MINUTES OF THE ASSEMBLY COMMITTEE ON TAXATION Sixty-eighth Session February 21, 1995 The Committee on Taxation was called to order at 1:15 p.m., on Tuesday, February 21, 1995, Chairman Price presiding in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. Bob Price, Chairman Mrs. Jeannine Stroth, Chairman Mr. Michael A. (Mike) Schneider, Vice Chairman Mr. Morse Arberry Mrs. Maureen E. Brower Mrs. Joan A. Lambert Mr. Mark Manendo Mr. John W. Marvel Mr. Roy Neighbors Mr. Brian Sandoval Mr. Larry L. Spitler COMMITTEE MEMBERS ABSENT/ EXCUSED Mr. Pete Ernaut, Vice Chairman GUEST LEGISLATORS PRESENT: Co-speaker Lynn Hettrick STAFF MEMBERS PRESENT: Mr. Ted Zuend, Deputy Fiscal Analyst OTHERS PRESENT: Mr. Robert Allgeier, Douglas County Commissioner Mr. Steve Teshara, Executive Director, Lake Tahoe Gaming Alliance Mr. Richard Wiggins, Tahoe Regional Planning Agency Ms. Carole Vilardo, Nevada Taxpayer's Association Ms. Stephanie Tyler, Regional Transportation Commission Mr. Don Miner, Douglas County commissioner A.B. 19 Allows proceeds from optional tax on revenues from rental of trasient lodging imposed within transporta- tion district to be used for public transit system. Charman Price called the meeting to order and stated we would take testimony on A.B. 19. He introduced Co-Speaker Lynn Hettrick as the first speaker. Speaker Hettrick, District #39, advised those present that A.B. 19 is the result of a lot of work that has gone on in Douglas County, at South Lake Tahoe in regard to the concerns they have for trying to maintain their economy at the lake. The Transient Occupancy Tax (TOT) has traditionally been held for projects more directed toward tourism. As most locals are aware, that area does not have a major airport, does not have mass transit systems, does not have a rail system. To the residents at Lake Tahoe, tourism is "transit". We have to get people into the basin and be able to move them around within that basin area. It is the feeling of the local leaders that, with the agreement of all the players involved, they support A.B. 19 which simply allows a percentage of TOT to be used to fund some form of public transit in the Lake Tahoe Basin. The way the bill is written now, it is broader than what they originally proposed and some sponsors of the bill have already had some discussion with other agencies who are concerned with how broad the bill is. They would like, at this time, to see the bill put into a subcommittee and work out the concerns of everyone so it does not affect those areas that chose not to be involved. It would not bother anyone who already has their funding obligated and does not want to get into a money battle over where the funding might go if we change the formula. That is not the intent of this bill in any way. All they are asking for is an opportunity to work on the tourism aspect and what would work primarily in the Tahoe Basin. They want to have input from all the players at the Lake, the people who might be involved and how we can narrow this down. If there are other people who are interested, they would be happy to meet and talk to them but their first interest is in regard to the Tahoe Basin. Mr. Price reiterated his understanding was the list of those interested in this project are the residents from parts of Douglas County, Carson City and parts of Washoe County. Speaker Hettrick agreed and added that whether or not they are all interested is not known. Carson City has no development at the Lake within their district that touches Lake Tahoe so whether or not they would be interested in participating is still a question. Washoe County is still in question. What they are trying to do is make this permissive rather than mandatory and they will strive to make certain it comes out that way. The counties that want to participate in that area may do so. Mr. Marvel asked, for the benefit of the new committee members, if the Speaker could explain a little more about how TOT works. Speaker Hettrick advised those present that TOT is basically a "Transient Occupancy Tax", or "room tax" on the hotels; the tax is collected by them and traditionally has been directed toward tourism. Tourism, to the officials in the Tahoe basin, is dependent upon transportation. If they are not able to get tourists into the basin, they would have a problem. It is a common concern that the basin is within the Tahoe Regional Planning Agency which is concerned about air pollution, water pollution, vehicle- miles traveled etc., and because of that, any way they can cut down on those problems and still keep the tourists coming into the basin to participate in the economy is what they are trying to accomplish. Speaker Hettrick suggested Mr. Ted Zuend, Deputy Fiscal Analyst may be in a position to give some further insight into the bill. Mr. Zuend had prepared a brief outline, (Exhibit C), which was distributed to the committee members. He expanded on that information by explaining the way the bill is written now it addresses the 1% optional tax. In Douglas County, their tax is by a special act - the room tax is in the Special Act Provisions. He asked Speaker Hettrick if it was his intent, inasmuch as this is an optional tax, that the voters would have to vote for approval, or is it their intent to amend the Lodging Tax Law to accommodate something like this. Speaker Hettrick deferred to some of the representatives directly involved as to how they want this done and extended that request to those representatives present today. Volunteering to address that question was Mr. Steve Teshara, Executive Director of the Lake Tahoe Gaming Alliance. His office represents the Casino Resort Properties and the Park Cattle Company, a major landowner in Stateline. In response to the question, he stated the TOT tax in Douglas County is a function of the state law first adopted in 1978. That, however, can be superseded by additional state laws or supplemented by additional laws. The TOT 1% optional tax came out of the legislature in 1991 and is the tax option Douglas County voters embraced in an advisory election in the fall of 1992. That is the subject at hand as the intent of this bill deals only with that 1% optional tax that has already been recommended by the voters of Douglas County. The TOT in Douglas County, in fact, went from eight percent (8%) to nine percent (9%) as of January 1, 1995, and what they are seeking is the possibility of using that 1% optional tax for transit facilities, not just on roads. This is supported by the primary TOT collectors at the Lake. Mr. Teshara distributed a letter supporting his statement (Exhibit D). Mr. Marvel questioned Mr. Teshara on the amount of money they anticipate generating as a result of this tax. Mr. Teshara advised that county-wide the 1% increment on the TOT, at the current occupancy rate would generate somewhere in the neighborhood of $600,000 annually. The way it is constructed, they have formed a transportation district within the Lake portion of Douglas County and the monies that are raised by the TOT collectors at the Lake and from that district would be approximately 92% of the annual collections. The balance would go to the Douglas County Regional Transportation Commission for use in parts of the county outside the Lake Tahoe Basin. There is a percentage split of the total amount collected per year. Mr. Marvel pursued the revenues to be derived and asked if money would be used to take people out and around the basin or how they planned on using it. Mr. Teshara stated that the monies at Lake Tahoe would be used primarily in support of the transit system as that is vital to the tourism trade. One of Lake Tahoe's biggest competitive issues is access to, from, and around the lake and this money would be used to fund adopted transit plans both at the county level and plans that have been adopted by the Tahoe Regional Planning Agency. He assured Mr. Marvel this new system would help speed up the traffic flow. Ms. Lambert questioned if the voters in Douglas County voted in 1992 for this room tax for roads, do they propose to have another election to change it to transit, or not have another election? Mr. Teshara responded the way the question was worded on the ballot gave the county flexibility on an advisory basis to be able to direct monies at Lake Tahoe for purposes of transit. That might be a question that Commissioners Allgeier or Miner could address, however, it is his understanding the question was advisory and it gave the county some latitude as to how they wanted to apply it. Testifying next in support of the bill was Mr. Robert Allgeier, Chairman of the Douglas County Board of Commissioners, who is also a member of the Regional Transportation Commission. He was present to urge passage of this amendment to NRS 244.33514. Douglas County has been working for the last two years to resolve some rather difficult transportation issues they perceive to exist within the county. Their county has elevation extremes of about 2,000 feet between the Carson Valley, a portion of Douglas County, and what they call the Tahoe Basin portion of Douglas County. The Tahoe basin portion consists of the community of Stateline which is a major casino core and recreational area. One of the major problems they perceive in that particular area in addressing the transportation issue is Carson Valley is transportation-oriented towards surface streets and surface means of transportation; namely, the personal passenger vehicle. At Lake Tahoe, in the Tahoe basin, which is also administered by the Tahoe Regional Planning Agency (TRPA), there are several difficulties. Situations exist which have been well identified and they are now attempting to mitigate and resolve. One of those concerns is the number of personal passenger vehicles that attempt to operate in and around the Stateline area and the Route 50 corridor coming in from California, going through Nevada, and eventually exiting the basin through Spooner Summit into Carson City. The Regional Transportation Commission studied this issue and it became very obvious to them that in order to resolve some of the transit issues at the Lake, it would require the use of alternate forms of transportation other than the personal passenger vehicle. They felt this plan would be economical in transporting people in and around the core areas and to those recreational facilities that do exist in the Stateline area. It will also provide the benefit of being able to handle the elderly and handicapped persons in that area. Right now they have no public transportation systems, except for the transportation that may be provided by the casinos themselves, to get customers from the airports in Reno, Tahoe Airport and from the South Lake Tahoe Airport into the core area. In 1992 the voters in Douglas County gave overwhelming approval to an advisory ballot question which asked whether or not the 1% Optional Transient Occupancy Tax should be imposed in Douglas County. The vote was 82% in favor of this tax. In 1993 the Douglas County Board of Commissioners took action and imposed the 1% optional TOT at the same time. They had worked diligently for several months with the Chamber of Commerce at the Lake, the businesses, the people and most important of all the Gaming Alliance in exploring the need for a transportation district at the lake. They envisioned working out a resolution to what the residents and the public officials perceived as transportation problems existing at the lake. On the basis of that, the officials in Douglas Country created the Tahoe-Douglas Transportation District at the Lake, which is a separate transportation district within Douglas County. It was estimated that by imposing the 1% optional tax, an additional $600,000 per year would be raised. Of that, 92% would be used within the transportation district of Lake Tahoe because that is the portion of the tax which is generated there. The balance would go to the Regional Transportation Commission for use within the Carson Valley because that is the portion of the 1% optional tax that is generated there. They also recognize that it is very important for them to cooperate with certain facilities within the City of South Lake Tahoe and Eldorado County such as buslines, rubber-tired trolleys and things of this nature so that we could conveniently move people in and through that core area of South Lake Tahoe and Douglas County. They feel it is very important to cooperate and do anything they can to enhance their ability to maintain a customer-based facility at Stateline. Their county is literally the economic engine that drives Douglas County and it is also an economic engine for the state of Nevada. It is his understanding this county raises the third largest amount of gaming tax revenues for the State of Nevada so it is important to all of us. They feel it is a fair resolution of the issue and gives them the means to participate in other transit issues they cannot fund in any other way from other sources due to the restrictive nature of the tax income which comes to them for operation of their transportation system. They are asking for the ability to address transit issues at their facilities within the Tahoe Basin. Copies of the Douglas County Transportation 5-Year Plan were distributed as (Exhibit E.) Ms. Brower asked for clarification on whether they currently have a bus or trolley system and, if not, is that what this revenue would be used for. Mr. Allgeier explained there have been bus and trolley systems created within Eldorado County, which is on the California side of the border in the City of South Lake Tahoe. They have been asked to participate in those systems and that has been addressed in the document distributed to the members of the committee (Exhibit E). He went over the figures in that report and indicated they have been anxious to participate further but, basically, they would be tying into an existing system. Ms. Lambert if whether Douglas County had the optional quarter cent sales tax for public transit and for road maintenance. Mr. Allgeier replied they had that as a ballot question in the last election and it was resoundingly defeated by the voters of Douglas County. Mr. Teshara asked if he would be permitted to return to the speaker's table and expand a little on his previous testimony. He indicated for the record that he had distributed to the members, letters of support for this bill from his organization, the Lake Tahoe Gaming Alliance and the Tahoe Douglas Chamber of Commerce (Exhibits D and F). He explained to the members that this bill is also supported by two other organizations from the Lake that are involved. They are the South Shore Transportation Management Association and the Tahoe Transportation Coalition. He had a telephone call from the Director of the League to Save Lake Tahoe who had also participated in the coalition. She expressed her regret that she was unable to be here today but she wanted it known that the League is also in support of passage of this bill. The other comments he wanted to make are they agree with the statements that have been made about the circumstances they have at Lake Tahoe and the true need for flexibility in using those monies. He reminded the committee this is not adding to a tax. The tax is already there and approved by the voters. It has already been enacted by the county commission. He assured those present the Gaming Alliance does not take the additional tax lightly. The fact that the 1% tax was not going directly into tourism was a tough burden for them to bear. Because transit is so important to the tourism product they were able to work with Douglas County and they all feel this is a solution that will be beneficial to our economic interests and to those of the county, the state and the community. So, again, it does not raise the tax. The optional tax in Douglas County is already in place. It just seeks to provide the flexibility so they can use it for their particular needs at Lake Tahoe. They appreciate the cooperation of the committee and expressed their desire to sit with a subcommittee to work out any of the issues raised by other individuals who have an interest in how this might play out in the state. Mr. Schneider was interested in learning the amount of the fee to the public for riding this system. He was advised by Mr. Teshara there are a couple of different systems. For example, the State Public Transit System which operates primarily in California but does run into Nevada, charges $1.25 per person, per ride. They did a rubber-tire trolley program last summer which had a $2.00 per person all-day pass. There are some elements of the transit system on the private side that are free of charge to hotel guests, to people going to Heavenly Valley to ski etc., so they have a mix of fares and structures. Speaking in support of A.B. 19 was Mr. Richard Wiggins, Senior Transportation Planner for the Tahoe Regional Planning Agency. He explained he is present today on behalf of the TRPA seeking passage of A.B. 19. He read the following statement into the record: "For too many years, transportation revenues raised from taxation have been restricted to highway use. While this has certainly benefitted highway construction and maintenance needs, there are other needs as well. He pointed out that A.B. 19 levels the transportation playing field. Much like the landmark Federal Intermodal Surface Transportation Efficiency Act (ISTEA), this bill allows local jurisdictions to decide for themselves how best to allocate transportation revenues, whether the needs be for roads or public transportation. It does not make sense for government to limit its transportation investment decisions to only the road construction alternative. Public transportation must be considered on equal financial footing. Expansion of the highly successful Nifty 50 Trolley into Nevada is one example of the benefits this bill could bring. Last year in California alone, the trolley carried 21,500 passengers over a 2 « month period. Giving Douglas County the ability to use these tax revenues to support the trolley service, or any other transit service for that matter, sends a clear message of Nevada's commitment to address transportation problems in the Lake Tahoe basin and elsewhere." He volunteered to answer any questions from the committee, whereupon Mr. Marvel brought up a statement from Speaker Hettrick relative to an amendment. He asked Mr. Wiggins what amendment would he propose or is the bill true the way it is. Mr. Wiggins stated he was speaking strictly not so much on the specifics but on the generalities of allowing these revenues to be used for transit purposes and not just highway purposes. Mr. Price pointed out for the record, according to his understanding, Mr. Wiggins was interested in transit in the Tahoe Basin - in the area and he was advised that was correct. Mr. Spitler stated his concern was based on what he has heard of what this actually raises in dollars and cents. He estimated this comes nowhere close to funding a public transportation system. Mr. Wiggins had mentioned the ISTEA funds, therefore, he asked if he was using an analogy or was he also going to utilize part of the public transportation arm of ISTEA to fold into this scenario. Mr. Wiggins explained that basically, transit in any region is funded through a variety of sources - no one source covers all the deficit. He mentioned other revenues from different sources of transit services, such as the trollies, which were about 25% of the operating costs. The business sector in the Tahoe Basin, both the south and north shore areas, were very active in providing funds and last year they provided about 35% of the operating revenues. As far as the trolley, he did not believe there are any federal grants but the Stage Bus System does receive federal operating grants and state operating grants as well. So there may be other sources which would supplement the revenues raised. Mr. Spitler questioned whether there were any public hearings with citizens testifying when this plan was put forward and was advised that as far as the state service and other services, they do have regular, annual "unmet needs" hearings for transit services in the area. Generally, with use of federal operating assistance funds, they are required to have public hearings for those also. Mr. Spitler then questioned whether there had been any opposition on the part of the citizens and was advised that, for the most part, the citizens feel if they can get more transit services they are in agreement and that is the attitude the residents in that area have. The last witness to testify was Ms. Stephanie Tyler, representing the Regional Transportation Commission of Washoe County. As the metropolitan planning organization for the Washoe County area, they want to have the opportunity to participate in any subcommittee discussions of this bill. They agree in terms of the very broad nature of the way it was drafted. They do, also, have the Tahoe Area Transit System (TART) they operate in Washoe County at the Lake level, which would be at the Incline area, therefore, they may very well have some linkage with Douglas County. In an effort to provide the best possible service and make certain we have a very workable piece of legislation in law, she wanted to be able to participate in that process. Received as part of the written record was prepared testimony of the Regional Transportation Commission of Clark County, (Exhibit G) signed by its Director, Kurt Weinrich. There being no further testimony to be heard, Chairman Price referred A.B. 19 to a subcommittee to be chaired by Mr. Schneider and asked for volunteers to work with him. Volunteering were Ms. Brower and Mr. Sandoval. Mr. Ernaut was appointed as a member of the subcommittee by Chairman Price. The hearing on A.B. 19 was adjourned. Chairman Price brought up a request for the committee to consider as a committee introduction which would create a state bank. He advised the members this idea had been tried several times and might be something they would be interested in. He distributed copies of news clippings on the concept, however, there was not much appetite for the bill. ASSEMBLYMAN NEIGHBORS MOVED TO REQUEST A BDR ON THE STATE BANK PROPOSAL. ASSEMBLYMAN PRICE SECONDED THE MOTION. THE MOTION FAILED WITH ONLY ASSEMBLYMEN NEIGHBORS AND PRICE VOTING AYE. * * * * * * * * * * * * * * * * * * * * Chairman Price presented a BDR that has been drafted having to do with sexual abuse of school age children. There was no interest in pursuing this and there was no motion put forth. There being no further business, the meeting was adjourned at 2:45 pm. RESPECTFULLY SUBMITTED: Nykki Kinsley, Committee Secretary APPROVED BY: Assemblyman Bob Price, Chairman Assemblyman Jeannine Stroth, Chairman Assembly Committee on Taxation February 21, 1995 Page