SENATE COMMITTEE ON BUSINESS AND ECONOMIC DEVELOPMENT

 

 

March 24, 2005                                                                                                       Hearing Room B

1:00 P.M.                                                                                                                     Tapes  48 - 49

 

MEMBERS PRESENT:         Sen. Rick Metsger, Chair

Sen. Bruce Starr, Vice-Chair

Sen. Jason Atkinson

Sen. Ryan Deckert

Sen. Laurie Monnes Anderson

 

GUEST MEMBER:               Sen. Vicki Walker

 

 

STAFF PRESENT:                 Theresa Van Winkle, Committee Administrator

James Goulding, Committee Assistant

                                                Paul Warner, Legislative Revenue

Dexter Johnson, Legislative Counsel

 

MEASURES/ISSUES HEARD:

                                                SB 171 – Public Hearing

                                                SB 323 – Public Hearing and Work Session

                                                SB 1002 – Work Session

                                                SJM 2 – Public Hearing and Work Session

 

 

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 #, A

003

Chair Metsger

Calls the committee to order at 1:12 p.m.  Opens a public hearing on SB 171. 

SB 171 – PUBLIC HEARING

007

Chair Metsger

Remarks on -4 amendments to the measure before the committee (EXHIBIT A).

024

Lee Beyer

Chair, Oregon Public Utility Commission (PUC).   Begins by testifying on the PUC’s positions on the measure.

035

Sen. Monnes Anderson

Inquires which section he is discussing.

037

Beyer

Replies that he is currently discussing the PUC’s recommendations.  Continues his testimony on SB 171. 

060

Beyer

Voices the reasons they would not recommend a trueup. 

075

Chair Metsger

Outlines the issues before the committee.  Talks about ratepayer services.

090

Sen. Atkinson

Wonders who the fix is directed at, now that Enron is out of the picture.

097

Beyer

Replies that what they are doing comes out of the Enron situation.

120

Sen. Atkinson

Speculates what might occur without the -4 amendments.

125

Beyer

Comments.

127

Sen. Atkinson

Considers what would happen with the adoption of the -4 amendments.

129

Beyer

Declines to speculate.

135

Sen. B. Starr

Asks how many Oregon utilities would be subject to the -4 amendments.

140

Beyer

Responds that he hasn’t had ample opportunity to scrutinize the -4 amendments.

157

Chair Metsger

Asks Mr. Warner to clarify the statute in question.

160

Paul Warner

Legislative Revenue Staff.  Clarifies the statute.

170

Sen. B. Starr

Discusses with Chair Metsger the original intent of the amendment and a potential error in the -4s.  Questions the changes in scope for the PUC.

180

Beyer

Offers that it should not present the PUC with a higher workload.

190

Sen. Deckert

Notes the heart of the matter is consolidated versus unconsolidated tax returns.  Questions if they could define that new type of hybrid business or “liger”. 

210

Beyer

Observes these are outside of the PUC purview, but are important to be defined.

230

Chair Metsger

Hopes to consider this matter further.

243

Sen. Vicki Walker

Senate District 7.  Asks Mr. Beyer about creating a more realistic picture of tax applications with the -4 amendments.

253

Beyer

Clarifies the amount paid by utilities in taxes. 

287

Sen. Walker

Observes the -4 proposal’s affect on tax obligations.

297

Beyer

Replies in regard to tax laws.

307

Sen. Walker

Discusses the spreading of liability through benefits.

309

Chair Metsger

Asks Mr. Warner to detail the -4 amendments.

320

Warner

Details the provisions of the -4 amendments to SB 171. 

360

Warner

Walks the committee through the sections of the -4 amendment.

380

Sen. Monnes Anderson

Considers how many entities would be covered under that particular section.

389

Warner

Clarifies that it refers back to section three of the measure.

413

Dexter Johnson

Legislative Counsel.  Notes that the point in question was a drafting error.

417

Warner

Expounds on the definition.

427

Sen. Monnes Anderson

Considers that she is still not clear on the review of rate schedules.

TAPE 49, A

005

Warner

Relates the calculation of tax rates.

010

Chair Metsger

Reiterates the process of filing a non consolidated tax return.

013

Warner

Resumes describing the sections of the -4 amendments to SB 171.

025

Chair Metsger

Asks for an analysis of the possibility of different tax requirements for utilities.

027

Johnson

Details the basic statement of the current law.  Points out the ways in which different entities are taxed. 

045

Chair Metsger

Suggests he narrow that definition further as it applies to public utilities.

050

Johnson

Replies in regard to those types of utilities and their rate regulations.

057

Warner

Observes the changes last session to the apportionment formula and the related statues that reference utilities.

070

Dan Meek

Attorney, Multnomah County.  Testifies in regards to a complaint he filed against the PUC.  Relates the charges that Portland General Electric (PGE) has applied to user fees for taxes they have not paid.

110

Meek

Elaborates on tax violations he has observed with PGE.  Talks about a pending lawsuit against PGE pending in Multnomah circuit court.

140

Meek

Observes the flaws in the PUC’s method of evaluating the rates of utilities. 

153

Chair Metsger

Appreciates his observations.  Asks about the findings of his research.

167

Meek

Replies that his research is limited to the activities of PGE.  Notes observations he has made in regards to the PUC not asking utilities how much they pay in taxes. 

190

Meek

Advocates that the PUC take the time to ask utilities what they pay in taxes.

197

Sen. Deckert

Notes the tax laws enacted by the legislature.  Points out that the PUC does not have jurisdiction over tax law.

217

Meek

Points out this is not a tax issue, but a regulatory issue.

225

Sen. Deckert

Questions what his suggested remedy would be.

233

Meek

Submits his recommendations for rate regulations.

257

Sen. Deckert

Asks if Chair Beyer wishes to respond to Mr. Meek’s proposal.

265

Beyer

Replies that the PUC makes adjustments in the rate setting process.  References that the attorney general does not agree with Mr. Meek’s interpretation. 

275

Chair Metsger

Summarizes the comments made.  Asks Mr. Lynch to testify.

293

Kevin Lynch

PacificCorp.  Submits to any questions the committee has.

295

Chair Metsger

Requests for his evaluation of the PUC’s recommendation.

305

Lynch

Refers back to the comments made by Sen. Deckert.  Discusses the differences in structure of a utility business. 

345

Lynch

Details energy industry in Oregon.

390

Lynch

Comments on the tax credit incentives for utilities.

TAPE 48, B

005

Lynch

Mentions the legislature’s use of the tax code as a business incentive. 

013

Chair Metsger

Notes the intent of the legislation.

017

Sen. B. Starr

Asks his reaction to the language in the measure.

019

Lynch

Replies.

023

Sen. B. Starr

Inquires about the possible impact on related Oregon jobs.

027

Lynch

Discusses the employment structure.

040

Chair Metsger

Reiterates the points Senator Starr brought up.

050

Elizabeth Harchenko

Director, Oregon Department of Revenue.

053

Chair Metsger

Asks Ms. Harchenko to comment on the amendments.

057

Harchenko

Makes general comments on the amendments and the tax implications.

080

Harchenko

Notes the income transactions taking place.

115

Harchenko

Suggests technical changes and narrowing the scope of the measure.

120

Chair Metsger

Discusses previous conversations of this issue. 

130

Sen. B. Starr

Asks what this change would mean to Ms. Harchenko’s department.

135

Harchenko

Feels if it is narrow in scope it will not cause an appreciable change in how they do their work.

147

Chair Metsger

Suggests that staff make additional changes to the bill to narrow the scope.  Offers additional summarizing comments.  Closes public hearing on SB 171.  Opens a public hearing SB 323.

SB 323 – PUBLIC HEARING

180

Sen. Walker

Introduces SB 323 and asks Ms. Harchenko to describe the measure.

190

Harchenko

Describes SB 323 and testifies in favor of it.  Discusses the proposed -2 amendments (EXHIBIT B). 

230

Harchenko

Observes the issues that have arisen with the amendments.  Notes the proposed -3 amendments that Mr. Gallagher submitted (EXHIBIT C).  Advocates they pass SB 323 without amendments.

267

Tom Gallagher

Oregon Newspaper Association.  Agrees with Ms. Harchenko that they work out any changes needed.

269

Chair Metsger

Clarifies Mr. Gallagher’s concerns.

273

Harchenko

Points out the need to address Mr. Gallagher’s concern.  Offers that the bill be amended in the House.

293

Chair Metsger

Notes Ms. Harchenko’s department might have the means to address these concerns.

297

Harchenko

Concurs that they do. 

303

Sen. Walker

States that even if they do not pass this bill there is operative legislation in place.  Feels this measure is ready to be moved to the House for further action.

320

John Draneas

Oregon State Bar.  Speaks in favor of SB 323 as drafted.  Opposes the proposed amendments.  Notes that now the amendments have been withdrawn and he is in full support of SB 323. 

350

Chair Metsger

Closes public hearing on SB 323.  Opens a work session on SB 323.

SB 323 – WORK SESSION

363

Sen. B. Starr

MOTION:  Moves SB 323 to the floor with a DO PASS recommendation.

365

 

VOTE:  3-0-2

EXCUSED:  2 - Atkinson, Deckert

 

Chair Metsger

Hearing no objection, declares the motion CARRIED.

SEN. WALKER will lead discussion on the floor.

367

Chair Metsger

Closes work session on SB 323.  Opens public hearing on SJM 2.

SJM 2 – PUBLIC HEARING

375

Sen. Walker

Introduces and explains the measure.  Defers to Mr. Lanter

400

Floyd Lanter

Department of Consumer and Business Services.  Presents written testimony in favor of SJM 2 (EXHIBIT D).

TAPE 49, B

003

Lanter

Recommends the passage of SJM 2.

006

Cheryl Pellegrini

Assistant Attorney General, Oregon Department of Justice.  Testifies in favor of SJM 2.  Submits a letter in favor of SJM 2 (EXHIBIT E).

039

Chair Metsger

Closes public hearing on SJM 2.  Opens a work session on SB 1002.

SB 1002 – WORK SESSION

048

Chair Metsger

Requests an overview of the proposed amendments.

050

Dana

Describes the modifications proposed -2 amendments would make to SB 1002 (EXHIBIT F).

057

Chair Metsger

Reiterates the changes.  Puts the committee at ease at 2:40 p.m.

066

Chair Metsger

Calls the committee back to order at back at 2:42 p.m.

067

Sen. B. Starr

MOTION:  Moves to ADOPT SB 1002-2 amendments dated 03/22/05.

068

 

VOTE:  4-0-1

EXCUSED:  1 - Deckert

 

Chair Metsger

Hearing no objection, declares the motion CARRIED.

070

Sen. B. Starr

MOTION:  Moves SB 1002 to the floor with a DO PASS AS AMENDED recommendation.

072

Sen. B. Starr

Asks if they have had any testimony from building industries.

075

Chair Metsger

Replies they are aware, but have not offered any testimony.

078

 

VOTE:  4-0-1

EXCUSED:  1 - Deckert

 

Chair Metsger

Hearing no objection, declares the motion CARRIED.

SEN. SCHRADER will lead discussion on the floor.

083

Chair Metsger

Closes work session on SB 1002.  Opens a work session on SJM 2.

SJM 2 – WORK SESSION

087

Sen. B. Starr

MOTION:  Moves SJM 2 be sent to the floor with a BE ADOPTED recommendation.

089

 

VOTE:  4-0-1

EXCUSED:  1 - Deckert

 

Chair Metsger

Hearing no objection, declares the motion CARRIED.

SEN. WALKER will lead discussion on the floor.

090

Chair Metsger

Closes work session on SJM 2.  Adjourns the committee at 2:49 p.m.

 

 

EXHIBIT SUMMARY

 

  1. SB 171, -4 amendments, staff, 7 pp
  2. SB 323, -2 amendments, staff, 2 pp
  3. SB 323, -3 amendments, staff, 2 pp
  4. SJM 2, Written testimony, Floyd Lanter, 13 pp
  5. SJM 2, Letter, Cheryl Pellegrini, 19 pp
  6. SB 1002, -2 amendments, staff, 1 p