PUBLIC HEARING: HB 2046-A

WORK SESSION: SB 427

 

TAPES 137, 138 A-B, 139 A

 

SENATE REVENUE COMMITTEE

JUNE 9, 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:                Gary Conkling, Beaverton School District

                                                Rep. Mark Hass, District 27

                                                Chuck Bennett, Confederation of Oregon School Administrators

                                                Laurie Wimmer Whelan, Oregon Education Association

                                                Robert J. Castagna, Oregon Catholic Conference

                                                Anthony Grenados, Oregon Catholic Conference

                                                Patti Whitney-Wise, Oregon Hunger Relief Task Force

                                                Marcia Kelly, American Assoc. of University Women (AAUW)

                                                Rep. Diane Rosenbaum, District 42                                                                                                  Tina Kotek, Children First for Oregon

                                                Ellen C. Lowe, Oregon Food Bank/United Way

                                                Ron Cease, Oregon Food Bank, Lincoln County

                                                Phil Donovan, Housing Alliance

                                                Donalda Dodson, Oregon Child Development Coalition

                                                Cassandra Garrison, Oregon Food Bank

                                                Cynthia Hanna, Multnomah County community advocate

                                                Robert & Michelle Kroft, Lincoln City

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Steve Meyer, Economist

                                                Lizbeth Martin-Mahar, Economist

                                                Barbara Guardino, Committee Assistant

 

TAPE 137, SIDE A

005

Chair Deckert

Calls meeting to order at 9:15 a.m. Opens work session on SB 427, which pertains to high cost disability grants in the school funding formula.

 

WORK SESSION, SB 427

016

Steve Meyer

Compares SB 427-3 and SB 427-4 amendments from last meeting.

 

023

Meyer

Compares SB 427-6 and SB 427-7 amendments (EXHIBITS 1 and 2). SB 427-8 amendment deals with all-day kindergarten, and is not a stand-alone amendment.

 

043

Meyer

Introduces SB 427-9 and SB 427-10 amendments (EXHIBITS 3 and 4). SB 427-9 states that 65% of monies from state school fund and local formula revenue have to be spent on classroom instruction, beginning in fiscal year 2006-07. Sen. SB 427-10 amendment requires that at least 51% of projected personal income tax revenues be appropriated to the state school fund.

 

056

Sen. George

Explains SB 427-10 amendment. See Stable Schools Plan talking points (EXHIBIT 5). This is the House Speaker’s plan.

 

079

Gary Conkling

Gives overview of SB 427-7 amendment. Focuses comments on the facility grant change. This provision was put into the formula to respond to limitations on bonds that schools can have when they build a new school. There are costs that can’t be bonded, and have to be absorbed. The facility factor attempts to help pay some of those costs. When introduced the facility factor had a $17 million cap. The factor, designed to cover 8% of costs, has never reached this. The amendment changes the cap from $17 million to $25 million in the 2007-09 biennium, so it has no impact in the coming biennium.

 

124

Sen. George

Asks Conkling whether Measure 47 or Measure 50 blocked schools from putting in computers.

 

134

Meyer

Recalls, it was M47.

 

138

Chair Deckert

Invites testimony of amendments. Is ready to adopt SB 427-7 amendment.

 

153

Vice Chair C. Starr

MOTION: MOVES ADOPTION OF SB 427-7 AMENDMENT.

 

156

Chair Deckert

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS. VOTE: 4-0-1. VOTING AYE: GEORGE, PROZANSKI, C. STARR, DECKERT. EXCUSED: METSGER

 

161

Meyer

Reviews SB 427-8 amendment and its revenue impact (EXHIBIT 6). Would allow school districts that have full-day kindergarten to have a formula weight of 1. Encourages schools to adopt full-day kindergarten.

 

173

Rep. Mark Hass

Testifies in support of SB 427-8 amendment (EXHIBIT 7), a simple school formula change. Refers to fact sheet (EXHIBIT 8). Discusses the research on benefits to students. Understands that this would water down the school formula, but this is too basic for educators to ignore.

 

238

Sen. George

Comments that years ago his wife formed a kindergarten class. Those children became excellent readers. People don’t take the impact of kindergarten seriously enough. Appreciates Rep. Hass’ work.

 

256

Sen. Prozanski

Asks Sen. Hass if he would be willing to start this in 2007-09 budget instead of 2005-07.

 

273

Rep. Hass

Yes, that would be a reasonable compromise.

 

281

Vice Chair C. Starr

Expresses concern that all-day kindergarten would not be mandated and would not reach the children who need it most.

295

Rep. Hass

Responds, the original bill called for that and was criticized for being a mandate. This is the first step toward that direction.

 

329

Chuck Bennett

Objects that the committee has taken a bill that preserved some worthy programs and has grown it to include such changes as school funding issues. This is occurring at a time when school funding numbers “are not going up on the floor.” Adding all-day kindergarten dilutes the available money. This is not being discussed adequately and without a run to see who wins and who loses.

 

377

Sen. George

Responds that the two chambers are not far apart in their figures, and there is $400 million more than anticipated. This is all going to the schools. These amendments fit very well with the idea that we’re stepping up to fund schools.

 

401

Bennett

Those are not the amendments he’s concerned with. All-day kindergarten is a good idea, but when you start adding programs, schools will argue there’s not enough funding.

 

456

Sen. George

Argues in favor of all-day kindergarten. In the long run it saves money.

 

 

 

TAPE 138, SIDE A

020

Bennett

Agrees, but the bottom line is investment. “You can move these deck chairs around all you want, but they’re still deck chairs and the boat’s still sinking.” Some children will lose from these changes.

 

040

Sen. Metsger

Disagrees with Bennett’s comments that all-day kindergarten has been added “on the quick.” Comments on Bennett’s concerns that he hasn’t had a chance to look at the runs. Applauds Rep. Hass for his efforts.

 

091

Bennett

Responds, the bottom line is the money. You can dismiss the runs, but moving money around affects kids’ programs.

 

129

Laurie Wimmer Whelan

Comments on SB 427-8, SB 427-9 and SB 427-10 amendments. OEA has expressed concerns on the distribution formula and what it was designed to do – to capture uncontrollable costs and distribute money fairly. OEA believes adopting SB 427-8 amendment would change the distribution formula. The state simply does not have the resources to “make a bigger pie.”

 

183

Wimmer Whelan

Explains OEA’s position with respect to distribution formula changes. Holding the line is the first priority; second is buying back recent program cuts; third is adding new programs. Full-day kindergarten should be a separate bill, separately funded.

 

226

Wimmer Whelan

Expresses OEA’s concerns about SB 427-9 amendment. Expresses OEA’s concerns about the SB 427-10 amendment (the Minnis plan). Opposes it.

278

Sen. George

Wonders why programs that were offered in the past don’t exist today. Believes the money has been diverted to bureaucracies.

 

320

Wimmer Whelan

Disagrees with Sen. George that bureaucracy is the No. 1 cost driver. Today’s cost drivers include increased enrollment of disabled students, ESL students, federal mandates and societal problems.

 

355

Sen. George

Comments that part of the societal problem is that children are no longer taught sound family values and social skills.

 

377

Sen. Metsger

Asks for a calculation concerning SB 427-10 amendment.

 

380

Wimmer Whelan

Responds, it would be significantly less.

 

389

Rep. Hass

Agrees with Sen. Metsger about runs, but disagrees that wealthier districts would fare better than poorer districts.

 

417

Acting Chair C. Starr

Closes work session on SB 427. Opens public hearing on HB 2046-A.

 

 

 

PUBLIC HEARING, HB 2046-A

449

Lizbeth Martin-Mahar

Gives overview of HB 2046-A (EXHIBIT 9). Phases in an increase in the percentage of the federal earned income tax credit (EITC) for Oregon’s earned income tax credit. Refers to revenue impact statement (EXHIBIT 10).

 

 

 

TAPE 137, SIDE B

020

Martin-Mahar

References research report (EXHIBIT 11) which details the impact of 1997 legislation for earned income and working family child care tax credits in Oregon.

 

044

Martin-Mahar

Discusses revenue impact of the bill beginning in FY 2007-08. Discusses feedback effects.

 

068

Robert J. Castagna

Testifies in favor of SB 2046-A on behalf of Oregon Catholic Conference, which would make EITC refundable. Comments on how the EITC helps lift people out of poverty.

 

126

Castagna

Directs members’ attention to handout (EXHIBIT 12). Refers to a chart on page 4, states that have adopted EITC. Federal EITC is the No. 1 program in lifting people out of poverty. Urges the committee to move HB 2046-A.

 

177

Anthony Grenados

Reads testimony of Phillip Kennedy-Wong verbatim in favor of HB 2046-A (EXHIBIT 13).

 

203

Patti Whitney-Wise

Testifies in favor of bill on behalf of Oregon Hunger Relief Task Force (EXHIBIT 14). Submits testimony from Maureen Goplen (EXHIBIT 15).

 

228

Castagna

Remarks that a key feature of federal income tax reform of 1986 was to eliminate the tax obligation of those below poverty level. Asks the state to follow in those footsteps.

 

240

Marcia Kelly

Testifies in favor of bill on behalf of AAUW. The bill would allow low income people to put the money back into the economy in the form of school clothes and supplies, rent, etc. Expresses concern that the feedback effect of the revenue impact statement is too low.

 

290

Martin-Mahar

Explains, creating a tax cut creates buying power for every group.

 

318

Kelly

Continues questioning the feedback effect.

 

326

Rep. Diane Rosenbaum

Was a member of a task force on this issue during the interim. Notes, this bill passed overwhelmingly in the House. This will help people at the bottom of the income ladder who are working hard to escape poverty. Urges passage of HB 2046-A.

 

366

Rep. Prozanski

Wonders if this bill will go into work session today.

 

370

Chair Deckert

Responds, the bill is not ready to move today.

 

379

Tina Kotek

This is an extremely important bill. Addresses Sen. Deckert’s concerns about paying for it this biennium. If there is going to be an exception, it should be this bill. To not pass HB 2046-A would be an incredibly missed opportunity. Lack of fairness in the tax structure is on the lower end. Urges moving the bill this session.

 

429

Ellen C. Lowe

Testifies in support of bill on behalf of Oregon Food Bank. This is one place where Oregon should reconnect with federal legislation. Notes, the press conference that introduced HB 3490 talked about a tax expenditure that could provide over $100 million more resources. Not many tax expenditure bills have a prospect of passing to make additional resources available.

 

 

 

TAPE 138, SIDE B

041

Lowe

Continues, Oregon needs to have comprehensive tax reform, and a refundable EITC must be part of that reform. Urges the committee to proceed with this bill.

 

073

Ron Cease

Testifies in support of bill. During economic difficulties, people at the bottom of the economy get pounded more. This approach makes sense.

 

093

Chair Deckert

Comments on recent newspaper article on the widening economic gap in U.S. This is one small way to confront that gap.

 

104

Cynthia Hanna

Gives personal testimony on how income tax refunds and EITC have helped her and other low income people.

 

135

Robert Kroft

Gives personal testimony of his financial status and where his money goes. Stresses that “you can fill the budget gap by cutting salaries for all school administrators.” Their three children are living with his parents because they can’t support them. They spend almost $1,000/year on taxes and that is ridiculous. Would like to see the state EITC refund retroactive.

 

 

 

220

Cassandra Garrison

Gives personal testimonial in support of HB 2046-A, how earned income tax credits helped her purchase her first home and climb out of poverty. Asks committee to make state EITC refundable.

 

291

Phil Donovan

Testifies in support of bill on behalf of Oregon Housing Alliance. See memo and letter (EXHIBITS 16 and 17). This legislation presents a great legacy opportunity. It will impact Oregonians for decades to come.

 

324

Donalda Dodson

Testifies in support of bill. Oregon Child Development Coalition helps families with an average annual income of $13,000. This bill would benefit these families.

 

 

 

335

Chair Deckert

Recesses meeting until 1:00 p.m.

 

 

 

340

Chair Deckert

Reopens meeting in work session on SB 427 at 1:10 p.m.

 

 

 

WORK SESSION, SB 427

361

Vice Chair C. Starr

MOTION: MOVES ADOPTION OF SB 427-9 AMENDMENT.

 

364

Vice Chair C. Starr

Explains SB 427-9 amendment, which designates 65% of education dollars into classrooms. This targets teachers, librarians and teaching supplies.

 

401

Chair Deckert

Likes the amendment, but expresses concern that this amendment might hurt chances for the overall bill to pass. Will vote “no.” Calls for a roll call vote.

 

423

Chair Deckert

THE MOTION, NOT HAVING RECEIVED THE REQUIRED MAJORITY, FAILS. VOTE: 2-3-0. VOTING AYE: GEORGE, C. STARR. VOTING NAY: METSGER, PROZANSKI, DECKERT

 

429

Sen. George

MOTION: MOVES ADOPTION OF SB 427-10 AMENDMENT.

 

432

Warner

Explains trend/cyclical projection simulation charts (EXHIBIT 19) from which SB 427-10 amendment was created.

 

477

Chair Deckert

Asks Warner to comment on the contention that this amendment would result in a cut to school funding.

 

TAPE 139, SIDE A

020

Warner

Explains, the reasoning behind the 2007-09 start date is the growth rates.

030

Sen. George

Asks what would happen if the numbers were to turn down. Would the legislature be prohibited from providing some other source?

 

038

Warner

Responds no, there is nothing in the bill to preclude that.

 

048

Rep. Butler

Comments, there would be no preclusion until the end of the next biennium. There is an extra opportunity to do a look-back.

 

065

Chair Deckert

Once again, will vote “no” on this amendment because he does not know what it would do to the rest of the bill. Asks for a roll call vote.

 

079

Chair Deckert

THE MOTION NOT HAVING RECEIVED THE REQUIRED MAJORITY, FAILS. VOTE: 2-3-0. VOTING AYE: GEORGE, C. STARR. VOTING NAY: METSGER, PROZANSKI, DECKERT

 

 

 

085

Vice Chair C. Starr

Will vote “no” on SB 427 as amended and file a minority report. If the minority report fails on the floor he will support the amended bill.

 

087

Vice Chair C. Starr

MOTION: MOVES SB 427 TO THE SENATE FLOOR WITH A DO PASS AS AMENDED RECOMMENDATION.

 

095

Chair Deckert

THE MOTION HAVING RECEIVED THE REQUIRED MAJORITY IS DECLARED PASSED. VOTE: 3-2-0. VOTING AYE: METSGER, PROZANSKI, DECKERT. VOTING NAY: GEORGE, C. STARR.

 

110

Chair Deckert

Adjourns meeting at 1:22 p.m.

 

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant                                                      

 

Exhibit Summary:

1.      SB 427, Amendment SB 427-6, Legislative Counsel, 6/7/05, 12 pp.

2.      SB 427, Amendment SB 427-7, Legislative Counsel, 6/7/05, 12 pp.

3.      SB 427, Amendment SB 427-9, B. Starr, 6/8/05, 1 pp.

4.      SB 427, Amendment SB 427-10, George, 6/8/05, 10 pp.

5.      SB 427, Stable Schools Plan, George, 1 pp.

6.      SB 427, Revenue Impact of Proposed Legislation, Meyer, 6/6/05, 1 pp.

7.      SB 427, Amendment SB 427-8, Hass, 6/7/05, 4 pp.

8.      SB 427, Extended Day Kindergarten: The Benefits, Hass, 3 pp.

9.      HB 2046-A, Staff Measure Summary, Martin-Mahar, 4/26/05, 1 pp.

10.  HB 2046-A, Revenue Impact of Proposed Legislation, Martin-Mahar, 4/19/05, 1 pp.

11.  HB 2046-A, LRO Research Report, Impact of 1997 Legislation – Earned Income and Working Family Child Care Tax Credits in Oregon, Martin-Mahar, December 2004, 9 pp.

12.  HB 2046-A, Center on Budget and Policy Priorities, A Hand Up, Castagna, May 14, 2004, 7 pp.

13.  HB 2046-A, written testimony of Phillip Kennedy-Wong, Grenados, 6/9/05, 1 pp.

14.  HB 2046-A, testimony of Patti Whitney-Wise, 6/9/05, 2 pp.

15.  HB 2046-A, testimony of Norene Goplen, 6/9/05, 1 pp.

16.  HB 2046-A, memo from Phil Donovan and Paul Rainey, 6/9/05, 1 pp.

17.  HB 2046-A, Housing Alliance letter, Donovan, 2 pp.

18.  HB 2046-A, Web article by Michael Leachman, Garrison, 2 pp.

19.  SB 427, House Bill 3460 – Cyclical Projection With Adjustments, Warner, 5/17/05, 2 pp.