MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session February 27, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:10 a.m., on Monday, February 27, 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 STAFF MEMBERS PRESENT: Dan Miles, Senate Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Ronald T. Steele, Program Analyst Jeanne L. Botts, Program Analyst Mary A. Matheus, Local Government Budget Analyst Dee Crawford, Committee Secretary OTHERS PRESENT: Richard Bunker, Vice Chairman, Colorado River Commission Douglas N. Beatty, Chief Accountant, Colorado River Commission Michael Nolan, Budget Analyst, Budget Division, Department of Administration Robert L. Crowell, Commissioner, Colorado River Commission Marc Ratner, Executive Director, Nevada Athletic Commission, Department of Business and Industry Luther Mack, Commissioner, Nevada Athletic Commission, Department of Business and Industry Nat Carasali, Commissioner, Nevada Athletic Commission, Department of Business and Industry Judge Jack Lehman, Eighth Judicial District Court, Clark County Drug Program, Las Vegas, Nevada John Marr, Director, Choices Unlimited, Las Vegas, Nevada Sandra Lee Avants, Administrator, Taxicab Authority, Department of Business and Industry Rose McKinney-James, Director, Department of Business and Industry David Perlman, Administrator, Commission on Postsecondary Education, Department of Business and Industry R. Leo Penne, Director, Nevada State Office, Washington, D.C., Division of Economic Development, Commission on Economic Development Senator Raggio proceeded with the hearing on the Colorado River Commission budget, account 296-4490. Colorado River Commission - Page 1861 Richard Bunker, Vice Chairman, Colorado River Commission, introduced Robert L. Crowell, Commissioner, Colorado River Commission, and Douglas N. Beatty, Chief Accountant, Colorado River Commission. Mr. Beatty distributed copies of the Comprehensive Annual Financial Report (Exhibit C. Original is on file in the Research Library.) published by the Colorado River Commission (CRC). He called attention to the overview of the CRC described in the introductory sections of the report and the following detailed financial information. Mr. Beatty pointed out the notes beginning on page 29 and the chart on page 31 relative to long-term debt. He reported there had been a $170,380,000 bond sale in November 1994 wherein the bonds were issued at an interest rate slightly in excess of 6 percent. He said some prior bonds had been refunded, thus their debt was included in the $170,380,000 outstanding obligation. Mr. Beatty said an explanation of the accounting system could be found on page XXI of the report. He delineated the various accounts depicted in the report which are included in the budgets under consideration. Mr. Beatty handed out an organizational flow chart, Exhibit D, and opened discussion of the CRC General Fund budget. He reminded the committee the CRC had been reconstituted in 1993 at which time the makeup of the staff was changed. He said the budget reflected details depicted in Exhibit D. He explained the departments had been split into an organizational department and an engineering department, the secretarial pool had been dismantled, and the secretaries were assigned to each department. Mr. Beatty noted the chart does not include a Deputy Director position, which is currently vacant as is the position of Director, for which a salary increase from $69,561 to $90,000 is being requested. Mr. Bunker said, "We have found in our negotiation process that we are dealing with some highly sophisticated water people." He averred it had become evident since the CRC joined with the Southern Nevada Water Authority (SNWA) that the technical expertise available to the Nevada CRC is not matched by similar management expertise. He declared Nevada needs a qualified director to participate in negotiations held with the other states and Indian tribes in the search for new water. He asserted: When we advertise for the executive director at that salary, the type of people that we were having apply were second- and third-line management people in some of the very agencies that we deal with on a regular basis. We just felt that it was in the state's best interest, and certainly southern Nevada's best interest, that we move forward and try to hire someone who could fill that position and assume that responsibility. Mr. Bunker expressed the opinion an appropriate applicant could be obtained at the $90,000 salary level. He said funding has been discussed with all commission customers who support the CRC through fees, and all have endorsed the opinion of the commission. Senator Raggio asked what allocation of water Nevada is receiving from the Colorado River. Mr. Bunker replied it continues to be 0.3 million acre feet. He said additional water sources are being pursued through negotiations with Arizona and Utah. He indicated unofficial discussions with Arizona have been held regarding a 60,000 acre foot allotment in perpetuity to Nevada from their Colorado River allocation of 2.8 million acre feet. He explained it would actually mean a return of approximately 100,000 acre feet of water with the addition of return-flow credits from treated effluents. Mr. Bunker reported during the last week an agreement had been reached with the Metropolitan District of California and the Arizona Department of Conservation and Natural Resources for the storage of water in Arizona. He indicated the agreement would provide up to 300,000 acre feet to be stored in Arizona, from which Nevada could draw as necessity should arise. Mr. Bunker said the state engineer has recently allocated 150,000 acre feet of water from the Virgin River to the Las Vegas Valley Water District, and negotiations are under way with Utah over the use of additional water from the Virgin River. He expressed optimism additional water can be obtained for southern Nevada. Senator Rhoads asked who represents Nevada at negotiating meetings. Mr. Bunker replied as a rule he and Janet Rogers, commission Chairman, represent Nevada at meetings of the CRC. Mr. Beatty pointed out the Deputy Director position is also vacant, and the commission recommended the position be abolished because the assignments could be reclassified to one of the other department heads. He suggested the administrative duties of the Deputy Director could be handled by the chief financial officer under the classified position of Chief Fiscal Officer. Noting it is not traditional for the deputy to be a classified position, Senator Raggio asked why the position should be protected if it is going to function as Deputy Director under an unclassified Director position. Mr. Beatty, who presently holds a position similar to Chief Fiscal Officer, responded he does not know the reasoning. He surmised the recommendation is because his position is classified as are the other administrative department-head positions. He explained the commission feels the Deputy Director position is a duplication of the Director position and is unnecessary. Mr. Beatty pointed out the Deputy Director did have some duties dealing with environmental implications on the Colorado River. He offered the opinion the current use of representatives from water and power agencies attending the meetings is not satisfactory to address environmental issues. Mr. Beatty said the CRC committee suggested a Chief Environmental Land position be formed at some time after a new Director is hired. However, he continued, Mrs. Rogers, the CRC Chairman, had attended a Habitat Conservation Plan meeting (HCP) 2 weeks ago with all seven member states of the Colorado River basin to consider a basin-wide habitat conservation plan to try to reclaim endangered species. After the meeting, Mrs. Rogers directed the CRC staff to ask the Budget Office to include an Environmental Land position in the budget. He called attention to page 4 of Exhibit D on which the specifications for the position are delineated. He said he had been informed there are comparable positions in the Division of Environmental Protection and the Nevada Department of Transportation. Mr. Beatty declared: The ... environmental laws become very dynamic in the operations of the river. And we feel that we need this position to adequately represent Nevada's interests on the river in environmental matters. Part of the reason that we wanted to set it up separately is because sometimes what you do in the environment will benefit power at the expense of water, or vice-versa. So rather than have someone within either one of those departments, who has to answer to that department, represent the commission, we want to set it up as its own independent department answerable only to the director so that the state perspective from both water and power can be evaluated in any decisions that are made. Senator Mathews inquired if a dollar amount has been attached to the prospective water transfer from Utah. Mr. Bunker replied although there was no dollar amount attached, there has been some speculation in the press that it would cost approximately $20 million. He reiterated the figure was only speculation. Senator Mathews asked if any entities, such as the rural counties, would profit from CRC water other than southern Nevada. Mr. Bunker replied it would benefit southern Nevada primarily, but the receipt of water from the Colorado River would preclude the search for water in other places to be used in southern Nevada. Senator Raggio requested discussion of the proposed transfer of the Southern Nevada Water System to the Southern Nevada Water Authority. Mr. Beatty responded authorization was received in 1993 for a bond issue of which $170 million has been sold and from which $25 million was used to retire prior bond issues. Mr. Bunker stated funds from the bond issue would be used to bring the water system up to maximum capacity in order to bring in the water presently allocated to Nevada from the Colorado River. He said it had become evident there are major financial considerations and the $150 million to be used to upgrade the system would probably not be adequate to meet the needs of southern Nevada over the next several years. He declared: Because of that, and because a major bond issue or a major construction project was going to be necessary, inasmuch as the SNWA...currently runs the Southern Nevada Water System under contract to us, we felt that it would be in the best interests of the taxpayers in southern Nevada if elected officials were responsible for the development of any new project or any new type of facilities that were going to be developed in that area. We did not think that it was the position of appointed people to be passing on commitments that were going to escalate or raise in any way the water rates in southern Nevada. Mr. Bunker proposed anything that would result in higher water rates should be the responsibility of elected officials. He said, "With that thought in mind we have been meeting with the Southern Nevada Water Authority since last summer to try to formulate legislation which...will be presented to the Legislature...." Senator Raggio asked, "If the water system is transferred out of the Colorado Water Commission, the only remaining purpose of the commission would be what, power?" Mr. Bunker replied a major responsibility is and would be finding new water as well as supervision of the maintenance and management of southern Nevada water systems through contracts with the Southern Nevada Water Authority and the Las Vegas Valley Water District. Senator Raggio asked if separate budgets on the water treatment facility and pumping and transmission would still be necessary. Mr Bunker replied they would not be necessary. He said, "There might be some personnel who would be transferred from the Colorado River Commission to the Southern Nevada Water Authority, but that's part of what we're still trying to finalize." When asked if the CRC would still be used to issue bonds after the water system was transferred out, Mr. Bunker replied it probably would not. He indicated bonds would probably be issued through the Southern Nevada Water Authority. He stated, "As I suggested to you that was one of the major financial commitments that is going to have to be discussed ...." Senator Raggio concurred further consideration is needed. He asked, "Is this generally accepted by not only the water authority, but by all of the customers, those who get water through the commission?" Mr. Bunker replied, "Yes, sir,...the Southern Nevada Water Authority... constitute all of the retail purveyors in the Las Vegas Valley. Yes, and it is acceptable to them because they've been on the other side of the negotiations as we've attempted to put this together." Senator Jacobsen asked the Budget Office to respond as to why the Governor has not recommended a new Chief of Environmental Land position. Mike Nolan, Budget Analyst, Budget Division, Department of Administration, replied the position was not included in the original budget request from CRC. He reiterated it was only recently that they determined the position would be advantageous. Mr. Beatty stated, "In 502, Federal Pumping Transmission, that's on page 1867 [of the Executive Budget], you will see a state cost allocation. That's the cost allocation that we received for the state for their services. That should not be in this fund but should be in 4490." The representative of the Budget Division agreed. Mr. Beatty interjected it would also allow power interests to participate. Jeanne Botts, Program Analyst, asked if there is a bill draft coming forward to change the law. She explained the law currently requires the Deputy Director position to be in the unclassified services. Mr. Bunker replied, "We were hoping to get some indication from the committee that that might be a wise thing to do or it might not be a wise thing to do. We can take that officially or unofficially." Senator Raggio responded the Deputy Director position has traditionally been unclassified, but if the CRC wanted something else, such as a fiscal officer, and the CRC feels it should be a protected position, (classified), the Senate Committee on Finance would take it under consideration. Federal Pumping and Transmission Facilities - Page 1867 Senator Raggio reiterated the budget would no longer be necessary if the Southern Nevada Water Authority takes over operations of the Southern Nevada Water System from the Colorado River Commission. Senator Rhoads asked what type of apparatus would be necessary if the state is successful in importing water from Utah or other Colorado River sources, and he asked if the necessary laws are in place to involve private entities in water importation. Mr. Bunker responded there is an active citizens committee studying water needs for the next several years which is attempting to develop that type of information. He repeated that is one of the reasons for the requested transfer of facilities to the Southern Nevada Water Authority. He declared because of major financial obligations the CRC feels elected officials should be responsible for water development in southern Nevada. Senator Rhoads inquired if the pipelines and pumping stations already in place are adequate for new water importation. Mr. Bunker replied present facilities are not adequate, but he asserted the upgrade being put in place with funds from the 1993 $150 million bond issue would bring southern Nevada up to capacity for the current allocation. Senator Raggio asked if decision unit M-200 reflects an increase in repayments to the federal government. Mr. Beatty replied it only reflects the increase in costs for additional water. Research and Development - Page 1869 Mr. Beatty pointed out the Research and Development budget is funded entirely by power revenues. He said present activity centers on basic substation upgrades, but plans are being made to sell power marketing authorities. He explained the federal government generates and markets hydropower through divisions of the Department of Energy called Power Administrators. He stated Nevada deals with the division called Western Area Power Administrators which owns the transmission lines along which hydropower is distributed. He indicated the United States Office of Management and Budget has recommended the sale of those power marketing authorities to the highest bidder. He noted the sale of those federal assets has been placed in the President's budget. Mr. Beatty declared the CRC is monitoring the proposed sale. He said: The current position is to oppose those sales, but should they start to go through, the State of Nevada would need to be in a position to purchase ... some of those facilities, particularly the facilities that service Nevada rather than allow some investor-owned utility to come in and buy them and then charge us. Senator Raggio asked if the commission distributes power outside of Clark County. Mr. Beatty replied in the affirmative and said power is sold to companies in Lincoln and Nye Counties and a couple of smaller entities, but none is distributed outside of the state. Power Marketing Fund - Page 1873 Mr. Beatty explained the fund was established to pass along the costs of the hydropower and to service the bonds that were sold for the upgrade of the Hoover Dam Power Plant. He stated paybacks from the fund to the state are current with a balance remaining of $294,881 to be repaid at the rate of $120,000 per year. He said customers paid in $10,000 per month to be remitted to the General Fund at the end of the fiscal year. He noted the original appropriation was $1,134,881 and payments commencing in Fiscal Year (FY) 1988 have been paid. Senator Raggio asked how much power is generated at Hoover Dam and if it is operating at near capacity. Mr. Crowell replied Nevada is entitled to take approximately 200 megawatts while most of the power is allocated to California. He could not say how much power is generated nor whether it is operating near capacity. Noting that the final payment to be made in FY 1996-1997 would be $54,881 instead of the full $120,000 payment, Ms. Botts pointed out the budget indicates it would be the full $120,000. She commented that should be adjusted. Fort Mohave Development Fund - Page 1875 Mr. Beatty handed out Exhibit E which includes portions of minutes from a meeting of the Colorado River Commission on January 23, 1995, and attachments. Mr. Beatty pointed out funding for the budget comes from the sale of land in the Laughlin area, once owned by the CRC, to private developers. He stated the funds are used as partial reimbursement for the development of infrastructure in the area as approved by the Clark County Board of Commissioners. Mr. Beatty noted the list of proposed improvements and the costs for each is attached to Exhibit E. He declared a portion of those expenditures would be requested from the Fort Mohave Development Fund. He explained, "The money that comes into Fort Mohave is not enough really to fund any project, so they use our money as judiciously as they can as matching funds to get federal grants, etc." He acknowledged the requests add up to more than the anticipated revenue. Mr. Beatty admitted the requests anticipated sales of land and there is a zero balance in the fund at present. Mr. Bunker interjected sales of land in the Laughlin area have slowed down, but the CRC is still available to negotiate with prospective purchasers. Mr. Beatty remarked the CRC has approximately 180 acres under contract to Paine Webber who took over when the previous group went into bankruptcy. He told the senators the land has an estimated value of about $12 million and added, "The contract that we currently have requires them to draw that down in minimum installments of about $3 million a year until that $12 million is completed." Mr. Beatty commented, "They could abandon the whole thing if they wanted and just turn the option back to us and then we would have that land and would have to market it." He said Gerald A. Lopez, Senior Deputy Attorney General for the Conservation and Natural Resources Section in Las Vegas, has requested clarification from Paine Webber on their plans as to whether they are going to purchase the land or turn it back to the CRC. Alfred Merritt Smith Water Treatment Facility - Page 1877 Mr. Beatty said the treatment facility is a companion to the transmission facility. He indicated it would be part of the transfer to the Southern Nevada Water Authority and the budget would be unnecessary if the transfer should go through. There being no further testimony on the Colorado River Commission budgets, Senator Raggio opened discussion on budgets under the authority of the Department of Business and Industry. Athletic Commission - Page 903 Marc Ratner, Executive Director, Nevada Athletic Commission, Department of Business and Industry, said there were 64 live boxing events in FY 1994 attended by 125,000 people. He stated the commission derives funding from 4 percent of the live attendance and 3 percent of the televised event funds, which resulted in a reversion of $1,499,000 to the General Fund in FY 1994. He said in Fiscal Year 1995 there have been 40 live events to date which have generated $916,000 for the General Fund. Senator Raggio asked why the budget projects just $750,000 in both FY 1996 and FY 1997. Mr. Ratner responded since more sites have opened up across the country, coupled with the proliferation of gaming where the events take place, they are in competition with Nevada. He indicated that precludes accurate prediction of the number of fights to be held in the state in the future, and he estimated the number of events conservatively. However, he claimed, Nevada remains in the forefront of boxing and has "the model commission for the world." In response to a query regarding a raise under M-200 by Senator Raggio, Mr. Ratner explained inspectors have been paid $50 per show for the last 10 years whether inspecting a small 2-hour show or an 8-hour world championship. He asserted those inspectors are entitled to a raise. He indicated the expenditure would also cover the cost of reprinting rule books. Mr. Ratner reported there is a 50-cent per ticket surcharge that takes in $50,000 per year which is distributed to amateur clubs. He described the recipients as any registered amateur club such as the Reno Boys Club and the police athletic leagues. He stated the funds are earmarked to be used for travel and equipment. Senator O'Donnell asked why the half-time investigator is being deleted. Mr.Ratner responded it does not make fiscal sense to employ a half-time person when the person would only be needed on a part-time, contract basis. Luther Mack, Commissioner, Nevada Athletic Commission, Department of Business and Industry, reiterated the budget is very conservative but warned there will be a need for an increase at the next legislative session. He agreed Nevada has the most sophisticated boxing commission in the nation which brings in not only lots of revenue, but also a growing number of inquiries which will necessitate updated computer information. He pointed out the commissioners serve with no salaries. Nat Carasali, Commissioner, Nevada Athletic Commission, Department of Business and Industry, concurred the commission produces a large amount of revenue for the state while holding down costs. Senator Raggio commended the commission members for their dedication. Senator Raggio asked Judge Jack Lehman, Eighth Judicial District Court, Clark County Drug Program, Las Vegas, Nevada, to come forward to address a proposed bill draft request (BDR) submitted by Clark County. BILL DRAFT REQUEST S-530: Makes appropriation to Clark County for expenses related to acupuncture program of treatment for abuse of drugs. Judge Lehman introduced John Marr, Director, Choices Unlimited, Las Vegas, Nevada. Judge Lehman said the Clark County District Court began a drug program as a result of a presentation at the National Judicial College which Judge Lehman attended in 1990. He explained the presentation described a "drug court" used in Miami, Dade County, Florida, a treatment program for first-time offenders under the influence of controlled substances. He said the treatment consisted of acupuncture, counseling and regular appearances before a "drug judge." Judge Lehman declared between 70 and 80 percent of the criminal calendar in Clark County is devoted to drug-related activities. He said the Miami program is annually removing approximately 1,000 people from the criminal system and treating them in the drug court program which had a recidivism rate of 3 percent of those who completed the program and 6 percent of those in the program. He acknowledged Dade County had allocated $1 million per year to the Miami Drug Court program. Judge Lehman related he had presented the program to a Clark County Commission task force set up to deal with the entire issue of crime. He said Russ Eaton, Administrator of the Justice Courts in Las Vegas, told him local justices were concerned with the quality of private schools for driving under the influence of controlled substances (DUI) offenders and traffic offenders and they had urged the county commission to establish county DUI schools. The result was that a clinic was established in Clark County in October 1992 and administered by a clinic in Reno recommended by Judge Lehman. The clinic, called Choices Unlimited, patterned treatment used on the Miami program . Since 1992, Judge Lehman said, the Clark County program has averaged between 300 and 400 people, all of whom have been charged with possession or being under the influence of controlled substances or who may be on probation, with 440 presently in the program. Judge Lehman stated several judges from Washoe County have visited the facility in Clark County and are interested in establishing a similar program in Washoe County. Senator Raggio noted the request in the BDR would provide $250,000 for expenses related to the acupuncture program. Judge Lehman stated it would allow Clark County to put an additional 100 people per year into the program. He said in the 2 1/2 years the program has operated, 183 people have graduated from the full 1-year program and only two people have had a relapse, whereas the recidivism rate for the entire program is approximately 10 percent. He explained in order to graduate people must be drug free for at least the last 3 months of the program, but over 60 percent of them have been off drugs for a minimum of 6 months. He said the average recidivism rate of programs that use counseling alone is between 50 and 60 percent, and it is between 70 and 80 percent for those who are sent to jail and have no treatment. SENATOR COFFIN MOVED FOR COMMITTEE INTRODUCTION OF BDR S-530. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Taxicab Authority - Page 949 Sandra Lee Avants, Administrator, Taxicab Authority, Department of Business and Industry, asserted the Taxicab Authority has experienced "incredible growth" in the past 2 years with a 29 percent increase in trips. She declared growth in the past year represented 4 million more trips than in FY 1991, with the addition of 800 new drivers for a total of 2,800 drivers in the industry in Clark County. Ms. Avants told the committee due to growth and to the federal Americans with Disabilities Act (ADA) regulations all taxicab companies within the jurisdiction operate at least one special service van for transportation of the disabled at regular taxicab rates. Ms. Avants attributed some of the growth to the introduction of Indian gaming in the Laughlin area, which has necessitated an increase for investigators in the area. She reported taxicab service has been started in Mesquite within the past year with projections for enormous growth in the next 5 years. According to Ms. Avants the number of participants in the subsidized transportation program, known as Senior Rides, has grown to over 4,700, of which 10 percent are disabled. She recalled the only requirement for the program is that an individual be a resident and be over 60 years of age. She pointed out a request in the budget for an increase from $150,000 to $200,000 for contributions to the program. She declared the authority is unable to meet current demand, and the increase would make 5,000 more half-fare coupon books available for distribution. Ms. Avants suggested the Senior Rides program should be transferred to the Aging Services Division. She surmised the Aging Services Division has better means to develop the program and certify the recipients. She related it is not unusual for wealthy persons to obtain the coupons for uses such as trips to the airport for overseas flights. Ms. Avants said 5 years ago the authority undertook a 6-month study of drivers' safety in the industry. She stated the published report was widely disseminated in newspapers and the media not only throughout the United States, but also in Canada. Since then, she said, safety workshops have been held and a blue ribbon committee will take recommendations to the authority on March 21, 1995. She cautioned a consequence of implementing new technology will result in higher taxicab rates. Ms. Avants indicated the budget has few changes, one of which is a request for three Compliance Enforcement Investigators found under Demographics unit 200 on Executive Budget pages 950 and 951. She attributed the need to growth and the expansion in Laughlin and Mesquite. She noted an Administrative Services Officer is necessary to assist the Administrator since there is no deputy position. She ascribed the need for a Taxicab Vehicle Inspector to a 50 percent work load increase due to the number of new drivers and taxicabs. She added an Administrative Aide position is necessary to handle the permitting process for drivers. Ms. Avants said, "For these positions that are just noted I'll require one patrol vehicle with full equipment, and that's a police package, the related operating costs of the position, and one computer terminal." She described the upgrades to the vehicle used for patrol as well as the radio equipment and scanners which are compatible with Nevada Highway Patrol and Las Vegas Metropolitan Police equipment. According to Ms. Avants the costs would amount to $157,485 for personnel, $8,074 for operating expenses, $22,306 for equipment and $5,065 for informational services for a total of $192,930. Ms. Avants explained the $100 budget item Improved Work Environment, E-175 on Executive Budget page 951, is in response to a request for styrofoam cups. She said E-710, Replacement Equipment, would provide $147,531 to replace the antiquated computer system in all vehicles as recommended by the Department of Information Services. She stated the line item Special Projects would transfer $33,603 to the director's office. Senator Raggio inquired: Is the time near when, like other taxicab operations, the Public Service Commission should assume the responsibility for operation of taxicabs in Clark County rather than a separate authority which has only one county under its jurisdiction? Rose McKinney-James, Director, Department of Business and Industry, acknowledged there is a lack of uniformity in regulatory oversight in the north and the south. She recognized a coming need to consider the senator's concern and determine whether or not the Public Service Commission would be the appropriate entity to regulate all taxicab service. She noted the issue had been discussed during budget preparations. Senator O'Donnell interjected the issue would be dealt with during the Senate Committee on Transportation hearings during the session and he requested the budget be held until those hearings are concluded. Senator Raggio assented. There being no further discussion on budget account 245-4130, Senator Raggio turned the meeting discussion to budget account 101-2666. Commission on Postsecondary Education - Page 279 David Perlman, Administrator, Commission on Postsecondary Education, Department of Business and Industry, told the committee the commission issues licenses to more than 104 schools in the state that enroll over 15,000 new students annually. He said the schools gross $30 million each year from an average tuition of $3,100 per student. Ms. McKinney-James recounted that as she reviewed the Department of Business and Industry after the Governor's reorganization she made determinations regarding the suitability of some agencies being within the department. She said Mr. Perlman had reported substantial changes in regulations and programs regarding post-secondary education at the federal level. After discussions on the matter, both the Department of Business and Industry and the State Department of Education came to the conclusion the post-secondary education program should be transferred to the State Department of Education. Ms. McKinney-James said a bill is being processed through the Assembly to enact the transfer. Senator Raggio inquired what the role of the Superintendent of Public Instruction, would be with respect to the commission if the transfer took place. Ms. McKinney- James responded she and Mary Peterson, Superintendent of Public Instruction, Department of Education, had discussed the issue of accountability because that was one of the reasons the commission was brought under the umbrella of the Department of Business and Industry. Ms. McKinney-James opined, "I suspect that she will work directly with members of the commission to provide the same kind of administrative oversight that I have attempted to provide." Continuing his discussion of the budget, Mr. Perlman said the only increases in the base budget are attributable to changes in group insurance. He stated there are two enhancements, one which would cover out-of-state travel to Veterans Administration (VA) functions, reimbursable by the VA, and one for in-state travel to cover the cost for the seven commissioners to attend meetings. He added there is a 5-cent per square foot increase in rent, the first rent increase since 1990. Mr. Perlman confirmed resources of $63,000 per year would be provided through a contract with the VA to cover costs of oversight of schools where veterans are eligible to use their benefits. Mr. Perlman pointed out the Governor's recommendation for a $17,300 one-shot appropriation for new computers for the agency. He explained the employees are currently using their own computers. In response to a question regarding complaints, Mr. Perlman responded there had only been two complaints in FY 1994 that had to go to the commission for a formal hearing; all others were resolved by staff. He remarked most problems have to do with dissatisfaction with instructors, and many complaints are in regard to night classes when owners of the schools are absent. Senator Raggio asked for confirmation that the United States Department of Education is going to start billing each state for a percentage of defaulted loans made to students attending postsecondary schools in the state. Mr. Perlman responded that had been proposed to take effect on October 1, 1994, for FY 1995, but it had been postponed. He reported indications are the federal government will not go forward with the billing. He explained confusion would arise regarding the many students who attend school in one state, but receive their funding from another state. In response to a query by Senator Raggio, Mr. Perlman declared the commission members are fairly active. He said meetings are usually attended by six members, and that only five members have missed any meetings. Senator Coffin inquired how long it had been since fees were increased. Mr. Perlman replied: It was established in 1990 and there's not been an increase. In the 1993 session we did increase fees and establish some new ones, but not the $4.00 fee. Cost of a program went from $100 to $500, and we also established a fee for an institution that wants to come from out-of-state and just have someone in the state who recruits and sends their people back to their state. There was no fee for that. It's $1,000 now. And we also have a transcript fee that was established in 1993. Senator Coffin asked how much the agency actually collects from people that goes into the General Fund. He calculated if 15,000 new students each year paid $4.00 the amount should be $60,000. He asked what additional sums go into the budget. Mr Perlman replied: There was $102,000 from fees and fines, which would be the $4.00 fee, new applications, transcript fees and things like that, change of ownership fees. And there was...$65,000 from the Veterans' Administration for FY 1994. Senator Coffin remarked it was difficult to determine from the figures whether the program could be self-sustaining. He surmised it appeared the program could become self-sustaining with an increase in fees. Senator Coffin asked how many of the 15,000 new trainees each year are learning to be casino dealers. Mr. Perlman answered he does not know, but the number is declining rapidly and several dealer schools have closed and moved to other states. He said the largest number of students are real estate trainees. There being no further testimony on postsecondary education matters, Senator Raggio closed the hearing and opened discussion on the Washington D.C. Office, budget account 101-1011. Washington Office - Page 9 R. Leo Penne, Director, Nevada State Office, Washington, D.C., Division of Economic Development, Commission on Economic Development, distributed copies of the proposed budgets for FY 1996 and FY 1997 with commentary (Exhibit F). He briefed the committee on the structure, responsibilities and priorities of the office as detailed in Exhibit F. Mr. Penne averred the office assists people seeking information or seeking to contact individuals regarding federal programs, particularly in the realm of economic development. He called attention to the list of responsibilities on the seventh page of the handout. Mr. Penne declared the largest measure of performance for the Washington Office is customer satisfaction. He offered to provide a list of those who have been assisted by the office. Mr. Penne affirmed just under $85 million in federal highway funds had been expended for Nevada highways in 1990. He said $134 million in highway funds were available to the state for FY 1995, some of which he attributed to the efforts of the Washington Office in collaboration with the Washington D.C. congressional delegation . Mr. Penne cited the selection of The Nevada Self Employment Trust for a demonstration project Microloan by the Small Business Administration (SBA) as an example of the accomplishments of the Washington Office. He explained the Microloan will provide $300,000 for loans of up to $25,000 during the coming year with expectations a similar amount will be available in future years. Mr. Penne revealed the Washington Office was instrumental in expediting the procurement of licensing for sales in Vietnam for a highly technical Sparks company producing water treatment equipment. He added appropriations were made for an Army Corps of Engineers project in Caliente as a result of the efforts of the Washington Office. Mr. Penne asserted, under the direction of the Governor, the Washington Office contributed to the defeat of the federal gaming tax proposal by coordinating interested parties in the gaming, travel and tourism industries. Mr. Penne declared the activities of the office in the recent biennium have centered on federal regulatory activities. He ascribed many Washington Office activities to the leadership position of Governor Miller as chairman of the Western Governor's Association, as chairman of the Environmental Committee of the National Governor's Association, as chairman of a governor's legal committee with respect to gaming, and as "lead governor on transportation." He explained those activities put Nevada in a position of leadership on important national issues such as the Safe Drinking Water Act and the Clean Air Act. Mr. Penne foresaw a continuation of basic economic development work in the coming biennium. He suggested new areas to be supported in the next 2 years would include environmental technology companies such as the Solar Enterprise Zone as it relates to telecommunications. Mr. Penne declared transportation decisions would have to be watched due to the possibility of rescissions of funds already appropriated by the federal government and to proposals for major changes threatening funding. He referred to the danger of formula distribution of funds for federal highways. Mr. Penne alerted the committee the tourism industry may be impacted from new fees, taxes and regulations. He added the Washington Office may become more involved in general legislative issues in the coming biennium. Senator Raggio inquired about a $7,000 difference between the Washington Office request and the Governor's recommendation in which one position would be cut back. Mr. Penne replied he had cut one part-time position in order to maintain level funding. He proposed to increase salaries for the other two positions and to hold the line on the part-time position. Senator Raggio expressed concern information would not be available for dissemination due to the position cut. Mr. Penne acknowledged the office would have to cut back on standard information requests and response would be slower. Senator O'Donnell wondered why the handout does not address the storage or transportation of nuclear waste. Mr. Penne acknowledged the office has not had an active role in those issues. He said the staff work was done through the Agency for Nuclear Projects and the Governor's Office. He admitted his office occasionally is called upon to attend hearings on regulations or proposed legislation regarding nuclear waste. Senator Jacobsen voiced his support for the Washington Office. He indicated he has used the office extensively over the years to set up appointments with the Bureau of Indian Affairs, the Department of the Interior and the General Services Office. Senator Coffin expressed concern over the issue of rescissions. He declared the state needs a measure of predictability in order to budget not only through FY 1997, but also beyond. He asked if Mr. Penne has any advice as to how the state could guard against a serious shortfall in federal funds. Mr. Penne answered the state should continue to closely monitor activities in Washington, D.C., it should work in concert with the National Conference of State Legislatures (NCSL) and it should consider systematic ways to communicate concerns. Senator Coffin declared he had attended a meeting of the NCSL in December where he observed a zeal to cut federal funding. He reiterated his concern that "hundreds of millions of federal funds ... may not appear" that are being included in the Nevada state budgets which could mean the legislature might have to return in a special session. Mr. Penne commented other states are having the same concerns. Senator Raggio announced a trip to the prison in Lovelock was scheduled for March 9 departing from Carson City. He estimated the committee would not return to Carson City before 2:00 p.m. and asked Senator O'Donnell and the chairmen of other committees that meet in the afternoon to take that into consideration when setting up schedules. There being no further testimony, Senator Raggio adjourned the meeting at 10:15 a.m. RESPECTFULLY SUBMITTED: Judy Jacobs, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance February 27, 1995 Page