MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session February 21, 1995 The meeting of the Committee on Ways and Means was called to order at 8:00 a.m., on Tuesday, February 21, 1995, Chairman John Marvel presiding in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Morse Arberry, Jr., Chairman Mr. John W. Marvel, Chairman Mrs. Jan Evans, Vice Chairman Mrs. Sandra Tiffany, Vice Chairman Mr. Dennis L. Allard Mrs. Maureen E. Brower Mrs. Vonne Chowning Mr. Jack D. Close Mr. Joseph E. Dini, Jr. Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Lynn Hettrick Mr. Bob Price Mr. Larry L. Spitler COMMITTEE MEMBERS ABSENT: None GUEST LEGISLATORS PRESENT: Assemblyman Peter Ernaut STAFF MEMBERS PRESENT: Mark Stevens, Fiscal Analyst Gary Ghiggeri, Deputy Fiscal Analyst DEPARTMENT OF BUSINESS AND INDUSTRY OFFICE OF PROTECTION AND ADVOCACY - PAGE 933 Mr. Travis Wall, stated he was Director of the Office of Protection and Advocacy (DOPA), as well as its successor agency under the Governor's Proposal for Redesignation, the Nevada Disability Advocate and Law Center (NDALC). Ms. Rose McKinney- James, Director of the Department of Business and Industry introduced herself and briefly summarized the budget overview provided to each committee member (Exhibit C). Mr. Marvel stressed the importance of all committee members having a copy of the handout as the pages in the Executive Budget were blank. Ms. McKinney-James remarked the NDALC revenue and expenditure information as well as oversight for federal dollars (audit results) would be provided on a regular basis. Mr. Marvel asked whether the office was privatized. Ms. McKinney-James replied the effective date for privatization was March 6, 1995. She hoped the Interim Finance Committee could be scheduled before the March 6th date in order to review the documents. Mr. Marvel asked whether there would be any contractual arrangements between DOPA and the Legislature. Ms. McKinney- James believed there would be a contract between the NDALC and the Office of the Director for the Department of Business and Industry which would require the approval of Interim Finance for the $62,000 General Fund appropriation. Mr. Marvel asked whether any litigation was anticipated due to their privatized status. Ms. McKinney-James replied affirmatively. She stated the nature of the work provided by the Protection and Advocacy Center, as envisioned by the federal government was to have a free hand in arriving at decisions in order to best protect the interest of the developmentally disabled. She commented it was not fair to say that litigation was the only avenue, but was an option that was used in other jurisdictions. In response to Mr. Marvel's question regarding how the board overseeing the operation of the newly formed organization functioned, Ms. McKinney-James replied it was a policy-making board and was established consistent with the requirements of the federal authorities in terms of its composition and fiduciary responsibility. On the subject of litigation, Mr. Wall maintained federal law outlined their responsibility to exhaust less drastic remedies other than litigation to solve problems. He emphasized they fully intend to comply with their federal mandates. Their interests are to protect the rights, well being and welfare of the people they advocate for. Mr. Marvel asked whether there was a guarantee from the federal government to finance the seventeen positions in their budget. Mr. Wall indicated all of the federal grant programs had doubled every three or four years during the past fourteen years. He said the grants run in a three year cycle; two years are available to obligate the funds and three years is provided to liquidate them. He anticipated there would continue to be growth over the next several years just as there had been over the last fourteen. Mr. Marvel requested the center's total reserves. Mr. Wall noted their reserves were $390,000. He turned the committee's attention to the third page of Exhibit C, bottom right hand column, noting in fiscal year 1997-98 a reserve of $89,000 would be available. He anticipated their fund growth would exceed the projections they built the budget on. A 3% annual fund growth has been allowed with their grants and other private sources of revenue will be explored to support the program over the long term. In response to Mr. Marvel's question regarding funding sources, Mr. Wall responded they would be contacting foundations, applying for grants and conducting private fundraising activities. Mr. Marvel pointed out the dramatic decline in reserves over the years. Mr. Wall responded this was due to their attempts to build a program based on reserves. He noted if they see a decline in revenues they are unable to compensate for, they will have to scale the program back. Mr. Marvel asked when their next grant was due. Mr. Wall replied grants are provided every year and run for a three-year period. Of their four federal grants, one is a pass through and the other three come to them directly. Ms. Rose-McKinney drew the committee's attention to the fact there were a variety of questions raised with respect to how the state appropriations will flow to this privatized entity. She reported the federal government mandates that the funds flow directly to the privatized entity; establishing a formula other than that would place the agency in non-compliance. She stated the point in time in which the program is formally privatized (anticipated as March 6), means those dollars, pending the approval of the Interim Finance Committee, will flow directly to the program. She noted the handout did not reflect the expenditure authority for the federal funds. Referring to the first page of the handout in which the Agency Revenue and Expenditures were reflected, Ms. Rose-McKinney yielded to Mr. Wall to define the acronyms. Mr. Wall said PAIMI is for the Protection and Advocacy for Individuals with Mental Illness Act which mandates they provide protection advocacy services to individuals who live in residential settings who have serious mental illness or disability problems. PADD refers to their Protection and Advocacy for Developmental Disability Services under the Developmental Disabilities Assistance and Bill of Rights Act. PAIR stands for Protection Advocacy for Individual Rights which is another mandated protection advocacy program which covers people with physical disabilities who are ineligible for services under their first two mandates and falls under the Federal Rehabilitation Act of 1973. AT represents Assisted Technology, a specialized advocacy mandate for people with disabilities who have a need for certain kinds of technologies to assist them in overcoming their disability (powered wheelchairs, breathing ventilators, etc.) He said four federal grants accompany the four previously mentioned mandates. He explained the personnel expenses category which was factored at 80%. He noted fringe benefits will provide staff with a comprehensive health plan. The Consultants and Contracts line refers to an ongoing contract they have with Related Disability Services for the publication of a statewide newsletter. He noted Closing Expenses demonstrate what it will cost the program to cash out the existing state employees who may accompany the program on a privatized basis. Mr. Marvel asked whether they had experienced resistance from the State Employees Association. Ms. Rose-McKinney remarked they worked well with the State Employees Association with respect to the transitional issues. Assemblyman Evans asked Mr. Wall to justify the office's employee count. Mr. Wall said the number satisfies the level of service commensurate with its mandated responsibilities. He reported 244,000 Nevadans are disabled and the number is growing. AIDS and substance abuse are contributing significantly to the number of people who are disabled. He noted two additional mandates have been added to their responsibilities this coming year. Mr. Wall explained they routinely refer many of their cases to other sources of assistance because due to an inability to provide services except to the most serious cases that come to their attention. Mr. Wall did not believe the service levels were out of line with other states of comparable size. Mr. Wall walked the committee through the caseload figures on page 6 of the handout. He noted the figures for the existing program (first column) were misleadingly high. He said this was due to the 200 pre-existing cases (added to their ongoing caseload) that had to be closed which should have been taken care of previously. Mr. Wall stated the projected figures corresponded to neighboring states with comparable demographics. Ms. Evans asked Mr. Wall to explain the ratios. Mr. Wall replied the slash separates the number of training and educational events (by advocates) and number of people receiving the training. Ms. Evans did not understand what the anticipated caseload would be for the advocates. Mr. Wall said the number in the Cases column represented the primary source of their work. Referring to the FY 94-95 column, Mr. Wall stated the figure shows 25 cases are anticipated per advocate. Thirty cases per advocate are anticipated in each succeeding year. In addition to the case activities, each advocate will also provide short term assistance to 300 individuals in the first year of the program and 400 over succeeding years. In terms of training/education, Mr. Wall indicated they anticipate each advocate will provide approximately four seminars or training events and train 100 individuals at each event and each advocate will be involved in providing some kind of activities around group advocacy. Ms. Rose-McKinney offered to provide the figures in a mathematical form that would be easier to comprehend. Ms. Evans asked for an explanation of the difference between an investigator and an advocate. Mr. Wall replied the investigators are responsible for carrying out the investigations of alleged incidents of abuse and neglect which may have occurred to people with disabilities. The advocates work as part of a team that is responsible for resolving rights problems that may have occurred with individuals that may have nothing to do with any kind of abuse or neglect of an individual. Assemblyman Hettrick, referring to page 2 of the handout, observed it looked expense heavy, as if there was no money being spent on the people needing help. Mr. Wall responded this was a direct service program responsible for providing advocacy services; he compared his office to one that provides medical services to people. He said they do not hand out stipends or financial awards to clients; it is the services they provide that are a value to their clients. Mr. Hettrick asked what was included in the $22,500 for Direct Services. Mr. Wall explained the money will pay for the hiring of psychological, medical, and rehabilitation experts who will assist the office in advocating for the services and benefits their clients need. Mr. Fettic asked what would happen if the state did not contribute General Fund money to this budget. Mr. Wall replied, under federal law, there are requirements that if the state has historically provided a contribution for protection advocacy services, the state must maintain those funds. Mr. Hettrick asked what the consequences would be should the general funds be cut. Ms. McKinney-James replied they would be held in non-compliance. The protection and advocacy systems comes through the Governor's office. It is the Governor's decision in concert with the legislative body as to whether or not a program should exist. It was Ms. McKinney-James' belief that every state has such a program. She did not know whether the federal authorities would withdraw their funds or what action they would take should non-compliance occur. Ms. McKinney-James stated they have made it very clear that the $62,000 General Fund appropriation would not increase. Mr. Hettrick found it hard to believe the program was doing $1 million worth of good for the population the state served; he did not believe it to be a very cost effective program. Mr. Hettrick realized it was federal money and was not costing the state more than $62,000, however, he felt more detail was needed. Mr. Fettic agreed with Mr. Hettrick. He said federal money comes from his back pocket when it comes time to pay income taxes. He stated he could not see how the effectiveness or the efficiency of the program was being measured. Mr. Spitler requested the program's performance measurement indicators and comparisons with other state's performance indicators. Ms. McKinney-James stated she hoped further exploration and examination of the operating costs would assist Mr. Hettrick in understanding their non-traditional setting. In response to Mr. Spitler's question, Mr. Wall said the service level data on page 6 is much like data they see generated from other protection advocacy systems. He said the levels are commensurate with those of other states. He recounted five sample cases so the committee could better understand how their services were utilized. He stressed due to the advocacy services provided, Nevadans with disabilities are often able to live more independently, more productively, free from the abuse and neglect which may have occurred in their lives. Assemblyman Brower asked Mr. Wall to explain their training. Mr. Wall replied they provide training directly to people with disabilities, advising them of their legal rights and the processes available to them so they can assert their rights when they might be denied or challenged. He said training is also provided to staff and the office tries to educate the public, raising people's awareness about the disabled, challenging the stigma and prejudices that often accompany disabilities. Mrs. Chowning concluded she saw privatization of an agency that would not be out of the purview of the state, an increase in staff, an expanded program with more of an opportunity to sue the state and asked for the Board's intent regarding increased litigation. Ms. McKinney-James said, with respect to privatization, there was an independent board making those very decisions and an annual review would deal with this proposed problem. She noted much could occur in a year and it would take the organization some time to gear up. She added the Board was concerned with the staff and program expansion. The program has had to expand in response to the addition of two federal mandates which required more staff. Mr. Spitler asked whether the Board was subject to the Open Meeting Law. Mr. Wall said he did not know whether the Board was subject to the law, however, the meetings were open to the public and publicly noticed. Ms. Giunchigliani urged the committee look at the issue that this was a protection and advocacy program. She appreciated the fact the program was working in concert with various agencies on preventative measures thus avoiding litigation in certain cases. She supported the function of the agency and said the Legislature would most probably hear from the groups representing the mentally retarded, mentally ill and disabled if the agency was not doing its job. Assemblyman Allard noted the agency was not getting much participation in their training events. Mr. Wall emphasized the figures were based on a per advocate basis; there were 40 events and 1,000 participants. Mr. Allard asked how the events and the existence of the agency were publicized. Mr. Wall said the events are advertised in facility and agency newsletters, public service announcements and through flyers posted in agencies throughout the state that serves people with disabilities. DIVISION OF AGRICULTURE - PLANT INDUSTRY - PAGE 845 Ms. Rose-McKinney introduced Tim Hafen, Chairman of the Board of Agriculture; Acting Administrator for the Division of Agriculture, Dr. Jack Armstrong; and Bob Gronowski, Director of Plant Industry. Ms. Rose-McKinney stated an audit was performed by the internal auditor for the Department of Administration. The intent was to identify areas that required some attention providing the agency with an opportunity for the agency to take corrective steps. She said various observations were made relating to the agency's accounting practices. She reported there was noncompliance with certain laws and regulations applicable to the agency in general, the division was not always in compliance with federal regulations, the division found itself out of compliance with state laws and regulations with respect to the use of an outside bank account, and there were inadequate internal controls. Dr. Armstrong reported there were two outside bank accounts. The auditors were concerned about a short-term bank account which was opened to provide for registration to a Weights and Measures conference. Mr. Marvel asked whether they were in the process of advertising for a director of the division. Ms. Rose-McKinney answered affirmatively. Mr. Gronowski reported the mission of the Bureau of Plant Industry was to encourage, protect and regulate agricultural industries within Nevada. The bureau conducts testing and licensing of weights and measure devices; conducts pest control programs; tests and certifies seeds; tests and registers petroleum products, antifreeze, fertilizers, pesticides to insure compliance with regulatory requirements; licenses agricultural buyers, licenses nurseries and pest control companies. He noted there were 19 service and regulatory programs conducted by the bureau. Referring to the reorganization approved by the 1993 Legislature, Mr. Marvel asked about the funding for the Director and Accountant positions. Mr. Gronowski stated a Reorganization Savings was transferred to Vacancy Savings during the last session allowing the agency to make up the vacancy savings in any manner that was legal. He indicated partial funding came from Agriculture Registration and Enforcement funds in order to comply. He added two vacancies were created to make up the difference. Mr. Marvel asked whether the two positions were needed during the biennium and why non-general funds could not be continued to partially finance the cost of the positions. Mr. Gronowski said they did not know whether it was this session's desire to place the value of these to positions in vacancy savings. Mr. Marvel stated the fiscal efficiencies were the purpose of the reorganization. He did not think this was being fiscally efficient. Mr. Gronowski had no further comment. Mr. Gronowski indicated the decision unit M-100 reflects the consumer price index for certain items and includes an increase for non-state owned building rent at 350 Capitol Hill in Reno. Mr. Marvel asked who negotiated the new lease. Mr. Gronowski replied it was negotiated by their Buildings and Grounds Committee in conjunction with the Division of Buildings and Grounds. He added the increase in lease covers inflation, and taking over the maintenance and janitorial service in the building. Mr. Marvel stated the new lease represented a 94% increase. Mr. Gronowski contended the rent increased from 51 cents a square foot to 99 cents. He noted a portion was dedicated to inflation over the ten years of the lease as calculated by the owners of the building and the remainder of the increase had to do with taking over the janitorial and building maintenance. Mr. Hafen testified the lease cost to be high for the type of building being occupied. They had asked for other alternative solutions in early 1994, however, none were brought to the Board. Mr. Marvel asked Mr. Hafen whether he had contacted Senator Jacobsen in regard to using the Stewart facility. Mr. Hafen agreed it might be a good alternative, although they had been planning a potential new building for the same lease price (or maybe less) also maintained with utilities furnished. Mr. Marvel asked whether the division was locked into their present lease. Mr. Hafen stated the lease expired on June 1. He indicated they would like to negotiate a lease on a year-to-year basis and look into the possibility of finding another building. Mr. Spitler questioned the $15,000 one shot for rehabilitating the building. Mr. Hafen said, according to their lease, the division was required to bring the building back to the condition it was in when they initially occupied it. Mr. Spitler asked the committee be supplied with a copy of the lease and details for bringing the building into compliance. Mr. Hafen agreed to comply with the request. Dr. Armstrong stated the existing 10-year lease stipulated the premises be maintained and upgraded to satisfy the lessor. He added the building suffered from normal wear and tear, however, the parking lot and interior and exterior portions of the building had deteriorated due to lack of maintenance personnel. Mr. Close asked what the lessor's responsibilities were for maintaining the building. Dr. Armstrong stated the original contract stipulated they maintain the building, its air conditioner, heating system and parking lot. Mr. Close asked who approved the lease. Dr. Armstrong said the lease went through the normal state system channels for approval. Mr. Marvel asked who was negotiating the present lease. Mr. Hafen reported they had a committee working on the new lease. He commented the board would be more involved in the new lease terms. He noted part of the one shot appropriation was for the resurfacing of the parking lot which had deteriorated badly. He said under the new lease the lessor would be responsible for major maintenance costs. He said this lease was not finalized and was in the process of being negotiated and in his opinion there was room for further negotiation. He reported his committee was working with the Division of Buildings and Grounds. Mr. Allard asked whether the agency had explored building their own structure. Mr. Hafen said a 15,000 square foot building was in the talking stage; they did not think they could convince the Legislature to provide them with capital funds for a new building. Pointing to the high cost of leasing, Mr. Allard thought the idea of building worthy of exploration. Mr. Price asked for the name of the lessor. Mr. Hafen replied Grace Wilson and her sister. Mr. Gronowski briefly explained decision unit M-200 was developed from a study which surveyed the thirteen western states. The study determined that one additional inspector was required to maintain adequate enforcement of weights and measures devices. Ms. Tiffany asked Mr. Gronowski to review decision unit E-450. Mr. Gronowski said this was a request to re-establish a noxious weed control program. The program was eliminated four years ago due to budget cuts. He said the weeds deprive wildlife and public of water and space. He noted sources of partial funding could be available from counties and the Department of Transportation. Ms. Tiffany advised the agency to encourage financial support from the counties. Ms. Tiffany requested Mr. Gronowski to discuss decision unit E- 710. Mr. Gronowski explained this was for the replacement of 2 pickup trucks which are over 10 years old and have over 100,000 miles. Two of the vehicles will be stationed in Reno and two will be in Las Vegas. In reference to E-450, Mr. Hettrick asked how weeds were going to be killed with the modest operating expense of $300; where was the weedkiller expenditure? Mr. Gronowski said they intended to use leftover herbicides. Mr. Hettrick wanted to know how much weed killer inventory was available. Mr. Arberry asked where the pickup trucks would be stored. Mr. Gronowski said a storage lot is located at 350 Capitol Hill and a locked facility at their Sparks facility. The facility in Las Vegas has its own locked and fenced area. Mrs. Brower questioned the responsibilities of the inspectors. Mr. Gronowski said seasonal positions spray the weeds directly along the highways and parks. Mrs. Brower requested a report detailing how serious the situation was. Mr. Gronowski referred to the one shot request on page 837 for $175,942. Mr. Marvel had a concern regarding the prepayment money received without the service being rendered. Mr. Gronowski said, a few years ago, their board approved billing once a year for efficiency and economy and then measuring all the devices. He said it would have worked had they tested all the weights and measures devices. Due to personnel problems in northern Nevada, not all the devices were tested (out of 15,000, the agency failed to test 3,700). He noted this was one of the failures reported in the audit. The Division collected $29,000 in fees for a two-year period that they did not actually test for. He reported they are reverting to a direct billing at time of service on July 1. In response to Mr. Marvel's question regarding the prepayments, Mr. Gronowski indicated they may be refunded. At the end of this fiscal year, Dr. Armstrong stated, the Bureau of Plant Industry will research its records and determine which vendors have paid a fee for a service they did not receive. Those vendors will be refunded or credited. Mr. Spitler asked what the fiscal impact would be should they decide to refund the money this year. Dr. Armstrong agreed it would have an effect, however, he did not have a specific plan to deal with the problem. He did not think the agency had sufficient funds to refund the money this fiscal year. One of the audit recommendations was to give customers a credit towards inspections performed the following fiscal year. Mr. Spitler asked that more information be supplied to the committee. Dr. Armstrong stated the results of the internal audit have recently become available. He said the refund process will be examined closely. AGRICULTURE REGISTRATION AND ENFORCEMENT - PAGE 857 Mr. Gronowski said the budget is funded through fees and grants from the federal government. The account supports registration, inspections, sampling, product inspection at the retail level, monitors the application of pesticides, enforces groundwater, endangered species and worker protection, and provides certification and training of restricted use applicators. Mr. Marvel asked why their performance indicators were somewhat flat. Mr. Gronowski declared numbers did not tell the complete story. He stated the complaints can vary from odor to suspected misuse of pesticides. They found 17 violations out of 103 complaints. Mr. Marvel stated those numbers were significant and asked that they be included in the agency's performance indicators. Mr. Marvel asked whether any fines were assessed. Mr. Gronowski said there was no system for fining individuals in place at the time. Mr. Marvel asked why federal EPA funding is projected to decline during the upcoming biennium. Mr. Gronowski explained the EPA analyzes every state in the nation and develops a funding level based on the amount of agriculture in each state. He said since federal funding has shrunk, the money available to the states to enforce the U.S. Environmental Protection Act has been reduced. Mr. Marvel asked whether the money was guaranteed. Mr. Gronowski replied it was negotiated on a year by year basis. Assurances have been given by the U.S. Department of Environmental Protection that funds will be available this year and next at the same level. Mr. Marvel noted the agency showed a very substantial reserve in both years of the biennium and asked why they did not repeat their previous practice of partially funding the director's office from the reserve. Mr. Gronowski said the reserve is there for a number of purposes: the registration of pesticides does not occur until January 1 - the reserve will carry the fund from June 30 to January 1; and to set aside funding for equipment that needs to be replaced on a regular basis. Mr. Marvel noted they have cash flow coming in from other sources. Mr. Gronowski said the cash flow is only for the EPA side of the program. The state regulation over pesticides, registration over chemicals, survey over chemicals that are for sale are funded out of fees which are collected from registration of pesticides and fertilizers. He concluded salaries from that program cannot be paid out of EPA funds, they have to come out of the fee funds. Mr. Marvel asked whether the licensing fees for pesticide and fertilizer registration only came in once a year. Mr. Gronowski answered affirmatively. In reference to performance indicators, Mr. Hettrick suggested the agency show which analyzed samples were not approved in addition to the number approved. He asked whether the tests could be contracted out due to the high cost of equipment replacement. Mr. Gronowski replied a single sample is analyzed from three to six times. A test to run the sample in a private lab runs approximately $500. LIVESTOCK INSPECTION - PAGE 865 Mr. Steve Mahoney, Bureau Chief, Livestock Identification Bureau (formerly the Brand Division) introduced himself. He stated the primary mission of the bureau is to prevent livestock theft and illegal killing, returning stray animals and promotion of the livestock industry. Mr. Marvel noted the livestock tax increases, yet the livestock inspection is decreasing. Mr. Mahoney stated less livestock has been inspected due to the drought and federal government withdrawing more and more grazing permits. In respect to the tax, Mr. Mahoney concurred it should have been decreased. They were hoping the recent good weather would help the industry and bring the livestock numbers and prices back up. Mr. Gronowski distributed copies of Resolution 4 from the Brand and Theft Committee, Nevada Cattlemen's Association and Nevada Wool Grower's Association (Exhibit D) and a Farm Bureau Resolution (Exhibit E) which supported a brand inspection fee increase. He indicated the program is supported entirely by the livestock industry. They have agreed to assess themselves an additional 10 cents per head for inspection. Mr. Gronowski stated the request came after their budget had been prepared, however, they had anticipated some support and had built it into the budget. He pointed to the $50,000 figure under "Enhancements," noting it had been included in the budget. Mr. Marvel questioned the re-recording of brands. Mr. Gronowski said some of these funds were included in the budget and would appear in the next fiscal year. He noted the line item that reflected recording fees of $210,000 in 1995-96 (several of the licenses and fees were put into one lump sum). He added the one time revenue would not occur again for four more years. Mr. Marvel asked why their reserve was being depleted so significantly. Mr. Gronowski stated their fixed costs remained the same with the exception of cost of living. A fee increase has not occurred in 12 years and in that time it had cost them more to do business. The decrease in the number of livestock had also caused their reserve to continually decline. He hoped the increase supported by the Cattlemen would help preserve the reserve. Mr. Marvel asked Mr. Mahoney to re-examine the number: $96,000 to $27,000 in one year. Ms. McKinney-James replied the status of the reserve had been of significant concern to her office. She pointed out the fees supported by the industry, some of which were anticipated to be included in this budget, were supporting the $27,000 in reserve. Ms. McKinney-James stated she felt obligated to explore other options. Mr. Marvel asked where the other $150,000 went. She replied it had been spread to deal with the expenditures for the bureau and yielded to Ms. Deborah Erickson. Ms. Erickson asked the committee to look on page 868, the fee income. She stated part of it is a reduction in the fee income and continued costs. Mr. Marvel recommended the committee analyze the figures more closely. Mr. Mahoney said they are anticipating $50,000 increased revenue in brand inspection. One new vehicle has been requested (the division purchases one every four years) as they have four full- time district inspectors who each have a state vehicle. The new vehicle will be replacing one that is four years old with over 160,000 miles. Mr. Marvel inquired whether the number of personnel would remain the same. Mr. Mahoney stated they may have to take a look at further personnel cuts within their budget depending on levels of revenue and fee increases. He indicated they were studying just where the cuts would occur. Mr. Hettrick requested clarification on EIA testing. Mr. Mahoney stated the Livestock Identification Bureau pays for the horse testing kits. In the past labor costs were paid in addition to the kits. It was his understanding they would not be paying the labor costs in the next biennium. Ms. Erickson said the agency requested $5,000 to reduce the labor costs which were salary costs in the veterinarian medicine budget; this transferred money to pay for the labor cost. Mr. Marvel asked whether this would transfer was included. Ms. Erickson reported it went to the veterinarian medicine budget which would be heard next. Mr. Marvel did not see it reflected in the budget. Ms. Erickson could not find it and stated she would have to do some research on the issue. Ms. Erickson was requested by Mr. Marvel to bring the information back to the committee. Mrs. Chowning asked whether Mr. Mahoney was satisfied with the budget; she was concerned it was underfunded. Mr. Mahoney stated he was not satisfied with the total package; they anticipate more revenue as the cattlemen and Farm Bureau have supported. He maintained this should help preserve the reserve money that was shown to be declining. Ms. McKinney-James voiced her concerns with this budget. She stated since it is not a General Fund agency and relies on industry assessments, it put them in an awkward spot. She said there had been a problem with respect to going back to the industry when they were already faced with their own dilemma. She reported other options were being explored so they can bring the budget back to a position of basic strength. Dr. Armstrong stated when the increase was approved at their last board meeting in January, Mr. Mahoney had asked for a 20 cent per head increase. He was granted a 10 cent increase plus increases in other fees. Mr. Marvel stated he would need more information on their fine tuning before this budget could be closed. Mr. Mahoney assured Mr. Marvel he would provide additional information outlining additional income and cost saving. VETERINARY MEDICAL SERVICES - PAGE 869 Dr. Armstrong stated the Bureau of Animal Industry administers the Veterinary Medical Services budget and is staffed by 8 full- time employees and 3 part-time. Two animal disease diagnostic laboratories are supported by this budget as well as their administrative offices in Reno. In reference to the measurement indicators, Dr. Armstrong reported the entry permits issued tend to reflect their regulatory activity whereby they require certain health standards for all types of animals entering the state. He noted figures 3, 4, 5 and 6 reflect the number of necropsies (done in their two diagnostic laboratories). Dr. Armstrong felt number 7 was of particular interest to the committee in that their two diagnostic laboratories (Elko and Reno) conduct all the rabies examinations for Nevada. He mentioned this represents the only plague laboratories within the state. Dr. Armstrong indicated Nevada has achieved national recognition in many animal health programs. The state has been declared brucellosis, bovine tuberculosis, swine brucellosis and swine rabies free. He added they have maintained front line defense against animal diseases that are transmittable to humans. Dr. Armstrong reported the bureau receives less than one percent of its revenue from outside sources. The $800 revenue source identified relates to the licensing and permitting of alternative livestock producers that the 1993 Legislature provided for. Referring to page 870, the expenditure category, Dr. Armstrong said no new positions are requested. A request has been made to the Department of Information Services for computer replacement upgrade in the laboratory and administrative offices. Referring to page 871, decision unit E-175, improved work environment, Dr. Armstrong stated there was one error: the microbiologist was not receiving computer training, it was one of the management assistants. He reported the laboratory training is received at the National Animal Disease Laboratory in Ames, Iowa and is necessary in order to receive laboratory certification. Mr. Marvel remarked this budget was very straightforward. There were no questions for Dr. Armstrong from the committee. GAS POLLUTION STANDARDS - PAGE 879 Mr. Gronowski reported the funding for Gas Pollution Standards comes from a transfer of funds from the Department of Motor Vehicles. Funded by certificate fees that are charged for pollution testing, the organization inspects and analyzes fuel, determines whether there are violations and enforces the penalties that are statutorily set. Mr. Marvel asked whether there was dialogue between the EPA and the organization. Mr. Gronowski said they coordinate air quality standards with the EPA. Mr. Gronowski reported the organization can fine up to $2,000 for the first violation, $4,000 for the second and $5,000 for the third. He noted the fund has issued as much as a $44,000 fine. Mr. Marvel asked why there were so many warnings. Mr. Gronowski replied warnings are issued for noncompliance when there has been an accidental occurrence. Mr. Marvel noted there was an error in regard to transfers. Ms. Erickson said both $159,000 and a total of $86,509 comes from category 20. She said it was not identified specifically as a transfer to agriculture, but that was the intent of that particular budget. She reported she had discussed this with the other analysts. Mr. Marvel asked whether the LCB analysts agreed. Ms. Erickson said she was not sure whether they did or not. Mr. Marvel requested she meet with the LCB analysts. Referring to the performance indicators, Mr.Hettrick noted one test out of 1,000 was reported to be inappropriate, there was only one administrative hearing and 1 person was fined $1,000. Mr. Hettrick wondered whether the $281,500 equipment expenditure for testing samples was necessary. He suggested random sampling. Mr. Gronowski replied the state's fuel was kept within the necessary standards only through vigorous enforcement. He said lack of monitoring would only draw those who had violated the rules to return to Nevada. Mr. Hettrick said he did not think the program was cost effective. Mr. Gronowski suggested more historic information would be helpful. Mr. Hettrick was surprised there were so few violations. Mr. Gronowski reported at least 3 service station operators had gone out of business because of their enforcement procedures; the major operators were not a big problem, the independents were. PREDATORY ANIMAL AND RODENT CONTROL - PAGE 883 Ms. McKinney-James reported Mr. Pete Paris, Chairman, Predatory Animal and Rodent Control Committee was unable to attend and was being replaced by Mr. Gary Simmons, State Director of the program. He said the federal program is part of the U.S. Department of Agriculture. Their mission is to protect Nevada's agricultural, industrial, natural resources and to safeguard public health and safety from diseases caused by wildlife. He said their base budget reflects a spending rate at the same level as that in previous budgets and maintains the 10-1/2 positions. He drew the committee's attention to the fact that their base budget assumes the continuation of a $20,000 transfer from the Division of Wildlife budget. Mr. Allard asked whether mountain lions were posing a problem within the state. Mr. Simmons stated it was a problem that continues to increase, especially in urban areas. Fifty-four lions directly involved in damage problems were taken within the last year. Mr. Marvel questioned their inflation factor in the maintenance section and asked why the numbers were so miniscule. Ms. McKinney-James said the two items addressed were postage and insurance. Mr. Simmons said most of the postage expense was covered by the federal budget. Mr. Allard wondered whether the program would benefit from the Department of Wildlife increasing the issuance of mountain lion hunting permits. Mr. Simmons said he believed it would have a definite impact in addition to raising revenues for the state through the sale of permits. He could not say whether it would lower their budget; they have two full-time people who are on call to deal with mountain lions. Mr. Simmons was requested by Mr. Marvel to explain his position on decision unit M-200. Mr. Simmons said this figure covers the addition of one person bringing their staff level up to 11-1/2 state positions. It will add one additional position in the Battle Mountain area. He emphasized the importance of per diem for their personnel as they spend 50% of their time camped in the field. Mr. Marvel asked where the federal money appeared in the budget. Mr. Simmons stated it was not reflected; the budgets operate in parallel. He said they do have a reimbursable arrangement through the interlocal agreement to fund the cost of the vehicles that state employees drive. Mr. Simmons reported their federal budget during the last year was $796,987. Mr. Simmons drew the committee's attention to the one-shot appropriation on page 838. He stated the one-shot covered the cost of helmets, flight suits, gloves, tranquilizer gun and an air gun to deal with migratory birds and beavers in urban areas. He noted the flight suits and helmets were critical for safety purposes in their aerial hunting operations; the amount would outfit 6 employees. GRAZING BOARDS - PAGE 889 Mr. Simmons said this budget is an account which allows the department to bank monies made available by the grazing boards. Accounting procedures have been changed and the department is placing the monies in federal trust funds. He said though they asked for spending authority in the coming biennium, they truly anticipated the monies would not be available. He stated this was the last time the account would be used. WOOLGROWERS PREDATORY ANIMAL - PAGE 891 Mr. Simmons said this budget is comprised of monies generated by the sheep tax which amounts to 20 cents per head. The monies come from the county assessors and through the state system. A full-time employee works half-time for this account and half- time for PARC. He pointed out an enhancement has been requested which is a contingency allowing them to take $10,000 more out of the base in order to meet emergency needs for aerial hunting costs. Mr. Marvel asked why the state allocation costs had risen from $700 to $1,200. Ms. McKinney-James said part of the change is a function of the normal adjustment (up and down) for the cost allocation as well as part of it is a change in how it was allocated within the department. She said the allocation in this account was the state allocation allotment which supports the budget office and other administrative matters. Ms. Erickson said the allocation for the department was based on an FTE basis and they only assess those agencies with two or more employees in an effort to alleviate some of the overhead for some of their small struggling agencies within Business and Industry. She said the reason it didn't show up in budget account 4600 was because it was a General Fund budget account. NEVADA BEEF COUNCIL - PAGE 913 Ms. McKinney-James introduced Ms. Tammy Wright, Administrator for the Nevada Beef Council, who presented the budget. Mr. Marvel asked why the number of cattle assessed is projected to decrease from FY 94. Ms. Wright said they suspect there will not be a herd expansion in Nevada. She said the industry is being cautious at the present time due to industry issues and the drought. She reported the national numbers have been increasing, however, Nevada is declining in cattle production. Mr. Marvel asked whether the numbers tied in with the brand inspector's numbers. Ms. Wright said she did not know. She said Mr. Mahoney's division inspects change of ownership, out- of-state, interstate, intrastate and slaughter. Ms. Wright said the Beef Council collects $1 per head for every change of ownership but not for every head that is inspected. Mr. Marvel said he felt there was a contradiction between the two numbers and requested Ms. Wright to examine them more closely. Ms. Wright said they have projected their revenue on what they foresee to be the cattle sales in Nevada which has been in a definite decline during the past 4-5 years. Mr. Mahoney said he did not have a cattle breakdown figures with him at the meeting. He said they attempt to coordinate the figures so the Beef Council has a good estimate. SHEEP COMMISSION - PAGE 945 Mr. Fred Fulstone testified he has been a sheep producer for sixty years and a member of the State Board of Sheep Commissioners for twenty-five years. Money from sheep inspection tax goes to fund 4-H and FFA Junior Livestock programs and awards. They tax themselves to support animal damage control, program activities through the Woolgrowers Predatory Committee. As an industry they contribute around $20,000 toward the predator control which allows other monies to be used to benefit the general public for such services as skunk abatement, bird and pest control and capture and relocation of wildlife. Mr. Fulstone stated they have seen their commission go from a financially stable position with a reserve of $10,449 to a deficit situation. He maintained if the circumstances reflected in their budget presentation come to pass they will not only be unable to support state cost allocations or any future Department of Business and Industry assessments, but they will not be able to service the industry they were set up to care for. He concluded there were no easy answers to their problems, however, they are working on solutions in order to continue to operate. He yielded to Stephanie Licht who would present their budget. Ms. Licht stated a frequently asked question was what the commission's role was now that most of sheep diseases in the state have been eradicated or controlled. She explained they provided promotional materials for the industry in conjunction with the national association, support youth activities, support the animal damage program ($20,000 per year), and monitor diseases that are new to Nevada. In respect to the budget on page 945, Ms. Licht said their sheep flock has declined statewide and numbers approximately 85,000. She explained the various taxes to the committee. The predatory animal tax is 20 cents. The sheep inspection tax is 10 cents which amounts to $8,500 income. Additional revenues are generated from a pro-rated tax charged to herders who seasonally graze along the borders. If they are in Nevada for six months they are charged 15 cents a head. Ms. Licht added Superior Lamb Feeders has established a feed lot in Lovelock which generated the $10,250 figure (other non-state resources, 93-94 actual). Mr. Marvel asked why their reserve was being reduced. Ms. Erickson said the projection in work program year had not been de-augmented yet. She said she would get back to the committee with the current reserve. Ms. Licht said part of their budget balance would come out of the Woolgrower's contract services. Any money left over from the sheep inspection fund that is not used to fund the operation of the Sheep Commission is generally turned over to any state association charged with promoting the sheep industry. Any monies that are shortfall come out of the contract services. In reference to budget enhancements, Ms. Licht noted they were used to partially defray legislative travel costs for the commissioners and herself. She remarked unless drastic measures were taken, they would be out of money by the end of the next biennium. A solution proposed by the commission to remedy the shortfall was to cut the salaries of the commissioners. They decided to accept no pay for at least one of the two years of the biennium and perhaps two with a savings of $3,000 ($1,500 per year). Mr. Marvel commented their budget was pretty straightforward and once the data from Ms. Erickson was received the committee would make the necessary adjustments. Mr. Deloyd Satterthwaite, a Nevada producer of sheep and cattle, stated although brand inspection fees was not a general funded item, the Sheep Commission does abide by some of the state's rules and regulations. The executive director's wages, mileage, district brand inspectors' retirement and fees are all set by the state. He noted although it was an industry funded type of program, the state had quite a bit of input into the Commission's activities. Mr. Satterthwaite mentioned the Department of Wildlife used to contribute $40,000 for mountain lions, today their contribution is $20,000. He maintained the commission needed to be free of government control; mandates were severely curtailing their activities. The Commission may have to contribute to the Department of Business and Industry due to their having one staff member. He concluded this self- help program which takes no money from the General Fund will be $1,100 in the red in 1996. Assemblyman Pete Ernaut testified many of his family members were associated with the Nevada sheep industry and agreed there was a problem. He recommended the situation be remedied this session either by reclassifying the Sheep Commission to dismiss them from paying the $11,000 administrative allocation or through an appropriation from the Ways and Means Committee. Mrs. Guinchigliani requested a list of the mandates that were being referred to. DAIRY CONTROL - PAGE 917 Mr. Robert Barengo, chairman of the Dairy Commission introduced R. Bryn Armstrong, their executive director. Mr. Armstrong gave a brief history of the Nevada dairy industry and commission (Exhibit F). Mr. Marvel inquired why indicator No. 5 projects a decrease in the amount of fines levied. Mr. Armstrong stated they had no way of accurately estimating how much they were going to levy in fines until they actually get into the period and start doing the auditing and investigation. He said their funds were placed by statute with the State Treasurer or Controller earmarked for the support of the Dairy Commission. Mr. Marvel noted their revenues decreased from $1 million to $895,000. Mr. Armstrong stated the Commission dropped assessments on fluid milk on October 1, 1994 and on January 1, 1995 assessments were reduced on ice cream and yogurt which are among their major revenue sources. He added this was a benefit to the industry and hoped it would be passed on, however, their reserve of $465,000 had become an unmanageable amount. Mr. Armstrong did not believe they should be assessing a regulated industry for amounts that were not used for the support of the Dairy Commission. Mr. Marvel asked what level of reserve they felt comfortable with. Mr. Armstrong replied around $250,000 and projected it would be met around July 1995. Mr. Marvel asked whether they had their own in-house counsel. Mr. Barengo replied they had recently changed counsel. Mr. Marvel asked whether there had been a move to replace the in- house counsel with an attorney general. Mr. Barengo stated they had not had any communication with the attorney general's office in that regard. Mr. Armstrong reported his intention to audit all their licensees on a three-year cycle. In order to meet the requirement they would have to perform 55 audits per year. To accomplish this, Mr. Armstrong indicated field officers will have to be equipped with laptop computers. He stated the request had not been approved due to a pending study by the Department of Information Services. Mr. Marvel asked whether the study would be completed before sine die. Mr. Armstrong stated he did not know. Ms. Guinchigliani questioned the need for two additional vehicles and the cost for their outside counsel. Mr. Armstrong said one vehicle would replace a 3-year old jeep with over 100,000 miles, another would be used by a compliance investigator (being requested) to be hired on July 1, 1996 in Las Vegas. The retainer for their attorney is $19,440 in each year of 1996 and 1997. Responding to Mr. Price's question regarding the consequences should the Dairy Commission dissolve, Mr. Armstrong said it would be up to the regional producers to petition if they wished to be under a federal order. Mr. Price questioned whether there was only one assessment. Mr. Armstrong replied the money was deposited into one fund and all sixteen classified service employees were supported from the fund. He said they pay assessments for the services rendered to the commission by the Department of Business and Industry, the Attorney General, the State Controller, and the State Treasurer amounting to approximately $46,000 a year. Mr. Marvel requested committee introduction of Bill Draft Request 17-457 which provides for fundamental review of base budgets of state agencies by legislature. ASSEMBLYMAN TIFFANY MOVED TO INTRODUCE BILL DRAFT 17-457. ASSEMBLYMAN CHOWNING SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. Mr. Marvel requested committee introduction of Bill Draft Request 31-459 which makes various changes regarding preparation of governmental budgets. ASSEMBLYMAN TIFFANY MOVED TO INTRODUCE BILL DRAFT 31-459. ASSEMBLYMAN ARBERRY SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. The meeting adjourned at 11:35 a.m. RESPECTFULLY SUBMITTED: Janine Sprout, Committee Secretary Assembly Committee on Ways and Means February 21, 1995 Page