MINUTES OF THE
	ASSEMBLY COMMITTEE ON TAXATION

	Sixty-Eighth Session
	March 9, 1995


The Committee on Taxation was called to order at 1:15 p.m., on Thursday, March 
9, 1995, Chairman Bob 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. Pete Ernaut, Vice Chairman
Mr. Michael A. (Mike) Schneider, Vice Chairman
Mr. Morse Arberry, Jr.
Mrs. Maureen E. Brower
Mrs. Joan A. Lambert
Mr. Mark Manendo
Mr. John W. Marvel
Mr. P. M. Roy Neighbors
Mr. Brian Sandoval
Mr. Larry L. Spitler

COMMITTEE MEMBERS ABSENT:

None

GUEST LEGISLATORS PRESENT:

Assemblyman Bernie Anderson

STAFF MEMBERS PRESENT:

Mr. Ted Zuend, Deputy Fiscal Analyst

OTHERS PRESENT:

Ms. Dorothy B. North, Chairman, Commission on Substance Abuse 	
	Education, Prevention, Enforcement and Treatment (Elko, NV)

Mr. Bobby Compton, Lead Counselor, Carson Detoxification Center


Dr. Richard D. Newbold, M.D., Carson Tahoe Emergency Physicians
and Lt. Col., NVANG, Clinic Commander

Dr. John Edgecomb, M.D., Carson Tahoe Hospital/Carson Detoxification 
		Center

Mr. Randy Peraldo, Vice President, L. W. Peraldo Co., Inc. (Winnemucca)

Mr. Harvey Whittemore, Nevada Beer Wholesalers and Nevada Resort 	
	Association

Mr. Van V. Heffner, President, Nevada Restaurant Association (Las Vegas)

Ms. Willlie B. Smith, Vice President, Westcare (Las Vegas)

Mr. Greg Ferraro, Vice President, R&R Advertising/The PBN Company, 
representing Nevada Resort Association

Mr. Kevin Quint, Nevada Association of State Alcohol and Drug Abuse 
		 Programs (NASADAP)

Ms. Kelly Crosbie, Taxpayers for Yes to Users Fees

Mr. Whitey Engeseth, Spiritual Counselor - Washoe Medical

Ms. Carole Vilardo, President of Nevada Taxpayers Association

Dr. John Chappel, Professor of Psychiatry, School of Medicine, University 
		of Nevada

Ms. Maryellen Waltz, Licensed Social Worker and Certified Alcohol & Drug 
		Abuse Counselor/Program Administrator

Ms. Catherine Blake, Executive Director, Ridge House

Mr. Robert L. Crowell, Anheuser-Busch Companies



Ms. Judy Jacoboni, Chapter President of Mothers Against Drunk Driving
(MADD) 		

Mr. Jerry Mather, Chief Deputy of the Operations Bureau, Carson City 	
	Sheriff's Department

Mr. Alan Barnes, Parole and Probation department and author/coordinator 
		of the Lifeskills Project

Ms. Stacey Carbine, Concerned Taxpayer

Mr. James J. Jackson, Nevada State Public Defender

Mr. John Albrecht, Deputy Attorney General of the Human Resources 	
	Division in behalf of the Bureau of Alcohol and Drug Abuse

Presiding Chairman Mr. Bob Price opened the meeting at 1:15 p.m.  The roll call 
was taken.  With the exception of Messrs. Arberry, Neighbors, Schneider who 
arrived later, all were accounted for.  Chairman Price thanked everyone for joining 
the Taxation Committee; there was standing room only.  He noted that A.B. 90 
was legislation that obviously drew a great deal of interest; over 35 people wanted 
to testify on the bill and the audience was so great that many were standing 
outside the door because the room was so crowded.


ASSEMBLY BILL 90 - Increases excise taxes on liquor to provide treatment for 
			     alcohol and drug abusers who have been accused or 	
			     convicted of crimes.


Chairman Price  decided to switch back and forth from proponents to opponents 
to give everyone an opportunity to be heard.  He based this concept on a hearing 
earlier in the week in another committee where people had complained because 
they had to sit so long before  they could speak and the proponents were always 
heard first.  Having explained this, the Chair asked if there was anyone who 
absolutely had to leave within a certain time so that he could  call upon them first.

Mr. Price recognized Dorothy B. North, Chairman on Commission on Substance 
Abuse Education, Prevention, Enforcement and Treatment.  According to Ms. 
North, her testimony represented a very important part of a major shift in public 
policy in Nevada (Exhibit C).  The 67th Session of the Nevada Legislature adopted 
Assembly Concurrent Resolution No. 71, which directed the Legislative 
Commission to conduct an interim study of drug and alcohol abuse among criminal 
offenders. The resolution specified  the study was to include a review of state laws 
concerning drug and alcohol related offenses and an evaluation of possible 
treatment programs that might be implemented in lieu of, or concurrent with, 
incarceration.

Ms. North stated that testimony during the study included the concerns and 
recommendations of state and local agencies involved with criminal justice and 
substance abuse, treatment providers, nationally known experts in corrections and 
treatment, and the public.


Twenty-eight (28) recommendations were adopted by the Committee.  The 
treatment portion of these suggestions fell into three major categories, which 
included assessment of alcohol and drug problems and referral to treatment from 
local courts, jails, and detention facilities; treatment in prison; and treatment, 
literacy, and job skills training for parolees and probationers.  Each one of these, 
Ms. North felt, was important if Nevada was to achieve the cost benefit of 
treatment versus incarceration and reduced recidivism.

She felt that A.B. 90 was a pivotal part of the strategy developed by the ACR 71 
subcommittee.  Increasing the liquor tax by 10% would provide approximately one-
million dollars in additional revenue to provide substance abuse counselors in every 
court, jail, and detention facility statewide.

Of the three treatment options previously discussed, Ms. North thought assessment 
and diversion on first offenses out of the courts and jails was much more cost-
effective than treatment in prison.  She pointed out that court-ordered offenders 
were frequently more successful in treatment than voluntary admissions--and 
treatment was much cheaper than incarceration.

She felt targeting the liquor tax was very effective, in that if you lined up ten drinks 
on the bar, seven of them would be consumed by one person.  She illustrated it yet 
another way: over half of all the liquor consumed, was consumed by only 20% of 
the people who drink.  Those people were also the ones who progressed, if left 
untreated, to D.U.I.'s, felony D.U.I.'s, incarceration, increased medical costs, etc. 
 Ipso facto - raising state revenue from this source would insure that the people 
who needed the treatment the most would pay for it themselves.

Ms. North asserted that an increased alcohol tax was a user fee only paid by the 
people who bought the product.  If you were a fiscal conservative, assessment, 
diversion, and treatment was a much more effective use of tax revenue than the 
revolving door of repeated incarceration.

She asked, "Is there a benefit to everyone who pays the tax, even if they are not 
one of those who need services?"  She answered her own question with an 
empathic, "YOU BET!  For a few cents more on their purchase, a life might be 
saved or the cost of a prison sentence might be avoided."  With that being said, 
she thanked the Committee for their consideration.

Assemblyman Pete Ernaut humorously noted that "there was nothing like a tax on 
beer to pack a room in Nevada" and then, on a serious note, asked Ms. North how 
she was currently funded.

"From a of  variety sources," she replied.  The publicly funded treatment system 
operated on a sliding fee schedule.  It operated much like a general hospital, a 
public hospital.  Services were not denied to people who needed them for lack of 
the ability to pay and people were provided services if they had no insurance and 
they were indigent.  Needless to say, treatment programs certainly, like hospitals, 
ate a lot of cost that way, because some people were NEVER able to pay and 
others just did not.  They were also funded through federal block grant money, city 
money, county money, a variety of sources.  But Ms. North did not think there 
were any of the programs publicly funded system in the State that were funded 
more than 40% or 50% in block grant money.    Most of the treatment programs 
raised a lot of additional money on their own.

Mr. Ernaut asked Ms. North for her best guess of what the overall budget was for 
on the programs last year, a ballpark figure of the money spent.

Ms. North thought there were others present who could answer his question better 
than she,  because  there was representation from the Bureau of Alcohol and Drug 
Abuse who could certainly give a better dollar amount than herself.

Mr. Ernaut wondered what, in her opinion, was the overall success rate of the 
programs.  He thought  the first funding mechanism was instituted about ten or 
twelve years ago.

"No," Ms. North corrected, "it went back longer than that: the publicly funded 
treatment system in Nevada was well over twenty years old."

Mr. Ernaut acknowledged that fact and again asked her opinion of the overall 
success of  the program and if there was an increased demand for the service, or 
a need for more services.

She declared that it had been enormously successful!  She had been doing this type 
of work for twenty-one years, and eighteen of it in Nevada.  If she had not seen a 
lot of success stories and a lot of miracles she would not keep doing it.
When he asked about success, Ms. North presumed what he was asking was if 
 anybody recovered.

Mr. Ernaut wanted to know how to qualify a program to see if it worked before 
more money was spent on it.


In other words, rephrased Ms. North, what she was being asked was if the money 
currently spent was for something that was effective, and the answer to that 
question was a very definite YES.  The problem with the kind of health care 
services  they delivered, and it WAS a health care service, was a lot of the people 
treated maintained their anonymity because of the stigma of alcohol and drug 
problems that still existed in this day and age.  After they were treated, many 
stayed clean and sober, and become productive.  They had lives and jobs in every 
segment of society and a lot of the time people did not know who they are.  It was 
an equal opportunity problem.  There were thousands of people all over the state 
of Nevada who had recovered through the publicly funded treatment system.

"The second part of the question was, if, in your opinion it is successful, was there 
an increase for higher demand or more services?"  Mr. Ernaut reiterated his inquiry.

"Both!"  Ms. North exclaimed.  One of the things about the treatment services in 
Nevada was they had  consistently been under-funded.  With the growth in Nevada 
and the fact that Nevada was right at the top in per capita consumption and per 
capita alcoholism and drug addition, the increased demand for services was 
astronomical!  There was a real demand for the services -- there was no question 
about it.  She could speak for her own agency.  Currently, there were between 35 
and 40 names on a waiting list just for the adult in-patient program and there were 
people from all over the state of Nevada who were waiting for a bed, trying to get 
in.

Assemblyman Jeannine Stroth had two questions: the first was in regard to the 
statement Ms. North made that 20% of the alcohol consumers who abused alcohol 
purchased 50 percent of the alcohol.  Ms. Stroth wondered where Dorothy North 
got  that statistic.  Also, in 1981, the statute was changed so the tax on hard 
alcohol was $2.05 and everything over $1.90 went to drug and alcohol 
rehabilitation.  Since 1983, tax contributions have been approximately $600,000 
per year. Ms. Stroth asked how the $600,000 per year was  being used.

"To answer the first question, the statistic came from a study done in 1982," 
replied Ms. North.  It was epidemical logical perspective on alcohol use and abuse 
in the United States: "Alcohol Consumption and Related Problems" from the 
Department of Health and Human Services, Washington, D.C.


Ms. North had to defer the second question to someone who worked in the Bureau 
of Alcohol and Drug Abuse (BADA).  Originally, when the bill was first passed, the 
primary area it was targeted for was to provide detoxification services for public 
inebriants.  Nevada decriminalized public drunkenness in 1974, but there was no 
place to take public inebriants outside of the county jail until the bill was passed in 
1981.  The money was spent for services, but Ms. North said she was not privy 
to how they prepared their budget.

Mr. Marvel inquired about the word "indigent" and wondered if any of the programs 
qualified for the "indigent medical fund."  There was an assessment in the tax bill 
for indigent accidents, indigent medical, and so forth.

Ms. North thought it was a good question.  She doubted they qualified because she 
thought the majority of the people being talked about were people who had been 
employed, usually prior to needing treatment services.  And they were people who 
were employable again after they left.

Mr. Marvel wondered if she had ever checked into using the "indigent medical 
fund."

She had.  For example, she knew that Elko county made a contribution to her 
organization, but it did not come out of the "indigent medical fund."

Assemblyman Brian Sandoval asked Ms. North if she were to get the money, how 
would she spend it.  He heard Ms. North state there was a bed shortage--did that 
mean they needed a bigger physical client?

Ms. North thought primarily what the money was earmarked to do was to provide 
additional staff to work in the courts and detention facilities, as well as with people 
who were in the criminal justice system. They were besieged and had been for a 
long time.  All the treatment programs were, with calls from the courts and parole 
and probation.  "They should get more than they do," Ms. North asserted. "And, 
if some of the other stuff being looked at during this session came through, they 
would be seeing more than before." 


Currently, there were counselors who had full caseloads of people they were seeing 
on a weekly basis; the counselors had to find the additional time to go to the jail, 
to go to the court, to do the evaluation, go back and appear in court, and do the 
kinds of things that would be necessary in order to do an adequate job of diversion 
for those people.  That was the intent of the legislation: to provide some additional 
"soldiers in the trenches" to make some shift at the front-end of the problem to get 
some more people out of the system.  The work was staff intensive.  The publicly 
funded system needed more staff to be able to do an adequate job.  They would 
like to be able to come back in two years and say, "Look what this money did!  
And look how many people we provided these services to!  And look how many of 
them have not re-offended, and therefore have not been an additional cost to the 
taxpayers!"

Assemblyman Mark Manendo asked Ms. North about the group of bills that came 
out of the ACR 71 Study Committee that helped to effectively apply alternative 
sentencing and rehabilitation programs:  in Ms. North's opinion, why did she feel 
that was not put into the overall budget to begin with?  And why were we coming 
here today to look at this if this was so important -- and he was not saying that it 
was or was not; there was always a need -- but why was this not put into the 
general budget to begin with?

She thought the recommendation had been made to the Governor to put in a 
portion of the ACR's twenty-eight recommendations for funding.  And the Governor 
did put some of the money in his budget.  For example, the money for the Lifeskills 
programs and the treatment in the prison system.  This particular bill came out of 
some very early testimony in the interim study and Ms. North thought basically it 
was left for this other piece to pick up.  But there was a significant amount of 
money that was put into the Governor's budget.

Mr. Manendo surmised  A.B. 90 to be  a final piece of the puzzle, per se, that was 
not put in.  Ms. North concurred.

When the law of diminishing returns was applied, Mr. Marvel asked Ms. North if it 
would do anything with the consumption of alcohol to where maybe it was just a 
stand off.  It seemed to Mr. Marvel that "we just kept taxing and taxing."

"I tell you what," laughed Dorothy North, "it did an awful lot with MY consumption 
when I got sober!  I was drinking my share and half of somebody else's!"

Mr. Marvel noted that we kept taxing commodity increase - like we did with 
cigarettes: we actually did not really gain anything because consumption levels 
dropped off.


Ms. North stressed that Nevada had the highest per capita of consumption in the 
fifty states and the District of Columbia and she doubted seriously if the bill was 
going to make an enormous dent in that consumption.  She thought there were a 
lot of people who were drinking.  And a lot of them were drinking socially.  She had 
no problems with the ones who could do it and not have a problem with it.  What 
the money was earmarked to do was take care of the ones who had significant 
problems so the taxpayers did not keep paying for them at the back- end of the 
problem where it did not work.

Mr. Marvel agreed.  If the consumption dropped off, he wondered if there would 
be much of a gain in taxes collected.

One of the things that happened, replied Ms. North, was because the beer and 
wine was taken out of this tax in 1981, there was a drop because of the fact 
drinking patterns changed all over the country over a period of time: there was a 
drop in hard liquor consumption.  Ms. North did not think it had anything at all to 
do with the bill because only a very small amount of money was being spoken to, 
not a noticeable increase on a bottle or on a drink.  So she did not think it had 
anything to do with it.

Assemblyman  Maureen Brower asked about the recidivism rate (which apparently 
was real difficult to track with this type of situation).   If Ms. North were able to 
implement this type of plan, would she then also have an opportunity to track and 
to find out how many people were coming back, or how many people had been 
helped and how long it lasted?

One of the pieces that came out of the ACR 71 study was a piece that would give 
money to the Bureau of Alcohol and Drug Abuse to be able to do just exactly that, 
Ms. North explained.  One of the advantages in being a small state was one was 
able to do a lot more in terms of keeping track of a lot of people who had gone 
through treatment.  For instance, a lot of them who had been through treatment 
and the Vitality Center whom she continued to hear from years later.  She knew 
where they were and where they went after they left treatment.  A great many of 
those people were clean and sober.  Ms. North acknowledged  there was a need 
for a formal mechanism to gather that kind of data, which was one of the reasons 
why that piece of this group of bills was important.  She would like to be able to 
provide some hard numbers.


Mr. Schneider noted that Ms. North referred several times to the fact that Nevada 
was the highest per capita in consumption.  Nevada had about a million-four in 
population.  In those numbers, was the total alcohol purchased in the state divided 
by our population?  And did Ms. North back out  over 30 million tourists who 
visited Nevada  per year?

Ms. North thought Mr. Schneider posed a good question but was unsure of how 
the number was derived.  It was not her number, but she  had noted the number 
moved back and forth between Nevada and Washington, D.C.

Mr. Schneider remarked that, again, Washington, D.C. was a very high "tourist 
place."  He was curious to see what the numbers were when the tourists were 
backed out.  Nevada tourists came to gamble, and drinking and gambling went 
together.  The numbers he had seen lately were D.U.I. numbers  and they were 
falling all the time, and had been for the last decade.

"That was because of our tougher D.U.I. laws,"  Ms. North interjected.

"That would mean people were drinking less," Mr. Schneider commented.

"Or having designated drivers," sparred Ms. North.

Mr. Price said he was going to raise that question, also, because he had "go 
arounds" with surveys on taxes and the impact on Nevadans.  There was a 
tendency for most out-of-state organizations to not consider the tourists.  Mr. Price 
figured most of  the people who were consuming in Nevada were from California. 
 (The audience and Committee found that a humorous statement and there was a 
lot of laughter.)

"Nice try!" chuckled Ms. North.  "I can tell you one thing: if you look at some of 
the indicators we have in this state in terms of what people die of here, Nevada is 
significantly high in cirrhosis deaths."  She thought you could pretty well pin those 
down to people who lived here.  She did not think we had too many tourists who 
came here to die of cirrhosis.

Chairman Price noted that Assemblyman Bernie Anderson had arrived.   Mr. 
Anderson had chaired the ACR 71 Committee and the normal procedure was to 
have the chairmen of the committees or the sponsor of the bill speak first.

Mr. Anderson apologized for being late; he had been under the impression  the 
meeting was being held at 1:30 (not 1:15 p.m., as posted).


Mr. Price informed Mr. Anderson there was a doctor in the audience who was on 
duty and who wanted to testify. "Did Mr. Anderson mind if the Committee let the 
doctor say his piece?"

"Not at all," Mr. Anderson graciously replied, adding that questions directed to Ms. 
North would probably be best directed toward himself from the Study Committee.

Dr. Dick Newbold identified himself as an emergency room physician at Carson 
Tahoe Hospital;  the co-director of the Department of Emergency Medicine and had 
been there for ten years;  he was also Lt. Col. in the Nevada Air Guard, proud to 
be a member of the "High Rollers".  He was a flight surgeon and, as a clinic 
commander, he was on the commander's advisory board on drug and alcohol 
abuse.  

"In the military, if it was a drug problem, you were out; if it is an alcohol problem, 
they tried to work with you," Dr. Newbold explained.  There were problems with 
alcohol in the military.  In the hospital,  the inebriant may come to the emergency 
room and may not be sick enough to be hospitalized.  "What were they going to 
do with this patient?  Were they going to just send him home and hope for the 
best?"

Dr. Newbold was present representing the Carson Detoxification Center; he was 
 one of the founding members.  He could see that it had made a change in the 
community.  The Center was understaffed; they were underpaid.  But he could tell 
us that it was a joy to have them in the town because there were less admissions 
to the hospital.  The hospital was not going to get paid, generally.  The Center took 
the inebriants off  the Hospital's hands.  The Carson Detoxification Center was the 
start for the inebriants, hopefully, to get into a program to get well.  The inebriant 
generally had a family and friends, and that also played a role in our society.  So 
Dr. Newbold had seen, over the last three years, positive things happen in the  
community in the Carson Detoxification Center.

Dr. John Edgecomb then introduced himself.  He was one of Dr. Newbold's 
partners and also an emergency physician at Carson Tahoe Hospital.  He had been 
there for about eight years.  He was certified by the American Society of Addition 
Medicine;  and had served on the board of NASAC and was a past-president of the 
Nevada State Medical Association Physicians Health Commission.  He had done 
some consulting work for the Board of Medical Examiners in regard to substance 
abuse.  

The overall population at Carson Tahoe had probably doubled in the last eight years 
and Carson Detoxification had been operating for about the last three years.  It had 
made a tremendous difference in terms of the numbers of patients they had to 
admit for alcoholism.  As Dr. Newbold had stated, now there is a place they could 
go and get into "detox" and hopefully into a therapeutic community, rather than 
ending up in jail, on the street, or on a medical bed where they would be spending 
an awful lot  more money than they would in the "detox" program.  So he thought 
it made a tremendous difference in Carson City in terms of the management of 
what you do with the alcoholic in the hospital setting or the emergency room 
setting.


Chairman Price inquired if there were any questions; there were none.  After he 
expressed appreciation that the doctors had taken the time to join the committee 
meeting, he called Assemblyman Bernie Anderson forth.

The ACR 71 Study Committee, which Mr. Anderson stated he  had the "pleasure 
of chairing," was an outgrowth of the last session.  In 1993, they were terribly 
concerned about the issue of prison over-crowding,  mandatory sentences versus 
mandatory release, and the affect of parol and probation procedures under the 
criminal justice system, and finally the intervention between prison funding and 
other programs.  The study itself had come as a result of a judiciary question when 
 the prior  Judiciary Chairman,  Bob Sader, indicated that what they had been doing 
was not working.

The Committee membership of the ACR 71 Study reflected not just the Judiciary 
concerns, but also the concerns of Ways and Means, Health, and fiscal questions 
that were related to drug and alcohol problems.  Senator Joseph Neil of Las Vegas 
was the Chair of Human Resources; Senator Callister was the vice-chair from 
Senate Finance; Senator Mike McGinness of Senate Judiciary; Assemblywoman 
Vonne Chowning from Ways and Means; Mr. David Humpke from Ways and 
Means; Mr. Richard Perkins who was in on Ways and Means; and Mr. Toomin, who 
was on Judiciary; and himself as the Chair.


During the study, several major problems had been found in addressing their 
concerns that in part rested in the fact of the effectiveness of drug and alcohol 
treatment programs nationally and which would, in fact, be most helpful in terms 
of trying to cut the recidivism rate.  In trying to put together the study, they ended 
up selecting several major pieces of legislation, which were in the process of being 
heard in Judiciary.  There were twelve separate pieces of legislation and A.B. 90 
was the funding mechanism to take care of part of the load.

During the hearing of that particular bill, they heard no testimony against finding 
a funding mechanism.  Of course, it was never a pleasant question for any 
legislator to say, "We are going to tax you yet again!"  and to try to find good, 
available resources to do this.

In preparation to work for this, Mr. Anderson had asked several different people for 
the fiscal analysis and handed out the analysis of the net effect of the various bills, 
in terms of the "need" formula, of the twelve pieces of legislation (Exhibit D).  A 
22 percent  increase was being asked for in alcohol by volume for hard liquor (that 
would be $2.05 per gallon); and that liquor containing more than 14  percent  be 
up and including 22 percent in alcohol by volume--those were cordials, that are 75 
cents per wine gallon.  Liquor containing 14 percent by volume would be 40 cents 
per wine gallon by volume and malt beverage liquor of 9 cents per gallon be added 
in.
  
Some of the questions he already heard asked were  relative to how effective these 
kind of programs were. That was one of the frustrations of the ACR 71 Study 
Committee:  there was a lack of study that had been done.  The dollars they had 
to put in the State -- the very limited number of dollars and resources that had been 
utilized in this State to try to fund the few programs that existed had been put into 
programs, not into studies of programs.  One of the crucial questions they had 
dealt with in the ACR 71 Study was to find valuable data that related to the state 
of Nevada as to whether this program or that program was effective.  The total 
dollars that would be generated would impart over $1.6 million in additional 
revenue which would be used to fund the program.  


Mr. Anderson believed A.B. 90 to be a solid piece of legislation that came after his 
study. The actual cost for the program itself had to be determined by Ways and 
Means, but he thought it was a solid funding formula that was workable and one 
that he asked the Committee to keep in front of them to solve some of the financial 
problems in trying to cut down on the residuum rate on the huge prison costs that 
had a tendency to envelop the State.  He wished he could say it was the only 
means of solving the problem; he could never make that kind of statement.  He 
believed drug courts and treatment programs held the current, greatest promise of 
success.  It was going to benefit the population in terms of people on the job who 
would get to stay at work.  By putting them in treatment and diversion programs, 
it kept them paying their taxes so our tax base remained solid.  It cut down on the 
cost of putting families on welfare when the primary breadwinner went away.  Mr. 
Anderson felt this was good tax policy, as well as good public policy.  

He concluded by saying he would be happy to talk about the specifics of the ACR 
71 or, with a little help, talk about A.B. 90.  Chairman Price acknowledged there 
were several questions, the first from Assemblyman Joan Lambert.

Ms. Lambert referred to a chart regarding the proposed amendment from the 
Bureau of Alcohol and Drug Abuse.  She wondered if Mr. Anderson was aware of 
it.  "It was fairly simple," she continued.  "On line four, it changed Human 
Resources to Employment Training and Rehabilitation.  Basically, it looked like it 
combined the 15 cents that was currently going to the fund in Section 1 with the 
new proposed money in Section 2."  Ms. Lambert thought perhaps she had her 
funds mixed up.  "How many gift funds for the tax on liquor do we have in the 
State?"  she asked.

Chairman Price thought Mr. Ted Zuend, Deputy Fiscal Analyst, could respond to 
 Ms. Lambert's inquiry.  Mr. Zuend replied he was going to suggest the same 
amendment if A.B. 90 were to be processed further.  Apparently, when the 
reorganization occurred last session the  gift fund was not moved from the 
Department of Human Resources to the Department of Employment Training and 
Rehabilitation when the Bureau itself was moved.  That was why there seemed to 
be a conflict.  He had talked with staff who were directly involved with the fiscal 
aspects.  Actually, it would be better if that move be made and the account 
consolidated into one fund.

Mr. Marvel asked how much money was being talked about and how much was in 
the fund to be transferred.

"The additional money was about $1.6 million,"  answered Mr. Zuend.  The use of 
the money would not be changed.  The Bureau was still using the money for the 
purpose, but when the reorganization bill was written last session, the account was 
not changed.  The Bureau was changed from one department to the other, but the 
account was not.

There was no objection to the "clean up language" necessary to facilitate the 
movement of the bill, Mr. Anderson stated.


Mr. Marvel asked about incarceration  rates and wondered what percentage of the 
prisoners were inebriants versus those who were drug addicts.

"The differentiation between those who were there on the third-time alcohol, or 
those who were at time of incarceration, or...?" Mr. Anderson required a more 
explicit question from Mr. Marvel.

Mr. Marvel clarified his question: "Those who we actually attribute to being 
alcoholics or those who were substance abusers."

Mr. Anderson responded that, among our recidivous, almost 78 percent, and  
higher among women than among men.  Among the first time offenders, there was 
a smaller percentage:  44.5 percent among males and 44.6 percent  (or 46 percent, 
Mr. Anderson was not sure)  among women alcoholisc for drug-related crimes.   He 
was not talking about people whose incarceration was because of violating a law 
dealing with drugs, but those who were  at time of incarceration identified as 
having a drug and/or alcohol problem.

"You do not distinguish between the two?"  Mr. Marvel asked, sounding amazed.

"Yes, they had in those studies," Mr. Anderson replied.  He offered to get those 
figures to Mr. Marvel.  During the study time, that had been looked at.  It was in 
the ACR 71 Study document.

Mr. Anderson then launched into a lengthy dissertation wherein he recited many 
percentage statistics.  He summarized by stating, "So, if you combined the alcohol 
factor in the crime and the drug factor as the crime and the combined alcohol and 
drug, you are talking about 40 percent of the population."

"But drugs stand out far more than alcohol?"  Inquired Mr. Marvel.

"Yes, because there was the 22 percent in the first instance," confirmed Mr. 
Anderson, and then he added more statistics regarding factors by age groups. 

"We do have a tax on drugs when we catch them," Mr. Marvel wryly remarked, 
which drew more than a few chuckles from the audience.


Mr. Anderson concurred.  "There seemed to be a relatively high tax on drugs when 
we catch them, Mr. Marvel, but sometimes I think it is the public who is paying the 
big end of that: that $15 thousand a bed we end up paying for."

The Chair recognized Assemblyman Pete Ernaut, who voiced his concern:  "If this 
was of such a nature of importance that Mr. Anderson and Ms. North had talked 
about today, and the relatively small amount of money that was being talked about, 
why had it not been handled as a general appropriation rather than a user fee?"

Mr. Anderson acknowledged that Mr. Ernaut had asked a very good question.  
What we were coming down to was "why was it not in the Governor's budget?" 
 He thought there were certain parts of it that were included in the Governor's 
budget, but not  the entire package.  When the ACR 71 Study was completed, they 
had no way of knowing which way the Governor's program was going to go -- nor 
of knowing what it was going to take to fund the entire package.  So, when they 
began to look for resources, this seemed to be the natural place to look for a 
resource.  He believed the answer to Mr. Ernaut's question was, for example,  "the 
drug and alcohol counselor program, when the coordinator position was going to 
 be a question that came before Ways and Means to determine whether that 
position should be  funded in."  

"What was hoped was to provide... realistically provide... rather than hide some 
place and say, `Find it!,' we would come to you with a proposal so that you could 
have something in front of you -- whether the Governor decided to do it or not.  If 
the  answer was whether the Governor was going to include it in his budget, we 
felt the Legislature  would want to include it in our budget...if there was a 
difference in those two kind of concepts.  You would have ways of cutting down 
on prison costs and meeting programs  you needed, and we saw this as a possible 
source of revenue for you.  Did that answer your question, Mr. Ernaut?"    

Mr. Ernaut said that "absolutely answered the question."  Another question he had 
was with regard to the opinion of the Study Committee that this was "good tax 
policy."  Mr. Ernaut was not so certain that he agreed that industry-specific taxes 
or user fees were good public tax policy.  But, at least the ones that we had, i.e., 
the fuel tax, tire tax, car registration, etc., went more broad-based, common good 
and they were taken from a more broad-based swatch of people.  Obviously, the 
fuel tax went into building roads and everybody who bought fuel drives on a road. 
 Where Mr. Ernaut was "lost on the tax policy of A.B. 90 was the fact that, from 
anybody's numbers -- and quite a few had bantered around -- we are saying the 
problem drinkers who utilize these services are at best 20 percent of the market 


share, so-to-speak.  How do we say, as a matter of public policy, the other 80 
percent of the people who are not utilizing the service, but  paying the tax, are 
being treated in a fair manner?!"

"Without entering the whole philosophical debate on whether we should legalize 
drugs and then put a tax policy on marijuana bars," which Mr. Anderson guessed 
would be one of the alternatives, "with that kind of policy we could say we could 
reach all of the real users of alcohol and drugs." He guessed the reason this was 
a "good tax policy" was because it addressed one group of the alcohol users and 
asked the persons who actually used the product to carry part of the burden -- the 
largest share of the burden -- of the treatment program.  Since the taxpayer already 
carried a large part of the burden of keeping prisons open, it would be nice for the 
user and abuser of the program to pay for the treatment program.  They were not 
being asked to pay for the beds per se, but only for the treatment program area. 
 Mr. Anderson saw that as good tax policy.  

"Since there was a need for the program, should we have people who do not use 
alcohol pay for an alcoholic program or drug program?  We CAN reach those people 
who use  alcohol; we cannot, currently (under our existing statutes) reach those 
people who use other drugs!"  asserted Mr. Anderson.

Mr. Marvel interjected, "You can if you catch them!"

"Right, Mr. Marvel," Mr. Anderson acknowledged.  "We can take products away 
from them: cars, planes, trains, and toys and things like that..."

Mr. Ernaut had one final question: "In talking about having the person who is 
getting the treatment PAY: currently, in this program, does the person who 
receives treatment pay any portion?"


"ABSOLUTELY!"  exclaimed Mr. Anderson.  "That was one of the MAJOR key 
elements in the particular program.  In fact, the highest level of success in the ACR 
71 Study Committee rested with programs like the drug treatment program.  To get 
people into these treatment programs: if you are found in need of that program and 
put into a program, you will pay for that program over the year's time period.  In 
fact, if you cannot pay for it -- if for some reason you cannot because of your 
economic condition -- then you would have to do some public service programs so 
that you would qualify.  NO ONE IS GOING TO GET A FREE RIDE!  In order to 
understand the overall package, Mr. Ernaut, if I could have a moment!  Mr. Chair, 
this is a three-level kind of program..."

But Mr. Ernaut explained that he just wanted a quick answer in order to "get a feel" 
of what percentage the person who was getting the treatment paid and what 
percentage the program paid.  Mr. Ernaut suggested Mr. Anderson just provide one 
case to give the Committee an idea of what the subsidiary was and what came out 
of the pocket of the person getting the treatment.

Mr. Anderson thought it would cost a person who was in the drug court program, 
rather than being put in prison, his own pocket somewhere  in the neighborhood 
of $1,200,  depending upon how long he was going to be in the program.

"And the cost is how much of the program?" queried Mr. Ernaut.

"The cost of the program is $1,200," Mr. Anderson responded.

"I guess I do not understand," said Mr. Ernaut.  "What does this program pay for!?"

"These dollars will be for those people who are inside the prison walls in the 
second stage of a program," Mr. Anderson clarified.  "But that person who was in 
the drug diversion program did not go to prison, so he saved you $15,000 a year! 
 So he paid $1,200 for one year; you put him into prison for two years or three 
years.  That cost you $35,000 or $45,000!  So those are cost savings.  What this 
million-six is going to be used for ..."

Mr. Anderson was interrupted by Mr. Ernaut.  "Wait, Bernie,..."

"That is why I asked the question about the third stage! YOU HAVE TO 
UNDERSTAND ALL THREE AREAS!"  insisted Mr. Anderson.  "The front part, the 
drug court is the diversion program is a drug program; the second part is 
incarceration; the third part is the post-probationary period, in which case you have 
additional costs.  That additional costs are off-set by the $15,000 lost.  So some 
of this is washed through.  In order to keep these programs viable, we are going 
to need money.  And that is what tax policy is all about.  This gives you an 
opportunity for the Legislature to decide how much of it we are willing to come up 
to.  We felt it was necessary to give you that option."


"Wait!"  Mr. Ernaut exclaimed.  "Where do the revenues FROM THIS PARTICULAR 
BILL GO?  In WHICH phase?  You just said that it went to...once they were already 
incarcerated...that is not what I understood..."

Mr. Anderson deferred to Dorothy North of the Elko substance abuse center, whom 
he thought could better answer Mr. Ernaut than himself in the fact that she worked 
on the front phase more frequently than anyone else Mr. Anderson knew.

"To answer your question," Ms. North replied, "this is directed toward the front-
end.  If you remember in my testimony I talked about the whole ACR 71 thing 
being in three pieces.  This money is directed toward diverting some of these 
people out at the front-end of the system BEFORE they hit the prisons."

"RIGHT!"  Mr. Ernaut agreed.  "That is why I was confused!"

"Exactly," concluded Ms. North.

"In the midst of that, I am sorry Mr. Anderson, but you said this money went to the 
people who were INCARCERATED.  It did not make sense!  Because my point 
would be, if they are in jail how could they possibly be paying or offsetting any of 
the cost of this program?!"

"They do it when they leave treatment," Ms. North elucidated.  "Basically, if you 
take somebody into treatment who is deferred out of a court system or out of jail, 
they may not be employed at the time that they are referred to treatment.  BUT, 
when they leave treatment, they are gainfully employed and they pay on the bill. 
 It is done on a sliding fee schedule based on debt and income."

Mr. Ernaut wondered if there was any type of a record of how often the fees were 
collected.  He noted that incarcerated people rarely paid the fines levied;  how 
many paid for the treatment cost?

That was one of the questions being "wrestled" with in Judiciary, acknowledged 
Mr. Anderson.   He explained, "In Judiciary they were trying to determine what 
kind of materials we could hold people leaving the prison system responsible for. 
Obviously, when they were broke and out on the street, they were going to  
commit another crime to pay for just living expenses. So you cannot take all their 
dollars away.  But we have to set up a program to try to make sure they are going 
to be successful."

Mr. Ernaut did not disagree with Mr. Anderson, but pointed out  "If the perception 
of the program is that we are creating a subsidized detoxification program -- 
because that is what it has begun to sound like -- if, at the end, when the person 
got out of jail, there is no mechanism to have the monies paid back, and there is 
no ability to collect those funds, then what we have created in essence  is an 
excise tax on a specific industry to pay for a state run "detox" center!"

But Ms. North disagreed with Mr. Ernaut!  She explained that "detox" programs 
were labor intensive.  If you took someone into treatment who did not have the 
money to pay at the front-end, then you may be carrying that bill for a very long 
time.  Many people did pay.  They paid whatever they could pay based upon their 
debt and income and based on their ability to do that.  

"Basically, what was being subsidized -- just like in a public hospital -- was our 
ability to take people into treatment and provide the staff to divert them out of the 
system at the front-end.  That was an enormous cost-savings, not only in the 
county jails, but also -- if they are not diverted -- later on in the prison system to 
keep them incarcerated," Ms. North defended.

Mr. Anderson offered more statistics.  About 43 percent of admissions in the 
public-funded treatment programs in Nevada, came from the criminal justice 
system.  Because resources were limited, however, most programs were at 
capacity. 

"Therefore, the waiting list was so long the choices are to place them in the 
$15,000 institutions.  By increasing programs at the front-end, we made it 
available to those people, thus creating beds on the inside for hard-time criminals. 
 There was a dollar cost shift," contended Mr. Anderson.

 The question was "Who is going to pay?"  If that was Mr. Ernaut's concern, then 
Mr. Anderson said  this program was a possible source to generate the dollars.

"Do we need to put more people into program prior to prison?"  queried Mr. 
Anderson.  "The ACR 71 Study Committee said YES!"



The Chair interrupted at this point, and said it was obvious that there was a time-
problem.  In an hour, only the first four presenters had the opportunity to speak and 
the opponents had not yet voiced their concerns.  Mr. Price asked that the 
questions and answers be kept more concise.  With that, he acknowledged 
Assemblyman Jeannine Stroth.


Ms. Stroth asked Mr. Anderson about avenues for funding the programs -- and she 
DID NOT disagree they were successful -- but wondered if he took into 
consideration the liquor industry already contributed into the general fund in liquor 
tax revenues. From 1988 to 1993, between $13 million and $14.5 million had 
been put into the general fund by the liquor industry.  And, in addition to that, 
above that figure was the $600,000 gift fund which already existed to fund those 
programs.

Mr. Anderson answered affirmatively.  They looked at the fact that quite 
generously the resort industry in the state of Nevada did,  both through their 
alcohol tax and other taxes, support the heavy burden of funding most of the 
programs.  

"The ACR 71 Study Committee never doubted for a second the amount of 
contribution that was coming here," he declared.

Further, Mr. Anderson thought the question was not how much was currently being 
put into the "bucket" but, rather, what type of programs generated the problem 
may have a responsibility to try to solve the problem.  They were in the problem-
solving mode and felt it was incumbent upon the Study Committee to make a 
recommendation, NOT just to IDENTIFY a problem, but potential sources for funds 
to solve the problem!  That was the motivation; that came unanimously from the 
ACR 71 Study Committee.  They heard no testimony during the many hearings, 
both in the north and in the south (but chiefly in Las Vegas), to the contrary.  
Certain members of the resort industry CLEARLY recognized the high percentage 
of drug and alcohol problems created in their work place.  In fact, much of the 
business community supported this type of program to try to deviate people 
because of the high number of the work population who had these programs to get 
into these programs.

In some of the testimony that Mr. Anderson heard, there were industries that had 
diversion programs within their houses and made them part of their medical 
programs available to their own employees.  In ACR 71, they were attempting to 
make some of the diversion programs to cut down on the overall prison cost.  That 
was what they were looking for.


Chairman Price recognized Assemblyman Brian Sandoval who stated he had some 
actual perspective from being on the Judiciary Committee.  He knew they had 
passed out of Judiciary A.B. 96 and A.B. 88.  One of those assembly bills was an 
appropriation of  $350,000 to the drug courts in Washoe and Clark county.  From 
the testimony Mr. Sandoval heard in Las Vegas, that money was to be used for 
treatment.

He pointed out  Subsection 3 of Section 3 of A.B. 90 said the money raised 
through this tax would go to the drug courts and detention facilities.  "So was this 
an attempt to take two bites at the apple?"  There was money going to the same 
place.

Mr. Anderson replied he hoped they were not going to do that.

Mr. Sandoval started to clarify himself by saying the language of the bill, which 
said "the Bureau shall, to the extent..."

But Mr. Anderson interrupted Mr. Sandoval and said, "I do not believe we are trying 
to create...the two bills you are talking about do appear to create `two bites at the 
apple.'  And, after Ways and Means is through dealing with that, maybe they 
would have an opportunity to decide whether there is even going to be a core of 
the apple left standing!"

Mr. Anderson recognized Mr. Sandoval's concern  because of some of the things 
that had happened in Judiciary. "Originally, as the two bills were drafted, there was 
the Las Vegas Drug Court and there was everybody else,"  Mr. Anderson explained. 
 

"We had amended the first bill to include  the second judicial district of Washoe 
County to the tune of $100,000," informed Mr. Anderson.   

"If we were to do that, and after Ways and Means has given their blessing, and 
knowing the "apple eater" behind you there, it is not likely..." Mr. Anderson 
humorously remarked, eyeing Mr. Ernaut (a crack that drew scattered laughter from 
the audience), "...if we were successful with that, then the remaining dollars would 
be available to the rural counties in the event  they decided to pursue a drug 
program.  If the less urban areas of the state did not choose to follow that 
program, then the dollar would revert to the general fund."

"Yes, in a way we are kind of hedging our bet," conceded Mr. Anderson.

"Maybe a better way to ask the question," rephrased Mr. Sandoval, "is that, 
assuming that if Ways and Means were to approve the money in the other bills for 
those drug courts, how would that money be spent differently assuming A.B. 90 
were to pass?"

"Much differently," Dorothy North exclaimed from the audience, "because those 
go specifically to two drug courts, one in Washoe and one in Clark!  BUT we have 
these people in every justice, municipal, and district court statewide!  Basically, the 
money in the liquor tax would pick up all of these other people who would not be 
possible to pick up in the drug courts!"

Mr. Sandoval pointed out that one bill was for Washoe and Clark, which was 
$350,000; the other bill is $90,000 for everybody else.  So the rural did have the 
opportunity to obtain funding through that other bill.

Ms. North stated, "If that does go through, $10,000 would certainly help a little 
bit.  But that would not even pay for a third of a counseling position, if you add the 
benefits."

"I understand your distinction with the rural, " continued Mr. Sandoval, "but what 
is the distinction in the two in Clark and Washoe counties?"

"You have one drug court in Clark and the majority of the population of the state 
down there," replied Ms. North.  "You have a publicly funded treatment system 
that deals with a lot of people in the criminal justice system, but really does not 
have the ability to serve the numbers of people that need the services.  So there 
are a lot more people who need the services than can be picked up in that one drug 
court.  The same thing is true in Washoe."

"Let me add to that," interjected Mr. Anderson.  "The $100,000 that was added 
in for Washoe county second judicial court system: when the ACR 71 Study 
Committee did  their report, there was no drug court in operation in Washoe 
County.  In part, because  information that was discovered because of the success 
of the Miami court, Portland, Oakland, and another court that is successful in the 
United States:  Judge Lehman's court in Las Vegas,  Washoe County decided they 
were going to move into this area, also."


"Currently, Judge Lehman's court is handling 400 clients a year, and tries to keep 
a 400 client load,"  Mr. Anderson further elucidated.   "The additional dollars was 
the hope the eighth judicial district would be able to expand its court to divert more 
people into this program so we would be able to make more beds available for real 
criminals in the system."

"Pure and simple, what we are trying to do is encourage these kinds of diversion 
programs.  And the reason we believe these diversion programs are successful is 
because of their extremely high rate of success!  As compared to a regular court 
appearance of 10 percent, you are seeing, depending upon the best case scenarios, 
60 percent (in some cases).  And, of course, when you come to Judge Lehman's, 
as you well know, Mr. Sandoval, he has had two recidivists out of 174 who have 
successfully completed his program in the three year time period.  It is an anomaly! 
If we are only successful with 10 percent more of the drug population, this 
program pays for itself and frees up ten more beds in prison for real losers," Mr. 
Anderson debated.


Chairman Price wrinkled his brow as he looked at the clock.  "This is going to be 
a little tough," he concluded, "because of how many folks we have!  Now, I am 
going to switch to some people who are in opposition, so we can get some fairness 
in today.  And, we were perusing this guest list, trying to figure out who are from 
out of town.  It is obvious that we are going to have to continue these hearings 
beyond today.  I know there are people here from out of town who perhaps are 
here just for the day; we will try to have those people testify before we have to 
adjourn."  Mr. Price pleaded for everyone to try to keep their testimony as brief as 
possible.  Saying that, he recognized Mr. Peraldo.

Mr. Randy Peraldo from Winnemucca stepped forward and identified himself as 
Vice President of L. W. Peraldo Co. and co-owner of a distributing company, plus 
the current President of Nevada Beer Wholesalers.  He said the Beer Wholesalers 
Association was an organization of ten beer wholesale distributorships located 
throughout Nevada.  As an organization, they opposed A.B. 90.


"Members of the Committee, my family has been involved in the distributing 
business since 1933 when my uncle started the L. W. Peraldo Company," informed 
Mr. Peraldo.  "From the beginning, we have been a responsible, local business.  
Personally, our company contributes to almost every civic activity in our whole 
area.  We contribute to every local school fundraiser, we help out the kids' rodeo, 
we have strong supporters of 4H activities, and the National Child Safety Council. 
 In addition to local financial support, we provide educational materials and 
programs to schools.  We sponsor a program that teaches families to talk about 
drinking and offer all the brewery-sponsored programs to schools and civic 
organizations.  Because Winnemuca is a small town, we are not involved in some 
of the programs that the larger distributors participate in."  

"Other members of the association participate in programs that pay for cabs for the 
people who have had too much to drink," continued Mr. Peraldo.   " We work with 
the bar owners to provide non-alcoholic drinks to the designated driver.  We all 
participate in the We I. D. Program that teaches retailers how to I.D. purchasers of 
beer."
 
"Those distributors located in university towns sponsor responsible drinking 
programs on campus.  During spring break, they set up pit stops that serve coffee 
and soft drinks for those on their way to their vacation spots.  In addition to this 
broad-range of activities, we contribute to local alcoholic abuse programs and we 
spend significant amounts of money (to) advertise in advocating safe and 
responsible drinking,"  Mr. Peraldo informed the Committee.

 "I would hate to have to see our dollars we reserve for these activities reduced 
because we were forced to contend with yet more alcohol taxes!  These programs 
have documented success.  We are proud to be a contributor to the effort to 
encourage responsible drinking, stop underage drinking, and prevent drunk driving!" 
Mr. Peraldo expounded.

The Nevada Beer Wholesalers Association is opposed to the increase in excise tax 
on alcohol.  To further explain our position, I would like to introduce, as you all well 
know, our Legislative Counsel Harvey Whittemore."


Mr. Peraldo turned the microphone over to Mr. Harvey Whittemore, who introduced 
himself, saying he was a partner in  Lionel and Collins, appearing on behalf of the 
Nevada Beer Wholesalers, and was also Legislative Counsel to the Nevada Resort 
Association.  They opposed A.B. 90.  They had members who would appear on 
behalf of the Resort Association.  He thought it was important, and he tried to limit 
his remarks so that other opponents could testify, because he presumed he would 
have another opportunity, if there was another hearing, to testify.


Mr. Whittemore felt that A.B. 90 did a couple of things  the Committee needed to 
focus upon in order to ask some questions about certain things.  "In 1981, the 
Legislature made a decision to allow for, the first time on an allocated and 
earmarked basis, certain transfers of monies associated with, under 369.174, 
certain funds in excess of the tax rate (at the time $2.09 which was now $2.05) 
to be used for certain programs."

 "So we have a historical perspective this body needs to be aware of!"  Mr. 
Whittemore declared.  "From 1982 until the present, you have spent over $6 
million on the programs which have produced the valuable results which is the 
geneses for a continuation of the ACR 71 studies.  We have the highest regard for 
Assemblyman Anderson's work with respect to that Committee, but the point that 
 was made then and is made now: we did not come in and testify in opposition in 
the Judiciary Committees with respect to the programs that are being proposed as 
ways to help generate savings to the State with respect to drinking and drug 
problems.  That is NOT an appropriate policy decision for our organization or 
anyone else to engage in other than to say to you that we support those activities 
because, indeed, we believe they do save the State dollars."

 "That raises the second question, which I am going to tell you," continued Mr. 
Whittemore. "Not only have you spent substantial money on the earmarked funds 
-- again, close to $6 million -- the question becomes, of the $40 million worth of 
taxes that the beer industry pays -- not the liquor, not anybody else -- through 
sales, and the liquor, your excise and license tax -- if it is this Committee's 
judgement that a percentage, an additional amount of money from those dollars 
should be spent in fund programs, we would certainly not object.  The point simply 
is this: we believe that under ANY SCENARIO if you say the problem associated 
with drinking trying to move people away from a situation where they end up in 
prison, certainly have sufficient dollars available NOW to fund those programs 
appropriately from the general fund.  It is a policy question."

Mr. Whittemore further explained: "When we had the ACR 71 hearings, we 
monitored those and, as Assemblyman Anderson has suggested, there was no 
opposition because we felt the funding mechanism which would ultimately be 
described would be included in a general fund budget where you were going to 
make tough choices with respect to allocation of dollars.  And clearly dollars that 
are sufficient to fund these programs."


"Let us talk about the taxes we paid and what happens when you tax an industry 
excessively," suggested Mr. Whittemore.  "In 1981, when you had increase in 
excise tax, we saw a decrease in the tax revenues generated in the State.  In 
1991, when the federal excise tax was imposed, you had a SIGNIFICANT decrease 
in the total revenue dollars that were generated.  Again, if you propose an 
economic model, you will see that, as you tax and continue to raise taxes, you will 
see some elasticity and you will see the product being used less simply because 
you are pricing it out of the range of certain folks.  So, again, you saw 
consumption figures stay relatively stable in the state of Nevada even though we 
had significant growth!  I think that is appropriate that we look at!  In 1987, you 
were at 37 million gallons in terms of beer and consumption.  In 1992-93, you are 
at 47 million.  So in the span of those five years, you have had a SIGNIFICANT 
increase, but that is basically attributable to the increased tourism growth AND 
NOT necessarily with respect to increased consumption of the product itself!" 

"So the point is that there is a concern with respect to elasticity with respect to 
this tax.  The simple fact of the matter is, as Assemblyman Sandoval and 
Assemblyman Ernaut correctly pointed out, the money utilized for THIS bill HAS to 
be utilized for those programs associated with people who have been arrested, 
accused, or convicted of a crime!"  emphasized Mr. Whittemore.  "If, in fact, you 
want to say and give direction to the Department that it is an appropriate use, all 
you have to do is to go back to the initial 369.174 and indicate that, within that 
program, you can use these types of funds for this type of program.  Because, 
indeed, what you have in existing law is that all money received by the Bureau 
pursuant to 369.174 MUST be used to increase services for the prevention of 
alcohol abuse and alcoholism and for the detoxification and rehabilitation of 
abusers!  YOU ALREADY HAVE THAT LAW!  And therefore, when you are trying 
to identify specific programs and identify funding mechanisms, I believe that what 
you are trying to do is NOT only get ONE BITE of the apple, I think you are trying 
to get FOUR or FIVE!   If you make the policy decision that the programs are 
appropriate to be funded, we clearly have significant dollars from this industry 
alone that would seem to make it an appropriate choice from a Ways and Means 
perspective to send these bills over and say, "Are these appropriate mechanisms 
to fund?"


Mr. Whittemore concluded by saying, "I would be happy to answer any questions. 
 I know lots of other people who are in opposition.  Again, we have provided, and 
will be able to provide information with respect to the dollars that have been 
previously identified.  We WHOLEHEARTEDLY support the notion that, in ten years, 
under 458.097, somebody should be able to do a study which shows what you 
have done with that money, what has been the increase in staffing levels, what 
sort of patient load you have increased and provided, and, again, one of the most 
important things that I think in Ted Zuend's memo (Exhibit D) to you is the notion 
that indeed, if these programs are as successful as they have been suggested, they 
will pay for themselves!  You do not need to reallocate and garner additional dollars 
if you impose and say, "Use the programs and do what you are supposed to do," 
you will save dollars.  That is the substance of that memo.  And,  again, I would 
like to quote from it:


`This package of bills, while requiring certain appropriations and
higher program costs for various state agencies, is primarily designed 
to divert certain drug and alcohol offenders away from the jails and
prisons in the state and into treatment and rehabilitation programs.
If successful, the approach will free up jail and prison space and
make available to house more serious offenders.'


The substance of that is if, in fact, you make that policy decision that you believe 
that statement, you will be able to fund these programs out of the savings 
associated with the implementation of the program.  Therefore, you do not need 
the tax!  I will be happy to answer any questions.  Again, I will be available at 
future hearings and I appreciate the Chair's accommodation of Mr. Peraldo."


It appeared there were no questions.  Mr. Price announced he would take two more 
on the against side.  With that, the Chair recognized Mr. Van Heffner, who 
requested that his letter, (Exhibit E), be distributed to the Committee.

Mr. Van Heffner, President of the Nevada Hotel-Motel Association, began his 
testimony.  He stated they represented 160 hotesl, casinos, and motels throughout 
Nevada, with over 60,000 rooms.  Plus, Mr. Heffner was President of the Nevada 
Restaurant Association, which represented over 500 restaurants throughout 
Nevada.  The groups alone provided jobs for over 160,000 Nevadans.

On behalf of the associations, he was OPPOSED to A.B. 90, which would increase 
excise tax on liquor to provide treatment for alcohol and drug abusers.  The 
Association represented over 500 restaurants with over 30,000 Nevadans alone 
in the restaurant industry.

They opposed the bill for the following reasons:

1.	It placed an unfair responsibility on casual and responsible drinkers to pay 
	for the burden of individuals convicted of crimes.

2.	It increased the financial burden on restaurants with already declining sales 
	in ratio to food sales.

3.	It increased taxes on liquor, adding direct inflated cost to the customers and 
	greatly impacted tourism.

4.	It set an undesirable precedent for responsible users to pay for abusers of 
	alcoholic beverages and drugs.

Having declared the formal statement from the Associations, Mr. Heffner thanked 
the Committee and said he was more than happy to respond to questions or 
comments.


There being no questions, Chairman Price switched to those who waited to testify 
in support of the bill.  He recognized Ms. Willie B. Smith.

Ms. Willie Smith, Vice President and C.O.O. of Westcare in Las Vegas, came forth 
to testify in favor of A.B. 90.   She stated she was a forty year resident of Las 
Vegas, so she felt she was acutely aware of the social problems related to 
substance abuse -- not only in the southern Nevada community, but across the 
state.

Westcare was a private, non-profit agency that provided a variety of treatment and 
prevention services.  They offered several protective custody, detoxification, long-
term residential services for adolescents and for adults, transitional services, and 
aftercare services.  They served over 40,000 individuals annually and turned away 
15 to 20 people per week because of a lack of bed space.

In their youth emergency shelter, which was for runaway and homeless youth, 79 
percent had problems or experimentation with drugs and alcohol.  In their adult 
long-term residential program at Harris Spring Ranch, 200 people were served.  
There are 31 people on their waiting list for that program, 20 of whom were 
criminal justice referrals.

Ms. Smith stated that 77 percent of the clients they served were low-income or 
indigent clients.  Their clients represented the highest level of severity for chemical 
dependency and, at the same time, represented the lowest level of psychological, 
social, vocational, and family types of resources.  She said 51 percent of their 
clients in their residential adult treatment program were criminal justice referrals 
and 60 percent of their adolescents were criminal justice referrals.

The statistics Ms. Smith received from the Department of Prisons in February 
indicated there were 6,118 inmates, 82 percent of whom had substance abuse 
problems.  Many would need treatment when they left prison.  Westcare programs 
were operating at capacity and there were waiting lists.  She was sure many of her 
co-workers could share similar statistics.

Ms. Smith strongly urged the Committee to pass A.B. 90.  She felt passage of A.B. 
90 was pro-active, especially in light of the problems that existed in Clark county 
alone as the population approached 2 million.  She added that she personally 
believed treatment worked.  She stated that 74 percent of Westcare clients who 
completed their community care programs remained clean and sober.

Ms. Lambert asked Ms. Smith if Westcare received any monies from the Bureau of 
Alcohol and Drug department and Ms. Smith replied that 45 percent of their budget 
included funds from them.

Ms. Lambert queried if any monies came from the 15 cents that came from over 
22 percent alcohol tax; Ms. Smith said their civil protective "detox." received funds 
through the liquor tax that was passed in 1981.

Mr. Ernaut requested expansion on Ms. Smith's statement that 45 percent of 
Westcare's funds came from the Alcohol and Drug Abuse department. "Where did 
the other 55 percent of the funds come from?"  Mr. Ernaut asked.

"Contracts with the federal government," Ms. Smith replied, "as well as a 
development person on staff who was active in raising funds through private 
sources."  Their annual fundraiser dinner netted them $50,000 for treatment 
services.  Focus Foundation had donated funds, as did the Lindsay Foundation.  
Ms. Smith thought Focus had awarded them $25,000 and Lindsay $25,000, as 
well.  Also, they secured some contracts from Clark county juvenile court for some 
referrals.


Mr. Ernaut wondered if, of the 77 percent of people who were indigent and the 51 
percent who were referrals from the criminal justice system, ANY of those people 
paid for the treatment, or was it completely subsidized?

"For some, it was completely subsidized and others paid," was Ms. Smith's 
response.    Once they completed the residential treatment program, they moved 
into a phase called transitional care.  In transitional care, they went to work: it was 
a live in, work out program.  When they secured jobs, they paid based upon 
whatever their income was.

"Generally, Westcare's program was subsidized by federal or state tax dollars in 
one mechanism or other,"  concluded Mr. Ernaut.  He asked for a ballpark figure of 
the budget.

The majority of support came from public funds, concurred Ms. Smith.  Westcare's 
budget was $2.5 million, including all the federal contracts, etc.  The client fees 
were about $400,000.

Mr. Price recognized Assemblywoman Maureen Brower, who was curious about 
success rate of Westcare clients.  She requested figures from Ms. Smith.

Before Ms. Smith attempted to answer Ms. Brower, she reiterated what she said 
earlier.  "Westcare clients represented the highest level of addiction severity.  They 
also represented the lowest level of .... resources.  That meant most of them did 
not have a lot to look forward to when they completed treatment."

Those clients who went through their long-term residential program and 
successfully completed that phase (approximately 55 percent), then went on to 
transitional. In transitional, 70 percent completed. In the community care treatment 
phase (active care before they were eligible for program graduation), 74 percent of 
their clients completed.  The longer the clients were in treatment and exposed to 
services, the higher their successful completion rates were.


Chairman Price thanked Ms. Smith for her testimony and then called forth Mr. 
Kevin Quint, who wanted to speak in favor of A.B. 90.


Mr.  Kevin Quint stepped forward with Ms. Kelly Crosbie.  Mr. Quint introduced 
himself, saying he was President of the Nevada Association of State Alcohol and 
Drug Abuse Programs (NASADAP).  His association represented the community-
based substance abuse treatment programs in Nevada.  NASADAP urged the 
Community to pass A.B. 90.

Mr. Quint distributed a leaflet regarding NASADAP's mission statement (Exhibit F) 
 and a booklet entitled "Invest in Treatment for Alcohol and Other Drug Programs: 
 It Pays" (Exhibit G), plus a "Per Capita Table of Financial Expenditures" (Exhibit H).

He explained that substance abuse was a primary and chronic condition that 
required treatment.  If left untreated, the disease was often progressive and fatal. 
 In our state's efforts to stem the tide of substance, treatment programs were 
effective.  Recent studies nationally and in California showed that treatment 
resulted in less crime, less medical problems, less welfare, increased employment, 
and savings all around.  In fact, for every dollar put into treatment, there was a 
savings to society of $7.00.

In Nevada, service delivery was a public-private partnership.  The beer or alcohol 
abuser, or BADA funneled money to community-based, not-for-profit programs 
throughout Nevada.  Treatment services were provided in a continuing service in 
a non-hospital or free standing setting.  Some of the points of interest were BADA 
funded 26 treatment programs at 40 sites; 6,740 individuals received treatment, 
services in FY94, ranging from "detox" to long-term residence or care.  Another 
9,300 were served in civil protective custody (C.P.C.).  An additional 10,000 youth 
were reached through prevention programs funded by BADA.  Populations included 
pregnant, addicted women, and women with dependent children.

In 1994, 37 percent of people treated in the programs were criminal justice 
referrals; however, that did not count the ones who told them after admission they 
had criminal justice involvement.  Many programs served a higher proportion than 
that.  For instance, Mr. Quint's program in Fallon served at least 55 percent 
criminal justice.  For every dollar of state or federal funding, the average program 
raised $1.15.  The 1994 annual budget for BADA was $10.1 million; 65 percent 
of funding was from the Federal Substance Abuse Treatment and Prevention 
Treatment block grant.

Nevada ranked 39th of 50 states (shown on Exhibit H).  It showed that Nevada put 
in 39th in per capita in the 50 states, which meant only 11 states put in less than 
we did per capita in treatment.


To illustrate their funding program, Mr. Quint pointed out the last funding cycle 
(calendar year for BADA for treatment): four times the amount of funding was 
requested than available to give to programs.  He had been selected to review 
grants and look at requests for funding.  What he found was many worthy and 
needed proposed services could not be funded and existing programs had to be cut. 
 

"Funding decisions were analogous to: which would you rather do, cut your left leg 
off or your right leg off?  The bottom line was Nevada growth out-paced funding 
for treatment," asserted Mr. Quint.

In March of 1993, Mr. Quint said BADA conducted a survey of funded treatment 
programs to determine waiting list information.  Based on information from this 
survey, 1,786 individuals were placed on waiting list in each year of the 1995-96 
biennium.  At any point, over 37 percent would be on the list for over 30 days.  
Programs generally reported a correlation between length of time on a waiting list 
and not accessing treatment.  In other words, if the clients had to wait very long 
the nature of the addiction dictated that most did not show up for treatment.  What 
that translated to was more substance abusers would be more involved in the legal 
system in accessing medical and social services, and homelessness, 
unemployment, and more.  

Passage of A.B. 90 would enable them to treat more clients and work more closely 
with the criminal justice system to provide appropriate alternatives to incarceration 
for certain substance abuse charges.  Nevada was faced with escalating prison and 
criminal justice cost, as well as other cost related to substance abuse.  In order to 
reverse this trend, Mr. Quint urged the Committee to pass A.B. 90.

Mr. Marvel wondered if anybody actually worked out a line item budget of how the 
$1.6 million would be spent.  Ms. Kelly Crosbie elected to respond.  She stated 
that all of the state funds available for private, non-profit treatment programs were 
applied for in the same process as Mr. Quint had described: the request for 
proposal process, where programs applied for money were graded based on need. 
 The programs were ranked and funding decisions were made.  In Nevada, there 
was no continuum of care; there was no basic service that blanketed the state.  
When programs applied for monies, they applied for the $600,000 in total, with the 
rest of the state and federal dollars available.


Mr. Anderson added to Ms. Crosbie's remarks, and explained that most of the 
dollars would be straight, flow-through dollars controlled through the BETA 
program.  Depending upon the number of pieces of legislation from the ACR 71 
Study, if the whole Study package were to pass as written, there would be a 
Nevada Association of State Alcohol and Drug Abuse Program (NASADAP) and also 
a treatment provider for Fallon, approximate cost of $9,600 over the biennium.  
Mr. Anderson believed they would  generate per year $1.6 million.

Mr. Marvel wanted to know what portion was in the present budget, to which Mr. 
Anderson replied the Governor's budget included a major element in the post-
program, the Lifeskills Project for example (which had not been approved yet).  As 
well, the coordinator for the program needed to be approved by Ways and Means. 
 
Mr. Marvel said he wanted an idea of what was presently in the Executive budget, 
what was outside of it, and how the Committee was going to have to plan to 
amend the budget.

But Mr. Anderson did not believe they had been able to make a complete study of 
the Governor's budget yet; he had not asked anybody to do that so far.  The last 
document he had asked for was from the Fiscal Division, dated February 1995 
(Exhibit D).  Exhibit D detailed provisions for various bills.  The addition since that 
report was for the second judicial district of $100,000 (an amendment that was 
to go before Ways and Means).

A major piece of legislation Mr. Anderson expected to introduce included the 
Governor's major package on juvenile and sentencing area, which was to go before 
the Judicial Committee soon.

Mr. Marvel asked if there was to be any duplication with ACR 71 and what the 
Governor proposed.  There were, according to Mr. Anderson.  And that was what 
they were waiting for in terms of trying to make the total analysis of how much 
was  going to be recommended in the Governor's program and how much was 
"stand alone."  A.B. 90 was not included in the Governor's package.

The Chair recognized Mr. Spitler, who questioned  Mr. Anderson.  "What would be 
the total cost for the delivery of all the services anticipated in ACR 71?"

Mr. Anderson quickly responded, "$1.6 million over the biennium if every one of 
the ACR 71 programs were to be funded."


The things Mr. Spitler had seen in Ways and Means did not have any funding 
mechanism, so that meant they were being funded from the general fund.  Based 
on that, it would indicate this was a much larger dollar amount for the full Study. 
 For example, Mr. Anderson indicated Lifeskills was part of the Governor's budget, 
which had a significant dollar amount attached to it.  Mr. Spitler and Mr. Anderson 
both had the impression that it was several million dollars.

Mr. Spitler emphasized to the Committee the importance of knowing what the total 
dollars were for the package for ACR 71.  He wanted to know how much was 
already in the budget funded through a general fund appropriation or through 
Federal grants already in place.  How much would then be "unfunded?"  Was not 
A.B. 90 following up with the "unfunded" portion of ACR 71?

Mr. Anderson generally concurred, but did not have a dollar amount.


Mr. Price recognized Ms. Kelly Crosbie, who testified in favor of A.B. 90.  She 
identified herself as the former director of the Carson Detoxification Center, the 
state-funded detoxification program.  Also, she appeared as a representative for the 
Taxpayers for Yes to User Fees organization.  Ms. Crosbie handed out a folder of 
information (Exhibit I) for the Committee's review.


She supported A.B. 90 because it was a user fee tax.  The tax only affected those 
people who used alcohol.  Rather than asking for an increase in general fund money 
where all Nevadans (including the 30 to 40 percent who did not use any alcohol) 
to pay, A.B. 90 applied to those people who used alcohol.

A.B. 90 raised the alcohol tax earmarked for substance abuse treatment for the 
first time in 14 years.  The revenue generated by the increased tax would be 
allocated to non-profit substance abuse treatment programs in Nevada.

Non-profit treatment programs currently competed for approximately $600,000 
raised by the 1981 level of excise tax. The figure had remained flat around 
$600,000 since 1991.  Unfortunately, the real value of the dollar had decreased 
considerably in the last 14 years.  In essence, the treatment programs were 
receiving less real dollars for providing considerably more real services than in 
1981.


Ms. Crosbie thought the tax increase very reasonable.  In fact, in 1989 the Surgeon 
General C. Everett Coop said (according to Ms. Crosbie), "I strongly recommend 
states consider 5 cents a drink to be the minimum tax increase.  After all, who 
could quarrel with a nickel a drink user fee that would generate millions of dollars 
to help save lives?"

Hence, she felt the proposed tax increase in A.B. 90 to be minimal.  The increase 
ranged from a penny increase to a 21 cent increase per wine gallon.  That 
translated into a range from a  low of nine one-hundreds of 1 percent increase on 
a can of beer, up to sixteen one-hundreds of a cent increase for a shot of whiskey.

"In other words," Ms. Crosbie said, "the tax increase was so minimal, you would 
have to drink 10 beers in order to pay one extra cent in tax.  Even for the largest 
increase, the 21 cent increase on hard alcohol, you would have to drink six drinks 
in order to pay one penny in tax."  She thought that was reasonable.  The Surgeon 
General had suggested a nickel a drink.  A nickel a drink for that shot of whiskey 
would mean a tax increase of $6.40!  A.B. 90 asked for 21 cents.  It was not a lot 
for the benefit it brought to our state.

It was estimated this tax would generate an additional $1.6 million for the 26 
programs that currently provided all of the non-profit state funded substance abuse 
programing in Nevada.  The money would go to staffing additional counselors to 
treat adults and juveniles who were involved in the criminal justice system because 
of their substance abuse problems.  That by itself would be a  great benefit to the 
citizens of Nevada.  However, Ms. Crosbie thought it was not the only benefit of 
A.B. 90.

Besides increasing the staff of private non-profit agencies, there was significant 
public health benefits that occurred when a state raised its alcohol tax.  For 
example, alcohol-related traffic fatalities declined, alcohol-related fatalities such as 
death from cirrhosis of the liver declined, the frequency of teenage drinking 
declined, and the high school graduation rate increased.

Any legislation that would result in a reduction in alcohol-related fatalities and 
increased high school graduation rates while raising money for treatment, yet only 
affected those who used alcohol seemed like excellent legislation for the citizens 
of our state.


Currently, Nevada had some serious public health problems we all paid for.  Nevada 
ranked third in the nation in rate of incarceration.  Nevada was second in alcohol 
consumption per capita, but 39th in the per capita expenditure for substance abuse 
treatment and prevention.  Nevada ranked third in the nation in alcohol-related 
mortality and  ranked near the top of the nation in high school drop out rates.

Ms. Crosbie thought the A.B. 90 to be a minimal tax increase that would go a long 
way toward addressing some of the problems.  It was not reasonable to expect 
private, non-profit treatment programs to continue serving more and more patients 
with less and less money.  Nevada's tax on beer, wine, and spirits ranked near the 
bottom when compared with the 50 states.  In addition, if you looked at the 
western states -- those that surround Nevada -- Nevada's tax on beer, wine, and 
distilled spirits was well below the average.  In conclusion, Ms. Crosbie said, "This 
is a bill whose time has come."  With that, she thanked the Committee for their 
consideration and said she would be happy to answer any questions they had.

 Mr. Schneider had a "tongue-in-cheek" question about Ms. Crosbie's logic in that 
if "we upped the tax to $10, would that result in 100 percent graduation rate in 
high schools and no deaths."  

She said it had been proven in two studies in the last ten years that when you had 
a high minimum drinking age such as 21 and a high alcohol tax (particularly a beer 
tax), high school graduation rates went up.  She added that the program which 
applied for monies had about $600,000 to apply for.  If one divided the 26 into 
$600,000, the result was funding ONE COUNSELOR at $23,000 per year, 
including fringe benefits.  Basically, what the tax paid for now was maybe 26 
counselors statewide.  The problem went beyond something that 26 counselors in 
Nevada could treat.


It appeared there were no further questions for Ms. Crosbie, so the Chair 
recognized Mr. Greg Ferraro.


Greg Ferraro introduced himself as the Vice President of R&R Advertising and 
Public Affairs in Reno.  He was present representing the Nevada Resort 
Association.  He stated that the N.R.A. was opposed to A.B. 90 for many of the 
reasons several of the witnesses explained earlier in opposition to the bill, but 
principally because they did not see the need for another tax increase -- particularly 
consumption tax increase.  Current statute seemed to be adequate.  The revenue 
generated by statute seemed to meet the needs of the program.  He reiterated the 
Nevada Resort Association was OPPOSED TO A.B. 90!

Assemblyman Mark Manendo declared he had a real problem that it was not put 
into the general fund to begin with and also, since it was not, he wondered what 
happened to the big surplus of money they had?  Although he was not a member 
of the Ways and Means Committee,  he was on the Judiciary Committee and saw 
the need for these types of program and staff.  Maybe a member of the Ways and 
Means Committee could answer  why we could not just funnel that into the extra 
surplus that supposedly we had...

Mr. Marvel interjected that "we had 50,000 special interests looking at that 
surplus!"

Mr. Manendo said he "definitely understood" that.

The Chair called for Alicia Smalley the Legislative Chair of the National Association 
of Social Workers who had indicated she wanted to testify in support of A.B. 90. 
 Ms. Smalley had to leave; the meeting had progressed beyond two hours by that 
time.  However, her  written testimony was entered for the record by Ms. Jan 
Gilbert  (Exhibit J).

Mr. Price invited Mr. Bobby Compton to testify.  He announced that he was 
appearing in behalf of Carson Detoxification Center and informed he had been 
through treatment himself.  Presently, he was a counselor/case manager; he was 
also a certified alcohol and drug abuse counselor.  Mr. Compton informed the 
Committee he had been through the recovery system for six years.  The program 
was especially important for the youth.  Initially, when he tried to get into 
treatment six years ago, he had been denied in Carson City because there was 
nothing for the youth.  As a counselor now himself, he dealt daily with people 
whom had been denied due to no room.  They were understaffed.  He voted YES 
FOR A.B. 90!


Mr. Price thanked Mr. Compton.  Mr. Price commented to the audience that most 
committees really appreciated having people who had gone through programs who 
came to talk to them, even though it was a little tough sometimes.  He again 
thanked those who did very, very much.



Saying that, Chairman Price called forth Mr. Whitey Engeseth, a Chaplin, who 
wished to testify in favor of the bill.  Mr. Engeseth explained his first name was an 
accepted nickname and announced he was the Chaplin at Washoe Medical Center, 
and had been for 29 years.  Before that, he was with the veterans administration. 
 He also had attended Rucor's School of Alcohol Studies, Utah School, etc.  His 
wife was on the Board of Ridge House.

Mr. Engeseth talked about the spiritual side of alcohol, declaring alcohol was a 
blessing.  No one had addressed the SPIRITUAL SIDE of alcohol yet, and he wanted 
his testimony to be in the records so as to reflect a bigger picture than had been 
painted thus far.

 "The ancient Jew, as well as the contemporary Jewish family, considered wine a 
part of their blessing service for their meal.  The second part of it was:

"Blessed art thou oh Lord God of our Father's King Eternal
who bringeth forth the fruit of the vine to gladden the heart 
of man."

It was part of the meal.  Jewish people tended to have a lower rate of alcoholism 
than Protestants, particularly Scandinavians (who were "bad" for it).  

Christians for thousands of years used wine as part of their ritual meal; it had been 
the focal point of their religion.  "So it was a real blessing!  It was a delight!"  
asserted Mr. Engeseth.

Mr. Engeseth informed that he came from a long line of alcoholics, but he was not 
one himself.  He was thankful because that meant he could still have that glass of 
wine and receive that blessing.

"It was unfortunate the churches were not faster in acknowledging that alcoholism 
is a disease that had some terrible effects."  Mr. Engeseth talked about Alcoholics 
Anonymous and his involvement with the A.A.  What he had learned was with 
alcohol and use of drugs was that it was not just the alcohol.  We talked about 
detoxification; we "dried somebody out."  He thought we did that fairly well.


As a licensed Marriage and Family Therapist, he discovered it was not just getting 
the alcoholic "clean," ("serine," if you were on drugs),  but to teach the things to 
help those people to function well in life.  It was also a question of education to 
learn how be a functional person in society.

Sometimes, when a person got in trouble with the law, it could be a turning point, 
and intervention for the person.  Instead of having a criminal record, they could be 
taxpayers like everyone else and no real problem of the law.

"Alcohol is a blessing," reiterated  Chaplain Engeseth.  "But, like all blessings, it 
could go bad."  He was very much in favor of A.B. 90 insofar as juvenile offenders: 
it gave a chance to intervene while they still had a life ahead of them.


Chairman Price thanked Mr. Engeseth, then announced there was a problem 
because the next set of meetings had already begun without some of the 
Committee members present.  He asked people who testified to please try to keep 
their statements brief.

Ms. Carole Vilardo, President of the Nevada Taxpayers Association, stepped 
forward to testify in opposition to the issue of tax policy.  She explained she was 
not present to address the public policy issue.  She felt that was for other 
committees to do (Judiciary as a public policy issue).  And she felt the ultimate 
amount of money that might be required, if this were to be accepted by those 
committees as good public policy, would then rightly belong before Interim Finance.

It had been represented to the committee that this was good tax policy, but Ms. 
Vilardo VERY STRONGLY DISAGREED with that issue!  Within the issue of 
principles of taxation, one looked at earmarking of a tax.  When one earmarked a 
tax, there must be a user-benefit relationship.  She referred to testimony that said 
not only was it good tax policy, but it was a USER fee and, as such, the users were 
paying the tax.  "The users may be paying the tax, but the bill then turned around 
and took the tax and directed it to effect social engineering public policy issue, 
which should rightfully be funded from general fund money.


"That user fee is NOT broad-based enough to meet the definition of what is 
acceptable in an earmarked tax!"  Ms. Vilardo exclaimed.  An example of a GOOD 
earmarked tax was the gas tax.  There you had a direct user-benefit relationship 
that is totally across the board.  People who bought  gas, drove cars, used the 
roads, and paid tax for the paving of those roads.  With A.B. 90, you had a 
beverage tax being proposed to be paid by everybody who drinks that would 
benefit approximately 40 percent of a population.  To the rest of the people who 
may not drink and paid the tax, they MIGHT receive a benefit in reduced prison 
costs, which would reduce  other taxes.  

"That is part of what makes this necessary if you chose in the appropriate 
committees to accept these bills as good public policy, to fund them from the 
general fund, NOT to earmark the taxes on these.  There are times when you DO 
use earmarked taxes, times when you DO NOT!  And this is one of the  times that 
you ABSOLUTELY DO NOT!"  Ms. Vilardo stressed.

There was another point she thought should be considered with this tax.  Revenue 
 yield for the tax for 1991-92 and 1992-93 was flat.  It actually reduced 
$100,000.  She would be very surprised if it had increased substantially from those 
amounts. 

"One of the things proven within the Taxpayers Association on these types of `sin 
taxes' was that every time there was an increase in the tax, there was enough of 
a chilling effect (Assemblyman Marvel referred to it as diminishing returns) that 
even if six months to a couple of years later you start to pick up to the original 
levels, you DO FLATTEN OUT or reduce the total amount of the tax.  We can prove 
it on cigarette tax," argued Ms. Vilardo.

Ms. Vilardo concluded her argument by saying, "I submit to you, again, that this 
bill with its tax mechanisms SHOULD NOT BE PUT FORTH BY THIS COMMITTEE. 
 We strongly urge you to OPPOSE leaving the tax sections and provisions in this 
bill."  

She thought  everyone, even the proponents of the bill, would find they did not get 
the money they thought they were going to get.  From her perspective, the 
proponents made a good case -- a case that should be made before the money 
committees for the revenue.


No one had any questions for Ms. Vilardo.  The Chair called forth a proponent and 
recognized Dr. John Chappel, a professor of psychiatry at the School of Medicine, 
University of Nevada.


Dr. Chappel stated he had come to Nevada in 1974 as a career teacher in alcohol 
and drug abuse.  He said he enjoyed being in the "ivory tower," but had also come 
out of that into the trenches.  He had worked in the private sector for profit and 
also had helped some of the non-profit groups, which he listed.

He did not know where we were going to get the money for this, but he said the 
money available currently did not come "anywhere close to touching the need."

He asserted there was a TREMENDOUS dearth of publicly funded additional 
treatment in Nevada.  He reminded the committee of the waiting list from Vitality 
House and said waiting lists like that existed in all of the publicly-funded programs 
he was aware of.

"If we began -- just began to address the need of convicted offenders, it would 
overwhelm the current programs we had," declared Dr. Chappel.  "The greatest 
gap, greatest chasm we have in treatment is the lack of residential facilities."  He 
knew A.B. 90 did not address that, but the legislators were going to have to face 
all of it and he urged them to look at the data Kelly Crosbie presented.  And also 
the fact that, however much money was being spent already, it was nowhere 
nearly enough! 

His hunch was that the ultimate savings was going to come out of the criminal 
justice system.  We had a burgeoning criminal justice system coming close to 
overriding the amount spent on education in Nevada! The kind of programs this 
money was directed toward would help reduce that cost and that expenditure.

There being no questions for Dr. Chappel, the Chair recognized Ms. Maryellen 
Waltz.  She lives in Carson City, is a third generation Nevadan, the co-founder of 
Carson Detoxification Center and  a co-founder of the Women's Resource Center. 
 Also, she had worked as a counselor or an administrator in psychiatry and 
chemical dependency since 1977.  She had established a private counseling 
practice in Carson City in 1990.

Regardless of where she had worked or what her job title had been, she had always 
found there to be one truth:  "Treatment works; treatment changes lives."


Currently in her practice, she has a 15 year old girl who is there as a result of the 
juvenile justice system.  She wanted the Committee to listen to a typical case. 
"The child's father is in prison, her mother just got out of rehabilitation.  The child 
lived with her grandparents, immigrants to this country.  The child had only known 
a life of violence, alcohol, and drugs. She would like to be a lawyer: the girl was 
smart, articulate, and could make it.  But there was nobody to encourage her.  
"Alcohol abuse and chemical dependency robs people of their dreams. It robs 
children of hope of any future.  Treatment could be helpful to this girl; it could 
make a difference to her," contended Ms. Waltz.

Ms. Waltz further stated she would like for her grandchildren to have a chance in 
their lives and felt their chances would be better if we treated people.  It did not 
work for everybody and it did not work all of the time.  It took confident workers 
to help people in treatment get into a life of recovery.  Ms. Waltz concluded by 
saying she would appreciate the committee's support on A.B. 90.


There were no questions for Ms. Waltz.  Mr. Price recognized Ms. Catherine Blake, 
Executive Director of Ridge House in Reno, who was in favor of A.B. 90.  She 
described herself as the person who worked in halfway houses and worked with 
ex-felons.

Ms. Blake wanted to provide statistics.  Ridge House had an outside survey done 
on all of their clients by the Department of Prisons.  In the last two years, only 24 
percent of her clients, since 1990, had been re-incarcerated.

An out-patient program had to be opened because Ms. Blake had over 100 people 
on her waiting list!  Ms. Blake said 72 percent of the people she took last year were 
homeless felons.  She asserted that we did not want felons homeless on the street.

She believed a user fee tax was one of the most responsible taxes there could be! 
Because the people who were using were paying.  Ms. Blake illustrated her point 
by saying she smoked cigarettes and said she "would love to have to pay $5.00 
a pack."  Her "penny-pinching mind" might help her stop.  Ms. Blake really believed 
the tax was appropriate; she thought it was RESPONSIBLE government.  She liked 
the idea that if taxes were raised, maybe people would stay home and  not drink 
and drive.  She concluded her testimony by saying she was totally in support of 
A.B. 90.

The prepared remarks of Mr. Robert L. Crowell on behalf of Anheuser-Busch 
Companies (Exhibit K) were submitted for the record.  Mr. Crowell had to leave 
before he could speak in opposition to A.B. 90. At the point of Mr. Crowell's 
departure, the meeting was going into its third hour of testimony.

Ms. Judy Jacoboni, chapter President of Mothers Against Drunk Driving (MADD) 
- Lyon County Chapter, was recognized by Chairman Price.  She said they were the 
only MADD in northern Nevada and they served all of Nevada.  She distributed their 
position statement (Exhibit L) on excise taxes on alcoholic beverages.  She testified 
in favor of A.B. 90.

In answer to Assemblyman Marvel's question about reduction in consumption, part 
of her handout had a newspaper article that said there was a three percent 
reduction after the 1991 beer tax was doubled.

Ms. Jacoboni emphasized that, when young people drank, they drank beer.  They 
chose it two-to-one over other types of alcohol like wine or hard liquor.  MADD 
supported A.B. 90 because they felt the taxes on beer would reduce teen drinking. 
 She espoused upon the significant external costs associated with alcohol use and 
abuse, reciting various cases and statistics.  For example, the cost of D.U.I. deaths 
and costs of alcohol-related crashes.  Although the external cost of alcohol abuse 
had risen,  the real price of alcoholic beverages had declined over time.

Since 1975 to 1990, the real price of distilled spirits fell 32 percent; the price of 
wine fell .8 percent, and the real price of beer fell 20 percent.  That was why 
MADD wanted the excise tax on alcohol to be INDEXED.  If it were indexed to the 
rate of inflation, the tax rates would be much higher and would be  gradual  over 
time.

Ms. Jacoboni then recited the benefits to increases in alcohol taxes such as  
increased revenues and lowered youth alcohol consumption. If there was lower 
youth alcohol consumption, there would be lowered adult alcohol consumption 
because of the strong correlation between alcohol abuse in adolescents and alcohol 
abuse in later life. 

She recited more statistics, most of which were mentioned in her hand-out (Exhibit 
L). To summarize, she thought there was a lot more at stake than treatment 
centers!  She truly believed the alcohol tax should be a lot greater.

Ms. Jacoboni  addressed Mr. Schneider's question regarding "if we raised the tax 
to $10, would everyone graduate?"  She thought you could raise it more than $35 
before the benefits would exceed the costs!



Chairman Price thanked Ms. Jacoboni, and then recognized Chief Deputy Jerry 
Mather of the Operations Bureau of the Carson City Sheriff's Department.

Mr. Mather announced that he was testifying on behalf of Sheriff Rod Banister.
The Sheriff's Department supported A.B. 90, and any other legislation that may 
help individuals within the community find a solution to their problems with alcohol 
abuse.  Unfortunately, in their roles as deputy sheriffs, they had repeated regular 
contact with alcohol abusers.  Their abuse of alcohol frequently was a major factor 
in their anti-social behavior.

Chief Deputy Jerry Mather said he brought the best example he could find on short 
notice: "This individual has been arrested by our deputies 109 times since June 
1977 for various misdemeanors, most of which were alcohol-related," he 
exclaimed.  To emphasize his point, he brought the arrest printout, a huge and 
lengthy report covering arrests for  civil protective custody, disorderly conduct, 
domestic assault, and D.U.I.'s.  The person was only 36 years old.

"This person's life is NOT a success story; this person HAS NOT completed a 
successful treatment program!"  Mr. Mather declared.

Rehabilitation programs, such as the Carson City "Detox" Center, needed to be 
enhanced.  Without effective treatment programs, Mr. Mather stated  the limited 
resources within the Sheriff's Department would continue to be used in this 
"revolving door" fashion.

On behalf of Sheriff Rod Banister, he thanked the committee for giving them the 
opportunity to address the issue.

Mr. Price asked Mr. Mather if, to his knowledge, had the person used alcohol and 
harmed or injured anyone else?  Mr. Mather replied that, "Yes, he had been arrested 
numerous times for domestic violence."


Mr. Alan Barnes, operations supervisor,  from the Nevada Department of Parole and 
Probation stepped forward to testify IN SUPPORT OF A.B. 90.  His handout  was 
distributed (Exhibit M).  Mr. Barnes identified himself as the author and project 
coordinator of the Lifeskills Project.


He reiterated that in the state of Nevada there were approximately 12,000 adults 
under supervision, and that number was going  to rise dramatically.  To divert 
populations from prison, there had to be systems to divert them to.  Washoe and 
Clark counties would be impacted by the diversionary efforts.  People were either 
going to "pay now or pay later."  He said that if we paid later, it would probably 
be in the form of prisons.

Of the 12,000 people currently being supervised, approximately 65 percent were 
property relating substance abusers.  "They went hand-in-hand: if they were doing 
property crimes, they were doing drugs; if they were doing drugs, they were doing 
property crimes."  He proceeded to cite facts and examples and statistics related 
to offenders who were substance abusers.

Mr. Barnes  believed the alcohol excise tax on liquor was a small price to pay to try 
to supplement the already over-taxed alcohol and drug treatment system.  He 
hoped the committee would vote favorably for A.B. 90.


Chairman Price stressed that, as the hearings were moving towards the fourth hour 
and everyone was missing appointments, the meeting was going to have to be shut 
down.  He recognized Ms. Stacy Carbine, who wished to testify on a personal basis 
in favor of A.B. 90.

Ms. Carbine explained that her daughter was in a residential treatment; she was 16 
years old.  She had been there since July of 1994.  Ms. Carbine truly believed that 
if it were not for the residential treatment program, her daughter would not be with 
her today at all!  She believed her daughter would be dead or in prison.  Ms. 
Carbine identified herself as a single parent who could not afford to put her into an 
expensive program and she was very grateful her daughter were still alive and still 
in Reno.  She was very much for A.B. 90 so that "other kids would have the 
opportunity that her daughter had."



Because the meeting was going  to be  adjourned before many could testify, the 
following people submitted their handouts for the records:

Mr. James J. Jackson, Nevada State Public Defender, submitted his written 
testimony in favor of A.B. 90 (Exhibit N).


Mr. John Albrecht, Deputy Attorney General of the Human Resources Division, 
submitted his written suggestions (in behalf of the Bureau of Alcohol and Drug 
Abuse) for amendments to clarify A.B. 90 (Exhibit O).

For the records, Mr. Ted Zuends's table on "A.B. 90: Revenue Estimate Based on 
Last 12 Months of Wholesale Activity" (Exhibit P) was entered.      

 Chairman Price announced  the meeting would have to adjourn. 

There would be NO ACTION TAKEN by the committee; the meeting adjourned at 
approximately 3:41 p.m.  

        



RESPECTFULLY SUBMITTED:


	
Carolyn Grabski,
Committee Secretary


APPROVED BY:



Assemblyman Bob Price, Chairman



Assemblyman Jeannine Stroth, Chairman

Assembly Committee on Taxation
March 9, 1995
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