MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session February 22, 1995 The Committee on Ways and Means was called to order at 8:08 a.m., on Wednesday, February 22, 1995, Chairman Morse Arberry, Jr. presiding in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. 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 STAFF MEMBERS PRESENT: Mr. Mark Stevens, Fiscal Analyst Mr. Gary Ghiggeri, Deputy Fiscal Analyst Ms. Mary Matheus, Program Analyst Chairman Arberry recognized Mr. Spitler who announced the Subcommittee on Public Safety, Natural Resources and Transportation would tour the Lovelock Prison on Friday, March 3 immediately upon adjournment of the Assembly Floor Session. Committee members who planned on taking the tour were requested to inform Mr. Ghiggeri. Chairman Arberry called for a motion to make a blanket introduction of several bill draft requests for appropriations. ASSEMBLYMAN MARVEL MOVED TO INTRODUCE BDR S-1482, BDR S- 1483, BDR S-1485, BDR S-1486, BDR S-1489, BDR S-1490, BDR S-1492, BDR S-1493, BDR S-1495, BDR S-1497, BDR S-1498, BDR S-1499, BDR S-1502, BDR S-1503, BDR S-1506, BDR S-1507, BDR S-1508, BDR S- 1510, BDR S-1511, BDR S-1512, BDR S-1513, BDR S-1514, BDR S-1517, BDR S-1520, BDR S-1523, BDR S-1524, BDR S-1525, BDR S-1527, BDR S-1528, BDR S-1530, BDR S-1531, BDR S-1534, BDR S-1535, BDR S- 1538, BDR S-1539, BDR S-1540, BDR S-1542, BDR S-1545 AND BDR S- 1546. ASSEMBLYMAN HETTRICK SECONDED THE MOTION. THE MOTION CARRIED. ECONOMIC DEVELOPMENT - PAGE 955 Chairman Arberry recognized Lieutenant Governor Lonnie Hammargren, Chairman of the Commission on Economic Development and Chairman of the Commission on Tourism who noted numerous changes have occurred since the budgets were reviewed in June and that some budget adjustments may be necessary in response to those changes. In his opening remarks, Lieutenant Governor Hammargren observed two main industry types exist in the state with tourism and gaming comprising one group and all other industry comprising the other group. The state's leadership in gaming and recreational tourism should be protected while at the same time the economy must be diversified. Industry defection from other states must be actively encouraged. During the last two years, 52 businesses have relocated to the state and 38 existing businesses have expanded. Approximately half of those businesses relocating to Nevada are from California. Lieutenant Governor Hammargren indicated only environmentally friendly manufacturing should be encouraged. Science and technologically based industries which require a highly skilled work force should be vigorously sought. Lieutenant Governor Hammargren expressed the desire to develop some areas of the budget in which to utilize the University and Community College System of Nevada in the evaluation of businesses wishing to relocate and in providing training for the highly skilled work force desired by technological industries. He noted the University and Community College System is the world leader in education for gaming and tourism. Although the 38 million people who visited Nevada last year brought $25 billion dollars to the state's economy, Lieutenant Governor Hammargren cautioned against complacency in the areas of tourism and gaming. Lieutenant Governor Hammargren explained the Governor announced a proposal to unite the Commission on Tourism and the Commission on Economic Development. The commissioners will evaluate the Governor's proposal and hope that the programs of both agencies will be positively affected by the reorganization. There will be no immediate change in any current program. He expressed the hope that excess dollars brought in by tourism will eventually be used to bring high tech industry into the state to develop more stable, better paying jobs. Lieutenant Governor Hammargren introduced Thomas Tait, Executive Director of the Commission on Tourism; Tim Carlson, Executive Director of the Commission on Economic Development; and Richard Moreno, Publisher of Nevada Magazine. Mr. Carlson distributed a document entitled "Nevada Commission on Economic Development" (Exhibit C) and pointed out a page entitled "CED Inquiries" which reflects the number of inquiries regarding business relocations received in FY 93 and FY 94, and a page entitled "Prospect Inquiries By State" which contains a map of the United States that demonstrates the number of inquiries coming from each state. The page entitled "Results" reflects that FY 94 surpassed FY 93 in the number of new companies, company expansions, jobs created, square feet occupied and payroll impact. The Commission on Economic Development has focused on bringing industries to the state that add to the state's value in taxes, employee benefits and salary increases. The page entitled "New and Expanded Companies" indicates growth for the years since 1987. The page entitled "Jobs Created" shows 9,940 new jobs were created during the 93-94 biennium. The page entitled "New Company Locations" indicates more of the new companies are locating in the northern part of the state. Mr. Carlson stressed the figures presented represent companies actively recruited by the Commission on Economic Development. The page entitled "All Budgets" reports the Governor's recommendation for the Commission on Economic Development (CED), Motion Picture, Rural Community and Procurement, and indicates Rural Communities receives 43 percent of the budget; CED receives 41 percent; Motion Picture receives 9 percent and Procurement receives 7 percent. The page reporting the CED budget of $2,233,000 indicates matching grants comprise 33 percent of the budget and personnel comprises 21 percent of the budget. Mr. Carlson reported a change in the page which outlines the Motion Picture Division budget: General Fund Revenue of $447,900 should be reflected as coming from the Commission on Tourism room tax. He pointed out the motion picture industry in Nevada has grown with more films being produced in the past year than ever before. The page reporting the Rural Community Development budget of $2,372,000 reflects the majority of funding to be federal. General Fund Revenue is $45,083. Balance Forward is $105,760, reflecting the close of the Rural Community Development budget and federal government budget. Federal funds of $2,008,000 are Community Development Block Grant (CDBG) funds. CDBG monies are used for economic development purposes to create jobs rather than to merely make infrastructure improvements. Mr. Carlson reported a production/manufacturing facility will be built in Lyon County. The Commission worked with the City of Yerington and Lyon County to help deliver a water system that will allow location of the 400,000 square foot facility in Wabuska. The business is to be built within the next year and will initially produce 150 jobs. Mr. Carlson stressed using CDBG funds for economic development purposes yields greater returns than merely making infrastructure improvements. Mr. Carlson discussed the Procurement Outreach Program. One function of the Program is the small business operation. It is proposed to move this function to Business and Industry as the small business program more closely matches the regulation profile of Business and Industry than the marketing profile of Economic Development. The small business office typically provides information to clients regarding how to start a business. Statistics show seven out of ten of these start- up businesses fail and closer cooperation with the agency that regulates and approves permits could help reduce the failure rate. Mr. Carlson said the other function of Procurement Outreach involves companies that have at least three to five years of experience in a specific business. Procurement Outreach matches he capabilities of businesses with federal, state or local contracts and helps the businesses apply for the contracts. Contracts let to Nevada businesses have increased by nearly $24 million in the past two years through Procurement Outreach. The Department of Defense provides some funding and soft matching dollars are used to match those funds. Mr. Carlson indicated he would be happy to answer any questions or provide further explanation. Mr. Price recalled that at the time the Commission on Economic Development and the Commission on Tourism were created, discussion centered on whether there should be one commission or two separate commissions. He inquired if both commission had been consulted regarding the proposal to consolidate them. Lieutenant Governor Hammargren responded that a presentation had been made regarding the proposed consolidation at the last meeting of the Commission on Economic Development. Mr. Price inquired whether there are plans to construct a sound stage in Las Vegas. Lieutenant Governor Hammargren responded there appears to be some interest among industry regarding construction of a sound stage in Las Vegas. Mr. Fettic asked how Economic Development interfaced with the other economic development agencies and whether there is any duplication of effort. Mr. Carlson responded twelve separate economic development groups exist throughout the state, each group having its own public/private partnership and corporation. Only a few of these development authorities existed prior to the formation of the Commission. The Commission provides $725,000 of state funds to the twelve development authorities on a grant basis, matching fund basis and formula basis as set by the Commission. Currently the Commission receives $3 for every $1 invested in the grant program. Mr. Fettic questioned whether the individual development authorities work in cooperation. Mr. Carlson responded affirmatively. Ms. Tiffany indicated the committee had received no information regarding the proposed reorganization of the two commissions, the goals, organizational chart or any bill draft requests involved. Mr. Tait explained the bill draft was in the process of review by the Governor's Office and Budget Office. That review should be completed within the week. Ms. Tiffany inquired what the reorganization is expected to accomplish and also requested information regarding a proposed organizational chart. Mr. Tait replied the Executive Budget in Brief contains a proposed organizational chart. Ms. Tiffany asked if the reorganization would cause the mission statement to change. Mr. Tait responded no program changes are expected; however, some economies of scale should be realized in printing costs. Also, 100 percent of funding for the Motion Picture Division would be assumed by the Commission on Tourism. Total projected savings is $200,000 for each year of the biennium. Ms. Tiffany observed this reorganization would impact the budget and inquired whether the committee would receive a revised budget if the bill draft request is approved. Mr. Stevens indicated each budget includes decision units that, if approved, will provide the necessary budgetary changes for reorganization. These decision units appear on page 958 in the Economic Development budget. The E900 decision unit reflects the program transfer which would eliminate $91,000 and $92,000 in the first and second years of the biennium respectively from the Economic Development budget. If reorganization is not approved, these amounts would be returned to the Economic Development budget. Mr. Dini observed the two commissions seem to be working successfully as independent bodies and questioned the need to combine them when the only apparent advantage of reorganization is the elimination of one board and commission which would result in more funding from the room tax. He requested comment on why the program would be stronger with reorganization. Lieutenant Governor Hammargren responded an advantage would be transfer of funds. Some positions will be eliminated and a reserve is predicted in the budget. Tourism generated money can be funneled into Economic Development. The Motion Picture Division budget has been funded 75 percent from Tourism; it is proposed to fund that budget 100 percent from Tourism. Mr. Allard asked Lieutenant Governor Hammargren if the missions of the two commissions are like in nature. Lieutenant Governor Hammargren responded both commissions promote the state; combining the two commissions should result in commissioners with broader perspectives; and, savings would be realized with a fewer number of commissioners. Mr. Fettic expressed doubt that combining the two commissions would be effective as the two organizations have different missions. Combining them might result in one agency moving to the forefront and the other to the background. Janet Johnson, Deputy Budget Director, offered explanation regarding the administrative purpose for reorganization. Both commissions focus on marketing Nevada. Economic Development promotes business assets while Tourism promotes recreational assets. In many cases in rural communities the roles of the commissions have overlapped and resulted in some duplication of effort. However, the major factor is the desire for a concerted, combined and coordinated effort between Economic Development and Tourism so the commissions do not compete but rather cooperate to perform all development activities in Nevada. Vice-Chairman Evans expressed concern about a lack of justification for reorganization and said a written statement explaining the benefits of combining the two organizations would be beneficial. Currently, each commission focuses on a particular area. With gaming and tourism being the major industry in the state, economic development could easily be overwhelmed if the agencies are combined. Mr. Marvel recalled that last session a bill was passed which allowed counties of limited population to combine economic development and tourism money as there is very little possibility of major industry relocating to many of these counties and tourism is their economic development. Ms. Johnson indicated to Vice-Chairman Evans that a written statement of the rationale for combining the commissions would be prepared. Chairman Arberry requested discussion of performance indicators. Mr. Tait deferred to Karen Baggett, Deputy Director for the Commission on Economic Development. Ms. Baggett referred to measurement indicators on page 955 of the Executive Budget. Measurement indicator No. 1, Responses To Paid Advertising Inquiries, reflects a decrease in numbers of inquiries; however, the quality of leads has been much better as a result of selective advertising. Mrs. Evans requested that wage scales for companies moving to the state be added to measurement indicators. Ms. Baggett indicated this would be done and added that generally manufacturing pays $25,000-$30,000 per year ($12.02-$14.50 per hour); distribution companies pay $15,000-$17,000 ($7.22-$8.15 per hour); service industries pay $25,000-$27,000 ($12.02-$13 per hour). Ms. Baggett discussed Sales and Use Tax Deferrals Processed, measurement indicator No. 4. Limited numbers of applicants in the past have led to discussion regarding legislation to change the sales tax use deferral. However, marketing of incentive programs has resulted in more companies applying for sales and use tax deferrals as well as business tax abatements. Last session, abatement rules were changed and many companies did not meet the qualifications for abatement rules. However, those regulations and guidelines have since been lowered and five companies within the past several months have met the guidelines for abatements. Chairman Arberry requested discussion of decision units. Ms. Baggett explained the M200 decision unit contains funding in the amount of $150,000 for the Quick Start Job Training Program, a program for companies relocating that require highly technically skilled employees. The Commission works to arrange memorandums of agreement between companies and community colleges to provide on-the-job training and classroom training in the specific skills needed by the company. Currently, a program is being arranged in Elko County for a company that rebuilds locomotives and requires highly skilled employees. The M200 decision unit also contains funding for additional advertising in the amount of $20,000 to allow more marketing for specific target areas. Chairman Arberry inquired what portion of the budget is targeted at international marketing. Ms. Baggett responded international marketing is part of the advertising request in the M200 decision unit and currently one staff member works on international marketing. Chairman Arberry requested a report detailing international marketing efforts be provided to staff. Mr. Carlson added that last session the Legislature provided the Commission the ability to charge for its services and this has benefited international marketing efforts. A program which charges businesses for site visits has been very successful and has generated over $35 million of business for those companies that have participated in the program. Mr. Carlson indicated an assessment is made based on the amount of work and effort expended by Commission staff. Mr. Carlson reported a requested increase in the amount of $291,000 to cover five new positions. Filling these positions has been delayed until reorganization takes place, at which time a determination will be made whether the positions are actually necessary. This would represent a savings resulting from reorganization as services, staff support and office operations can be shared. Mr. Carlson added international marketing has not increased in this budget because the Commission has been able to charge for its services. Mr. Marvel asked what benefits the Washington office has provided. Mr. Carlson responded the office helps create a Washington, D.C. presence for the state. R. Leo Penne, Director of the Washington, D.C. Office, provides guidance, direction and coordination for all state departments. Chairman Marvel requested a written report of Mr. Penne's accomplishments. Mr. Carlson indicated this information would be forthcoming and would include the number of companies assisted and the types of contracts involved. Chairman Arberry requested discussion of the E325 decision unit. Ms. Baggett explained the $27,000 represents a matching contract with the Federal Economic Development Association to provide funding for a contract loan packager. Ms. Baggett said the E710 decision unit provides funding for replacement furniture and recording equipment to tape Commission meetings. Ms. Baggett said a one-shot appropriation on page A38 of the Executive Budget for $16,200 is to replace the existing telephone system as the Commission currently functions with an outdated, one-line telephone system. TOURISM - PAGE 961 Thomas Tait, Executive Director of the Nevada Commission on Tourism, reported the Commission was founded in 1983 to provide a composite view of Nevada; promote the image of the state both domestically and internationally; provide a hedge against competition; promote rural Nevada; provide a means for showing the cultural, scenic, recreational and historic attractions of the state in the most favorable light; collect and disseminate data about the health of the entire tourism industry; and plan for the orderly development of a tourism infrastructure. Mr. Tait reported Room Tax Revenue, measurement indicator No. 6, reflects an increase of $6.4 million (or 10 percent) in FY 95 compared to FY 94. Mr. Marvel inquired whether the 10 percent figure was accurate considering information this year showing a 22 percent increase in room tax revenue. Clara Fitz, Business Manager for the Commission on Tourism and the Commission on Economic Development, responded at this point room tax revenue is 22 percent ahead of the same time last year. The tremendous boost in income is due to new properties which opened last year; however, the basic projection of 10 percent is expected to be accurate overall. Mr. Tait indicated the 22 percent reflects a spike resulting from the number of new mega resorts. Mr. Marvel questioned whether this was an upward trend that should be recognized. Ms. Fitz responded the monthly rate collected for November, which was when the spike began, is 9.3 percent of the total revenue, very near the 10 percent projection. Mr. Marvel inquired whether the new mega resorts had been taken into consideration. Ms. Fitz responded affirmatively. Mr. Tait said projections for 1996 and 1997 are 8 percent per year above the current year, a collective of 16 percent over the biennium and 26 percent over the past three years. Mr. Dini observed projections should include the fact that existing properties have probably experienced a decrease in occupancy because of the new resorts and projections may be somewhat artificial until attendance levels off. Mr. Tait added a secondary phenomenon has taken place in communities such as Laughlin which compete directly with new mega-resorts. Some properties have found it necessary to significantly reduce room rates in order to fill rooms and maintain a customer base; this affects the room tax collected in those communities. Chairman Arberry requested discussion of the two new conference planner positions requested in the M200 decision unit. Mr. Tait reported conference planners are currently on contract to provide part-time services. Conference planners are needed on a more consistent basis, so it is recommended those contracts be converted to full-time positions. The two positions, one in the north and one in the south, would promote holding conferences in the state as well as organizing the meetings to insure logistically successful conferences. Chairman Arberry inquired whether those individuals would be hired directly or whether they would be hired through State Personnel. Mr. Tait responded the positions would be unclassified and so would be hired directly from private sector individuals who are currently meeting planners and have proven skills. Chairman Arberry requested discussion of the proposed 79 percent increase in in- state and out-of-state travel. Mr. Tait reported the Commission has had a great deal of success in working trade shows over the past two years, especially in the international market. The tour and travel manager position in northern Nevada will be designated as the international trade representative. The tour and travel manager in southern Nevada will be designated as the domestic trade show representative and will handle all the North American trade shows. Projected travel for both positions is listed in the budget document. Mr. Spitler verified that the two new conference planner positions are currently under contract and inquired where the contract budget is reduced in response to those positions moving from contract to full-time. Mr. Tait responded $29,986.67 remains in the budget for those contracts and that it should be removed and appear as a negative in the M200 decision unit; however, it is not known if the positions will be approved and, if approved, whether they will start in October or July. If the positions start in October, a portion of those funds needs to be retained to provide conference services for July, August and September. Mr. Spitler inquired whether a written amendment was being prepared to remove those costs and whether the costs would have been in operating expenses. Mr. Tait responded the contract costs would have been in the marketing, promotion and advertising budget. Mr. Hettrick inquired whether the $29,000 represented the total spent over the past year. Mr. Tait responded this represented the base budget for FY 94. Mr. Hettrick observed personnel expenses for the two positions would be $110,000 and questioned whether productivity of the two positions would also triple. Mr. Tait indicated converting the current part-time contracts to full-time positions is in response to the increasing number of requests for assistance in developing conference proposals as well as the actual production of proposals. Mr. Hettrick restated his question whether productivity of the two positions would triple. Mr. Tait responded affirmatively. Ms. Fitz explained the Commission had appeared at the Interim Finance Committee regarding FY 95, and currently $60,000 is available for meeting planner contracts. The $29,000 figure reflects what was actually spent in FY 94, so the cost does not actually triple. Mr. Hettrick inquired whether $60,000 or $29,000 needed to be taken out of the budget. Ms. Fitz answered $29,000 should have been removed from the budget; $60,000 is not budgeted. Ms. Tiffany inquired what impact reorganization would have regarding board meeting time and board member service and expressed concern that additional assistants would be required when one director takes over activities currently handled by two directors. Mr. Tait explained the proposed director's office will also include a deputy director and at this point there appears to be no need for an additional assistant. The constitution provides for a total of nine board members excluding the chair; four members would represent tourism, four would represent economic development and general business and one person would represent film and television. The Lieutenant Governor serves as chairman. Ms. Tiffany asked whether the number of board meetings would change. Mr. Tait responded that initially the board would most likely find it necessary to meet more frequently and for longer periods of time until the board determines its direction and mission. After a period of time, quarterly meetings would probably suffice. Ms. Tiffany questioned what meeting schedule the boards currently follow. Mr. Tait indicated the Commission on Tourism meets quarterly. Mr. Carlson said the Commission on Economic Development meets at the call of the Lieutenant Governor, usually bimonthly. Mr. Carlson added the Commission had requested the budget hearing be postponed until such time as a determination of the organizational structure had been made. Chairman Arberry inquired who would be responsible for hiring the conference planners. Mr. Tait indicated that as chief executive of the agency, final responsibility would rest with him. Chairman Arberry asked how long the current conference planners had worked for the agency. Mr. Tait responded the two conference planners currently under contract are not necessarily the individuals who would be hired and added that both planners have successful businesses and may not want to become full-time employees. Hiring would include statewide publication and interviews by the professional staff. Chairman Arberry requested fiscal staff be provided with the names of the conference planners currently on contract to insure proper hiring practices are followed. Mr. Tait reiterated it was highly unlikely both contract planners would want to become full-time employees and added the original contracts were put to bid and the individuals were hired through the bid process. Chairman Arberry requested discussion of enhancements to the budget. Mr. Tait explained the Rural Advertising/Marketing Contingency is a new program which proposes $300,000 per year of the biennium be used to provide emergency assistance to communities that have suffered as a result of man-made or natural disasters. He cited examples of fires, flood, building collapse and terrorist attacks which devastated communities. Mr. Tait indicated that if none of the funds are expended, the issue would be revisited in the next biennium to determine whether a cap should be placed or whether the fund should be allowed to grow. Mr. Hettrick observed the budget does not reflect this request and noted that as the money would come from the reserve it could be left there. If a disaster should occur, the agency could obtain funding from the Interim Finance Committee. Mr. Hettrick added that occurrences such as those cited by Mr. Tait had little in common with "Rural Advertising/Marketing Contingency." Mr. Tait indicated Rye Patch and Lake Lahontan are examples of disasters in Nevada. Mr. Hettrick expressed his support for helping rural areas in the event of disasters but reiterated that as funding would be from the reserve, it should be left in the reserve and expended through the Interim Finance Committee on an as-needed basis where project magnitude and associated expenditures can be more fully explored. Mr. Tait testified the only difficulty with funds remaining in the reserve is that the types of events covered by the contingency require emergency action and waiting up to 45 days for a meeting of the Interim Finance Committee could present serious difficulties. Mr. Tait proposed being allowed to spend the funds and then report back to the Interim Finance Committee. Mr. Hettrick noted Mr. Ghiggeri indicated the Governor has the ability to grant emergency funding within 15 days and the expenditures could then be reported to the Interim Finance Committee. Chairman Arberry requested Mr. Tait discuss Rural Matching Grants. Mr. Tait reported some of the most successful programs in rural Nevada are the direct result of funding received from the Legislature through the Commission on Tourism. The Cowboy Poetry Festival has been supported for the past 11 years by the Commission on Tourism as has Shakespeare at Sand Harbor, the Festival in the Trees in southern Nevada and the Fallon Air Show. During the past year, 221 requests for funding were received with $450,000 of funding available. The Commission was able to fund only 163 of the requested programs at reasonable levels. It is hoped to allow this fund balance to continue to grow so that the matching grants become more suited to the programs requesting funding. MOTION PICTURES - PAGE 969 Tim Carlson, Executive Director of the Commission on Economic Development, testified the Motion Picture Division presently receives 75 percent of its funding from Tourism and 25 percent from the General Fund through Economic Development. It is proposed to obtain 100 percent of the Motion Picture Division's funding from Tourism. Mr. Carlson indicated the budget requests the return of one secretary/receptionist position which was deleted two years ago. Secretarial support is currently borrowed from Economic Development. Mr. Carlson reported a production directory is published every other month at no cost to the state for listings or advertisement. The Division charges for the listings and advertisements contained in the directory. Chairman Arberry requested discussion of performance indicators. Karen Baggett, Deputy Director for the Commission on Economic Development, reported the performance indicators reflect the growth experienced by the motion picture industry in the state. The data includes motion pictures, commercial shoots and other projects. Ms. Baggett pointed out page 18 of the Biennial Report, Fiscal Years 1993 and 1994, of the Nevada Commission on Economic Development (a copy of which is on file in the Research Library of the Legislative Counsel Bureau) which lists feature films, television shows and commercials produced in Nevada. Ms. Baggett called attention to measurement indicator No. 5, Filming Projected Expenditures, which projects $65 million for FY 94 and reflects actual expenditures of $43 million. She explained the discrepancy was the result of every state using its own system for projecting revenues while Nevada uses actual figures. At the Film Commission meeting in the fall a committee was formed to establish a uniform projection module to be used by all states. Chairman Arberry requested discussion of the M200 decision unit. Ms. Baggett explained this decision unit incorporates an increase in operating expense for postage and telephone charges to communicate with out-of-state companies. The training expenditure line provides for staff training on recently installed computers. Chairman Arberry referred to the requested increase for location scouting statewide and asked whether most scouting is done in Las Vegas or Reno and how rural areas are included. Ms. Baggett responded Las Vegas, Reno and Lake Tahoe are internationally and nationally known. The rural areas are more difficult to market because of the distances from airports and other major services. Ms. Giunchigliani asked about the status of a hiring issue discussed last session. Mr. Carlson indicated union representatives had been present at two commission meetings to explain their concerns and the commission has adopted guidelines to eliminate the problems identified. Ms. Giunchigliani inquired who is responsible for scouting in Nevada. Mr. Carlson reported some contract scouts are used and both the Commission's northern office and southern office also do scouting. Ms. Giunchigliani questioned the difference between the actual FY 94 work program figure of $25,000 and the Governor's recommendation of $60,000. Ms. Baggett responded AB 762 authorized expenditures of up to $60,000. Ms. Giunchigliani asked whether Nevada businesses are used whenever possible and whether out-of-state business pay SIIS premiums when working in the state. Mr. Carlson responded that Nevada businesses are used extensively and that it is difficult to insure SIIS premiums are paid because the Commission is not a regulatory agency. However, the Commission is working with SIIS to insure that premiums are paid. Ms. Giunchigliani inquired whether out-of-state businesses working in Nevada are subject to the state business tax. Mr. Carlson replied he would investigate. Mr. Hettrick asked what was incorporated in the Information Services expenditure line in the M200 decision unit. Ms. Baggett responded the Commission recently received a DOE grant of $200,000 for computer hardware which has been used mostly in the Economic Development account. The $2,000 will allow office computers to be connected for communication purposes and will also provide maintenance on the computers. Mr. Spitler inquired whether it would be necessary to fund the two commissions from the General Fund if the merger is not approved. Mr. Carlson responded negatively. Mrs. Evans expressed interest in reviewing the calculations that show a benefit to the state economy from the reorganization. Mr. Carlson indicated the calculations would be forthcoming. Mrs. Evans expressed concern over newspaper articles following Lieutenant Governor Wagner's trip to Southern California to meet with film executives, the first time a state representative had visited, and questioned the lack of a consistent program for familiarization trips for location managers. Mr. Carlson answered the Motion Picture Division has had a very low travel budget which has allowed only out-of-state travel to the Film Convention in Los Angeles. Mr. Carlson added the Division's host budget is less than $200, making it impossible to provide meals or transportation for visiting producers; however, Nevada is the third largest state in the nation producing motion pictures. During the last board meeting chaired by Lieutenant Governor Wagner, a subcommittee was formed to determine the best way to organize and fund familiarization trips. Lieutenant Governor Hammargren plans to add two more individuals to that subcommittee and the subcommittee's recommendation should be available within six months. Mrs. Evans inquired what financing was used for a familiarization trip that took place after Lieutenant Governor Wagner's trip. Ms. Baggett indicated the familiarization trip had been planned prior to Lieutenant Governor Wagner's trip to Southern California and that airline tickets and meals had been donated by various businesses. Mrs. Evans asked how many familiarization trips have taken place through donation of travel and meal expenses. Ms. Baggett responded she did not have that information; however, Mr. Carlson indicated he knew of two such trips. Mrs. Evans expressed reluctance to add money to the budget without more evidence of leadership and ideas for expansion in this area. Ms. Giunchigliani asked whether the budget of $5,300 is adequate for necessary out-of-state travel if not, what amount would be reasonable. Mr. Carlson indicated travel money would go further if the two commissions are merged as one person could perform several functions on the same trip. Ms. Giunchigliani confirmed that if the two commissions are combined, out-of-state travel might not necessarily need to be increased. Mr. Carlson responded affirmatively. Mr. Fettic inquired whether the Division might perform better under Tourism. Mr. Carlson responded that historically the Division has always been associated with Economic Development and partially funded by Tourism. Mr. Price observed the Motion Picture Division is a function of Economic Development as it was created to bring money into the state, not specifically to draw tourists. Chairman Arberry requested discussion of decision unit E325. Ms. Baggett explained the request is for a Management Assistant I position for Las Vegas which was deleted during a prior legislative session. There is currently no clerical support for the Las Vegas staff. Chairman Arberry inquired why Robert Hirsch, Director of the Motion Pictures Division, was not present. Mr. Carlson responded Mr. Hirsch was working in Las Vegas; it had been decided directors of various departments would not appear at this time but possibly would appear during joint hearings. Mr. Carlson indicated Mr. Hirsch was available to appear if the committee so requested. RURAL COMMUNITY DEVELOPMENT - PAGE 975 Ms. Baggett explained this budget is the Community Development Block Grant (CDBG) program. The Program provides projects local governments would not be able to fund. Measurement indicators show how successful the Program has been in awarding many different projects; there is also a revolving loan fund. The program receives approximately $2,008,000 from the federal government. Ms. Baggett referred to pages 12 and 13 of the Biennial Report (a copy of which is on file in the Research Library of the Legislative Counsel Bureau) which list the various types of projects funded. Measurement indicator No. 4 reflects the revolving loan fund which provides gap financing for small businesses. An elected advisory board for CDBG grants meets twice yearly. Businesses applying for grants must make a presentation before the advisory board. Grants are then prioritized and awarded in accordance with the amount of money provided by the federal government. The Revolving Loan Fund functions in a similar manner. The membership of the Loan Fund advisory board includes two bankers who help review applications and financial statements to insure loans granted are likely to be paid back. The program has been very successful. Chairman Arberry inquired where the committee would find the rate of loans defaulted. Ms. Baggett indicated the information would be provided. Chairman Arberry requested information be provided regarding what recourse is available to insure loans are paid back. Ms. Baggett observed only two revolving loans had been refunded back and that collateral is required. PROCUREMENT OUTREACH PROGRAM - PAGE 979 Ms. Baggett explained Procurement Outreach is a federal program. Measurement indicator No. 2 projected the dollar value of federal contracts received by client firms in FY 94 to be $13 million and actual was $27.5 million. Ms. Baggett noted the M200 decision unit requests a Management Assistant I and a Management Assistant III be moved from three-quarter time to full-time; in addition, one full-time professional position is requested for the Las Vegas office to meet the growing work load. Ms. Giunchigliani inquired what staff works in the Carson City and Las Vegas offices. Mr. Carlson responded Ray Horner serves as Director of the Procurement Outreach Program, is based in Carson City and is responsible for Northern Nevada. Roger Tokarz, Deputy Director of Procurement Outreach, works in Las Vegas along with a three-quarter time secretary. That office is located in the new state office building. Mr. Hettrick mentioned an error in measurement indicator No. 1 on page 979 of the Executive Budget; the phrase (in millions) should be deleted. He inquired if contracts averaged approximately $100,000 as the performance indicators seem to show. Mr. Carlson responded the dollar amounts vary dramatically. Mr. Hettrick observed a measurement indicator reflecting the value per business would be useful. Mr. Carlson responded the Division would work at providing better performance indicators. Mr. Close referred to loss of funds from the federal program Small Business Revitalization and inquired whether money from the General Fund would be required to continue the program if federal funding stopped. Mr. Carlson indicated there will be no future funding from the federal government. Mr. Close observed that when federal funding for a program stops, perhaps the program should also stop. Mr. Carlson indicated thought had been given to moving the program to the Department of Business and Industry and that Rose McKinney-James, Director of the Department of Business and Industry, had expressed some interest in doing this. Ms. Giunchigliani requested Mr. Carlson discuss the positions to be moved to the Department of Business and Industry. Mr. Carlson indicated three positions, two of them filled, were to move. The two positions to move are the Director of the Office of Small Business in Las Vegas and the secretary for that office. Ms. Giunchigliani questioned whether the Office of Small Business would continue to exist. Mr. Carlson responded he assumed that the Department of Business and Industry budget would propose those three positions remain intact. Ms. Giunchigliani observed the office has been extremely busy and the office should continue to be funded. Mr. Carlson concurred and added one problem has been that the program was funded with federal dollars for staff only and no additional money was added for program costs. NEVADA MAGAZINE - PAGE 983 Richard Moreno, Publisher of Nevada Magazine explained the budget request contains no new positions and no new programs. Nevada Magazine operates as a self-supporting entity and expenditures are directly dependent upon the Magazine's ability to generate revenue. Mr. Moreno noted the main budget enhancements are in the equipment category where increases are proposed to replace old equipment. The Magazine converted to a MACINTOSH system seven years ago and some of those machines and a laser printer are still currently in use. The request will allow replacement of some of the older computers and the laser printer. The network is also seven years old. Mr. Moreno indicated these items will be purchased only if there is sufficient revenue. Mr. Moreno highlighted accomplishments of the past two years. When he came to Nevada Magazine, warehouses were filled with back issues of the magazine. The magazines have been bundled in hardcover limited collector editions and are sold for $40. The collector editions are produced by theme in limited numbers of one hundred each. Cowboys and Ghost Towns have been sold out. Historic people will be the next collectors edition produced. Booklets entitled "Nevada's Living Ghost Towns" and "The Great Nevada Cookbook Sampler" were produced for retail sale through mail order and gift stores in the state. These booklets are also used as incentives to attract new and renewing subscribers. A newsletter has been started during the last year, produced on contract for the Nevada Travel Update, the Commission on Tourism, the Las Vegas Convention and Visitor's Authority and the Reno-Sparks Convention and Visitor's Authority. It is included in the center of magazines sent to 26,000 travel agents. Mr. Moreno reported the magazine industry experienced a slump for the last three years, paralleling the slump in the national economy. However, sales have improved and the November/December issue contained more advertising than any previous November/December issue. Mr. Hettrick requested explanation of the Information Services category which has risen from $1,300 to $12,000 per year. Mr. Moreno responded this was for the new computers. Mr. Hettrick inquired whether there were maintenance contracts on the computers. Mr. Moreno responded the laser printer had a maintenance contract but the individual PC's do not because the Magazine has staff members who are able to provide service on the computers. Chairman Arberry asked whether any per issue or subscription rate increases were anticipated over the biennium. Mr. Moreno reported raises in the cost of postage and paper led to a decision to increase the per issue cost from $2.95 to $3.25 and the subscription cost from $14.95 to $15.95 on July 1, 1995. This will cover the increased costs of postage and paper. Chairman Arberry questioned projected increases in sales from actual of $27,000 in FY 94 to $40,000 projected in FY 96 and $60,000 in FY 97 in relationship to the Magazine's proposed move to the lower floor of the old library. Mr. Moreno indicated plans include opening a retail store; however, the plan is dependent upon the move to the old library and would involve an increase in inventory. The store would open in the corner closest to the Nugget. Discussions have been held with the State Museum regarding how the Museum Stores were set up. Mr. Price indicated most states have a store in the state capitol or in the legislative building and questioned whether there had been discussion regarding a store in the Nevada Legislative Building. Mr. Moreno responded this would more likely be done in cooperation with the State Museum. Mr. Price added notices could be posted in the lobby of the Legislative Building and in the Capitol Building to let visitors know state memorabilia is available at the State Museum and the Old Library. Mrs. Evans commended Mr. Moreno for his accomplishments and initiative in producing the collector's editions of back issues of Nevada Magazine. Mr. Spitler expressed his support of the store and asked whether the building is set up for that now. Mr. Moreno responded the existing space should be suitable with most costs being related to signage and possibly some limited advertising. Mr. Spitler added that if it is anticipated additional funds will be needed for rehabilitation of the space, they should be requested. Mrs. Chowning expressed her appreciation that more minority faces appear in the magazine and added she had seen Nevada Magazine on sale in New Orleans. She also expressed her support for the store and inquired whether new teachers in the state receive brochures indicating what materials the Magazine can provide. Mr. Moreno responded teachers have not been specifically targeted but indicated he would attempt to inform teachers in the future. Mr. Moreno added a Magazine index had been published this past year which was discounted for schools. Ms. Giunchigliani inquired to whom the indexes had been addressed at the schools. Mr. Moreno responded librarians receive them. Chairman Arberry called for public testimony. There was none. Chairman Arberry called for a motion on A.B. 29. ASSEMBLYMAN MARVEL MOVED DO PASS ON A.B. 29. ASSEMBLYMAN CHOWNING SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMEN SPITLER, DINI AND PRICE VOTED NO. Chairman Arberry requested Mrs. Chowning introduce A.B. 29 in Assembly Floor Session. Chairman Arberry called for a motion on A.B. 31. ASSEMBLYMAN DINI MOVED DO PASS ON A.B. 31. ASSEMBLYMAN HETTRICK SECONDED THE MOTION. THE MOTION CARRIED. Chairman Arberry requested Ms. Tiffany introduce A.B. 31 in Assembly Floor Session. Chairman Arberry called for a motion on A.B. 32. ASSEMBLYMAN DINI MOVED DO PASS ON A.B. 32. ASSEMBLYMAN EVANS SECONDED THE MOTION. THE MOTION CARRIED. Chairman Arberry requested Mr. Spitler introduce A.B. 32 in Assembly Floor Session. Chairman Arberry called for a motion on A.B. 77. ASSEMBLYMAN MARVEL MOVED DO PASS ON A.B. 77. ASSEMBLYMAN EVANS SECONDED THE MOTION. THE MOTION CARRIED. Chairman Arberry requested Mr. Allard introduce A.B. 77 in Assembly Floor Session. There being no further business, Chairman Arberry adjourned the meeting at 10:38 a.m. RESPECTFULLY SUBMITTED: Deborah Salaber, Committee Secretary Assembly Committee on Ways and Means February 22, 1995 Page