MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session February 28, 1995 The Committee on Ways and Means was called to order at 8:00 a.m., on Tuesday, February 28, 1995, Vice Chairman Jan Evans 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 COMMITTEE MEMBERS ABSENT: None STAFF MEMBERS PRESENT: Mr. Mark Stevens, Fiscal Analyst Mr. Gary Ghiggeri, Deputy Fiscal Analyst Ms. Jeanne Botts, Program Analyst Vice Chairman Evans explained she was presiding at the meeting because Chairman Arberry had lost his voice. OFFICE OF THE GOVERNOR - WASHINGTON OFFICE - PAGE 9 Mr. Leo Penne, Director of the State of Nevada Washington, D.C. Office, distributed copies of a prepared statement explaining the background and operation of the Washington, D.C. Office (see Exhibit C). Ms. Tiffany thanked Mr. Penne for providing such a comprehensive overview of his office. She requested that the information be provided in the measurement indicators in the future. She also requested information in the measurement indicators regarding the types of services provided by the office and the outcomes of those services. Ms. Giunchigliani asked if there were three staff members. Mr. Penne responded there were three staff members, himself and two other individuals, one of whom was a part-time employee. Ms. Giunchigliani expressed her continued opposition to the Washington Office. She explained she viewed this office as providing a duplication of services and could see that nothing new had been added to change her position since 1991. She suggested other offices, e.g., the offices of the congressional delegation, could provide the services provided by the Washington Office. Mr. Price expressed appreciation for the work of the Washington Office. Mr. Penne encouraged members of the committee to use the services of the office or to at least visit the office if they are in Washington, D.C. He stated it was difficult to appreciate the work of the office in the abstract. He explained in the past the office had provided services to the Legislative Counsel Bureau and facilitated the visits to Washington of the Public Lands Committee. He suggested the office could help make business trips to Washington more efficient and more valuable, simply due to its familiarity with the city. Mr. Price inquired whether Mr. Penne was the only full-time employee of the office. Mr. Penne answered there were two full-time employees and one part-time employee. Mr. Close asked if the Washington Office received any consulting fees from the Nevada Department of Transportation (NDOT). Mr. Penne explained the office was partially funded by NDOT. The working relationship of the two agencies was a team relationship. The highway consultant retained by NDOT was a former highway administrator with extensive expertise and worked closely with but independently from the Washington Office. Mrs. Brower inquired whether every state had an office of the governor in Washington, D.C., and if not, how many states did have such an office. Mr. Penne replied approximately 30 to 35 states had similar offices in Washington, D.C. Most were located in the same building as Nevada's Washington Office. Other states, which did not have offices in Washington, might retain a law firm or consulting firm to provide services in Washington. Additionally, many states would retain assistance on particular matters relating to major federal programs and legal or regulatory issues. Mr. Allard asked for clarification on the postage expense. Mr. Penne explained postage expense included $500 for postage and $1,000 for express mail. The bulk of the express mail was utilized to transmit materials for events. He noted a FAX machine had considerably reduced postage and express mail expense but increased telephone costs. COLORADO RIVER COMMISSION - PAGE 1861 Mr. Richard Bunker, Vice Chairman, introduced Commissioner Bob Crowell and Mr. Doug Beatty, Chief Accountant. Mr. Bunker explained statutorily the Colorado River Commission was set up as the agent of state government and as of the recipient of Nevada's interest in the Colorado River insofar as water allocation was concerned and in the power allocated to Nevada through Hoover Dam, Parker Dam, and Davis Dam as well as sources of power for purchase. Additionally, Nevada had a substantial land responsibility in the Laughlin area. Over the years the Colorado River Commission had served as the receiving agent for the state of Nevada in dealing with the federal government, the Department of the Interior, the Department of Energy, and various other federal agencies. He explained the commission is funded by administrative fees charged on the delivery of water. The commission is a wholesaler which sells to retail outlets, i.e., the various purveyors in the city and the Las Vegas Valley Water District. Power is provided to various customers in southern Nevada, including Clark County and portions of Nye and Lincoln Counties. Mr. Bunker stated in 1987 the Legislature determined the proceeds of Laughlin land sales would be allocated to Clark County to assist in the development of infrastructure in the Laughlin area rather than to the state General Fund. He noted the Executive Budget projected land sales. He explained the proceeds of those sales would be allocated, pursuant to statute, to the infrastructure development in the Laughlin area. Mr. Bunker said in 1993 the Legislature reconfigured the Colorado River Commission. Historically, the commission had been a five-member body appointed by the Governor. In 1993 legislation was passed that changed the configuration to four members who were appointed by the Governor, including the chairman, and three members of the Southern Nevada Water Authority, who are elected officials representing the purveyors of water in southern Nevada. Vice Chairman Evans asked for an explanation of conservation and renewable energy programs. Mr. Bunker responded the commission, as a wholesaler, was not involved in conservation to a great extent. He stated the commission was extremely supportive of conservation ordinances and water rate increases instituted by the Southern Nevada Water Authority and the Las Vegas Valley Water District as a conservation measure. Vice Chairman Evans noted conservation was an area of interest for the committee. She suggested it would be helpful to include information in the measurement indicators which reflected the conservation efforts of the commission done in conjunction with others. Mr. Bunker reiterated the commission was not in the business of conservation and to do so would require additional staff and funding. Vice Chairman Evans asked for an explanation of the measurement indicator on page 1861 listing the number of conservation and renewable energy programs established and maintained in compliance with the Hoover Power Plant Act of 1984. Mr. Beatty explained that measurement indicator referred to energy programs monitored for the federal government on power customers. Mr. Beatty explained commission funding was comprised of governmental fund types and enterprise fund types. In the Executive Budget governmental fund types, including the General Fund, were listed under fund 296. The enterprise funds dealt with the sale of water (treatment and transmission) and power marketing. Mr. Beatty said following reconstitution of the commission after the 1993 legislative session the staffing structure was also revised. He distributed a packet of organization charts reflecting the reorganization (see Exhibit D). The first page depicted the organizational structure of the commission prior to 1994. The restructuring attempted to delineate more clearly the responsibilities of each department within the commission. Mr. Beatty said the commission had requested that the Deputy Director position be abolished and the administrative duties of the Deputy Director be assigned to the Chief Financial Officer. The commission believed the Deputy Director position was- - except for some land duties and administrative duties--duplicating the function of the Director, and therefore, was not of great value to the customers. The land duties would be assigned to the new Chief Environmental position requested in the budget. He explained environmental laws were beginning to affect the operations of the river substantially and the commission had become involved in attending environmental meetings. Water issues were sometimes in conflict with power issues. Therefore, it was determined an independent division, which did not report to either the water or power divisions, would be set up to report to the Director. He explained the commission was currently in the process of developing a habitat conservation plan to reclaim endangered species up and down the Colorado River. Mr. Allard asked for a brief overview of the commission's efforts regarding negotiations with other states on water matters. Mr. Bunker answered the commission had established a negotiating team comprised of the commission and the Southern Nevada Water Authority. The team had been negotiating with the seven basin states and ten Indian tribes on a regular basis for the past several months. He asked the committee not to focus on a specific event to solve water problems. He explained a number of events would have to take place in order for the commission to obtain needed water. The team was currently negotiating with the state of Arizona for 60,000 acre feet of water and with the state of Utah for 100,000 acre feet of water. Those kinds of negotiations and environmental work in conjunction with management of the river would allow the commission to solve southern Nevada water problems. He noted the commission was confident some significant events would occur over the next 12 to 18 months. Mr. Allard inquired whether any headway had been made in negotiations regarding wheeling of the water. Mr. Bunker said wheeling was a difficult issue because some states had internal problems with the idea of wheeling, but economically, this was the only way to move water on the river. He said the issue of wheeling would have to be part of ongoing discussions. Mr. Allard questioned how many acre feet of water would be available from the Muddy and Virgin Rivers. Mr. Bunker said the Las Vegas Valley Water District had been allocated 150,000 acre feet. He was not certain if there was that much water left in the Virgin River. The commission was currently negotiating with Utah and Arizona about the Virgin River allotment. One of the things which precipitated Arizona's 60,000 acre feet offer was the fact Arizona would prefer to have the Virgin River issue disappear. This was one of the issues of negotiation. Mr. Allard asked how banking was proceeding. Mr. Bunker replied banking was working very well. Two or three years ago the Metropolitan Water District and Arizona entered into an agreement with Southern Nevada Water Authority and Las Vegas Valley Water District to bank water in Arizona. The Colorado River Commission recently approved an agreement to increase banking capability from 100,000 acre feet to 300,000 acre feet. Mr. Allard inquired about the possibility of building a desalination plant in Mexico and obtaining some of the Mexican allotment. Mr. Bunker stated the Nevada Water Summit had explored a number of ideas for obtaining water. He suggested a desalination plant in Mexico was not a top priority although the idea had been reviewed. Mr. Hettrick asked for an explanation of the negative operating costs reflected in the budget. He also noted there appeared to be a problem in transferring the reserve fund from the 1995-96 budget to the 1996-97 budget. Mr. Beatty responded the negative balance in operating expenses was the result of the transfer of the Attorney General cost allocation out of the operating expense category. The total of the two figures equaled the correct figure. Mr. Hettrick questioned why the budget summary also contained a negative number under operating expenses. Mr. Mike Nolan, Budget Analyst, Budget Division, explained 40 percent of operating expenses were directly attributable to the Attorney General cost allocation. He explained this was a technical adjustment which had been discussed with the Fiscal Division program analyst and an appropriate memo was forthcoming. Ms. Jeanne Botts, Program Analyst, Fiscal Division, stated she had been in communication with Mr. Nolan and had received a memo outlining the necessary corrections. She noted this budget was unusual compared to other accounts. Historically, revenue was brought in at the category level to offset expenses. Normally revenue from other funds was shown as inter- agency transfers. This had the effect of artificially reducing total expenses. She expressed disagreement with this practice. Mr. Beatty explained inter-agency transfers were displayed this way in the budget in conformance with accounting principles. Vice Chairman Evans asked Mr. Beatty to work with Ms. Botts on this issue. Mr. Beatty noted there was legislation pending relative to the transfer of the Southern Nevada Water System to the Southern Nevada Water Authority. If the transfer did occur the enterprise funds would cease to exist. Ms. Tiffany noted this issue could impact the whole budget. She requested a copy of the proposed legislation. Mr. Bunker said the proposed legislation was being drafted. Ms. Tiffany asked when the proposed transfer would occur, what the budget impact would be, what would happen if the transfer did not occur, what the impact would be on the Colorado River Commission, and how bond obligations would be handled. Mr. Bunker said the state owned the water treatment system. The federal government owned the water transmission system. In 1993 the Legislature authorized $175 million in bond capacity to the Colorado River Commission to bring the system to its maximum capability. The bond proceeds would be used to drill a new tunnel and develop new infrastructure. In the long term, major construction would be necessary to build water treatment facilities in Clark County. During the bonding process, it became evident to the commission that it would be important for elected officials in Clark County to have a greater say in the expenditure of taxpayers' money than they have had in the past. Therefore, the commission approached the Southern Nevada Water Authority with a proposal to assume responsibility for the operation of the system. He noted bond counsel had reviewed the proposed legislation, which was in its final draft. He said he expected the final bill draft to be completed within two or three weeks. It would be delivered to the committee as soon as possible. Mr. Bunker stated the effect of the legislation on the Colorado River Commission would be that some of the accounting people currently involved would be transferred to the Southern Nevada Water Authority. Other than this transfer, there would not be a great deal of impact on the Colorado River Commission since the commission's primary responsibility was the general policy issue of seeking out new water and power resources. The technical aspects of the commission would change in that the ownership would change from state to local and eventually from federal to local control. Ms. Tiffany asked when this transfer was anticipated to occur. Mr. Bunker said he expected the transfer to take place July 1, 1996. Ms. Tiffany asked how much flexibility would be necessary to achieve the transfer. Mr. Bunker responded the commission needed to have the flexibility of being able to approach the Interim Finance Committee for additional funding, if necessary. Mr. Bunker reiterated the proposed legislation would be delivered to the committee as soon as possible and the commission would keep the committee as well informed as possible. Ms. Tiffany asked about $7 million from the sale of land and its connection with Laughlin. Mr. Bunker stated the Colorado River Commission purchased land, as the agent of the state, from the federal government. The commission, in turn, acted as a land broker. Several million dollars worth of property had been sold by the commission in Laughlin. Mr. Beatty noted there were currently 180 acres under option to Paine Webber. Paine Webber acquired the option as a result of the bankruptcy of the previous owner. Paine Webber was now obligated, as part of the bankruptcy proceedings, to either act on the option or abandon it. The commission was anticipating that Paine Webber would exercise the option for a minimum sales price of $7 million. Ms. Tiffany asked if this transaction had anything to do with the expansion of the water treatment system. Mr. Bunker said the $7 million would be used for the development of the infrastructure in Laughlin. He noted the state's contribution to that development was a small portion compared to the contribution of the county. Mr. Bunker explained the transmission system was comprised of pipes, fixtures, pumps, reservoirs, etc. The treatment system was comprised of lagoons where water was treated as it entered the system. The treatment facilities were built with bond proceeds. The federal government built the transmission system. Ms. Tiffany asked if the sewer development was a separate issue. Mr. Bunker said the sewer development was separate. Mr. Close asked for an explanation of decision unit E-999. Mr. Nolan responded this item reflected total cutbacks in the agency request. Mr. Dini asked what the effect on the bonds would be if they were transferred to the Southern Nevada Water District. He inquired whether the water district had a credit rating comparable to the state's. Mr. Crowell answered it was his understanding the state and Clark County had similar bond rating capacity. Therefore, it was not expected this transfer would increase the cost of the indebtedness. Ms. Giunchigliani asked for an explanation of decision unit E-325. Mr. Beatty answered this item was intended to restore the reserve balance by increasing power sales revenue. Ms. Giunchigliani inquired whether the federal government was in agreement with the transfer to the Southern Nevada Water Authority. Mr. Bunker said his understanding was the Bureau of Reclamation was in agreement with the transfer. Vice Chairman Evans noted the commission had requested a substantial increase in the Director's salary. Mr. Bunker stated water negotiations were highly sophisticated and it was important that Nevada's interests be adequately represented. The only way to attract suitable candidates for the position was to offer a fitting salary. Vice Chairman Evans noted the Governor had not recommended the salary increase. Mr. Beatty stated it was his understanding the salary increase would be recommended in the unclassified pay bill. Mr. Bunker indicated the commission would be meeting with the Governor and the Budget Director to discuss the necessity of increasing this salary. Mr. Nolan said he was not aware of what was recommended in the unclassified pay bill. He said he was under the impression a salary increase would be included in the unclassified pay bill but not at the level requested by the commission. Mr. Stevens explained the unclassified pay bill was normally based on the salary levels which appeared in the Executive Budget. In this budget account the recommendation was for a salary of $69,561, which fiscal staff assumed the Governor's recommendation to be for this position. Vice Chairman Evans asked fiscal staff to work with Mr. Beatty and Mr. Nolan on this budget. Mr. Hettrick noted the increase in the administrative charge would bring the reserve balance to $1,179,542 in Fiscal Year 1997. Adding the balance forward from the current fiscal year would bring the total balance to nearly $2.4 million on a $2 million budget. He questioned how much of a reserve balance was needed. Mr. Beatty explained increases in the administrative charge were only requested every five or six years. The last rate increase was requested five years ago. He said the customers needed stability in the rates over several years. CRC FEDERAL PUMPING & TRANSMISSION FACILITIES - PAGE 1867 Mr. Beatty stated this account included the base budget plus an increase based on customer-supplied demand curves. He noted the customers anticipated an approximately 5 percent increase in demand. Vice Chairman Evans inquired about the increase in contractual repayment to the federal government. Mr. Beatty said there was none. The only increase reflected in the budget was for operating costs. He explained the narrative in the Executive Budget was incorrect. The increase resulting from the sale of bonds appeared in the state side. The federal repayment contract was fixed so there was no increase. Ms. Giunchigliani asked what changes would have to be made in pumping and transmission capabilities in the future if more water was secured. Mr. Bunker said the project proposed in Clark County would cost between $700 million and $1 billion. Ms. Giunchigliani inquired whether there had been any discussions about piping water to Nevada from other states. Mr. Bunker said several proposals had been presented at the water summit. Mr. Crowell replied in the past the possibility of building an aqueduct between the Snake River and Columbia River and southern Nevada had been studied. The environmental problems associated with the proposal rendered it unfeasible. CRC RESEARCH AND DEVELOPMENT - PAGE 1869 Mr. Beatty explained this budget was funded exclusively through administrative charges on power sales. The commission anticipated continuing its efforts to rebuild the basic substation and acquire an interest in the transmission lines. Vice Chairman Evans inquired whether any particular studies were anticipated in the coming biennium. Mr. Beatty stated the commission was currently involved in a feasibility study which would lead to pre-design and design studies, then construction. POWER MARKETING FUND - PAGE 1873 Mr. Beatty testified this was the enterprise fund through which the commission bought and sold hydropower. Mr. Bunker reminded the committee the commission had an indebtedness to the state. Rather than ask the Legislature to forgive that indebtedness, the commission had been repaying that debt over the past several years, and the obligation was nearly paid off. Ms. Botts explained the commission would be making payments of $120,000 in Fiscal Years 1995 and 1996, which would leave a balance of $54,881 remaining in Fiscal Year 1997. She noted the budget would have to be adjusted to reflect the $54,881 payment rather than the $120,000 payment. FORT MOHAVE DEVELOPMENT FUND - PAGE 1875 Mr. Beatty explained this was the fund which reflected the proceeds from the land sale discussed previously. He noted the money in this fund was allocated to Clark County to defer the cost of infrastructure in Laughlin. Every legislative session Clark County determines the amount of funding required based on projects planned in Laughlin during the biennium. He added the county would fund the projects whether it received any reimbursement from the state or not. The allocation from the state helped the county defray a portion of the costs. Ms. Giunchigliani noted the value of the property was $14 million. She asked if the total value of the property would be recouped. Mr. Beatty said the commission anticipated recouping the full $14 million eventually. Ms. Giunchigliani questioned why the state would reimburse Clark County for infrastructure costs. Mr. Beatty said legislation passed in 1987 directed the state to reimburse Clark County for a portion of the costs of building infrastructure. Vice Chairman Evans asked Mr. Beatty to enlighten the committee regarding the bankruptcy proceeding. Mr. Beatty said land sales had been frozen by the bankruptcy. He noted the commission had 9,000 acres in Laughlin in addition to the 180 acres optioned to Paine Webber. If there was a need to sell any of those acres funding would be required for travel expenses, sales negotiations, etc. The budget was developed to provide for flexibility in funding marketing efforts. Vice Chairman Evans asked the commission to provide a copy of the contract with Paine Webber to the fiscal staff. Mr. Bunker agreed to do so. Mr. Bunker reminded the committee growth in Laughlin was beginning to level off. As a result, land sales had also leveled off. Vice Chairman Evans asked if decision unit M-200 was dependent on Paine Webber exercising its option. Mr. Bunker stated Paine Webber had not yet indicated whether it would exercise the option. If it did not, all of the property would revert to the Colorado River Commission. Mr. Hettrick stated it would be helpful if the commission would provide a flow chart showing the relationship of the budget accounts. ALFRED MERRITT SMITH WATER TREATMENT PLANT - PAGE 1877 Mr. Beatty stated this account represented the enterprise fund which covered the water treatment costs. He said this budget reflected anticipated increased deliveries based upon the water purveyors' demand curves and additional debt service on bonded indebtedness. Vice Chairman Evans inquired whether increased deliveries were based on projected growth. Mr. Beatty responded affirmatively. Mr. Dini asked if the reserve balances could be transferred from this account to the Southern Nevada Water Authority. Mr. Beatty replied reserves were collected from the customers, and therefore, the funds would transfer to the Southern Nevada Water Authority. Mr. Dini inquired whether the reserve was allocated to construction costs. Mr. Beatty responded the commission had earmarked reserve funds for construction. He assumed that is what the Southern Nevada Water Authority would use the funds for as well. DEPARTMENT OF BUSINESS AND INDUSTRY - ATHLETIC COMMISSION - PAGE 903 Ms. Rose McKinney-James, Director, Department of Business and Industry, introduced Mr. Marc Ratner, Executive Director of the Athletic Commission. Mr. Ratner reported the function of the Athletic Commission was to regulate boxing in the state of Nevada. He noted the name of the commission was a misnomer since it had nothing to do with sports other than boxing, wrestling, and kick boxing. Mr. Ratner stated there had been 64 live boxing matches in Fiscal Year 1994. Over 125,000 people attended those matches in Nevada. Those matches generated a gross gate of $21 million. The commission's revenue was generated from a percentage of the live gate and from television and closed circuit rights. In Fiscal Year 1994 the commission provided $1,499,000 to the General Fund. In the first eight months of Fiscal Year 1995, 40 live boxing events had taken place and $916,000 had been generated. Mr. Ratner explained this budget reflected projected income of $750,000 in Fiscal Years 1996 and 1997. He indicated he was unable to predict with any degree of accuracy what major fights would come to Nevada in the future due to the worldwide proliferation of legalized gambling. Mr. Ratner reported a boxing event scheduled April 22, 1995, would generate approximately $250,000. Vice Chairman Evans asked about revenue projections for the current fiscal year. Mr. Ratner said he anticipated revenue of $1.2 million to $1.3 million for Fiscal Year 1995. Chairman Arberry inquired how medical emergencies were handled to ensure the well being of the boxers. Mr. Ratner replied two doctors were present at every boxing event. Three emergency doctors were present at major events. At certain events neurosurgeons were available. In addition, an ambulance and two paramedics were present at every event. Oxygen was available at ringside. He said the commission was prepared to deal with emergencies. Mr. Spitler noted the 1993 Legislature had recommended increasing the Director's salary from $46,000 to $53,000. He asked if that increase had, in fact, occurred. Mr. Ratner responded affirmatively. Mr. Spitler said the 1993 Legislature had also approved a half time investigator position. He asked for an explanation of why that position no longer appeared in the budget. Mr. Ratner said he had been responsible for removing the investigator position from the budget. He said the number of investigations did not warrant a staff position. The commission instead contracted with the Attorney General's Office for investigation services on an as-needed basis. Mr. Spitler stated the commission had testified in 1993 as to the absolute necessity of the investigator position, and had indicated it would be more cost effective to add the half time position than to contract for those services. He asked Mr. Ratner to research this issue and the rationale of the commission's 1993 testimony and provide to the committee an explanation for the elimination of the position. Mr. Spitler inquired whether the salaries of board members had been increased, as recommended in 1993. Mr. Ratner stated board members were now being paid. They formerly had been unpaid for several years. Mr. Spitler questioned whether funding for travel expense was increased significantly and if it was now adequate. Mr. Ratner responded the out-of-state travel budget was $3,500. Mr. Spitler asked if this funding was adequate to attract boxing events to Nevada. Mr. Ratner stated some commissioners were able to travel at their own expense, and Nevada was well represented worldwide. Mr. Spitler said it was inappropriate to require appointed commissioners to pay their own travel expenses. Anyone should be able to serve as commissioner, not only wealthy people. Mr. Ratner said the commissioners were not promoters. The job of the commission was to regulate boxing in Nevada. It was not the responsibility of the commission members to travel throughout the world attracting boxing events. Mr. Spitler stated the integrity of the commission attracted boxing events and the commission served a public relations function in bringing events to Nevada. He noted the Nevada Athletic Commission far surpassed other boxing regulators, and while it was not responsible for promoting boxing events, its integrity was extremely important in attracting events to Nevada. Mr. Spitler inquired where funding for the Attorney General's services appeared in the budget. Mr. Ratner said those funds appeared in operating expenses. Mr. Spitler asked if $20,000 was allocated for legal fees. Mr. Ratner answered affirmatively. Mr. Spitler questioned whether this was more cost effective than funding a half time position. Mr. Ratner said in light of the small number of investigations, he was surprised to find a half time position had been funded. The request for the position had not come from the staff. Mr. Spitler indicated this was a contradiction to the testimony provided in 1993. Mrs. Brower inquired whether the state had any liability in the case of serious injury to a boxer. Mr. Ratner responded every boxing match was required by statute to be insured. He said the state would probably not be held accountable for injuries as long as it took the necessary medical precautions described previously. He noted boxing was an inherently dangerous sport, and problems would occur occasionally. Mr. Close asked how much revenue was generated by boxing events. Mr. Ratner answered 85 percent to 90 percent of the revenue was generated by boxing. There were very few wrestling matches in Nevada. Mr. Close inquired whether the commission administered the amateur boxing fund or if proceeds went into the General Fund. Mr. Ratner stated tickets for boxing events included a 50 cent charge for the amateur fund. He indicated the commission administered the amateur fund, and distributed grants for travel or the purchase of equipment. Ms. Giunchigliani suggested adding the number of live matches, gross gate, and attendance figures to the measurement indicators. She also requested the number of fight cards and bouts be itemized according to type of event, i.e., boxing, wrestling, etc. Mr. Ratner agreed to do so. Ms. Giunchigliani inquired why projected revenue dropped from $1.5 million to $750,000. Mr. Ratner stated again he was unable to accurately predict what fights would occur in Nevada. He projected a conservative figure. Ms. Giunchigliani asked if Nevada was realizing the greatest revenue potential from boxing events. Mr. Ratner said he was satisfied that Nevada was competitive with other states. Mr. Dini noted the Gaming Control Board could spend up to 10 percent of revenue collected from investigations. He questioned whether the Athletic Commission could do the same. Mr. Stevens said he had no recollection of a provision in the Athletic Commission statutes similar to the gaming statutes. He noted this issue could be explored. Mr. Spitler suggested the Attorney General cost allocation appear as a separate line item in the budget so the committee would know those funds were reserved for investigations as opposed to general operating expenses. Mr. Jere Schultz, Budget Analyst, Budget Division, indicated the budget would be adjusted. Mr. Spitler questioned how many line item expenses throughout the Executive Budget were being included in the operating expense category. He noted this format made it appear as if something had been funded when, in fact, it had not been funded at all. Mr. Schultz explained the problem with investigations in 1993 was due to the workload in the Attorney General's Office and whether there was available staff to support the Athletic Commission. Mr. Spitler stated that was not the situation. The Legislature suggested contracting with the Attorney General's Office. But compelling testimony from the commission indicated a staff position was required. Ms. McKinney-James noted the commission had submitted a conservative budget request while recognizing the impact of growth in the state. She asked the committee to consider the possibility of an expanded budget to accommodate that growth over the next biennium. Vice Chairman Evans noted the committee was willing to work with the commission on developing its budget. Mr. Spitler asked for clarification of Ms. McKinney-James' statement. He questioned whether the budget needed to be revised. Ms. McKinney-James stated the budget did not have to be revised. She explained the commissioners had simply made the point that the budget request was adequate for the present, but they recognize the significant growth in the industry would necessitate additional resources in the future. Mr. Spitler concurred with the commissioners' position. He noted it did not seem prudent to cut the budgets of agencies with the potential to generate revenue. He said he would be interested in hearing how much more funding was necessary to put Nevada in the most competitive position in attracting boxing events to the state. He indicated he would assist in this area. Ms. McKinney-James stated she would work with the commission and staff to identify specific needs. DEPARTMENT OF BUSINESS AND INDUSTRY - TAXICAB AUTHORITY - PAGE 949 Ms. Sandra Lee Avants, Administrator, noted the Athletic Commission was the main source of the Taxicab Authority's income since each time there was a major boxing match in Nevada, the authority received 15 cents from every trip. Ms. Avants stated growth in the taxicab industry in Clark County had been incredible since 1993. Trips had increased 29 percent. There were now 2,800 drivers, 800 more than in 1993. Programs for the disabled and for seniors had expanded in response to growth. Ms. Avants noted the budget request included an increase in the subsidized transportation program of $50,000 to provide for 5,000 additional coupon books for distribution. She explained the agency was working with the Division of Aging Services in the hope of transferring this program to that division, including two positions and funding for operating costs. Ms. Avants said a major issue in the taxicab industry was driver safety. A blue ribbon committee was currently reviewing available technology and would be making a recommendation to the board on March 21, 1995. She noted taxicab rates would probably have to be increased to offset the cost of safety technology. Vice Chairman Evans asked for clarification on the agency request regarding positions. Ms. Avants stated the agency was requesting additional positions to deal with growth in the industry. The Taxicab Authority wanted to make the subsidized transportation program successful and used by the appropriate people. It was determined the program should be housed within the Division of Aging Services, the agency which worked with many of the needy and/or disabled seniors. The Taxicab Authority would transfer to the Division of Aging two clerical positions and funding for those positions as well as funding for operating costs. Vice Chairman Evans asked if the positions were currently located in the Taxicab Authority budget. Ms. Avants answered affirmatively. Ms. McKinney-James noted while negotiations were still ongoing with the Division of Aging about this matter it was anticipated the transfer would occur and details of the transfer would be submitted to the committee in the future. Vice Chairman Evans asked Ms. Avants to work with fiscal staff on this issue. Ms. Avants stated the positions requested were three compliance enforcement investigators needed due to the increased number of trips, vehicles on the road, and driver violations. She noted the Taxicab Authority had become the clearing house for problems within the taxicab industry. Complaints were being referred from hotels and taxicab companies. Ms. Avants said the Taxicab Authority was also requesting an administrative services officer to serve as assistant to the Administrator. The need for improved and more immediately available data necessitated adding a professional caliber staff person. The agency was also requesting an additional taxicab vehicle inspector to keep up with a workload that had increased 50 percent and an administrative aid to handle increased paperwork. Mr. Dini asked fiscal staff to investigate whether the statutory authority existed for transferring positions to the Division of Aging Services or if new legislation was required. Ms. Avants noted the Deputy Attorney General had determined new legislation would be required. Mr. Price noted the 1993-95 budget reflected a staff of 54. This budget reflected only 53 positions. He asked what position had been lost. Ms. Avants said the Deputy Administrator position had never been filled. Mr. Price asked why the radio communications equipment budget had decreased. Ms. Avants said the Taxicab Authority had made a major purchase of equipment. There was no need to replace that equipment at this time. Mr. Price inquired about decision unit M-859. He asked what was reflected in the transfer to director item. Ms. McKinney-James stated this item was a transfer of the cost allocation to the office of the Director of the Department of Business and Industry. Mr. Allard asked what criteria was used in determining to suspend a driver's permit. Ms. Avants replied the procedure was done according to statute. Mr. Allard inquired whether the Taxicab Authority shared information with the Department of Motor Vehicles (DMV). Ms. Avants responded the Taxicab Authority had access to DMV records, but DMV had no access to Taxicab Authority records. She explained DMV records were checked before permits were renewed. Mr. Close noted the measurement indicators projected a significant increase in taxicab service complaints. He asked how that projection had been made. Ms. Avants responded as the agency was becoming better known in the community, it was receiving more requests for assistance from hotels, casinos, restaurants, and taxicab companies. The increase in the number of new drivers was also taken into consideration since new drivers tended to receive complaints. Mr. Close asked about the response time to complaints. Ms. Avants noted the Taxicab Authority was proud of its record of responding to complaints within 15 minutes. She noted not every complaint had to be responded to in person, but could be handled over the telephone or by mail. Mr. Close referred to decision unit E-710. He noted the agency had requested $2,661 in Fiscal Year 1997 and the Governor recommended $15,196. He asked for an explanation. Mr. Rick Boxer, Management Analyst, Taxicab Authority, stated other replacement equipment items were rolled into decision unit E-710. The $2,661 requested was to fund a computer maintenance agreement. The Budget Division rolled unfunded decision unit E-999 ($8,750) and funding for other replacement equipment into decision unit E-710. Ms. Giunchigliani questioned why the deputy administrator position was being deleted. Ms. McKinney-James responded the vacant position in the Taxicab Authority had been reclassified to an administrative services officer position within the office of the Director of the Department of Business and Industry. In the meantime, the Taxicab Authority had developed a need for a lower professional staff position to assist the Administrator. Ms. Giunchigliani asked if the coupons for the senior rides expired. Ms. Avants said they expired after 12 to 15 months, depending on when they were printed. Ms. Giunchigliani stated she was in agreement with transferring the program to the Division of Aging Services. Ms. Giunchigliani expressed concern that the Taxicab Authority was a state agency which only served Clark County. She suggested this issue be revisited. Ms. Avants agreed one standard should be set throughout the state. Ms. McKinney-James noted this issue had been raised in the Senate Finance Committee. She stated the Department of Business and Industry had explored a variety of options to this situation and had held discussions with industry representatives. Ms. Giunchigliani asked whether legislation would be drafted to effect the transfer of the senior transportation program. Ms. McKinney-James said legislation would be drafted. Mrs. Brower inquired whether the budget addressed driver safety issues which could arise from the recommendations of the blue ribbon committee. Ms. Avants explained costs of improved safety technology would be paid by the riding public through a rate increase. Mrs. Chowning requested information to be provided to herself and the subcommittee. She asked for information on the outcome of taxicab robberies, number of licenses suspended or revoked and reasons for suspension or revocation, the need for drug testing, and protection of drivers. Vice Chairman Evans noted there were several more questions on this budget which, in the interest of time, would be dealt with in subcommittee. DEPARTMENT OF BUSINESS AND INDUSTRY - COMMISSION ON POSTSECONDARY EDUCATION - PAGE 279 Mr. David Perlman, Administrator, introduced Mr. Don Hataway, Budget Analyst. He testified the commission consisted of seven members appointed by the Governor. Staff was comprised of the Administrator, two Education Specialists, and one Program Assistant. The commission currently licensed approximately 100 schools. The regulated schools enrolled approximately 1,500 new students each year and grossed over $30 million. Average tuition was approximately $3,100. Mr. Perlman reported the commission had reduced complaints from 112 in Fiscal Year 1993 to 24 to date in Fiscal Year 1995. Vice Chairman Evans asked the commission to provide measurement indicators which would reflect how well the agency performed its mission and whether the industry was complying with laws and regulations. She said the committee would also be interested in knowing about the quality of education offered. In addition, the committee would be interested in knowing the percentage of complaints received versus total student population and the average length of time to resolve complaints. Mrs. Chowning said she would like to know how many institutional closures were voluntary, the reasons for the closures, the number of people impacted, and whether tuition was refunded. She asked the commission to provide the information to the committee in writing. Ms. Giunchigliani inquired whether postsecondary institutions had any agreements with school districts allowing students to earn high school credit while attending vocational or technical institutions. Mr. Perlman said to his knowledge there were no agreements with school districts. He noted postsecondary institutions could give credit for previous training in order to reduce tuition. He said the commission normally dealt with individuals who were beyond the compulsory age of high school. Ms. Giunchigliani suggested this issue should be reviewed. She noted high school students could earn college credit. She questioned why vocational students should not be allowed to do the same. Mr. Perlman continued his budget presentation. He explained the base budget reflected a slight increase in group and general liability insurance expenses. Decision unit M-100 represented a small inflationary increase. Decision unit E-250 included funding for out-of-state travel required to attend conferences in conjunction with an agreement with the Veterans Administration. He noted those travel expenses were reimbursed by the Veterans Administration. Decision unit E- 250 also included increased funding for in-state travel to allow the commissioners and staff to travel between Las Vegas and Reno and to cover the cost of a rent increase. Decision unit E-720 provided funding for computer maintenance agreements for new computers, which are recommended to be funded with a one- shot appropriation. Ms. Tiffany asked how much revenue was generated from fees. Mr. Perlman replied in Fiscal Year 1994 $102,000 was generated from fees and fines; $65,300 was received from the Department of Veterans Administration pursuant to a reimbursement contract. Ms. Tiffany inquired whether the commission had any difficulty collecting or assessing fees and fines. Mr. Perlman said he had developed an automated billing system which had increased fine assessments by approximately $4,000. The commission had instituted quarterly audits of institutions. Ms. Tiffany asked if the commission had received any complaints about the fee structure. Mr. Perlman said complaints had been received about the amount of fines. Ms. Tiffany asked why private school license revenue was decreasing. Mr. Perlman stated reductions in federal funding for private schools had affected the number of private school licenses. Ms. Tiffany inquired whether the decline would continue. Mr. Perlman answered affirmatively. Ms. Tiffany asked what the basis of that projection was. Mr. Perlman replied it was no longer lucrative to open a private school since federal funds were not as readily available. Ms. Tiffany requested that fines, fees, and complaints be reflected in the measurement indicators in the future. Mr. Close asked if the commission members had met routinely in the past, prior to the request for travel funding. Mr. Perlman stated not all commission members attended meetings. He explained he had budgeted funds in anticipation of all commissioners attending all meetings. Ms. Botts noted the Governor had recommended transfer of this agency to the Department of Education. Legislation was pending which would effectuate that change. Vice Chairman Evans requested committee introduction of a bill making an appropriation to the account for local cultural activities. MS. TIFFANY MOVED FOR A COMMITTEE INTRODUCTION OF A BILL MAKING AN APPROPRIATION TO THE ACCOUNT FOR LOCAL CULTURAL ACTIVITIES. MRS. CHOWNING SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * Vice Chairman Evans requested committee introduction of a bill making appropriation to the Department of Transportation for construction of a highway between the Patrick interchange of Interstate Highway No. 80 and Storey County. MR. HETTRICK MOVED FOR A COMMITTEE INTRODUCTION OF A BILL MAKING AN APPROPRIATION TO THE DEPARTMENT OF TRANSPORTATION FOR CONSTRUCTION OF A HIGHWAY BETWEEN THE PATRICK INTERCHANGE OF INTERSTATE HIGHWAY NO. 80 AND STOREY COUNTY. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * There being no further business, the meeting adjourned at 10:57 a.m. RESPECTFULLY SUBMITTED: Dale Gray, Committee Secretary Assembly Committee on Ways and Means February 28, 1995 Page