MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session May 3, 1995 The Committee on Ways and Means was called to order at 7:42 a.m., on Wednesday, May 3, 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 Ms. 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: Mark Stevens, Fiscal Analyst Gary L. Ghiggeri, Principal Deputy Fiscal Analyst Mary Matheus, Local Government Budget Analyst ASSEMBLY BILL 237 Makes appropriation to Nevada commission for veteran affairs of department of motor vehicles and public safety for replacement of backhoe at Boulder City veterans' cemetery. Randy C. Day, Commissioner, Veterans Affairs, introduced Karen V. Olson, Budget Analyst for Veterans Affairs, and Mark Krmpotic, Management Analyst, Department of Motor Vehicles and Public Safety. He explained A.B. 237 was a one-time appropriation for the purchase of a backhoe for the Boulder City veterans' cemetery. The present backhoe was 20 years of age and required a great deal of maintenance. When the backhoe needed maintenance, the cemetery relied on backup from the city of Boulder. The appropriation in the bill would not cover what was needed but would provide the basics, and an upgraded model would be purchased with additional funds. Chairman Arberry inquired how much money was needed for the backhoe. Mr. Day reiterated the appropriation would cover the cost of a basic model, but the upgrade to a four-wheel drive with other additions would be funded by donations. Mr. Hettrick inquired if the old backhoe would be traded in on the new model. Mr. Day stated the old backhoe would be kept as a backup since burials had increased to occasionally five per day, and it was projected that two services at a time may be held. Chairman Arberry inquired if it was possible that federal money would be available for the purchase of the backhoe. Mr. Day stated federal money was available for real improvements but not equipment. Chairman Arberry called for testimony on behalf of or in opposition to A.B. 237. There being none, Chairman Arberry closed the hearing on A.B. 237 and opened the hearing on A.B. 238. ASSEMBLY BILL 238 Makes appropriation to Nevada commissioner for veterans affairs of department of motor vehicles and public safety for improvements to veterans' cemeteries. Mr. Day explained the appropriation contained in A.B. 238 would be matched by the federal government. The plan was to accomplish five improvement projects. Listed in order of priority, the projects included: 1) An eight-acre expansion at the Boulder City facility, which included additional roadway and burial sites; 2) Importing effluent water from the Eldorado Valley to the cemetery site in conjunction with federal funds received by Boulder City, Boulder City funds, and state Department of Wildlife funds. The water would be brought to a wetlands area, gravity fed to the cemetery site and pumped into the cemetery irrigation system. The cemetery will pay $3,700 per year for water use compared to current irrigation costs of $37,000 per year, which does not include the cost of irrigating the additional acreage; 3) Enclosure of the pavilion at the Fernley veterans' cemetery to provide protection from the wind during services; 4) Paving the road coming into the cemetery at Boulder City to eliminate the washboard surface and to reduce dust conditions; and 5) The preburial of vaults to be used in case of equipment breakdowns or during extreme bad weather, should funds be available. Mr. Fettic inquired how much the cemetery was paying per acre foot for water. Mr. Day replied $1 per 1,000 gallons of water, and there was discussion of raising the fee in the Boulder City area. Mr. Hettrick asked about the time line for the effluent water project. Mr. Day indicated as soon as the federal funding was available the project would commence, which could be early Spring 1997. Mr. Hettrick inquired if the project would have a budget impact as a result of the decrease in the cost of water. Mr. Day stated the budget could be reviewed, but he did not expect a windfall savings. Chairman Arberry called for testimony on behalf of or in opposition to A.B. 238. There being none, Chairman Arberry closed the hearing on A.B. 238 and opened the hearing on A.B. 431. ASSEMBLY BILL 431 Revises provisions governing estates of persons for whom Nevada commissioner for veteran affairs acts as guardian. Gary Crews, Legislative Auditor, Audit Division, Legislative Counsel Bureau, explained staff audited the commissioner for Veteran Affairs and found the commissioner earned approximately $145,000 on investments for a two-year period. It was determined if the money had been placed with the state treasurer the earnings would have been approximately $277,000. The state treasurer would also have provided additional safeguards. Consequently, one of the recommendations of the Audit Division was to bring investment funds into the state treasury. The Audit Subcommittee directed the Audit Division to work with the commissioner for Veteran Affairs to arrive at some language to bring the funds into the state treasury, which was accomplished through A.B. 431. Section 2 of the bill creates a trust fund in the state treasury to account for funds of the wards and requires that all money received by the commissioner of Veteran Affairs to be deposited into the trust fund. Section 3 of the bill allows the commissioner to maintain an outside checking account to pay immediate expenses. Section 4 of the bill provides for an orderly transition of the current investments no later than the maturity of the investments. Ms. Giunchigliani inquired if there was a policy whereby two signatures were required on a check. Mr. Crews replied two signatures were not required by statute but it was a good internal control measure. Ms. Giunchigliani asked if the checking account for the commissioner would require two signatures on a check. Mr. Crews reiterated language would not require two signatures, but it would be a good control mechanism. Mr. Day stated it had been past practice to use a two-signature system, and he anticipated that system would continue. Chairman Arberry expressed concern regarding safeguards of the funds. Mr. Crews stated that bringing $1.8 million into the state treasury was the safeguard. The checking account was a zero-balance account which would be maintained by the state treasurer. Mr. Dini pointed out it was likely more interest would be earned through the state treasurer and the controls were adequate. Chairman Arberry asked if Mr. Day supported A.B. 431. Mr. Day said he had no problem with the bill after discussions with the treasurer's office and the Legislative Counsel Bureau. Mr. Crews remarked there were 49 separate bank accounts, and the bill would consolidate all the accounts into one account and would place the investment with the state treasurer, which would substantially increase controls of the funds. Chairman Arberry called for testimony on behalf of or in opposition to A.B. 431. There being none, Chairman Arberry closed the hearing on A.B. 431 and opened the hearing on A.B. 350. ASSEMBLY BILL 350 Revises provisions governing use of taxes levied for capital projects of school districts. Douglas C. Thunder, Director, Fiscal Services, Department of Education, explained the bill superimposes certain accounting requirements onto the more general capital project obligation programs. There were also added reporting requirements for the school districts to be submitted to the Department of Education, which will be compiled and forwarded to the legislature and the Department of Administration. Concerning A.B. 350, Mr. Thunder provided a list of suggestions from which he read, a copy of which is attached as Exhibit C. Ms. Giunchigliani inquired about the difference in the amount of assessment based on population. Mr. Thunder stated he was not aware of the history of the assessment. The assessment based on population isolated the counties of Clark and Washoe and allowed a lower tax rate for capital expenditures. Chairman Arberry called for public testimony regarding A.B. 350. Howard Barrett, Nevada Taxpayer's Association, spoke in support of A.B. 350. It was felt the bill provided additional protection for the taxpayers who voted to allow the tax rate and provided assurance the funds would be spent as indicated. He agreed with concerns regarding the reporting date and felt there should be a mechanism provided so taxpayers would know how the money was spent. Chairman Arberry asked if Mr. Barrett wanted an amendment to the bill. Mr. Barrett remarked he had not come before the legislature to speak regarding an amendment but did want to address the reporting date. Chairman Arberry requested Mr. Barrett to provide in writing his concerns so they could be addressed by the committee when a decision was made on the bill. Mr. Dini asked what had caused the bill to come about. Mr. Barrett stated he did not know how the bill came about. He assumed a problem might have arisen in the Humboldt area. Henry Etchemendy, Nevada Association of School Boards, did not feel he could comment on the bill as there was no one present who could explain it. Chairman Arberry stated it was his understanding the bill came out of the A.C.R. 47 interim study. Mr. Etchemendy remarked he had attended some of the interim study sessions and had not heard the bill discussed. He requested the committee receive some input from someone knowledgeable about the bill so his association could respond. Chairman Arberry inquired if anyone knew who was on the committee. Mr. Barrett indicated Senator Dean Rhoads chaired the committee and Carole Vilardo was a member of the committee. He stated he thought the subject was discussed at the Elko meeting and came about as a result of a problem in Humboldt and possibly Lander Counties. Chairman Arberry called for testimony on behalf of or in opposition to A.B. 350. There being none, Chairman Arberry closed the hearing on A.B. 350 and opened the hearing on A.C.R. 71 (1993 legislative session), the interim study on drug and alcohol abuse. ASSEMBLY CONCURRENT RESOLUTION 71 Assemblyman Bernie Anderson remarked A.C.R. 71 was an interim study on drug and alcohol abuse as it affected the prison system, particularly recidivism. He read from prepared remarks, which are attached as Exhibit D. The committee was composed of an equal number of members of the Committee on Ways and Means and the Committee on Judiciary. Mrs. Evans thanked Assemblyman Anderson for his presentation and requested him to address concerns expressed during committee hearings regarding A.B. 81. Assemblyman Anderson indicated there were many national statistics, most of which indicate that these types of programs do not work. Currently 10% of the people who come before a judge for the first time will not return; 90% will return, particularly because of alcohol and drugs. The people who are put into treatment programs increase to 15% the people who do not return to court. If a person goes to a drug court program, the percentage is increased from 10% to 40% to 60% for those people not returning to court. People in the Assembly did not feel they had the expertise to determine which program was best, so the Bureau of Alcohol and Drug Abuse was asked to become involved in the process to determine what was relative to Nevada. It has been proved early intervention gives the greatest chance for success. Mr. Fettic inquired how the age of less than 18 was picked for the study rather than less than 21 in regard to A.B. 94. Assemblyman Anderson explained less than 18 years of age fit into other things the Committee on Judiciary was addressing relative to the child still being under the control of the parents and relative to control over drivers' licenses. Children between 18 and 21 face different certification problems and are treated differently in A.B. 94. Mr. Fettic asked why possession of drugs was not included in the issue of license revocation. Assemblyman Anderson indicated the possession question raised a different issue in terms of who was selling and the profile of the individual who would benefit from these types of programs. Simple possession of a small amount would not indicate the person was a dealer, and there was concern of where the line should be drawn. Mrs. Evans asked if statutory language was needed for the position of substance abuse director. Assemblyman Anderson stressed he felt it was absolutely necessary to do so. He questioned how a program for people who are treated before coming into the prison system relates to the person who fails. The treatment programs for people who move from prison system to prison system need to be compatible. The proper kind of follow-up program needs to be available after a person is put on probation. It was necessary to coordinate the programs, and the person currently doing the job was doing two or three jobs, and statutory authority would provide a mechanism to prioritize the position. Mrs. Chowning explained she presented legislation in 1989, and it mandated the revocation of a juvenile's driver's license for possession, consuming, or purchasing alcohol or controlled substances. The Senate changed "mandate" to "may." The juvenile authorities were happy with the bill because it was an effective tool to use against juvenile offenders. She pointed out controlled substances as referred to on page 2 of A.B. 94 are still in the "may" category, but it mandates the revocation for possession of alcohol, which is the more common problem and leads to other abuses. Research demonstrates judges do not revoke drivers' licenses nearly as much as anticipated in Nevada; however, in other states such mandates have proved to be very successful. ASSEMBLY BILL 400 Authorizes grants of money to certain community centers for training retarded persons to assist in payment of prospective administrative and operational expenses. Ed Guthrie explained Opportunity Village provided vocational training and employment to adults with mental retardation. He expressed his support of A.B. 400. The purpose of the bill is to reduce the cash flow problems currently being experienced by a number of the community training centers in their efforts to provide service to people with mental retardation. Opportunity Village bills approximately $85,000 to $90,000 per month in community training center services to the state of Nevada. Payment for services occurs 45 to 60 days after the beginning of the billing period. This means that Opportunity Village needs 45 to 60 days' worth of working capital, which is borrowed from banks. Opportunity Village paid interest in excess of $27,000 in 1994 as a result of borrowings. Mr. Guthrie suggested changes or amendments to the bill as follows: 1) An appropriation of additional operating dollars to the Division of Mental Hygiene and Mental Retardation to avoid upsetting the division's cash flow with Medicaid and thereby causing delays in fourth quarter payments to all community training centers. The amount would be a one-time allocation of approximately $700,000 and could be rolled into FY 1997. 2) Specify that the funds designated in the bill will not be subject to the provisions of NRS 435 which require the distribution of all unspent funds in the community training center account be allocated at the end of the fiscal year to the community training centers. 3) Change the act from permissive legislation which states "the division may make grants," to "the division shall make grants of money from the appropriation to qualified centers if so requested." Mr. Hettrick noted that $27,000 in interest would be based on approximately $300,000 worth of loans per year. The bill appropriates a two-month advance, which does not appear to be a very significant gain. Mr. Guthrie noted the figures represent approximately half of Opportunity Village's borrowing. The center borrows approximately $350,000 because not all of the programs are financed by the state of Nevada. The bill would allow the reduction of interest payments by approximately $13,000 to $14,000 per year. Another problem arises at certain times of the fiscal year when the budget is very tight. If payments do not arrive timely, making payroll can become a problem because the center is borrowed to capacity. Mrs. Evans requested an explanation of the mechanics of how A.B. 400 would work. Jack Middleton, Program Manager, Division of Mental Hygiene and Mental Retardation, stated A.B. 400 as written would be difficult to manage. The community training center budget of approximately $2.6 million was comprised of 50% state dollars and 50% federal collections, resulting in approximately half of the budget existing in general fund revenue. If an advance of up to two months of payments were made from the budget to one or more of the community training centers, the division would have a significant cash flow problem, particularly in the last quarter of the year. Instead of the money being in the state treasury drawing interest for the state of Nevada, Opportunity Village would be drawing interest from their checking account. There would obviously be a fiscal impact to the state because the money would not be in the state treasury as had been mentioned in previous bills. Mr. Middleton pointed out maintaining a revolving account or a loan fund would require more division staff time. Jean Laird, Deputy Administrator, Division of Mental Hygiene and Mental Retardation, explained staff time would be increased by a minimum of 18 days. Mr. Middleton did not feel the bill was timely and community training center operators feel it is more important to receive a check from the state of Nevada on or about the same day of each month than to receive a large check every two or three months. Over the years a number of community training centers had shut their doors, and if advance payments had been given, what assurance would there be that services were provided or the money was returned to the state. Mr. Middleton mentioned the program began as a grant program. In 1985 the program was changed to fee for service because of federal requirements and has been paid after the fact since 1987. This is the first time concern has been expressed in meeting payments and obligations. Mrs. Evans asked how the 18 days of increased staff time was calculated. Ms. Laird explained staff members identified tasks that would be involved if the method was changed. Some of the tasks which would be required every two months would involve approving requests, notifying the secretary to agendize the request for the commission, the commissioners' time, preparing handouts for the commission meeting, notifying the community training centers of the meeting, presenting the request at the commission meeting, notifying the director of the Department of Administration of the request, additional correspondence related to advance grants, entering the data into a computer information system to help with tracking advance payments, the follow-up accounting process, preparing invoices, preparing a voucher for pre-audit to request the advance, and preparing documentation when excess grant advances need to be returned to the division. The tasks would require 17 hours 40 minutes every 2 months, times 6 times per year, would equal 18 days. The figure of 18 days assumes there would be no time spent on audits of costs. The current language of the bill may imply audits would be required by stating, "Each center that has received a grant of money pursuant to subsection 2 shall submit a report to the administrator itemizing the expenditure of the money. If a center does not spend the entire amount of such a grant for administrative and operational expenses within 2 months after receiving the grant, it shall immediately return the unused portion of the grant to the division." Ms. Laird pointed out if the committee supported the legislation, a few things would need to be clarified. She prepared a calculation of the amount of money the state would lose in interest if all 15 of the community training centers requested and received advances, which would be approximately $18,000 to $19,000 per year. If only Opportunity Village requested and received an advance grant, the amount would be $3,000 to $4,000 per year. The bill did not seem to provide a connection between payments and services rendered. The bill did not address what would happen if a community training center went out of business and owed money to the state. Payments are made to community training centers through other budgets in the division, and A.B. 400 does not address whether it includes only the community training center budget. Ms. Laird stated she felt the intent was that a qualifying center would be the same as in all other sections of the statute that cover community training centers, but it was not specified in the bill. Administrative and operational expenses required clarification. Money would need to be appropriated upon passage and approval in order to implement the advance grants. Mr. Hettrick expressed concern about the word "loans" used during testimony and the word "grants" used in the bill. He requested the wording in the bill be changed from "grants" to "loans" or "advances." The bill also states it provides for a penalty, yet Mr. Hettrick stated he could not find a provision in the bill for a penalty. Ms. Giunchigliani inquired if the services provided by community training centers saved the state money. Mr. Middleton explained the community training center program was begun a number of years ago primarily as an education service for children who were not in the school district. The centers then moved into the area of providing service to adults and preschoolers. Preschool was subsequently dropped as services were picked up elsewhere. The community training centers provide a very valuable service to the state. It has been referred to as a partnership because the state does not refund 100% of the cost of any community training center. Many of the centers in the beginning were the result of efforts of associations for retarded citizens, which were advocacy groups and were very interested in seeing people with retardation get quality care and services. The community training centers were often able to start programs before the legislature could be convinced of the need for the programs. Mr. Middleton felt they were a valuable tool by providing services throughout the state both in sheltered workshops and day activity centers and more recently by putting people into jobs. Ms. Giunchigliani inquired what percentage of the funding to community training centers was provided by the state. Mr. Middleton stated it varied considerably from program to program. The community training centers, as a group, offered a variety of services, and many of the services included no state participation. Ms. Giunchigliani requested a high and a low figure. Mr. Middleton commented there was some disagreement as to the percentage provided by the state. For instance, Opportunity Villages's budget is $5 million. The amount the state gives Opportunity Village is approximately $1.2 million, which would appear that the state pays approximately 21% to 22% of their program. However, the sheltered workshop program is the portion which the state funds, and Mr. Guthrie indicated last fiscal year he provided $460,000 of the total cost of $1.6 million, which is 27% private and 73% state for that portion of the program. Ms. Giunchigliani pointed out that by segregating a specific service, the state is doing more of a partnership, but if the entire budget is considered, the state would be far below what Ms. Giunchigliani would consider a partnership. Mr. Middleton responded that was correct. Ms. Giunchigliani inquired if the state only funded sheltered workshops. Mr. Middleton replied at Opportunity Village the state funded sheltered workshops and supported employment. Ms. Giunchigliani inquired why that was. Mr. Middleton explained that was the only service Opportunity Village offered which the state had dollars to participate in. Ms. Giunchigliani asked if the state funded different community training centers for different services, and Mr. Middleton stated that was correct. Ms. Giunchigliani remarked the state discriminately or indiscriminately determined where the dollars were going by choosing to fund one or two areas. Mr. Middleton replied that was not correct. The community training centers choose the services they wanted to offer, and the state could purchase those services. Ms. Giunchigliani stated the issue needed to be looked at as a whole. The state was not paying enough for the services provided by private sector, which did not fit the criteria for a flow-through. She asked why would the state pick and choose parts of services rather than looking at the whole person. Ms. Laird stated it was more complicated than that. The same clients who attended the community training centers also received other services from the Division of Mental Hygiene and Mental Retardation. Ms. Giunchigliani suggested looking at the possibility of the state acting as administrator and directing dollars to the most localized level. Mr. Close inquired if the community training centers received federal funds. Ms. Laird explained the state paid the community centers directly, and the funding was comprised of general fund dollars, Title XX social services dollars and Medicaid dollars. Mr. Close asked if the state was then the petitioner for the community training centers. Ms. Laird indicated after the community training center was paid, the state claimed the federal dollars, as required by federal regulation. Mr. Close inquired if the community training centers were required to provide matching funds. Ms. Laird responded not for services provided to clients funded by the state. Mr. Close asked if the community training center was reimbursed by the state on a daily basis for patient services. Ms. Laird indicated a daily per- patient rate was established, and the center would submit billings for the number of days and patients, for which they were paid after the fact. Mr. Close asked if the average number of days of services was 235 days per year. Ms. Laird replied the rate was based on 230 days of attendance. Chairman Arberry called for testimony on behalf of or in opposition to A.B. 400. There being none, Chairman Arberry closed the hearing on A.B. 400 and opened the hearing on A.B. 406. ASSEMBLY BILL 406 Makes contingent appropriation to Clark County for improvements to fairgrounds for Clark County fair. Assemblyman Allard, Assembly District 20, introduced Glen Hardy, Ace Robison and Jim Hardy and provided a handout to the committee reflecting appropriations for county facilities (Exhibit E) and a letter of endorsement from the Nevada Farm Bureau Federation (Exhibit F). He explained A.B. 406 was a straightforward bill containing an appropriation for $250,000 which was contingent on a match by Clark County to be used to make a small animal pavilion. Ace Robison, Chairman, Moapa Valley Town Board, and Chairman, Clark County Fair Board, spoke on behalf of A.B. 406. He explained the Clark County Fair was held in rural Clark County in the agricultural community of Logandale. The community fair was started in the early 1970's. In the late 1980's the Clark County Commission made the Logandale fair the county fair. The Clark County Fair is a southern Nevada regional fair and has grown in attendance to over 50,000 people, which has created a logistical problem. The fair is not for profit and is run and organized almost entirely by volunteers, including the Board of Directors. The exception is the fair manager who receives $26,000 a year. Its purpose is to provide education and fun for the participants. Programs include the junior livestock show, which is the largest livestock show in the state; a PRCA Rodeo; the traditional handicraft and agricultural exhibits, small animal exhibits, Heritage Village where Native Americans perform; blacksmith shop; furriers, and entertainment. Mr. Robison read into the record the following letter from Blue Eagle Holsteins in Fallon, Nevada: "As an agricultural producer, my hat is off to you on what a super job you are doing with the small animal displays and agricultural exhibits and demonstrators to educate the public on where their food and fibers come from. From start to finish, you people did a great job in promoting agriculture and its importance." Mr. Robison stressed the importance of the Clark County Fair as a reminder of Nevada's diverse rural heritage and rich native cultures. He added that the dollars allocated to this type of activity is one of the most effective dollars spent in the state in light of the challenges faced by Nevada's youth. Mr. Robison noted the fair is an excellent investment in the future of Nevada and is an asset to the state, even though it is owned by Clark County. The value of the fair is between $3.5 million and $4 million. Because of the strong volunteerism, the hard dollar costs are less than $1 million, and the soft costs have been donated since 1988. Mr. Robison respectfully requested the committee's consideration of A.B. 406 which would allow the expansion of two vital areas of the fairgrounds, one being the addition to the livestock pavilion and the other a permanent building to house the small animal exhibit. The structures are estimated to cost $400,000 to $500,000 with matching funds being sought from the County Commission. Mr. Robison expressed appreciation for past support from the committee. Ms. Tiffany asked if Mr. Robison had discussed funding with the Clark County Commission. Mr. Robison indicated he had discussions with the Clark County Commission and Parks and Recreation, and they were willing to provide matching funds. Ms. Tiffany inquired about the process to receive matching funds from the county. Mr. Robison explained the process was the same as requesting funds from the legislature. Ms. Tiffany asked if the process included anything other than a presentation. Mr. Robison stated he did not know if formal documentation needed to be submitted, but he assumed a formal proposal would be presented to the county commission. Ms. Tiffany questioned whether the county commission had earmarked matching funds for the fair. Mr. Robison remarked firm commitments had not been made. The commitment was if the legislature was willing to make the commitment, the county commission would look favorably at matching the funds. The request to the legislature would be that any appropriation toward the grant would be made contingent upon matching funds from Clark County. Ms. Tiffany asked if the matching funds from the county would come from rainy-day funds or parks and recreation. Mr. Robison replied it was his understanding the funds would come through the parks and recreation budget. Mrs. Evans inquired how the $100,000 that Clark County received in 1991 for fairgrounds improvements was spent. Mr. Robison explained the fairgrounds property was developed from raw BLM land for recreation and public purposes. The actual amount received in 1991 was $115,000 and was used to build restrooms and grandstands for the rodeo. Ms. Giunchigliani asked if Clark County matched the $115,000 funding in 1991. Mr. Robison replied yes. Ms. Giunchigliani inquired if Clark County included the fairgrounds as one of their regularly funded programs. Mr. Robison answered no. Ms. Giunchigliani requested information be provided to the committee on the amount of money Clark County has contributed towards the fair. She asked for the total amount of money needed by the fairgrounds. Mr. Robison noted funding was received from Clark County as matching funds and the Las Vegas Convention and Visitors Authority, and he offered to provide a breakdown of the funding sources. The fair had money in a rainy-day fund as a result of the large attendance, but not the necessary funds for the infrastructure development. Glen Hardy stated he had been involved with the fair and the livestock show in excess of 30 years. He presented background information on the structure of the fairgrounds using visual aids. Howard Barrett, Nevada Taxpayers Association, expressed opposition to state funding being appropriated to a county fair district. Chairman Arberry called for further testimony on behalf of or in opposition to A.B. 406. There being none, he closed the hearing on A.B. 406. ASSEMBLY BILL 210 Makes various changes regarding preparation of governmental budgets. Mark Stevens, Fiscal Analyst, explained amendments had been proposed regarding A.B. 210. A proposed amendment on page 4, line 31, would change the date from December 1 to December 15. The language had been negotiated between the Budget Division and Jan Evans, chairwoman of the interim study committee. There was discussion regarding whether language should state "45 days in advance of session." Page 8, line 20, provides that the budget subcommittee consisting of the newly appointed members of the Committee on Ways and Means and the Senate Committee on Finance before each legislative session shall hold an initial meeting on or before January 5 of each odd-number year. The proposed amendment would remove the January 5 date and leave the language permissive so that the subcommittee would meet in advance of the regular legislative session. * * * * * MR. DINI MOVED TO AMEND AND DO PASS A.B. 210. MR. ALLARD SECONDED THE MOTION. THE MOTION FAILED WITH MR. MARVEL, MS. TIFFANY, MR. PRICE, MR. HETTRICK, AND MRS. CHOWNING ABSENT AT THE TIME OF THE VOTE. MR. SPITLER AND MS. GIUNCHIGLIANI VOTED NO. * * * * * ASSEMBLY BILL 216 Increases salary of members of boards of trustees in certain school districts. * * * * * MR. DINI MOVED DO PASS A.B. 216. * * * * * Ms. Giunchigliani asked why would the bill address only one county. Chairman Arberry stated he would hold the bill until the entire committee was present. ASSEMBLY BILL 431 Revises provisions governing estates of persons for whom Nevada commissioner for veteran affairs acts as guardian. * * * * * MR. CLOSE MOVED DO PASS A.B. 431. MR. SPITLER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY VOICE VOTE WITH MR. MARVEL, MS. TIFFANY, MR. PRICE, MR. HETTRICK, AND MRS. CHOWNING ABSENT AT THE TIME OF THE VOTE. * * * * * BUDGET CLOSINGS SCIENCE, ENGINEERING AND TECHNOLOGY - PAGE 17 Chairman Arberry noted concern by the committee members regarding which budgets were scheduled for closing prior to the time of the committee hearing. He explained the day prior to the closing of a budget a list would be present to the committee members of those budgets scheduled to be addressed. Mrs. Brower inquired if a response had been made to the suggestion that Science, Engineering and Technology be put into Economic Development. Mr. Stevens noted Science, Engineering and Technology had been discussed earlier and was held. Staff did not have recommendations regarding the account. Ms. Giunchigliani stated it was her understanding the vote was to move this budget out of the Governor's office. Chairman Arberry requested the budget be held until the questions from the committee could be answered. Mr. Close went on record that he was prepared to make a motion to move Science, Engineering and Technology to Economic Development. CONTROLLER'S OFFICE - PAGE 73 Mr. Stevens explained the Controller requested the committee to consider certain additional costs within their budget, as reflected on page 1 of the Budget Closing Action sheets (Exhibit G). 1) The Controller indicated the State Printing Office was going to raise rates and therefore requested an additional $9,300 in FY 1995 and $11,147 in FY 1997. 2) Other contract services show an increase of $3,720 in the first year of the biennium and $6,033 in the second year of the biennium for maintenance of data processing equipment. 3) Vacancy savings in the amount of $32,813 in each year of the biennium was included in the Governor's budget. Philosophically, the Controller did not feel it was appropriate for the Governor to include vacancy savings in a budget account that is requested by constitutional officers. 4) The Controller's Office requested three additional personal computers in addition to what was included in the Governor's budget. The Senate Committee on Finance included $9,000 in the one-shot appropriation recommended by the Governor. 5) The Controller requested that the state's payroll function be transferred from the Department of Personnel to the Controller's Office. Included in the Budget Closing packet is a letter explaining why they feel there is statutory authority for the request. Mrs. Evans inquired if there were current vacancies in the Controller's Office. She also asked if vacancy savings were not granted, would the result be a general fund add. Mr. Stevens responded yes. He explained vacancy savings had been generated in the past. As of April 18 four positions were vacant in the Controller's Office. Mrs. Evans stated she did not support the request. Mrs. Evans queried if the Department of Personnel was in agreement with the request to transfer the payroll function to the Controller's Office. Janet M. Johnson, Deputy Budget Administrator, Budget Division, stated it was her understanding the Department of Personnel had originally requested a new payroll system. The Department of Personnel and the Controller's Office had discussions regarding the payroll system, but she did not have knowledge of the outcome of the discussions. Mr. Stevens remarked as the Executive Budget was constructed, the payroll system would remain with the Department of Personnel. Changes would need to be made to the Executive Budget to extract the payroll unit out of the Department of Personnel to place it in the Controller's Officer, if that was the desire of the committee. The Governor recommended retaining the payroll function within the Department of Personnel. Mrs. Evans suggested leaving the budgets as they currently are and coming back with a recommendation in two years rather than creating a disruption at this point. Ms. Giunchigliani stated she did not think a case had been made for moving the payroll function to the Controller's Office. She pointed there would be a bill coming from the Senate for a constitutional amendment to combine the duties of the treasurer and the controller. Mr. Close inquired if other constitutional officers had vacancy savings in their departments. Mr. Stevens replied yes, and reiterated the argument was philosophical in that the Budget Office should not have the ability to change the budget of a constitutional officer, and a constitutional officer should be able to present any budget they please directly to the legislature. Mr. Close stated a decision should be made that would apply to all constitutional officers or none. * * * * * MR. DINI MOVED TO ACCEPT ITEMS 1 AND 2 OF THE CONTROLLER'S OFFICE BUDGET CLOSING ACTION (EXHIBIT F). MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY VOICE VOTE WITH MR. MARVEL ABSENT AT THE TIME OF THE VOTE. BUDGET CLOSED. * * * * * STATE TREASURER - PAGE 91 Mr. Stevens indicated he had called the staff of the two constitutional officers to obtain any available information concerning areas of appeals or additional expenses which they felt were required over and above the Governor's recommendation. The committee needed to consider 1) the technical issue of State Owned Building Rent in the amount of $2,650 which was built into the base as well as an enhancement unit, resulting in that amount being budgeted twice. 2) The State Treasurer requested funding for an additional Bloomberg database investment system. One system is built into the Executive Budget. A memo is attached to the Budget Closing Action sheets (Exhibit F) explaining their request. 3) The State Treasurer has requested that vacancy savings be eliminated from its budget. The argument is not philosophical in nature, but a practical one. The State Treasurer budget reductions contributed during the budget cuts were to leave positions vacant and then revert the dollars. He noted vacancy savings were projected by the Budget Division comparing past history and then projecting the figures into the future. The State Treasurer's office feels they left the positions vacant in order to contribute dollars to the state because of the budget crisis. The action would prevent the State Treasurer from hiring a number of authorized positions. The State Treasurer currently has two accountant tech II vacancies and feels it would need to leave one or two positions vacant in order to meet the vacancy savings and requested it be eliminated or reduced from the $43,000 level in their budget so they can hire more of the authorized positions in their account. * * * * * MR. DINI MOVED TO ACCEPT ITEMS 1, 2 AND 3 OF THE STATE TREASURER'S BUDGET CLOSING ACTION (EXHIBIT F). MR. SPITLER SECONDED THE MOTION. * * * * * Mr. Dini commented the State Treasurer did a good job administering the state's money, and the vacancy savings have created a shortage of staff. The State Treasurer needed the tools to do the job, including the Bloomberg database investment system. Chairman Arberry stated it was his understanding if item number 3 were reduced by half, the result would be adequate to satisfy the treasurer. Mr. Stevens commented the treasurer would like to have all of the vacancy savings eliminated but any reduction would be of benefit. Mr. Hettrick expressed support for Mr. Dini's motion and agreed with his comments that the State Treasurer had done a good job for the state and took a cut when it was needed. Mr. Close agreed with the comments regarding vacancy savings, but he stated vacancy savings should not be prejudicial to just one office. Chairman Arberry called for a vote on the motion. * * * * * THE MOTION PASSED BY VOICE VOTE WITH MRS. EVANS, CHAIRMAN ARBERRY AND MR. CLOSE VOTING NO. MR. MARVEL WAS ABSENT AT THE TIME OF THE VOTE. BUDGET CLOSED. * * * * * WICHE LOAN & STIPEND - PAGE 385 Mr. Stevens noted the budget closing had been previously discussed at length. Mr. Sparks answered questions during the hearing on A.B. 136, which resulted in a memo that is attached to the Budget Closing Action sheets (Exhibit F). There was a question, should the number of law slots be approved at the level recommended by the Governor. If not approved, which programs should be added to if additional slots were provided. The memo indicates if law slots were reduced, it would be the WICHE commissioner's preference to add to the physical therapy program, which would result in a slight increase in cost. Ms. Giunchigliani suggested one slot be added to optometry and one to physical therapy. Chairman Arberry inquired if there would be an additional cost if one slot were added to optometry. Mr. Stevens noted a law slot cost $4,500, a physical therapy slot cost $7,467, and an optometry slot cost $8,200. Mr. Dini commented there was a shortage of physical therapists in the state of Nevada. Mr. Close disclosed he is a physical therapist even though the action of the committee would not affect him. He agreed there was a shortage of physical therapists. The University of Nevada, Las Vegas, was in the process of trying to develop a program for physical therapy and was seeking a director. The program would solve some of the shortage problems in the state, but the physical therapy program was not certain because of the difficulty in acquiring faculty for the curriculum. * * * * * MS. GIUNCHIGLIANI MOVED TO CLOSE THE WICHE LOAN & STIPEND BUDGET AS RECOMMENDED BY THE GOVERNOR BY SHIFTING TWO SLOTS TO PHYSICAL THERAPY FROM LAW WITH A LETTER OF INTENT TO REVIEW ALL CATEGORIES OF APPLICATIONS. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED BY VOICE VOTE WITH MR. MARVEL BEING ABSENT AT THE TIME OF THE VOTE. MS. TIFFANY AND MR. SPITLER VOTED NO, AND MR. CLOSE ABSTAINED. * * * * * DEPARTMENT OF TAXATION - PAGE 597 Mary Matheus, Local Government Budget Analyst, Legislative Counsel Bureau, explained the first adjustment on the revenue side was an increase in the out-of-state audit recovery revenue. The amount was originally calculated in the Governor's budget at 50% of the cost, and it should have been calculated at 85%, which is a decrease in the general fund requirement and an increase in the out-of-state audit recovery. The next adjustment is a reduction on the revenue side in the M-200 module for the audit recovery and a reduction in the M-200 module for the cost of the audit lap top computers from $6,200 to $5,100 as requested by the division. There is a reduction in the general fund requirement for having the positions in both the E-375 and the M-200 modules start in October rather than July. The positions are for three out-of-state auditors, two tax examiners, one revenue officer, one management assistant, one administrative services officer, and one management assistant II. Ms. Matheus pointed out one of the items that needs the committee's attention is the recommendation in the Executive Budget to continue the combined audit program on a reduced scale. The Department of Taxation has determined that the approximate amount of time to perform the 55 proposed combined audits is 1,045 hours. It is estimated that 65.3 sales and use tax audits can be performed in that same amount of hours. The opportunity cost of not completing the 65.3 sales and use tax audits is approximately $265,000. Estimated revenue generated from the 55 combined audits totals $27,087 from the Employment Security Department (ESD) and the State Industrial Insurance System (SIIS) compared to $292,087 generated from sales and use tax audits. Mr. Stevens noted the remarks made by Ms. Matheus were included in the closing sheets because the committee had some discussion as to whether the combined audits program should continue and how much could be generated if those hours were devoted to sales tax audits versus SIIS and ESD audits. Fiscal staff requested a response from the Department of Taxation, and the information included in the closing sheets was their response. The Governor's recommendation does include 55 combined audits in each year of the biennium to be completed by the Department of Taxation, but all the other remaining positions that were doing combined audits would be transferred back to ESD and SIIS. Ms. Giunchigliani thought the subcommittee recommended doing no combined audits. Mr. Stevens stated the closing sheets reflect the Governor's recommendation in the Department of Taxation budget of doing 55 combined audits in each year of the biennium. Ms. Giunchigliani stated the subcommittee she was in voted to not do any combined audits. Mr. Stevens pointed out that would be for the ESD budget and would not impact the Department of Taxation budget. If the subcommittee did not include the 55 combined audits within the Department of Taxation and indicated sales tax audits should be the focus, that would theoretically increase the amount of sales tax recoveries that go into the general fund. Ms. Giunchigliani asked if the subcommittee recommended ESD be closed without the combined audits, would that not affect the Department of Taxation budget. Mr. Stevens stated the full committee would have to take the action in the Employment Security Division budget. It would need to be communicated to the Department of Taxation that the committee felt staff time would be more appropriately placed with sales tax audits and SIIS and ESD staff should do their own audits. Mrs. Evans stated she did not support eliminating combined audits, and the business community preferred combined audits. Chairman Arberry requested Ms. Matheus to address the request for positions. Ms. Matheus explained the Department of Taxation had 47 audit positions in 1993. The Governor's recommended budget includes 62 audit positions after the elimination of 8 audit positions who would be specifically assigned to the combined audit program. The additional positions represent a 31% increase in the number of audit positions. The chart included in the Budget Closing Action packet (Exhibit F) used the revenue that the Department of Taxation projected for 1996 and 1997 along with the total number of authorized audit positions, and it still reflects a slight increase in the productivity of the audit positions. With the elimination of the combined audit program, the Department of Taxation suggests a larger audit staff is necessary to collect the sales and use taxes. Mr. Stevens stated the Department of Taxation would have a significant increase in audit staff if the Governor's recommendation is followed. If the department is going to concentrate on sales tax recoveries, the sales tax recovery account should increase dramatically compared to previous fiscal periods. Each auditor is projected to bring in more money than the cost of their position. Mrs. Brower indicated she had received favorable response from the business community about returning to regular audits as opposed to combined audits. Mr. Allard stated he thought the idea behind the combined audits was to save time and personnel. As a businessman, he supported the idea of combined audits to avoid having three separate audits. Ms. Giunchigliani stated the revenue generated from 55 combined audits totaled $27,087. She suggested putting the auditors where they are most effective and can collect the most cash. Mr. Price felt the auditors who spoke during the 67th legislative session made a good case for not going to the combined audits. The auditors stated they were specialized, and even though it was inconvenient to have two or three different auditors come in, the loss of income and the technical ability of the auditors to do three or four different types of audits was a problem for them. Mr. Close agreed with Mr. Price's comments. The auditors also pointed out that when they did ESD or SIIS audits, there were a number of contested audits which needed to be done again because of complaints that the auditors were not as trained as they could be. Mr. Allard stated Mr. Price's comments were an argument to keep 55 combined audits. It would allow for cross training in all three of the audit areas. Allowing 55 combined audits would allow the auditors to expand their knowledge and possibly allow other auditors to receive training. Mr. Spitler noted A.B. 423 would have a major impact on the general fund allocations. He asked how the budget would be closed if $1 million in each year of the biennium was included in the budget should A.B. 423 pass. Mr. Stevens commented there appeared to be two choices: 1) Close the Department of Taxation budget. If A.B. 423 passes and has a general fund impact, an appropriation could be made in the bill; or 2) the budget can be held until there is an indication on whether the bill is going to move. Mr. Hettrick commented he had served on the interim study committee to fund highways, and the bill came from that committee. The Department of Taxation collected the tax and a fee for the collection of the tax and turned it over for highway use. The fee amounted to the money reflected in A.B. 423. The bill was a philosophical way to determine whether the Department of Taxation budget should be funded out of something else rather than from highway funds. Mr. Allard commented another bill in the Committee on Transportation takes the privilege tax from the general fund and places it in the highway fund. Mr. Spitler inquired if a percentage or all of the privilege tax went to education as opposed to the highway fund. Mr. Stevens explained some of the privilege tax was handled locally and went to the school districts. Mr. Spitler had the understanding work was being done in the Committee on Transportation to move the privilege tax to the highway fund. Ms. Giunchigliani asked if two privilege taxes were collected, one at the local level for road improvement and one at the state level. Mr. Stevens explained the privilege tax was increased 20% approximately 4 years prior, and a portion of the tax in Clark County was applied to road improvement. Mr. Allard noted the Article IX, Section 5 of the Constitution gave authority to the Department of Motor Vehicles to retain any ad valorem tax. After discussion among the committee members, the decision was made to hold the Department of Taxation budget until further information was received by the committee. SENIOR CITIZENS' PROPERTY TAX ASSISTANCE - PAGE 607 * * * * * MS. GIUNCHIGLIANI MOVED TO CLOSE THE SENIOR CITIZENS' PROPERTY TAX ASSISTANCE BUDGET ACCOUNT AS RECOMMENDED BY THE GOVERNOR. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY VOICE VOTE. * * * * * Chairman Arberry commented he would take offense if any of the information from the Budget Closing Action sheets was released prior to the hearing. There being no further business, Chairman Arberry adjourned the hearing at 11:00 a.m. RESPECTFULLY SUBMITTED: Jonnie Sue Hansen, Committee Secretary Assembly Committee on Ways and Means May 3, 1995 Page