MINUTES OF THE ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session April 21, 1995 The Committee on Government Affairs was called to order at 8:00 a.m., on Friday, April 21, 1995, Chairman Lambert presiding in Room 330 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Douglas A. Bache, Chairman Mrs. Joan A. Lambert, Chairman Mrs. Deanna Braunlin, Vice Chairman Mr. P.M. Roy Neighbors, Vice Chairman Mr. Max Bennett Mrs. Marcia de Braga Mr. Pete Ernaut Mrs. Vivian L. Freeman Mr. William Z. (Bill) Harrington Ms. Saundra (Sandi) Krenzer Mr. Dennis Nolan Mrs. Gene Wines Segerblom Mrs. Patricia A. Tripple Mr. Wendell P. Williams COMMITTEE MEMBERS ABSENT: None GUEST LEGISLATORS PRESENT: None STAFF MEMBERS PRESENT: Denice Miller; Research Analyst OTHERS PRESENT: T.J. Grady; Nevada League of Cities, Kathleen M. Tighe; City of Las Vegas, Ande Engleman; Society of Professional Journalists, Lee-Ann Keever; Ethics Commission, Donna LaGue; Attorney General's Office. Chairman Lambert opened the meeting on A.B. 404. ASSEMBLY BILL NO. 404 - Makes various changes regarding financial disclosure by public officers. (BDR 23-664) Tom Grady, Nevada League of Cities, and Kathy Tighe, City Clerk, City of Las Vegas, also the chairman of the City Clerk's Association introduced the bill. Mr. Grady said this is a meritorious piece of legislation to open up government more to the people. He said they have worked with the Attorney General's office and agree with their amendments. Kathy Tighe stated she entered a letter into the record. (Exhibit C) This gives some of the specifics of the problems that clerks and local government officials were having in dealing with the financial disclosure statement. She noted the bullet items at the bottom of the document indicate the solutions that were proposed. She concluded she has seen the amendments and has no problem with the bill being amended. Chairman Lambert asked if the Ethics Commission had been contacted prior to this bill coming forward. Ms. Tighe responded that she had spoken with Lee-Ann Keever over the issue of changing from anniversary date to a single filing date. She said at that time Lee- Ann had no problem with it. Chairman Lambert asked if it is assumed when a financial disclosure is filed with her that it would also be filed with the Ethics Commission. Ms. Tighe responded "absolutely", there would be no change instigated by this bill. Chairman Lambert recognized Mr. Bennett. Mr. Bennett asked if the bill applied to both elected and non elected officials. Ms. Tighe replied "yes". Chairman Lambert recognized Mrs. Segerblom. Mrs. Segerblom asked if there is a standard form to be filled out. Ms. Tighe gave her a sample form. Chairman Lambert recognized Lee-Ann Keever. Lee-Ann Keever, Executive Secretary for the Nevada Commission on Ethics, and their legal researcher Donna LaGue testified. Ms. Keever stated they do not have any objections to the bills as written. She said there are minor changes to be made. They were worried about the language in lines 23 and 24. She pointed out they would like the cities and counties to realize that the forms also have to be filed with the Ethics Commission. They also support a single date for filing by both elected and appointed officials. She said a March 31st or June 30th date would be better because December is a holiday month, and those filing may overlook the date for filing. She mentoned they would like to be responsible for the cause of distribution and of any forms which need to be filed with them. She questioned as to who would be responsible for the payment for the printing of the forms issued by the counties or the cities. She maintained they have a small budget. Chairman Lambert recognized Mrs. de Braga. Mrs. de Braga asked if Ms. Keever had looked over the amendment. Ms. Keever responded she had not seen the amendment. Chairman Lambert recognized Mr. Ernaut. Mr. Ernaut stated this was not going to affect that many people. He asked if the cost was basically just making copies. Ms. Keever responded it was her understanding that none of the cities or counties have a form in effect or on the design boards. She pointed out the form will be going to NCR paper with 3 color coded copies. Chairman Lambert asked, if for example, a councilman would have to fill out both an Ethics form and a state form. Ms. Keever stated it was her understanding that if they fill out the form for their local entity and then send a copy to the Ethics Commission, then their filing requirements would be satisfied. Chairman Lambert asked if the Ethics Commission would be satisfied with that form of filing even if they do not know what the form will look like. Ms. Keever said the provisions of the bill call for the Ethics Commission to have final approval over the finished forms, so there would be uniformity among them. She testified the commission would like some sort of deadline put in place, to have the forms sent to them for approval before distribution. She emphasized the commission does need some lead time to take a look at them. Chairman Lambert recognized Mr. Ernaut. Mr. Ernaut suggested they have pre-printed forms already. Ms. Keever stated they have distributed to all the cities and counties copies of the forms prior to each election and upon request. Chairman Lambert recognized Mr. Bache. Mr. Bache asked if it would be easier to have language stating if they do not use their own form, they must use the form provided by the state. Ms. Keever replied that would be acceptable. Ms. Keever asked the committee if there were any questions for Ms. LaGue . Ms. LaGue entered a statement into the record as (Exhibit D). Chairman Lambert recognized Ande Engleman. Ande Engleman, representing the Society of Professional Journalists and the Las Vegas Ethics Review Board offered an amendment to the committee. She referred to the bottom of page one, beginning at line 20. See (Exhibit E). She testified the amendment offers the person or officer, whom the ethics opinion has been rendered, the opportunity to release the opinion if they wish to do so. Presently the only one who can make it public is the committee if the public officer acts contrary to the opinion rendered, or the person who requested the ethics opinion can release it. Chairman Lambert recognized Mr. Ernaut. Mr. Ernaut asked if Ms. Engleman deemed her amendment consistent with the other ethics. Ande Engleman replied the State Ethics Commission also has the power to release something in the public interest if they feel it is worthwhile to do so. Mr. Ernaut stated he was concerned that at the local level it could be construed as something that could be abused politically. He said at the state level he feels more secure. Ms. Engleman stated he raised a good point and that is quite possible. She hoped an ethics committee is structured so that it is not political and there are restraints on who can be appointed, in order to avoid that. She pointed out local ordinances govern who and how people get appointed to a local ethics committee. Mr. Ernaut stated that he is secure in the thresholds to be appointed to the State Ethics Commission. He stressed he was not as confident in the local ethics boards. Ms. Engleman stated that Mr. Spike Wilson of the State Ethics Commission feels any requests on ethics opinions on actions that occurred in the past should all be public. He feels these ethics commissions and committees are set up to be preventative. They are to encourage public officers to ask for opinions before they act, not after the fact. Chairman Lambert asked if she felt it would have a chilling affect to encourage people to ask questions about future actions. Ms. Engleman stated it would depend upon the structure of the local ethics committee. If a committee is intent upon doing their job correctly, and wants to encourage these requests, then it would not have that affect. She commented the only time it would be a situation, where they felt they wanted to release it, would probably be on a past action. She added ethics commissions do get asked for opinions on past action. There is a great deal of confusion as to where the local ends and the state picks up. Chairman Lambert recognized Kathleen Tighe. Kathleen Tighe, City Clerk of Las Vegas, stated she had seen the amendment and felt that it does not create any problem for the city of Las Vegas. Chairman Lambert recognized Mr. Nolan. Mr. Nolan asked if any other amendments were discussed. Ms. Tighe said she had seen all of the amendments proposed and had no objection to any of them. Chairman Lambert recognized Mrs. Segerblom. Mrs. Segerblom asked Ms. Tighe what her feelings were on section "D" of Ms. Engleman's amendment. Ms. Tighe replied it was a decision that the committee would have to make. She said she was only familiar with the Las Vegas committee, and felt they do a good job. She added it normally hits the media, and there is no stopping that. Most of the cases that come to the attention of the public deal with the elected official. It could be in the best interest of the public to put those before the media and let the people decide. Mrs. Segerblom asked even if the person they are referring to does not want it released. Ms. Tighe stated it was a tough decision. Chairman Lambert recognized Frances Dougherty. Frances Dougherty, Deputy Attorney General representing the State of Nevada Commission on Ethics, stated the point of Nevada Revised Statutes 541, which is the section that gives local jurisdiction to have the authority to have their own commission, is intended to allow local entities to control the local ethics of their jurisdiction if they so desire. She emphasized the purpose is to have that local body operate exactly the way the state body would. It would provide the individual who appears before them the same opportunities and rules they have at the state level. She commented it was not inappropriate to allow the local body the same authority to release opinions in the public interest. The language of the bill should "parrot" exactly the language provided to the State Ethics Commission in allowing it to release those opinions. The Ninth Circuit Court of Appeals has held that confidentiality, at least to the extent of requiring third parties to maintain confidentiality, may be a violation of the first amendment. She explained in other words, you cannot prohibit someone who is a requester in an opinion request that is confidential, from going out and talking about that opinion request. She mentioned they are working on trying to define this area more consistently with constitutional law and with the movement towards a little bit less confidentiality in cases involving past conduct. She noted in cases involving future conduct, it would have a chilling affect for someone to think they are going for advice, and then have that opinion release to the public. She expressed there is a clear distinction between past conduct and confidentiality and future conduct. Chairman Lambert recognized Ms. Tripple. Ms. Tripple asked about page 3, line 1 and the gifts of two hundred, as compared to a state office, gifts of five hundred. She asked why the difference. Ms. Dougherty stated if this bill passes and there is going to be a state collection of financial disclosure, and local financial disclosure, they would have to be consistent. Chairman Lambert closed the meeting on A.B. 404. Chairman Lambert asked for further business and recognized Mr. Bache. Mr. Bache stated in regards to A.B. 171, Kim Morgan explained about the March 1, 1995 date as the most recent addition of the model energy and uniform building code. The reason for that is for future additions, the section and language could be changed, and it would not be what the legislature would want to have. He said they are reviewing the documents and should they have a revised addition that meets their needs, it would have to be amended in the future. He said this gives the legislature the control as opposed to control by the governing body of the various codes. Chairman Lambert recognized Mrs. de Braga. Mrs. de Braga stated that Judge Hoyt in White Pine County has agreed to impanel a grand jury to investigate the superintendent and the school board for misappropriated public money and violating the trust of public officers. She said the complaint was brought by a retired teacher and signed on by other teachers. She said it is unfortunate, because the general public did not support the teachers as they should have. She testified the school board convened to sign or agree to accepting the loan that had been arranged by the local government advisory board. She emphasized the meeting they convened was not properly posted. She pointed out the teachers will not be paid, due entirely to the further inappropriate action of the school board. She stated the meeting has been re-posted for Monday, so that they can accept the loan and the local newspaper has held the legislature responsible. She asked Marvin Leavitt to respond. Mr. Marvin Leavitt; of the City of Las Vegas, said the chairman of the Board of Trustees of the White Pine County School District called Dave Pursell and Gene Echeverry of the Department of Taxation and blamed them for the non payment of the teachers and they should allow the release of checks. Mr. Leavitt added if the checks were released, there would be no money to cover them, secondly, if the bank agreed to cover them, they would essentially be agreeing to enter into an illegal loan, because they have no authority to borrow money from a bank to do that. Mr. Leavitt said at the advisory committee they discussed the report that was made here on the tenth as to what the total problem was. He testified the bill was finally prepared and the Senate took action on that bill on Thursday. He said on Monday the seventeenth the Assembly introduced it and passed it the same day. Between Monday and Thursday the local government advisory committee made arrangements for the loan and prepared the necessary legal documents, notified all the banks, and received three bids, all in that period of time. He maintained everyone on the legislative end has acted in dispatch in a manner over an extremely short period. The one and only thing White Pine County School Board had to do was meet to approve it. He said they failed. They posted incorrectly. It was discussed at the advisory committee meeting, and they were told well in advance.He expressed there was no reason the Department of Taxation was blamed for the checks not going out. He went on to say they received three bids on the loan. The lowest was Five point seven four percent from Nevada State Bank. He stated the other two were six point zero eight and six point four nine. The loan is structured to be paid in nine equal payments, beginning in February 1996. The reason it is in nine instead of ten, is because they need to accumulate the money from the state distributed school fund over those two periods. He remarked the loan was treated essentially as a letter of credit, so there will be a draw down. If the school board approves the loan, the funds will be wired to their bank account so the teachers will get paid. He stated they anticipate that amount to be approximately four hundred thousand dollars. He said they would draw down as they need money only upon approval of the Department of Taxation. He mentioned the feeling he received from the school board was they were getting more money to do more with. He stated they were intending on planning trips that were not previously scheduled . He had to indicate to them that the Department of Taxation would not give their approval for those type of things. He emphasized there is a tendency to incur additional obligations even at this late date. In addition to the local advisory commission, a subcommittee was formed to prepare the budget for the district for this next year. The advisory committee was going to meet again on Tuesday, May 2nd and go over that budget and hopefully come up with some answers. He concluded they would like to advise the Government Affairs Committee on May 3rd as to the status of the budget. Chairman Lambert asked if the letters of intent by the teachers due by May 1st, and the budget information not being ready until May 2, what will happen. Mr. Leavitt said there has to be an attempt to get someone out there before they get the budget document together. He said the problem is the time allotted. Chairman Lambert stated that White Pine County is very fortunate to have Mr. Leavitt do all the work that has been done. She surmised she does not think the people of White Pine County really have any idea what is really going on. Mr. Ernaut made a comment in regard to the two school buses that White Pine County ordered. He explained the tax commission tried to send them back to the company. The company said they would become bankrupt if they took them back. He noted there was an attempt to find another school district in the state of Nevada that would take these buses. He testified these school districts implied that the buses were the "Rolls Royce" of buses and they could never justify to their own school board to buy this type of bus. Mr. Ernaut stated the buses were ordered after they knew they were in debt. Mrs. de Braga commented there were four buses ordered originally. She mentioned they did get their money back on the ten thousand seven hundred fifty dollar Grand Piano. She asked if the four hundred thousand allocated for the teachers salaries was for two weeks. Mr. Leavitt replied "yes", it was for this payroll. Mrs. de Braga stressed they are totally disregarding the debt they have to cover and are in the mind that they have money to spend. They have leased band equipment and uniforms. She concluded the top priority is getting a superintendent or CPA firm out there as soon as possible. Mr. Leavitt testified when the legislative auditor went out there, they were trying to prepare a cash flow schedule to give an idea as to what the cash situation was. There were no accounting records, and so there is a great deal of work to be done in order to get the records in some sort of shape when the next fiscal year starts. He pointed out they have nobody "in house" that is capable of doing that. Mrs. de Braga said they have only one bookkeeper. In June they will have a six hundred thousand dollar principal payment due and that is another reason they need to get someone in place that can handle the financial aspects of that and hopefully get a five year loan term plan in place. Chairman Lambert recognized Mrs. Segerblom. Mrs. Segerblom remarked she had a problem with the term "local advisory", It should read "state advisory" so it would not be misconstrued with White Pine County. Chairman Lambert recognized Mr. Harrington. Mr. Harrington said he saw two problems here. One is that the legislature is asking to get a competent person who is fiscally responsible to go in there with the board of trustees with a mind set that they do not want that. It would take a fool who would take that job and be seen as the villain coming in and cutting back. He added until they change the board of trustees and until the mind set of the people is changed, the legislature will not get a competent person in there. He suggested in order to correct that, is there any way they can get a mailing to the people saying they are four million dollars in debt so we are going to have to tax every man, woman and child, four hundred dollars per person over the next year or two and actually send them a tentative bill saying they will have to pay, courtesy of your board of trustees. Mr. Leavitt stated there has been a considerable amount of discussion about an appropriate way to try and get the message out to the people of White Pine County. At the present, they do not completely understand how bad the problem is. It appears to many of the people Mr. Cahill has done a good job, due to the new high school. Chairman Lambert questioned Mr. Leavitt as to the board spending more money since they were getting the new loan, specifically a golf trip. Mr. Leavitt said it was his understanding that Dave Pursell received a phone call wanting him to approve a golf trip. Mr. Pursell essentially replied "how could you be asking to fund a trip when you can not even meet payroll". The reply was they were getting the two million dollars and that should solve the problems, so they should be able to continue on. Mr. Leavitt maintained the two million dollars will be barely enough to get them through this next year. He insisted there is nothing there for additional expenses. Mr. Leavitt remarked the request for the golf trip was made for the golf team. Chairman Lambert recognized Mrs. de Braga. Mrs. de Braga said Mr. Pursell's strongest comments was that the two point million has to be stretched as far as it can possibly go. To achieve that, the school has to liquidate some of their assets, property, and any extracurricular activities, and this has parents and teachers calling. She said not so much as to their wages but to the children, and anything else that can be cut back. She noted it is unlikely the teachers will get a salary increase. Chairman Lambert recognized Mr. Ernaut. Mr. Ernaut stated that Magma Mining commissioned some people in White Pine County to do a study, and the study was saying they would have an enormous impact from the company coming in. Magma asked White Pine to send them back a figure of a loan at zero interest. White Pine came back with a figure of ten million dollars. The company denied that amount and gave them one million dollars, of which two hundred and fifty thousand went to the school district. The rest went to the county and city. He stressed the city has been drained from subsidizing the school. The company came through with a loan at zero interest with payments not even beginning until four years later and then four years to pay it off. He concluded the community is now demanding they do this. There being no further business the meeting was adjourned at 9:00 a.m. RESPECTFULLY SUBMITTED: Kelly Liston,Committee Secretary APPROVED BY: Assemblyman Douglas A. Bache, Chairman Assemblyman Joan A. Lambert, Chairman Assembly Committee on Government Affairs April 21, 1995 Page