MINUTES OF THE ASSEMBLY COMMITTEE ON TAXATION Sixty-Eighth Session April 6, 1995 The Committee on Taxation was called to order at 1:15 p.m., on Thursday, April 6, 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 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 NOT PRESENT/EXCUSED Mr. Morse Arberry, Jr. GUEST LEGISLATORS PRESENT: Mr. John Carpenter STAFF MEMBERS PRESENT: Mr. Ted Zuend, Deputy Fiscal Analyst for Legislative Counsel Bureau OTHERS PRESENT: Ms. Kathy Karrasch, Representing Dr. C. Craig Karrasch Ms. Janice Wright, Department of Taxation OTHERS PRESENT, CONT. Ms. Marsha L. Berkbigler, Public & Government Relations Dr. Charles F. McCuskey, President of the Nevada State Medical Assoc. Dr. Dallas Penrod, Nevada Podiatric Medical Association Mr. William Bible, Chairman of the Gaming Control Board Ms. Stephanie Tyler, Nevada State Chiropractic Association and the Nevada Nurses Association Ms. Michelle Gamble, Nevada Association of Counties (NACO) Chairman Bob Price opened the meeting at 2:00 p.m. by asking for the formal roll call. A quorum was present. The first order of business was discussion and testimony regarding Assembly Bill 373. Mr. Ted Zuend, the Taxation Committee's staff member from the Legislative Counsel Bureau, provided a floor statement on A.B. 373 (Exhibit C), as well as a proposed amendment to A.B. 373 (Exhibit D). ASSEMBLY BILL 373 - Proposes to exempt from taxes on retail sales orthotic appliances and ambulatory casts, other supports and casts if prescribed or applied by licensed physician, and splints, bandages, pads, compresses and dressings prescribed, furnished or sold under certain circumstances. Assemblyman Brian Sandoval, Washoe County - Assembly District 25, introduced himself as prime sponsor of A.B. 373. Mr. Sandoval explained the intent of the bill was to include within the definition of medicine, which is excluded from sales tax, certain items as described in the bill. Formerly the Bill read "if prescribed by a podiatric physician," but now had been amended to apply to a "health care provider within the scope of practice." There are other items that would be excluded from sales tax that presently are not: splints, bandages, pads, compresses, and dressings which are subject to sales tax now. One important distinction Mr. Sandoval wanted to call to the Committee's attention was approval of the bill would mean if these items were to be excluded from sales tax along with other medicine, it would have to go before a vote of the people. He felt it was important for the Committee to know that if A.B. 373 were to pass, it would go on the ballet on November 5, 1996 for approval by the citizens of the state of Nevada. Mr. Sandoval then introduced Ms. Kathy Karrasch, a constituent of his, who was particularly interested in A.B. 373 and wanted to provide testimony to the Committee. Ms. Kathy Karrasch identified herself and stated that, in 1977, her husband (Dr. C. Craig Karrasch) went into practice complying with all local and state licensure laws. At that time, he was never informed by any local or state agency to register with the Department of Taxation and no other health care professional they knew had registered, either.) Approximately 10 to 12 years later, new practitioners and professionals could not even receive their business licenses without registering with the Department of Taxation and showing proof thereof! When Ms. Karrasch learned of the use tax, she consulted with an attorney who supplied her with a copy of the Nevada Revised Statute 374.287, defining medicine. Considering she ordered medical and office supplies from some out-of- state suppliers, Ms. Karrasch registered her husband's practice with the Department of Taxation. They began reporting and paying the use tax on the non- medicinal items. In 1992, she was "hit" with an eight year retail sales tax audit, which she appealed. The Department of Taxation's appeal hearing officer could not render a decision on the very subject A.B. 373 addressed; therefore, she was ordered to pay a use tax on those medicinal items. After the appeal process, she went to Ms. Yolanda Gonzales, who was the Executive Director of the Department of Taxation at that time. It was Ms. Karrasch's intent to try to come to some sort of agreement and possibly have a regulation drafted to clarify the definition of medicine without having to go through the legislative process. Ms. Karrasch was informed by Ms. Gonzales that someone at the Legislative Counsel Bureau emphatically told her the regulation would never make it out of the L.C.B. to the next Taxation Committee hearing that was to be held in Las Vegas. With the increasing concern of the rising cost of health care, introduction of A.B. 373 seemed very timely. During Ms. Karrasch's audit and appeal, she referred to N.R.S. 374.287 many times. The definition seemed clear to her; however, it was ambiguous enough for the state to interpret the definition otherwise. She felt it was clear the items addressed in A.B. 373 were all a substance and/or preparation intended for use by external application to the human body in the diagnosis, cure, mitigation, treatment, or prevention of disease or affliction of the human body. "The state contends that orthotic appliances are strictly supports," informed Ms. Karrasch. "This is WRONG! Orthotic appliances are not supports! Crutches, walkers, and canes are supports." Assemblyman John Marvel wondered if anyone had done a fiscal note on A.B. 373. Mr. Sandoval replied that a fiscal note had been requested, but he had not received a response. However, he felt there would "undoubtedly" be a fiscal impact because of less sales tax generated to the state. He did not know why there was a delay in receiving the fiscal note. Ms. Karrasch then presented a slide show to help illustrate what orthotics were used for. Some of the slides were very graphic. "There were many people who are not good candidates for surgery; therefore, orthotic appliances helped in the treatment and cure of whatever the diagnosis may be. Some patients could be treated more conservatively with tape strapping and orthotics," Ms. Karrasch explained. "Post-operative care is very, very important," Ms. Karrasch emphasized. "Items such as dressing change trays and leg casts were required many times. If a person lost a toe, for example, they would require an orthotic appliance, which in that case would fall under the definition of a prosthetic device by replacing a missing body part." Orthotic appliances are not items that can be bought over the counter; they are things that are bio-mechanical. The patients are "casted" in the office by the prescribing physician and, therefore, they are prescribed items. After the graphic slide show, Ms. Karrasch recited from the Dolan Medical Dictionary as to define orthotics. "Serving to protect or restore or improve function pertaining to use or application of orthosis." The definition of "orthosis" is the correction of a physical distortion. Orthotics are used as a correction of the body structure and replacement of a body part. Prosthetic devices are also replacement of body parts. The state informed Ms. Karrasch she had to collect a retail sales tax from her husband's patients for home-use prescribed medicinal items. She argued with the Department of Taxation she would not charge a sales tax on items that clearly fell within the definition of medicine. Besides that, her husband's practice and other health care professionals were not retail sales establishments. However, she would without hesitation pay a use tax on non-medicinal items. When asked, the Department of Taxation could not give her a definitive answer as how to charge for a cast to be applied to the leg of an obese adult versus a seven year old child knowing the casting material would differ dramatically from the obese patient to the pediatric patient. Ms. Karrasch also asked the Department of Taxation why hospitals were exempt from paying a use and retail sales tax on those very items. However, an answer never followed. What DID follow was Yolanda Gonzales asked her, "Are you SURE hospitals are exempt?!" To which Ms. Karrasch replied, "Yes! If you look it up you find that hospitals are exempt in Nevada!" Ms. Karrasch asserted that was discriminatory to health care professionals. The cost of the tax, whether it be a use or retail tax, was passed on to all Nevadans as we are all patients to a doctor. She felt there should not be a financial impact to the state since the state never really collected a use tax from health care professionals until the amnesty program was introduced in 1993. She asked the committee please keep in mind that none of them knew about the use tax until audits. She further stated this was not a tax to be repealed since the very issue fell well within the definition of medicine. Moreover, private indemnity insurance companies -- PPO's, HMO's, and SIIS -- would not reimburse the doctor nor the patient the cost of a use or retail tax. She closed her testimony by asking the members of the Taxation Committee, "Should the state profit on people's infirmities?" The Chair recognized Assemblyman Maureen Brower, who wanted confirmation the items were not the type of things one would purchase in a drug store and were only items prescribed from a physician or provider. Ms. Karrasch answered affirmatively to both phases of the question. Chairman Price requested Ms. Janice Wright from the Department of Taxation to speak about the fiscal note. Ms. Wright stated she had been the hearing officer for Dr. Karrasch's specific case and she wanted to clarify a few statements for the record. The definition in Chapter 372 clearly does not include orthotics. The definition of medicine, as the current statute provides, says: "Medicine does not include any . . . orthotic . . . device or appliance; it does not include articles in the nature of splints, bandages, pads, compresses, supports, dressings, instruments, crutches, cranes, devices, braces, and other mechanical or electronic, optical, or physical equipment." With that in mind, there was no way to fit an orthotic into the definition of medicine. The Department of Taxation's regulations also support the statutory definition of medicine. The case was also discussed with the Legislative Counsel Bureau (L.C.B.). She had asked the L.C.B., "If there were a change proposed by the Nevada Tax Commission to include items such as orthotics within the existing statutory framework, would it be approved?" Ms. Wright said the Legislative Counsel Bureau said, "NO! The existing language of the statute would prevail." The other tax that was referred to was the use tax, which was placed into effect in 1955. Many individual businesses had not been remitting use tax. When the Legislature in 1991 adopted the business license tax, it gave the Department of Taxation an opportunity to audit businesses which had previously never registered because they were not in the business of making retail sales. At that point, the Department of Taxation audited doctors, lawyers, C.P.A.'s, etc., -- professionals who were not in the business of making retail sales. That is when podiatric and individuals in that line of business were subject to audit; the Department of Taxation found they had not been remitting the use tax. Many had not been aware of what the definition of medicine was. It was then the department offered an amnesty program which was in effect for approximately six months to advise all professionals in the field as to what their tax consequences were with respect to sales and use tax. Ms. Wright explained a fiscal note was developed by looking at the current bill being proposed and based upon information conducted during a survey of all of the businesses selling medical equipment and supplies, and all of the podiatric or individual labs that create orthotics. It was determined the "lion's share" of the loss was going to be borne by the local governments. Of the 7 percent sales tax, only 2 percent went to the state; the remainder went to the local governments. The full impact was determined to be approximately a little over $4 million a year. However, if A.B. 373 went into effect, it would need to be approved by the voters on the ballot in 1996. That meant there would be a six month period -- from January 1 through July 1 of fiscal year 1996 -- the first year this would be imposed -- that would reflect only six month's worth of the loss, which would be a little over $2 million dollars. Of that, the state would lose about $593,000; the local school support tax would lose $668,000; the basic city county relief tax impact would be a loss of $148,000; the SCCRT loss would be $519,000; and the county option (which is provided for counties for mass transit, tourism, or roads) would lose about $150,000. For a six month period, then, the loss would be approximately $2 million. The other portion of A.B. 373 had to do with exempting items that were currently specified as taxable: braces, supports, bandages, dressings, etc. When the medical supply companies were contacted by the Department of Taxation, they said it would be extremely difficult for the retailers to determine because one could buy bandages and compresses over the counter without a prescription. According to the language posed in A.B. 373, one would need a prescription to buy these items if one wanted to be exempted from taxation. The Department of Taxation had talked to drug stores, K-Mart, etc.; they said this would create an "administrative nightmare" for them because they would have to then try to determine if the customer was buying a bandage for a wound they had not seen a doctor for, or if they had a prescription for the bandage, in which case the store would need to segregate it. There was no fiscal impact that the Department of Taxation could relay to at this time for the portion that dealt with bandages, dressings, and items of that nature; they do not know how much of the loss would be experienced by the local governments or the state. No one could provide any good information to work with; therefore, the dollar amounts Ms. Wright had supplied to the committee ($2 million for the six months) ONLY reflected the orthotic information and did not include the additional items that were presented in A.B. 373. Assemblyman Mark Manendo had a concern about the language of the ballot question. He asked, "Does everyone on the committee feel comfortable with it? Especially the portions regarding exemptions . . ." Assemblyman Pete Ernaut wanted to know if Ms. Wright had an "exact figure of how much use taxes were collected in 1993-1994." The information the Department of Taxation had received were from 25 different entities. Ms. Wright elaborated, "Nevada Limb in Las Vegas, for example, had collected in FY95 $1 million . . . actually, I am not sure that I can provide this type of testimony with respect to an individual business . . . I am sorry, but I believe cannot!" "The reason I am asking," Mr. Ernaut explained, "is because I am trying to get a correlation between that and the fiscal note. It seems the fiscal note is high. I was under the impression that it would at least correlate to the use tax you collected in the last fiscal year. I would like to see the figures on that so that we can make some sort of comparison." Ms. Wright repeated the information had been obtained by conducting a telephone survey of all the business in the state and the figure the Department of Taxation developed for the six months was $2,770,893 in tax that would be remitted, except for "this language." "I don't understand that," said Mr. Ernaut, confused. "If it is already taxable now, how much did we ACTUALLY collect?" Ms. Wright replied, "$2 million in a six month period of time. That is based on the estimates of the businesses that we conducted the survey with. All of their sales are not just these items. The businesses tried to break out those items for the department to include just the orthotics . . . they do more business than this. So they are paying more tax. But if orthotics were exempted, these figures represent their estimates of how many dollars they would not be remitting tax on. Is that more clear, Mr. Ernaut?" asked Ms. Wright. "Thank you, that was EXACTLY my question," he replied. Chairman Price then recognized Assemblyman Marvel, who had a question regarding the number of exemptions there were currently on the sales and use tax. He had a "philosophical" problem: he could realize the merits of most all the exempts that came before the committee but thought "we had this one tax law so `stratified' that it was going to be a NIGHTMARE to administer!" "A.C.R. 47, which met during the last interim, did a rather exhaustive study of a number of exemptions," informed Ms. Wright. "It was mentioned during the hearings -- and there were numerous public hearings in the north and south -- that probably what you could do is take the sales tax and cut it in half if you eliminated the exemptions that you currently have. There are numerous exemptions! If you look at the beginning of Chapter 372, there are lists of numerous items that are exempt." From an administrative standpoint, the Department of Taxation spent an "inordinate amount of time in trying to administer just the exemption portion." Ms. Wright thought the actual sales tax was really easy, but for people who said "this could be considered exempt" was where the problems were. When one tried to define exemptions, she pointed out the difficulty with respect to religious, charitable, and eleemosynary. " What entities are exempt, which are not? That is the kind of thing that feeds the difficulty in understanding what should be considered within the framework of exemptions . . . and what is not . . . " Chairman Price recognized Assemblyman Brian Sandoval, who wanted to clarify the fiscal note issue. He understood that Ms. Wright had called retail outlets to get her figures, and the point of the bill was the exemption only applied to those licensed health care providers who did the casting, etc. "I am thinking these are apples and oranges," Mr. Sandoval asserted, "because the retail outlet still would not be subject to the sales tax, even with the passage of this bill." "That is EXACTLY what we were concerned about," declared Ms. Wright. "And when we contacted the laboratories and the people who make these items, we said SPECIFICALLY these would only be the items that you would make to fill a prescription for a licensed podiatrist for his particular patient. These WOULD NOT be items you sell over the counter. That was their understanding of it, that is our understanding of it. It would only be an item that is sold on a prescription." Ms. Marsha Berkbigler, Public and Government Relations, testified next. She came forth representing both the Nevada State Medical Association and the Nevada State Podiatric Medical Association. "I find those figures AMAZING!" exclaimed Ms. Berkbigler. "I can't imagine it is that high!" She went on to testify regarding the specific concerns the organizations she represented had. " The cost of medicine in Nevada is very high," Ms. Berkbigler asserted. "Our goal with the State Medical Association has been to look at all different ways of lowering the cost of medicine. If this happens to be one of those ways, it would be an advantage to the citizens of Nevada." Her second point was this was an advantage to patients. If patients in hospitals received those specific items without having to pay taxes, but once they are outside of the hospital and being treated, they had to pay taxes on those same items was confusing and inconvenient for citizens. Dr. Charles McCuskey, President of Nevada State Medical Association, and an orthopedic surgeon, came forward to testify. He said they supported "this fair piece of legislation." He asserted that casts and braces were forms of medicine in that they promoted and allowed healing of bone and joint injuries and diseases. They were a necessary part of the practice of medicine. Taxes on these devices increased the cost of medical care. "I did not realize how much it increased it until I heard the last presentation by Ms. Wright," the doctor declared. "It does not benefit the provider; it will help benefit the patients in meeting their medical bills." Next to testify was Dr. Dallas Penrod, the President of the Nevada Podiatric Medical Association, who spoke in behalf of A.B. 373 "for the benefit of the patients." His complete testimony is included in these minutes as (Exhibit E). "We, as podiatric physicians, are specialists and surgeons of the foot and ankle. We deal with injuries such as fractures, contusions, and abrasions, as well as... diabetes-type diseases ... Often times, the treatment for these diseases require the use of prescribed braces, casts, splints, and orthotics. Or, in the case of wound management, daily wound care and sterile dressing changes." "Furthermore," Dr. Penrod continued, " diabetics require prescribed orthotic therapy to prevent ulcerations and limb loss. Prescribed functional diabetic orthotics have proven to prevent limb-threatening foot ulcerations and are an essential preventive therapy. Unfortunately, prescribed wound care material ... is expensive. These patients are then "blind sighted" by the use or sales tax added on by the state; it adds substantially to the patients' costs of medical care. Due to their medical condition . . . many diabetics are disabled with no source of income . . . the added . . . tax for prescribed . . . items only INCREASES the patients' costs for items they have to have to prevent limb loss. This gives new meaning to the . . . phrase . . . BEING KICKED WHILE YOU ARE DOWN! If these patients want to be healed, they have NO OTHER CHOICE but to purchase these items. They should not have to be taxed while they are getting healed." Dr. Penrod urged, in behalf of the Nevada Podiatric Medical Association, the committee change the Nevada Revised Statute as shown in A.B. 373 so that prescribed medical supplies . . . specifically, braces, casts, splints, and orthotics be exempted from "this unfair tax burden to patients." Further, the Nevada Podiatric Medical Association "was here to put their stamp of approval on medical cost containment through legislative change; we are also here to speak on behalf of our patients to help lower their medical costs for prescribed medical items which help them heal..." Chairman Price recognized Ms. Stephanie Tyler, who came forward to represent the Nevada State Chiropractic Association and the Nevada Nurses Association. She testified for A.B. 373 and felt what was being addressed was the most basic of health care supplies required. Further, she agreed with Assemblyman Marvel's ideas of the tax structure with regard to the exemption process; however, she felt the uniqueness of A.B. 373 was "it gave it back" to the vote of the people. She surmised that we might be at a state with our tax policy where more of these issues should be posed back to the people. Carrying on, Ms. Tyler asserted there was an inconsistency in state law with regard to these medical supplies. "For example," she illustrated, "if I am going to be put into a back brace in a non-profit hospital, I would not have to pay a tax on my back brace. But, once I was out of the hospital and in another . . . basically body cast . . . I would have to pay a tax on that." She argued that we already had a substantial inconsistency in the law and, by posing this question to the voters, they would have a "chance to level that playing field a little . . . and that is a step in the right direction." There was no further testimony in behalf or in opposition to A.B. 373. The Chair recognized Assemblyman Jeannine Stroth, who had a question about what the mark-up was on the items being discussed. Dr. Charles McCuskey replied that he did not have the exact figures available, but he knew there were allowances in Medicare formulas . . . Ms. Kathy Karrasch responded to Ms. Stroth by explaining the mark-up differed drastically with respect to the orthotics. "Lab bills ranged anywhere from $13 to $150, depending upon the case. It varied. Regardless of what the lab charged them, they charged a certain fee for the orthotics. Therefore, if they charged $100 for the orthotics, and their lab fee was $150, the doctor's office absorbed that $50 difference. As far as Medicare was concerned, they would not reimburse patients for those items." There being no further testimony or hearing statements on A.B. 373, Chairman Price proceeded to the next order of business: Assembly Bill 375. Mr. Ted Zuend's floor statement is included for the records (Exhibit F), as well as a letter from Mr. Ceasar Salicchi, Office of Elko County Treasurer (Exhibit G). ASSEMBLY BILL 375 - Coordinates dates upon which certain taxes and fees are due. This bill was sponsored by Assemblyman John Carpenter, Assembly District 33, whom Chairman Price recognized for testimony. Mr. Carpenter explained that A.B. 375 was introduced to help the taxpayers in Nevada to coordinate dates upon which certain taxes and fees were due. He pointed out that many tax bills fell on different dates, and recognized that some of the dates would be impractical to try to change because of some of the problems that state agencies would "run into." He thought that was certainly the situation with the gaming taxes. Currently, the business, sales, and local gaming taxes are due on the last day of the month. What was being spoken to was the property tax, and maybe the fuel tax. Mr. Carpenter added that the fuel tax issue may have been taken care of because there was a bill that was, or would be, introduced to change the fuel tax so it would be paid at the wholesale level, rather than collected as it is now: at the retail level. "The real nitty-gritty of A.B. 375 is there was only one tax that could really be considered . . . which could be paid on the last day of the month . . . and that is the property tax," summarized Mr. Carpenter. The present law states the property taxes are due the third Monday of August, the first Monday of October, the first Monday of January, and the first Monday of March. When Mr. Carpenter examined this, it came as "quite a surprise to him" because he remembered when he served on the county commissioners they "not only were able to pay them on three equal installments, they were paying them in specific time periods of three months apart. Right now, they were being paid in six months. The taxpayers did not get a break during the last number of years . . . as legislature sessions ran later and the assessors were not able to get the rates out . . . the taxes were due on the third Monday of August." Mr. Carpenter pointed out "one mistake in the bill. . . where the date did not coincide with the taxes as they become delinquent . . . so if we were to do anything on the property tax, we would have to change that date also . . . in order to give the treasurer time to notify the people." He thought anything we could do to help the small business to coordinate the taxes would be of help. As he stated previously, he thought the only tax which could be discussed in detail was the PROPERTY TAX. He could see " . . . the gaming tax . . . that we have to pay the annual license fee on slot machines . . . becomes due on June 20 . . . the gaming people get so many taxes . . . it would probably really hinder them to try to put it on the last day of the month . . . ". Further, he had taken the calendar and "looked at the situation of the property tax . . . which this year would be due on August 21 . . . if we moved it to the last day, it would be paid on August 31 . . . (10 day's difference) . . ." and, as Mr. Carpenter understood it, "That might be a problem with the school people because they really waited to get that first . . . shot at taxes to them . . . because they need it to start up . . ." Mr. Carpenter thought it would really help the schools and the local entities if property tax payments were due on July 31. He then recited due dates and said he did not see a "great amount of money the local districts would be losing" and how much it would help those who had to pay the property taxes if they knew they were due the last day of the month. Chairman Price recognized Assemblyman Marvel, who questioned Mr. Carpenter about a letter from Ceasar Salicchi (Exhibit G). Mr. Carpenter said he talked to Ceasar; whose main concern was the dates did not coordinate as far as delinquencies were concerned. Mr. Marvel mentioned "cash flow to schools." Mr. Carpenter realized that problem, saying he thought we could help the schools and local governments by changing the date to July 31. Next to testify was Mr. William Bible, Chairman of the Gaming Control Board for the state of Nevada. He distributed an eight page report (Exhibit H) to the Committee; it explained their tax collection cycle. Mr. Bible expressed his admiration for Assemblyman Carpenter; he thought the goals were admirable in terms of having a single tax payment date throughout the statutes. It would cause, however, a number of implementation problems for the Board. Mr. Bible proceeded to refer and quote from his hand-out (Exhibit H) and review it with the Committee page-by-page, item-by-item. There were thousands of tax-related forms the Gaming Board had to process. Mr. Bible stated that, by combining all of the dates, there would be a June "crunch." They would have not only their percent fees, but the quarterly and non- restricted flat fees due at the same time. Plus, under A.B. 375, the annual slot tax due, as well. There would be about a 145 percent increase in the amount of forms. Chapter 353 provided that agencies were required to deposit all monies they collected to the credit of the State Treasury within one business day. "So," Mr. Bible concluded, "in order to accommodate this particular legislation, we would require additional staff for processing. As well, Chapter 353.250 would need to be amended." There would also be a fiscal impact if A.B. 375 passed, because the due date would move and would create a loss of interest earnings on those monies. Ms. Janice Wright with the Nevada Department of Taxation stepped forward to testify next. To determine the impact on the property tax, the Department of Taxation had contacted the county assessors. In Clark County and several of the other larger counties, approximately 65 percent of the real property accounts were paid semi-annually on the first and third. That was because people had impound accounts. The remaining 35 percent were paid quarterly. Based on the number of days, in the first year of fiscal 1996, there would be a loss to the counties of about $255,000; in the second year of fiscal 1997 -- because the dates would be moved differently -- the figure would be about $104,000. And then every year, depending upon which day the dates fell on, it would be a different fiscal impact with respect to the property tax. Ms. Wright stressed that was only the local government's loss, not the state's loss. When the fuel tax portion of A.B. 375 was examined, there was an impact to the state and the state general fund (referred to earlier by Mr. Bible). Currently, the Department of Taxation had about 200 licensed fuel dealers; most were the big companies (Chevron, Texaco, Shell, Arco, etc.). The licensed fuel dealers reported on the 25th and under the A.B. 375 scenario would be reporting on the last day of the month. The Department of Taxation's statistical roll of all sales would be affected; they reported all the excise tax at that same time. "If the department were to delay by six days, they would be doing the sales tax roll and would not have the fuel tax information to provide. The state might lose about $15,000 a month or about $180,000 a year to the state general fund just on the interest," informed Ms. Wright. The other problem would be with respect to the sales tax roll: would it be desirable for the Department of Taxation to delay those statistics for a month, or to go ahead and submit them without the fuel tax . . . and submit that information at a later date? Those were the concerns of the Department of Taxation. No one had any questions for Ms. Wright. Next, Chairman Price acknowledged Ms. Michelle Gamble, who represented the Nevada Association of Counties (NACO). She commended Mr. Carpenter for thinking of the taxpayer and wanting to help them out. Ms. Gamble provided a letter from Barbara Reed, the Clerk-Treasurer of Douglas County (Exhibit I) to be included in the minutes. When NACO asked their counties to review A.B. 375, they had several immediate concerns with the dates, of which Mr. Carpenter had already "touched" on. The February date was mentioned. Ms. Gamble said NACO was willing to work with Mr. Carpenter to address some of the concerns the counties had raised. One concern that came up from one of the rural counties was that, on the last day of the month, there were many other reports due. To have taxpayers come in to pay their taxes on the same date compounded problems some of the smaller offices faced. Ms. Gamble then proceeded to recite Barbara Reed's letter (Exhibit I) to the Committee. There being no further testimony, Chairman Price announced that hearings were concluded for the day. There would be NO ACTION taken on either bill. Formal adjournment was at 3:32 p.m. RESPECTFULLY SUBMITTED: Carolyn Grabski, Committee Secretary APPROVED BY: Assemblyman Bob Price, Chairman Assemblyman Jeannine Stroth, Chairman Assembly Committee on Taxation April 6, 1995 Page