PUBLIC HEARING & WORK SESSION:

HB 3143-B, HB 2089-A

PUBLIC HEARING: HB 2234-C

 

TAPES 149, 150 A-B, 151 A

 

SENATE REVENUE COMMITTEE

June 29, 2005   8:00 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:                Jana Tindall, Parks and Recreation Dept.

                                                Jack Isselmann, Lane Metro Partnership

                                                Hasina Squires, Special Districts

                                                Mike Salsgiver, Economic & Community Development Dept.

                                                Larry Glassock, Strategic Economic Development Corp., Salem

                                                Art Fish, Economic & Community Development

                                                Doris Penwell, AOC

                                                Joe Schweinhart, AOI

                                                Bill Fashing, Hood River County

                                                Ken Messerle, Coquille Indian Tribe

                                                Michelle Deister

                                                Rep. John Lim, District 50

 

Staff Present:                          Paul Warner, Legislative Revenue Officer

                                                Mary Ayala, Economist

                                                Mazen Malik, Economist

                                                Barbara Guardino, Committee Assistant

 

 

TAPE 149, SIDE A

005

Chair Deckert

Calls meeting to order at 8:03 a.m.

 

016

Vice Chair C. Starr

Introduces guests.

 

PUBLIC HEARING, HB 2089-A

030

Mazen Malik

Gives overview of HB 2089-A (EXHIBIT 1), which allows state or local government to withhold payment of tax collected on camping and recreational vehicle spaces until amount collected by agency reaches or exceeds $100. No fiscal or revenue impact.

 

066

Jana Tindall

Testifies in support of HB 2089-A. Notes, Parks and Recreation’s intent in this bill is efficiency for the agency and local governments. Asks committee for support (EXHIBIT 2).

 

WORK SESSION, HB 2089-A

080

Vice Chair C. Starr

MOTION: MOVES HB 2089-A TO THE SENATE FLOOR WITH A DO PASS RECOMMENDATION.

 

083

Chair Deckert

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

 

PUBLIC HEARING, HB 3143-B

105

Mary Ayala

Gives overview of HB 3143-B (EXHIBIT 6). Authorizes the Department of Economic and Community Development to approve designation of up to 10 urban or non-urban enterprise zones, bringing the number of enterprise zones up to a total of 59. Discussion on this bill has focused on the opt-out provision.

 

123

Ayala

Introduces HB 3143-B11 amendment (EXHIBIT 8), which removes the opt-out provision. Introduces HB 3143-B12 amendment (EXHIBIT 11), a language conflict amendment.

 

129

Sen. Prozanski

Is working on another amendment. Believes the bill needs to include a buy-in to require companies taking advantage of this windfall to stay at least three years beyond the length of this benefit. Amendments should be available later today.

 

 

 

175

Jack Isselmann

Testifies in support of HB 3143-B. This legislation is potentially the most effective action this legislature can take this session. The addition of 10 enterprise zones will meet current demand.

 

236

Isselmann

Notes, the most controversial part of the bill is the opt-out provision. New enterprise zones will provide a test case to see if cooperation with special districts will mean the death of an enterprise zone. Believes it will create broader support for enterprise zones. The experiment could provide a positive precedent.

 

263

Sen. George

Asks if Isselmann sees Sen. Prozanski’s proposed amendment as a positive or negative.

 

271

Isselmann

Responds, placing further restrictions on an enterprise zone won’t increase its effectiveness. Will have to see Sen. Prozanski’s amendment before he can comment on it.

 

312

Sen. Prozanski

Notes, Isselmann’s statements today are different from what he said in an earlier conversation.

 

327

Isselmann

Responds, the dynamic has changed so it’s not surprising to see an appeal for greater participation at the local level. We won’t know how effective this program is until we test it.

 

366

Sen. Prozanski

Follows up, is it good or bad to require companies to stay in the community?

 

376

Isselmann

It depends on the case. Does not believe amending the statutes is a good idea.

 

423

Chair Deckert

Asks Mike Salsgiver to address the requirement in Sen. Prozanski’s proposed amendment.

 

449

Mike Salsgiver

OECDD believes companies would view this provision as a negative, particularly in the tech sector. Gives an example.

 

TAPE 150, SIDE A

030

Salsgiver

In case of an enterprise zone, when there is tax abatement, a company in the trade sector would chafe at the lack of flexibility. To require them to stay for a period of time is somewhat unrealistic in a global economy. The market shifts quickly.

 

052

Chair Deckert

Asks if companies other than manufacturing move into states because of enterprise zones.

 

058

Salsgiver

Responds, most investment is in manufacturing sector, but service jobs are created as a result.

 

061

Isselmann

Explains, the statute defines the types of investments that can be made under the enterprise zones.

 

065

Sen. George

Is there anything in current law to prohibit negotiation of how long a firm would stay?

 

 

 

089

Salsgiver

If the abatement expires, the company can go elsewhere. But it’s unusual for a firm to leave without a substantial amount of thought. Lack of flexibility in the manufacturing sector is a negative.

 

102

Larry Glassock

Responds to Sen. George’s question.

 

107

Sen. Prozanski

Continues questioning with Salsgiver about his “black mark” statement. Gives examples of companies that left their communities high and dry. Is concerned this won’t happen again.

 

130

Salsgiver

Responds, in the case of Colorado, tax benefits have to be repaid. Expresses concern with a provision in statute requiring a company to stay if conditions shift.

 

152

Sen. Prozanski

Responds, this is what his amendment will address. If companies leave they’ll have to pay back their benefits.

 

166

Salsgiver

Proposes allowing this provision to be negotiated within a community rather than in statute.

 

178

Glassock

Favors expanding the number of enterprise zones but opposes the opt-out for special districts. Also, believes Sen. Prozanski’s amendment needs further analysis.

 

247

Hasina Squires

Testifies in support of HB 3143-B on behalf of Special Districts. See written testimony (EXHIBIT 13). Focuses comments on sections 3-5 of the bill. Special districts would like to be afforded the same opportunity to choose whether to abate taxes. Asks for equity.

 

 

 

332

Squires

Points out page 3, lines 20-21 of bill in response to Glassock’s testimony. These provisions do not apply to the 49 renewals. Contends there’s nothing wrong with two sets of standards.

 

417

Ken Messerle

Testifies in favor of HB 3143-B. Submits written testimony from Edward Metcalf, chairman of Coquille Indian Tribe (EXHIBIT 14). The tribe is asking the committee to delete the density requirement in the statute so it can compete with other enterprise zones. This concern was addressed in a House amendment.

 

425

Bill Fashing

Expresses concern over the opt-out provision and support for creating additional zones. Gives an example of how Hood River County works with its special districts without the opt-out option.

 

TAPE 149, SIDE B

030

Chair Deckert

Comments, the language in the bill would help ensure the same type of cooperation experienced in Hood River.

 

035

Fashing

 Understands the concerns but there are other ways to these resolve issues.

 

045

Sen. Prozanski

Asks how to put that into statute in order to assure communication.

 

047

Fashing

Does not know.

 

051

Arthur Fish

See written testimony (EXHIBIT 15). Testifies against creating an opt-out provision. This is an unprofitable way to go. Exemption in an enterprise zone is only 3-5 years. Reiterates Fashing’s concerns of creating two classes of enterprise zones.

 

127

Fish

Notes, the HB 3143-A8 amendment was written to encourage greater communication. Urges the committee to pass the HB 3143-B11 amendment.

 

135

Sen. Prozanski

Asks Fish for his views on the proposed call-back provision.

 

138

Fish

Responds, it depends on how it’s done. Would have to look at the amendment and think through its ramifications.

 

166

Doris Penwell

Testifies in favor of HB 3143-B with amendments. AOC introduced the HB 3143-B11 amendment to delete the opt-out provision. Counties would like some interim discussion to assure this law works and all parties agree.

 

219

Michelle Deister

Concurs with Penwell’s testimony.

 

221

Joe Schweinhart

AOI supports enterprise zones and opposes the opt-out. The risk of companies leaving the area is low. Oregon is competing with other states with enterprise zones. Districts should be part of the process.

 

244

Sen. Prozanski

Why did this opt-out provision pass in House Revenue? What are we missing?

 

248

Penwell

Responds, this has never been addressed in testimony and is a decision the committee must decide.

 

257

Schweinhart

Contends that AOI misunderstood the bill when testifying before House Revenue.

 

309

Sen. Prozanski

Defends his proposed amendment to make it clear that local communities can negotiate call-backs.

 

315

Vice Chair C. Starr

The committee has heard clear testimony that communities already have the ability to receive back the taxes. Will not support an extension.

 

331

Chair Deckert

Wonders, what is the average initial investment of a company in Oregon? Follow-up questions.

 

337

Fish

Responds, the average investment is about $1.5 million; the median is $2 million. During the 3-5-year period, if you can’t maintain your operation, you do pay back taxes.

 

398

Sen. George

Gives examples of options that firms have within an enterprise zone including moving the operation off-shore. Follow-up questions.

 

417

Fish

Counters, leaving early is not a huge problem.

 

443

Sen. Prozanski

Responds, is hearing we no longer want communities to have local control. Refers to a bill currently being heard in Rules Committee that puts in an incentive plan to maintain jobs in Oregon without outsourcing.

 

498

Fish

Responds to Prozanski’s concerns. Statutes already have some flexibility.

 

TAPE 150, SIDE B

039

Chair Deckert

Recesses the meeting until after morning floor session. Perhaps Sen. Prozanski’s amendment will be available by then. Will see if the opt-out amendment has the votes.

 

049

Chair Deckert

Calls meeting to order at 10:45 a.m. Resumes discussion on HB 3143-B.

 

050

Sen. Prozanski

Spoke with Economic & Community Development Department and Mr. Fish in particular, who assured him communities already have the ability to enter into call-back. The committee does not need to wait for an amendment.

 

072

Fish

Agrees, it is possible to do call-back in certain circumstances. The urban zones have the ability to attach additional conditions. The rural zones do not.

 

102

Sen. Prozanski

Clarifies, it is only during the extension period, not in the first 3 years.

 

108

Fish

Follow-up discussion with Sens. Prozanski and George.

 

129

Rep. John Lim

Expresses strong support from the House Trade and Economic Committee and members of the House for this bill. Oregon is running out of enterprise zones and his committee discussed how much to expand. Believes 10 is sufficient for now. The enterprise zone is one of the tools used to attract jobs to our state.

 

183

Rep. Lim

Suggests trying the opt-out and if it doesn’t work, correcting the problem.

 

198

Chair Deckert

After talking to Senators on the floor he sensed they wanted to remove the opt-out provision from the bill. It will return to Trade and Economic Committee.

 

206

Rep. Lim

Agrees. The best approach is to concur.

 

WORK SESSION, HB 3143-B

235

Sen. Metsger

MOTION: MOVES THE ADOPTION OF THE HB 3143-B11 AMENDMENT.

 

238

Vice Chair C. Starr

Will vote against adoption of the HB 3143-B11 amendment.

 

243

Sen. Prozanski

Will also vote no. Suggests a sunset clause. Will support the final bill.

 

269

Chair Deckert

ORDER: THE MOTION HAVING RECEIVED THE REQUIRED MAJORITY IS DECLARED PASSED. THE VOTE: 3-2-0. VOTING AYE: GEORGE, METSGER, DECKERT. VOTING NO: PROZANSKI, C. STARR

 

273

Sen. Metsger

MOTION: MOVES THE ADOPTION OF THE HB 3143-B12 AMENDMENT.

 

275

Chair Deckert

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

 

277

Sen. Metsger

MOTION: MOVES HB 3134-B AS AMENDED TO THE SENATE FLOOR WITH A DO PASS RECOMMENDATION.

 

279

Chair Deckert

ORDER: THE MOTION HAVING RECEIVED THE REQUIRED MAJORITY IS DECLARED PASSED. THE VOTE: 5-0-0. VOTING AYE: GEORGE, METSGER, PROZANSKI, C. STARR, DECKERT.

 

 

PUBLIC HEARING, HB 2234-C

299

Ayala

Gives overview of HB 2234-C (EXHIBIT 19). Allows for designation of 6 additional e-commerce enterprise zones; changes the sunset provision. Explains, e-commerce zones have to be located within existing enterprise zones.

 

326

Ayala

First provision extends sunset of enterprise zones. There is no revenue impact associated with it (EXHIBIT 20). The remainder of the bill deals with clarifying language requested by Dept. of Revenue.

 

378

Fish

Testifies in favor of additional e-commerce enterprise zones. See written testimony (EXHIBIT 21). 25% of e-commerce assets can be used to generate tax credits. It is a powerful tool.

 

423

Fish

Refers to results of a poll (EXHIBIT 22). Returns to written testimony, pages 2 and 3. This program is limited to rural zones.

 

TAPE 151, SIDE A

022

Fish

Supports DOR’s “housekeeping” language changes in sections 4-7 of the bill. Requests additional changes.

 

037

Penwell

AOC supports HB 2234-C. The current number of designations goes from 4 to 10. Implementation has been delayed for one year at the request of Harney County. Encourages the committee to move forward WITH this bill.

 

051

Fashing

Testifies in support of HB 2234-C. Encourages committee’s support.

 

056

Sen. Prozanski

Asks what other issues would be resolved by delaying this change until 2006.

 

058

Penwell

Responds, it reduced the state’s revenue impact. Some people thought the bill was going too fast.

 

067

Sen. Prozanski

Will this go through Budget for review?

 

069

Ayala

No.

 

072

Sen. George

Comments on Fish’s testimony, exhibit 21, page 2, Utilization & Value: “…this program generates great interest among prospects involving large investments and very well-paying jobs…”

 

077

Fish

Responds, “We are seeing great things.”

 

095

Chair Deckert

Closes public hearing on HB 2234-C. Adjourns meeting at 11:20 a.m.

 

 

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant                                                      

 

Exhibit Summary:

1.      HB 2089-A, Staff Measure Summary, Malik, 6/29/05, 1 pp.

2.      HB 2089-A, testimony of Jana Tindall, 6/29/05, 1 pp.

3.      HB 2089-A, Staff Measure Summary, Jordan, 6/9/05, 1 pp.

4.      HB 2089-A, Staff Measure Summary, Harris, 6/24/05, 1 pp.

5.      HB 2089-A, Staff Measure Summary, Malik, 4/12/05, 1 pp.

6.      HB 3143-B, Staff Measure Summary, Ayala, 6/27/05, 1 pp.

7.      HB 3143-B, Revenue Impact of Proposed Legislation, Ayala, 6/27/05, 1 pp.

8.      HB 3143-B, Amendment HB 3143-B11, Legislative Counsel, 6/16/05, 1 pp.

9.      HB 3143-B, Staff Measure Summary, Ayala, 6/29/05, 1 pp.

10.  HB 3143-B, Revenue Impact of Proposed Legislation, Ayala, 6/29/05, 1 pp.

11.  HB 3143-B, Amendment HB 3143-B12, Legislative Counsel, 6/28/05, 1 pp.

12.  HB 3143-B, Staff Measure Summary, Ayala, 6/29/05, 1 pp.

13.  HB 3143-B, testimony of Hasina E. Squires, 6/29/05, 3 pp.

14.  HB 3143-B, testimony of Edward L. Metcalf, Coquille Indian Tribe, Messerle, 6/27/05, 2 pp.

15.  HB 3143-B, testimony of Art Fish, 6/29/05, 1 pp.

16.  HB 3143-B, Staff Measure Summary, Ayala, 5/25/05, 1 pp.

17.  HB 3143-B, Revenue Impact of Proposed Legislation, Ayala, 5/25/05, 1 pp.

18.  HB 3143-B, Staff Measure Summary, Harris, 6/24/05, 1 pp.

19.  HB 2234-C, Staff Measure Summary, Ayala, 6/27/05, 2 pp.

20.  HB 2234-C, Revenue Impact of Proposed Legislation, Ayala, 6/27/05, 1 pp.

21.  HB 2234-C, Oregon Economic and Community Development Department, Fish, 3 pp.

22.  HB 2234-C, Demand for Electronic Commerce Status Among Existing Oregon Enterprise Zones, Fish, 2 pp.

23.  HB 2234-C, Revenue Impact of Proposed Legislation, 3/02/05, 1 pp.

24.  HB 2234-C, Staff Measure Summary for HB 2234-A, Stembridge, 3/9/05, 1 pp.

25.  HB 2234-C, Staff Measure Summary for HB 2234-B, Ayala, 4/28/05, 1 pp.

26.  HB 2234-C, Staff Measure Summary for HB 2234-C, Ayala, 5/25/05, 2 pp.

27.  HB 3143-B, Staff Measure Summary for HB 3143-A, Stembridge, 5/2/05, 1 pp.