SAO Takes on Advocacy Role, Hires Lobbyist

Enters Dialogue on Corporate Kicker; Anticipates Special Session of Legislature; Seeks Member Input

By Jack Isselmann, Vista Strategies

SAO’s Board of Directors recently resolved to promote the successful growth of software companies through advocacy, and subsequently formed an Advocacy Committee directed to monitor and influence public policy making. The new committee will advance SAO’s ongoing efforts to promote and grow the software and information industry in Oregon by leading discussions with federal, state and local officials about the important contributions of software companies throughout the state. The SAO will advocate for tax and economic development policies that are technology company friendly. SAO Board Member Craig Barnes – CEO of Attensa, Inc. – chairs the Advocacy Committee, which includes representatives from SAO member companies, both large and small. A complete list of Advocacy Committee members can be found by clicking here.

Oregon’s corporate kicker

The Advocacy Committee was pressed into action almost immediately after its formation. The March budget forecast issued by Oregon’s Office Economic Analysis indicated that the state’s continued economic recovery had produced $666 million more in tax revenue than expected when lawmakers set the two-year state budget in August 2005. Based on the March budget forecast, individual taxpayers are in line to receive $461 million in kicker refunds in December 2007 with corporations receiving $205 million. SAO participated in discussions with leading business associations in response to suggestions by state elected leaders about possible changes to the corporate share of the kicker. The discussions included possibly redirecting the corporate kicker to a rainy-day fund or other state budget items, like education.

Oregon has the nation’s only “kicker” law. It requires the return of excess revenue to taxpayers when state revenue exceeds the amount forecast at the start of a budget period by more than 2 percent. The kicker was adopted in 1979 by the State Legislature to ward off a property tax limit like Proposition 13 that had been recently passed by Californians. Voters ratified the kicker in 1980 with more than 90 percent approving it. In 2000, voters again supported the individual and corporate kickers by locking the rebates into the Oregon constitution. The law permits legislators to suspend the payment of either the individual or corporate kicker in a particular period, but such a move requires a two-thirds vote of both the House and Senate. Changes to the kicker law would require the Legislature to refer a constitutional amendment to voters in time for the November ballot.

SAO quickly sought member input about the corporate kicker in an online poll powered by SAO member SurveyWave. More than 72 percent of respondents indicated they would vote to repeal the corporate kicker if a constitutional amendment appeared on the November ballot. Additionally, more than 84 percent of those participating indicated the excess revenue should be directed into a rainy-day fund reserve. Finally, nearly 90 percent of survey participants believe the SAO should be involved in the discussion of the future of the corporate kicker.

Special legislative session

Since the time of the initial budget forecast and SAO’s member survey, chances have diminished that the corporate kicker will be addressed in a special session of the legislature this year. This is due, in part, either to the challenge of referring the matter to voters or the difficulty of obtaining the supermajority votes required to suspend the kicker, particularly in the midst of an election year. SAO has committed to further monitor the corporate kicker. SAO will partner with other leading business organizations in the 2007 regular legislative session when the corporate kicker will likely be the subject of a broader analysis of Oregon tax policy.

While the prospects for changes to corporate kicker in 2006 have diminished, the calls for a special session this year have grown. Legislative leaders, interest groups and editorial pages have all encouraged the legislature to convene soon. It is likely that legislature will return to Salem before the fall to work on at least two pressing demands. The first would be to allocate resources sufficient to bridge an approximately $140 million gap in the current budget of the Department of Human Services. The second would look to alleviate budget shortfalls anticipated by school districts throughout Oregon by disbursing approximately $45 million in unanticipated lottery proceeds to schools by funneling the surplus through the state’s school funding formula. However, it is unclear whether a special session can effectively be limited to these two issues, thereby avoiding the risk of election-year politicking that could result if other legislature issues are allowed for consideration. The determination of whether, and when, a special session will occur hinges in large part on the answer to that question. The SAO Advocacy Committee will monitor and report back to members as this situation resolves.

Your input sought

The SAO Advocacy Committee intends to spend the next several months engaging in a dialogue with our members. SAO President John Tortorici and SAO Vice President Molly Moore will provide staff support to the Advocacy Committee and will be working with me in my role as SAO’s contract lobbyist and government relations consultant. We want to hear from you about the public policy issues that impact your business. At the same time, we will be eliciting your views and opinions through surveys and other public affairs forums designed for your participation. Our goal is to add SAO members’ perspective and voice to the dialogue between policy makers and Oregon businesses. SAO’s advocacy will combine with our educational, workforce development and industry promotion activities to advance SAO’s mission to Start, Move, and Grow innovative companies within Oregon in our state’s most exciting industry. Please provide your feedback to: jack@sao.org.

About the author

Jack Isselmann is the Founder of Vista Strategies. After serving in executive management positions in technology companies and for the State of Oregon, Jack founded Vista Strategies to represent technology companies like Pixelworks and Electro Scientific Industries before state and local governments in Oregon. For more information on Vista Strategies go to www.govtcounsel.com.