MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session May 11, 1995 The Committee on Ways and Means was called to order at 7:38 a.m., on Thursday, May 11, 1995, Chairman John Marvel presiding in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: 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 COMMITTEE MEMBERS ABSENT: Mr. Morse Arberry, Jr., Chairman (Excused) STAFF MEMBERS PRESENT: Mr. Mark Stevens, Fiscal Analyst Mr. Gary Ghiggeri, Deputy Fiscal Analyst ASSEMBLY BILL 113 Makes appropriation to Tricounty Railway Commission of Carson City and Lyon and Storey counties for restoration of railroad line from Virginia City to Carson City. Assemblyman Joseph E. Dini, Jr., District 38, reported the Tricounty Railway Commission was created during the 1993 Legislative Session from Carson City, Lyon and Storey Counties for the purpose of restoring the Virginia and Truckee Railroad from Virginia City to Carson City. Storey County voted for a one-quarter cent sales tax to fund that railroad. The measure failed in Lyon County and lost by approximately 100 votes in Carson City. Mr. Dini proposed using either a bond or cash of $5 million to be matched by the Tricounty Commission to begin construction of the railroad. The Commission has proposed to pay $1 per ride back to the state. Mr. Dini observed this is a unique opportunity to develop tourism in western Nevada. Railroads are a popular attraction and a boon to the local economy. The net gain to Nevada with increased gaming revenue and room revenue would more than offset the $5 million state contribution to begin the Railroad. Assemblyman Thomas A. Fettic, District 40, spoke in support of A.B. 113. He agreed the Virginia and Truckee Railroad would provide an economic benefit to western Nevada. A workable plan has been developed; the $5 million would not be made available until certain criteria are met; and, once the railroad is running, $1 per ride would be repaid to the state. Chairman Marvel inquired how much money is available through grants and gifts. Mr. Dini responded an ISTEA (Intermodal Surface Transportation Efficiency Act) grant of $2 million is available and private contributions would come from fund raising activities. Chairman Marvel asked if the $5 million would be considered a loan. Mr. Dini concurred and indicated repayment would be at the rate of $1 dollar per ride in perpetuity. Chairman Marvel asked if the Commission had already purchased the necessary rolling stock. Mr. Dini responded the operation of the V & T would be leased to private enterprise. Mr. Hettrick expressed his support of the project and the benefit local economy would derive. Greg Smith, Chairman of the Tricounty Railway Commission, reported the project would be 17 miles of track from Carson City to Virginia City which will utilize approximately 85 percent of the original right-of-way. Western Nevada Development District, a six county coalition, commissioned a feasibility study from Northwest Engineering in Pennsylvania, one of the top railroad engineering firms in the entire country. The Northwest Engineering report indicated approximately 160,000 individuals would ride the V & T in the third year of operation; the railroad could break even the first year of operation and would make money by the second or third year of operation. The Durango & Silverton Railroad in Colorado is comparable to the Virginia and Truckee. However, it is hundreds of miles from the nearest major airport and a great distance from the nearest major interstate highway while Virginia City and Carson City are near Reno and Lake Tahoe. The Comstock and much of its history are already well-known both nationally and internationally. Mr. Smith reported approximately $20 million would provide a quality reproduction of the V & T. Mr. Smith said the $2 million ISTEA funds cannot be used until progress is shown in raising the remainder of the funding. Local engineering firms have donated a considerable amount of time; two years of public testimony and hearings have been held in all three counties and a private fundraising operation will begin July 1, 1995. Carl Dubois, a nationally recognized fundraiser, has estimated that approximately $7 million could be raised through the private sector. Mr. Smith said the lack of interest in investing in the V & T project on the part of private sector was a contributing factor in the defeat of the sales tax question in Carson City. Chairman Marvel asked what portion of the $20 million needs to be collected before ISTEA funds can be accessed. Mr. Smith said there was no specific amount but he felt passage of A.B. 113 might be enough to access those funds. Chairman Marvel asked when the train would actually be in operation. Mr. Smith said the private fundraising campaign is estimated to take 12-18 months so the train could be running within three to four years. Mr. Dubois indicated a $5 million appropriation from the state would provide the catalyst for other donations from foundations, businesses and grants. Chairman Marvel inquired if the $5 million would be in the form of a loan. Mr. Smith said the Commission would request no money be released until the Commission could provide a $5 million match. The money would be repaid at the rate of $1 per ride, resulting in revenue of $160,000-$200,000 for the state. Mrs. Evans observed that a $5 million appropriation from the state, $2 million received from ISTEA and $7 million in private donations still lacks $6 million of the $20 million estimated project cost. Mr. Smith indicated a private foundation has expressed the intention to provide up to $10 million and would have done so if the ballot question had passed. Mr. Smith said he had no doubt the foundation would still support the project. Mr. Fettic confirmed the V & T train would offer gaming and dining. He asked whether any potential income from the film industry had been considered. Mr. Smith responded that Ron Allen, the president of the Virginia and Truckee Railway Historical Society had received numerous inquires from movie industry representatives who have asked to be informed when the railroad is completed. Mr. Allard asked if it was intended to delay construction until the entire $20 million was raised. Mr. Smith responded affirmatively and added that none of the money will be spent until the entire amount necessary to finish the project is raised. Mr. Close asked what the assets of the V & T would total once the project is completed. Mr. Smith responded the railroad cars would each cost from $250,000 to $300,000. The engines could cost from $750,000 to nearly $1 million. Ron Allen, President of the Virginia and Truckee Historic Railroad Society, estimated the physical assets would be at least half of the total project price. He noted the estimate would have to include right-of-way, physical assets and the goodwill of an ongoing business. Mr. Close inquired if the three counties would guarantee the loan. Mr. Smith said that had not been discussed. Mr. Allard asked if the state would be in the first position if it became necessary to dispose of assets. Mr. Smith indicated that would be likely. Mayor Marv Teixeira of Carson City spoke in support of the railroad as an investment in Nevada's past to insure its future. He noted the V & T enjoys a world wide reputation and investment in the project will insure the financial well- being of Carson City and northern Nevada. Mayor Teixeira observed a financial commitment from the state will lead to private sector involvement and noted the railroad would ultimately support itself. Lieutenant Governor Lonnie Hammargren, Chairman of the Commission on Economic Development and the Commission on Tourism, spoke in support of A.B. 113 and the great benefit the state would derive through increased tourism and from the movie industry whose representatives have expressed interest in the project. Larry Osborne, Executive Vice President of the Carson City Chamber of Commerce, spoke in support of A.B. 113. He observed the Chamber receives many questions from tourists looking for the train to Virginia City. Two or three national lodging firms have expressed interest in locating a major hotel/motel in the area when the V & T project is completed. The Chamber plans to participate with fundraising efforts in the private sector. Mr. Price expressed support for the project and asked who would operate the railroad. Mr. Smith said Mr. Bob Gray who successfully operates the current Virginia and Truckee Railroad between Gold Hill and Virginia City and owns the rights to the name would most likely operate the railroad. Chairman Marvel asked whether it would be necessary to construct roundhouses at both ends of the railroad line. Mr. Smith said the actual design would be done in the next phase of engineering; however, roundhouses are more expensive and a less costly "Y" arrangement could also be used. Mr. Fettic inquired whether the railroad would operate year around. Mr. Smith responded the train would operate 365 days a year, weather permitting. Mr. Allard asked what cost per ride would be charged. Mr. Smith said discussions thus far have centered around $15-$20 per person per ride with a discount for seniors and children. The train is intended to be a family attraction. Mr. Allard asked how the $1 per ride repayment to the state was selected. Mr. Smith said that is what the Commission can afford to repay. By the third year of operation, it is expected 160,000 individuals will ride the train. Mr. Allard asked where the language specifying the payback appeared in the bill. Mr. Dini indicated A.B. 113 will be amended to include language regarding the payback. Mr. Dini pointed out there had been a great deal of interest in the train at the time of the election with Storey County approving a quarter cent sales tax; Lyon County expressed very little interest and did not approve the sales tax; in Carson City the measure failed by only a few votes. He noted the project would benefit the entire western Nevada area. Mr. Smith observed those who voted against the project did not vote against the idea of reconstructing the Virginia and Truckee railroad; people voted against an increase in sales tax to fund the project. Mrs. Evans asked whether the project would again be placed on the ballot to request local support. Mr. Smith said that would be the last resort but it could be done. Ms. Giunchigliani confirmed the quarter cent sales tax failed in two of three counties. She questioned whether the project was a state responsibility and noted a commitment of local support should be received before the state provides funding for the project. Mr. Smith indicated the Commission has contracted with Carl Dubois of the Dubois Group, a nationally known fundraiser, who performed a feasibility study that indicated $7 million would be raised through grants, foundations and businesses in twelve to eighteen months, reflecting interest on the part of private sector. Mrs. Chowning noted one of the most successful railroads is in Colorado where the weather is much more severe than in Nevada. Mr. Smith indicated that railroad operates nine or ten months of the year. Mrs. Chowning asked whether grant funding from Historic Preservation could be sought. Mr. Smith responded affirmatively. Mr. Price expressed support for the project, noting trains are a tourist attraction with the added benefit of preserving local history. He noted concern relative to putting state money into a private sector project. Mr. Close expressed support for the concept of the project as a tourist attraction for western Nevada and the entire state. He expressed concern for liability on the part of taxpayers for any money that might be put into the project. He asked whether a default guarantee could be obtained from the counties involved and suggested charging interest because repayment would take twenty years at the suggested rate of payback. Chairman Marvel called for further public testimony. There was none. ASSEMBLY BILL 220 Makes appropriation to budget division of department of administration for development of requirements for integrated financial system. Perry Comeaux, Director of the Department of Administration, reported A.B. 220 requests an appropriation of $165,000 for the Budget and Planning Division to fund the development of systems requirements for integrated financial systems involving the Treasurer's Office, the Controller's Office, the Department of Personnel and the Budget and Planning, Internal Audit, Purchasing and Risk Management Divisions of the Department of Administration. This systems requirements development will determine the hardware and software enhancements necessary to improve these systems. During the current biennium a business process re-engineering study was completed on the integrated financial systems and it is now time to develop the systems requirements; the third phase to be requested during the 1997 Legislative Session would be funding for enhancements to the system. Chairman Marvel inquired where the equipment would be located. Mr. Comeaux said the intent is to put out a request for proposal for the systems requirements development and a location would not be specified; the contractor would help determine what type of equipment is necessary and where it should be located. Darrel Daines, State Controller, testified the Controller's office had requested funding for the purpose of developing a study to consider an accounting system for the state of Nevada. Mr. Daines noted the Controller has a constitutional responsibility to administer the accounting system for the state. Mr. Daines cited a case in Idaho in 1986 when the Legislature appropriated funding for a separate agency to perform the function of the State Auditor. The Auditor requested the courts reconsider with the conclusion that the Legislature must appropriate funding necessary for a constitutional officer to perform his constitutional duties. He observed the accounting system is the constitutional responsibility of the State Controller and should be under the direction and control of the State Controller. Mr. Daines proposed an amendment to A.B. 220 that would place that funding under the State Controller. Ms. Tiffany asked whether a functional specification study relating to work flow and process had been done. Mr. Comeaux said that portion of the study was completed during the prior year. The second portion of the study will include hardware and software design. Ms. Tiffany asked how much of the functional requirement for the integrated financial system related to accounting done by the Controller's Office. Mr. Comeaux said accounting is a very important piece; however, the integrated system also includes Payroll, Purchasing, Pre-Audit, Risk Management and the Treasurer's Office. Ms. Tiffany asked whether one particular department would control the integrated financial system. Mr. Comeaux responded negatively; the systems will be independent but do need to be integrated because they affect each other. Ms. Tiffany observed that because the system is meant to provide pathways between various types of information and is not centralized, no one individual should control the system. Mr. Daines referred to the Idaho case and reiterated the courts held the legislature may not prevent the constitutional officer from performing his constitutional duties. Mr. Daines noted he held constitutional responsibility for paying the state's bills and if the bill-paying function is removed from the Controller's Office, the controller could not be held responsible for that function. Mr. Daines stated that unless the Legislature removed his constitutional authority to perform those duties, he would perform them, even if a court opinion was necessary to support his position. He noted the Controller's Office requested funding to study financial system needs; however, funding was provided to the Department of Administration, thwarting attempts by the Controller's Office to design an appropriate accounting system for the state. Mr. Comeaux assured the committee if the appropriation to the Department of Administration is approved, the Controller's Office would be included in developing the request for proposal so that the Controller's concerns would be addressed. There is no interest in imposing a certain type of hardware or software on any of the agencies involved in the integrated systems. The Department of Administration would like to write a request for proposal to bring in a consultant to examine the systems and help make determinations relative to hardware and software. Chairman Marvel called for public testimony. There was none. ASSEMBLY BILL 221 Makes appropriation to real estate division of department of business and industry for telephone and computer upgrades. Joan Buchanan, Administrator of the Real Estate Division, distributed a packet of material (Exhibit C) and explained A.B. 221 requests a one-shot appropriation of $31,730. Of the requested $31,730, $18,500 would provide an upgraded telephone system for the Las Vegas office to accommodate additional staff and workload. The phone system would include self-directed features to the Licensing, Education, Compliance and Administration sections as well as voice mail. Ms. Buchanan explained $13,230 would provide computer upgrades for internal management functions and for the Department of Information Services to connect the Division mainframe to compliance staff in Las Vegas. ASSEMBLY BILL 222 Makes appropriation to employee-management relations board for certain office equipment. Birgit Baker, Administrative Services Office for the Department of Business and Industry, reported A.B. 222 requests a one-shot appropriation of $700 from the state General Fund for office equipment for the Employee-Management Relations Board. The Board shared space with the Governor's Office in the Bradley Building and also shared telephone equipment and a fax machine. The Governor's office has moved to the new Sawyer Building in Las Vegas and the Employee- Management Relations Board will remain in the Bradley Building. The original request was for two telephones for $300 and a fax machine for $400; however, State Purchasing has indicated that a basic plain paper fax machine costs $877. The Governor's Office left behind two telephones so the agency no longer needs to purchase phones. The Board requests the appropriation be increased to $877. Ms. Tiffany asked why the request was not included in the budget. Ms. Baker said this equipment was requested in the budget; however, the Budget Office chose to handle the request as a one-shot appropriation. Mr. Stevens suggested if the committee did not wish to process a bill for $877, A.B. 221 could be amended to include the request in A.B. 222. Ms. Tiffany asked whether the request could not be returned to the budget. Deb Erickson, Budget Office, indicated the fax machine could be processed either through a one-shot appropriation or put back into the budget. Ms. Giunchigliani asked whether fax machines were being handled through bills or through budgets. Ms. Baker indicated fax machines were included in fee-funded budgets but were not included in General Fund budgets. Mr. Spitler indicated many agencies expressed the intent to purchase equipment with current year surplus funds so that was why equipment requests were in the form of bills rather than in budgets. Chairman Marvel called for public testimony. There was none. ASSEMBLY BILL 236 Makes appropriation to division of parole and probation of department of motor vehicles and public safety for replacement and purchase of various equipment. Richard Wyett, Chief of the Division of Parole and Probation, introduced Acting Deputy Chief Carlos Concha and Deputy Chief Pete English. Mr. Concha reported a change in the request contained in A.B. 236 from $480,078 to $411,914 as the result of a change in the number of staff. Mr. Concha explained A.B. 236 requests the purchase of protective vests, service ammunition and service weapons. Historically the Division of Parole and Probation has not purchased weapons or safety equipment for staff. These purchases cost a newly hired individual approximately $1,000. Other Divisions within the Department of Motor Vehicles and Public Safety purchase weapons for their employees. Also requested is $45,225 for the purchase and replacement of calculators, telephones, transcribers, and file cabinets. Mr. Concha distributed a document (Exhibit D) which details specific items requested in A.B. 236. Also requested is $112,254 to replace computer hardware and software and $12,215 to purchase new equipment. The total equipment request is $169,694. Mr. Concha noted pages 3 and 4 of Exhibit D itemize equipment related to weapons totaling $242,220. Chairman Marvel expressed his appreciation for the detailed information provided. Mr. Fettic asked whether officers are currently required to purchase a particular type of weapon. Mr. Wyett responded negatively. Chairman Marvel confirmed weapons will be standardized. Mr. Wyett explained all law enforcement and public safety entities now use 40 caliber weapons and that would be standardized throughout the Department. Dave Wyble, President of the State of Nevada Peace Officer's Association spoke in support of A.B. 236. The appropriation would provide the purchase of equipment officers currently must personally provide. Mr. Wyble said future requests might include replacement for damaged clothing. Chairman Marvel confirmed parole and probation officers do not wear uniforms. Chairman Marvel called for any additional public testimony. There was none. ASSEMBLY BILL 545 Requires state board of nursing to issue licenses to practice nursing to certain applicants without examination. Chairman Marvel called for a motion to rerefer A.B. 545 to the Committee on Commerce. ASSEMBLYMAN HETTRICK MOVED TO REREFER A.B. 545 TO THE COMMITTEE ON COMMERCE. ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ASSEMBLYMAN ARBERRY WAS NOT PRESENT AT THE TIME OF THE VOTE. ************** ASSEMBLY JOINT RESOLUTION 26 of the 67th Session Proposes to amend Nevada constitution to clarify exemption from debt limitation of money borrowed to retrofit state buildings to make use of energy more efficient. Dean Borges, Deputy Manager, Public Works Board, explained A.J.R. 26 was held over from the 67th Session to change the Constitution to allow investment to retrofit some of the 1,800 state of Nevada buildings by an energy retrofit coordinator. Existing buildings will be retrofitted with energy efficient items such as lighting, energy management systems, variable frequency controls for fans, free cooling systems and possibly the use of hydroelectric power. Chairman Marvel asked what the investment would be per year. Mr. Borges said the bond indebtedness could go as high as $5 million. Mr. Dini observed retrofitting the buildings is very important and would result in considerable savings. ASSEMBLYMAN HETTRICK MOVED DO PASS ON A.J.R. 26 OF THE 67TH SESSION. ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ASSEMBLYMAN ARBERRY WAS NOT PRESENT AT THE TIME OF THE VOTE. *************** ASSEMBLY JOINT RESOLUTION 35 of the 67th Session Proposes to amend Nevada constitution to allow investment by state to stimulate economic development. Mrs. Evans said A.J.R. 35 was the result of work by a large group of private sector individuals who feel the measure is very important for the state's future economic development. Presently it is constitutionally prohibited to use state money for private investment. A measure similar to A.J.R. 35 was on the ballot several years ago and did not pass because the language was vague regarding how state monies would be used and who would have oversight and authority. The current measure puts control under the Legislature and provides criteria for expenditures. Larry Struve, Chief of Industrial Development and Planning, Department of Business and Industry, noted prior to his current position he was Director of Commerce and it was in that capacity he became involved with A.J.R. 35. Mr. Struve distributed a letter from himself dated May 10, 1995 (Exhibit E) and a letter from Theodore J. Day dated May 10, 1995 (Exhibit F). Mr. Struve said capital availability is a major issue of interest to business and industry in the 1990's. During the 1993 Session, the Department of Commerce retained the services of a consultant who performed a study of Nevada's record in providing capital for business expansion. The Department of Business and Industry is particularly interested in the availability of capital for manufacturing facilities which is part of the state's economic diversification strategy. In 1993, Nevada's capital investment per employee in the manufacturing sector was on the average 12 percent lower than the national average from 1987 to 1990. Nevada firms have not been upgrading factories or investing in productivity as extensively as competitors in other states and in the nation. In 1990, Nevada ranked 39th in the United States for average value added per worker. Overall, Nevada manufacturing firms would have had to invested $56 million more between 1987 and 1990 to be consistent with national levels and to keep pace with competitors. At that time, the consultant felt one of the reasons was the fact that other states have very aggressively developed capital programs specifically designed for firms like manufacturing and technology. Mr. Struve said the 1993 Legislature unanimously passed A.J.R. 35. Mr. Struve said capital funding remains a major issue. Passage of A.J.R. 35 would allow state voters a second chance to indicate whether the Nevada Legislature should be allowed to make investment of public monies to help improve access to capital for business and manufacturing sectors. The language was based on language successfully passed in Kansas in 1986, Wyoming in 1987, Georgia in 1988 and Oklahoma in 1988. Other states have developed seed capital funding. The Utah Technology Finance Corporation was started ten years ago with a major appropriation from the state legislature matched by the private sector and now provides start-up financing for new businesses. Mr. Struve said Exhibit E deals with the language of A.J.R. 35; the "whereas" clauses would provide the basis for an educational campaign for Nevada voters. Changes to the constitution involve three elements: 1) A determination through statute enacted by the Legislature through which a responsible person or entity would conclude there is a need for an investment of a certain type in economic development or a program to help create new employment opportunity and also a determination that the state can expect to achieve a reasonable rate of return on the investment adjusted for the relative degree of risk. 2) Each investment must be made through a cooperative venture with private investors of reasonable sophistication. Those who participate from the private sector would have to do so on either the same or less favorable conditions than the state to make sure the state is not put in an inferior position. 3) Any authorization to spend public monies for these types of investments must be passed by a two-thirds vote of the state legislature in both houses. Mr. Close asked whether there had been any discussion regarding putting a cap on the maximum amount that could be loaned. Mr. Struve said any cap would be set in the implementing legislation. He noted A.J.R. 35 is to amend section 9 of article VIII of the constitution to give the Legislature the opportunity to consider authorizing investments of public money for economic development projects. Ms. Giunchigliani requested definition of "reasonable sophistication" and "economic development." Mr. Struve said the definition would be done by the Legislature through the implementing legislation. The term "reasonable" is intentionally flexible so those who make the definition in a specific context or case can take into account the particular needs of each situation. Ms. Giunchigliani expressed concern for the vagueness of the term "economic development." Mr. Struve said that would have to be addressed in implementing legislation. He reiterated the language of A.J.R. 35 was based on language that was successful in other states. Mr. Price expressed his support for A.J.R. 35 and noted state investment in economic development is not a new concept; the first state-paid public/private project was the Erie Canal which was built with state money for the private purpose of transport. He expressed concern with the language in A.J.R. 35 because the constitution is meant to be a set of principles and not a set of detailed legislation. He also expressed concern with the requirement of a two-thirds majority. Mr. Struve concurred with Mr. Price's argument but noted the issue is extremely important to the future of the state and Nevada is so far behind other states that A.J.R. 35 may make a better argument for the voters. Ms. Giunchigliani observed that frequently when a ballot measure fails, the measure is returned to the ballot again. She expressed concern with returning the measure to the voters once again. Mr. Struve observed one of the challenges would be to get the private sector to raise money for a voter education program. Mrs. Evans commented in 1982 the voters overwhelmingly rejected the estate tax measure which had been on the ballot several times. The missing component was education; the voters did not realize what they were voting on and thought the measure was an expansion of the estate tax. A coalition funded and performed public education and the measure passed. She noted this underscored the importance of public education for ballot questions. Tim Carlson, Executive Director, Commission on Economic Development, spoke in support of A.J.R. 35. Mr. Carlson concurred with Mrs. Evans that the business community must be responsible for promoting state investment in economic development. Brian Krolicki, Chief Deputy Treasurer, read a letter from State Treasurer Robert Seale in support of A.J.R. 35, attached as Exhibit G. Bob Schreiber, past president of the Nevada Economic Development Association, a statewide group of business, education and economic development professionals spoke in support of A.J.R. 35. He noted Nevada lags far behind neighboring states in capital formation. The realization of what needs to be done to attract quality industry is growing and it is incumbent on business to sell the concept to the voters. Chairman Marvel expressed his support for A.J.R. 35. Mr. Dini noted the concept of public/private partnership has been used before in the 1970's when the state loaned money to the counties who in turn loaned money to the private sector. Mr. Dini noted if the state wants to attract clean industry with good paying jobs, the capital must be available. Ms. Tiffany expressed her support of A.J.R. 35 and government becoming actively involved with business and economic development. Mr. Struve said A.J.R. 35 amends the constitution to allow the investment of public monies but how that is done would be determined through a bill or perhaps an interim study. He explained in Utah when the Utah Technology Finance Corporation was formed, a group within the University of Utah met with staff from the Governor's office and worked prior to a legislative session to draft enabling legislation to establish that corporate entity and provide its initial capitalization through an appropriation matched in the private sector. Mr. Spitler noted lines 5 through 7 indicate a two-thirds vote approval is required for each project and said approval would be difficult when the legislature meets every two years. He noted the process, if it is to be similar to that in Utah, needs to be clarified because it currently appears as though the legislature must approve every project. Mr. Struve agreed the committee putting the campaign together would need to consider those points. He noted it is the law to establish the program that requires a two-thirds vote. Each specific investment would not require a vote because the initial authorization and terms set forth in that legislation would govern investments. Mr. Spitler asked how much money other states appropriated for the initial enactment of this legislation. Mr. Struve said Utah appropriated $1 million to get the Utah Technology Finance Corporation started. Eastern states have appropriated much more; however, those states have larger populations and a more mature industrial sector than do western states. Chairman Marvel called for further testimony. There was none. ASSEMBLYMAN FETTIC MOVED DO PASS ON A.J.R. 35 OF THE 67TH SESSION. THE MOTION WAS SECONDED BY ASSEMBLYWOMAN EVANS. THE MOTION CARRIED UNANIMOUSLY. ASSEMBLYMAN ARBERRY AND ASSEMBLYWOMAN GIUNCHIGLIANI WERE NOT PRESENT AT THE TIME OF THE VOTE. *************** SENATE BILL 346 Makes supplemental appropriation to department of administration for personnel expenses of office of internal audits. Chairman Marvel called for a motion on S.B. 346. ASSEMBLYMAN DINI MOVED DO PASS ON S.B. 346. ASSEMBLYWOMAN EVANS SECONDED THE MOTION. THE MOTION FAILED. ASSEMBLYWOMEN BROWER AND TIFFANY AND ASSEMBLYMEN ALLARD AND CLOSE VOTED NO. ASSEMBLYWOMAN GIUNCHIGLIANI AND ASSEMBLYMEN ARBERRY AND HETTRICK WERE NOT PRESENT AT THE TIME OF THE VOTE. ************** Chairman Marvel called for reconsideration of S.B. 346. Mr. Price requested explanation of the appropriation contained in S.B. 346. Mr. Stevens explained the agency hired personnel at a higher step than was budgeted and consequently there is a projected shortfall of $4,000 through June 30, 1995. The $4,000 would take the agency through the current fiscal period. If S.B. 346 is not approved, employees would most likely face immediate lay-offs. Mr. Price observed not passing S.B. 346 would punish employees who accepted positions in good faith and should not be expected to understand funding for their positions. Ms. Giunchigliani expressed agreement with Mr. Price's comments. Mr. Allard, Ms. Brower, Mr. Close and Ms. Tiffany indicated they did not wish to punish the employees and would vote for the measure; however, they expressed concern with the department manager's actions in exceeding budgeted spending authority for salaries. Mr. Hettrick noted the division's purpose is to monitor internal controls and audit functions and actions such as hiring personnel above budget restraints makes it difficult for the agency to justify its existence. Mr. Close suggested a letter be sent to all agencies indicating the committee does not approve hiring personnel at levels higher than budgeted. Chairman Marvel said if S.B. 346 is approved, he would request Senator Raggio concur with the committee's action and a letter would be sent. Mrs. Evans asked whether the $4,000 remains an accurate figure. Janet Johnson of the Budget Office indicated her office had not been informed of any change in the $4,000 figure. Chairman Marvel called for a motion on S.B. 346. ASSEMBLYMAN FETTIC MOVED DO PASS ON S.B. 346. ASSEMBLYWOMAN EVANS SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMAN ARBERRY WAS NOT PRESENT AT THE TIME OF THE VOTE. ******************** With no further business to come before the committee, Chairman Marvel adjourned the meeting at 10:17 a.m. RESPECTFULLY SUBMITTED: Deborah Salaber, Committee Secretary Assembly Committee on Ways and Means May 11, 1995 Page