THE TWENTIETH DAY

                               

Carson City (Monday), July 14, 2003

    Senate called to order at 1:38 p.m.

    President Hunt presiding.

    Roll called.

    All present.

    Prayer by the Chaplain, Pastor Albert Tilstra.

    Awesome God, we admit that sometimes we try to put You in a box so we can understand You. When we realize that other people see You differently than we do, we are forced to take You out of the box to confront You in all Your complexity. Your love may be simple, but Your power and wisdom is not.

    Help us be open to other people’s understanding of You. May we be clear about our own beliefs but open to learn more about You through others’ understandings. Even though we are more comfortable with You in the box we have made, we realize that You are beyond our comprehension. Your thoughts are not our thoughts. Your ways are not our ways. You are truly an awesome God, and we bow before You in gratitude for how You work in our lives.

Amen.

    Pledge of allegiance to the Flag.

    Senator Raggio moved that further reading of the Journal be dispensed with, and the President and Secretary be authorized to make the necessary corrections and additions.

    Motion carried.

MESSAGES FROM THE ASSEMBLY

Assembly Chamber, Carson City, July 13, 2003

To the Honorable the Senate:

    I have the honor to inform your honorable body that the Assembly amended, and on this day passed, as amended, Senate Bill No. 6, Amendments Nos. 3, 4, 7, and respectfully requests your honorable body to concur in said amendment.

Diane Keetch

Assistant Chief Clerk of the Assembly

MOTIONS, RESOLUTIONS AND NOTICES

    Senator Raggio moved that the Senate resolve itself into a Committee of the Whole for the purpose of considering Senate Bill No. 6, as amended by the Assembly, with Senator Raggio as Chairman and Senator McGinness as Vice Chairman of the Committee of the Whole.

    Motion carried.

IN COMMITTEE OF THE WHOLE

    At 1:57 p.m.

    Senator Raggio presiding.

    Senate Bill No. 6 considered.

    The Committee of the Whole was addressed by Senator Raggio; Brenda J. Erdoes, Legislative Counsel; Senator Neal; Senator Washington; Senator O'Connell; Senator Carlton; Ted A. Zuend, Deputy Fiscal Analyst; Senator Care; Charles Chinnock, Executive Director, Department of Taxation; Senator Tiffany; Senator Townsend; Senator Nolan; Senator McGinness; Senator Cegavski; Senator Amodei; Senator Titus; Senator Rhoads; Senator Mathews and Gary L. Ghiggeri, Senate Fiscal Analyst.

    Senator Raggio:

    We will now consider Senate Bill No. 6, which has been amended by the Assembly in the form of the third reprint of Senate Bill No. 6. We will require and ask for certain information or testimony to be presented. We will not be hearing witnesses unless the Committee needs to hear new information, if there is misinformation or the Committee should be made aware of any impact. I would ask the Legislative Counsel Bureau to review and summarize the changes made to Senate Bill No. 6. It would be helpful to get a general overview of the changes that were made in the bill and the difference made by those changes in the revenue plan.

    Brenda J. Erdoes (Legislative Counsel):

    The first 24 sections of the new reprint of Senate Bill No. 6 concern the payroll tax on wages paid by employers. The change would be a decrease in the amount of the tax. It was 0.6 percent and is now 0.5 percent. The other change in the Senate’s version was that the only nonprofits exempted were those that did not pay unemployment tax. The Assembly expanded the exemption to all nonprofits. The difference in 501(c) is 501(c)(3)s were exempt previously and now all nonprofits that are registered as 501(c) are exempt.

    The rate on the banking franchise tax was changed to 4 percent.

    Senator Neal:

    Would you explain what is meant in the bill by, “The amount of any refund of income tax received from another state which has been included as income in computing federal taxable income?”

    Mrs. Erdoes:

    The language refers to the banking franchise tax. The 4 percent is applied to the Nevada taxable income. This would be obtained by taking the federal taxable income of the bank, which is the figure taken from the federal income tax form, and increased by the amount of any deduction for the tax imposed by section 24.38, the amount of any net operating loss in the taxable year and any interest or dividends on the obligations or securities of any state or political subdivision of a state and decreasing that figure by any income that is exempt from taxation, any interest income received on obligation of the United States and by the amount of any refund of income tax received from another state. The language referred to would be the third decrease to that amount and would be subtracting any refund of income tax received from another state, which has been included as income in computing the federal income tax. The way the calculation works is to take the federal taxable income of the financial institution, as a whole, across the nation not just in Nevada, and add and subtract these items. One item would be any refund of income tax received from another state, which reduces the net income and is later apportioned to Nevada. It is appropriate because this would be the total federal income tax at this point in this formula.

    Senator Neal:

    The preceding language designates that only the money made in Nevada would be taxed. I question what that language meant because if the amount is decreased then no tax could be owed.

    Mrs. Erdoes:

    This is only a part of the formula to determine the amount to which the percentage of the tax is applied. You are correct, but this is how you get there.

    Senator Washington:

    Does the definition of a financial institution include mortgage brokers or any financial institution?


    Mrs. Erdoes:

    Yes. An institution licensed, registered or otherwise authorized to do business in this State pursuant to the provisions of chapter 604, 645B, 645E, or 649 of NRS includes mortgage brokers.

    Senator Washington:

    Would it include a check cashing institution?

    Mrs. Erdoes:

    If the business were licensed under the provisions of chapter 604 of NRS, then it would be included. The bill defines it in this way because financial institutions often operate under federal charters or through the states. The language in section 24.18 lists other financial institutions.

    Senator Washington:

    If the institution is a parent company and is outside of the State, how would the tax be calculated?

    Mrs. Erdoes:

    It would depend on how they are organized. There are provisions contained in the bill for affiliated companies. A branch would be a part of a larger institution. It would be applied to the total income, but it would only be Nevada income and would be apportioned to the State; therefore, it would be a small percentage of the total.

    Senator O'Connell:

    Has the $21,500 cap been removed from the payroll tax?

    Mrs. Erdoes:

    It is confusing because it does not state a figure, but the tax is paid on base wages, which is line 5 on the form under unemployment chapter 612.

    Senator O'Connell:

    Would a sole proprietor be required to file?

    Mrs. Erdoes:

    The rules would be the same for the payroll tax except for nonprofits. Under chapter 612, there is an exemption for independent contractors. It depends on how the sole proprietorship is organized. If they pay unemployment compensation, then the payroll tax would be applicable. It is dependant on how it is structured under unemployment compensation chapter 612.

    Senator Carlton:

    In section 24.18 there is language referring to a nonprofit organization under the provisions of chapter 678 of NRS or the Federal Credit Union Act. What would be the difference between them?

    Mrs. Erdoes:

    The reference to credit union was left in the language because, in the future, under the federal banking laws, there may be another way to come in as a credit union. At present all credit unions must be licensed in this State under chapter 678 or under the Federal Credit Union Act; therefore, all the credit unions would be exempt.

    Senator Carlton:

    As far as we are aware, all credit unions operating in this State are organized under this exemption provision?

    Mrs. Erdoes:

    Yes. We left the language in the bill.

    The next change under the banking franchise tax was the expansion of the definition we have discussed. There was a change to the apportionment formula for net income under this tax that would be based on a numerator and denominator that are determined pursuant to the gross revenue. It takes the gross revenue of the financial institution across the nation, or wherever it operates, as the bottom number in the fraction; and the gross revenue of the institution in the State of Nevada or whose accounts have addresses in this State, would be the top number forming a fraction. The fraction is then applied to the federal Nevada taxable income to determine the amount of tax. Staff requested the language be changed because the original language may not have been constitutional.

    Senator Neal:

    Would the businesses that have a unitary system as described in section 24.40 pay taxes on an aggregate basis or by each unit?

    Mrs. Erdoes:

    This section gives the Department of Taxation the authority to allow more financial institutions that are members of an affiliated group to file a consolidated return. The same is true with the unitary businesses. They are required to file with the Department such reports as is determined appropriate. They tell the Department how they are operating, and they may be required to file.

    Senator Neal:

    Will they pay more or less tax?

    Mrs. Erdoes:

    The facts in each case would determine the amount. It would depend on their assets and income and from where those came.

    Senator Neal:

    I am referring to the law. If they are permitted to file a consolidated report on a unitary banking system where there are two or more members involved rather than a stand-alone bank, would that system permit them to pay a higher tax than the stand-alone bank?

    Mrs. Erdoes:

    Because the bank franchise tax is a percentage of the net and does not have a low-end threshold minimum and does not have a high-end threshold, it would not make a difference.

    Ted A. Zuend (Deputy Fiscal Analyst):

    It could make a difference on a year-to-year basis, but not in the long-term. For example, if there were ten different banks, some could have loses and others profits. There could be losses carried forward. It is to simplify the reporting and make it as clean as possible from year to year. The intent is to consolidate it at the federal level. Collectively, they would have income and be subject to tax.

    Mrs. Erdoes:

    The taxes on live entertainment are addressed in sections 25 through 58. The rate of 10 percent of the admission charge remained the same for live entertainment where the capacity is less than 7,500 seats. It now includes amounts paid for food, refreshments and merchandise. Nongaming establishments having a capacity of 300 or less seats would not have to pay the tax. There are two dimensions. In a venue with seating capacity over 7,500, the rate is a straight 5 percent on the admission charge only. In a venue with a seating capacity of less than 7,500 but more than a seating capacity of 300, the tax would be 10 percent on the admission charge, food, refreshments and merchandise.

    Senator Neal:

    In section 36 the language, “If such a permit does not designate the maximum occupancy of the facility, the actual seating capacity of the facility in which the live entertainment is provided,” says to me, if a fire marshal did not issue a permit, then the seating capacity becomes whatever seats are available. They could move up into the other category, which could be exempted. Is my understanding correct?


    Mrs. Erdoes:

    Yes. This is the fail-safe. Most facilities will have a maximum occupancy set by the fire marshal. We were thinking about an outdoor event, and they would have a special use permit in case there would be no maximum occupancy stated. Your theory could be possible, but if more than 7,500 seats were put up to get the lower tax rate, then their risk would be greater.

    Senator Care:

    All my questions concern section 36. If the venue has an excess of 7,500 seats the tax is 5 percent not 10 percent, but no tax is paid on the food, refreshments and merchandise purchased?

    Mrs. Erdoes:

    Yes.

    Senator Care:

    Are the nonprofit organizations the same as would be exempted from the payroll tax?

    Mrs. Erdoes:

    Yes. Throughout the bill it would be all the 501(c)s not 501(c)(3)s.

    Senator Care:

    How would that apply to food and drink at a boxing match?

    Mr. Zuend:

    Boxing is not subject to being taxed under the boxing statute. They have a different tax system which is based on broadcasting rights and the gate.

    Senator Care:

    In Nevada, how many venues would qualify under the exemptions for facilities with a maximum seating capacity of 300 seats, 51 slot machines, less than six games or any combination within those respective limits if the facility has a maximum seating capacity that is less than 300?

    Mr. Zuend:

    In the case of gaming, it would be a huge number. Since the tax would not only apply to admissions but also to food and beverage, it would apply to every place that had a small group playing in the back room. Most bars have slots. Reds 395 in Carson City has slots and a piano bar. Without this exemption, technically, they would be subject to the tax.

    Senator Care:

    In Nevada, how many venues have between 6,000 and 7,500 seats? I am specifically thinking about the occasion where additional bleachers are used to meet the 7,500-seat threshold.

    Mrs. Erdoes:

    I do not know. One of the reasons for the maximum occupancy requirement was to help with the addition or subtraction of seats. The maximum occupancy is a load-factor based on the size and does not change. If there were no fire authority’s set capacity rate for that building and it is under a special use permit or by how many seats there are, that would become an issue.

    Senator Washington:

    Would the term “natural person” used in sections 30 and 34 be someone that contracts to do a major event but does not reside in this State?

    Mrs. Erdoes:

    The facility would be responsible for the fee. This provision pertains to the determination of business that has the facility. It depends on how they are organized. If they were organized as a single person putting on the event, they would not be considered a business, but if they have declared themselves a business for federal income tax purposes, then they would be deemed a business for this purpose.


    Senator Raggio:

    The next tax for discussion would be the business franchise fee effective October 1, 2003.

    Mrs. Erdoes:

    The first collection would be in January, 2004. There is a new chart in section 58.44. One change is the $0 to $500,000 category of annual total revenue of a business entity. The franchise fee per quarter would be $0 and the cap on the top end of the chart was removed. Also, there is an additional $3,500 assessed for each $10 million in total revenue that a business entity earns over and above $20 million which continues in perpetuity.

    Senator Raggio:

    Section 58.44 indicates this would be a quarterly franchise fee on each business entity based on the total revenue. Would that be the gross receipts of the entity?

    Mrs. Erdoes:

    Yes.

    Senator Raggio:

    Any entity with less than $500,000 would be exempt, does that apply to the full amount of gross receipts with no cap?

    Mrs. Erdoes:

    Yes.

    Senator O'Connell:

    Do we have any information from the Department of Taxation on their ability to implement this provision?

    Charles Chinnock (Executive Director, Department of Taxation):

    The franchise tax was set to be effective October 1, 2003, which would be difficult for the Department to implement. We have a concern about the October date. On past bills, our testimony has been that a January 1, 2004, effective date would be preferable to make certain the Department could implement the tax through technology and passing appropriate regulations. The other concern would be there are several other taxes implemented around the January 1, 2004, time frame.

    Senator Raggio:

    Do you have a specific cost for the implementation of the business franchise tax? How many full-time-equivalents would be required?

    Mr. Chinnock:

    I will get the information for you.

    Senator Tiffany:

    If a company is incorporated in Wyoming but they do business in Nevada, would they be subject to the gross receipts tax?

    Mrs. Erdoes:

    Yes. Their tax liability would be apportioned on the revenue that would be determined by the Department of Taxation, under an apportionment formula, to be Nevada income.

    Senator Tiffany:

    If they incorporated in Wyoming and all their business is here, the answer would be no matter where they are incorporated the tax would be on the business in Nevada, am I correct?

    Mrs. Erdoes:

    Yes.

    Senator Townsend:

    In section 58.28, “total revenue” means gross revenue minus the language: “If a business entity pays a tax on premiums pursuant to title 57 of NRS, the gross revenue of the business entity derived from direct premiums written.” However, in NRS 680B.036, it is a general tax on premiums that gives a credit for policies of industrial insurance. It addresses specifically each insurer providing industrial insurance in this State is entitled to a credit against the premium tax for its policies of industrial insurance. How would this conflict be resolved?

    Mrs. Erdoes:

    If a tax were paid on premiums, the gross revenue that would be determined to be involved in those direct premiums would be the amount you would get the credit for and would not be a deduction under this statute.

    Senator Townsend:

    My next question relates to the language, “Any operating revenue of a public utility for the provision of electric, gas, water or sewer service which is operated or regulated by a government entity.” When this language was processed, our discussions concerned any regulated entity being able to go directly to their regulator for purposes of getting the tax reimbursed to them. Now, the language states, “operated by” which would be different than “regulated by” which includes all gas, water and sewer. Were there any discussions concerning the monopolies of telecommunications, which in essence would be a utility but is not defined in this bill. We put the regulated portion of telecommunications in our original definition.

    Mrs. Erdoes:

    No one talked to me about adding telecommunications to the language.

    Senator Townsend:

    I wanted to be certain I read the language correctly. Even though the telecommunications industry is going competitive, quickly, there are still portions that are regulated as are electric, gas and sewer.

    Mrs. Erdoes:

    A utility-type entity has a franchise with a local government, and their rates are set under that franchise. There is language in this bill that would allow a pass-through of that increase in any of these taxes, so the increase could be passed on to their customers. I believe it would affect cable not telecommunications.

    Senator Townsend:

    It is an issue for the utilities identified in the bill and telecommunications. We dealt with the issue in a manner that allowed them to pass the increase through and get it reclaimed quickly. Based on this language, it is using it against the gross.

    Mrs. Erdoes:

    There are two separate issues. One, for utilities as a deduction against the gross and two, for a public utility or franchisee of a local government where the rates are set at a certain amount. The rates can be increased effectively to make up for the overall effect of this bill in any taxes they would pay.

    Senator Townsend:

    Would the payroll portion be included?

    Mrs. Erdoes:

    Yes, it includes the entire bill.

    Senator Nolan:

    Mr. Chinnock, what would be the responsibilities of the new employees that are needed to administer the taxes?

    Mr. Chinnock:

    The new employees would be tax examiners providing the information and creating the forms, processors for billing and collections, information technology personnel, revenue officers to oversee the long-term collections and auditors.

    Senator Nolan:

    How would you envision the interaction and compliance of those affected by this tax and your Department? Would they be audited on a regular basis?

    Mr. Chinnock:

    They would be audited in line with the existing taxes. We would have a system of selection, education and information made available to the companies, and then they would be included within the rest of the taxes that would be audited.

    Senator Nolan:

    When you are doing your calculations, could you address the time lines it would take the Department, under the revenues projected, to pay for the cost of imposing the tax?

    Senator Washington:

    Under section 58.16 which deals with direct sellers, in the bill we passed, direct sellers were included in the collection process which is assessed on 67 percent of the average annual wage, would the Department or the individual calculate that amount?

    Mr. Chinnock:

    I believe that is something that comes from the Employment Security Department.

    Mrs. Erdoes:

    The person would know the amount based on their calculations for unemployment compensation. The numbers are determined and announced by the Employment Security Department.

    Senator Washington:

    Would they need to participate in the unemployment compensation program?

    Mrs. Erdoes:

    No. They could be an independent contractor and not be a member of the program, but get the numbers from the Employment Security Department. It is recalculated and made public each year.

    Senator Washington:

    There are financial institutions, that in addition to banking, sell insurance. Would both entities be charged the 4 percent?

    Mrs. Erdoes:

    It would depend on how the institution is organized and chartered. If it would be organized and chartered as a bank and they are selling insurance as a part of the banking, for instance, deposit insurance, it would be considered banking income. If it were a separately licensed insurance company, then the insurance income would be taxed under the franchise tax.

    Senator Washington:

    Both entities would pay 4 percent on their income?

    Mrs. Erdoes:

    The franchise tax is a rate on the gross, which would be lower. This would only occur if there were two different licensed entities.

    Senator Raggio:

    I am having difficulty reading through the various definitions in section 58. What is contemplated as exemptions or deductions from gross revenues under this bill as amended?

    Mrs. Erdoes:

    The deductions are delineated in section 58.48 and three were added. Number 11 is for contractors and subcontractors in what is referred to as “cascading.” It is set up in the event a contractor received gross receipts of $800,000 for the sale of improved property. Then the contractor paid $500,000 to subcontractors. The contractor would be able to subtract that amount and count $300,000 toward their gross receipts.

    Number 14 is for the real property transfer tax referring to section 95 that is the State portion of the $1.30 per $500 of value. If a person is in the business of developing, building and selling improved property and the gross receipts were $200,000 and if you were the party to the sale that paid the real property transfer tax, you would subtract from the gross receipts the amount of that sale for property on which the real property transfer tax was paid. Many times, parties in a transaction will split the real property transfer tax.

    Number 15 was suggested because the Constitution requires all excise tax revenue on motor vehicle fuel goes to the highway fund.

    Senator Raggio:

    In section 58.44, there are various tiers of the franchise fee per calendar quarter based on the level of gross revenue. The analysis by the Fiscal Analysis Division indicates an anticipated collection under the Nevada franchise tax of a total of $115 million and $153 million depending on the scenario. Could you explain the list of deductions concerning the franchise tax?

    Mr. Zuend:

    The first would be the deduction for the real property transfer tax.

    Senator Raggio:

    Are developers, people that develop and sell property and subdivisions, affected by this tax?

    Mrs. Erdoes:

    It would also apply to undeveloped real property. For example, if you had a large piece of undeveloped property that you sold, that is why it applies to developers. The contractor provision only applies to improved real property; whereas, the real property transfer tax deduction applies to whether it is developed or undeveloped property.

    Senator Raggio:

    Is there a specific exemption that this covers?

    Mrs. Erdoes:

    Yes, any revenue where you pay real property transfer tax would be deducted. If you had a large parcel of undeveloped property, sold it and paid the real property transfer tax on the total amount of the sale, then the total amount you received from the sale would not be included in your annual total revenue.

    Senator Raggio:

    Explain the basis for the gaming exemption.

    Mr. Zuend:

    Gaming pays separate taxes on its gaming revenue; therefore, those revenues attributable to actual gaming activity are exempt from the calculation of the gaming franchise fee but not the revenues received from hotels, restaurants, gift shops and such.

    Senator Raggio:

    Where is that covered in the bill?

    Mrs. Erdoes:

    It is covered in section 58.28. If a business entity pays a license fee pursuant to NRS 463.370, which is the tiered gross revenue tax, the total sum of the entire amount that you excluded and included in determining the amount of the total revenue is the definition of total revenue.

    Senator Raggio:

    Does it include revenue from rentals if a person does not have more than four units, agriculture product sales and net proceeds of mining?

    Mrs. Erdoes:

    Yes.

    Senator Raggio:

    We have talked about public utilities. Would it include operation of a vending stand?

    Mrs. Erdoes:

    It only includes the blind vendors.

    Senator Raggio:

    The next item is construction. There is an indication there would be a deduction for contractors and subcontractors. What does that cover?

    Mr. Zuend:

    Those are the payments made by contractors to a subcontractor, the cascading of payments, to avoid being taxed multiple times. A contractor who earns $1 million but has paid $750,000 to subcontractors would be subject to a tax on the difference, $250,000. It is described in section 58.48 of the bill.

    Senator Raggio:

    That is “the cost of all payments made to contractors and subcontractors for the portion of any materials or service provided in the development of improved real property made by a business entity who is a contractor or subcontractor or in the business of developing improved real property.” Is that what you were referring to?

    Mr. Zuend:

    Yes.

    Senator Raggio:

    The next item is insurance.

    Mr. Zuend:

    Under the definition of total revenue, the language, “if a business entity pays a tax on premiums, the gross revenue of the business entity derived from direct premiums written would not be subject to the franchise tax.” For example, the American Automobile Association sells insurance and provides other services, they would deduct the income on which they paid the insurance premium tax.

    Senator Raggio:

    The next item is mining.

    Mr. Zuend:

    The gross yield would not be subject to the tax, but if there were any other operations from which they earned income, they would be subject to the franchise tax.

    Senator Raggio:

    Public utilities and financial institutions have been covered.

    Mr. Zuend:

    In the third reprint of Senate Bill No. 6, financial institutions are paying a different tax.

    Senator McGinness:

    Could manufacturers make the same case as contractors saying their materials are a major part of their business and, therefore, deductible?

    Mr. Zuend:

    Yes. Any business with a high cost of goods sold could make the argument they have some cascading, but this was not included in the Assembly version of the bill.

    Senator Neal:

    Does the gross revenue have any relationship to gross revenue found in section 58.22?


    Mrs. Erdoes:

    The definition found in section 58.22 would apply to the gross revenue referred to in section 58.28.

    Senator Neal:

    Is a business entity defined in the law?

    Mrs. Erdoes:

    The definition can be found in section 58.16.

    Senator Neal:

    Is the business entity, referring to a corporation, partnership, proprietorship and the others listed? Would a business entity, having gaming, shops and other things be exempt under section 58.28?

    Mrs. Erdoes:

    It would only apply to the gaming revenue. The language refers only to the revenue that is used in the computation that is in NRS 463.370.

    Senator Neal:

    It states a business entity. As I understand it, the language means a corporation.

    Mrs. Erdoes:

    It does include the whole corporation. They would take the income of the corporation and deduct, according to section 58.28, the gaming revenue which leaves the remaining income of that corporation, which includes the hotel and other parts.

    Senator Neal:

    The language says, “ If a business entity pays a license fee pursuant to NRS 463.370.”

    Mrs. Erdoes:

    The language continues to explain if that tax is paid, then the total sum is subtracted by the amounts specifically included by and all amounts specifically excluded by statute from the calculation of that fee for the business entity.

    Senator Neal:

    Would you explain what that means?

    Mrs. Erdoes:

    It is the total revenue considered in determining the gross revenue from gaming that the gaming tax is paid with regards to NRS 463.370.

    Senator Neal:

    The gaming revenue is exempted, but all the other revenue is not exempted?

    Mrs. Erdoes:

    Yes. This is the reason for the language, "including and excluding," they do not pay on the total amount. There are some deductions from gross revenue.

    Senator Neal:

    Do they have any other offsets in this bill? Other revenues?

    Mrs. Erdoes:

    In section 58.28, there are other revenues listed. An insurance company would take off the insurance premium tax.

    Senator Neal:

    The gaming industry could deduct the items listed in section 58.48?


    Mrs. Erdoes:

    Most of these were set up so only one or two would apply to an entity and most are mutually exclusive.

    Senator Neal:

    If they had any payments or expenses between their parent company outside of the State, could they exempt those expenses?

    Mrs. Erdoes:

    If the expenses were part of the gaming revenue, but unless the expenses fell under another item, they would not be able to take them as deductions.

    Senator Neal:

    Legislation has been passed to allow gaming entities to deduct a certain amount of their corporate expenses they might have for development of gaming in other states.

    Mrs. Erdoes:

    It might happen if the gaming corporation is multistate. They would not be paying the gaming gross revenue tax on their out-of-state gaming revenue. When they apportion their total income, they would not be able to deduct expenses related to gaming in another state.

    Senator Neal:

    I am referring to the exemption in relationship to the gross receipts.

    Mrs. Erdoes:

    They could only subtract their Nevada expenses.

    Senator Neal:

    They could only deduct the portion that deals with Nevada?

    Mrs. Erdoes:

    Yes.

    Senator Townsend:

    The numbers staff provided us for the franchise fee for fiscal year 2004 in the third reprint of Senate Bill No. 6 was $82.4 million. Mr. Chinnock, you testified the Department of Taxation would have difficulty in implementation because of multiple taxation issues. How much would the State collect in 2004 that could be depended on to fund this budget?

    Mr. Chinnock:

    October 1, 2003, was the implementation date presented in the bill, which would provide three-quarters of a year of collections. We have testified, we could implement taxes for January 1, 2004, with first collections to begin on April 1, 2004, which would provide two‑quarters of a year of collections. I expressed concern because there were multiple taxes effective in the same time period.

    Senator Townsend:

    Based on the bill, what level of revenue can we expect that would generate $82.4 million for the franchise tax? What number can staff rely on for the purpose of building this bill?

    Mr. Chinnock:

    I would be less comfortable with three-quarters of collections and more comfortable with two-quarters’ collections.

    Senator Townsend:

    The $82.4 million figure would be for three-quarters?

    Mr. Zuend:

    Yes. It is a projection based on the October 1 effective date for the liability of the tax.


    Senator O'Connell:

    Does section 58.30 prohibit a business from identifying this tax on a bill to the customer?

    Mrs. Erdoes:

    It is not specifically stated as a prohibition. Section 58.30 is added for the purposes of allowing the business to deduct it from their federal income tax. The language says it is imposed on the business itself not the person.

    Senator O'Connell:

    What is its purpose?

    Mrs. Erdoes:

    It is for the purpose of allowing the business to deduct what they pay under this tax from their federal income tax. There must be a statement that it is on the customer or on the business.

    Senator O'Connell:

    Is it your testimony that this tax could be declared to a customer on their bill?

    Mrs. Erdoes:

    There is no prohibition that a business cannot do it, but there is no provision to require it be done. If a business wanted to say their prices increased because of this tax, they could do it.

    Senator Cegavske:

    It was indicated during the regular session that a gross receipts tax would take the Department of Taxation into October, 2005, because of the implementation. What has changed to allow the Department to implement this October, 2003?

    Mr. Chinnock:

    Early in the session, the effective date was July 1, 2005. Later, the date was January 1, 2005, as far as implementing a gross receipts tax. We were looking at new technology to accomplish these various taxes, but due to the interest in getting new taxes and revenues onboard, we decided if there was a need, we could do some quick programming and do billing and collections. The various adjustment processes could be saved for the new technology.

    Senator Cegavske:

    We would be implementing something at half rate or substandard just to get going?

    Mr. Chinnock:

    This would be true for many of the taxes because of the existing technology.

    Senator Raggio:

    There has been discussion in the public concerning any form of a gross receipts tax, or a franchise tax on business based on gross receipts. There has been an indication that this would require the State to establish a mini-Internal Revenue Service. Would this be required?

    Mr. Chinnock:

    We are account driven, which drives our workload. Whatever the type of tax, if there were more accounts involved, then more manpower would be required.

    Senator Raggio:

    At some point, would you be able to tell us the number of full-time-equivalents needed? There would be a large number of business accounts. Do you have an estimate of how many would fit under the various tiers?

    Mr. Chinnock:

    Yes.

    Senator Amodei:

    Is my understanding that there is a federal application to section 58.30?


    Mrs. Erdoes:

    Yes. One of the considerations that the Internal Revenue Service (IRS) uses in determining what state taxes can be deducted from income for federal purposes is whether it is tax on the business itself rather than on the customer.

    Senator Amodei:

    Does the federal government defer to the states to legislate in that area?

    Mrs. Erdoes:

    It is just a factor they consider in determining whether that tax would be deductible, and one we added in the event it is helpful.

    Senator Care:

    Does a for-profit business, that has no obligation in its opinion under this tax, have to file or make its records available?

    Mrs. Erdoes:

    Under this tax, they would not need to file, but they would need to make their records available.

    Senator Care:

    In section 58.28, what is considered a disadvantaged business enterprise?

    Mrs. Erdoes:

    There is a program through the counties that certify businesses as disadvantage business enterprises for the purposes of competitive bidding on contracts. If they are certified, then they could subtract the revenue from the business and not be subject to the tax.

    Senator Care:

    What would be the percentage of ownership entitlement?

    Mrs. Erdoes:

    I could obtain the figures for you.

    Senator Care:

    What does the language, “Any promotional allowances by the business entity,” mean?

    Senator Raggio:

    Are you referring to deductions?

    Senator Care:

    Yes.

    Mrs. Erdoes:

    It would be left up to the regulation of the Department of Taxation to clarify. My interpretation would be, if an item was sold normally for $5.00 and on a promotion it was sold for $2.50, then it would not be part of the gross receipts.

    Senator Care:

    I was thinking about a promotion such as, “Win this car.” I see a similarity between promotions and advertising. Advertising would not be deductible.

    Senator Titus:

    How would “comps” fit into the promotional scenario?

    Mrs. Erdoes:

    This language came from the Governor’s original Task Force proposal. There might be something in there that would clarify the meaning. I will look into it.


    Senator Nolan:

    Based on other states that have gross receipts, what would be most problematic about instituting that type of tax?

    Mr. Chinnock:

    The regulations that define apportionment and the allocation of receipts for the State of Nevada would be the most problematic.

    Senator Nolan:

    Would this be an elusive tax? Could a business manipulate this easily?

    Mr. Chinnock:

    I do not know how to answer the question.

    Senator Rhoads:

    Would the language in section 58.34 apply to a business that does not qualify for the $500,000 level?

    Mrs. Erdoes:

    Yes. The business does not need to turn the records in, but they should keep them in the event there is any question as to their income level.

    Senator Carlton:

    With the $500,000 exemption and the discussion of the disadvantage business entities, what percentage of businesses in this State will not be paying taxes under this provision?

    Mr. Zuend:

    Based on the $450,000 exemption under the original gross receipts tax, the numbers of exempted businesses were approaching 60 percent of the total. The figure would be higher with the exemption of $500,000 and the other exemptions.

    Senator Carlton:

    Do you know how many businesses would fall under the disadvantaged business entities? I do not believe they were included with the original calculations on the bottom threshold.

    Mr. Zuend:

    No, we do not have a number. It would depend if the disadvantaged entities were above the threshold, they could not be counted twice.

    Senator Carlton:

    There is a possibility that 65 percent of the businesses in this State will not be paying this tax.

    Mr. Zuend:

    Based on earlier information on the gross receipts tax of $450,000 with the inclusion of other exemptions, the figure would be more.

    Senator Amodei:

    Of the 40 percent of businesses that would pay this tax, how much would that generate in gross receipts?

    Mr. Zuend:

    The exempt entities would be less than 20 percent. The other exemptions would reduce the yield on the tax which would be proportional to the gross receipts by another 30 percent in addition to the amounts that are never included. In total, we are exempting less than 50 percent of the gross receipts in the State.

    Senator Amodei:         

    Could we conclude that it is the top-earning businesses? Would 50 percent of the businesses in the State be paying this tax?


    Mr. Zuend:

    The figure would be closer to the top 30 to 35 percent.

    Senator Amodei:

    Have you done any calculations to cross reference the businesses that generate receipts in this State verses those that have employees and what were their average wages? Some of the lower base-wage averages are retail sales at $25,000 a year and gaming at $27,000 a year. When we identify them under this different mechanism as paying potentially the vast majority of this tax, do we have something that relates those earnings to employees and wages they are paid?

    Mr. Zuend:

    One of the problems is getting the detailed data on an individual firm basis. Except for the things we now tax and are exempting, it is somewhat difficult. There has been some research into big banks, retailers and manufacturers to compare it on that basis. The research was done based on applying this tax scenario to their total receipts on a national level. Different taxes affect businesses differently. In many cases, they are not all that dissimilar. I do have information on that data which I can provide to the Committee.

    Senator Mathews:

    Are the disadvantaged business enterprises’ guidelines those of the federal government?

    Mrs. Erdoes:

    I believe you are correct, but I will report back to you.

    Senator Mathews:

    If it is the federal guidelines, then 51 percent must be owned and controlled by one or more socially and economically disadvantaged individuals. There is a ceiling, and after the ceiling, you pay what everyone else pays. I am concerned when any one group is exempt from a tax. If there is going to be a tax, then everyone needs to be taxed equally. I am a business owner and do not want people to say I voted for this tax bill because my business would be exempt from this tax. I did not advocate for this exemption.

    Senator Cegavske:

    Overall, are there any industries or businesses that every tax affects? When I look at the list of taxes, convenience stores come to mind as being affected by every one of the proposed taxes except for the room tax and entertainment tax.

    Mr. Zuend:

    Some retailers would be affected. Businesses with gaming devices, selling cigarettes and alcohol would have multiple taxes. The retail sector having these activities would have to charge higher prices. The one advantage for convenience stores in selling high volumes of gasoline is they could deduct from their total revenue any revenue from their sales of gasoline under the provisions in the third reprint of Senate Bill No. 6.

    Senator Cegavske:

    Could contractors deduct rental equipment?

    Mr. Zuend:

    The deduction would be payments from a contractor to a subcontractor. If there would be rental equipment at the subcontractor level that has been billed, the contractor would not be subject to the tax because that would have been part of the cost.

    Senator Cegavske:

    Have you been asked how different businesses would be impacted by these taxes?

    Mr. Zuend:

    Only to the extent that research was done and data compiled. Exemptions change the dynamics. Some businesses are going to be mostly congregated in the under $500,000 annual revenue category.

    Senator Neal:

    The states of Washington and New Mexico have this tax. The tax is paid at the end of the commerce stream. For example, if I contracted with a contractor to build a house, he would get all the materials but does not pay the tax on the materials when purchased. He pays for the tax after he builds the house. Could those companies that are multistate, such as banks or casinos, direct that commerce stream outside of the State to another jurisdiction where they would not pay this tax?

    Mrs. Erdoes:

    I believe they could pay the tax of another state and not pay the tax here. There is a provision which requires the Department of Taxation to determine how the gross receipts will be apportioned or assessed state-to-state. The answer to your question would depend on the Department of Taxation regulations for those situations. The State of Washington has a different scenario because of the amount of production business Boeing generates but does not sell much in the state verses manufacturing which is sold within the state. Their apportionment formula is based on those facts.

    Mr. Chinnock:

    You asked me about manpower and costs of implementing the tax. It would take 70 positions at a cost of $2.6 million per year to implement the tax.

    Senator Raggio:

    Would this be for the business franchise tax?

    Mr. Chinnock:

    Yes.

    Senator Raggio:

    Would they be new positions? Would the $2.6 million be the cost for these positions?

    Mr. Chinnock:

    Yes, per year.

    Senator Raggio:

    The next area of discussion would be the administrative provisions.

    Mrs. Erdoes:

    There is a change to the business license fee. The rate stayed the same, but language was eliminated because some businesses felt they would be subject to the fee, and it was an unintended consequence. The definition of nonprofit is minus the provision concerning any taxable revenue they might incur. We revised the definition of employee to expand the definition of the exclusion there, from a newspaper carrier or the immediate supervisor of a newspaper carrier who is an independent contractor of the newspaper. In section 63, we removed language that was obsolete. The language removed was, “Who was paid directly by the person who purchased the newspaper.”  Now, newspapers pay everyone.

    In section 64.5 a provision was added to require the deposit of the proceeds in the State General Fund. The effective date of the business license fee was changed from July 1, 2003, to passage and approval of the third reprint of Senate Bill No. 6 and should not be retroactive.

    Senator Raggio:

    Would the existing business activity tax be repealed effective January 1, 2004? Under this bill, would the business license fee become effective upon passage and approval and increase the fee to $75?

    Mrs. Erdoes:

    Yes. The fee would increase from $25 to $75.

    Senator Raggio:

    Sections 77 through 79 cover the liquor tax.

    Mrs. Erdoes:

    The amount of increase in the tax was decreased to 50 percent.

    Senator Raggio:

    Is the tax on liquor being increased by 50 percent?

    Mrs. Erdoes:

    Yes. In an earlier version of the bill, liquor would have been increased by 89 percent. Almost all the effective dates have been modified in the bill. In this case, the effective date would be August 1, 2003.

    Starting with section 80, the cigarette tax is described. The effective date has been changed to the passage and approval of this bill. The sole increase was 45 cents per pack of cigarettes upon passage and approval of the bill with no further increases during the biennium.

    Senator Raggio:

    Does the description of the real property transfer tax begin with section 95 with an effective date of January 1, 2004?

    Mrs. Erdoes:

    Yes, it was effective July 1, 2004, and has been moved forward. The next item would be the nonrestrictive gaming license fee.

    Senator Nolan:

    During our discussions of the real property transfer tax, we were provided a copy of the federal exemptions which apply to the resale of real property. A time frame was imposed whereby the tax cannot be imposed more than once on the same property. Could you comment on that provision?

    Mrs. Erdoes:

    I am not aware of the provision.

    Senator Nolan:

    There is a federal exemption if the seller of a property were to buy, develop and resell the property within a period of time, they would be exempt from paying this tax twice. Would you look into the federal provision?

    Mrs. Erdoes:

    Yes.

    Mr. Zuend:

    I recall, there had been testimony concerning a federal estate-tax provision on transfers that occurred. If a party paid 100 percent today and resold the property within 6 months, a portion of the estate tax would be paid. It was suggested this concept be applied to the real property transfer tax, but I do not believe it was adopted.

    Mrs. Erdoes:

    In section 102, the transfer of real property to an educational and a university foundation have been reentered into the bill and are now exempt.

    Senator Care:

    There had been discussions concerning stock transfer. All that changes is the ownership of the stock, but the corporation continues to own the real property. In section 102, the language concerning this issue seems even more difficult.

    Mrs. Erdoes:

    Are you referring to a stock transfer and whether it affects the ownership interest of real property?


    Senator Care:

    The question arose in this context: what happens if a corporation owns a building or series of buildings and there is a change in ownership of the shares in the corporation? The way I interpret section 102 is, it closes the possibility of a real property transfer tax. Am I correct? What does the language mean, now, after the deletion?

    Mrs. Erdoes:

    The language narrows that exemption and is more restrictive. If there were a difference in the stock so the ownership interest could be discernibly different, then this exemption would not apply. The language has narrowed the intent. If the name of the corporation is changed, but none of the ownership in the corporation has changed, it allows the name to be changed without the requirement of paying the real property transfer tax.

    Senator O'Connell:

    Could you explain the reasoning behind charging a different collection fee for the smaller counties than the larger counties as described in section 95?

    Mrs. Erdoes:

    It is because of volume. In the larger counties, there are more transactions to pay for and report.

    Senator Amodei:

    Has the Secretary of State’s fees been omitted in Senate Bill No. 6?

    Mrs. Erdoes:

    They were in Senate Bill No. 2. It was the old A.B. No. 536 of the 72nd Legislative Session with several other fee bills and was incorporated into Senate Bill No. 2. It was sent to the Assembly and has not been returned to the Senate.

    Senator Raggio:

    Sections 126 through 131 creates the Legislative Committee on Taxation, Public Revenue and Tax Policy. Other sections have been changed from the bill we sent to the Assembly and will need to be explained. This bill now includes the Senate bills that we sent to the Assembly involving the distributive school account and the bill for class-size reduction. Am I correct?

    Mrs. Erdoes:

    Yes. There was a change to the amounts based on the collection allowances being reduced.

    Senator Raggio:

    In section 188.7, the Assembly has removed $30 million from the appropriation in the rainy‑day fund. Section 191.3 includes the requirement that the Legislative Auditor conduct performance audits of certain school districts. Section 191.5 provides for the formation of business advisory councils.

    Before there are other questions, I would like the Fiscal Division to cite the differences in the components of the tax plan and the revenues from those components between the Assembly and Senate versions of the bill.

    Gary L. Ghiggeri (Senate Fiscal Analyst):

    The Senate version was passed with the assumption that a number of the tax increases would be effective July 1, 2003. Due to timing, any legislation that is approved would need to be upon passage and approval, either August 1, 2003, or October 1, 2003. The Senate’s bill had a 55-cent cigarette tax; the Assembly version has a 45-cent increase, the revenue differences are inflated because of the July 1, 2003, effective date. The Senate version on the liquor tax was an 89‑percent increase. The Assembly version is a 50-percent increase with an August 1, 2003, effective date. The Senate version of the bill included a 1-percent increase in the room tax, effective August 1, that was projected to generate $24.8 million in fiscal year 2004 and $34.4 million in fiscal year 2005. The Assembly version does not have a room tax increase. The Senate’s real estate transfer tax would be at the same rate as the Assembly’s version except the implementation date would be July, 2004, with revenue generated in the amount of $67.2 million. The Senate version included a 3-percent bank franchise fee instead of the current 4 percent included in the Assembly version. The Senate version included a 1-percent employer tax on capped wages effective January 1, 2004, which would generate $128 million in fiscal year 2004 and $199.6 million in 2005. Excluded from the Senate’s version was the 501(c)(3)s and all 501(c)s, would be exempt in the Assembly’s version. Concurring with the Assembly on that item would reduce the revenue by approximately $3 million.

    Senator Townsend:

    Based on the Department of Taxation's projections of the loss of one-quarter’s revenue on the franchise fee which is projected at $82 million for three-quarters’ collections, how could that be reconciled?

    Mr. Zuend:

    There would be a loss of $27 million dollars if the effective date were moved to January 1, 2004, which would need to be supplemented by additional revenues. Moving the effective date of the real estate transfer tax forward three months could rectify the deficit. This might cause additional problems for the Department of Taxation concerning regulations. I have discussed keeping the effective date October 1, 2003, and not requiring the payment until April, 2004, but Mr. Chinnock does not favor this method.

    Senator Townsend:

    There would be an issue of cash flow. If there is a projection of $82 million and you would be more comfortable doing two-quarters, then it would be necessary to plug it into the first year; otherwise, there would be a serious cash flow problem. Where are we in terms of time frame and the ability to generate the revenue expected?

    Mr. Chinnock:

    I concur with your statement. I am concerned about the start of a franchise tax on October 1, 2003, and trying to collect two-quarters at a later date puts a burden on the business itself.

    Senator Raggio:

    There has been an unofficial news item announced. According to a news flash, U.S. District Judge Phillip Pro has issued a temporary restraining order regarding the Assembly’s passage of Senate Bill No. 6 with less than a two-thirds vote. He has ordered a hearing with all district judges for 9 a.m., Wednesday, July 16, 2003, in Reno and Las Vegas. I assume we have not received such an order. The action would prevent any action with less than a two-thirds vote. Pending any official information, we will proceed. We will continue our discussions. Mrs. Erdoes do you have anything further on this matter?

    Mrs. Erdoes:

    No.

    Senator Raggio:

    Does the Senate, sitting, as the Committee of the Whole want to recommend concurrence or nonconcurrence with the Assembly’s action?

    Senator Coffin moved to not concur with the action of the Assembly and amendments 3, 4, and 7 of Senate Bill No. 6.

    Senator Amodei seconded the motion.

    Senator Tiffany:

    I am wondering whether we can vote on an illegal bill?

    Mrs. Erdoes:

    Until we are served with an actual order, I do not believe there would be a problem with voting. This action will serve to move the process along one more step. The Committee would be constrained from moving past the step of conference to a further step until this is resolved.

    Senator Tiffany:

    I feel uncomfortable about taking any action.

    Senator Raggio:

    The motion before us is to not concur in the action of the Assembly.

    Senator Tiffany:

    The action would be on a bill that is illegal.

    Senator O'Connell:

    My husband is president of a bank, and we are the major stockholders. Therefore, I will abstain from the vote on this issue.

    The motion carried.

    Senator Carlton voted no.

    Senator O'Connell abstained.

    Mrs. Erdoes:

    I will read the restraining order. “This action having been referred by the Honorable Howard D. McKibben, U.S. District Judge, to the undersigned Chief Judge for the consideration of the assignment to the active U.S. District Judges of this Court sitting en banc, and the undersigned having conferred with each of the active judges of the court having determined that the issues raised in Plaintiffs’ Emergency Application for Temporary Restraining Order and Order to Show Cause Re: Preliminary Injunction should be considered in a comprehensive manner by the active District Judges of this Court sitting en banc, and preserve the status quo such pending en banc consideration, and good cause appearing.

    It is ordered that the Defendants are hereby temporarily restrained from giving effect to the action on July 13, 2003, by the Nevada Assembly deeming Senate Bill No. 6 as “passed,” without the two-thirds vote required by Article 4, section 18 (2) of the Nevada Constitution, pending hearing on and further Order of the Court regarding Plaintiffs’ Application for Temporary Restraining Order and Order to Show Cause Re: Preliminary Injunction.

    It is further ordered that Plaintiffs’ Emergency Application …”

    Basically, it states the hearing is at 9 a.m. on July 16, 2003. No bond shall be required unless ordered by the Court; no bond shall be required of the plaintiffs, and they must immediately give notice.”

    Senator Raggio:

    Does the order temporarily restrain us from acting without a two-thirds vote?

    Mrs. Erdoes:

    It temporarily restrains the Legislature from taking action that deems Senate Bill No. 6 as passed without the two-thirds required. The Senate would not be able to further act on Senate Bill No. 6 because it was not deemed passed by the Assembly. Therefore, it would not be in the Senate.

    Senator Raggio:

    In view of the action taken be the Committee of the Whole on Senate Bill No. 6, what is your advice?

    Mrs. Erdoes:

    The Committee cannot go further. The action was taken prior to the Senate being served with the temporary injunction. The Committee of the Whole has recommended to not concur, but I would recommend the Committee take no further action.

    Senator Raggio:

    Is there any reason the Senate cannot meet and not concur with the action?


    Mrs. Erdoes:

    Because of the wording of the restraining order, “Defendants included in both the Senate and the Assembly, are hereby temporarily restrained from giving effect to the action on July 13, 2003, of the Nevada Assembly deeming Senate Bill No. 6 as passed,” having the Senate meet after receiving this order would not be advisable.

    Senator Raggio:

    We should not take any further action in the Senate, as a whole, on this issue, is that correct?

    Mrs. Erdoes:

    Yes.

    Senator Raggio:

    We will return to the Senate and have the order read.

    On the motion of Senator Neal, the committee did rise and return to the Senate Chamber.

SENATE IN SESSION

    At 4:25 p.m.

    President Hunt presiding.

    Quorum present.

COMMUNICATIONS

United States District Court

District of Nevada

Hon. Sharron E. Angle, et al.,

                                Plaintiffs,                 CV-N-03-0371-HDM (VPC)

v.

The Legislature of the State                   ORDER

of Nevada, et al.,

                                Defendants.

    This action having been referred by the Honorable Howard D. McKibben, United States District Judge, to the undersigned as Chief Judge for consideration of assignment to the active United States District Judges of this Court sitting en banc, and the undersigned having conferred with each of the active judges of the court, and having determined that the issues raised in Plaintiffs’ Emergency Application for Temporary Restraining Order and Order to Show Cause Re Preliminary Injunction should be considered in a comprehensive manner by the active District Judges of this Court sitting en banc, and to preserve the status quo pending such en banc consideration, and good cause appearing.

    IT IS ORDERED that Defendants are hereby temporarily restrained from giving effect to the action on July 13, 2003, by the Nevada Assembly deeming S.B. 6 as “passed,” without the two-third vote required by Article IV, § 18 (2) of the Nevada Constitution, pending hearing on and further Order of the Court regarding Plaintiffs’ Application for Temporary Restraining Order and Order to show Cause Re Preliminary Injunction.

    IT IS FURTHER ORDERED that Plaintiffs’ Emergency Application for Temporary Restraining Order and Order to Show Cause Re Preliminary Injunction is hereby scheduled for hearing before the active District Judges of this Court sitting en banc at Las Vegas and Reno, Nevada, to be held on Wednesday, July 16, 2003, at 9:00 a.m. in Courtroom #7C of the Lloyd D. George United States Courthouse, Las Vegas, Nevada and Courtroom #5 of the Bruce R. Thompson United States Courthouse, Reno, Nevada.

    IT IS FURTHER ORDERED that unless otherwise Ordered by the Court, no bond shall be required of Plaintiffs to secure the relief requested.

    IT IS FURTHER ORDERED that Plaintiffs shall immediately give notice to Defendants of the hearing scheduled for July 16, 2003, at 9:00 a.m., and that Defendants shall have to and
including Tuesday, July 15, 2003, by 12:00 noon within which to file in the United States District Court at Reno, Nevada, any Memorandum of Authorities in response to Plaintiffs’ Application for Injunctive Relief.

DATED: July 14, 2003

                                                                                _____________________

                                                                                Philip M. Pro

                                                                                Chief United States District Judge

    Senator Raggio moved that the Senate adjourn until Tuesday, July 15, 2003 at 12 m.

    Motion carried.

    Senate adjourned at 4:32 p.m.

Approved:                                                                  Lorraine T. Hunt

                                                                                   President of the Senate

Attest:    Claire J. Clift

                Secretary of the Senate