Gift card legislation has few local backers

SALEM"" After weeks of contentious negotiations and significant compromises, a bill that offers to funnel millions of dollars to cash-strapped schools is sputtering in the state Legislature amid concerns that the proposal would be too onerous on businesses.

Opposed by Medford-based gourmet food purveyor Harry David, the bill would require retailers to transfer money to the state that remains on gift cards that had not been used in three years.

State Sen. Ben Westlund, the Bend-area Democrat who brought forth the controversial measure, said Senate Bill 460 should be sailing through the state Legislature, but instead it is floundering. "We have accommodated every concern from businesses except one: The fundamental question of whose money is it?" Westlund said. "They would have you believe that it's theirs and they'd like to keep it."

Oregonians, he said, spend $1 billion annually on gift cards, at least 10 percent of which goes unredeemed by cardholders.

He and school advocates, including the Oregon Education Association, say rather than contributing to a company's bottom line, that money should instead be held in perpetuity, just as other unclaimed property is under Oregon's escheat laws.

Westlund is proposing that unclaimed gift card value go to the state Department of Lands for deposit into the Common School Fund, where unclaimed payroll checks and abandoned assets of all types now go.

There, the principal would be held in trust for consumers to reclaim. The interest accrued, meanwhile, would go to schools.

Ashland School District Superintendent Juli DiChiro questions just how much of a benefit students would realize. She said more money going into the Common School Fund would have no "direct benefit" to classrooms.

Under a complex funding formula, she said, the money districts receive from the Common School Fund is considered local revenue; and as such is deducted from what the district would have otherwise gotten from the state.

The $235,272 Ashland School District received from the Common School Fund for the 2006-07 school year, for instance, was not extra money the district had to spend beyond its regular state appropriation, but only that much less that the state had to fork out of its general fund.

"And they wonder why we don't get more excited about the Common School Fund," DiChiro said.

For good or ill, that is how the Common School Fund has worked historically, said Jake Weigler, a spokesman for Gov. Ted Kulongoski.

Weigler said the Democratic governor, as a part of his Education Enterprise Plan, has proposed legislation this session that, among other things, would change the way support for schools is calculated, making the Common School Fund a truly additional source of education dollars.

Oregon Education Association lobbyist Laurie Wimmer Whelan said while individual school districts may not see more money because of the bill, additional resources would be available overall for schools.

Leigh Johnson, director of government relations for Harry David Holdings Inc., said Senate Bill 460 is far from being the consumer protection bill that proponents portray it to be. He said a truly consumer-friendly bill would not force cardholder to go to the state to be able to spend what is theirs rightfully.

"It is their money, it is their card, and it should be theirs to do with what they want," Johnson said.

Westlund said he understands that companies, like Harry David, do not want to run the risk of offending one of their customers by declining a gift card simply because it had not been used in three years.

Even with the amendments, state Sen. Alan Bates, D-Ashland, said he will likely vote for the bill, but reluctantly so.

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