MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session February 23, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Thursday, February 23, 1995, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews GUEST LEGISLATORS PRESENT: Assemblyman Marcia de Braga STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Ronald T. Steele, Program Analyst Sue Parkhurst, Committee Secretary OTHERS PRESENT: Deb Erickson, Budget Analyst, Budget Division, Department of Administration Kenny Guinn, Interim President, University of Nevada, Las Vegas Ashok Dhingra, Vice President for Finance, University of Nevada, Reno Jim Richardson, Lobbyist, Nevada Faculty Alliance Bob Gagnier, Executive Director, State of Nevada Employees Association (SNEA) Rose McKinney-James, Director, Department of Business and Industry Tim Hafen, Chairman, State Board of Agriculture Jack Armstrong, M.D., Administrator, Division of Agriculture, Department of Business and Industry Robert Gronowski, Director, Plant Industry, Division of Agriculture, Department of Business and Industry Steve Mahoney, Chief, Bureau of Livestock Identification, Division of Agriculture, Department of Business and Industry Doug Busselman, Executive Vice President, Nevada Farm Bureau Joseph Guild III, Lobbyist, Nevada Cattlemen's Association Pete Paris, Chairman, State Predatory Animal and Rodent Committee Steve Fairaizl, Assistant State Director, Animal Control Damage Division, U.S. Department of Agriculture Stephanie D. Licht, Executive Secretary, State Board of Sheep Commissioners Tammy Rae Wright, Management Assistant, Nevada Beef Council Robert R. Barengo, Chairman, State Dairy Commission Bryn Armstrong, Executive Director/Secretary, State Dairy Commission Jackie Burris, CPA and Management Analyst II, State Dairy Commission Rich Lee, National Director, Nevada High School Rodeo Association Frederick Dressler, President, Nevada Junior Livestock Show Board Sue Hoffman, Member, Nevada Junior Livestock Show Board Senator Raggio requested the presentations of testimony be as concise as possible in deference to the limited time available. SENATE BILL 117: Authorizes financing of parking facilities with certain revenue bonds of University and Community College System of Nevada. Kenny Guinn, Interim President, University of Nevada, Las Vegas (UNLV), testified in support of S.B. 117. He provided a historical account of what led to the proposed legislation. In 1971 a revenue bond was passed by the state allowing the university system to bond up to $10 million for housing. UNLV exercised its option and sold $7.5 million in bonds, all but $4.2 million of which was used for the housing that currently exists on the campus. The remaining $4.2 million was set aside for Greek housing on the university campus; however, the modern tendency throughout the country seems to be not to have sorority and fraternity houses on the campus because of the costs or scarcity of land and the freedom desired by the sororities and fraternities, and the Greek housing was never built. The bonds were sold at 6.4 percent. Mr. Guinn described the situation regarding the $4.2 million portion of the original bond sale as a revenue bond having been sold, but with no revenue realized. After analyzing the situation it was determined that currently, with the payments being made out of the principal, the value of the $4.2 million has decreased to $3.2 million. The payment is about $372,000 per year. A substantial negative arbitrage exists which UNLV cannot afford, Mr. Guinn stated. After meeting with bond counsel, Mr. Guinn continued, it was determined the $3.2 million balance of the bond issue could be used for something other than housing. UNLV currently does not have a need for housing, but has a tremendous need for parking facilities. Since UNLV is already paying on the bond and soon will have nothing left but a 20-year payment schedule with no revenue to show for it, it is being proposed under S.B. 117 that authority be given to modify the previous law of 1971 to allow use of the $3.2 million for functions other than housing. The university would use the authority to construct parking facilities in a location that conforms to UNLV's master plan. The reason for the bill is to ensure the institution does not violate its bonding covenants. Senator Raggio requested the written opinion of the bond counsel for the university indicating its approval of the proposed use of the revenue bond. The letter is attached to these minutes as Exhibit C. Mr. Guinn noted a new parking garage will cost at least $5 million to $7 million and asked the committee to amend S.B. 117 to not only authorize the use of the bond revenue for parking, but to increase the amount of the authorization to the original $10 million. After some discussion on the amount of bonding authorization actually being requested, Senator Raggio suggested UNLV work with the Legislature's Fiscal Analysis Division to determine the amount that can and should be authorized. Ashok Dhingra, Vice President for Finance, University of Nevada, Reno (UNR), provided testimony in support of S.B. 117. He told the committee UNR has completed plans for building a parking structure that would cost about $8.5 million and would provide over 1,000 parking spaces. A feasibility study is under way, and the preliminary information indicates that if the university relies entirely on the parking permit fees to pay for the parking garage, an increase of nearly 300 percent in the fees would be required over the next 8 years. UNR cannot impose such a large increase on its constituency of faculty, staff, and students, Mr. Dhingra stated, and is therefore seeking some combination of state support and parking permit fee revenues to pay for the new parking facility. UNR supports S.B. 117 because it may be necessary for the revenue bond option to be used to fund a portion of the proposed parking garage, and the authorization for such use would be provided by this measure. Mr. Dhingra said UNR will return to the Legislature to request a specific authorization and dollar amount at such time as it is ready to pursue this option. For the present, UNR simply wishes to support the concept of using the revenue bonds for parking facilities. Senator O'Donnell inquired as to the parking fees charged at UNLV and UNR. Mr. Guinn said UNLV will institute an annual fee of $30 for students and $60 for employees beginning in September 1995. Mr. Dhingra said UNR currently charges $25 for students and $50 for faculty and staff. Senator O'Donnell remarked he has received complaints about the great difficulty in finding parking spaces at UNLV and UNR, and he applauded the fact the problem is being addressed. Mr. Guinn indicated the issue is not simply whether parking space can be found but whether convenient parking can be found. Jim Richardson, Lobbyist, Nevada Faculty Alliance, stated for the record the alliance's support for changing the language in S.B. 117 as recommended in the testimony above. Bob Gagnier, Executive Director, State of Nevada Employees Association (SNEA), said SNEA does not oppose the bill, but takes issue with the proposed revenue source. He said a bill now in the Assembly, Assembly Bill (A.B.) 168, would prohibit parking fees within the university system should it pass. SNEA strongly opposes having to pay the parking fees, Mr. Gagnier stated. ASSEMBLY BILL 168: Requires board of regents of University of Nevada to exempt all employees of University and Community College System of Nevada from payment of parking fees. Senator Raggio asked Mr. Gagnier what other source of revenue the university would have with which to build a parking garage. Mr. Gagnier replied the capital improvements program could be used, as it has been for other buildings. Mr. Guinn said the classified employees at the university have indicated opposition to the proposed $60 annual parking fee, which translates to slightly less than 25 cents per day for parking. A subcommittee of employees and students is currently working on a recommendation to set aside free parking space on campus property, probably on the west side of the Thomas and Mack Center, for those who do not feel they can afford the parking fee. Mr. Guinn said the alternate parking would be free although not convenient and will be part of the university's parking plan. Senator Raggio closed the hearing on S.B. 117. He requested that the committee be furnished the proposed amendment that would accommodate the requests communicated by Dr. Guinn. Plant Industry - Page 845 Rose McKinney-James, Director, Department of Business and Industry, introduced herself and several persons who were present to testify on agriculture-related budgets. They were Tim Hafen, Chairman, State Board of Agriculture; Jack Armstrong, M.D., Administrator, Division of Agriculture; and Robert Gronowski, Chief, Bureau of Plant Industry, Division of Agriculture. Senator Raggio acknowledged Mr. Hafen's previous service in the Nevada Legislature and welcomed him in his appearance before the committee. Mrs. McKinney-James told the committee Mr. Gronowski would present the budgets for the plant industry bureau. Mr. Gronowski said the Bureau of Plant Industry protects, promotes and regulates agriculture in the State of Nevada. It performs 19 regulatory and service programs for agriculture that include such activities as licensure, inspections, certification of crops for sale and for export, and analysis of seeds, pesticides, fertilizers, petroleum and antifreeze products. In decision unit M-100, Inflation, the recommended funding for a projected increase in non-state owned rent pertains to the agency's leased building on Capital Hill in Reno, Mr. Gronowski said. The 10-year lease will expire on June 30, 1995. The building is old and the maintenance has become considerably expensive, Mr. Gronowski stated. The bureau has proposed that the owners of the building assume the cost of janitorial services and maintenance. Mr. Hafen elaborated on the rent item. He reiterated the building is old, and under the current lease the bureau has been paying about 65 cents per square foot and has been responsible for the maintenance. The new lease that has been proposed increases the cost to 99 cents per square foot, with the owners handling the maintenance. The proposal for the new lease triggered efforts by the State Board of Agriculture to seek other alternatives for space. Mr. Hafen said the board has determined the agency might be able to move into a new building for the same amount of rent or possibly a little less, including maintenance. Such an arrangement would provide a much more adequate building, he stated, because the current facility is completely inadequate at times in terms of heating and cooling. The board may attempt to negotiate a lease for 1 year in the existing building with the intention of relocating to a new facility when the lease expires. Mr. Gronowski noted the facility is supported by the bureaus of livestock inspection and veterinary medical services as well as the plant industry bureau. Regarding decision unit E-450, Natural Resources Management and Protection (page 848), Mr. Gronowski said the recommendation in this budget would reestablish a noxious weed control program in the state. The noxious week program previously funded in the plant industry budget was eliminated during the budget cuts in the last legislative session. It would be a cost-sharing enterprise with either the counties or the Nevada Department of Transportation (NDOT) to control weeds along the highways, in parks and other locations. In response to questioning from Senator Raggio regarding the nature of the weeds and the need for the weed control program, Mr. Gronowski said there are many noxious weeds in the state, and they deprive farmers and the public of water and they deprive wildlife of food sources. Failure to control the noxious weeds will cause the weeds to overrun the state, he stated. Senator Raggio inquired as to the source of 50 percent in non-state funding proposed in the plant industry budget. Mr. Gronowski replied the funds would come from cooperative agreements with either the counties or NDOT. The weed control projects would only be undertaken where the funds are provided by the entities involved. With respect to decision module E-710, Replacement Equipment, Mr. Gronowski explained the two pickup trucks that would be replaced through this request are over 10 years old, and both of their engines have accumulated mileage of more than 100,000 miles; the cost of repair has become excessive. The replacement vehicles would be stationed in Las Vegas and in Reno. Senator Raggio requested comment on the results of the internal audit of this agency and the steps being taken to address the problem areas. Mrs. McKinney-James said the audit conducted by the Internal Audit Division of the Department of Administration identified a variety of accounting noncompliance issues. The Division of Agriculture has provided to the internal auditor a series of recommended steps which incrementally will respond to each of the concerns, Mrs. McKinney-James stated. She said the response was recently submitted and the division is actively pursuing the adjustments. Senator Raggio required more specifics with respect to the audit findings and the controls being implemented to deal with them. Mrs. McKinney-James stated she would summarize the findings and would then defer to Dr. Jack Armstrong to provide the specifics of the agency's response. Mrs. McKinney-James said the audit determined the Division of Agriculture was out of compliance with a variety of laws and regulations applicable to state agencies in general, that it did not comply with a variety of federal regulations, that it was specifically out of compliance with respect to state laws and regulations for the establishment of outside bank accounts, and that the division's internal controls were generally not in compliance with the Nevada Revised Statutes (NRS) 353a. In addition there was a specific finding that the division charged certain owners of commercial measuring devices for inspections that were not actually performed. The number of such inspections was 3,733, and the amount overcharged was $29,600. Senator Raggio asked what is being done with respect to the owners of the commercial measuring devices who were overcharged. Mrs. McKinney-James deferred to Dr. Armstrong to respond. Dr. Armstrong said the State Board of Agriculture several years ago approved billing in advance, once a year, for the fees for all measuring devices. What has been discovered is that not every device in the State of Nevada has been tested even though the charges were imposed. Dr. Armstrong said there is a mechanism whereby a scale operator can request a refund, although many persons may have been unaware of this option. As of July 1 the agency will return to the practice of billing at the time of service so that when a device is tested, the billing will be generated and then paid. It is the board's intention to refund the overpayment of $29,600. Dr. Armstrong said the source of the funds to be used for the refunds has been under discussion. One avenue being considered is a cost savings that will result from the delay in hiring a replacement for the administrator who recently retired, and from the retirement of a weights and measures supervisor. It is anticipated a new administrator will be hired within 90 to 120 days. Dr. Armstrong said the interim administrator has been doing a fine job and has vigorously responded to the audit findings. Mr. Gronowski resumed his review of the plant industry budget requests. He called attention to the related one-shot appropriation request (page A37) for $175,942, which would allow for replacement of the current weights and measures truck in Las Vegas. Senator Raggio asked the purpose and need for the request. Mr. Gronowski said the current large scale testing vehicle in Las Vegas and related equipment are no longer safe to operate and must be replaced. The request would also provide a gas testing device that would speed up the testing of gas stations by 9 to 10 times and would supply safety clothing for inspectors. Grade and Certification of Agricultural Products - Page 851 Mr. Gronowski said this budget is funded through fees collected from requested services from the Division of Agriculture for grading and certification of products and from federal funds provided for inspections, including inspections at airports on foreign aircraft arriving in Nevada. Concerning decision unit E-325, Business/Government Environment (page 853) in the enhancement budget, Mr. Gronowski said this item reflects a request from two industries. The garlic growing industry has requested the agriculture division to perform certification of the garlic so it can be exported to other states in the U.S. and to foreign countries; three seasonal agricultural inspectors (only one of which was recommended for funding) were requested for this purpose. The other industry is the garlic and onion dehydration plant in Empire, which Mr. Gronowski described as a unique operation using geothermal heat for the dehydration. Grading services are needed to ensure only onions and garlic of satisfactory quality are purchased for dehydration. The recommended 7-month seasonal Agricultural Inspector position would address this need. Senator Raggio inquired if the Agricultural Inspector position would be a contract position. Mr. Gronowski replied yes. The senator asked if the agency also works with the potato industry. Mr. Gronowski said yes and explained the potato inspectors grade the potatoes in Winnemucca for shipment throughout the country, and the grading services are paid by the "potato shed." Senator Raggio further inquired if the onion, garlic and potato industries are experiencing growth in Nevada. Mr. Gronowski answered that the garlic and potato industries are expanding. Garlic companies have been interested in Nevada because of its disease-free, insect-free environment and dry climate, he continued. Garlic growing has left California due to the increase in serious diseases, and Nevada has become the number one garlic seed producer in the U.S. Alfalfa Seed Research - Page 855 Mr. Gronowski said the alfalfa seed research budget is funded by "self-taxation" of the alfalfa seed producers. The funds are collected and used to fund research projects to benefit the alfalfa seed industry. The program has worked extremely well, Mr. Gronowski stated, and has produced desirable research results. Senator Raggio noted a number of the ranches in the Carson Valley area are recipients of the alfalfa seed research grants and asked Mr. Gronowski to expand on the program and related developments. Mr. Gronowski said the work being done includes integrated pest management to reduce the use of insecticides, research projects to control bee diseases that affect alfalfa, and cooperative efforts with the national alfalfa seed producers to promote the crop and increase the export market for alfalfa seed. Alfalfa seed is a good, profitable crop, Mr. Gronowski continued, and it affects income in Lovelock and Orevada, where it is grown. Senator Raggio asked about the source of funding for this budget. Mr. Gronowski said the funds are obtained from an assessment that is levied on all clean seed, at 41 cents per hundred weight. Agricultural Registration/Enforcement - Page 857 This budget is funded through fees collected from registration of pesticide, fertilizer and antifreeze and from two grants from the U.S. Environmental Protection Agency (EPA). The purpose of one of the EPA grants is to conduct enforcement of pesticide use, groundwater protection, worker protection and the endangered species program. The other grant is used to train restricted use applicators in the proper use and handling of the restricted use, hazardous chemicals. In response to a query from Senator Raggio regarding the location of the agency facilities, Mr. Gronowski said the laboratory portion of the program is housed in Reno, and the enforcement action is carried out in all of the agriculture division's offices. Senator Raggio inquired if the new position previously authorized by the Legislature has been filled. Mr. Gronowski replied yes and explained the position is for the new worker protection program developed by the EPA. The purpose of the program is to educate the workers on the EPA requirements and to help them set up a program so they are in compliance with and can enforce the EPA requirements. Senator Raggio asked if a decline in federal funding is anticipated. Mr. Gronowski said the federal government has indicated the same level of funding will be maintained. Senator Raggio said his inquiry is based on the fact the agency is projecting collection of $288,627 in federal funds for each year of the biennium, a decrease from the actual $360,341 collected in FY 1994. Mr. Gronowski replied there had been "a slight adjustment" in the last negotiation based upon the amount of agriculture in Nevada, but the federal agency has said the projected level will be maintained. Senator Raggio requested justification of the recommended transfer of $23,243 to partially finance two positions in the Director's Office of the Department of Business and Industry. Mr. Gronowski responded that in the last legislative session, the reorganizational savings were transferred to vacancy savings and this "allowed the agency to make up that program, justifiable out of other accounts." He further explained that some activities conducted by inspectors were paid out of the General Fund. The activities of these inspectors were charged against this fund and transferred to the plant industry fund to accomplish the vacancy savings. Regarding the enhancement budget, Mr. Gronowski said the request in E-450, Natural Resources Management and Protection, is a recognition of NRS 586.270, which was passed in the last legislative session and authorized a portion of the agriculture pesticide registration fees to be placed in a pesticide disposal fund. Nevada Administration Code (NAC) 586 allows $5 of every registration fee (currently $40) to go into the disposal fund. The disposal fund allows for the proper disposal of pesticides that are no longer useful and are harmful to the environment. Apiary Inspection - Page 863 Senator Raggio asked where the killer bees that have been migrating into Nevada are at present. Mr. Gronowski said they are 45 miles south of Laughlin and will be moving further north as spring approaches. The senator inquired what actions can be taken to deal with the killer bee situation. Mr. Gronowski replied the bees cannot be stopped from migrating into Nevada. The agency's program has been to educate responders such as fire department personnel, to implement education programs in the Las Vegas schools and to educate the general public about the need to become more knowledgeable about the bees in anticipation of their arrival. Mr. Gronowski said the agency's role will be to educate responders and other people as to how to deal with the bees, to identify the bees once they have arrived,and to inform people about the hazards of contact with the killer bees. Senator Raggio noted the agency has projected the occurrence of 25 killer bee incidents in 1997. Mr. Gronowski explained the basis for the projection and the process involved in the bees' infiltration of Nevada. Mr. Gronowski said the Apiary Inspection budget is supported by fees collected from in-state bee keepers and from bee keepers who enter the state to conduct pollinization. Senator Raggio inquired as to the importance of the inspections. Mr. Gronowski replied the inspections protect the bee keepers in Nevada and the pollinators who come into the state, so the bees stay healthy and can perform the pollination service needed for agricultural purposes. It was noted the budgets for Livestock Inspection (page 865) and Veterinary Medical Services (page 869) were to be presented out of sequence. Insect Abatement - Page 873 Mr. Gronowski stated insect abatement houses two programs, the first being vertebrate pest control. He said pocket gophers cause major damage to crops in Nevada. The agriculture division has the only registered product for control of this pest. The division prepares the bait and sells it to the growers, who reimburse the state for this service. Currently pocket gophers are causing major damage to agriculture and their populations are on the increase, Mr. Gronowski stated. The other program provides a fund for the eradication of other destructive pests, insects and noxious weeds when the grower fails to assume this responsibility. When this occurs the state performs the eradication and charges the grower to obtain reimbursement. Rural Rehabilitation Trust Fund - Page 875 Mr. Gronowski said this fund derives from the Depression-era program to help farmers. The federal government discontinued the program and turned over any remaining profits to the state to fund a junior agricultural loan program. Junior agricultural loans are available to youths 8 to 21 years old. Up to $10,000 can be borrowed for any bona fide agricultural product. A committee composed of community representatives such as 4-H leaders examines the projects requested for funding, approves those deemed acceptable, determines the likelihood of loan repayment, and funds the projects that are approved. Senator Raggio asked if all the loans funded in this budget are junior agricultural loans. Mr. Gronowski answered there are two components in this budget, the largest being the junior agricultural loans. The senator asked him to explain how the loan program operates. As an example, Mr. Gronowski said, a youth from a family involved in agriculture who is attending school and working with a 4-H leader, and who desires a hands-on learning experience in a particular aspect of the agriculture business, may seek a junior agricultural loan for this purpose. Many of the loans go toward funding what are called "cow-calf" operations, involving the purchase of a cow to produce calves. He said about 50 percent of the participants in this program go on to become farmers and ranchers. In response to questioning from Senator Raggio regarding whether the loans are repaid and the program's record with respect to loan repayment, Mr. Gronowski said the loans are repaid with 6 percent interest. Dr. Armstrong also responded, stating the program works very well. He said when the fund was transferred to the Division of Agriculture (previously the Department of Agriculture) there was a $96,000 balance. The program currently has assets of $200,000. Defaulting has occurred on only one loan. Dr. Armstrong emphasized the parental involvement and guarantee of the loans and the screening of the loan applicants by a local committee. He said there are small administrative costs and almost no losses, and the program is very successful. Senator Raggio inquired if the enhancement in E-325, Business/Government Environment (page 876) is intended to accommodate more junior agricultural loans. Mr. Gronowski replied yes and explained a large amount of funds have accumulated in the reserve account, and the agency has requested the balance forward to fund additional loans. Senator Raggio observed the request would decrease the reserve fund to $34,000. Mr. Gronowski affirmed this and said the purpose of this budget is to provide loans and not to have a large reserve account. The agency is therefore requesting that the funds be removed from the reserve account and made available for future loans. The program is administered by the State Board of Agriculture, and no positions are involved in this budget. Senator O'Donnell suggested the agency furnish information in its future budgets regarding the assets in this account as well as a breakout of the interest income. Dr. Armstrong stated the information is presently available. The senator said it would be helpful to have the information in the budget, because the particular budget is different from others in that it involves asset accounting in addition to the normal fund accounting. He reiterated his request for information in the budget regarding the interest income as well as the assets. Gas Pollution Standards - Page 879 Mr. Gronowski explained the gas pollution standards program was developed to ensure the agriculture division's automobile engines operate properly and that the gasoline use does not pollute the air. The charge of this program is to adopt, monitor and enforce fuel standards through fines imposed by the State Board of Agriculture. The funding is obtained from the transfer of funds from the Department of Motor Vehicles and Public Safety that are derived from the certificate fees charged for the pollution tests on automobiles in Washoe and Clark counties. The decision unit E-720 enhancement request for new equipment (page 881) would provide equipment for monitoring and detection of such phenomena as fuel blending, the practice of attempting to avoid paying taxes by blending the regular, taxable fuels with nontaxable fuels. Mr. Gronowski said the practice increases air pollution, and increasingly sophisticated fuel-blending methods are being utilized by organized groups who produce and sell the blended fuels. The equipment is needed to keep Nevada on the cutting edge of detection technology, he stated. It would be used in the laboratory that was built after construction of the facility was approved by the Legislature in the last legislative session. Senator O'Donnell called attention to statistics in the performance indicators that show there were 35 violations in 1994, 34 warnings were issued, and one administrative hearing was held. He requested Mr. Gronowski to elaborate on these statistics. Mr. Gronowski said the number of violations for 1994 was relatively low, for serious violations. Most of the problems involved occurrences in Las Vegas in which a major oil company's tank farm was contaminated with water containing a surfactant, and the major cleanup effort that resulted. Mr. Gronowski further stated the company spent a considerable amount for clean-up and to compensate individuals for the damages to their automobiles, and had solved the problem at the tank farm by installing a new lid on the major tank. Returning to the new equipment request in E-720, Senator Raggio asked about the requirement in several counties to add oxygenated fuel in the winter months. Mr. Gronowski said the regulations are monitored by Washoe and Clark counties and help to reduce air pollution. Livestock Inspections - Page 865 Steve Mahoney, Chief, Bureau of Livestock Identification, Division of Agriculture, Department of Business and Industry, said this budget is funded entirely by the livestock industry and no state General Fund money is involved. The bureau's mission is to protect the livestock industry from theft, illegal butchering and other losses. This is done through inspecting cattle at the point of origin, recording all brands in the state, enforcing livestock statutory laws, returning "lost and strayed" livestock to their owners, and licensing livestock dealers. The bureau currently has 8.25 full-time personnel and approximately 90 part-time deputy brand inspectors. Mr. Mahoney said the proposed budget was prepared prior to obtaining support and approval from the livestock industry (the Nevada Cattlemen's Association and the Nevada Farm Bureau) and a vote of the State Board of Agriculture to raise the fees, and some of the fees that are expected to be approved are in the budget. The agency is presently working with its budget analyst and the budget office to increase the revenues to be produced by livestock inspection and to include them in the proposed budget. In reply to questioning from Senator Raggio with regard to revising the budget and the anticipated completion time, Mr. Mahoney said the agency is planning to begin revising the budget immediately. He stated the agency's intention to do everything possible to preserve the balance in the reserve account. Senator Raggio noted the reserve is anticipated to decrease to $27,000 (by the end of the biennium) as stated in the budget. Mr. Mahoney affirmed this. The senator inquired about rerecording fees received by the agency every 4 years. Mr. Mahoney said about $210,000 in fees will be forthcoming in 1996. He anticipated the possibility of personnel cuts to address the problem. Senator Rhoads questioned Mr. Mahoney about an incident that occurred recently involving the theft of 300 head of cattle in Elko County. He asked if anyone in the livestock inspection bureau was disciplined as a consequence of the incident and if steps have been taken to ensure such incidents will not occur again. He voiced the opinion the brand inspection procedure allowed the incident to occur. Mr. Mahoney replied the bureau has had a part-time inspector for a number of years who had inspected the cattle. The brand had been altered in such a manner that it was nearly impossible to detect unless each animal had been clipped. Mr. Mahoney indicated the inspector has been admonished to more closely examine cattle; however, the bureau felt good detective work helped to uncover the problem. He said that had the district supervisor in Elko County not brought it to the cattle owner's attention, the brand alteration might never have been detected. It was missed by inspectors in Wyoming and in Nevada and was very difficult to detect, Mr. Mahoney stated. Senator Rhoads contended the cattle branding of the different ranches is easily distinguishable, and with the number of cattle being shipped out of state the problem should have been detected. Mr. Mahoney responded that the cattle ranch owner in question had made the mistake of allowing his ranch foreman, a trusted employee for over 20 years, to run his own herd along with the rancher's, and the cattle were very similar. Senator Rhoads pointed out the number of cattle being shipped was three times more than the foreman was running and suggested this should have become very obvious to the brand inspector. Mr. Mahoney said it did become obvious and the inspector alerted the livestock inspection bureau of the situation, along with the fact some mature cows had been clipped. As soon as the clipped cows were detected, the bureau contacted the cattle owner, apprised him there appeared to be a problem and enlisted his cooperation in prosecuting the offense. Mr. Mahoney noted the convicted cattle thief is incarcerated in prison in Carson City where he is serving a 10-year sentence. In further discussion on this matter, Senator Rhoads reminded Mr. Mahoney that several years ago the senator's cattle ranch lost 30 to 40 head of cattle to an unknown fate, and he blamed the problem on the brand inspection. Mrs. McKinney- James addressed the senator's remarks. She suggested he inform the livestock identification bureau of those brand inspection procedures he has identified as faulty so the bureau can examine them. Senator Rhoads agreed to do so. Senator Raggio indicated further hearing on the budget for this agency would be postponed pending revision of the budget, but invited comment from anyone wishing to testify at this point. Doug Busselman, Executive Vice President, Nevada Farm Bureau, expressed support on behalf of the farm bureau for the proposed increases in brand inspection fees and for other reasonable increases needed to finance the brand inspection program. He said the farm bureau favors funding the livestock identification bureau from brand inspection fees and from recording fees and does not support paying salaries from the General Fund. The Nevada Farm Bureau also recommends all state agencies be self- sustaining by raising revenue from the people served, Mr. Busselman continued. He reiterated the farm bureau's strong support for increasing the brand inspection fee to generate revenue for financing the brand inspection activities. A copy of the farm bureau's resolution in support of the fee increase is attached to these minutes as Exhibit D. Joseph Guild III, Lobbyist, Nevada Cattleman's Association, stated the cattle association also supports the proposed fee increase. The association's resolution of support is attached as Exhibit E. Veterinary Medical Services - Page 869 Dr. Jack Armstrong introduced himself as chief of the Bureau of Animal Industry, which administers the Veterinary Medical Services budget. He said the bureau accepts all of the base, maintenance and enhancement portions of the Governor's recommended budget. He called attention to the appropriation request on page A37 which would fund vehicle replacement and laboratory equipment. Mrs. McKinney-James informed the committee Dr. Armstrong had stated his intention to retire, but since then he has agreed to continue in his position. Predatory Animal and Rodent Control - Page 883 Pete Paris, Chairman, State Predatory Animal and Rodent Committee, said the predatory animal and rodent control (PARC) program is very important to the State of Nevada and its population. The committee's services range from taking care of the geese problem at the Reno airport, beaver damage in the Truckee River, and skunks in private dwellings, and controlling predatory animals that prey on domestic animals, wildlife and even, lately, humans themselves. Mr. Paris introduced Steve Fairaizl, Assistant State Director, Animal Damage Control Division, U.S. Department of Agriculture. He informed the committee Mr. Fairaizl would present this budget and answer questions regarding the services provided by the PARC program. Senator Raggio requested that the agency representatives discuss the problems addressed by the PARC program and some instances of its application. Mr. Paris said as a rancher he is most familiar with the situation as it relates to domestic animals, which are preyed upon by coyotes and mountain lions. Senator Raggio asked what kinds of problems are being experienced with respect to coyotes. Mr. Paris said the problem of coyotes is becoming increasingly serious in Nevada as the coyote population continues to expand tremendously and the pressures to protect the coyotes prevail. He attributed the problems less to insufficient efforts by the state to control the predators than to the efforts of entities seeking to protect them. Senator Raggio inquired as to the kinds of control programs being used to address the coyote problem. Mr. Fairaizl said the PARC works cooperatively with the animal damage control section of the U.S. Department of Agriculture and implements an integrated pest management program to deal with predator problems. He said the agency uses a combination of lethal and nonlethal controls, the latter being used whenever possible. Nonlethal controls include the use of guard dogs to protect sheep flocks and using such "scare devices" as sirens, whistles, propane, cannons and other means of breaking up a predator's normal routine. If the nonlethal controls fail, lethal control programs are implemented, including traps, snares, aerial hunting and calling and shooting. Continuing the budget presentation, Mr. Fairaizl said the PARC committee cooperates with the federal animal damage control (ADC) division and is authorized by NRS 567. The ADC was authorized by the Animal Damage Control Act of 1931. PARC's mission is to protect Nevada's agricultural, industrial and natural resources and to safeguard public health and safety through cooperative assistance, Mr. Fairaizl stated. The PARC is the agency primarily responsible for dealing with conflicts between human beings and wildlife, which it does using a variety of control techniques. Mr. Fairaizl highlighted the requests in this budget. Regarding decision unit M-200, Demographics Caseload Changes (page 884), Mr. Fairaizl said the full-time Field Assistant position for Battle Mountain is needed to deal with increased predator problems in that area. The maintenance budget also requests authorization for funds for travel and vehicle expenditures in decision module M-201. The recommendation in the M-202 category (page 885) would provide funds to cover aerial hunting. Mr. Fairaizl noted that in the vast rural areas of Nevada, aerial hunting is quite frequently the most efficient, and almost the only, method for actively covering large areas and hunting predators in those areas. Senator Raggio inquired if the funds requested are all from the General Fund or if they represent the state's share of federal funding. Mr. Fairaizl replied the specific funds are being requested as an appropriation from the state General Fund; however, the program is approximately 50 percent federally funded. The federal program is essentially a stand-alone program and is not reflected in the Executive Budget, but the federal government matches state funds "almost dollar for dollar" to perform the PARC work. Regarding the enhancement budget requests, Mr. Fairaizl said decision unit E-275, Consumer Treatment, would provide funding for in-state per diem costs. A one-shot appropriation for safety equipment (page A38) is also being requested. Senator O'Donnell inquired as to the extent of the problem with regard to coyotes at the lake level. He said he has seen them running across the road at the lake level for the first time. Mr. Fairaizl explained the jack rabbits run in population cycles of about 10 years; that is, every 10 years the population peaks and crashes. Up to 2 years ago or so the jack rabbit and coyote populations were very high, but the jack rabbit population has crashed and the coyote is now forced to prey on the only other food supply available, which is livestock and people's pets. This accounts for the more frequent encounters with coyotes in urban areas. Responding to Senator O'Donnell's question regarding whether a problem exists with respect to mountain lions, Mr. Fairaizl said there very definitely is a problem. He said the mountain lion population is probably at an all-time, record high due to abundant breeding as well as immigration from California. The mountain lions are very adaptive predators, and increasing numbers of them are encountering people in urban areas, Mr. Fairaizl stated. Senator O'Donnell asked if the PARC committee's activities dovetail with those of the wildlife agency in terms of issuing hunting tags. Mr. Fairaizl indicated there is not a correlation between the agencies in this regard. He said the PARC entity operates essentially on a depradation complaint basis and does not engage in preventative predator control, which is the responsibility of the Nevada Division of Wildlife. Grazing Board - Page 889 Mr. Fairaizl said the Grazing Board is a self-funded budget account, with the revenues being derived from grazing fees paid by ranchers. Currently there are only two grazing boards in this account, the Las Vegas and Winnemucca grazing boards, both of which are in the process of phasing out. The revenues are being accumulated in federal trust funds and managed through the federal Animal Damage Control program. The request in this budget is for spending authority to "spend down" the budget accounts to zero over the next biennium. The funds will be used for aerial hunting. Woolgrowers Predatory Animal - Page 891 Mr. Fairaizl said this account is also self-funded with revenues from the predatory animal tax levied by the sheep industry (20 cents per head) on its producers. A half- time position which cooperates with PARC is associated with this account, and the agency is requesting authority to continue the position along with aerial hunting operation costs. Senator Rhoads asked why the state cost allocation in this budget is so high, almost double what the work program was in 1993-1994, whereas there is no such allocation in some of the other (similar) budgets. Deb Erickson, Budget Analyst, Budget Division, Department of Administration, addressed the senator's question. She stated the following: Some of my input for the statewide cost allocation came in lumps and some of it came specifically to budget accounts. This one was specifically to the budget account, and as I looked at it probably the biggest part that was the increase was a new assessment from the State Library, and it was based on FTEs, as I recall. So that one raised specifically this particular line item. The other function that raises the statewide cost allocation is [that] it is something of about a 6-year process, so they go back and look at past costs and they add and subtract costs to come up with what their current assessment is going to be. So that is the function of why that one raised. Senator Rhoads requested the above information be presented in writing. Ms. Erickson agreed to furnish the written information and then further explained the state cost allocation situation. She said the reason there is no state cost allocation item in some of the budget accounts is that they are funded with General Fund dollars, and it would be inappropriate to allocate additional state funds to pay a General Fund assessment. Mr. Paris said the 20 cents per head assessed by the woolgrowers on themselves helps to free other state funds so they can address the various other PARC problems such as the geese problem at the Reno airport. The sheep industry is hard-pressed at this time, Mr. Paris observed, but the industry continues to impose the tax on itself to help keep the predator control program viable. Senator Raggio asked if the woolgrower industry is reasonably satisfied with the efforts being put forth (by the state agencies). Mr. Paris replied yes. Sheep Commission - Page 945 Mr. Paris said the sheep commission has overseen all matters related to the sheep industry for 87 years, especially those issues dealing with disease control and eradication. The disease control and eradication efforts have been very successful, he stated, and the diseases of heavy economic impact have largely been eliminated. The commission is currently cooperating with many agencies toward the control and/or eradication of scabies, club lamb, fungus and blue tongue, among other diseases. The money from the sheep industry's tax on itself, the sheep inspection tax, also goes to fund 4-H and junior livestock programs and awards, wool-classing schools for sheepmen, newsletters and other promotional activities of the woolgrowers' auxiliary, and to maintain communication and cooperation with the American sheep industry and the national organizations. Due to several factors, Mr. Paris continued, over 2 biennia the commission has gone from a financially stable position with a reserve of over $10,000 to a deficit situation. If the circumstances reflected in the budget presentation to follow were to come to pass, the sheep commission would not only be unable to pay state allocations or other future Department of Business and Industry assessments, but could not serve the industry for which it is intended to care. The commission is actively attempting to find solutions to the problems so it can continue to operate. Noting the budget indicates the reserve being depleted to the level of $2,854 by the end of the biennium, Senator Raggio inquired if this portends a problem in the next biennium. Mr. Paris deferred to Stephanie D. Licht, Executive Director, Board of Sheep Commissioners, to answer the senator's question and to present the budget. Ms. Licht directed the committee's attention to the budget summary on page 946. Referring to the $17,576 amount shown under Resources, Other - Non-state in the 1994-95 work program, Ms. Licht said the sheep inspection fund is funded by a 10- cent per head assessment on the sheep producers in addition to the 20 cents assessed by the woolgrowers predatory animal committee. Therefore, through the sheep commission, the industry assesses itself a total of 30 cents per head, 10 cents of which goes into the sheep commission fund. At present, the state flock is down to about 85,000 head, and at the amount of 10 cents per sheep that could reasonably be expected the amount of revenue would be $8,500. Most of the time the revenues have been from $9,500 to $10,000. Part of the reason for the lower revenues is that there are several border outfits that graze along California, Idaho and Utah borders, and they pay a prorated amount based on the length of time they are grazing in Nevada. There is a very large feed lot in Lovelock through which Superior Land runs quite a few sheep, and this brought the actual revenues for 1993-1994 up to $10,250. The $17,576 is a miscalculation, Ms. Licht explained, and it is not possible for that amount of revenue to come into this account. Senator Raggio noted the projection in the budget is for $9,500 each year. Ms. Licht said this applies for the next 2 years, but the carryforward balance is based on the $17,576, which means the reserve in the work program year would be reduced from $8,000 to $1,000. Senator Raggio asked if the sheep commission is prepared to recommend an increase or if some other solution is contemplated. Ms. Licht replied the commission is proposing some legislation to strengthen the law because several of the state's sheep producers have refused to pay their fair share. One sheep producer is currently $6,000 in arrears on his assessment, payment of which would mean $2,000 more for the sheep commission account. The proposed measure, Senate Bill 178, would strengthen the law to allow the sheep commission to collect interest penalties, court costs and attorney's fees. As the law stands now the commission can levy a fine or impound the sheep, but can take no further action if the sheep producer continues to refuse to pay. Ms. Licht said the sheep commissioners have offered to forgo pay for at least one of the next two biennia, which translates into $3,000 for the fund. SENATE BILL 178: Revises remedies available to state board of sheep commissioners with regard to delinquent taxes. Ms. Licht said the sheep industry is in dire straits at this time. At a recent meeting the sheep commissioners were told the increased losses to coyotes, the impending grazing fee hike, the fact that the national organization wants to pass a referendum to take funds away from the commission and the loss of the Wool Act have hammered the sheep industry, which is now "between a rock and a hard place" when it comes to raising taxes on itself. Senator Raggio commended Ms. Licht for the job she does and informed the new committee members that as a result of her persistent efforts, the state cost allocation in the last biennium was reduced measurably (by about half). Nevada Beef Council - Page 913 Mrs. McKinney-James announced Tammy Wright, who administers the council's day- to-day operations, would present the agency's budget in place of the council's chairman, Dallas Byington, who was unable to attend the hearing. Tammy Rae Wright, Administrator, Nevada Beef Council, said the council works with the national beef check-off program, which is based on a $1 assessment each time cattle are sold. A decrease in revenue for the coming biennium is projected in this budget. Collections of approximately $190,000 are anticipated. With the projected decrease in revenue the council has decreased its expense budget and have gone from 1.4 FTE (full-time equivalency positions) to 1.0 FTE. The out-of-state travel, in-state travel, operating expenses and distributions to the other national boards all have been decreased. Mrs. Wright noted that by federal law, 50 percent of all collections must be remitted to the national beef board. Mrs. Wright informed the committee that even though there has been an expansion in the cattle industry nationally, there has been a decline in Nevada. This concerns the council, and it is anticipated the beef producers will want to take a very conservative approach to their role in state programming. In response to Senator Raggio's questions regarding the distribution of revenues collected by the beef council, Mrs. Wright said about 25 percent is remitted to the national livestock and meat board, 50 percent is remitted to the beef board and 25 percent is used for in-state promotion. The senator inquired as to the types of in-state promotions used by the beef council. Mrs. Wright said the Nevada Beef Council lately has devoted much of its time to education, including partnering with the agricultural division, the Nevada Farm Bureau and the Nevada cattlewomen, who represent the largest vehicle for education and promotion of beef. Mrs. Wright further stated the beef council's attempts to increase beef consumption by educating consumers about industry issues, as well as ways to prepare beef, have helped greatly. Additionally, the council has been educating young beef eaters as well as food service personnel in schools and restaurants. The council also sponsors a state beef cookoff. Dairy Control - Page 917 Robert R. Barengo, Chairman, State Dairy Commission, introduced himself and his associates on the commission, Executive Director Bryn Armstrong and Jackie Burris, CPA. Mr. Armstrong presented the budget. Drawing on written testimony (Exhibit F), Mr. Armstrong provided historical and background information on the dairy commission. He first noted that at the time the Legislature created the commission he was a newspaper reporter and was very familiar with the issues surrounding its creation. The reason the commission was created, he said, was that the domestic producers were threatened with extinction at the time because the state was being flooded with milk from adjoining milk sheds including Arizona, California and Idaho. The milk in those states was being produced by larger and more efficient plants and a ready supply of milk. At the time the dairy commission was created there were approximately 200 dairies in the State of Nevada. There are now only 42 dairy farms in the state: 36 in western Nevada, six in southern Nevada, four in Clark County and two in Nye County (Pahrump). The commission was created after the Legislature declared the production and distribution of fluid milk and fluid cream a business "affected with a public interest," Mr. Armstrong stated. Reading language from the original statute, he said it was enacted "in the exercise of the police powers of this state for the purpose of protecting the health and welfare of the people of this state." Mr. Armstrong drew from his prepared text for the balance of his presentation (see Exhibit F). He testified the State Dairy Commission voted last fall to temporarily forgo the assessment on fluid milk and fluid cream, effective October 1, to reduce the reserve balance of $465,000 to a more manageable size. Despite the commission's action, at the end of November 1994 the reserve balance exceeded $482,000. The commission then temporarily discontinued assessments on ice cream, yogurt and frozen dairy products. It is anticipated the reserve will be approximately $210,000 by July 1, 1995. Senator Raggio noted the reserve amount is stated at a significantly higher level in the Executive Budget. Mr. Armstrong said the amount will vary and the dairy commission has no way of accurately forecasting the reserve amount. The senator asked what products the dairy commission is currently assessing. Mr. Armstrong said the assessments are being made on butter and cottage cheese. Mr. Armstrong further stated that in order to accurately assess the accomplishments of the dairy commission it must be pointed out that as of July 1, 1993, a new regime assumed responsibility for the operation of the commission. The Governor appointed a new chairman and a new commissioner, who named a new executive director. Mr. Armstrong said when he arrived he immediately realized the dairy commission was an agency in serious administrative trouble. His original mission was therefore to write manuals of internal control, manuals for investigators and manuals for auditors. He also instituted an employee control program in which employees sign in and out and a requirement that all employees provide a report of their daily activities. Investigators are required to obtain the signature of the person in authority when they investigate retail outlets. The executive director now assigns audits, Mr. Armstrong continued. Additionally, a new audit manual has been developed. Some of the dairy commission's accomplishments, as delineated in the written testimony, were further recited by Mr. Armstrong. In conclusion, he said the result of the efforts of the new management was that on December 15, 1994 the audit subcommittee of the Legislative Counsel Bureau gave the dairy commission a clean bill of health, in writing (Exhibit G). The letter states that all eight of the recommendations for correction have been met by the dairy commission. Senator Raggio congratulated Mr. Armstrong for the manner in which the dairy commission's new regime has dealt with the difficult problem that existed. He requested Mr. Armstrong to address the recommendation in the maintenance budget, decision unit M-201, Demographics Caseload Changes (page 919), for a Compliance Investigator I in FY 1997. The decision module also recommends funding for purchase of one automobile and related operating, insurance and in-state costs in conjunction with the position request. Mr. Armstrong said the commission maintains a record of the number of retail outlets that must be inspected by the investigative staff for compliance with pricing, labeling and licensure of the dealership. In Clark County, two investigators have the responsibility of inspecting more than 120 hotels, many of them major resorts with multiple dining rooms. They are also responsible for monitoring 1,200 restaurants, 82 supermarkets, 286 convenience stores and 60 ice cream and yogurt shops. Additionally, they are responsible for monitoring similar outlets in such fast developing areas as Laughlin, which now has 13 hotels, and at stateline, Jean, Mesquite and Pahrump. Mr. Armstrong said the commission believes another compliance investigator will be needed by the beginning of FY 1996 to provide adequate monitoring. Senator Raggio noted the recommendation in the enhancement budget (E-720, New Equipment, page 919) for purchase of two automobiles for the agency's audit program, in addition to the automobile request in decision unit M-201 for the compliance investigator, and inquired if the three automobiles are necessary. Mr. Armstrong replied yes. He explained the commission performed a cost accounting that determined significant savings would result through agency ownership of its vehicles versus leasing from the state motor pool. Senator Raggio asked the budget office representative if an adjustment due to decreased use of the motor pool is reflected in this budget. Ms. Erickson replied yes and said the in-state travel costs in decision unit E-720 also reflect the decrease in motor pool costs. Mr. Armstrong said it is necessary to transfer approximately $3,200 for each year of the biennium from the motor pool budget to the dairy commission's budget for maintenance, fuel and oil. Senator Raggio asked if a budget adjustment is required. Ms. Erickson said the adjustment would be in Operating Expenses. The senator requested she consult with the fiscal analysis staff on this matter. Mr. Armstrong then presented a request by the dairy commission that was not included in the Executive Budget. Referencing the current study by the Department of Information Services regarding the assignment of computers to each of the state agencies, Mr. Armstrong said he would like to put more than 166 licensees on a 3-year auditing cycle to ensure compliance by major distributors with applicable laws and regulations as well as payment of the remittances owed. To do this he proposes equipping the commission's auditors with lap-top computers and other devices so they can begin to write their reports and record their findings while on site. Furthermore, Mr. Armstrong stated, there is only one computer for the eight employees in the Las Vegas office and in the Reno office there are only two computers for eight employees. He indicated this proposal would facilitate the commission's use of modern technology. Senator Raggio suggested the proposal be "costed out" in terms of equipment and personnel and then presented to the committee. Equating the State Dairy Commission with the Public Service Commission in terms of its charge of establishing fair and reasonable market rates (minimum prices), Senator O'Donnell inquired how the rates in Nevada compare with the rates in neighboring states. Mr. Armstrong said he will furnish the committee a report of the International Association of Milk Control Agencies. Jackie Burris, CPA and Management Analyst II, State Dairy Commission, also responded to the question. She said Nevada's minimum and market prices for milk are below California's prices. She noted the market price of milk is consistently higher than the minimum price established by the dairy commission. Senator O'Donnell said he has received complaints from constituents the dairy commission is artificially raising milk prices. The dairy commission representatives indicated the complaints were unfounded. Mr. Barengo said the commission has made a great effort to elicit the cooperation of all of the markets in the state regarding the minimum price. He said some stores post signs stating the milk prices are set by the dairy commission, but this is not the case. The dairy commission sets a minimum price, below which the milk cannot be sold. The stores sell at above the minimum price and the dairy commission is blamed for the higher prices, Mr. Barengo explained. He reiterated the dairy commission has worked very hard with the industry and said it has been aggressively monitoring the stores for posting the misleading signs. Senator O'Donnell said he would so inform his constituents. Mr. Armstrong said the minimum prices are set according to statute. He further testified the dairy commission has performed on-site audits of major processing plants and distribution plants in the adjoining states and has been able to compare the costs in the other states with those in Nevada. He said Nevada's costs compare very favorably with those of most of the major processors in the surrounding states. The dairy commission's formula for establishing a minimum price is based on such factors as the cost of raw milk, the cost of the container, and the cost of processing, Mr. Armstrong explained. Responding to Senator O'Donnell's observation the dairy commission's minimum pricing policy protects the dairy farmer who may be subject to large predatory pricing from out-of-state, Mr. Armstrong said the policy also protects the domestic processing industry. The large plants can produce the milk products much more efficiently because of the large volumes they have. The dairy commission protects the industry itself, Mr. Armstrong stated. Mr. Barengo said this includes both the producers and the processors. Mr. Armstrong said the dairy commission is in the process of establishing solid evidence that its formula for setting the minimum prices is authentic and can be defended and explained. As soon as the evidence has been established, he continued, the dairy commission intends to ask the media to publish the minimum prices set by the commission, the object being to inform the public of prices so they know the difference between what the market is charging and the minimum price. He said that while a retail outlet must charge more than the minimum price to make a profit, it is hoped that publicizing the pricing information will eliminate price gouging. Mr. Armstrong said the dairy commission conducts an out-of-store price survey every month in both northern and southern Nevada. Senator Coffin asked why coupons cannot be used on the purchase of milk. Mr. Armstrong said the dairy commission approves coupon plans that do not involve the sale of dairy products below cost, a practice prohibited by state statute to prevent the predatory pricing that threatens the domestic industry with extinction. Senator Coffin asked if a store that accepts double coupons would then have to artificially increase the price further to allow customers to use the coupons. Mr. Armstrong replied the prices do not have to be inflated, the store simply cannot sell under cost. Mr. Barengo said in the southern Nevada area in February 1995 the store prices were $1.48 to $1.59 for a half gallon of milk, while the minimum price established by the dairy was $1.09. He said the store's pricing needs to be figured into the coupon plan. Senator Coffin suggested there should be a meeting of the minds with retailers so they better understand the situation. Mr. Armstrong said the dairy commission has approved many coupon plans. Mr. Barengo said it is easier for the retailer to blame the dairy commission than to allow the use of the coupons. Senator Jacobsen said he had served as the interim committee chairman of the Legislature at the time of the severe crisis in the dairy industry many years ago. He said the Legislature at that time placed the administration of the dairy commission in independent hands, removing control of the commission by the dairy industry. The senator further stated there would be no dairy industry in Nevada if it were not for the dairy commission, because the outside suppliers had previously come into the state and undersold Nevada producers. He commended the dairy commission for its acceptance of all of the audit recommendations and for the work they do. He said the most important factor with respect to the dairy commission's budget is that the commission is funded by the industry and not by General Fund dollars. He voiced the opinion the dairy commission is the appropriate vehicle for the dairy industry's self- regulation. Senator Jacobsen said the dairy industry in Nevada is much smaller than in other states, and if the dairy commission were to disappear the people of Nevada would be at the mercy of outside suppliers and would have to pay whatever price they demand. Senator Jacobsen demanded that the budget office justify the state cost allocation it has included in the dairy commission's budget. Ms. Erickson said she would need to research the matter. Senator Raggio requested the information be provided to the committee. The next budget was taken out of sequence to accommodate Assemblywoman Marcia de Braga in testifying on the budget for the High School Rodeo Association. High School Rodeo Association - Page 927 Assemblywoman Marcia de Braga, Assembly District 35 and State Secretary, Nevada High School Rodeo Association (NHSRA), introduced herself and Rich Lee, National Director, NHSRA. Mrs. de Braga said the state appropriation for NHSRA is used entirely to send a Nevada team of rodeo contestants to the National Finals Rodeo, the largest rodeo in the world. The high school rodeo program in Nevada has been in effect since the early 1940s, Mrs. de Braga continued, and for more than 20 years the Nevada Legislature has provided funding for this program to the high school rodeo contestants. The program is statewide and does not eliminate any high school rodeo student desiring to participate unless the students fail to adhere to the association's strict grade and conduct requirements. Continuing, Mrs. de Braga said local high schools cooperate with the NHSRA in providing such information, guaranteeing the students meet all requirements of the Nevada Interscholastic Athletic Association and exhibit good conduct in school. The program has 24 qualifying rodeos throughout the state which offer some tourism benefits to the towns in which they are held, Mrs. de Braga stated. The top qualifiers at the end of the rodeo season, those who are in the top four places throughout the year, qualify to go to the National Finals Rodeo. Mrs. de Braga said the national rodeo offers a chance at international competition and represents a marvelous opportunity for the youngsters involved. The $17,000 recommended appropriation gives about $350 per contestant to go to the national finals and the entire amount goes directly to the contestant. Senator Raggio inquired how many contestants the state has been sending to the national rodeo. Mrs. de Braga said the number varies from year to year, but averages approximately 45; up to 53 contestants would be eligible to go, depending on whether they qualify in more than one event. The funds received from the state will not entirely pay the contestants' way, she said, but it does avail some contestants of an opportunity they otherwise could not afford. Remarking that his interest in this budget is personal, Senator Jacobsen said he paid $400 to replace the flag he had borrowed from the Legislature for the rodeo queen's visit to Douglas County after the flag was damaged by rain. Assemblywoman de Braga expressed appreciation for Senator Jacobsen's action on behalf of NHSRA. She said the queen leads the high school rodeo team and is not a beauty pageant winner, but a rodeo contestant who represents the state very well. Mrs. de Braga said both the state and national flags are carried in the grand entry of every rodeo, and the rodeo association contestants are "great embassadors for the state." Mrs. de Braga said every state has a representative on the national board of the High School Rodeo Association that oversees the entire program for each state and serves on the national level. Rich Lee, National Director, NHSRA, expressed appreciation on behalf of the high school rodeo participants for the support they have received from the Legislature. Senator Raggio asked how the Nevada participants have been doing in the National Finals Rodeo. Mr. Lee replied the Nevada contestants have not been lower than 15th nationwide in the past few years and have placed as high as second. Two years ago a young girl in Eureka was the national breakaway champion, and last year two youths from Fallon were third in the team roping nationwide. "We produce very good cowboys in this country," Mr. Lee stated. Ms. Licht testified that as a former NHSRA adviser she wished to thank the committee and the state for allowing the fund to go forward. She said it is expensive not only to keep a horse, but to haul one, and the equipment used is not inexpensive, either. She expressed appreciation for the state's sponsorship of the NHSRA activities. In additional testimony Assemblywoman de Braga told the committee Nevada's high school rodeo program is unique in that the contestants do not try out for a team but are all eligible to participate. One of the rewards, in addition to the rodeo honors, is the availability of mini-scholarships on both the state and national levels. Last year the state program awarded 18 $500 scholarships, Mrs. de Braga continued, and everyone who applied was able to obtain a scholarship; many more applicants received scholarships on the national level. Senator Rhoads told the committee "probably 99 percent" of the state's 450 or so high school students who are active in rodeo go to college out-of-state because the colleges in Nevada do not support the college rodeo system. He said most of the top- notch high school rodeo participants are recruited to an out-of-state college, and he voiced the opinion it is unfortunate Nevada's colleges do not have a rodeo program. Mrs. de Braga said UNR had such a program in the past and has dropped it, and UNLV currently has a fairly active program. She noted that Idaho, California, Arizona and several other surrounding states offer a waiver of out-of-state tuition to recruit these students to their colleges. Senator Coffin pointed out the UNLV college rodeo program is one of the best in the country and the participants are currently contending for the national championship. He said the rodeo program is very expensive and is heavily subsidized by boosters in the casino business. Nevada Junior Livestock Show Board - Page 927 Mrs. McKinney-James introduced Frederick Dressler, President, Nevada Junior Livestock Show Board (NJLSB) and Sue Hoffman, Member, NJLSB, who presented the budget for this agency after providing an overview of the board's purpose and activities. Ms. Hoffman invited committee members to attend the Nevada Junior Livestock Show May 11-14 in Reno. She said the junior livestock show board is dedicated to encouraging the participation in educational opportunities and applied life skills to young people with an orientation toward the livestock industry. Events the board sponsors and are involved with include the teaching of sportsmanship, leadership, citizenship, responsibility and current information relating to the agricultural industry. Through youth education the board promotes growth, maintenance and development in matters relating to the state's livestock industry. Senator Raggio asked who would receive the overtime pay for which funding is requested in decision unit E-150, Employee Treatment, page 927. Ms. Hoffman said the board has a half-time employee who is paid through a contract with the University of Nevada. She said events such as the upcoming junior livestock show are very time- intensive and overtime is therefore incurred in connection with these events. Senator Raggio asked Mr. Dressler how active the seven-member junior livestock show board has been. Mr. Dressler replied the board is very active during the livestock show and meets quarterly. The senator noted the request for an increase in board and commission pay (decision module E-325, Business/Government Environment, page 928) and inquired if there had been vacancies on the board. Ms. Hoffman said there were some vacancies in the base salary year, the state rate of board fees is $80 per meeting and the board meets four times during the year. Senator Mathews inquired if it would be advantageous to upgrade the half-time position to full-time rather than having to pay overtime. Mrs. Hoffman said the full- time position would probably not be warranted because the need for overtime is limited, and the cost to go to a full-time employee would be about $13,000 in contrast to the $1,305 being requested for overtime. Ms. Hoffman called attention to the one-time appropriation request for $5,040 (page A38) to purchase new panels for handling animals. The ones currently being used are at least 12 to 15 years old and have become unsafe. Ms. Hoffman said the board is aware the amount requested will probably not be sufficient to cover all of the costs for the new panels. It is seeking outside sources to augment the requested funds. Senator Raggio said the livestock events facility in Reno is one of the best in the country. Senator Jacobsen indicated full support for the Nevada Junior Livestock Show, which he said draws a large attendance and is one of the best programs in northern Nevada. He noted that Mr. Dressler's father, Fred Dressler, holds the record for length of service by a Nevada state senator from Douglas County and is in the Legislature's hall of fame. He also thanked Mr. Dressler for his efforts in behalf of the livestock events show over the years, including the use of the Dressler ranch vehicles to haul livestock from Douglas County to the livestock show in Reno at no charge. Mr. Dressler reiterated the board's need for the new panels that would be funded by the one-shot appropriation request for $5,040. On behalf of the Nevada Farm Bureau, Mr. Busselman expressed support for the junior livestock show program and for funding of this budget. Speaking as "a former ag[riculture] teacher and a former 4-H leader who has been in the trenches," Ms. Licht testified in support of this budget. Following the budget hearings the committee discussed its calendar for the coming weeks. In connection with the joint subcommittee meetings, Senator Raggio requested notification of any problems with the new regime; if the committee as a whole feels the process is nonproductive, the Senate Committee on Finance will return to the previous system of meeting as a full committee. The senator indicated the current process is subject to approval. The meeting was adjourned at 10:40 a.m. RESPECTFULLY SUBMITTED: Sue Parkhurst, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance February 23, 1995 Page