WORK SESSION: SB 302

PUBLIC HEARING: SB 718, SB 994

 

TAPES 61, 62 A

 

SENATE REVENUE COMMITTEE

MARCH 9, 2005† †8:30 AM ††STATE CAPITOL BUILDING

 

Members Present:††††††††††††††††† Senator Ryan Deckert, Chair

††††††††††††††††††††††††††††††††††††††††††††††† Senator Rick Metsger††††††††††††††††††††††††††††††††††††

††††††††††††††††††††††††††††††††††††††††††††††† Senator Charles Starr, Vice Chair

†††††††††††††††††††††††

Members Excused:†††††††††††††††† Senator Gary George

††††††††††††††††††††††††††††††††††††††††††††††† Senator Floyd Prozanski

 

Witnesses Present:††††††††††††††† Sen. Vicki Walker, District 7

††††††††††††††††††††††††††††††††††††††††††††††† Kate Richardson, State Treasurerís Office

 

Staff Present:††††††††††††††††††††††††† Paul Warner, Legislative Revenue Officer

††††††††††††††††††††††††††††††††††††††††††††††† Mazen Malik, Economist

††††††††††††††††††††††††††††††††††††††††††††††† Barbara Guardino, Committee Assistant

 

 

TAPE 61, SIDE A

005

Chair Deckert

Calls meeting to order at 8:35 a.m. Committee will move through Oregon Investment Council bills sponsored by Sen. Vicki Walker.

 

WORK SESSION, SB 302

014

Paul Warner

Bill limits the number of terms members can serve on the Oregon Investment Council. Ensures minutes are available to the public.

 

021

Warner

Committee discussed 3 potential amendments. Today there is only one, the 302-1 amendments (EXHIBIT 1). Deletes lines 43-45 on page 2 in Section 6. This deletes the monthly meetings requirement. The other 2 amendments have not been drafted.

 

056

Kate Richardson

Comments, the proposed amendment to add the qualification for a PERS Board crossover member doesnít work. State Treasury will address this issue later.

 

062

Chair Deckert

Does not oppose bill but is lukewarm. Is concerned that good people might be eliminated from serving as chair.

 

070

Sen. Vicki Walker

Responds, in the councilís past, lack of term limits led to concerns and resulted in loss of millions of dollars. Other advisory councils have term limits because power can corrupt.

 

119

Sen. Metsger

MOTION: MOVES ADOPTION OF SB 302-1.

 

122

Chair Deckert

ORDER: THERE BEING NO OBJECTIONS THE CHAIR SO ORDERS.

VOTE: 3-0-2

MEMBERS VOTING AYE: METSGER, C. STARR, CHAIR DECKERT

EXCUSED: PROZANSKI, GEORGE

 

124

Sen. Metsger

MOTION: MOVES SB 302 AS AMENDED TO THE SENATE FLOOR WITH A DO PASS RECOMMENDATION.

 

126

Chair Deckert

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS.

VOTE: 3-0-2

MEMBERS VOTING AYE: METSGER, C. STARR, CHAIR DECKERT

EXCUSED: PROZANSKI, GEORGE

 

PUBLIC HEARING, SB 718

129

Mazen Malik

Gives overview of SB 718. Directs members of Oregon Investment Council to declare conflicts of interest in writing no later than one business day after discovering conflict. See Staff Measure Summary (EXHIBIT 3).

 

147

Malik

Directs membersí attention to Background for SB 718 (EXHIBIT 4).

No revenue or fiscal impact.

 

154

Sen. Walker

Testifies in support of SB 718. Diana Goldschmidt served on the OIC and there was a lengthy investigation regarding her decision to authorize an investment in Texas Pacific Group while her husband was being offered a job there. An investigation found a series of coincidences but no wrongdoing. Ms. Goldschmidt knew several days in advance that there would be a conflict of interest but didnít disclose it to the council. This led to embarrassment for the council and called into question their integrity. This bill imposes a 24-hour (one business day) notice of potential conflict of interest. SB 994 sponsored by State Treasury would require a 72-hour notice.

 

 

 

224

Sen. Metsger

Asks why 24 hours is critical as opposed to 72 hours.

 

222

Sen. Walker

Responds, the sooner the better.

 

243

Richardson

State Treasury shares Sen. Walkerís concern about conflict of interest. There is already a statute pertaining to conflict of interest. Conflict doesnít arise until thereís an actual vote. That knowledge was not available to the staff in the Goldschmidt case. Had it been available, the committee would have taken different action. Also, no deals had been struck so there was no legal conflict of interest. This created perception problems, however.

 

288

Richardson

Bill gives notification of the possibility of a potential conflict of interest. Because of that, Treasury is concerned about a 24-hour timeline. SB 994 allows 3 days, also a short timeline, but more reasonable than one business day. Also, the proposed $1,000 civil penalty would be as severe as not disclosing at a vote.

 

345

Sen. Walker

Understands Ms. Richardsonís concerns, but does not think $1,000 is a big penalty. Also, in the days of fax and e-mail, anyone can meet these timelines in writing.

 

PUBLIC HEARING, SB 994

375

Malik

Gives overview of SB 994. Prohibits members of Oregon Investment Council from certain partnerships (EXHIBIT 5). Covers partnerships with members and their spouses.

 

427

Richardson

Speaks to Section 2 of SB 994. It attempts to address a situation that could arise. It is directed toward a member or spouse. Director of PERS and State Treasurer are listed separately. Treasurer wishes to delay this provision in the bill.

 

TAPE 62, SIDE A

045

Richardson

There are protections in place for addressing conflicts of interest. Requests a delay of the delay bill. Requests amendments in Section 2. Also, is still interested in Section 3.

 

056

Sen. Metsger

Questions Richardson concerning Section 2. What constitutes a partnership for OIC?

 

066

Richardson

Explains, a general partner is the one who makes the investment. OIC is one of the limited partners. It canít make investments.

 

079

Sen. Metsger

Follow-up questions on what constitutes a partnership.

 

099

Richardson

Responds.

 

124

Chair Deckert

Warns, the committee should be careful not to tie the hands of the state too dramatically on where it can invest.

 

131

Richardson

Agrees. OIC does not have this exactly right. It could create more embarrassment. Current review is going to these types of issues. Would like to postpone bill to avoid exchanging one problem for another.

 

151

Sen. Walker

Defers to Treasurerís Office on their judgment on Section 2. As Sen. Metsger pointed out, Section 2 could create potential problems. Still believes there should be a civil penalty. Is open to reasonable discussion.

 

191

Chair Deckert

Thanks Sen. Walker for her work. She researched this issue well. Adjourns the meeting at 9:17 a.m.

 

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant††††††††††††††††††††††††††††††††††††††††††††††††††††††

 

Exhibit Summary:

1.      SB 302, Proposed Amendments to Senate Bill 302, 3/7/05, Warner, 1 pp.

2.      SB 302, Legislative Fiscal Office, Minimal Expenditure Impact Statement, 3/8/05, Warner, 1 pp.

3.      SB 718, Staff Measure Summary, 3/9/05, Malik, 1 pp.

4.      SB 718, Background for SB 718, 3/8/05, Malik, 2 pp.

5.      SB 994, Staff Measure Summary, 3/9/05, Malik, 1 pp.

6.      SB 841, SJR 29, SB 974, SJR 23, SJR 19, SJR 2, Reserve Fund Bills, revised 3/9/05, Warner, 1 pp.