MINUTES OF THE MEETING OF JOINT SUBCOMMITTEE ON PUBLIC SAFETY, NATURAL RESOURCES AND TRANSPORTATION ASSEMBLY COMMITTEE ON WAYS AND MEANS AND SENATE COMMITTEE ON FINANCE Sixty-eighth Session March 15, 1995 The meeting of the joint subcommittee on Public Safety, Natural Resources and Transportation of the Assembly Committee on Ways and Means and the Senate Committee on Finance was called to order at 7:45 a.m., on Wednesday, March 15, 1995, Chairman Thomas A. Fettic presiding in Room 321 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Thomas A. Fettic, Chairman Mr. Morse Arberry, Jr. Mr. John W. Marvel Mr. Jack D. Close Ms. Chris Giunchigliani Mr. Larry L. Spitler SENATE COMMITTEE MEMBERS PRESENT: Senator William R. O'Donnell Senator Bernice Mathews COMMITTEE MEMBERS ABSENT: Senator Lawrence E. Jacobsen (Excused) STAFF MEMBERS PRESENT: Jeanne L. Botts, Program Analyst Gary L. Ghiggeri, Principal Deputy Fiscal Analyst Robert A. Guernsey, Principal Deputy Fiscal Analyst STATE ENVIRONMENTAL COMMISSION - PAGE 1999 Lew Dodgion, Administrator, Environmental Protection Division, commented the State Environmental Commission's budget had been previously heard and asked if there were questions by the joint subcommittee members. Mr. Marvel inquired what the functions of the State Environmental Commission were. Mr. Dodgion explained the primary function of the commission was to be the policy setting body for environmental programs. Rules and regulations were adopted to implement federal programs and state statutes. Programs were enforced and carried out by the Environmental Protection Division. Another major function of the commission was to act as an appellant board for actions by the Environmental Protection Division. Statutes provided that persons aggrieved by enforcement actions of the division or by decisions of the division with respect to permits could appeal the decisions to the commission. The commission could then ratify, amend, affirm or overturn any action by the division. When Mr. Marvel asked if the number of hearings projected at six would remain the same, Mr. Dodgion responded yes. He remarked the commission had historically met four to six times per year, depending on the agenda. The appellant board with a panel of three members met usually four to six times per year for appeal hearings. When Mr. Marvel inquired if an appeal could go to court after the commission hearing, Mr. Dodgion responded affirmatively. Chairman Fettic requested information on whether the federal Environmental Protection Agency (EPA) will allow more flexibility in the composition of the state's Compliance Advisory Panel. Mr. Dodgion pointed out during the full joint committee hearing Senator Raggio requested Willie Molini, vice chairman of the commission, and Mr. Dodgion to ask the full commission whether or not the commission could handle the functions of the Compliance Advisory Panel. The commission had the ability to perform those functions; however, the commission did not meet the federal criteria of the Compliance Advisory Panel. Mr. Dodgion discussed with the federal EPA whether they would grant the flexibility to use the commission rather than the panel, and the EPA answered the makeup of the panel was specified in the federal statutes and the state must adhere to the statutes. Mr. Arberry inquired what the proposal was regarding underground storage tanks. Mr. Dodgion explained there were three programs dealing with underground storage tanks. The first program, called the Underground Storage Tank Program, was mandated by federal law under the Resource Conservation and Recovery Act, which specified certain design criteria for underground storage tanks and required tanks to be upgraded according to the age of the tanks to the point all tanks would be upgraded to design standards with leak detection, double walls of a specified material, et cetera. Tanks were required to be registered with the Environmental Protection Division and the federal EPA, and there were approximately 6,700 tanks registered. It was estimated when the program was started five years ago that approximately 25% of all underground storage tanks were leaking. The second program, called the Leaking Underground Storage Tank (LUST) Program, receives federal funding to investigate leaking underground storage tanks where a responsible party is not readily identifiable. The funds may be used to investigate, to clean up the tank and do whatever was necessary under the specific situation. The act allows for the recovery of expenses for the cleanup and investigation if the responsible party is identified. The third program was called the Petroleum Fund. Federal law required financial responsibility for the owners and operators of underground storage tanks and provided various mechanisms to meet the responsibility requirements. Since environmental liability insurance was difficult and expensive to obtain, the 1991 legislature created a petroleum tank fund which was capitalized by a fee on the sale of petroleum products in the amount of 6/10 cent per gallon. The fund generated between $6.5 and $7 million per year and provided financial insurance for underground storage tank owners. In other words, a registered tank owner in the fund would be covered by the fund, and leaks were cleaned up from the fund. Once the deductible was met, the rest of the cleanup was covered by the fund to a maximum of $1 million per case. Mr. Arberry inquired if the funds could be used to backfill the tanks with sand instead of removing the tanks. Mr. Dodgion explained if a tank were to be abandoned, the operator had the option of removing the tank at his expense, but removal of the tank was not covered by the fund. If the tank was not leaking and there was no contamination, it could be abandoned in place and filled with either neat cement or something comparable. When Don Hataway, Chief Assistant Budget Administrator, Budget Division, queried whether Mr. Arberry was referring to the state-recommended CIP projects, Mr. Arberry replied affirmatively. Mr. Hataway stated he was not familiar with the CIP projects, but he was aware of tanks at state park facilities and other facilities which fell under the jurisdiction and requirements referred to by Mr. Dodgion. Mr. Dodgion commented any eligible tank, whether owned by the Forestry Division or Parks Division, which was properly registered would be eligible for cleanup by the fund, subject to the deductible. Mr. Arberry inquired if there was an inventory of all state tanks. Mr. Dodgion replied there was an inventory of all registered tanks. If the state had a tank that was not registered, it would not be included in the inventory. Mr. Arberry asked if a new inventory was being requested. Mr. Dodgion indicated he was not aware of a request for a new inventory. Mr. Marvel asked how many tanks which needed remediation had been identified. Mr. Dodgion commented he did not have that information but would provide it to the joint subcommittee members. Mr. Marvel stated $1 million was included in CIP for the remediation of underground storage tanks, and he wanted to know how the money would be spent. Mr. Hataway agreed to provide the information. Mr. Dodgion commented he did not know how the money had been earmarked, but he suspected the funds would be used for tank upgrades as opposed to contamination cleanup. Chairman Fettic asked if there were further questions regarding the State Environmental Commission. There being none, he closed the hearing on budget account 4149 and opened the hearing on budget accounts 4195, 4227, 4196 and 4235. FORESTRY - PAGE 1927 FORESTRY INTERGOVERNMENTAL AGREEMENTS - PAGE 1935 FOREST FIRE SUPPRESSION - PAGE 1939 FORESTRY NURSERIES - 1951 Chairman Fettic asked Mr. Trenoweth to address concerns that the Forestry Division might not be able to operate within the limits of its budget for the remainder of FY 1994-95. Roy W. Trenoweth, Jr., State Forester, Forestry Division, pointed out budget account 4195, category 17, included volunteer fire departments, which paid for vehicle insurance for 189 fire suppression and support vehicles, SIIS for up to 20 volunteers per station, in some cases physical exams for volunteers as required by statute, and buildings and contents insurance for the volunteer stations. A reconciliation of insured vehicles and SIIS coverage for volunteers had been completed, and it was anticipated adjustments of $10,000 to $15,000 would need to be made for additional funds. Mr. Trenoweth stated he would provide the information to the Legislative Counsel Bureau staff. When Mr. Marvel inquired if the Forestry Division anticipated using volunteers for the remainder of FY 1995, Mr. Trenoweth responded they would use all available volunteers. Mr. Marvel asked if there was enough money included in the budget to support the volunteers. Mr. Trenoweth explained the division had collected in excess of $130,000 in forest fire reimbursements, and he hoped to use those funds to augment category 17. Mr. Marvel asked from where the funds were derived for the fire suppression account. Mr. Trenoweth indicated $450,000 was derived from the state general fund, and the account also received reimbursements. When Mr. Marvel inquired if county funds went into the fire suppression account, Mr. Trenoweth responded no. Mr. Spitler commented he had a series of questions regarding honor camps. He noted the ratio among supervisors, staff and prisoners for fire crews had diminished significantly. He inquired how much an interagency fire crew would cost as opposed to the inmate fire crews. Mr. Trenoweth stated an interagency overhead crew cost approximately $1,000 per day, compared to $250 per day for an inmate crew. To average that amount for the previous three years would have added an additional $1 million cost to the suppression account. Mr. Spitler suggested an important key would be how people were placed in camps as opposed to the dollar amount in savings being derived, and Mr. Trenoweth agreed. Mr. Spitler asked if there were reliable aircraft that could respond in a timely manner to fire situations other than the aircraft under the control of the Forestry Division. Mr. Trenoweth said no and explained all federal agency aircraft were considered national resources. Nevada was in the great basin of Nevada, Utah, and southern Idaho. Fire suppression resources often leave the state to fight fires in other states. Mr. Spitler queried if that left only private enterprise as an option because there was no federal agency support. Mr. Trenoweth agreed and explained that during the year there were requests for aircraft which were never filled. Nevada relied heavily on the National Guard Chinook helicopters. Mr. Spitler requested an estimate of how much had been saved by participating in the federal excess property program. Mr. Trenoweth indicated the Forestry Division acquired between $600,000 and $1 million a year in federal excess property. The fleet of approximately 421 vehicles includes 60% federal excess property. Most of the volunteers in Mr. Marvel's district used excess property. Mr. Spitler inquired what the staffing ratios were when comparing wildland fire suppression agencies such as the U. S. Forest Service or BLM with the Nevada Forestry Division. Mr. Trenoweth stated the Nevada Forestry Division staffing ratio was much lower. The division relied heavily on volunteers in all areas of the state. Mr. Spitler asked if there was data available which compared the staffing ratios of wildland fire suppression agencies. Mr. Trenoweth said he could provide the information. Mr. Spitler asked the average age of vehicles used by the Forestry Division. Mr. Trenoweth indicated the average age of vehicles was between 12.5 and 14 years, depending on the region. The northern part of the state averaged 14 years, while the rest of the state averaged approximately 12.5. Mr. Spitler inquired if the Forestry Division "benchmarked" off of other agencies which performed like services. Mr. Trenoweth replied the division did not, but it was something they were looking into. The benchmark for the division would be the BLM, and the average age of BLM vehicles was between six and eight years. Mr. Spitler inquired which of the camps generated the most revenue. Mr. Trenoweth replied the four camps generating the most revenue were Stewart, Silver Springs, Jean, and Indian Springs, with Stewart being the largest generator Jean the second largest, and Indian Springs and Silver Springs tied for third and fourth. When the closure of Jean was proposed, there was a meeting with Robert Bayer, Director of the Department of Prisons, and Mr. Trenoweth, which resulted in the formation of a steering committee. The Forestry Division made some concessions and agreed to take out inmates who were less than "fire ready." The prison agreed to provide up to 72 inmates to make three 20-person crews which would be available at all times during the fire season. The Forestry Division would take all available inmates, and the prison would keep out the sick, lame and lazy. The Department of Prisons would provide people who might not be quite fire ready but would be able to clean the highways and do other projects to help bring in revenue to offset some of the expenses of the program. Prisons would also review classification and good-time credits. Mr. Spitler inquired if there were plans to change the law requiring inmates to be within 18 months of parole. Mr. Trenoweth stated he and Mr. Bayer were looking at the requirement, but it was under Mr. Bayer's control. Mr. Spitler commented he was looking forward to positive results from the meeting between Mr. Trenoweth and Mr. Bayer, but during this legislative session a decision needed to be made regarding the closure of camps with low performance. Mr. Marvel asked if budget adjustments needed to be made in order to get more capable crews in the camps. Mr. Trenoweth replied yes and pointed out he was waiting for the Department of Prisons to get back to him regarding that issue. Mike Nolan, of the Budget Division, commented he was waiting to receive the updated prison population projections and the distribution among the facilities. The camps were full, and adjustments would need to be made in operating budgets and one- shot appropriations because the one-shot items were based on the elimination of 36 crew supervisor positions and a certain percentage of vehicles at each camp. If the number of crews was increased, an adjustment would need to be made. When Mr. Marvel inquired how many supervisors would need to be added back in the budget, Mr. Nolan replied he did not know since he had not seen any information from the prison. Mr. Spitler expressed concern that Jean was still being considered for closure when it was the second largest generator of revenue among the camps. Mr. Nolan commented there had been a request to develop a separate DUI camp, but for financial, and perhaps political, reasons it was not feasible. Looking at what was available in terms of space, the 112-bed camp at Jean was the most logical alternative. The decision was made independently of the Forestry Division and the revenue situation was not considered. The decision was an internal prison decision, and the recommendation was forwarded through the prison budget process. Senator O'Donnell remarked that was exactly the problem, and it was not being looked at in a homogeneous fashion. They were separately addressing prison problems, Nevada Division of Forestry problems, fire crew problems, and not looking at the picture as a whole. If the question were posed whether or not the Forestry Division benefited from prison honor camps, the answer would be yes. The division stated $1 million would have to be expended in addition to what is being spent now to fight fires for this state. But the prison budget does not care about the Division of Forestry or fighting fires; they care about housing inmates and doing that in the most cost efficient way. All the other agencies that benefit by having the honor camps, the local communities, the counties, the fire departments, the fire crews, are not included in the equation. A case needs to be made to the legislature that these honor camps are very necessary. Senator O'Donnell stated he believed they were necessary, and he fought to keep them during the last biennium. Mr. Nolan stated the conservation camp system was originally envisioned as a cost-effective alternative to house inmates. The services that were made available to the state, county, cities and local entities were a side benefit. The prison, in terms of evaluating the Jean camp, was looking at the number of inmates who could be processed and treated under DUI release, which freed up other beds at $14,000 a year. If 100 inmates were processed through on a 45-day cycle and half of them were out, the amount would be more than the revenue generated by the camp. Mr. Nolan agreed options and their impacts needed to be considered. Senator Mathews commented, as a businesswoman, she could not imagine closing a camp which was producing revenue, and she supported the continued operation of the Jean camp. When Mr. Close inquired if the Forestry Division had adequate work for the honor camps, Mr. Trenoweth replied there was no problem providing work. Mr. Close asked if the manpower was available, how many crews could the Forestry Division utilize. Mr. Trenoweth stated each camp was slightly different. Some camps generated more revenue, some did community projects and some did highway cleanup. Mr. Close pointed out the federal government had funds available to pay for forestry services. He requested an estimate of the revenue which could be generated from the federal government if crews were available to perform the work. Mr. Trenoweth stated the Forestry Division generated the demand for work. The federal government had a limited amount of available money, but more funds would probably be available from the Department of Transportation. When Mr. Close asked if more revenue could be generated if the manpower was available, Mr. Trenoweth responded yes. He pointed out the Forestry Division had received a letter from the Department of Transportation indicating revenue could be increased by $120,000 by providing services to them. Mr. Close commented a way needed to be found to qualify individuals who were willing and able to work. Workers from the prisons needed to be motivated to work by providing rewards. Mr. Close inquired what the effect would be if there was a reduction in the amount of federal grants during the next biennium. Mr. Trenoweth indicated he had responded to legislative staff regarding that question. The Forestry Division had received a letter from the U. S. Regional Forester indicating there would be a reduction in grant programs by approximately 10%. The program with the biggest reduction would be the rural fire prevention and control program. In the past the Forest Service grant had been used to cover general operating expenses. The Forest Service then modified their philosophy to indicate the grant should be used to accomplish certain tasks such as training volunteers, sharing resources, and having an engine and crew available to respond to fires. During the 1980's, the fire fighting forces were moved from budget account 4195 to budget account 4227, but the federal grant funds were not moved. The federal program was on a five- year cycle, 1995 being the last year of the cycle in which funds could be used for general support. Chairman Fettic asked if the bottom line would be a 10% reduction in funding. Mr. Trenoweth replied the reduction would be at least 10%. Chairman Fettic inquired if the general fund would cover the reduction. Mr. Trenoweth indicated a plan was being formulated whereby the federal grant funding would be moved from budget account 4195 to budget account 4227 to help with the cost of the fire fighters, captains, and battalion chiefs. When Chairman Fettic inquired if there was going to be a plan to cover the cost of the shortage, Mr. Trenoweth replied yes. When Mr. Close asked if the practice of using county funds to cover payroll expenses for federally funded employees would continue, Mr. Trenoweth replied no. He explained that practice involved the Toiyabe and Humboldt National Forests, which were in budget account 4227, and there was not enough money to cover the cost of the seasonal workers hired to man those national forests. The shortage had been made up by starting the seasonal workers later in the season and letting them go earlier. Mr. Arberry inquired who would supervise the three new accounting positions. Mr. Trenoweth indicated the fiscal manager and accounting specialist would be supervised by the director's office, and he would supervise the management assistant. When Mr. Arberry asked who was preparing the Forestry Division budget and handling the billings and payments for the division, Mr. Trenoweth replied he was responsible for those functions. Mr. Marvel inquired if Linda Marty's responsibilities would increase because of the addition of new employees and had consideration been given to upgrading her position. Peter G. Morros, Director, Department of Conservation, indicated the reclassification of Linda Marty's position had been considered. When Mr. Marvel asked if the request had been approved for the budget, Mr. Morros replied no. Mr. Marvel asked if Mr. Nolan was working on the Forestry Division budget. Mr. Nolan replied yes and explained he had been in contact with the program analyst and Linda Marty. As part of the technical adjustments prior to closing the budget, a request would be made to address her reclassification. Chairman Fettic inquired if the Governor would recommend the $10,000 to $15,000 supplemental request for FY 1994-95. Mr. Nolan explained the Budget Division was waiting for the information so they could analyze it. Until the information was received, neither the Governor nor the Budget Division could take a position on the request. Mr. Marvel inquired if the accounts payable were current. Mr. Trenoweth explained there were approximately 13 vouchers in the amount of $2,000 left to be paid and approximately $843,000 left to be collected, primarily from the Forest Service. Mr. Marvel asked when it was anticipated the $843,000 would be received. Mr. Trenoweth stated he had talked to the federal agencies, and he hoped it would be received within 30 days. Chairman Fettic inquired if it was possible the Forestry Division could be reimbursed from the highway fund for their role in responding to highway accidents. Mr. Trenoweth did not think that was possible but offered to look into the situation. When Mr. Close inquired if the fire suppression account was broken down into categories representing different types of fires, Mr. Trenoweth responded yes. Mr. Close requested a list describing the types of incidents reported. Mr. Trenoweth stated he had provided a spreadsheet of all expenses and the incidents were broken down in the standards. Chairman Fettic requested information regarding the division's role in training, maintaining and equipping volunteer fire organizations. He also asked if the division provided insurance coverage for vehicles and SIIS coverage for volunteers. Mr. Trenoweth indicated there were approximately 20 volunteers per volunteer unit which were covered for SIIS. Building and contents insurance was provided for volunteer stations, and in some cases under category 17, budget account 4195, physicals were provided to volunteers. Auto insurance was provided for approximately 189 vehicles. Chairman Fettic asked if there were concerns these expenses were beyond what was budgeted. Mr. Trenoweth explained the Forestry Division had been working with the budget analyst and legislative staff, and information would be provided indicating additional funds might be necessary to cover expenses. Mr. Morros explained the fire suppression account was used for emergency response as well as fire suppression. He suggested the name be expanded to include emergency response. Mr. Marvel asked if Mr. Morros had sought reimbursement from the highway fund for emergency response calls by the Forestry Division. Mr. Morros remarked he had not looked at that possibility but would do so. Chairman Fettic called for further questions or public testimony regarding the Forestry Division. There being none, Chairman Fettic closed the hearing on budget accounts 4195, 4227, 4196 and 4235 and opened the hearing on budget account 4456. WILDLIFE - BOATING PROGRAM - PAGE 1969 Terry R. Crawforth, Deputy Administrator, Division of Wildlife, explained the Division of Wildlife had been in charge of the Boating Program since 1964. The program was divided into five categories: titles and registrations, enforcement, navigational aids, boating safety, and boating access programs. Mr. Crawforth distributed to the joint subcommittee members information describing the division's 1994 actual revenue (Exhibit C) and expenses (Exhibit D). The Boating Program was funded through yearly boat registration fees from approximately 45,000 boats and 11,000 titles, federal boating aid from excise and fuel tax distributed to states through the United States Coast Guard, resources from the Sport Fish Restoration program which were used for boating access projects, 50% of the state fuel tax paid by boaters, and interest on a reserve account. Mr. Crawforth referred to Exhibit D and explained the top pie chart referred to actual expenditures by category. A process had been developed whereby boaters paid property tax on their boats at the time of registration. The Boating Program collected the money and distributed half of it to the county school fund where the boat was registered. The lower pie chart on Exhibit D referred to the program element for which annual expenditures were made. Mr. Crawforth stated the Boating Access Program was one of the more aggressive programs the division was pursuing. The projects under the Boating Access Program typically took more than one fiscal year to complete. He provided a list of the Boating Access Program's projects for the previous two years (Exhibit E). On the average, $600,000 is spent annually on such projects. Projects were planned for the subsequent three years at many state parks, including Big Bend of the Colorado, Wild Horse Reservoir and Rye Patch Reservoir. Chairman Fettic requested an explanation for the late salary transfer referred to in decision unit M-200. Mr. Crawforth stated at the end of a fiscal year all salaries were paid out of the Wildlife account. Money for salaries was transferred from the Boating Access Program account into the Wildlife account. A reconciliation was performed after the fiscal year had ended, and an adjustment was made to the Wildlife account to cover the expenses. Chairman Fettic asked for information on the conversion of two positions from part time to full time and the upgrade of another position. Mr. Crawforth indicated one part-time employee registered boats in the Las Vegas office. Because of the increase in boat registration, the full-time position was requested and approved through Interim Finance to help with the reduction of lines and improve service to customers. The Reno office had experienced a similar increase in boat registrations. The employee traveled to Carson City, Yerington, Hawthorne and Lake Tahoe to register boats; however, with the increased demand, a full-time position was needed. The upgraded position worked in the Reno office performing data entry and customer service. The position entailed more responsibility for customer service, and the position was upgraded to a conservation aid from a data entry operator. When Chairman Fettic asked how many motor boats were registered in calendar year 1994, Mr. Crawforth responded approximately 45,000. Chairman Fettic inquired what types of boating projects were being planned for the subsequent two years. Mr. Crawforth stated the Boating Access Program was participating in projects at Big Bend, Onion Valley Reservoir, Washoe Lake, Rye Patch Reservoir, and Wild Horse Reservoir. Fewer projects were planned, but they were larger and more expensive projects. Chairman Fettic requested a list of the activities planned for the Boating Access Program and support information on the construction projects planned for each year of the biennium. Mr. Arberry requested a description of the types of projects and the names of parks in Las Vegas referred to in decision unit 425. Mr. Crawforth responded the Boating Access Program was going to participate with State Parks in the construction of a boat ramp, parking lot and restroom facilities in Clark County at Big Bend. The Boating Access Program was also participating with the National Park Service on extending the ramp at Government Wash and repairing the Lake Mead Marina. Mr. Close inquired if all the officers in the Boating Access Program were POST certified. Mr. Crawforth replied they were Category I POST certified. Chairman Fettic called for further questions or public testimony regarding the Boating Access Program. There being none, Chairman Fettic closed the hearing on budget account 4456 and opened the hearing on budget account 4454. WILDLIFE ACCOUNT - TROUT MANAGEMENT - PAGE 1973 William A. Molini, Administrator, Division of Wildlife, explained budget account 4454 had been approved by the 1985 legislative session. The primary goal of the program was to construct a new hatchery at the Mason Valley Wildlife Management area because of continuing problems at the century-old hatchery in Verdi. The Trout Management program entered into bonded indebtedness in the amount of $3 million to cover the cost of construction of the new facility. The 1985 legislature authorized the issuance of a $5 trout stamp, which generated approximately $450,000 per year in resources. The funds could be used in two ways: 1) retirement of the bond; and 2) enhanced management of trout resources. Approximately $370,000 was expended annually in retirement of the bond, with full retirement scheduled for the year 2001. A proposal was being made to transfer $100,000 from budget account 4454 to the Wildlife account for use in hatchery operations. A reserve would be maintained in an amount sufficient to cover two years of bond payments. Chairman Fettic requested information be provided to the joint subcommittee regarding the annual costs to operate the fish hatchery program. Mr. Molini agreed to provide the information. He indicated there were 16 personnel in the hatchery compared to 22 personnel 10 years ago, which demonstrated increased efficiency. The cost per pound of trout had risen due to increased costs for electricity and the water purveyor from Lake Mead, but the program was producing approximately 100,000 pounds of fish more per year than in 1986. Mr. Close inquired as to the number of trout stamps issued annually. Mr. Molini indicated the number of trout stamps issued had decreased in 1994 because of the $5 cost and the consequences of the drought in northern Nevada. At the request of people in southern Nevada a stocking program was instituted at Lake Mead, which was working well with catchables but not fingerlings because the striped bass seemed to be consuming them. The numbers were fairly consistent with approximately 75,000 to 80,000 trout stamps issued each year with some decline during times of drought. Mr. Close requested the rationale for eliminating the trout stamp and increasing the fishing license fee by $5, which was not recommended by the Governor. Mr. Molini indicated staff had examined the fee structure. One of their recommendations for simplification was to eliminate the trout stamp. There was still bonded indebtedness existing, and rather than run the risk of eliminating the trout stamp and raising the license fee, the Wildlife Commission felt it would be better to retain the trout stamp. When Mr. Close asked if adding $5 to the fishing license was prejudicial against those people who did not fish for trout, Mr. Molini responded yes. Chairman Fettic called for public testimony regarding Trout Management. There being none, Chairman Fettic closed the hearing on budget account 4454 and opened the hearing on budget account 4451. HABITAT MITIGATION - PAGE 1975 Mr. Molini explained the Habitat Mitigation account was established during the prior biennium, and all the revenue in the account was generated by a mitigation agreement with the Independence Mining Company. The philosophy was based on the cumulative impact of mining operations in the Independence Mountains in Elko County. Over some fairly lengthy negotiations, the mining company agreed to provide $500,000 for use in improving the mule deer winter range northeast of Battle Mountain. It was anticipated mining companies would continue to provide donations for the habitat improvement program, and there was some federal revenue from Pittman-Robertson matching funds for specific projects. Mr. Marvel inquired if the Sleeper Mine was still in operation. Mr. Molini said it was his understanding the mine was phasing down. Mr. Marvel asked if there was a plan for maintenance of the wetlands in that area if the Sleeper Mine ceased operations. Mr. Molini explained it would be a liability to maintain the wetlands when the mining company ceased operations. The mining company's costs for pumping water exceeded $100,000 per month, which the state could not afford. If a time came when the pit filled with water and technology advanced to a stage where water could be pumped in a cost efficient manner, there was a possibility of maintaining some wetlands in the area, but there were no plans to do so. When Mr. Marvel inquired if water could be pumped to the wetlands through a syphon system, Mr. Molini responded it might work. Mr. Marvel asked if the area of the wetlands was hunted. Mr. Molini stated the wetlands area was very popular during the drought because it was the only wetland area in western Nevada. Mr. Marvel asked if other mines had areas of wildlife. Mr. Molini stated water from most other mines was used for irrigation or went directly into a river. Nothing had been developed to the same extent as the Sleeper Project. Chairman Fettic called for further questions or public testimony regarding Habitat Mitigation. There being none, Chairman Fettic closed the hearing on budget account 4451 and opened the hearing on budget account 4457. WILDLIFE HERITAGE - PAGE 1977 Mr. Molini indicated the Wildlife Heritage Program was a concept developed by field- level and mid-level employees of the agency. The account was created for revenues generated from big-game auction tags. The proposal would give the Wildlife Commission authority to organize a second-chance drawing for those people who were unsuccessful in the first drawing. The tag fees would go to the proposed Wildlife Heritage account. It was anticipated $600,000 could be generated from the auctions. The proposal included the provision that only interest could be used for an array of special projects like habitat acquisition and development, and the principal would remain intact. Mr. Marvel asked if Mr. Molini felt comfortable with the interest projections of $80,000. Mr. Molini stated he was comfortable with the projections, but it was difficult to predict how many people would participate in the second drawing. There were some records to follow regarding auction tags, but if more tags were auctioned, the price would not be as high. Mr. Close inquired if the Wildlife Commission would authorize expenditures. Mr. Molini stated Interim Finance would provide approval in a nonlegislative year. During the legislative session a request would be made for broad expenditure authority. The Wildlife Commission would be the body taking public testimony at a public meeting based on project proposals coming from the agency or the public. The Wildlife Commission would have the authority for granting funds on proposed projects. When Mr. Marvel inquired if the agency would be coming to the general fund for revenue, Mr. Molini responded yes. Mr. Marvel asked why revenue generated from auction tags could not be used by the agency. Mr. Molini stated the general fund request was predicated on funding the nongame programs and Project Wild Education Program which were a benefit to all the people in the state. The other part of the general fund request was to make up for the reimbursement of the low-cost license fees. The revenue from auction tags was generated directly from big-game hunters. Mr. Marvel expressed concern about the agency's reserve account. Mr. Molini indicated with the proposed cost-of-living salary increase and without increases in license fees, the agency would be out of reserved funds. Without the cost-of-living increase the agency would end the biennium with approximately $500,000 in reserve. With the cost-of-living increase at the proposed level, the cost to the agency would be $900,000, leaving a $400,000 deficit. Ms. Giunchigliani noted she had signed on Assemblyman Humke's bill for the purpose of discussion and debate. She asked if projections had been requested in the event the bill passed. Mr. Molini stated he did not think the language in A.B. 307 (Refer to the Committee on Natural Resources) changed the way things were done by the agency. The agency paid for their law enforcement program, habitat program, a small part of the conservation and education program, and part of the administrative services program out of the license fees, all of which were a legitimate part of the management of wildlife. If the true intent of the bill was to channel the funds only to "on-the-ground" management, havoc would be caused within the agency. Chairman Fettic inquired why, if the division's operating budget was already tight, had staff requested moving receipts in the amount of $242,643 from the big-game auction tags out of the operating budget and into the Wildlife Heritage budget. Mr. Molini explained the first auction tag sold by the Division of Wildlife was for one bighorn sheep. Subsequent auction tags were requested by other outside organizations. The Mule Deer Foundation, Nevada Bighorns Unlimited, and the Rocky Mountain Elk Foundation had been supportive in seeking legislative authorization for the sale of auction tags, and they also marketed the auction tags. The organizations had a network of people who were interested in purchasing auction tags, but the organizations did not want the auction tag revenue put into the general operating funds. As a result, the auction tag revenue was kept in an obligated reserve, and the reserve was growing. Statutes did not require the funds to be placed in an obligated reserve; the decision was administratively made. The last major expenditure from the obligated reserve was the purchase of a used helicopter in 1991. Most of the participating organizations had no problem with the purchase of the helicopter because it was pivotal for the big-game program in terms of big-game surveys, inventories, capture and transplant of big game, and water development. Chairman Fettic requested written justification for moving the receipts of the big-game auction tags to the Wildlife Heritage budget. Chairman Fettic called for further questions regarding the Wildlife Heritage Program. There being none, Chairman Fettic closed the hearing on budget account 4457 and opened the hearing on budget account 4452. WILDLIFE - PAGE 1961 Chairman Fettic inquired if there had been a decline in the number of licenses sold by the Division of Wildlife as a result of the drought. He also asked if there would be increased revenues from the sale of fishing licenses because of the large snowpack. Mr. Molini stated fishing would improve. He expected Lahontan and Rye Patch reservoirs to come back on line, as well as the other reservoirs. There would be a small increase in fishing license sales, although they had not declined dramatically during the drought years. When Chairman Fettic inquired if most of the decline was related to hunting licenses, Mr. Molini responded yes. He compared deer tag sales in 1988, which might have been an all-time high, in the amount of 50,000 to those sold in 1994 in the amount of 16,000. The deer tags were not offered in the free market. The Division of Wildlife had reduced the available tags because of the decline in harvestable resources as a result of the drought. Mr. Marvel inquired where the Habitat Biologist to assist the Heil Wild Horse Commission was placed on the Wildlife priority list. Mr. Molini stated the Division of Wildlife had not requested any new positions. However, the division had agreed to accommodate the position. He stated the position was not a high priority for the Division of Wildlife, but it was a high priority for the Heil Wild Horse Commission. Chairman Fettic stated there was a request in the Division of Wildlife budget to establish a $20 permit for minors to carry unloaded hunting firearms in vehicles. Mr. Molini indicated the permit fee was part of the Governor's initial proposed bill to control youth and juvenile crime. It was Mr. Molini's understanding the permit fee had been taken out of the legislation, so it would come out of the budget as well. Chairman Fettic called for public testimony regarding the Division of Wildlife. Gerald A. Lent, President of the Nevada Hunters Association, agreed with Senator Mathews' comment regarding the need to keep programs which made money. He expressed an interest in where the funding from the budget was going and what citizens were receiving in return. Nevada was one the highest among the western states in terms of fees. In reviewing the budget, approximately 96% of the fees in the budget came from fish and game and, therefore, fish and game programs should have priority use of the revenue. The license fees were expected to increase to cover a deficit in the budget, but there would be no new programs as a result. There was testimony that if there was no tag increase, the fish hatcheries would be shut down. The answer was not to shut down fish hatcheries, but to trim fat from other areas. Agencies which did not generate income were fully staffed; whereas the big-game agency had no chief. The emphasis was in the wrong area. Sportsmen were fed up with the system, were dropping out, and the agency was losing its funding source. There were no new programs as a result of the sale of 50,000 deer tags. The agency needed to save for a rainy day, budget and plan. Mr. Lent requested the expenses be allocated back to the revenue source. If revenue did not meet expenses, the budget needed to be cut. The only cut Mr. Lent had seen in the Wildlife budget was the game biologist, which still did not result in new programs. The creation of game programs and planting fish increased revenue. Mr. Lent provided copies of a document entitled "The Wildlife Account Future Financial Factors" to the joint subcommittee members (Exhibit F) and drew attention to page 2 of the document where it stated, "By the end of FY 1995, obligated reserve funds will be utilized for daily operational expenses." The director said he had the prerogative of spending the funds wherever he wanted. The sportsmen had the impression the funds would be spent for game programs, which they were not. State Financial Management Information and Reporting System (FMIRS) Report #3.0 indicated there was $175,000 in the bank, and the agency had a payroll of $320,000 biweekly, leaving no money for payroll. The $915,000 for the obligated reserve was a paper number and was not in the bank. The question should be asked, was the money used for shortages. The mining money was also not being used for its intended purpose. Mr. Marvel inquired what the purpose of A.B. 307 was. Dr. Lent explained the bill organized the department and provided cost allocation. The revenue would be put back into programs. The general fund had provided funds for non-game items throughout the years and did so very well. Mr. Marvel asked how the Licensing Inventory Sales Accounting (LISA) system was working. Dr. Lent responded the LISA system was tracking approximately 50% of what it was supposed to and was tracking some of the revenue. There was a recommendation to scrap the system, but Dr. Lent did not feel there was sufficient money to go into another system. Ira Hansen, Chairman of the Nevada Conservation Committee, Lifetime member of Bighorns Unlimited, Founding Member of the Coalition for Nevada's Wildlife, a member of the Nevada Trappers' Association, the Nevada Rifle Association, and the Nevada Wildlife Federation, agreed with the points made by Dr. Lent with the exception of the obligated reserve money. He stated Mr. Molini had reported to the Coalition for Nevada's Wildlife the obligated reserve was $1.7 million. The FMIRS #3.0 report indicated up to $915,000 could be spent. The year-to- date expenditures were zero for programs and were used for general support of the department. The problem of not spending the funds where sportsmen were told the funds would be spent needed to be addressed. The biggest expense of the Division of Wildlife was for salaries. In 1979 when the division was created, there were 148 employees, the peak was 202 employees, and presently there are 198 employees. The budgeted expenses for the division went from $5 million to $16.5 million during the same time period. The total number of licenses sold had remained constant for the same period. Positions in the agency should be cut. In 1988 the deputy director position was created, which made a deputy director to a deputy director. Sportsmen did not trust the Wildlife Commission, a politically appointed board, which did not represent the needs of the sportsmen. The Wildlife Heritage Fund represented a large source of revenue and must be carefully managed. Sportsmen did not like the idea the Wildlife Commission would control the Wildlife Heritage Fund. Mr. Hansen commented Mr. Molini had not mentioned the tag and license fee increases would go to salary increases for an over-staffed agency. Cecil Fredi, President of Hunters Alert, agreed with the comments made by Mr. Hansen and Dr. Lent. He stated apparently no one was monitoring spending within the Division of Wildlife. As long as no one monitored how money was being generated or how money was spent, the division would always be in financial disarray. Mr. Fredi stated Ms. Giunchigliani and Willie Molini opposed the privatization of the big-game tag draw, which had been very successful. People outside the Division of Wildlife had good ideas, as demonstrated by privatization. Joe Johnson, representing the Coalition for Nevada's Wildlife, stated the fund that was not supposed to be used for operation had been used over the years for cash flow maintenance, which was not approved by the sportsmen of the state. The establishment of the Wildlife Heritage Fund would remove the concept that funding for special programs would not be used to offset general fund obligations. Sportsmen want additional funds raised as a result of their efforts to be removed from the general support of wildlife programs. Not all members of the coalition shared the views expressed by Mr. Johnson. Mr. Marvel inquired how the LISA system was working. Mr. Molini responded the system had problems from the outset which still continued. The Division of Wildlife and the Department of Information Services (DIS) were trying to remedy the problems, but he did not know how much the cost would be. Mr. Marvel asked how much had been spent on the LISA system to date. Mr. Molini stated the division had spent approximately $300,000 in development, and money was expended annually for operation of the system through DIS. Mr. Marvel pointed out $200,000 was spent each year of the biennium for DIS. Mr. Molini stated the $200,000 figure included boat programs and the application hunt, which amounted to more than the LISA system. Mr. Marvel queried how much influence the county game boards had with the Division of Wildlife. Mr. Molini stated the major influence came during the season- setting process. The division would make recommendations to board of wildlife commissioners and the public. Recommendations would also be published in a booklet and sent to all counties and sports organizations. Wildlife advisory boards in each county would determine if they agreed with the division's recommendations and then report to the commission meeting with their recommendation. Mr. Molini commented he had researched the decisions of the commission over a three-year period, and more than half of the time, the commission changed the division's recommendation to agree with what the county boards wanted. Chairman Fettic requested Mr. Molini meet with staff to determine if obligated reserves should be transferred to a separate budget account for ease of tracking. Mr. Molini agreed to schedule a meeting to discuss setting up a separate account for obligated reserves. When Mr. Molini requested an opportunity to respond to public testimony, Chairman Fettic agreed. Mr. Molini commented he did not want the committee to be left with the impression the division was doing something surreptitious or underhanded in the way the agency managed its budget. The reason people knew so much about the division's budget was because there were no less than six public hearings before the commission where the division disclosed its entire budget. It was true there was a cash flow problem. There was a major inflow of cash as new license fees and application funds for big-game tags came in. By midwinter there would be a cash flow problem again. It was true the auction tag money was not available; however, by the end of the fiscal year the money would be in the account. As to who monitored the division's expenditures, the list included county wildlife advisory boards, the commission, the legislature, the governor's office, the Budget Division, and the Department of Conservation and Natural Resources. Mr. Molini commented he had more people trying to help him manage the division than anyone he knew. Senator O'Donnell inquired about the $218,000 expense for the Department of Information Services. Mr. Molini explained the Division of Wildlife was a big user of DIS services. They provided annual mainframe services for the boat program and the license program, plus services for other activities. Senator O'Donnell asked how many terminals the division had. Mr. Molini stated the division was not networked to the mainframe computer system, other than through the batch system. Mr. Crawforth explained the boat registration and title system was connected through terminals to the mainframe computer. The privatization of the big-game drawing was performed by a private company located in Fallon. There was one terminal in each regional office and two in Las Vegas. Senator O'Donnell remarked an annual budget of $218,000 for tracking boat licenses seemed high. Mr. Crawforth indicated the expenses for boat licenses was well under $218,000. The mainframe service was a small part of the division's operations since the big-game drawing had been privatized. Senator O'Donnell asked what was included in the $218,000 expense. Mr. Crawforth explained the expense included the LISA system, which was the license and fee tracking system. Senator O'Donnell inquired who licensed the system. Mr. Crawforth explained the system was for the licenses sold at sporting goods stores. Senator O'Donnell queried how much was spent for the batch system. Mr. Crawforth stated he could provide the information to the joint subcommittee. Albert E. Boardman, Chief of Administrative Services, Division of Wildlife, replied $65,000 per year. Senator O'Donnell asked if $65,000 a year was expended to track licenses. Mr. Molini explained 170 license agents sent batch reports monthly to the division for inventory and accountability purposes. Senator O'Donnell stated he felt services could be provided for less than $218,000 annually. It seemed that agencies with special funds could syphon from the funds and call the expenses data process fees. Mr. Molini remarked he was not a computer expert, but he had made the same argument to DIS. He offered to provide a breakdown of the expenditures. When Mr. Spitler inquired if a helicopter had been requested in the budget, Mr. Molini replied no. The division had two helicopters, had replaced a fixed-wing airplane, and planned to "co-locate" with the Division of Forestry, so the division was not requesting a third helicopter. When Mr. Spitler asked if a performance audit had ever been conducted on the Division of Wildlife's customer base, Mr. Molini stated no. Mr. Spitler inquired why a performance audit had not been performed. Mr. Molini explained the division had a pretty good idea of the customers' feelings because they were so vocal. Mr. Spitler asked if other states conducted performance audits. Mr. Molini replied other states performed what the division called responsive management, which was more of a survey. Mr. Spitler remarked it was somewhat alarming to hear so many complaints from the public regarding the Division of Wildlife and suggested a polling of the customer base would help in addressing the problems. The most compelling argument was the division's revenue was fee-based, and customers should see a direct return from the dollars they invested. Mr. Molini remarked the state of Nevada was unique in that each and every county had a wildlife advisory board appointed by the county commission which provided a mechanism for input. Mr. Spitler commented the average person saw only Fish and Game, not county boards. Mr. Marvel stated some people were disturbed because the division was attempting to restock the Lahontan cutthroat trout at the expense of the brookies and rainbows. Mr. Molini remarked he had a lot of thoughts on the cutthroats but would save them for later. Mr. Arberry agreed with the comments made by Mr. Spitler and stated the complaints needed to be dealt with. Chairman Fettic remarked he hoped the people who had complaints, staff and Mr. Molini could get together to work out their problems. The area of the obligated reserves had caused a great deal of concern. Ms. Botts requested a meeting with the Division of Wildlife, the director's office and the Budget Division to discuss the position roster. HEIL WILD HORSE BEQUEST - PAGE 2017 Mr. Nolan wished to address the wildlife biologist position for the Wild Horse Commission. The position was not originally recommended for funding. However, Ms. Barcomb made an eloquent presentation, and without establishing a precedence of providing general fund money directly to a trust fund, it was deemed the best way to fund the position was through the Division of Wildlife. The request was to provide the position for the biennium which would allow Ms. Barcomb time for fund-raising. Catherine A. Barcomb, Director of the Wild Horse Commission, stated, as a one-person agency, during the preceding 56 working days she had attended 26 meetings, replied to 73 land-use planning documents, and responded to 481 telephone calls. It was impossible to keep up with the workload in light of other statutory obligations which needed to be met. The objective was to request a position for September through the end of the fiscal year plus one additional year. Filling the position would allow Ms. Barcomb to write grants, initiate a membership drive, publish a newsletter, and work with MasterCard on a program whereby the agency would provide 20,000 names to MasterCard and receive 1% of sales charged to the credit cards. The proceeds would be put into the grant program for land- use planning projects and pay for the position. Mr. Marvel expressed concern with the management of the wild horse herds. Ms. Barcomb agreed management of the wild horse herds was important but stated it was impossible for one person in the state of Nevada to keep up with management. Adding the position would help to promote better management of the herds. Ms. Giunchigliani inquired if the position would assist with management. Ms. Barcomb explained the agency had many statutory obligations like tourism and creating ranges for public viewing of wild horses which she had not addressed. The position would allow time to promote those projects plus provide better management. Ms. Giunchigliani asked if there was a plan for management in place but staff was not available to do so. Ms. Barcomb explained the federal government managed the program, and the state provided oversight. Each time the federal government performed an action in a herd area on grazing allotment, the agency would receive a land-use planning document, some being hundreds of pages long. Ms. Giunchigliani inquired if the groups affected by the land use document, for instance, a rancher using BLM land which had a wild horse herd, would then work out the relationship. Ms. Barcomb responded affirmatively. Senator O'Donnell inquired if Ms. Barcomb was paid for her services. Ms. Barcomb stated she was paid from the Heil Trust Fund. Senator O'Donnell inquired if the requested position would result in an increase in fees through the Division of Wildlife budget. Mr. Nolan responded no and explained the position would be funded by the state general fund for approximately 21 months to give Ms. Barcomb an opportunity to perform fund-raising activities. The agency operated off the interest from the $900,000 principal in the Heil Trust. Because of declining interest and income, the agency could not satisfy the statutory obligations with just one position. The position would be funded by the general fund through the Division of Wildlife for 21 months. There being no further business, Chairman Fettic adjourned the hearing at 10:35 a.m. RESPECTFULLY SUBMITTED: _________________________________ ___ Jonnie Sue Hansen, Committee Secretary Joint Subcommittee on Public Safety, Natural Resources and Transportation Assembly Committee on Ways and Means Senate Committee on Finance March 15, 1995 Page