB 3460-4 amendment.

 

 

 

257

Warner

Responds that those sections refer to interest earnings from the  current Educational Stability Fund, and they would go into a sub-account.

 

 

 

265

Cindy Hunt

Discusses the two versions of funding in current statute. There is a bill pending in the current legislative session that would eliminate the second version.

 

 

 

294

Rep. Komp

Asks about the spending cap in HB 3460.

 

 

 

305

Warner

Responds that there is not a spending cap in the bill, but rather there is a limit on the biennial growth of the State School Fund.  Discussion with Rep. Komp about the bill’s intent to dedicate an incoming stream of revenue and then divide it up among the various dedicated funds.

 

 

 

354

Chair Butler

Comments that the bill is a revenue dedication for school funding. General comments about the bill’s intent. Discussion with Rep. Komp about policy issues.

 

 

 

404

Rep. Riley

Asks about the $5.318 M amount that comes from the School Revenue Forecast Committee.

 

 

 

423

Chair Butler

General comments about the School Revenue Forecast Committee.

 

 

 

419

Warner

Adds that the HB 3460-4 amendment refers to the 2001 memo to Susan Castillo (see Exhibit 15 from 05/12/05 hearing). Discusses the purpose of the Forecast Committee with Rep. Riley.

 

 

 

TAPE 173, SIDE B

032

Rep. Hass

Asks where the $5.318 M amount is mentioned in the amendment, and why is that specific number used as a starting point.

 

 

 

036

Warner

Responds that the amount is referred to in Section 2,  page 4, regarding the “where to start” amount that came out of a work group discussion.

 

 

 

044

Chair Butler

Comments on the work group discussion of the budget number being used during this legislative session.

 

 

 

060

Rep. Riley

Clarifies that the $5.318 M amount is the number needed to keep current service levels for the 05-07 biennium as opposed to trying to replace any services taken away during the past few years.

 

 

 

069

Warner

Discusses the factors used to reach the $5.318 M amount.

 

 

 

080

Rep. Hass

Discusses the summary handout regarding the HB 3460-9 amendment (Exhibit 13) and the tax expenditures proposed for deletion. If education is going to be limited to 50-51% of personal income tax dedication, then there should be a limit to tax breaks that have been given.

 

 

 

148

Lizbeth Martin-Mahar

Discusses the handout:  Summary of HB 3460-9 Amendment (Exhibit 14) and discusses the specific sections affected. Refers to the HB 3460-9 amendment (Exhibit 15).

 

 

 

220

Chair Butler

Discusses the Summary components with Martin-Mahar and Rep. Hass.

 

 

 

253

Rep. Boquist

Asks for an explanation of “Key Man” life insurance.

 

 

 

258

Chair Butler

Discusses the “Key Man” insurance program with Rep. Boquist. Discusses the tax liability of the insurance premium with Warner.

 

 

 

325

Laurie Wimmer Whelan

Discusses the HB 3460-5 amendment (Exhibit 16) that is sponsored by the Oregon Education Assn (OEA). This amendment addresses the absolute minimum the OEA members would need in order to support HB 3460.

 

 

 

TAPE 174, SIDE A

049

Rep. Berger

Asks if the OEA has run a report on the percentage numbers proposed.

 

 

 

060

Wimmer Whelan

Responds that the OEA has not yet done a report on the percentages.

 

 

 

CLOSES WORK SESSION FOR HOUSE BILL 3460

 

 

 

062

Chair Butler

Adjourns meeting at 3:00 p.m.

 

 

Tape Log Submitted by:

Reviewed by:

 

 

 

Kristi Bowman, Committee Assistant

Kim Taylor James, Committee Coordinator

 

Exhibit Summary:

  1. 1.      HB 2234, Handout: Summary Sheet, Ayala, 1 pg., 05/25/05
  2. 2.      HB 2234, Revenue Impact Statement, Ayala, 1 pg., 05/25/05
  3. 3.      HB 2234, Handout: HB 2234 B-6 Amendment, Buchanan, 4 pp., 05/25/05
  4. 4.      HB 2234, Staff Measure Summary (Revised), Ayala, 1 pg., 05/25/05
  5. 5.      HB 2234, Staff Measure Summary (Corrected), Ayala, 1 pg., 05/25/05
  6. 6.      HB 3143, Staff Measure Summary, Ayala, 1 pg., 05/23/05
  7. 7.      HB 3143, Handout: Summary of Amendments, Ayala, 1 pg., 05/25/05
  8. 8.      HB 3143, Revenue Impact Statement (Revised), Ayala, 2 pp., 05/25/05
  9. 9.      HB 3143, Staff Measure Summary HB 3143 A-9, Ayala, 1 pg., 05/23/05
  10. 10.  HB 3460, Amendment HB 3460-4, Leg. Counsel, 11 pp., 05/25/05
  11. 11.  HB 3460, Handout: Summary Sheet HB 3460-4 Amendment, Warner, 1 pg., 05/25/05
  12. 12.  HB 3460, Handout: HB 3460 Trend Projection, Warner, 2 pp., 05/25/05
  13. 13.  HB 3460, Handout: Amendment to HB 3460, Rep. Hass, 1 pg., 05/24/05
  14. 14.  HB 3460, Handout: Summary of HB 3460-9 Amendment, Martin-Mahar, 2 pp., 05/25/05
  15. 15.  HB 3460, Amendment HB 3460-9, Leg. Counsel, 3 pp., 05/25/05
  16. 16.  HB 3460, Amendment HB 3460-5, Leg. Counsel, 6 pp., 05/25/05