MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session March 27, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Monday, March 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, Fiscal Analyst Bob Guernsey, Deputy Fiscal Analyst Jeanne L. Botts, Program Analyst Pamela Jochim, Committee Secretary OTHERS PRESENT: Lonnie L. Hammargren, Lieutenant Governor, Office of the Lieutenant Governor Gary Gehrm, Assistant to Lieutenant Governor, Office of the Lieutenant Governor John P. Comeaux, Director, Department of Administration Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration David Bash, Acting Director, Youth Correctional Services, Child and Family Services Division, Department of Human Resources Carol Jackson, Director, Department of Employment, Training and Rehabilitation Maynard Yasmer, Chief Financial Officer, Financial Management Section, Department of Employment, Training and Rehabilitation Donny L. Loux, Chief, Community Based Services, Rehabilitation Services, Department of Employment, Training and Rehabilitation Peter Lennon, Consultant Steven Vander Schaaf, President, Accessible Space, Inc. Beverly Perry, Director, Northern Nevada Center for Independent Living Lisa Erquiaga, Employee, Northern Nevada Center for Independent Living Reginald Bennett, Representative, Governor's Planning Council on Developmental Disabilities Fred Inman, Chairman, Independent Living Council Lyn Gondorcin, Consumer Education, Accessible Space, Inc. John Drew, Chief, Investigation Division, Department of Motor Vehicles and Public Safety Wayne Perock, Acting Administrator, Division of State Parks, State Department of Conservation and Natural Resources Steve Weaver, Chief of Planning and Development, Division of State Parks, State Department of Conservation and Natural Resources R. Michael Turnipseed, State Engineer, Division of Water Resources, State Department of Conservation and Natural Resources Barbara Willis, Director, Department of Personnel Robert Gagnier, Lobbyist, State of Nevada Employees Association Lieutenant Governor - Page 19 Lonnie L. Hammargren, Lieutenant Governor, Office of the Lieutenant Governor, distributed a revised budget (Exhibit C) for the lieutenant governor's office to the committee. Lieutenant Governor Hammargren referred the committee's attention to a recent article published in the Las Vegas Sun newspaper regarding the Lieutenant Governor's increased budget requests. The article pointed out the Lieutenant Governor has requested a 50 percent budget increase to cover increased travel plans and equipment purchases. The Lieutenant Governor stated he will be working 40 hours per week on state business. Since becoming Lieutenant Governor, he has met with several businessmen who will be moving their operations to Nevada because of government accessibility. He will be promoting an accessible, responsible, and flexible government. The Lieutenant Governor noted the Governor has accepted a proposal he made last year regarding the inclusion of a liaison person from the university system to sit on the Economic Development Commission. He commented the state needs to "tap into" the university system's expertise for business, tourism, and economic development. In referring to the revised budget (Exhibit C), the Lieutenant Governor stated he has requested an increase in staff salaries. The salary levels are justified, he maintained, because of the staff's expertise and the additional work load the staff will be expected to handle. He pointed out the agency's staff has worked nine out of the last 10 nights either contacting businesses or making business presentations. The Lieutenant Governor is requesting increased funding for out-of-state travel to expand the agency's efforts to market the State of Nevada. He indicated a recent trip to Washington, D.C., proved successful in decreasing the amount of time it takes to receive a permit to film on Bureau of Land Management property. He attended an international tourism and economic development conference in Mexico last year at his own expense and next year will be attending a Lieutenant Governor's conference in Mackinaw, Michigan and making numerous trips to California. An increase in operating expenses is requested to support current activities and planned additional activities. The Lieutenant Governor stated Operational Expenses have already been spent on the purchase of staff business cards and one ream of paper. He indicated the office equipment in the Lieutenant Governor's office is outdated and reported his medical secretary in Las Vegas wastes 3 hours a week to transport a more modern dictation machine from his medical office for use at the Lieutenant Governor's office. His medical office computer has been loaned to the Lieutenant Governor's Las Vegas office and his personal computer is being utilized at the Carson City office. The Lieutenant Governor stated he is proposing an Outreach Program which will combine the Nevada Commission on Economic Development and the Nevada Tourism Commission. Funding is requested for contract labor for a full-time high level University of Nevada liaison person. He reported that Dr. Hoover from the University of Nevada, Reno (UNR), has developed a Manufacturing Assistance Partnership, whereby UNR professionals assist small manufacturers with research and technical transfer efforts. The office is proposing a toll free "800" number which will assist businesses with high level technical support provided by the university system. Once the program is operating efficiently and successfully, it will be transferred to the Commission on Economic Development. Senator Raggio asked the Lieutenant Governor to provide the committee with a report outlining the Outreach Program in a more detailed fashion. In addition, the office is requesting funding for a Host Account to support expenses incurred for hosting or entertaining foreign dignitaries. Since January 1995, the Lieutenant Governor has hosted functions for foreign dignitaries from Finland, Austria, Japan, Thailand, New Zealand, and Russia. The Host Account will help expand Nevada's international trade potential. Senator Raggio thanked the Lieutenant Governor for his budget presentation and turned the committee's attention to bill amendments which were voted on by the committee on March 23, 1995. SENATE BILL 149: Makes supplemental appropriation to department of education for expenses related to residential and educational needs of children with disabilities. Senator Raggio noted testimony on Senate Bill (S.B.) 149 indicated the appropriation could be reduced from $870,659 to $603,311 and Amendment Number 169 to S.B. 149 makes that necessary adjustment. SENATE BILL 222: Makes appropriation to division of state lands of state department of conservation and natural resources for equipment. Senator Raggio stated the committee previously amended the bill by deleting $24,750 and inserting the amount of $24,350. Amendment Number 170 to Senate Bill 222 makes the necessary adjustments. SENATE BILL 211: Makes appropriation to mental hygiene and mental retardation division of department of human resources for certain equipment and refurbishment of facilities. Senator Raggio explained Senate Bill (S.B.) 211 was amended by deleting $824,752 and inserting $707,342. Amendment Number 171 to S.B. 211 makes the necessary adjustments. Senator Raggio opened the hearing on Amendment Number 172 to Senate Bill (S.B.) 117. SENATE BILL 117: Revises provisions governing issuance of certain revenue bonds of University and Community College System of Nevada. Senator Raggio related S.B. 117 was amended to allow the University of Nevada, Reno to increase the authorized bonding amount to $12 million and the University of Nevada, Las Vegas to increase bonding principal to $17.5 million. The bonding time period was also increased from 5 years to 9 years. Amendment Number 172 to S.B. 117 makes the necessary adjustments. SENATOR MATHEWS MOVED TO AMEND AND DO PASS S.B. 117 BY ADOPTING AMENDMENT Number 172 SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.) * * * * * Senator Raggio closed the discussion on S.B. 117 and opened the hearing on Senate Bill (S.B.) 215. SENATE BILL 215: Makes appropriations to division of child and family services of department of human resources for vehicles, equipment, supplies and building maintenance for certain youth bureaus. David Bash, Acting Director, Youth Correctional Services, Division of Child and Family Services, Department of Human Resources, came forward and testified the funding request is for replacement equipment and furnishings for the Nevada Youth Training Center, Caliente Youth Center and the Youth Parole Bureau. He clarified the lawn mowers requested are not riding lawn mowers. Senator Raggio asked why the two requested lawn mowers cost $750 apiece. Mr. Bash responded the mowers are commercial grade equipment. Mr. Bash stated the most costly items requested in S.B. 215 are the 15 passenger vans. Two vans are requested for the Cliente Youth Center and two for the Nevada Youth Training Center. Senator Raggio asked if any of the requested equipment will be utilized for the proposed juvenile boot camp. Mr. Bash replied, "No sir." Senator Jacobsen questioned if the division can purchase any of the requested items from Prison Industries. Mr. Bash explained a large number of the requested equipment items will be purchased from Prison Industries. Senator O'Donnell inquired why the bureau needed two airless spray paint guns. Mr. Bash said one spray paint gun will be located at the Caliente Youth Center and the second gun will be purchased for the Nevada Youth Center in Elko. Senator O'Donnell observed a price difference of $50 between the cost of the two spray guns and asked Mr. Bash for an explanation. Mr. Bash responded he does not have an explanation for the price difference, but he will research the issue and report back to the committee. Senator Raggio closed the hearing on S.B. 215 and opened the hearing on Senate Bill (S.B.) 216. SENATE BILL 216: Makes appropriation to department of employment, training and rehabilitation for developmental disabilities program. Carol Jackson, Director, Department of Employment, Training and Rehabilitation, stated $100,000 of the $227,427 requested to support low-income housing for persons with disabilities would be used to fund the submission of four applications to the United States Department of Housing and Urban Development, Section 811, Supportive Housing. She said each funded application generates 25 units of accessible and affordable housing for disabled low-income individuals. The appropriation will allow the agency to meet its federal matching requirement. She related the other $100,000 will be utilized over the next 2 years to create 10 accessible home ownership opportunities. The funding will allow the agency to add a "Home of Your Own Program" for affordable housing to persons with disabilities. The loans will be combined with grants, low interest loans, and consumer equities. Ms. Jackson stated the remaining funds from the appropriation will be split between developing Nevada's first community development housing organization and establishing assisted technology demonstration sites. Senator Raggio asked whether the funding request is sufficient to meet the agency's federal match requirement. Maynard Yasmer, Chief Financial Officer, Financial Management Section, Department of Employment, Training and Rehabilitation, explained the funds are sufficient if they are combined with the funds listed on page 1515 of the Executive Budget. The combined funds will come within $8,000 - $10,000 of the needed federal match. Senator Raggio questioned why the agency is not asking for the additional $8,000 - $10,000 in matching funds. Mr. Yasmer replied because budgets and federal funding change so much, the funds requested should be sufficient. Donny Loux, Chief, Community Based Services, Department of Employment, Training, and Rehabilitation, interjected the agency has an additional $15,000 in the Developmental Disability budget which can be utilized for the matching funds if necessary. Peter Lennon, Consultant, former director of the Illinois Housing Development Authority, stated he developed a program for the State of Illinois which helps persons with developmental disabilities finance single family homes. Disabled persons receiving a subsidy from the federal government are precluded by the federal government from having savings. Mortgage companies will not purchase loans from persons with disabilities because the disabled person does not use their own funding for a down payment, remarked Mr. Lennon. Mr. Lennon explained the state of Illinois began the program 2 years ago with funds from the state, a low-income housing trust fund, and federal grants. The program provides subsidies to disabled persons who want to be a home owner. The subsidies range from $2,000 to $30,000 depending on the neighborhood and type of dwelling being purchased. Currently, the state of Illinois has provided home owner assistance to 30 disabled individuals. The program has also provided housing for individuals who had previously been placed in state institutions. Program expansion demands are increasing not only in Illinois, but in other states. Mr. Lennon stated financial institutions are now becoming more involved in the program. The pilot program for Illinois will be ending in June 1995, but the state will continue the program by housing another 50 disabled individuals. Mr. Lennon pointed out the program could be adopted on a smaller scale for the State of Nevada. Senator Raggio asked how many units the program would accommodate during the next biennium. Ms. Loux stated it is estimated 10 people will be able to purchase their own home, but if the "buy downs" are lower than expected, then more disabled individuals may be accommodated. Senator Raggio questioned where the units would be located. Ms. Loux replied throughout the State of Nevada. She said the division has identified five disabled individuals who want to participate in the program. The units would be located in regular middle-class neighborhoods because most low-income housing units available to disabled persons are located in high crime areas. Steven Vander Schaaf, President, Accessible Space, Inc., testified the company was asked in 1990 to review Nevada's needs regarding accessible and affordable housing for persons with disabilities. He said a study conducted indicated there are less than 250 units throughout the state which are accessible and affordable. Since the company's involvement with the state, four successful Housing and Urban Development (HUD) Section 11 applications have been processed. Two units will be located in Las Vegas, one unit in Reno, and one unit in Carson City. He stated, if the funding is provided, another four accessible housing developments will be available, in addition to the 10 homes for the Own Your Own Home Program. Mr. Vander Schaaf pointed out S.B. 216 also provides for the development of a community housing development organization. The organization will be nonprofit and set up to receive "set-aside funds" from the Own Your Own Home Program. He noted the funds will be used "to lend assistance development dollars, as well as, operating dollars to the various housing projects throughout the state." Senator Raggio questioned if this is the only program the state sponsors regarding low- income housing for disabled individuals. Ms. Jackson responded HUD provides some programs for disabled persons, but the HUD programs do not address housing accessibility. Beverly Perry, Director, Northern Nevada Center for Independent Living, remarked accessible and affordable housing enables people with disabilities to be contributing independent people. She said it is her experience that housing which is determined to be accessible for disabled individuals is not truly accessible. After completing a survey of Fallon housing costs, the center discovered rental units ranged from $500 to $1,200 a month. She related one of the center's clients lives in a shed with no heating. The center deals with a number of individuals who are in nursing homes, but are capable of living on their own if accessible and affordable housing is made available. Recently, the center has funded construction for ramps and shallow steps for residences throughout the Fallon area. One disabled individual had not been able to leave his residence for 6 months because the residence did not have a ramp. Ms. Perry declared the demands in the Fallon area alone would fill up the proposed 10 housing units. She urged the committee to support S.B. 216. Lisa Erquiaga, Employee, Northern Nevada Center for Independent Living, testified she works with disabled individuals on a daily basis who greatly need accessible housing. In order for the center to successfully promote independent living, accessible and affordable housing is needed. Ms. Erquiaga related two of the center's clients live in a "marginal rooming house" which has recently been put up for sale. When the rooming house is sold, the two individuals most likely will be placed in nursing homes. Senator Rhoads asked how many disabled individuals have been identified in rural communities in northern Nevada. Ms. Perry responded the center has just begun an outreach program to the rural areas. Senator Rhoads asked whether the center's jurisdiction extends to Elko County, Lander County, Humbolt County, and Eureka County. Ms. Perry replied a satellite office covers Elko County and northeastern Nevada. Reginald Bennett, Representative, Governor's Planning Council on Developmental Disabilities, came forward and read a letter (Exhibit D) to the committee from George Brown, Chairman, Developmental Disabilities Council. Mr. Brown's letter urged the committee to support S.B. 216. Fred Inman, Chairman, Independent Living Council, testified he has a severely disabled son who has been unable to find adequate housing in the Las Vegas area. His son placed an application with the Las Vegas Housing Authority, but the application will not be "acted on" for 18 months. Mr. Inman stressed Nevada needs to do more to help disabled persons and elderly persons with their housing concerns. Lynn Gondorcin, Consumer Educator, Accessible Space, Inc., stated in addition to working on housing projects, the company is also involved in community affairs. Ms. Gondorcin indicated she sits on the Washoe County Board for Affordable Housing. Although the board has many projects regarding low-income housing, not one of the projects addresses accessible living space for disabled persons. She said Nevada is a progressive and proactive state in addressing low-income housing needs and hopes the committee continues this trend by supporting S.B. 216. Senator Raggio closed the hearing on S.B. 216 and opened the hearing on Senate Bill (S.B.) 219. SENATE BILL 219: Makes appropriation to investigation division of department of motor vehicles and public safety for replacement of vehicles. John Drew, Chief, Investigation Division, Department of Motor Vehicles and Public Safety, came forward and distributed a handout (Exhibit E) listing the division's vehicles and the mileage on each vehicle. He noted S.B. 219 requests the replacement of 45 division vehicles. Due to economic circumstances, the division has not been able to replace any vehicles for approximately 5 years. Senator Raggio noted the division has 41 investigative personnel and asked why 45 new vehicles are requested. Mr. Drew responded the division has 43 investigators, and explained, in addition to the vehicles used by investigators, the division also maintains undercover vehicles. Two investigators' salaries are covered by a discretionary grant, but the grant funds do not cover vehicles costs. Senator Raggio stated there is no record the division's existing vehicles were purchased through the state Purchasing Division and asked how the vehicles were acquired. Mr. Drew said all vehicles, except those received by the division from forfeitures, are purchased from the state Purchasing Division. Senator Raggio questioned if some of the vehicles requested for Peace Officers Standards and Training (POST) could be purchased with forfeiture funds. Mr. Drew explained the division has utilized forfeiture funds to purchase vehicles, but the funds are primarily used to provide the match needed for a federal grant. He stated forfeiture funds are not a reliable source of funding because the amount differs so much from year-to-year. Senator Jacobsen asked how the division maintains its vehicles. Each year, Mr. Drew replied, the division contacts garages and car dealerships for quotes on service. Senator Jacobsen commented a Vocational Technical Center may be implemented at the Stewart facility and the division possibly could have their vehicles serviced at the center. Mr. Drew agreed the division could take the vehicles to the facility for routine maintenance. Senator Raggio asked whether the vehicle request takes into consideration a trade-in allowance for current vehicles. Mr. Drew replied historically the division receives only a $500 - $750 trade-in allowance per car because of high mileage and the overall age of the vehicle. He explained S.B. 219 provides that any remaining funds not committed to vehicle purchases will revert back to the General Fund. Senator Raggio closed the hearing on S.B. 219 and opened the hearing on Senate Bill (S.B.) 220. SENATE BILL 220: Makes appropriation to division of state parks of state department of conservation and natural resources for various expenses. Wayne Perock, Acting Administrator, Division of State Parks, State Department of Conservation and Natural Resources, came forward and distributed a handout (Exhibit F) detailing proposed park improvements, replacement and new equipment requests, and computer equipment requests which are included within S.B. 220. Steve Weaver, Chief of Planning and Development, Division of State Parks, State Department of Conservation and Natural Resources, stated the division's original Capital Improvement Program (CIP) request included 25 priority projects. The agency's funding request for the projects totaled $5.6 million, but the Governor only recommended $1 million in funding. The appropriation recommended by the Governor will only fund eight of the division's priority projects. He said all the projects are badly needed and are a result of years of deferred maintenance. In addition, $468,000 in federal funds will be made available to the division during the next biennium, if $419,000 in matching funds are appropriated. Mr. Weaver commented the division needs the flexibility to move funds from one area to another in the event projects cost less or need to be canceled. He requested that the bill contain specific language giving the division the authority to move funds from one project to another if necessary. Senator Raggio noted Jeanne L. Botts, Program Analyst, Fiscal Analysis Division, has suggested amendment changes to S.B. 220. Ms. Botts explained the bill as written, does not indicate an expenditure limit for each proposed project. Senator Raggio asked fiscal staff if the bill would be acceptable if it included a funding limit for structural and other improvements. Ms. Botts suggested the $1 million requested in the bill for park improvements be broken down on a per-park basis. The division could move funds between projects with Interim Finance Committee (IFC) approval. She recommended the $1 million park improvement funds be utilized as follows: Washoe Lake State Park $130,000; Lake Tahoe, Nevada State Park $97,740; Spring Valley State Park $302,600; Cathedral Gorge State Park $30,310; Spring Mountain Ranch State Park $281,850; Valley of Fire State Park $135,000; and Fort Churchill State Park $22,500. Ms. Botts suggested the $491,000 recommended by the Governor for new and replacement equipment be reduced to $474,270. She proposed reducing the firearm request from seven semi-automatic pistols, 26 shotguns, and 36 crime scene cameras, to two semi-automatic pistols, eight shotguns, and 10 cameras. The firearm reduction will save $17,106. Senator Raggio pointed out a $902 error in "start-up equipment" for the new visitor's center at Big Bend of the Colorado State Park. Ms. Botts replied there is an addition error and she has reduced the figure accordingly. Referring to section 3 of the proposed amendment, Ms. Botts stated she has placed language in the amendment to clarify that payments may be made through the last Friday in August immediately following Fiscal Year (FY) 1996 and FY 1997. Section 4 of the amendment provides authority to move funds between park projects with IFC approval. Senator Raggio questioned if the Division of State Parks approved of the suggested bill amendments. Mr. Weaver related he agrees with the amendments as long as the division is authorized to use excess funds from park improvement projects for federal matching funds. Senator Raggio suggested the language in section 4 of the proposed amendment could be changed to accommodate other park projects, if IFC approval is designated. Mr. Perock said he accepts the proposed changes to S.B. 220. Mr. Perock informed the committee the State Parks' Cultural Arts Board will donate approximately $20,000 for replacement of an existing irrigation system and landscaping at the Spring Mountain Ranch State Park if the donation is authorized by the Legislature. Senator O'Donnell pointed out the donation must be acted on by the Legislature rather quickly because the proposed renovation needs to be completed before the park's performance season begins. Mr. Perock said the donation acceptance will be placed on the next IFC agenda. Senator O'Donnell asked when the next IFC meeting is scheduled. Dan Miles, Fiscal Analyst, Fiscal Analysis Division, responded an IFC meeting has not been scheduled, as yet. Senator O'Donnell questioned if the division could match the donation through federal funds. Mr. Weaver replied there are no federal funds available which will accommodate this type of a project. He said land and conservation funds from FY 1996 could be used, but FY 1995 funds have already been allocated. Senator O'Donnell inquired if the funds for the pond renovation project could be utilized for the project. Mr. Weaver explained the funds for the pond renovation project are subject to passage of S.B. 220 and will not be available until after June 30, 1995. He said the division currently has no funds available for the irrigation project. Senator Mathews asked if the weapons reduction suggested by Ms. Botts will affect the division's law enforcement ability. Because of the multitude of weapons used by the division's peace officers, explained Mr. Perock, different types of training and ammunition have to be provided. The state furnishes the officers with weapons and practice ammunition, but due to costs and practical considerations, the division is attempting to standardize its weaponry. Ms. Botts, referring to the $20,000 donation from the Cultural Arts Board, stated once the Budget Division receives a request from the division regarding the donation acceptance, the Budget Division can forward the request to the IFC and ask for expeditious action. Mr. Perock commented the division has recently received a letter from the Budget Division regarding this matter. He has instructed Mr. Weaver to gather the necessary information and send it to the IFC. Ms. Botts stated a second set of proposed amendments to S.B. 220 dealing with the "Question 5 Park Bond Projects," Senate Bill (S.B.) 189 of the Sixty-fifth Session, authorized the issuance of $47.2 million in park bonds for Question 5 projects. SENATE BILL 189 OF THE SIXTY-FIFTH SESSION: Directs submission of proposal to issue bonds for acquisition of property and water rights to protect and preserve natural resources of state. Although the park bonds included $300,000 for preparation of feasibility studies, presently, the division's feasibility study expenditures will total $314,000. In order for the division not to exceed its statutory limit of $300,000, S.B. 189 of the Sixty- fifth Session must be amended. Ms. Botts suggested S.B. 189 of the Sixty-fifth Session could be amended by decreasing the amount allocated for land acquisitions and facility development by $14,000 and increasing the amount allocated for feasibility studies by $14,000. Senator Raggio inquired why the studies will cost $14,000 more than anticipated. Mr. Weaver explained the division is now required to pay management fees which were not anticipated when S.B. 189 of the Sixty-fifth Session was drafted. Senator Jacobsen asked about the division's firearm request. Mr. Perock explained the weapons wear out due to the practice requirements for POST qualification. He said the weapon request for 40 caliber firearms will standardize the division with other law enforcement agencies. Senator Coffin complimented the division regarding the Old Las Vegas Mormon Fort State Historic Park. He noted the new park has been very successful and he especially likes the division's use of volunteers. Mr. Weaver related the division will be using volunteers to build the trail and boardwalk at Sand Harbor. Senator Rhoads asked if any park rangers have ever fired a weapon in the line of duty. Mr. Perock replied, several years ago at Floyd Lamb State Park, a ranger used his weapon during a concession robbery. Senator Raggio closed the hearing on S.B. 220 and opened the hearing on Senate Bill (S.B.) 221. SENATE BILL 221: Makes appropriation to division of state parks of state department of conservation and natural resources for various expenses. R. Michael Turnipseed, State Engineer, Division of Water Resources, State Department of Conservation and Natural Resources, testified S.B. 221 appropriates $41,737 for equipment purchases. Mr. Turnipseed distributed a list (Exhibit G) detailing the equipment which will be purchased with the funds appropriated by S.B. 221. Senator Jacobsen asked if Prison Industries would be able to provide the division with any of the equipment listed in Exhibit H. Mr. Turnipseed replied the division does use Prison Industries, but there is nothing in S.B. 221 which could be made by the prison. Senator Raggio closed the hearing on S.B. 221 and referred the committee's attention to Senate Bill (S.B.) 223. The chairman noted the committee had previously heard testimony on S.B. 223, but had requested more detailed information. SENATE BILL 223: Makes appropriation to channel clearance account. Mr. Turnipseed explained the division had to draw on the Channel Clearance Account in September of 1993. The Interim Finance Committee (IFC) restored the account on May 4, 1995, but since that time, Brenda Erdoes, Legislative Counsel, Legislative Counsel Bureau, has researched the issue and found no statutory authority allowing the IFC Contingency Fund to allocate funds to the Channel Clearance Account. Mr. Turnipseed noted the account has only been drawn upon six times in its 20 year existence. Senator Raggio commented the proposed amendment to S.B. 223 would create an account for channel clearance, surveying and monumenting program to be administered by the state engineer. He indicated the amendment would also allow replenishment of the account by the IFC when the Legislature is not in session. The chairman asked if Mr. Turnipseed agrees with the proposed amendment. Mr. Turnipseed said the amendment is acceptable. Senator Jacobsen questioned whether the division preforms any preplanning regarding excess channel brush and fallen trees. Mr. Turnipseed responded the division does not preform preplanning for fallen trees, but they do preplan prison crew use for channel clearance duties. Senator Raggio referred the committee to page 95 of the Executive Budget. Bond Interest & Redemption - Page 95 Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration, came forward and distributed a booklet (Exhibit H. Original is on file in the Research Library.) depicting the state's general obligation debt plan. He noted the budget contains several errors and a revised budget will be submitted to the committee at a later date. Mr. Hataway related the base budget continues to fund principal and interest payments on bond debt. Budget category M200 recommends issuance of bonds for the Capital Improvement Program (CIP) in the aggregate amount of $43,400,000 in August, 1995 and $34,179,946 in August, 1996. He noted budget calculation regarding property tax revenues generated from the 15-cent tax rate are understated. Mr. Hataway explained, "I balanced the Balance Forward dollars from the previous year and drove the real property tax figure down." He stated the Reserve funds are needed to pay debt requirements and meet the needs of the debt as principal and interest payments change over the next biennium. Senator Raggio questioned what specific changes will be made to the budget. Mr. Hataway referred the committee to page 96 of the Executive Budget and stated the budget category of Other - State for Fiscal Year (FY) 1996 will change from $39,202,370 to $44,434,846, and in FY 1997, the corrected amount is $47,000,014. He related the Assessed Valuation figures in Exhibit H on page 2 of section 2 will be updated by the Department of Taxation. Mr. Hataway stated the second error made in the budget deals with the interest calculated on Capital Improvement Bonds. He explained he included escrow funds which are passed through the Capital Improvement Bond account from the escrow agent. He indicated the funds should not have been reflected in the interest part of the CIP. Because of the correction, the budget's Reserve account will be higher in FY 1997 than what was projected; however, the 15-cent tax rate will need to be maintained through the year 2003 in order to meet the principal and interest requirements for debt retirement. Senator Raggio asked if the budget projections will change because of the new prison budget. John P. Comeaux, Director, Department of Administration, answered the projections will not change. He stated the department is recommending that additional prison construction be funded out of the General Fund. Senator Raggio questioned what the amount would be for the additional prison construction. Mr. Comeaux replied the Lovelock Prison addition and the honor camp addition totals approximately $13 million. Senator Raggio inquired what accounts in the Executive Budget would be reduced to accommodate the $13 million in additional prison construction. Mr. Comeaux responded prison construction funds will be provided from unappropriated General Fund dollars. He explained $13 million will be added to the CIP for the current biennium. Mr. Comeaux indicated the bond debt listed for projects on page 95 of the Executive Budget will not change. Senator Raggio asked for committee introduction of Bill Draft Request (BDR) R-1933. BILL DRAFT REQUEST R-1933: Expresses disapproval of certain recent actions of Governor and Attorney General of the State of Nevada. Senator Raggio commented he anticipates the action will be prepared as a Senate Resolution. Senator Coffin asked if hearings will be held on the issue. Senator Raggio said the issue will be debated on the floor of the Senate. SENATOR RAWSON MOVED FOR COMMITTEE INTRODUCTION OF BDR R-1933. SENATOR JACOBSEN SECONDED THE MOTION. Senator Coffin stated he would like to hold hearings on BDR R-1933 due to the constitutional questions raised in the proposed resolution. He noted he is reluctant to vote favorably for the measure without a full hearing. Senator Rawson stressed the debate on the measure could be held on the floor of the Senate. Senator Mathews noted a hearing should be held so the issue can be debated by all those concerned. Senator Rawson interjected he understands Attorney General Del Papa has asked for injunctive relief and an immediate court hearing. Senator Jacobsen stated, "The Governor or the attorney general did not hold a hearing to determine how the constituency felt." He declared the Legislature has the right and obligation to act on this measure. Senator Raggio noted BDR R - 1933 as drafted is a Concurrent Resolution and he suggested the measure be changed to a Senate Resolution. Senator Rawson concurred with Senator Raggio's suggestion. THE MOTION CARRIED. (SENATORS MATHEWS AND COFFIN VOTED NO.) * * * * * Highway Fund Salary Adjustments - Page 469 Mr. Comeaux testified the budget funds salary increases for positions funded from the Highway Fund. The increases recommended include a 4 percent increase effective July 1, 1995, and an additional 3 percent effective July 1, 1996. He stated he has recalculated the amounts required for the increases and the original amounts have been overstated. The corrected amounts are $3,926,131 for FY 1996 and $7,066,876 for FY 1997. Senator Raggio questioned what a 1 percent increase would represent. Mr. Comeaux stated each 1 percent totals $981,533 annually. Senator O'Donnell asked why the amounts have to be corrected. Mr. Comeaux explained the Budget Division's original calculation included gross salary and fringe benefits cost. The calculations should have included only two fringe benefits: retirement and Medicare. Senator O'Donnell inquired where the funds will come from for the other fringe benefits. Mr. Comeaux responded the other fringe benefits are not affected by the salary increases and have already been included in the budget. General Fund Salary Adjustments - Page 471 Mr. Comeaux commented the budget represents the amount necessary to fund the recommended 4 percent salary increase effective July 1, 1995, and an additional 3 percent effective July 1, 1996 for positions funded from the General Fund. He distributed a handout (Exhibit I) detailing the necessary salary adjustments. He noted the figures were revised because the original calculation for classified and unclassified state employees was understated. The General Fund appropriation should be increased by $942,112 for FY 1996 and increased by $1,836,119 for FY 1997. The salary adjustment totals approximately $2.8 million. Mr. Comeaux related adjustments were made to two other General Fund budgets. The adjustments made to the Retired Employees Group Insurance budget and the Social Services Block Grant offset the increases made to the General Fund Salary Adjustment budget. He commented the Budget Division failed to consider how the Social Services Block Grant are interconnected and as a result the General Fund requirement was overstated. Senator Raggio asked for an explanation regarding the Executive Budget's recommended salary increase. Mr. Comeaux responded state employees and university personnel have not received a cost of living increase (COLA) for the last 3 years. He said Governor Miller asked him to try and fund a salary increase which would equal the increase in the Consumer Price Index (CPI) for the last 3 years. The CPI increase for the last 3 years is approximately 12 percent and Mr. Comeaux remarked a 12 percent increase was not possible. He was asked by the Governor to fund a salary increase as large as possible for FY 1996 and then the increase for FY 1997 would be tied to the CPI for that year. In terms of including the various employee groups, traditionally, funding has been provided in the Distributive School Account for salary increases for classroom teachers and university personnel. Senator Raggio questioned when the funds would be paid for the additional prison construction. Mr. Comeaux responded the scheduled completion date for the project is April of 1997. He indicated most of the payments on the project would be made in the first year of the biennium. Senator Raggio observed expenditures exceed revenues by $53 million in the second year of the biennium. Mr. Comeaux said the figure is correct if the estimated figures for the 1997 Legislative Session are included. Senator Raggio noted his concern regarding the salary increases due to the fact the second year of the biennium indicates a budget deficit. Mr. Comeaux commented the revenues in the 1998-1999 biennium will have to grow sufficiently to cover the deficit created in FY 1997. He stated: It does represent a risk that we recommended. It is not a huge risk in my opinion, in that we can grow out of that in the following biennium. But, we will be subject to future events that we have not formally attempted to forecast at this point. Senator Raggio asked if Mr. Comeaux, in his position as Director of the Budget Division, feels comfortable in recommending the proposed salary increase. Mr. Comeaux responded the revenue growth the state needs to experience in order to cover the deficit requires consistent and healthy growth. Barbara Willis, Director, Department of Personnel, came forward and distributed two handouts to the committee. Exhibit J (Original is on file in the Research Library.) represents a 1994 salary survey conducted by the department and Exhibit K provides an overview of the department's survey. Ms. Willis said the Nevada Revised Statutes 284.175(5) requires the department to conduct surveys of salaries of comparable jobs in government and private industry within the Western states. When making salary recommendations, the statute also requires the department to consider such factors as: changes in cost of living; rate of turnover and recruitment difficulty; and maintenance of an equitable relationship among classifications. A survey is also conducted to determine the state's competitive position in the marketplace. Ms. Willis noted 77 employers were invited to participate in the survey and 61 responded. She pointed out Exhibit K contains a list of the employers participating in the survey. Referring to page 3 of Exhibit J, Ms. Willis indicated the chart reflects Western state survey participants. The survey participants represent 12 percent of the employees in the state's labor force. Ms. Willis remarked the survey results indicate Nevada salaries are 2.64 percent below other employees. She noted the state of California did not participate in the survey. The survey indicates salaries for state employees are 13.5 percent below all other Nevada salaries and are 20.6 percent less when compared to salaries paid by the southern Nevada labor market. Senator Raggio commented the state cannot compete with Clark County salary increases. Ms. Willis said the salary surveys conducted in the last 4 years indicate an erosion in state employee salaries. In 1990, the state was below the Nevada market by 6.7 percent, and in 1994, state salaries were behind by 13.5 percent. In developing the survey, the department selected 45 benchmark classes for the purpose of reviewing salaries for state employees and determining how the classification compares to like posts. Senator Mathews asked if the salary information for the City of Reno pertains to union employees. Ms. Willis responded the survey includes all City of Reno employees. Senator Mathews stated some of the survey information regarding City of Reno employees is incorrect. She suggested the salary figures for the City of Reno be reviewed. Ms. Willis replied the department will look into the matter. Senator Raggio stated he would like the department to prepare a salary comparison which does not include Clark County salaries. Robert Gagnier, Lobbyist, State of Nevada Employees Association, pointed out the survey results do not include information on California salaries. He said, in the state of California, a correctional officer's beginning salary is $222 higher than in the State of Nevada. A California correctional sergeant's beginning salary is $1,300 above Nevada's starting salary. Senator Raggio noted California employees also have to pay state income taxes. Dan Miles, Fiscal Analyst, Fiscal Analyst Division, Legislative Counsel Bureau, announced a revised prison budget has been completed and a copy will be placed in each senator's budget book. In addition, a prison budget summary (Exhibit L) was provided to the committee members. There being no further committee business, Senator Raggio adjourned the meeting at 10:45 a.m. RESPECTFULLY SUBMITTED: Pamela Jochim, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance March 27, 1995 Page