MINUTES OF THE ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session June 22, 1995 The Committee on Ways and Means was called to order at 8:04 a.m., on Thursday, June 22, 1995, Chairman 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. 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. Bob Price Mr. Larry L. Spitler COMMITTEE MEMBERS EXCUSED: Mr. Lynn Hettrick STAFF MEMBERS PRESENT: Gary L. Ghiggeri, Principal Deputy Fiscal Analyst Mark Stevens, Fiscal Analyst Jeanne L. Botts, Program Analyst Chairman Marvel announced testimony would be limited this day due to time constraints and requested remarks be kept brief and opened the hearing on Assembly Bill 421. ASSEMBLY BILL 421 Revises provisions relating to taxation of special fuels. Mr. Ray Sparks, Acting Deputy Director, Department of Motor Vehicles and Public Safety (DMV/PS), introduced Donna Wadey-Howell, Acting Chief, Registration Division. Mr. Sparks testified A.B. 421 was requested in the "Legislative Commission Study on the Financing of Construction, Maintenance, and Repair of Highways and Roads in Nevada", a report issued by the interim study committee. The study was authorized because of the widening gap between highway fund revenues and the needs of the Nevada Department of Transportation (NDOT) as projected in their long-term plan for highways. During the study DMV/PS presented concerns about the collection of special fuel taxes. As background, Mr. Sparks explained the special fuels are typically diesel fuel, liquefied petroleum gas (LPG), and compressed natural gas (CNG). The tax is assessed on each gallon of fuel sold in Nevada. The current tax rate is $0.27 per gallon for diesel fuel and $0.23 per gallon on LPG and CNG. CNG is stored and sold in a gaseous state and to assess the tax per gallon a method to convert the gaseous volume to a gallon measurement is needed. The method has been established in NRS 366.197 which equates 125 cubic feet of CNG to one gallon. The statute also includes LPG in the conversion formula; however, LPG is stored in a liquid state and it makes no sense to convert from a gaseous volume to a liquid volume. Mr. Sparks noted there is one large user of LPG in Nevada, a taxi fleet in Las Vegas, which buys LPG in bulk. Because this taxpayer files a tax return with DMV/PS and does not pay the tax at the time of fuel purchase, they are able to apply the conversion formula in the calculation of their tax. Since LPG is a liquid, the company converts the liquid to a gaseous state, applies the conversion formula to take the gaseous state back to a liquid and then determines the tax rate. The first conversion factor the company uses is 36.3 cubic feet per liquid gallon to convert the LPG to a gaseous state. They then apply the statutory formula of 125 cubic feet to equal one gallon in converting it back to a liquid. The last figure is used for tax purposes. The original one gallon of LPG is converted to 0.29 gallons for tax purposes resulting in the company paying a tax of $0.0668 per gallon versus $0.23 per gallon. Chairman Marvel asked if it payment structure was by court order or is it how the formula works. Mr. Sparks responded DMV/PS audited the taxpayer and disallowed the use of the conversion formula. It was the Department's position it made no sense even though the statute provided for the use of the conversion formula for LPG. The company protested the audit, litigated the issue, and prevailed. The court ruled the statutory language was clear on its face and therefore the Department had to allow the use of the conversion formula. Mr. Sparks clarified it is only the one taxpayer who is able to take advantage of the payment structure since they purchase LPG in bulk and file quarterly tax returns. A private individual making a purchase from a retailer would pay the $0.23 per gallon. Chairman Marvel asked if the rate is amended from $0.23 to $0.067 does the Committee have the proper fiscal note showing the loss to the state. Mr. Sparks replied yes, the fiscal note is correct. He added the Department suggested LPG be removed from the conversion factor formula in statute. The interim committee was concerned the taxi fleet company would be harmed since the company would be required to pay a higher tax rate; therefore, in addition to eliminating LPG from the conversion formula the interim committee suggested the tax rate be changed to $0.067 per gallon. With the change the company would not be harmed and other users of LPG would benefit from the reduced tax rate. He noted the Department's collection process would be simplified because the convoluted calculation would not be used. He described the fiscal note as being the Department's projection of what the additional loss of revenue would be by applying the $0.067 per gallon for LPG across the board. Chairman Marvel asked how the $0.09 per gallon tax for CNG was determined. Ms. Donna Wadey-Howell, Acting Chief, Registration Division, testified the per gallon amount for CNG was amended in the Assembly Transportation Committee to give the same tax rate as the $0.067 for LPG. Mr. Sparks stated Mr. Ted Zuend, LCB Fiscal Analysis Division, staffed the interim study and was familiar with the issues and could handle questions from the Committee. Mr. Daryl Capurro, Nevada Motor Transport Association, prefaced his statements by noting the Association had worked with the interim study committee and the only Assembly member on the committee who returned to the Assembly this session was Mr. Lynn Hettrick. He stated the intent of the study committee was to eliminate the problem caused by the court decision regarding the conversion formula. He agreed the formula made little sense since LPG is sold by the gallon. He stated his concern was the arguments made before the court regarding the conversion. He pointed out the conversion could also be applied to gasoline and diesel; gasoline is in a gaseous state when it reaches the carburetor or fuel injection system. The same arguments could be used for fuels currently being taxed at $0.23 or $0.27 per gallon. The Association is concerned for the highway fund and money which would be taken from it. Mr. Capurro noted there have been various arguments about giving a break to alternative fuels for purposes of clean air, etc. He stated good highways are important to the element of clean air and to reduce the money going to the highway fund would be inappropriate for the purpose of clean air. He added if a tax break is needed for clean fuels it should be in the general fund. He testified the Association's position has been to eliminate LPG from the formula in statute and return the tax to $0.23 per gallon. He concluded several suggestions have been made for compromise; the Association would support something which brings the tax up to a level which would not harm the highway fund and preserves the premise the money is to build and maintain the highways. Chairman Marvel asked Mr. Ted Zuend if he had analyzed the fiscal note. Mr. Ted Zuend, Deputy Fiscal Analyst, responded he had reviewed the fiscal note prepared by the Department of Motor Vehicles and Public Safety. He stated the loss is largely due to all LPG users receiving the same tax break as the taxi fleet company in Las Vegas. He detailed the actual number as about 3.8 million gallons sold, but due to the conversion formula applied by the bulk user the taxable gallonage is reduced to 1.6 million gallons. He reiterated, at this time, the people who pay at the pump do not get the tax break; however, they would receive the benefit of the $0.067 reduced rate. He verified the Department's fiscal note as accurate. He continued by identifying a small loss of tax revenue due to CNG purchases which run about 12,000 gallons per year. He reviewed when the statute was passed in 1987 there had been considerable testimony regarding the proper conversion factor and much of the testimony stated the 125 cubic feet was not accurate for an energy equivalent to one gallon of gasoline. Ms. Stephanie Tyler, representing the Nevada Propane Dealers Association, noted there had been confusion regarding the law. She testified the Association's position is in support of comments made by Mr. Daryl Capurro regarding "leveling the playing field." The Association sees no reason for a large user of propane to receive a break when other users can not. The Association would be comfortable with an amount between the current $0.23 per gallon for CNG and the $0.067 specified in law; a range of $0.15 - $0.16 per gallon would be fair, provide the incentive for alternative fuels, but not create a major drain on the highway fund. Chairman Marvel asked if the statute were changed would the change supersede the court decision. Ms. Tyler responded, per her understanding, if the law is changed the precedent law would be abolished. Mr. John Sande, representing the Western States Petroleum Association, echoed the purpose of the bill was to create equity for LPG since it is not a gas. The Association would support raising the tax on LPG to be energy equivalent to other forms of fuels. He noted CNG is taxed at $0.23 per gallon which, he understands, is equivalent to diesel at $0.27 per gallon and gasoline at $0.23 per gallon. Mr. Sande testified the Association's experts advised LPG should be taxed at an energy equivalent basis of $0.17 per gallon. To create fairness the Ways and Means Committee should eliminate the conversion formula, leaving Section 2 of the bill, and increase the tax on LPG to approximately $0.17 per gallon. The Association is opposed to any reduction in the tax for CNG as lowering the tax would discriminate against other alternative fuels, such as, reformulated gasoline and ethanol. He added reducing a tax without a cost benefit analysis indicating improved air quality makes no sense and is bad tax policy. Highway funds would be lost if a tax is reduced to encourage the use of an alternative fuel. He pointed out the federal government has indicated there will be fleet requirements for use of CNG resulting in increased use of the gas. He stated if there is a tax break with no cost benefit analysis it will effect the highway fund. Chairman Marvel inquired how available is LPG and CNG. Mr. Sande replied LPG and CNG are becoming more available and the power companies are attempting to market the product. Currently, it is "still a small player." Mr. Stan Warren, representing Sierra Pacific Power Company (SPPCo), stated everything had been said in previous testimony, and the SPPCo is looking for "a level playing field." He stated CNG and LPG are similar fuels; both have a capital cost conversion involved in preparing a vehicle to use them. He explained it is mainly governmental fleets which are tax exempt that are converting to use the fuels. He concluded a formula is needed to convert CNG and he would not want it eliminated. Mr. Woody Miller, Sierra Pacific Power Company, testified alternative fuels deserve a tax break due to their environmental benefits. He stated SPPCo would support an "intermediate level" of tax. Mr. Jay Taylor, representing Southwest Gas Corporation (SWG), Las Vegas, described SWG's program in Las Vegas. He explained there are about 600 CNG fueled vehicles (200 SWG and 400 government vehicles.) The government vehicles used approximately 70,000 equivalent gallons of CNG in May 1995 which were tax exempt. SWG would like to see the tax reduced due to the high cost of converting a vehicle (approximately $4,000) and the poor payback (which can be in excess of ten years for the private sector.) He noted California's tax per gallon is $0.07 and Arizona's $0.01. Mr. Taylor stated a tax reduction would allow the private sector to participate (for environmental reasons) though there would not be many. In Arizona, which reduced the tax in 1988, there are less than 100 non- governmental vehicles using CNG. He explained Nevada's problem of non- attainment of air quality in Washoe and Clark County has been identified by the Environmental Protection Agency (EPA) as carbon monoxide. The most effective alternative fuels to reduce carbon monoxide are LPG, CNG, and the electric vehicle. He added, regarding equality, electric vehicles, which are increasing daily, are not taxed for fuel use and damage the road as would a CNG vehicle. He added some car companies (Ford, General Motors, Chrysler) offer CNG fueled vehicles from the factory but most vehicles are conversions. Mr. Fettic wanted to clarify that Mr. Taylor had said he wanted the tax reduced to encourage consumer use in other fuels. Mr. Taylor answered it costs $4,000 to convert a vehicle and CNG currently sells for $1.20 per gallon which is comparable to gasoline and so gives no cash incentive. If the tax could be reduced as little as a dime, purchasing 100 gallons per year would save the consumer $100. He stated the only way to entice the private sector to convert and help air quality is to give them the best price of fuel possible. Ms. Helen Foley, representing Western Ethanol (WE), testified WE was very supportive of reducing the tax for alternative fuels; however, the bill is for LPG and CNG. She stated, in southern Nevada ethanol is mixed with fuel which reduced carbon monoxide to an acceptable EPA level. She noted General Motors (GM) has announced the largest single model alternative fuel vehicle production program of any manufacturer and by 1997 all of GM's 4-cylinder, light weight pickup trucks will be flexibly fueled to run on gasoline, ethanol, or a combination of the two. Ms. Foley stated there is a financial incentive for LPG and CNG users; but the private person, not being part of a fleet, can do little to help as it would be difficult to obtain the alternative fuels. She stressed everyone can do their part by using ethanol. She referred to Senate Bill 565 (68th Session), amended by Mr. John Sande and sponsor Senator Ray Shaffer, to ask for a comprehensive study by the Department of Business and Industry to develop a statewide plan for alternative fuels. She stated this was the appropriate approach--to bring in all interested parties to look at alternative fuels rather than changing the statute "piece meal." She acknowledged the problem caused by the court decision and endorsed Mr. Sande's recommendation of a $0.17 per gallon tax for LPG for energy equivalency. Mr. Allard asked if diesel needs to be taxed at $0.27 per gallon, LPG at $0.17 per gallon, and CNG at $0.23 for "a level playing field." Ms. Foley responded yes. Chairman Marvel asked what was the tax on ethanol. Ms. Foley replied $0.23 per gallon. Mr. Clete Kus, Principal Planner, Clark County Department of Comprehensive Planning, identified his responsibilities include preparing air quality plans and managing air quality programs. He read into the record his prepared testimony (Exhibit C, Page 1, Paragraphs 1 and 2, and Page 2) regarding the Department's support of A.B. 421, as amended. He added unlike methanol and ethanol, currently listed in NRS as alternative fuels, LPG and CNG are being utilized and the technology is proven. Chairman Marvel asked what Mr. Kuz was endorsing; the bill as written, 1st Reprint. Mr. Kuz stated that was correct. He requested the written testimony of Mr. Dan Hyde, Vehicle Services Manager, City of Las Vegas, be accepted for the record (Exhibit D.) Chairman Marvel asked what was the actual product of the study committee. Mr. Zuend responded the study committee's recommendation was to remove the fictitious conversion formula for LPG and set the tax rate at $0.067 per gallon. He stated the issue of CNG was not discussed. The proponents of CNG, particularly the gas companies, had wondered why CNG was not receiving the same tax break. The response by the study committee was the tax break was already being received by the one Las Vegas company since the tax equated to $0.067 after the conversion formula was applied. Chairman Marvel inquired if there had been discussion about ethanol by the study committee. Mr. Zuend answered there may have been brief commentary on other fuels but it was not substantive and was at the committee's final meeting. Mr. Tom Fronapfel, Assistant Director, Planning and Program Development, Nevada Department of Transportation (NDOT), testified the bill as rewritten is substantially better than the original version and the Department agrees with the air quality benefits. He stated regardless of the fuel source the vehicles do the same amount of damage to the road network and there is currently a $350 million backlog in existing road maintenance efforts which will take approximately 12 to 15 years to alleviate at the current tax structure. The Department would oppose any reduction in revenues to the highway fund. Chairman Marvel asked what amount of an increase in tax would Mr. Fronapfel propose. Mr. Fronapfel responded the Department would agree with Mr. Sande's comments regarding "leveling the playing field" based on energy value for the alternative fuels. Mr. Charles Bosch, Chief, Operations Analysis Division, Nevada Department of Transportation, testified over half of the state's revenue is from motor fuel taxes and the reduction being proposed may not be large now but it could be in the future. The Department is opposed to the way the $0.067 was developed as it was based on a fictitious formula. He stated Mr. Sande's testimony mirrored the Department's viewpoint. Chairman Marvel closed the hearing on Assembly Bill 421. He opened the hearing on Senate Bill 366. SENATE BILL 366 Increases number of judges of family court in eighth judicial district. Ms. Christina Chandler, Family Division Administrator, representing the Eighth Judicial District Court, testified in support of S.B. 366 requesting two additional family court judges for Clark County. She submitted supporting documents (Exhibit E) depicting the need in Clark County. She reviewed the genesis of the family court and added the Legislature had determined the funding mechanism would be an ad valorem tax and the make-up of the court would be six judges. She stated six judges was a compromised figure; the requested number of eight judges had been based on the caseload at the time. She reviewed caseload figures in 1992 reflected nineteen judicial officers handling in excess of 21,000 family and domestic cases, giving an average of 1,032 per officer. In 1993 Clark County had 10 judicial officers and 25,000 cases, increasing the average to 2,500 cases per judicial officer. Ms. Chandler stated currently there are 11 judicial officers handling over 29,000 family and juvenile domestic cases resulting in an average of more than 2,600 cases per officer. She continued the Rose Commission completed an assessment of Nevada court workloads and found in order to continue with the family court concept Clark County would need, at least, six additional family court judges in order to survive. The data was based on information provided by the National Council of Juvenile and Family Court Judges and was supported by the Nevada Council on Family and Juvenile Court Judges. She explained the records and caseload national averages were analyzed in three comparative locales: Contra Costa, California; Pima, Arizona; and Ventura, California. The Rose Commission recommended the average caseload filings per juvenile or family court judge should be 1,400 cases per year. The Clark County judicial officers manage about 2,700 cases/filings; 45% over the national recommended manageable average for judicial officers. She added the Commission recommended Clark County's civil/criminal judges be increased; however, Clark County's judges determined the greater priority was family court judges. She detailed the average available time per case is 39 minutes. There are uncontested cases which take less than 39 minutes but many cases are complex and require multiple, protracted hearings and various agency referrals. The consequences of the caseloads are families languish in the system, domestic violence increases, children are torn within families, and other hardships occur. Chairman Marvel stated he understood the increase has already been funded. Ms. Chandler confirmed it had been funded. Chairman Marvel commented the Committee understands the needs of the court. Mr. Fettic questioned the fiscal note which indicated no effect on State Industrial Insurance but reflected an appropriation from the state general fund of $100,000. Mr. Mark Stevens, Fiscal Analyst, LCB, answered the fiscal note was based on the original bill which did not have an appropriation. He could not remember how many new judges were built into the district court salary budget; seven or nine. During budget closings the new judges were eliminated and the Ways and Means Committee decided to add the necessary appropriation for the recommended new judges to S.B. 366. The bill adds two judges and appropriates $100,000 for the final six months of the 1995-97 biennium. Mr. Spitler asked where are the ancillary costs absorbed, such as, office space, clerical support, and staff. Ms. Chandler replied the ancillary costs of $500,000 and $700,000 per judicial officer are borne by the county. Mr. Spitler stated he did not understand what Mr. Stevens stated. Mr. Stevens clarified the state pays the salary for the judges and the additional costs are borne by the local governments. The $100,000 would pay the salary costs of two additional judges in the final six months of the upcoming biennium. It would then be an ongoing expense. Mr. Spitler asked if it was built into the budget. Mr. Stevens responded the Supreme Court had placed new judges into their salary budget; Ways and Means and Senate Finance eliminated the positions from the budget and indicated S.B. 366 would recommend a number of new judges and an appropriation would be added based on the number of judges recommended. He added he thought Clark County had agreed two judges were appropriate and no other county indicated more judges were needed. He noted both of the judges in the bill would be allocated to the family court. Chairman Marvel closed the hearing on Senate Bill 366. He opened the hearing on Senate Bill 562. SENATE BILL 562 Eliminates office of coordinator of program for substance abuse, education, prevention, enforcement and treatment. Mr. John Orr, Assistant Director, Department of Employment, Training and Rehabilitation, described the purpose of the bill was to align NRS 458 with actions already taken by the Ways and Means Committee. Mr. Stevens elaborated the bill was introduced by the Senate Finance Committee to match up the statutes with budget closings. The "drug czar" was to be transferred to the Parole and Probation Division based on previous actions of the Ways and Means and Senate Finance Committees. This resulted in the introduction of S.B. 562. This bill must be passed to match the budget closing of both money committees. Chairman Marvel entertained a motion. ASSEMBLYMAN TIFFANY MOVED TO DO PASS SENATE BILL 562. ASSEMBLYMAN ALLARD SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMEN EVANS, ARBERRY, HETTRICK, GIUNCHIGLIANI, AND CHOWNING WERE NOT PRESENT FOR THE VOTE. Chairman Marvel opened the hearing on Senate Bill 470. SENATE BILL 470 Makes appropriation to department of education to develop and carry out new high school proficiency examination. Mr. Kevin Crowe, Director, Planning, Research, and Evaluation, Department of Education, representing Superintendent Mary Peterson, expressed the Department's strong support for S.B. 470. He introduced Dr. Thomas Kline, an expert in test and measurement and in charge of Nevada's proficiency examination program. Mr. Crowe discussed points of the bill: 1) The bill would allow new exit examinations to be put into place. The need for accurate, high standard examinations have been voiced by employers, post-secondary schools, parents, and citizens. 2) The bill fulfills the program's primary legislative intent which is mandated under NRS 389.015. The intent is to empower the Department to insure all high school graduates have adequate skills in the basic core academic areas. 3) The existing staff is busy maintaining the existing program which currently scores approximately 50,000 examinations annually which are scored and reported back to the teachers within 3-5 weeks. 4) The bill would provide the capacity to continually update examinations and have new forms of the examination go on-line annually. Dr. Thomas W. Kline, coordinator of the Nevada Proficiency Program, stated the examinations currently in use have been used for five years. He felt it would be naive to think the content of the tests are not well known throughout the state. It is necessary to upgrade and replace the examinations to have a better indicator of a student's skills and provide more information to teachers about an individual student's abilities for remedial action when a student fails to pass an examination on a first attempt. Ms. Tiffany referred to the handout, "Budget Account 2697-Develop and Maintain New Tests in Reading and Mathematics for the High School Proficiency Examination Program at Grades 11 and 12/Adult" (Exhibit F), and asked Dr. Kline to explain the reducing amounts in each fiscal year noted in Line Item 7060, Contractual Service. Dr. Kline responded in the first year of the appropriation (FY 96) $75,000 is set aside for an external contractor to review the Department's procedures in activities, such as, bias review, equating different forms of the test, and other technical matters in order to have external expertise if the test is ever challenged in court. Ms. Tiffany inquired why the amounts change; why is it "front end loaded." Dr. Kline replied because the expenses are maximal at the time the examinations are developed. He added once the examinations are developed and the initial four forms are equated only a single form of the examination would require additional review and equating in subsequent years. Ms. Tiffany asked how the amount for the contractor was determined; was someone chosen and a bid received. Dr. Kline answered in an effort to arrive at a cost three different, nationally known, contractors were asked to submit bids for conducting the entire process. The amounts, including the estimates for the entire development effort, were almost $1 million. Mr. Spitler asked what the difference is between what is being done currently and what is being proposed. Dr. Kline responded the Department is currently relying on examinations developed in 1988-89. He stated a major difference, in the examinations to be developed under S.B. 470, is the examinations would be criterion referenced. Currently the criterion for passing is the student scores higher than the lowest 16% of students who took the examination the first time is was administered. The new examinations would require students demonstrate particular levels of academic skills in order to pass. Mr. Spitler inquired when would the tests be given. Dr. Kline answered currently the tests are administered in the spring of the eleventh grade. Students who do not pass at that time have three additional opportunities before graduation, in twelfth grade, to retake and pass the examinations. An additional opportunity is provided after graduation. Mr. Spitler asked if a student is able to graduate if he fails the tests. Dr. Kline responded if the student does not pass all three examinations by graduation the student will not receive a standard high school diploma; they may receive a certificate of attendance. After graduation an individual who has not passed one, or more, of the examinations may continue, through adult education, to improve academic skills and qualify to take any test not passed until the test is passed. Mr. Spitler inquired if the new tests are replacements for those currently given. Dr. Kline responded they are replacements. Mr. Spitler asked how much will the Department's budget decrease if the bill is passed, based on the fact the old tests would not be given. Dr. Kline replied the new tests would be expected to cost somewhat more than the previous tests; a decrease in the current budget would not result. He added the ability to keep the tests current with the state course of study and curriculum being taught was built in. Mr. Close inquired if any of the money was directed toward providing the examination or just the development of the examination. Dr. Kline answered the money provided in the appropriation is to develop, print, and implement the test no later than the 1997-98 academic year. Mr. Close asked why it would take three years to develop the test. Dr. Kline explained it is a complex process, particularly for a "high stakes" examination. He stated courts have ruled a high school diploma is a property right and, as such, there have been many challenges that a student who does not pass the examinations is being denied a property right-- a standard high school diploma. The test development must be done carefully; the content must be aligned with the state course of study and curriculum taught in the school, and students must be provided with adequate time to learn the materials covered in the test before they are tested. Ms. Tiffany wondered if there was a similar examination somewhere in the other states. Dr. Kline replied there are fifteen similar examinations in fifteen other states. The other states, however, have developed their own program and assessment because the assessments must match those states' course of study. He explained states' course of study are not uniform. Ms. Giunchigliani noted Senate Bill 386, Senator Raggio's accountability bill, also deals with changing the examinations. She asked if it was for only the 4th and 8th grade examinations. She acknowledged S.B. 470 was dealing with the 11th and 12th grades and noted the difference. Vice Chairman Tiffany closed the hearing on S. B. 470. Chairman Marvel asked the Committee to consider S.B. 366 to entertain a motion. ASSEMBLYMAN CLOSE MOVED TO DO PASS SENATE BILL 366. ASSEMBLYMAN DINI SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMAN EVANS AND HETTRICK WERE NOT PRESENT FOR THE VOTE. Chairman Marvel opened the hearing on Assembly Bill 631. ASSEMBLY BILL 631 Revises distribution of revenue received from lease of federal land. Assemblyman Roy Neighbors, District 36, explained the reference to mineral leases is not about gold, silver, or anything to do with net proceeds. The bill concerns geothermal, oil, royalties, land leases, gravel, and things of that nature. He stated for every dollar the federal government collects from the leases and royalties, etc., $0.50 is returned to Nevada. Since the inception of the law there has been only one administrative change (amendment); an administrative fee charged by the federal government for collecting the money. He distributed a handout received from Mr. Doug Soleida regarding data received to prepare the 1992/1993 Nevada Bureau of Land Management (BLM) Progress Report (Exhibit G.) Mr. Neighbors stated the impact could be as much as $7-10 million, which he prefaced as in "the eye of the beholder." He asked, where is that impact--with the state or with the county; he stated he would explain. Mr. Neighbors testified he had been reviewing this issue since 1975 and $150 million has come back to the state. In 1985 a BLM administrator asked Mr. Neighbors if he had ever reviewed the federal law regarding how the money should be distributed. He researched the federal law and determined some of the money should come back to the counties. At that time a threshold of $4 million was suggested; anything over the threshold amount would go to the counties. He noted currently the $10 million goes to the distributive school account which is probably the big issue. Since the $10 million threshold was accepted the revenue has not been over $10 million. He pointed out no money has ever been provided to the counties. He noted, over the years, he has tried to change the formula but has been unable to. He mentioned he is the only signer on A.B. 631; he did not ask anyone else to sign because they may think money is being taken from the distributive school account. Mr. Neighbors discussed the handout: Item 1- Direct Cost Expenditures. He stated the amounts are federal money and not as much of a concern. Item 2 - Disbursements by State & County which lists the amounts each county has generated towards the mineral tax. Item 3 - Federal Mineral Revenue Disbursements..., Fiscal Year 1993. He pointed out the memo text states the report is for internal federal government use only, but he had been able to obtain a copy. It is also incomplete for 1993. He noted the language of the report, "Amount paid to..." and stated he could assure none of the counties received a dime from the shown distributions of money. Item 4 - Payment in Lieu of Taxes (PILT), the Santini-Burton Act. He included this item so no one would be confused between PILT and the mineral tax or net proceed. Item 5 - general information on various topics. Item 6 - Nevada's Oil Production and Royalties. He stated about 85% of the oil comes from Nye County. Chairman Marvel interrupted Assemblyman Neighbors' presentation and asked if he would mind breaking for a few moments to allow the Committee to receive subsequent testimony on A.B. 502 and A.B. 581 from parties now available to testify. Chairman Marvel reviewed A.B. 502 was heard on June 19, 1995 and it needs to be expedited. ASSEMBLY BILL 502 Makes various changes relating to discriminatory practices. Ms. Giunchigliani commented part of the bill was housekeeping to clarify jurisdictions and thought the bill would help local governments and the state save money when they process anything dealing with the Nevada Equal Rights Commission (NERC). Some of the housekeeping language from the Department of Training, Employment, and Rehabilitation was included. Mr. George Cott, Clark County Affirmative Action Manager, testified Clark County is in support of the bill as it will help the community to respond to cases brought by the state agency rather than the federal agency. Currently they must deal with offices outside of Nevada which becomes costly. He added if Nevada's law is not changed they will still need to deal with the federal agencies. Chairman Marvel entertained a motion. ASSEMBLYMAN GIUNCHIGLIANI MOVED TO DO PASS ASSEMBLY BILL 502. ASSEMBLYMAN TIFFANY SECONDED THE MOTION. THE MOTION CARRIED. ASSEMBLYMEN DINI, EVANS, ARBERRY, AND HETTRICK WERE NOT PRESENT FOR THE VOTE. Chairman Marvel requested the Committee to consider Assembly Bill 581 which was heard June 21, 1995. ASSEMBLY BILL 581 Makes various changes concerning department of business and industry. Mr. Price stated he had a concern about the relationship of the attorney for the injured workers who could potentially represent employees opposed to the agency. He noted this appears to be a conflict for a law firm and asked Ms. Rose McKinney- James if she saw a problem with this activity outside her agency. Ms. Rose McKinney-James, Director, Department of Business and Industry, responded whenever there is litigation and a possibility for the Department or an employee, or an activity of the Department to have impact on the litigation there is the potential for conflict. She stated it is difficult to say with sureness where the Nevada Attorney for Injured Workers should be. She referred to the decision made during reorganization of state government in 1993 to place the attorney within the Department. It has worked well; there has been recognition for the potential of conflict. She stressed she does not engage in any intervention in the policies established by these entities needing to maintain their independence. She could support a decision, if it is made, to remove the Nevada Attorney for Injured Workers from the Department. She would raise some concern due to the structure of the Director's Office budget and any movement would have an impact on the budget. Ms. Giunchigliani stated she wished to make an amendment. Vice Chairman Tiffany interjected no action was going to be taken on the bill as too many people were gone. Ms. Giunchigliani noted time must be given for this issue to work. The previous amendments suggested should be considered and also, perhaps there could be a sunset in 1997, under the jurisdiction of the director, for items `M' through `R', on Page 4. There would then be two years to see what happens, how it works, and what the impacts are. Otherwise, the intent of A.B. 581 would be destroyed. Vice Chairman Tiffany asked if it had been decided to remove Lines 9-16 on Page 5. Ms. McKinney-James responded there were some concerns related to Section 2 but did not recall discussion about eliminating the section. The language offered in the Department's technical amendment was crafted in a specific response to the input from the dairy commission and others. She referred to a previously distributed handout and recollected Chairman Marvel's question regarding how many boards and commissions are within the Department and the answer being 12 boards and commissions. She noted only two have taken exception to what is being attempted by A.B. 581. Some of the agencies have fiscal and management control issues which is why the steps are being taken to address the issues. Vice Chairman Tiffany returned the Committee discussion to A.B. 631. Assemblyman Neighbors continued by referring to a listing reflecting money received by the state since 1975 (Exhibit H) and stated Nye County takes a position that $70 million of the $147 million has gone to the wrong area. He submitted a document reflecting apportionments to the distributive school account (Exhibit I.) He pointed out the money received versus the money paid in by comparing Clark County and Nye County. He reviewed the current law, NRS 328.450 (Exhibit J.) He noted his proposal is for each dollar collected on federal payments, 25% would go to the school district in the county effected, 25% would go to the Department of Business and Industry for grants in those mineral areas, and 50% to the county from which the minerals and geothermal are attached. Mr. Neighbors reviewed the federal law, 30 U.S.C. #191., Disposition of moneys received (Exhibit K). He then submitted a letter of June 1, 1995 from the Legislative Counsel Bureau (Exhibit L) and pointed out the conclusion, Page 5, stating the reserving of the $10 million received exclusively for educational purposes does not comply with the objectives and spirit of the federal law. He noted an amendment and options (Exhibit M.) He reiterated the money has been put into the wrong account for a number of years; the federal law should have been implemented. He concluded if the Committee should decide he is correct he would be willing to sit down with the school system to discuss a phase-in procedure. There being no further business before the Committee Vice Chairman Tiffany adjourned the meeting at 9:33 a.m. RESPECTFULLY SUBMITTED: Jacque Sneddon, Committee Secretary Assembly Committee on Ways and Means June 22, 1995 Page