MINUTES OF THE ASSEMBLY COMMITTEE ON TAXATION Sixty-Eighth Session May 9, 1995 The Committee on Taxation was called to order at 1:15 p.m., on Tuesday, May 9, 1995, Chairman Jeannine Stroth 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: Ms. 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 EXCUSED: Mr. Bob Price, Chairman GUEST LEGISLATORS PRESENT: None STAFF MEMBERS PRESENT: Mr. Ted Zuend, Deputy Fiscal Analyst OTHERS PRESENT: Mary K. Sharron, Historic Property Home Owner Mr. Ronald M. James, State Historic Preservation Officer, Historian OTHERS PRESENT, cont. Mr. Scott W. Klette, Historic Architect Review Committee and Historic Homeowner Mr. Kit Carson Weaver, C.N.A., Assessor, Carson City Assessor's Office Ms. Martha Willliams, Historic Home Owner Ms. Nancy C. Miluck, Historic Home Owner Ms. Shirley Giovacchini, Historic Home Owner Ms. Laurel Hickey, Historic Home Owner Ms. Noreen Humphreys, Historic Home Owner Ms. Jean Ziebron, Historic Home Owner Mr. Stanley Ziebron, Historic Home Owner Ms. Robertine Benson, Historic Home Owner Mr. Ron Bommorito, Historic Home Owner Mr. Nowland Prater, Historic District Home Owner Mr. T. Farrow, Historic Property Home Owner Ms. Catherine Thayer, Historic Property Owner Ms. Kathy Hart, Sheridan House Mr. Bob McFadden, Historic Property Owner Mr. Michael Miluck, Historic Home Owner Mr. Gerald "Jerry" W. LaMiaux, Lander County Commissioner, Battle Mountain, NV Ms. Carole Vilardo, Nevada Taxpayesr Association Chairman Jeannine Stroth opened the meeting by requesting the Committee Secretary to take a roll call; a quorum was present. The first item of business on the agenda was Assembly Bill 416. ASSEMBLY BILL 416 - Revises provisions for tax assessment and depreciation of sites designated as historic. Mr. Ted Zuend reviewed the pertinent points of the bill so there was no confusion. His handout (Exhibit C) was reviewed. Mr. Zuend explained A.B. 416 was a result of an interim study on taxing districts that was conducted after the 1993 session. The intent of A.B. 416, as he understood it, was to do two things: 1. Continue the 75 percent reduction in assessed valuation because of the age of house, even if improvements were made to the property that were more than 10 percent of the original cost. 2. It would eliminate the special tax designation for historic sites from the additional 26 percent reduction in the assessed value. He believed it was the Nevada Taxpayers Association that brought this to the Committee's attention. The law was originally passed in 1975. In 1981, the Legislature decided to change the way improvements were valued and gave an automatic depreciation each and every year of 1.5 percent -- up to 50 years. That meant all old properties automatically got a 75 percent reduction in their taxable value. A.B. 416 essentially "cleaned that up" to give the tax break for those properties that were improved considerably, but eliminated the additional tax break for those that were still sitting at the 50 year depreciation schedule. Chairman Stroth noted no one was present who wished to testify for A.B. 416, but there were many present who wished to speak against A.B. 416. That being the case, she requested the testimonials not be repeated. It would be appreciated, Chairman Stroth announced, if the testimonies to the Committee be limited to new ideas and concepts, rather than repetition of remarks and comments made by others. Speaking first was Ms. Mary Sharron, resident of Genoa and historical property owner (parcel number 1709423). The first question she had was, "What started this to bring this about (sic) to go through it again to change it (sic)?" She referenced Mr. Zuend's remarks on the 1976 reformat and also the 1981 ("the economic tax recovery act"). Ms. Sharron cited some of the things the tax recovery act would do. One was to provide a 25 percent investment tax credit. It permitted a 15 year depreciation on an adjusted basis for historical buildings and there were special transition rules for rehabilitation projects in process. The main thing was, it repealed any provisions denying accelerated depreciation of the buildings constructed on site in a designated historic district. The whole idea of the tax break was the incentive to restore an old home. She said her home was built in 1879. She had done nothing but work repair on it to keep it. In 1990, a large truck went through the front of her house. She completely restored it to the way it was is 1977 (how it was when she purchased it). She kept it up as well as she could. Ms. Sharron said she hoped the Committee would really consider this. The property values were going up in Genoa. She concluded her testimony by advising the Committee that, should A.B 416 pass and taxes were increased, there would be no incentive to keep a historic home. It would be far easier to quit going to meetings to "fight all the time" to try to keep an old house. There were very few historic homes. Nevada had only two counties that used the "historic break." She was not sure the Committee understood what care there was involved in taking care of an old house. Chairman Stroth expressed her appreciation for the good job done by all of the people who owned historic property in Genoa and added it was one of her favorite places to visit. Next to testify was Mr. Ron James, State Historic Preservation Officer, who stated A.B. 416 obviously effected historic preservation. Thanks to the Nevada legislature, the state had done some remarkable things to benefit historic preservation. He was appreciative that Nevada had a historic preservation office, and had given them the $2.5 million bond issue (it had helped a number of projects scattered throughout the state). The historic "tax break" was a rather small thing, according to Mr. James. It was an option to local governments. Only two of the local governments chose to use it in their tax assessment. Storey county did not use it at all. In places like Austin and Eureka it would make very little sense, because so much of the tax base would involve historic houses. Only two local governments had seen this as an advantageous means to encourage preservation. It did not benefit more than perhaps 50 houses, yet it made a difference to those who owned the houses. The audience turn-out at the meeting obviously indicated that. But not everyone in the audience was a property owner, Mr. James noted. There were a lot of people present who felt very strongly that the "historic tax break" was a means to help encourage preservation within their communities. They valued that, as well. Assemblyman John Marvel asked Mr. James if the mansions in Virginia City had the tax exemption. He remembered a number of people who restored some of the old mansions had opened them up to the public. By allowing the public access, they were also given a tax break. Was that tax break still in existence? Mr. James asserted that Mr. Marvel's memory was better than his, because (without being indelicate) Mr. Marvel went back further than himself. Mr. Marvel chuckled and humorously asked Mr. James if he knew Thomas Jefferson. It was Mr. James' understanding that Storey county never used the state tax break; that may be more a reference to either grant funds provided to them early on through the federal program. Or it may be a reference to the federal tax credit program, which was available for rehabilitation for properties that were used as businesses. But, to his knowledge, Storey county never took advantage of it. We gave special consideration to the mansions, Mr. Marvel insisted. At the time, he thought there were four or five in Virginia City that, because they allowed public access, were provided some type of tax exemption. But, as far as Mr. James' knew, Virginia City did not have one right now. He was not sure he shed any light on the matter. Obviously, he said, we all want to bow to the wisdom of the interim subcommittee and to the Committee on Taxation, as well. There was a reason for this, clearly. But there was also a reason why it existed in the law. That was a small way to benefit historic preservation, to benefit the properties of the state, and to give the counties the choice to decide whether they wanted to take advantage of the exemption or not. Mr. James' perceived the tax advantage as a local issue that had been handled in a way that had dismissed it as an issue in all but two counties. Chairman Stroth called Ms. Mary DeFelice forward to testify. Ms. DeFelice stated only that she was against A.B. 416, as was Angelo DeFelice was when he was called upon to speak. Mr. Scott Klette spoke next, identifying himself as the Chairman of Carson City's Historic Architectural Review Committee. He added that he also had a "real job" working for the Division of Museum and History for Nevada. He lived in a historic district in a house that was built in the late 1860's. He did not get the tax deferral, although he thought he probably could. Granted, his taxes were fairly low. The deferral would probably knock off an additional $200 a year on his tax bill. But as a member of the Historic Architectural Review Committee for Carson City, it was the only "carrot on the end of the stick" they had to encourage people to fix up their places and keep them nice. There are strings attached with the deferral; it was not just some automatic thing. For Carson City, there was a document (H- 901) that stated the property would be in good repair, it would be historically significant, etc. When someone made the application to the county assessor in Carson City, the application was forwarded to Mr. Klette's committee. It was little, it was a pittance. Except for the PRINCIPAL involved. It was a small thing to give a person a $200 tax credit a year for putting thousands of dollars ($40,000 to $100,000) into the rehabilitation and restoration of a historic property. Therefore, concluded Mr. Klette, he was against A.B. 416. He believed there were less than 30 properties in Carson City that took advantage of the tax break. He saw the tax break as a principal issue for historic preservation and for those people to keep up their properties. Living in a house built in the 1860's -- no matter how much work was done on it -- was still a "pain in the butt." Mr. Klette pointed out how old houses leaked air, that heating bills were higher, and there were all kinds of terrors that did not match the new construction. But he thought we had a "great historic district" and he just wanted to make sure it stayed that way. Assemblyman Maureen Brower wondered if A.B. 416 affected commercial property. Or was it for private homes only? Mr. Ted Zuend replied that A.B. 416 would only affect those sites designated as historic. He did not think commercial was involved. But Mr. Klette pointed out there were historic commercial properties all over the place. Plus, there was a difference between commercial zoning and residential/office zoning. There were historic businesses. So A.B. 416 might affect both private and commercial businesses, probed Ms. Brower. Mr. Kit Carson Weaver, Assessor of Carson City, stepped forward to clarify the issue. There were 29 houses designated historic, one being a title company. Therefore, some businesses qualified. But the business would have to maintain the ambiance of a house. An old house could be used in a residential office area for a business. Therefore, ascertained Ms. Brower, a business could also get a tax break, as well as a private citizen who has a home they are keeping up. She asked for a dollar figure on how A.B. 416 would effect the state, plus how many actual houses would be effected. Mr. Weaver estimated a loss for the entire state of Nevada of about $200,000 a year to the school district. The entities would be held harmless because they were guaranteed their revenues for the ensuing year. Ms. Martha Williams was invited to testify next. She simply announced that she was against A.B. 416. Speaking next was Ms. Nancy Miluck, historic home owner. She said she was a resident of Genoa and had been since 1969. She announced that, when she finished restoring her house (which had been empty for 20 years and had been built in the 1860's in Virginia City and moved to Genoa in 1898), it cost about $30,000. It was a five room house. They could have built a new house for $30,000. She stressed that Nevada was spending a fortune to promote tourism to attract tourists to Nevada, as did various counties. Reno-Sparks Convention and Visitors Bureau funded events to the tune of a quarter million dollars for the current year. Douglas county spent between $200,000 to $250,000 yearly on tourism promotion. It seemed to Ms. Miluck that A.B. 416 was undermining a lot of it. As gaming spread across the nation, Nevada needed other attractions to get the tourists. Tourists did not put any stress on school systems, etc. As long as Nevada was working constantly to attract tourists, we should keep the tax incentive for historic properties in. It not only offered quaint areas for tourists to enjoy, but also gave some of the heritage of Nevada for our children. (Chairman Stroth apologized that she could not read, and therefore could not attempt to pronounce correctly, many of the names off the guest list of people who desired to testify. Compounding the problem was many had not printed their names and their writing was not legible.) Ms. Stroth called Ms. Shirley Giovacchini, Director of the Court House Museum in Genoa, and also a historic home owner. Her house was built in 1885. Her opinion was the government needed to do everything within its power to preserve whatever was left of history. That history was our future. In Genoa, especially, taxes were going "sky high," because of the golf course and the rising property values. Whatever could be done to preserve historical sites would be a great help to everyone. Mr. Ted Zuend murmured he thought A.B. 416 was being misunderstood; Ms. Stroth quietly concurred, but continued to invite forward those who wished to speak, the next being Ms. Laurel Hickey. However, Ms. Hickey announced she was not going to testify because her testimonial would be redundant. She wished to be recorded as against A.B. 416. Ms. Noreen Humphreys testified next. Her historic house in Genoa was built in 1875; her husband and she spent six years restoring it -- not even able to live in it. It would have been far easier to have torn it down and started over. In order to get the tax deferment, the house had to be 50 years or older and had to be appropriate. It had to go through the HP&A (Historic Preservation and Architectural, which Ron James is the head of) to see if the house was appropriate. It needed to be appropriate from the street facade, not the interior or the back. Ms. Humphreys stated they had done all those things. Next, it had to go to the county assessor. It was not so much the money, Ms. Humphreys stressed. It was the principle of the thing. They were very proud of the heritage. They had spent a great deal of time and effort and money (to preserve the historic house). It would have been easier to build a new house, but they felt they had added to the ambiance of Nevada. Speaking next was Ms. Jean Ziebron. She explained she lived in the historical district; her home was built in 1867. They had spent five years working on it after they purchased it in 1990. They hated to use the word `advertising', but that was what they did for Nevada: they advertised. She talked about the significance of living in the historic district and contributing to the value that came about from it. Mary Walker, the director of redevelopment, had written a letter and Ms. Ziebron quoted from it: "Thank you for support of these historic activities. All of these activities are designed to put Carson City's best foot forward and to make our community proud of its heritage." In 1994, Ms. Ziebron informed she opened her home for the "Landmark's Christmas Tour." Visitors to her home, according to the register, came from Nevada, California, Oregon, Alaska, Montana, Iowa, and Illinois; also the countries of England, Wales, and Switzerland. They had representatives from Hollywood, California, who had been associated with the movie "Cobb," filmed here several weeks last summer. All of the visitors are considered beneficial to the pride and economy of our city. There were 24 homes that would be effected by the elimination of the small, deserving tax decrease for their efforts. "Will the revenue gained by the state be worth the possibility of losing our contributions?!" exclaimed Ms. Ziebron with strong emotion. "We stood for five hours welcoming 162 people! For whom?! For what?! We are finished! We will not do another thing if this bill goes through! Thank you!" Chairman Stroth thanked Ms. Ziebron and then called for testimony from Mr. Stanley Ziebron, who was also in opposition to A.B. 416. However, he felt confident that his wife had summarized his feelings quite well and declined to come forward. Ms. Robertine Benson, also a historic home owner, announced she was in opposition to A.B. 416. Mr. Ron Bommorito, who owned a historic house, was also in opposition to A.B. 416 for many of the points made in previous testimonies. Chairman Stroth called forth Ms. Theresa Sandini, a historic property owner and home owner, who opposed A.B. 416. Mr. Nowland Prater spoke next. He identified himself as a property owner in the historic district, as well as the neighbor of Theresa Sandini and Cynthia Houlihan. He informed that Theresa Sandini had 2,500 people in her house on the "Ghost Walk," an annual affair in Carson City to draw both locals and tourists. As far as tourism, if anybody had any question about historic houses stimulating it, Mr. Prater would suggest they assist him mowing his lawn: it took about four hours because he had to visit with all the tourists. Carson City had painted a blue line that started with the Capitol, went 3.5 miles and was a walking tour. There was a constant parade of tourists going on the tour. It was a definite addition to the tourism to the state of Nevada. Also to be considered with the tax grace was that several of the historic homes in Carson City were on several lots and, from a financial standpoint, it would probably be a good deal more profitable to tear down a 100 year old house and build three or four replicas, which would not be authentic and would change the character of the city. Mr. Prater's fear was that would happen, and it would destroy the way of life he liked. But he could see it happening if additional burdens were added. Dealing with a building 100 years old -- from the paint to the roof maintenance -- was about five times the cost of what it would be on a new building. Plus, the owner had to go in front of the architectural committee for any modification, even one as small as changing a porch light. You cannot buy the one on sale, because that was not in keeping with the architecture; and the one you needed cost about five times more. Mr. Prater failed to see the logic of passing A.B. 416 when the state spent a fortune to promote tourism. In 1970-71, Nevada lost half of its history when there was a great surge in Lovelock and Winnemucca: they lost historic districts and the Chinese Josh House due to the freeway. Carson City itself lost the most significant piece of 19th century industrial architecture west of the Mississippi when the V & T shops were torn down. In addition, Carson City had lost the Arlington Hotel downtown since the mid- seventies. About half of downtown was lost, actually. The buildings or parking lots built to replace those cites were certainly not in keeping with tourism and did not make the town look better. To preserve the look of the town has great advantages. Mr. Prater pointed out film production. He received a notification that NBC's movie of the week "Trail of Tears" was planning to film a few scenes in his neighborhood. They could use Carson City to look like neighborhoods in Utah, Idaho, and Nebraska. Also, there was a state film commission that spent a great deal of money trying to get film crews and movie production here. " If we do something to destroy the appearance of the town's historical section, you can throw this movie business right out the window!" declared Mr. Prater. He came out of southern California, an area where films were shot everywhere, and the primary thing they looked for were good locations. California had destroyed a great deal of them; so had other areas. Mr. Prater felt we should do everything possible to preserve them in Nevada; it was going to bring money into the state. For the anticipated $200,000 tax loss, Mr. Prater asked what was going to be lost to Nevada if the movie industry quit coming because historic districts no longer existed; if people gave up and modified the buildings, modernized them, and they could not be used for "location" in the film industry any longer. He did not think he was in error if he guessed the movie "Cobb" alone had a great deal more in the state of Nevada than $200,000. Those were his concluding remarks. Mr. Kit Weaver requested to speak again. He realized he made a mistake earlier in his testimony. Assessors spoke in terms of assessed valuation; there would be $200,000 in assessed valuation lost to Nevada. That was about $6,000 in taxes to the schools. Called to testify next was Mr. Farrow, who declined to speak but wanted to be recorded as opposed to A.B. 416. So did Mr. Tom Hart. Assemblyman Mark Manendo commented that, being a member of the Economic Development and Tourism Committee, it was very nice to see so many people involved in the state. To some people, he was a new-comer to Nevada; he had been living in the state for 13 years. Listening to the testimony, Mr. Manendo thought of the movie, "Field of Dreams," where the line "build it and they will come" made him think of "preserve it and they will return." Looking at Ms. Stroth he asserted, "Anytime you are ready for a motion, Madam Chair..." But Chairman Stroth noted there were more people who had signed up to speak so it was premature to make a motion. She thanked Mr. Manendo and stated he would be given first opportunity to motion. Ms. Catherine Thayer, also a historic property owner, testified next. She noted the recent convention of travel agents who came through the historic district in Carson City. It was a great success. She thought the travel agents would return to their homes and tell people about Nevada and the historic section. The Kit Carson trail brought in many people on walks throughout the year. They opened their house several times a year and people toured it; they were very appreciative. People really liked to see historic preservation. She thought Nevada had to do everything possible to generate that. Ms. Kathy Hart, who was next to testify, announced she and her husband Tom owned the old Sheridan Hotel, which was built in 1861. When they first bought the property, what she wanted to do was "overhaul" it. She was an interior designer and that was what a designer did. However, after being there for a time, she had come to realize that old places had a very special personality (unlike new homes). The more she read and studied about the area, the more she realized their house and the Old Grist Mill were the only remaining relics of the town of Sheridan. In the 1860's, Sheridan was a very important part of the state of Nevada. Realizing that, all her big plans to put in French doors, etc., changed. Instead, they had spent the last four years preserving what was already there. Anyone who had ever lived in an old house understood what she was talking about. The spirits from people of the past were still there and even though the old houses took a lot of money to keep up, they were very special. Chairman Stroth expressed her love of historic buildings. She happened to reside in one of them. Her landlord was present, the last one signed in to speak, and she invited Mr. Bob McFadden forward to testify. Mr. Bob McFadden announced he was restoring a hotel across the street from the capitol. He had with him several pictures to show the Committee. He elaborated on the historical significance of each picture. One of Mr. McFadden's historic homes was the site of a movie, John Wayne's last. Mr. McFadden mentioned he had talked with a lady named Sonia, who worked with the museum system and gave tours. They had done a senior's tour (80 seniors coming through the hotel). The seniors were from Las Vegas. Sonia had told Mr. McFadden his house was the most asked for home to look at in Carson City. He was astounded and replied, "Well, how about the Governor's Mansion?!" "No," Sonia had replied, "more people ask for your home than the Governor's Mansion." Mr. McFadden was very flattered. He bought the house in 1991 and spent about $140,000 improving it. He had the tax credit on that particular property. He talked about the other properties he owned: Champion's Real Estate and Mobile Homes in Carson City, as well as dealerships in Reno, Fallon, and Silver Springs. For the records, Mr. McFadden declared his business was the second largest mobile home seller short of Tom Terry in Las Vegas. In addition to the St. Charles Hotel, he had spent $300,000 so far in the last year and one-half in restorations to his historic properties. He commenced to elaborate on the cost of some items, everything from the steel girders to the redwood; the spindles and hand rails. The point was, everything was very expensive in the old buildings and properties. In addition, Mr. McFadden had purchased a mobile home dealership location called Ragtown. That was where the pioneers crossed the 40 mile desert. Ragtown had a historic nature; his father (who was sitting in the audience) and he purchased a building at 1218 South Carson ( a little house) that had been moved from Gold Hill. It used to be the ticket booth at the V & T Railway site. Also, Mr. McFadden informed the Committee that he owned Desert Air Hotel in Carson City on Highway 50. The barracks had been moved from Fallon after the war. All these properties had historic significance. Next, he mentioned a federal program called "Preservation Tax Incentives for Historic Buildings." He recited from the first paragraph: "A community's historic buildings are the tangible links with its past and reflect its unique character. Various federal laws now exist to encourage the preservation of these irreplaceable resources. Since 1976, the Internal Revenue Code has contained incentives to stimulate capital investment and income historic buildings and the revitalization of historic communities." Nowland Prater and Theresa Sandini (with the Bliss Mansion), Roy Farrow (with the Sadler Mansion), and himself owned more expensive historic properties. Many of the people who moved into their neighborhoods may not have the income they had; the tax incentive really helped everybody. Mr. McFadden thought every incentive possible was very appreciated. Ms. Stroth graciously expressed that it was not the Committee's intention to discourage preservation activities of anyone interested in restoring the heritage of Nevada. Since Co-Chairman Price was not present (he was in Las Vegas attending a funeral), Ms. Stroth decided no action would be taken on A.B. 416. A.B. 416 would be taken up in a work session in the next week or so. She thanked everyone for coming and asked if there was any other discussion on A.B. 416. Mr. Michael Miluck, historic home owner, requested to testify. He stated he spent a lot of money on their house in Genoa. He talked about a church building without a steeple; it was not used and sat idle. Mr. Miluck undertook a project to raise funds and constructed a nice bell tower with a bell, painted it, and did architectural work on it. As a result, the church was rented out and brought $5,000 a year (compared to nothing before the restorations were made). He contributed to the town to show his appreciation. Also, Douglas County had a marvelous film shown country-wide regarding the charms of the area; they highlighted Genoa to encourage people to visit. Mr. Miluck said the town hall once had no porch on it, and he was responsible for raising the money and building one, plus a boardwalk. His point was, one never knew what happened when someone got involved in the restoration of historic buildings. Although not present to testify, H. Williams Brooks submitted a "Real Property Land and Improvement" valuation made by the Douglas County Assessor for the town of Genoa (Exhibit D). Also submitted was a letter/petition from the residents of Genoa (Exhibit E), as well as a letter (Exhibit F) from John P. Copoulos, a Carson City architect, all opposed to A.B. 416. Chairman Stroth repeated it was not her intent to discourage anyone from the restoration process. She noted no one had testified for A.B. 416 and foresaw no major problem with the bill; however, she wanted to wait to take action until after Mr. Bob Price, Co-Chairman, returned. She thanked everyone for coming and for all their hard work done to make the area such a beautiful place. With that, she closed the hearing on A.B. 416. The hearing on Assembly Bill 481 was opened. Mr. Ted Zuend's explanation of Assembly Bill 481 is shown as (Exhibit G). ASSEMBLY BILL 481 - Revises provisions governing financial administration of local governments. Chairman Stroth recognized Assemblyman John Marvel. Mr. Marvel introduced Mr. Gerald "Jerry" LaMiaux, Chairman of the Lander County Commissioners, as well as a past school board member and past president of the Nevada school trustees association. Mr. Marvel asserted Mr. LaMiaux was the chief architect for pay-as-you-go for schools. A.B. 481 was a product of Mr. LaMiaux's studies (Exhibit H). Mr. LaMiaux stated Dr. Leon Hensley, Superintendent of Schools, had worked with him for a number of years in pay-as-you-go schools. Dr. Hensley had intended to testify, but was not able to this day. He urged the Committee to send A.B. 481 on with a "Do Pass" recommendation. It was enabling legislation. It had no impact on the state budget. It would enable voters to decide for themselves to save for one or more capital projects, rather than be forced for lack of any other legal or practical means to go into debt to finance such projects. Over the last ten years, Mr. LaMiaux had done a lot of schedules and developed programs to speed it up; he had done hundreds of them. The more he did it, the more solid was his conviction this was cost-effective. His mission was to convey that conviction to the Committee. He pointed out his addendum to the package (Exhibit H). He quoted directly from it. The Lander County Board of Commissioners lent their support to A.B. 481, with the condition the 20 years be dropped from the request. They asked for 10 years. They would like to see the public get a chance to re-vote on it every so often. Mr. LaMiaux returned to quoting from (Exhibit H), moving from pay-as-you-go to combination pay-as-you-go/bonding, and then moved on to discuss replacement funds. He explained these three types of pay-as-you were available currently to school districts. Other governmental entities had obligation bonds (voted on and passed by a majority of the voters); they were responsive to public issues and provided funds immediately for such projects. They were a form of debt that had to be paid back, with interest. Revenue bonds were approved by a governing body and not directly voted upon; they had to be paid back. Municipal government loans were the same. Pay-as- you-go, as it was used by the schools, was always approved by the voters. It most often involved a delay, because you had to save the money to spend and it generated interest. Schools, of course, had the three types of pay-as-you-go he mentioned. Mr. LaMiaux explained his package (Exhibit H) contained a summary with a hypothetical capital project to help illustrate pay-as-you-go. He then elaborated on the charts in (Exhibit H). As well, he drew attention to Mr. Hensley's letter, page 1 of (Exhibit H), wherein Mr. Hensley, Superintendent of Lander County School District, wrote A.B. 481 had his wholehearted support. Mr. LaMiaux quoted from the letter. Also, on page 8 of (Exhibit H), Mr. Kenneth H. Lords, Superintendent of Humboldt County School District, had pay-as-you-go in force right now. On page 9, Mr. LaMiaux referred to another testimonial from Ms. Marcia Bandera, Superintendent of Elko County School District; they had 75 cents per annum in place right now in pay-as-you. Elko County did not want to go into debt. If mining were to withdraw, they would lose a tax base that would leave large equal payments for the balance of the residents there. Elko did not want that to happen. Mr. LaMiaux summarized pay-as-you-go as a way for taxpayers to save money. He felt the way it has been structured for schools made it responsive to voters' approval and definition. "We were living in a fool's paradise if we did not maintain our equity value in constantly valued dollars while we are balancing our operating budgets," he asserted. The long term replace fund defined in A.B. 481 would help Nevada do that. He expressed his gratitude to the Committee for considering the bill. He thought it was important, and pay-as-you-go would serve Nevadans well in the future. Assemblyman Joan Lambert had a question of policy. It appeared that instead of the 15 cents levied by a county, it would now be up to 35 cents for all local governments, including library districts, fire districts, etc. "Did you mean for it to include all of those special districts?" wondered Ms. Lambert. "I thought it should be as general as possible," replied Mr. LaMiaux. "The language should reflect only 35 cents in total. Also, the 35 cents is under the $3.64 cap." "So," Ms. Lambert surmised, "it is 35 cents total; not 35 cents potential for each district that might overlap?" For example, you could live in a fire district, a general improvement district, a library district, a school district, and a county and you would not be able to pay 35 cents for each of those: it would be 35 cents total and they would have to share if they all had a project. Mr. LaMiaux explained there would be a cap. If the 35 cents were taken up by other entities, there would only be so much available. Also, Mr. LaMiaux suggested it would go through bond commission. Ms. Lambert referred to the last page of (Exhibit H), lines 36 through 38. She asked why it was necessary to obtain the approval of the state Board of Finance to accumulate the money for 20 years. He did not intend for that to be written into the law; he simply submitted his desires and thought it could be sent to the bill drafters. Assemblyman Marvel interjected, saying something may have been either added or omitted from what he had submitted to the bill drafters. Mr. LaMiaux added to Mr. Marvel's statement, remarking he did not see language in for a combination pay-as-you-go and bond issue. He questioned the people in the Legislative Counsel Bureau, who told Mr. LaMiaux that language already existed and there was not a need to put it in. Next to speak was Ms. Carole Vilardo, President of the Nevada Taxpayers Association. She wanted the Committee to understand she had opposition to A.B. 481, but the opposition was not to taxpayer's saving money. There was a bill very similiar to A.B. 481 last session. Pay-as-you-go projects were great because there was no accumulation of interest. There are three provisions currently available to local governments for pay-as-you- go. One is the ability to go to the voters. On the override provision, you could go to the voters and say, "I would like `X' amount of dollars to do `whatever.'" That exists right now in law. With the provision last session, it turned into a 15 cent total. Ms. Vilardo appreciated there was a cap at 35 percent, though she thought it could be awkward when the total capital was going to be at 35 cents, because there could be existing issues. "And what is," as Mrs. Lambert asked earlier, " the definition of local government?" When entities that had an immediate need, pay-as-you-go was not effective. And it was not effective for the very reason stated: you have to have a plan and want a replacement so you are putting away money over a period of time. You can have pay-as-you-go in place and suddenly find a major mine coming on with a huge infusion of people (i.e., Magma: 600 people) -- do we assume we are going to have another 100 students in the schools? Suddenly, the pay-as-you-go does not give you money to build a facility! You find yourself going for a bond issue to get the immediate amount of money required. It does happen. Ms. Vilardo pointed out there was the provision for override in the statute, there was a 15 cent capital with voter approval for 10 years (a shared situation), and there was a 5 cent approval for capital (also a shared situation). In addition to which the Government Affairs Committee had processed A.B. 48 that allowed for infra-structure financing by bond issues. Also, A.B. 48 allowed for a government to create a capital fund. As well, Senator Porter had introduced a bill that took elements of A.B. 48, with setting aside money that is transferred out of general fund and allowed a budget stabilization fund to be created. She thought the legislature and the local governments have been right over the last three sessions in expressing concerns for financing infra-structure. To put another element in law concerned her because it went more to the capital project side and, with a $3.64 cap in some areas, there would be no operating left. Voters wanted nice things. If you made a case, the voters would approve. More bond issues were approved in Nevada than were defeated. There was a point when you start heading up to the cap where you may have the room to go to the voters for these issues, but where was the money to operate when you started putting them on line? Also, if you were going to process A.B. 481, it would have to go before the Debt Management Commission, which is in another bill. Ms. Vilardo stressed that we were trying to keep governmental entities from fighting for their share of the $3.64. This, again, was another element that allowed for that. Therefore, she thought there was a great deal of concern to be expressed on A.B. 481. Mr. LaMiaux responded to Ms. Vilardo's concerns. He agreed with several of Ms. Vilardo's points. He admitted he was not aware of any bills that were going through the legislative session that allowed for replacements on the major county facilities, such as county court houses and hospitals, other than the 15 cents that was put in A.B. 282 of last session. He felt 15 cents was not adequate. He was anxious to see anyway of accommodating depreciation and replacement fund -- whether it was pay-as-you-go, or any other way. Those remarks concluded all testimony on A.B. 481. Chairman Stroth closed the hearing. The next order of business was bill draft committee introductions and Chairman Stroth requested that Assemblyman Pete Ernaut read them. The first one was Bill Draft Request No. 32-965. BILL DRAFT REQUEST NO. 32-965 - R E Q U I R E S A L L O C A T I O N O F C E R T A I N P O R T I O N O F T A X L E V I E D O N S P E C I A L F U E L T O C O U N T I E S I N W H I C H P A Y M E N T S O F T A X O R I G I N A T E . ASSEMBLYMAN MAUREEN BROWER MOVED TO INTRODUCE B.D.R. #32-965. ASSEMBLYMAN MORSE ARBERRY SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT. Chairman Stroth and Assemblyman Pete Ernaut introduced Bill Draft Request #32- 2020. BILL DRAFT REQUEST NO. 32-2020 - R E D U C E S R A T E O F E X C I S E T A X O N M O T O R V E H I C L E F U E L . ASSEMBLYMAN MORSE ARBERRY MOVED TO INTRODUCE B.D.R. #32-2020. ASSEMBLYMAN MAUREEN BROWER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT. Next, Bill Draft Request No. S-2019 was introduced by Mr. Ernaut. BILL DRAFT REQUEST NO. S-2019 - P R O P O S E S T O R E D U C E R A T E O F S A L E S A N D U S E T A X E S . ASSEMBLYMAN MAUREEN BROWER MOVED TO INTRODUCE B.D.R. #S-2019. ASSEMBLYMAN MORSE ARBERRY SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT. Chairman Stroth announced that, in an effort to expedite Mr. Carpenter's bill, which was A.B. 375 (coordinating dates when certain taxes and fees were due), and after the testimony by the Gaming Commission and others, Mr. Carpenter had decided to delete all of the changes -- except the changes on page one. Those changes on page one were related to the property taxes on the counties. Mr. Carpenter wanted to change the due dates. It would move them up one month. For example, instead of August, it would be July. Instead of September, it would be October, and so on. Mr. Carpenter informed Ms. Stroth he thought it would benefit the school districts to change the dates. Mr. Ernaut suggested to Ms. Stroth that Mr. Carpenter get the amendments because it was his bill. She replied she was just going to request the amendment to redraft it. Mr. Marvel did not think we should; someone else announced that Legal did not want amendments requested unless it was voted upon. Mr. Ted Zuend's feeling was, after hearing the amendment, it would delay the payment of the property taxes. It would spread it out over four quarters. Chairman Stroth asked for the pleasure of the Committee. It was to wait to talk to Mr. Carpenter and find out what his feelings on the bill are before any action was taken. Mr. Zuend added that Mr. Carpenter had the right to ask Bill Drafting to bring a proposed amendment before the Committee for review; Mr. Zuend felt that was the proper way to go about it. There was a lot of confusion and discussion on another bill of Mr. Carpenter's: A.B. 377. There was no consensus on what to do about the bill and Ms. Stroth decided to wait until Mr. Price returned. There being no further business or discussion, the meeting was adjourned at 3:30 p.m. RESPECTFULLY SUBMITTED: Carolyn Grabski, Committee Secretary APPROVED BY: Assemblyman Bob Price, Chairman Assemblyman Jeannine Stroth, Chairman Assembly Committee on Taxation May 9, 1995 Page