Consumption and Excise Taxes

1. Consumption and Excise Taxes 2007 Orientation

2. Excise Taxes Tobacco Alcoholic Beverages Telecommunications Fuel and Weight Mile Transient Lodging Tax

3. Tobacco Revenues Cigarette Taxes Other Tobacco Products Taxes Master Settlement Agreement

4. Cigarette Tax Rate

5. State Excise Tax Rates

6. Sales + Excise Taxes

7. 2005-06 Revenue

8. Distribution Proportions(Percents)

9. Cigarette Tax Revenue Forecast

10. Cigarette Consumption

11. Taxed Distributions

12. Price Per Pack in Cents

13. Price Per Pack in Cents

14. Taxed Distributions

15. Taxed Distributions

16. Taxed Distributions

17. Taxed Distributions

18. Taxed Distributions

19. Taxed Distributions

20. Other Tobacco Products

21. Tax on Cigars

22. 2005-06 OTP Revenue

23. Total Tobacco RevenueCigarettes and OTP

24. Master Settlement Agreement 47 States Cigarette Manufacturers 4 Original Participating (96.4%) Subsequent Participating Non-Participating Annual Payments in Perpetuity Subject to Adjustments

25. Estimated Payments

26. Payments

27. Alcoholic Beverages Beer & Cider (Malt Beverages) Wine Distilled Spirits

28. BEER TAX RATES

29. State Rates (Excise) as of 1/1/06

30. State Rates (Excise + Sales) as of 1/1/04

31. 2005-06 Beer Tax

32. Beer Tax Revenue

33. Wine Tax Rates

34. State Wine Tax Rates

35. State Wine & Sales Tax Rates

36. 2005-06 Wine Tax Revenue

37. Wine Tax Revenue (History)

38. OLCC Liquor Markup

39. OLCC Sales

40. 2005-06 OLCC Revenue

41. DISTRIBUTION FORMULA Privilege Tax 2� of Wine Tax to Wine Board (1984) Balance of Wine Tax + Beer Tax 50% to Mental Health 50% included in OLCC Distribution OLCC Net Revenue 56% to State General Fund 10% to Counties by Population 20% to Cities by Population 14% to Cities by Formula (1977) (ORS 221.770)

42. 2005-06 Total OLCC Revenue Distributions

43. OLCC Distributions (Historically)

44. 9-1-1 Emergency Access Tax 1981: 3% of Access Charge 1991: 5% of Access Charge (Temp.) 1995: $0.75 per Month per circuit

45. 9-1-1 Revenue

46. Fuel Taxes Gasoline (any fuel the chief use of which is for) Propulsion of Motor Vehicle (24�) Propulsion of Aircraft Piston (9�) Jet (1�) Diesel, CNG, & etc. (used to) Propel a Motor Vehicle (24�) Weight-Mile Tax (vehicles > 26,000 pounds) Flat Fees Road Use Assessment Fee

47. Motor Vehicle Fuel Tax Rates

48. Fuel Tax Revenue

49. Weight-Mile Taxes Table A: 26,000 to 80,000 Pounds Graduated Based on Weight $0.0364 per Mile @ 26,000 Pounds $0.1197 per Mile @ 80,000 Pounds Table B: 80,000 to 105,500 Pounds Graduated based on Weight and Axles In Lieu (Flat Fees) Log, Sand & Gravel, and Chip Trucks Road Use Assessment Fee

50. Weight-Mile Tax Rates Adjusted for 2003 law changes

51. In Lieu Taxes Flat Fees Log Trucks $6.10 per Hundred Weight Farm Trucks $5.00 per Hundred Weight Dump Trucks $6.05 per Hundred Weight Chip Trucks $24.62 per Hundred Weight Road Use Assessment Fee 5.7� per ESAL* Mile equivalent single-axle load� means the relationship between actual or requested weight and an 18,000 pound single-axle load as determined by the American Association of State Highway and Transportation Officials Road Tests reported at the Proceedings Conference of 1962. (ORS 818.225)

52. Weight-Mile Tax Revenue

53. Transient Lodging Tax HB 2267 of the 2003 session Imposes a state wide 1% tax on transient Lodging DOR administers, transfers net of collection cost (max 2%) to Tourism commission Fund State tourism marketing and regional marketing program Lodging providers collect and keep 5%. Start January 1, 2004, and transmit quarterly Limits new local taxes to tourism related taxes (70%)

54. Transient Lodging Tax Revenue Estimates in millions (at start time by LRO) 03-05 05-07 07-09 $16.46 $20.41 $22.51 First year 2004 actual were weak $1.5 million, FY 2005 $8.4 million, and FY 2006 is closing on $9.24 million

55. Transient Lodging Tax

56. LOTTERY The voluntary tax

57. OREGON STATE LOTTERY Terminology History Net Proceeds Traditional Video Transfers Issues

58. LOTTERY TERMINOLOGY Revenue Game Other (interest and unclaimed prizes) Prizes Net Receipts = Game Revenue Less Prizes Expense Game Operating Contingency Reserves Net Proceeds = Net Receipts Less Expense

59. LOTTERY HISTORY 1984 Created by Initiative Petition Traditional Games Net Proceeds Dedicated to Economic Development 1989 Legislative Action Created Sports Action Lottery Authorized Video Lottery (suspended by Governor) 1991 Legislative Action Implemented Video Lottery, prohibited private lotteries Dedicated 2.5% of Net Receipts to counties 1995 Referred Measure # 21 Added �financing public education� as allowable use Gave lottery bonds first claim on revenue Dedicated 15% of Net Proceeds to Education Endowment Fund 1998 Initiative Petition (Ballot Measure # 66) Dedicated 15% of Net Proceeds to Parks, Beaches, and Watershed Protection

60. Lottery History (cont.) 1999 Legislative Action Dedicated not less than 1% of Video Net Proceeds to Problem Gambling 2002 (3rd SS) Legislative Referral Converts EDF to Education Stabilization Fund (ESF) Lottery Dedication Increased, Conditionally If Fund Balance < 5% of GF, 18% to ESF Else 15% to School Capital Matching Subaccount Allows Appropriation of Principal, Conditional 3/5 Vote Plus Specified Economic Conditions or Emergency 2005 Legislative Action Repealed Sports action and like games. Dedicated 1% of Net Proceeds to Collage athletic programs.

61. Traditional Lottery Games2005-06 Net Receipts

62. TRADITIONAL GAME REVENUE

63. TRADITIONAL GAME REVENUE Percentages

64. VIDEO LOTTERY

65. VIDEO LOTTERY REVENUE

66. VIDEO LOTTERY REVENUE Percentages

67. TOTAL LOTTERY REVENUE

68. TOTAL LOTTERY REVENUEPercentages

69. LOTTERY TRANSFERS

70. 2007-09 Lottery Distributions

71. ISSUES Line Games Video Payout Percentage Retailer Compensation Lottery Expense

72. Line Games Lottery (Line Games) explosive growth 2003-05 $60 million < $80 2005-07 $230 million > $ 130 2007-09 $ 270 million predicted

73. Video Prize Percent

74. Annual Growth: Video

75. Video Compensation Rates Annual Net Receipts Rate Up to 200,000 35% 200,000 to 400,000 30% 400,000 to 600,000 25% Over 600,000 20% Average 32%

76. Video Compensation Rates Annual Net Receipts Rate 3-Tier Option Up to 175,000 32.5% 175,000 to 475,000 26.0% Over 475,000 17.0% 2-Tier Option Up to 650,000 26.0% Over 650,000 19.0% Estimated Overall Blended Rate 28% to 29%

77. Video Compensation Rates Annual Net Receipts Rate 4-Tier Option Up to $175,000 29% $175,000 to $475,000 24% $475,000 to $800,000 15% $800,000 and up 12% 3-Tier Option Up to $600,000 23.0% $600,000 to $1,800,000 18.5% $1,800,000 and up 12.0 % Estimated Overall Blended Rate 22% to 26%

78. Video Compensation Rates Annual Net Receipts Rate 4-Tier Option Up to $175,000 27.5% $175,000 to $475,000 23% $475,000 to $800,000 14% $800,000 and up 11% 3-Tier Option Up to $600,000 22% $600,000 to $1,800,000 17.5% $1,800,000 and up 11% Estimated Overall Blended Rate 21% to 25%

79. Retailer Compensation

80. Retailer Compensation

81. Retailer Compensation

82. Lottery Expense Percents