SENATE COMMITTEE ON REVENUE

 

January 17, 2005†† Hearing Room A

8:30 AM††††† Tapes 1 - 2

 

MEMBERS PRESENT:††††††††††† Sen. Ryan Deckert, Chair

††††††††††††††††††††††† ††††††††††† ††††††††††† Sen. Gary George

††††††††††††††††††††††† ††††††††††† ††††††††††† Sen. Floyd Prozanski

 

MEMBERS EXCUSED:††††††††††† Sen. Bruce Starr, Vice-Chair

††††††††††††††††††††††† ††††††††††† ††††††††††† Sen. Rick Metsger

 

VISITING MEMBER:†††† ††††††††††† Sen. Charles Starr

 

STAFF PRESENT:††††† ††††††††††† Paul Warner, Legislative Revenue Officer

James Goulding, Committee Assistant

 

ISSUES HEARD:†††††††† ††††††††††† Organizational Meeting

††††††††††††††††††††††† ††††††††††† ††††††††††† Informational Meeting

††††††††††††††††††††††† ††††††††††† ††††††††††† Orientation: Overview of Revenue System

 

These minutes are in compliance with Senate and House Rules. Only text enclosed in quotation marks reports a speakerís exact words. For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 1, SIDE A

003

Chair Deckert

Calls the meeting to order at 8:38 AM. Makes opening remarks on start of new session and first meeting of the committee.

Informational Meeting

011

Sen. Charles Starr

Makes opening remarks, comments on replacing Senator Bruce Starr on the Senate Revenue Committee.

018

Chair Deckert

Talks about the change in committee scheduling.

021

Sen. C. Starr

Discusses Bruce Starrís desire to serve on the committee, but his inability due to his very heavy schedule.

027

Chair Deckert

Begins discussion of committee rules.

037

Paul Warner

Discusses 73rd Legislative Assembly Senate Model Committee Rules, 2005 Session (EXHIBIT A).

046

Chair Deckert

Talks about an abbreviated meeting schedule for the first few meetings of Revenue committee, (EXHIBIT B).

051

Warner

Clarifies the committee will meet at 9:00 AM for first few meetings. Begins greater discussion of the rules.

067

Sen. Prozanski

Discusses House committee rules, to clarify a rule.

073

Warner

Talks about other rules of the committee.

077

Chair Deckert

Asks if there are any questions. States committee will return to the rules later. Begins discussion of Draft, Senate Revenue Committee Work Plan, 2005 Session (EXHIBIT C). Goes into depth on issues to be discussed ĖTax Compliance and Collections Process and Local Government Fiscal Issues.

122

Warner

Talks about a house bill that connects to federal taxation issues.

125

Chair Deckert

Goes on to discuss tax reform at the federal level. Discusses items listed in page 2. Includes sales tax and stimulus plans and their potential impact on revenue. Talks about school finance code (page 3) and charges and fees as a revenue source.

159

Sen. Prozanski

Asks about tax expenditures not being addressed in the work plan.

166

Chair Deckert

Offers that it is a good topic to consider.

177

Chair Deckert

Contends it is more useful to focus on a specific area rather than the whole issue. Brings up pending and past legislation in determining what actions to take.

189

Sen. George

Brings up a constituent issue on tax compliance and collections. Wonders if issue might be something the committee could look at.

195

Chair Deckert

Suggests collections process would be something the committee could look at. Talks about reforms Gov. Schwarzenegger is bringing forth in California.

216

Sen. George

Asks if committee will look at school revenue sources and spending.

222

Chair Deckert

Anticipates those types of issues will appear before the committee.

230

Sen. George

States he will bring in that information in regards to potential savings.

240

Chair Deckert

Points out Sen. Charles Starr is Vice-Chair of Senate Education Committee and could provide insight on those issues.

245

Sen. C. Starr

Talks about impacts on education issues.

260

Chair Deckert

Feels Sen. Starr will provide great assistance on education issues. Asks if there are any comments on the committee work plan.

276

Warner

Presents list of staff specialists (EXHIBIT D). Begins discussion of booklet, 2005 Oregon Public Finance: Basic Facts (EXHIBIT E). Moves to presentation table to present slides.

Orientation: Overview of Revenue System

354

Warner

Begins PowerPoint presentation, Overview of Oregonís Revenue System (EXHIBIT F). Talks about Oregonís rank compared to other states (slide 2). Oregon ranks high in overall spending and revenue, middle ranged in own sources of revenue and taxes. Oregon is near the bottom of taxes per person.

TAPE 2, SIDE A

005

Chair Deckert

Asks about how recent the data is.

010

Warner

States it is based on recent census data. Points out 2004-05 data will not be available for some time. Continues with presentation with Oregonís Revenue System, slide 3.

024

Chair Deckert

Asks about specific categories of spending growth.

030

Warner

Discusses increases in education spending and health care spending. Continues with presentation of revenue system, including various revenue sources.

058

Warner

Outlines Oregonís Tax System, slide 4. Discusses State Taxes By Source, slide 5, comparing Oregon to the U.S. average.

084

Chair Deckert

Asks about Oregonís dependency on a relatively few revenue sources.

090

Warner

Clarifies Oregonís acquisition of revenue. Continues presentation giving a state to state comparison, slide 6. Outlines changes in Oregonís revenue system and policies since 1989.

124

Warner

Continues discussion on State Tax Systems comparisons, slide 7.

155

Warner

Points out the changes in the federal government to reduce debt, resulting in less federal money for the state, slide 8.

170

Warner

Outlines revenue impacts of Measure 5 and Measure 50 on market value of property and property taxes, slide 9. Directs membersí attention to Exhibit E chart concerning votes on revenue issues (section L1).

248

Warner

Offers information on Oregonís growing financial obligation to schools and volatility of income and sales taxes, slide 10.

254

Warner

Discusses national dateís volatility of income and sales taxes over the past decade, slide 11. Compares Washington and Oregonís revenue stability, slide 12.

290

Chair Deckert

Wonders what the forecast for the corporate kicker amount is.

300

Warner

Specifies the projected amount. Outlines Oregonís rank in state and local government revenue. Compares Oregonís 2001-02 revenue system with the 1989-90 system, slides 13-14.

348

Warner

Presents Oregonís current revenue system, including general fund, slides 15-16. Relays that he has additional data dating back several years if members want to look it over.

371

Warner

Discusses 2003-05 General Fund Resources, slide 17. Pie chart shows personal income taxes comprise 90% of fund. 2001-03 All Funds Revenue, slide 18, shows actual numbers in governorís budget. Most interesting sliver is interest, which is 90% PERS. Also, the yellow donations fund is significant.†

422

Warner

Continues with presentation detailing Discretionary Revenue Sources for 2005-07, current law projection, slide 19.

TAPE 1, SIDE B

030

Warner

Continues with slide 19, discussing general fund and lottery.

042

Warner

Directs membersí attention to General Fund Revenue History chart.

065

Chair Deckert

Offers that their recent financial crisis was the worst in Oregon since the 1930s.

067

Warner

Turns membersí attention to General Fund Revenue: Modest Rebound Expected. Presents information on December revenue forecast. Refers to Gov. Kulongoskiís recent State of the State address.

091

Warner

Outlines governorís recommended revenue policies including assumptions behind expansion of lottery games.

104

Warner

Summarizes Oregonís revenue system, slide 23. Relatively low tax burden is legacy of Measure 5.

140

 

Details strengths and weaknesses of Oregonís revenue system, slide 24. Talks about strengths and weaknesses of income tax and sales tax over time. Notes tax issues exist about Oregonís aging population.

160

Chair Deckert

Wonders if elderly medical deduction is temporary.

165

Warner

Replies the change is permanent.

170

Sen. George

Asks about where Oregon ranks in inheritance tax.

176

Warner

Responds that he does not know since this is a complex issue. Now that federal inheritance tax is in decline, individual states are going in different directions on the issue.

205

Sen. George

Wonders, what is the percentage on inheritance tax?

207

Warner

States he doesnít know.

210

Sen. George

Points out he has heard it is as high at 60%. Offers that he would like to have additional data on the issue.

225

Warner

Continues with strengths of Oregonís revenue system.

255

Warner

Presents the weaknesses in the system, including instability of income tax. Wraps up presentation with discussion of excessive charges.

305

Chair Deckert

Feels the long-term fiscal outlook would not support future state programs. State cannot continue to fund programs today as in the past.

320

Warner

Talks about being unable to sustain the programs of the 90s economic boom. This is a national issue.

338

Chair Deckert

Expresses his concern that lottery will not be able to grow enough to fund state programs the same way it did in the 90s.

350

Warner

Discusses the stability of gambling revenues through recessions.

359

Sen. Prozanski

Feels there is a lot of data to absorb. Discusses how federal decisions will reflect onto the actions available to the committee.

390

Chair Deckert

Discusses upcoming committee schedule.

395

Warner

Details committee actions.

400

Chair Deckert

Points out the committee plans to meet at 9:00 AM the remainder of this week. Closes informational meeting, opens work session.

Work Session

405

Sen. George

Moves adoption of committee rules.

410

Chair Deckert

Hearing no objection, the chair so orders 3-0-2. (AYE 3: Chair Deckert, Sen. George, Sen. Prozanski, EXCUSED: Sen. Metsger, Sen. Bruce Starr.

420

Chair Deckert

Adjourns the meeting at 9:58 AM.

 

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee AssistantReviewed by Kim Taylor James

 

 

EXHIBIT SUMMARY

 

  1. Senate Model Committee Rules, Warner, 2 pp.
  2. Senate Revenue Committee Meeting Schedule, Warner, 2 pp.
  3. Draft Ė Senate Revenue Committee Work Plan, Warner, 4 pp.
  4. Legislative Revenue Office Ė 2005 Staff Specialists, Warner, 1 pp.
  5. 2005 Oregon Public Finance: Basic Facts, Warner,

†††† †F.† Overview of Oregonís Revenue System, Warner, 12 pp.