PUBLIC HEARING

SJR 2, SJR 19, SJR 23, SJR 29

TAPES 49 A-B, 50 A

005

Chair Deckert

Calls meeting to order at 8:34 a.m. Committee will discuss four proposals for creating a stability fund.

022

Paul Warner

Gives overview of four proposed stability funds. See summary sheet, Stability Fund Proposals (EXHIBIT 1).

030

Warner

Establish General Stability Fund

Explains SJR 29 (SB 974).

072

Warner

Explains SJR 23.

100

Warner

Modify Education Stability Fund

Explains SJR 19, SJR 2.

PUBLIC HEARING, SJR 29

140

Sen. Frank Morse

Testifies in favor of SJR 29. The bill was known as SJR 2 in 2003 session. It passed the Senate and would have passed the House but the committee chair chose not to hear it. The need for a stability fund is universally accepted. The question is, how do we fund it?

170

Sen. Morse

 See handouts:

RE: Accumulative Effect of Unfunded Voter Initiatives (EXHIBIT 2).

Also, Kicker Reform, Creation of General Fund Operating Reserve (EXHIBIT 3).

Exhibit 2 addresses the issue of where funds should come from. Segment entitled “General Fund/Lottery Spending is Now Lower than 1989-91…” suggests that pressures on budget to fund current policy will make it exceedingly difficult to create a stability fund out of current revenues. Demand for scarce dollars is so great. The sacrifice has been largely in education.

247

Sen. Prozanski

Thanks Sen. Morse for his work on this issue.

271

Chair Deckert

Notes, all resolutions put forth will use existing revenues. Economy is looking better than even a month ago.

286

Sen. Morse

This is true, but still legislators are not addressing the structural deficit that exists. Projected revenues will not be adequate to meet demands. If existing revenues were used to fund a rainy day fund, it would mean eliminating programs.

311

Chair Deckert

Questions Sen. Morse on the question of triggers, noting that this would have to be passed by voters. Follow-up questions.

321

Sen. Morse

Bill mirrors access to the Education Stability Fund. Polling in May 2003 illustrated that 71% of Oregonians favored amending the kicker. They want stability.

376

Sen. Bruce Starr

Testifies in favor of SJR 23. In every session he’s been involved with, since 1987, there has been talk of stability funds. Not one has been created except the education fund. The simpler you make the rainy day fund the better. The more complicated, the more difficult to sell to the public. SJR 23 proposes to put 3% of the general fund revenues into a budget stabilization account. It is simple to explain.

420

Sen. B. Starr

Expresses fear that if this legislature does not accomplish this, it won’t happen. Modifying the kicker will be hard to sell to voters.

474

Sen. B. Starr

SJR 23 uses the same triggers as the education stability fund.

010

Sen. B. Starr

Summarizes, keep it simple; it’s critical that lawmakers get the job done this session.

026

Chair Deckert

Asks, would it be a hindrance to be limited to capital projects when a lot of needs are operational? Follow-up questions.

029

Sen. B. Starr

Responds, the money in the stability fund could be spent on anything. Once it reaches a 10% cap, then only 3% could be spent on capital projects.

067

Sen. Prozanski

Reminds committee that in 1997 and 1999 during a booming economy, House Speaker Lynn Lundquist tried unsuccessfully to establish a rainy day fund. We made a mistake and it’s time to admit it and repair it.

099

Sen. Kurt Schrader

Testifies in favor of SJR 2. Changes the cap on the Education Stability Fund (Oregon’s only rainy day fund) from 5% to 10%. Contends its simplicity will make it easy to pass. It’s not controversial. A dedicated revenue source already exists – lottery – and nobody has to fight over it. This is a nonpartisan bill.

180

Chair Deckert

Voter initiatives and the Oregon Health Plan have resulted in a structural deficit. Oregonians have to address this deficit.

199

Sen. Schrader

Public doesn’t want to hear that it’s the initiative process that has doubled spending. This legislative session is a watershed, and lawmakers need to address the structural issues in the budget process. Lawmakers haven’t done a good job in communicating to the public the tough choices they have made – such as health care. They have made some structural changes but have a lot more to go.

245

Sen. Richard Devlin

Testifies in favor of SJR 19. Lawmakers clearly recognize the need for a stability fund. Bottom line is the need to improve the stability fund. All options addressed in the past have good and bad aspects. Most notable in terms of bad aspects was the Bucket Plan. It was poorly presented. Measure 5 required the state to replace funding for K-12 for five years. State failed to recognize $1 billion in additional cost from M5.

315

Sen. Devlin

A new proposal is utilizing the ending balance. This would change the dynamics and culture of governmental organizations. Considers proposals to use 3% of general fund “lofty goals.”

332

Sen. Devlin

SJR 19 is modeled after Measure 19, the Education Stability Fund approved by voters. It’s very simplistic. It adjusts lottery dedication percentage from 18% to 20% to 22%.

366

Sen. Devlin

Asks committee to consider capping a portion of the Education Stability Fund.

394

Sen. Devlin

Summarizes, SJR 19 is simple for voters to understand, is stable and is tied to an expanding revenue source (lottery).

419

Chair Deckert

Asks if Sen. Devlin fears voters would be confused on referrals. The “no” vote tends to lead if there is any confusion.

422

Sen. Devlin

Believes any measure that the legislature refers to the public is an orphan unless there’s adequate explanation. Does not see this measure generating opposition.

035

Sen. Devlin

Does not anticipate May 2005 election to have high voter turnout. There is not the broad public discussion of policy issues as in general election.

055

Rick Bennett

Testifies in favor of SJR 23 and SJR 29. AARP Oregon supports creation of a rainy day fund for general purposes. Will help Oregon emerge from downturns more quickly.

079

Chair Deckert

Might AARP oppose expansion of the Education Stability Fund?

083

Bennett

Believes it would support any rainy day fund ballot measure, either for schools or for general purposes.

097

Don Schellenberg

Testifies in favor of SJR 23 and SJR 29 and other stabilization bills. See written testimony (EXHIBIT 4). Oregon Farm Bureau does not support one bill over another.

123

Julie Suchanek

Testifies in favor of SJR 2. See written testimony (EXHIBIT 5). Oregon Community College Association supports an increase in the maximum amount allowable in the Education Stability Fund.

168

Laurie Wimmer Whelan

Testifies on behalf of Oregon Education Association. It is far past time to get serious about a meaningful stabilization fund. Expresses pro’s and con’s on issue. Chief issue is whether it’s better to capitalize a fund with lottery or kicker revenues, and which grows the fund more quickly. Urges committee to consider which one would help faster. OEA cannot support a proposal that would take money out of existing general fund revenues.

199

Whelan

Expresses OEA’s concern with political viability. OEA would want to know which fund would work best.

219

Chair Deckert

Has set March 15 as the date when committee will move forward on these bills.

227

Jacqueline Zimmer

Oregon Association of Area Agencies on Aging and Disabilities is concerned that a rainy day fund may require shifting resources from human services. Last session people died from losing services last session. Interested in criteria for distribution of these funds.

265

Chair Deckert

Adjourns meeting at 9:49 a.m.