WORK SESSION: SB 427

PUBLIC HEARING & WORK SESSION:

HB 2237

PUBLIC HEARING: HB 2511-A

 

TAPES 127, 128 A

 

SENATE REVENUE COMMITTEE

MAY 31, 2005   9:00 AM   STATE CAPITOL BUILDING

 

Members Present:                  Senator Ryan Deckert, Chair

                                                Senator Gary George

                                                Senator Rick Metsger

                                                Senator Floyd Prozanski

                                                Senator Charles Starr, Vice Chair

                       

Witnesses Present:                Chuck Bennett, Coalition of Oregon School Administrators (COSA)

                                                Laurie Wimmer Whelan, Oregon Education Association (OEA)

                                                Grover Simmons, Oregon State Elks Association

                                                Michelle Deister, League of Oregon Cities

                                                John Phillips, Oregon Dept. of Revenue

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Steve Meyer, Economist

                                                Mazen Malik, Economist

                                                Mary Ayala, Economist

                                                Barbara Guardino, Committee Assistant

 

 

TAPE 127, SIDE A

005

Chair Deckert

Calls meeting to order at 9:07 a.m. Discusses what will occur in committee this week. Opens work session on SB 427, school funding formula for high cost disability grants.

 

WORK SESSION, SB 427

010

Steve Meyer

Introduces SB 427-3 amendment (EXHIBITS 1, 2) and SB 427-4 amendment (EXHIBITS 3, 4), as requested by the committee. Refers to “SB 427 Issues” sheet distributed May 19 (exhibit 11). SB 427-3 amendment continues the high cost disability grant permanently, retains the $25,000 floor. Does not continue the small high school supplement fund. The SB 427-4 amendment extends the small high school supplement fund for two more years.

 

045

Meyer

Discusses a third issue, interim school distribution review. Notes, the Chalkboard Project is doing a review of the formula. Is not sure how detailed, but they will probably make some recommendations. A review could entail an informal interim work group or could be dealt with in a separate bill setting up a task force legislatively.

 

060

Meyer

Distributes a draft outline that would be dealt with in SB 427-5 amendment (EXHIBIT 5). The School Finance Equity Task Force would consist of two groups: policy and technical. Breaks down the membership in both groups; discusses their purposes.

 

105

Chair Deckert

Asks when the school funding formula was last reviewed.

 

109

Meyer

Responds, a review was made in 1990, but was not this detailed. Discusses issues that would occur if the committee selected the formal route.

 

112

Chair Deckert

Likes the idea of an exhaustive review of the formula. Asks the committee for their opinion.

 

115

Vice Chair C. Starr

Likes the idea, but the Chalkboard Project is already reviewing it. Would like to hear from the education community before moving forward on a new task force.

 

140

Chuck Bennett

Testifies in regard to SB 427-3 and SB 427-4 amendments. One challenge in Oregon is keeping small school districts afloat. The small high school supplement fund (addressed in SB 427-4) has been successful, and COSA would prefer to see it continue, regardless of future task force discussions. One way to keep these small towns alive is to keep the schools strong. Also, COSA is interested in participating in the school fund formula discussion.

 

197

Sen. George

Comments on a community called Alpine. The school shut down and became a community center. Afterwards, the grocery store closed as did other businesses. This is happening all over the state.

 

214

Bennett

Responds with a story of a similar situation in Detroit (Oregon). This is a real problem. Asks the committee to pass SB 427-4 amendment despite upcoming task force discussions.

 

231

Chair Deckert

Comments that taking $5 million out of the formula in some ways exacerbates what is already an inequitable situation. Uses an example of Sherwood school district. It says “no” to one district and “yes” to another.

 

247

Bennett

Agrees. The problem with small districts reaching the level where they can offer a basic education and meet the needs of small populations. This is an attempt to keep those schools open.

 

268

Chair Deckert

Asks, what other weighting factors are in the formula that will help a small school district?

 

270

Bennett

Poverty, social factors, the standard weighting factors. They probably don’t have special education students.

 

288

Meyer

There is also the small school correction factor, which gives extra weight for small elementary and high schools. The small high school supplement fund is additional money generated along with the small high school weight.

 

300

Sen. George

Comments on rising property values in Sherwood, a high growth area. That has to have a significant impact on its tax base, and it seems as though the problem could solve itself.

312

Laurie Wimmer Whelan

Studies have not shown that growth pays for itself. You can’t build schools fast enough to accommodate growth.

 

326

Vice Chair C. Starr

Supports continuing the small school grants and passage of SB 427-4 amendment.

 

345

Meyer

Refers to handout from May 17 (exhibit 7) that lists small high school grants. It was run at a different high cost disability amount.

 

355

Wimmer Whelan

Testifies in support of SB 427-4 amendment. Extending it two years is a compromise with the understanding that a review of the school distribution formula might be a good idea. Notes, when there’s an inadequate funding supply for K-12, everyone scrambles for crumbs. The distribution formula reflects those pains. A review of the formula would help determine what needs to be there. OEA welcomes the idea of a review and will be at the table.

 

412

Chair Deckert

Does not see the rationale behind creating a formal task force.

 

427

Wimmer Whelan

Agrees, it does not need to be formalized; a small work group might work. OEA’s goal is the well-being of students across the state. How to get there is where the fights come in. Will participate whether it’s formal or informal. OEA did an analysis of the Chalkboard Project’s last review. She will provide it to the committee. Would prefer a quasi-private process.

 

445

Chair Deckert

Asks how the project is going.

 

450

Bennett

One ongoing discussion is where they will focus. COSA hopes this discussion of the distribution formula will occur in the public forum.

 

TAPE 128, SIDE A

025

Sen. George

Asks if Multnomah County is a big winner with SB 427-4 amendment because of its population of high cost students.

 

039

Bennett

Correct. It is the center of population for high cost disability students.

 

040

Sen. Prozanski

Expresses support for SB 427-4 amendment. Expresses concerns about a fifth amendment and a task force. Asks who participates in the Chalkboard Project. Legislature should not shirk its responsibility on this issue. Comments on who should be involved, including OSEA classified workers.

 

061

Chair Deckert

Suggests building this public process into the Chalkboard Project.

 

070

Sen. Prozanski

That would be fine, depending on who will be at the table.

 

085

Paul Warner

Has spoken with Jim Scherzinger who heads the Chalkboard Project. They have asked for LRO input in the interim. Mr. Meyer will work with them.

109

Chair Deckert

Hears the committee saying they like SB 427-3 and SB 427-4 amendments. Will re-post this bill for Friday. Closes work session.

 

PUBLIC HEARING, HB 2237

144

Mazen Malik

Gives overview of HB 2237 (EXHIBIT 6). Requires Oregon State Lottery Commission to adopt alternate dispute resolution process for contract disputes with lottery game retailers. The bill injects (shall not may) in every contract with game retailers as alternative dispute resolution process. This builds on an existing law. What is new is that the bill requires the lottery to go through the process every time.

 

186

Chair Deckert

Asks if anyone has questions or thoughts about the bill.

 

 

 

WORK SESSION, HB 2237

190

Sen. George

Expresses surprise that nobody came to speak to this bill.

 

194

Vice Chair C. Starr

MOTION: MOVES HB 2237 TO THE SENATE FLOOR WITH A DO PASS RECOMMENDATION.

 

196

Chair Deckert

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS. VOTE: 5-0-0. VOTING AYE: GEORGE, METSGER, PROZANSKI, C. STARR, DECKERT

 

 

 

PUBLIC HEARING, HB 2511-A

201

Mary Ayala

Gives overview and revenue impact of HB 2511-A (EXHIBITS 7, 8) which adds 4 organizations to the current list of fraternal organizations whose properties are exempt from property tax, subject to certain restrictions.

 

238

Grover Simmons

 

Testifies in opposition to this bill and submits HB 2511-A3 amendment (EXHIBIT 9). Explains, the purpose of the bill is to add Lions Club, Soroptimist, Rotary and Kiwanis as tax-exempt. Notes, the original bill was so poorly constructed that it would have created a tax on fraternal organizations. Reads from the original bill. The bill also eliminated some language that concerns him – grand and subordinate lodges of – on line 21. Asks that his amendment be passed to restore those words. Opposes the bill without this amendment.

 

 

 

305

Chair Deckert

The committee will not move the bill today since there is nobody here advocating for it.

 

318

Sen. Prozanski

Notes, HB 2511-A3 amendment will take care of Mr. Simmons’ concerns.

 

330

Michelle Deister

League of Oregon Cities has no particular concerns with this bill.

 

344

John Phillips

States that line 20 says “includes but not limited to”. Dept. of Revenue is unclear about the meaning of “service”. It has not been included in this exemption before.

369

Sen. Prozanski

Is unsure of the definition of a fraternal organization. Would this open up service organizations to be defined of fraternal?

 

393

Phillips

Defines lodge system, ritualistic and fraternal under the IRS code.

 

417

Sen. Metsger

Asks if there is a legal definition of service.

 

420

Phillips

Is not aware of one in the property tax statutes. Follow-up discussion with Sen. Metsger.

 

447

Sen. George

Suggests removing “or service” and including HB 2511-A3 amendment.

 

 

 

451

Simmons

That would restore the system. A cleaner bill would to be to name the entities to be added to the list of tax exemptions on lines 24-25. The amendment does not do that, it just restores the language.

 

471

Phillips

The “or service” would almost certainly require DOR to ask for legal advice.

 

480

Sen. Metsger

Suggests defining service to include the four groups.

 

499

Chair Deckert

Agrees. Closes public hearing on HB 2511-A. Adjourns meeting at 10:07 a.m.

 

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant                                                      

 

Exhibit Summary:

1.      SB 427, Revenue Impact of Proposed Legislation for SB 427-3 amendment, Meyer, 5/27/05, 1 pp.

2.      SB 427, Amendment SB 427-3, Legislative Counsel, 5/27/05, 11 pp.

3.      SB 427, Revenue Impact of Proposed Legislation for SB 427-4 amendment, Meyer, 5/27/05, 1 pp.

4.      SB 427, Amendment SB 427-4, Legislative Counsel, 5/27/05, 11 pp.

5.      SB 427, Draft Outline, Meyer, 5/27/05, 2 pp.

6.      HB 2237, Staff Measure Summary, Malik, 5/31/05, 2 pp.

7.      HB 2511-A, Staff Measure Summary, Ayala, 1 pp.

8.      HB 2511-A, Revenue Impact of Proposed Legislation, Ayala, 1 pp.

9.      HB 2511-A, Amendment HB 2511-A3, Simmons, 1 pp.