MINUTES OF THE JOINT SUBCOMMITTEE MEETING OF ASSEMBLY COMMITTEE ON WAYS AND MEANS AND SENATE COMMITTEE ON FINANCE ON GENERAL GOVERNMENT Sixty-eighth Session April 7, 1995 The joint subcommittee meeting on General Government of the Committee on Ways and Means and the Senate Committee on Finance was called to order at 7:40 a.m., on Friday, April 7, 1995, Chairman Tiffany presiding in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Morse Arberry, Jr., Chairman Mr. John W. Marvel, Chairman Mrs. Jan Evans, Vice Chairman Ms. Sandra Tiffany, Vice Chairman Mr. Dennis L. Allard Mrs. Maureen E. Brower Mrs. Vonne Chowning Mr. Jack D. Close Mr. Joseph E. Dini, Jr. Mr. Thomas A. Fettic Ms. Chris Giunchigliani Mr. Lynn Hettrick Mr. Bob Price Mr. Larry L. Spitler SENATE COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bob Coffin Senator Bernice Mathews GUEST LEGISLATORS PRESENT: Mrs. Vonne Chowning STAFF MEMBERS PRESENT: Mark Stevens, Fiscal Analyst Gary Ghiggeri, Deputy Fiscal Analyst OTHERS PRESENT: See attendance roster Chairman Tiffany announced the readjustment of the agenda. Senator Townsend and Assemblywoman Vonne Chowning would be first in line to speak to be followed by the three Consumer Affairs budgets, the Labor Commissioner, Plant Industry, Livestock Inspection, Minerals Division, and the Taxicab Authority. Chairman Tiffany welcomed Senator Townsend and Mrs. Chowning. Senator Townsend stated he appeared before the committee as Chairman of the Commerce and Labor Committee and as an elected official who was interested in auto repair fraud and had written much of the law currently in statute. He indicated the state was facing a documentable arena of complaints, particularly in southern Nevada, in the area of automotive repair. Referring to Ms. Chowning's BDR 52-9 (Exhibit C), Senator Townsend maintained it addressed the specific problem of monitoring garages that repair motor vehicles. He suggested the state contract with an automotive expert to train Consumer Affairs Division employees how to properly investigate garagemen. He stressed the financial restructuring of the department had merit. Ms. Tiffany why this particular time had been chosen to draft the BDR. Senator Townsend said the department has not been able to keep up with the escalating complaints in regard to automotive repair issues. He was overwhelmed by the written complaints which have mushroomed to a dramatic proportion. Ms. Tiffany asked whether the subject had been previously addressed in bill form. Senator Townsend replied the BDR was attempting to address public policy. He said the issue was not accepted in previous legislative sessions due to its expense and the poor working relationship that occurred in the past between the Commerce Department and Attorney General's office. He noted there presently existed a closer working relationship between the two departments in relation to consumer rights. Ms. Chowning reported the majority of her constituents drove used cars. One of her primary consumer complaints was auto repair fraud. She indicated the bill appearing last session dealt with licensing auto repair businesses. The bill was not approved by the Assembly Commerce Committee because the auto repair businessmen asked for a two-year delay in order to clean up the trade. From their clean up effort the businessmen were able to draw 50 businesses into an association; Mrs. Chowning estimated there being 1600 auto repair businesses in the state. Ms. Tiffany summed up Mrs. Chowning's reply by saying it looked as if the previous session's bill did not pass due to lobbying efforts by auto repair businesses. Mrs. Chowning agreed. Ms. Giunchigliani commented she saw the main difference as being registration versus licensing and asked Mrs. Chowning to define the two. Senator Townsend replied registration identifies the physical location and name of a business. It does not apply to the management of the business and does not require the business to meet any type of criteria. The registration fee will be used to fund a consumer affairs effort that will deal with deceptive trade practices. The bill will allow the Attorney General's office to establish a pattern of fraud. Licensure establishes a substantial amount of guidelines that must be adhered to and requires constant regulatory authority. Mrs. Brower asked Mrs. Chowning how she determined the $200 figure. Mrs. Chowning replied automobile wreckers, salvage pools, and body shops are charged a $300 annual license fee. She felt $200 was a very fair figure; the other alternative would be deleting the charge and funding the program with General Fund dollars. Ms. Giunchigliani commented the issue of registration was a beginning step. Licensing could become an issue if there remained problems or the issue of safety or complaints changed. Senator Jacobsen explained rural automotive businesses combine many automotive services under one roof and asked whether one fee covered all services. Mrs. Chowning said one fee did not cover all services; she did not want to impact the business person any further than necessary. The bill did not require a bond. The bill states separate fees would be required for each type of repair service. DEPARTMENT OF BUSINESS AND INDUSTRY CONSUMER AFFAIRS - PAGE 811 Ms. Patricia Morse Jarman, Commissioner of the Consumer Affairs Division (CAD) introduced herself to the committee. Referring to the division's projected revenue of $150,000, Ms. Tiffany asked how confident the division felt in regard to the collection of the revenue and what their contingency plans were should it not materialize. Ms. Jarman responded the $150,000 was based on cases pending within the division. She noted they were working closely with the Attorney General's office and were confident the monies would be collected. Ms. Tiffany asked how many cases from the deceptive trade actually were taken to the Attorney General's office. Ms. Jarman believed there were twenty and yielded to the division's Deputy Attorney General, Margaret Stanish. Ms. Stanish reported her office had seven lawsuits pending related to deceptive trade practices that were totally unrelated to telemarketing. The remaining twenty lawsuits involved telemarketing of some form. Ms. Tiffany asked what percentage of the seven lawsuits would go to litigation. Ms. Stanish predicted most would settle out of court; her division preferred avoiding the expense of litigation due to their limited resources. Referring to the seven cases, Ms. Tiffany asked how many would be litigated and how many would be settled prior to litigation. Ms. Stanish responded all seven were already filed in court and would probably be settled, not tried. Ms. Tiffany asked how many Attorney Generals were assigned to deceptive trade. Ms. Stanish replied there were four attorneys on staff who have been totally funded by telemarketing revenue and fees since 1993. She noted the use of her office's resources were restricted to telemarketing, however, they do make time available to the best of their ability to address other deceptive trade practices. Ms. Tiffany concluded zero cases were to deceptive trade. Ms. Stanish responded this was true since 1993. Before 1993 the status was .5 attorneys for the entire state. Ms. Tiffany asked for Ms. Stanish's opinion regarding the joint responsibilities between the two offices. Ms. Stanish responded there had been a tremendous turnaround within the past year. She was confident her office would be able to work with the Consumer Affairs Division and address what had been avoided in Nevada law in the past. Ms. Stanish indicated her office handled 12,000 consumer complaints within an 18-month period that related to telemarketing. The Consumer Affairs Division handled everything else. As part of their Joint Memorandum of Understanding, the two offices have a procedure for referring cases to each other in an effort to streamline the process. Quoting from a memo written by Ms. Stanish on February 28, Senator O'Donnell read, "only one case was referred to the Attorney General's Office for legal action and the office is currently settling the matter by way of assurance and discontinuance and anticipates collecting only $16,500 from the case in fiscal year 1995. In 1995 we have been working with the division investigators on three potential lawsuits." He asked what had happened since then. Ms. Stanish replied they get cases from sources other than the Consumer Affairs Division. The office participates in multi-state actions with other states and other agencies also refer cases to them. She reported since December of 1994 the Attorney General's Office has been working with the division on a case which will result in a significant settlement in addition to three separate investigations that should result in litigation. Senator O'Donnell asked whether Ms. Stanish was working mainly on telemarketing. Ms. Stanish replied yes, based on attorney time sheets. Although her office worked primarily on telemarketing, time was also devoted to deceptive trade. Senator O'Donnell asked if the purported revenue collected for deceptive trade came from automobile registration. Ms. Jarman replied money came in from telemarketing not automobile registration. Senator O'Donnell, quoted from the new budget, page 6, "telemarketing funding for fiscal year 1995-96 revenue total: $0." Ms. Deborah Erickson of the Budget Division explained the figure was an adjustment to the current budget. She said it took into effect what was currently in the budget document; the latest proposal was an augmentation to the Executive Budget. In the telemarketing budget on page 819 of the Executive Budget, no General Fund monies were indicated. Referring to page 6, Ms. Erickson noted the amount was a balance forward not a General Fund figure. Senator O'Donnell asked whether the fees in the telemarketing budget were stabilizing. Ms. Erickson said the intent was to leave the fees as they were, decrease some of the expenditures and move some of the other additional fee increases into the budget account 3811 which would help the deceptive trade unit as opposed to the telemarketing unit in budget account 3845. Senator O'Donnell remarked Ms. Erickson's explanation was difficult to follow. Referring to Sports Information businesses, Ms. Jarman reported they were placed into telemarketing and have been paying $6,000 since the creation of the unit, however, her office had reasons to believe in the very near future the Gaming Control Board would take full jurisdictional authority over the businesses. She said in anticipation of the Control Board's move, Consumer Affairs has removed the businesses from their budget. Ms. Stanish was under the opinion Gaming Control had a BDR pending to further strengthen their statutory authority over Sports Information. Senator O'Donnell reminded those testifying the Legislature decides where Sports Information businesses should be placed. Ms. Jarman believed the Gaming Control Board had the statutory authority over the businesses. Senator O'Donnell responded the businesses were presently defined as telemarketers and paying the $6,000 fee. He maintained a BDR was necessary so the Legislature could clearly delineate their placement. Senator O'Donnell expressed his concern over whether or not the automobile repair shops would be funding the Consumer Affairs Division at their own expense in order to police the telemarketing units. Ms. Jarman said regardless of whether a bill passes allowing their division, they will still continue to address the fraudulent issues of illegal automobile repair and illegal telemarketing. Senator O'Donnell asked how much money would come in from the telemarketers in the next biennium. Ms. Joanne Gierer, Program Assistant IV (CAD), stated the amounts they anticipated collecting were based on the actuals for 1994 and amounted to $336,000 per year (offset by the telefunding in lieu of the sportsbooks they did not anticipate regulating any longer). Ms. Erickson explained the line item detail has a specific amount in it for telemarketing registration which is $336,000 per year; administration and application fees account for the rest of the $500,000. Senator O'Donnell asked how much total revenue was expected over the biennium for the telemarketing unit. Ms. Erickson said it remained at $500,000 level in the Executive Budget. The telemarketing proposal being presented did not change their revenue projections. In response to Senator O'Donnell's question regarding there being General Fund dollars in the $500,000 figure, Ms. Erickson replied there were none. Senator O'Donnell asked how much the division anticipated collecting from licensure of automobile repair shops. Ms. Jarman said the division had identified there being 1,647 automobile repair shops (excluding service stations). Based on information gathered from other states, the division predicted registering approximately 800 businesses the first year which would generate $250,000 ($200 per business). Based on case histories of other states, 75% of the auto repair businesses will be registered in the subsequent year and revenues are expected to amount to $375,000. The total over the biennium would be $575,000. Senator O'Donnell summed up the conversation by recounting the division's revenue statistics should BDR 52-9 pass: 1. $575,000 would be collected from registration of auto repair shops; and 2. $500,000 would be collected from telemarketers. He noted the division handled 13 telemarketing cases and seven automobile repair cases. Ms. Stanish stated the division's legal support under the current law is concentrated on criminal efforts and they have stretched their resources to do other deceptive trade practices. She maintained her office is primarily a telemarketing law enforcement unit at the present time. Senator O'Donnell acknowledged that was his point; the office was spending its energy on telemarketers yet most of the money was being collected from automobile registration. Ms. Stanish stressed this was not correct. She stated the proposal was to restructure both the Attorney General's and Consumer Affairs Division's resources. There would be a diversification of funding from telemarketing and auto repair, the two industries within the state that generate the most consumer complaints. The General Fund monies would support the overall consumer protection function in Nevada. Since the division will not be totally reliant on telemarketing due to the addition of General Fund monies, she felt the division would be able to address the consumer problems of Nevadans. Mr. O'Donnell asked for a clarification of General Fund dollars. Ms. Stanish said the Governor had recommended the Attorney General's office budget receive General Fund monies directly. Ms. Tiffany maintained there was a shift in deceptive trade that went to General Fund from telemarketing. She noted $57,116 in FY 96 and $61,860 in FY97 was requested to replace transfers from Consumer Affairs Telemarketing budget due to the telemarketing revenue shortfall. She asked whether the remainder was to come from a lawsuit. Ms. Jarman replied the remainder would come from settlements that were pending which they were confident would be collected. Ms. Tiffany said according to the committee's information, only one lawsuit had been turned over, yet according to the division's AG representative there were seven lawsuits pending to be settled. Ms. Tiffany was not sure how many lawsuits the division had and whether they were out of the telemarketing budget or Consumer Affairs Division budget. Attorney General Frankie Sue Del Papa attempted to clear up the situation. She stated two years ago concerns were voiced regarding the funding mechanism for both the Consumer Affairs Division and the Attorney General's Office. The concerns that were expressed proved to be true. Many of the telemarketers have branched out into recovery rooms, charitable solicitations and telefunding which her office is trying to address through legislation. She said it would be helpful to walk through the history and overall view of the complicated problem in order to save some time. Ms. Tiffany replied she appreciated Ms. Del Papa's offer, however, she felt the issues were first, the reliability of the funding and second, the concern of slipping to General Fund versus the telemarketing fund and mixing in the lawsuits on top of that. She did not have confidence the numbers were accurate. Ms. Del Papa explained the committee should not look at only lawsuits as they were the end of the line. She recommended the committee examine patterns and number of complaints. This was a much larger picture for both divisions than just the end results of lawsuits. Ms. Tiffany replied it had to be more quantifiable if a budget was to be based on it. She added it was the committee's lack of confidence in the numbers; they were trying to balance the budget. Ms. Del Papa acknowledged the deceptive trade practices area was important and needed to be funded. She said it was difficult to predict with total accuracy what cases would be coming in, that it varied from year to year. Ms. Del Papa stated she respected the position the committee was in. She felt it was the best solution to help address a major public policy issue. Senator O'Donnell maintained the Attorney General probably understood the complexities of the telemarketing issue better than anyone in the state. He pointed out most victims lived in other states even though the crimes were perpetrated in Nevada. He maintained the problem was money and the solution was funding more police agencies to control the telemarketers. He suggested a bill be passed that would state, "if any telemarketing company is enjoined from doing business in any other state, they would be enjoined from doing business in Nevada." Ms. Del Papa stated this was not the issue that was before the committee, however, she would give it some thought. Ms. Jarman said quite often telemarketing companies re-enter states by changing their names with a different person as their lead. Senator O'Donnell said the individual telemarketers charged with an offense would not be able to use the phone to make solicitations. Ms. Giunchigliani asked for an explanation of the General Fund portion of the budget account 3811. Ms. Erickson said the budget account was General Funded last year and although there was a switch of some funding, it remained in this year's recommendation. Budget account 3845 was never General Funded and it remains as such. Ms. Giunchigliani remembered from previous testimony that two deputy attorney generals had been requested but were not recommended. Ms. Jarman said that remained the case and that it would be addressed in their reorganizational proposal. Addressing the audit, Mrs. Tiffany noted there were no regulations for conducting hearings. Ms. Jarman replied all of the recommendations in the audit were accepted and they have since set forth policies and procedures on how hearings will be conducted. Once the legislative session is over the division intends to completely revamp the Consumer Affairs program to insure the problems never occur again. Ms. Tiffany requested a copy of the division's regulations related to investigations and violations. Ms. Tiffany noted the division's data was not reliable and asked for a current written report as to what had been accomplished. Ms. Tiffany also asked for written information regarding restitution and a statement expressing CAD's confidence that the Attorney General's office could take investigational material CAD had prepared and use it for prosecution purposes if it was necessary. Ms. Tiffany felt there remained miscommunication between the two offices. Ms. Stanish attempted to clarify the audit report. In compliance with a request from Mr. Marvel, her office had supplied the committee a listing and description of their cases (Exhibit D). Ms. Stanish said the Memorandum of Understanding outlines how the Consumer Affairs Division will perform initial intake and analysis of the complaints. There will be liaisons between the two offices so the investigators from both offices can work together to prepare a case for litigation and if need be, for criminal action. Ms. Tiffany stated she wanted to cover the confidence of the revenue projections, whether the infrastructure from the audit report was in place in order to handle the expansion if approved, how the joint responsibility was working with the Attorney General's office, the shift of revenue into the General Fund and the confidence of the litigation. Ms. Rose McKinney-James, Director, Department of Business and Industry, said the restructuring was an attempt to provide the department with greater and broader flexibility in terms of dealing generally with consumer fraud and more specifically with the wide variety of deceptive trade practices while being responsive to the requests made by Senator Raggio when the budget was originally presented. Senator Raggio asked the department to identify a budget that adequately addressed their two largest complaints: automobile repair and telemarketing. She drew the committee's attention to Senator Townsend's testimony that morning where he maintained the division was prohibited from adequately dealing with automobile repair concerns because of the way it was structured. His testimony also pointed to the fact that one, the division was unproportionately forced to deal with telemarketing and two, the way in which it was funded made it difficult for the division to function effectively. Although she was not present two years ago, Ms. Jarman stated she reviewed the records and understood there was substantial debate with respect to the funding mechanism that was set forth. She maintained the proposal was an attempt to address all of the policy issues and she thought it was critical that it be viewed in that vein. With respect to the General Fund appropriation that dealt with the CAD and the Attorney General's Office, Ms. Jarman said it was as a result of going to the Governor that in order to develop a program that would address consumer's needs, the division had to have a dedicated stable source of funding. In addition, in order for the division to address automotive repair they felt it important to go to the industry responsible for the consumer concern and by establishing identification through registration, CAD would have the resources necessary to assist with the resolution of the complaints and a funding mechanism tied directly to the industry that is the subject of regulatory oversight which enables the division to go forward. The division is intending to establish a unit to deal with automotive repair and a substantial reorganization of existing resources that clarifies exactly how the division will address their two major issues. Senator O'Donnell commended Ms. McKinney James on her clear explanation. In response to the Senator's question pertaining to the telefunder BDR, Ms. Stanish said BDR 52643, requested by the Attorney General, makes the amendment to add telefunders, recovery rooms and those who sell magazines over the telephone. The business registration fee is $6,000 and $100 per sales person. Ms. Jarman testified as a direct response to Senator Raggio's request on January 30, 1995, CAD, the Budget Office and the Attorney General's office developed a plan regarding telemarketing and automobile repair problems. She reported the Attorney General's telemarketing unit presently has ten staffers and Consumer Affairs telemarketing unit has seven positions, two of which are vacant. Consumer Affairs proposes to dedicate 4.5 positions in the AG's office to maintain the telemarketing unit, continue to dedicate three people to telemarketing in Consumer Affairs (registration and collection of fees). The AG's office would then have 5.5 people available from their telemarketing unit to form a Consumer Protection/Consumer Fraud unit within the Attorney General's office. Within the 5.5 positions are 2.5 attorneys, giving the CAD access to 2-1/2 full time attorneys to deal with deceptive trade problems. In the Consumer Affairs agency, the program officer will be transferred to deceptive trade. Ms. Jarman testified the Department of Taxation has identified 1,647 automotive repair businesses excluding service stations and other specialty areas that perform automotive repair. In creating the automotive unit within the reorganization plan, the division intends to begin registering businesses by 1996. Ms. Jarman said the division intends to return to the Legislature in 1997 (when most of Nevada's businesses have been registered) in order to expand. When the proposal was first written the division requested $200,000 seed money from the State General Fund to start the CAD auto repair shop registration and auto unit. They have since recalculated and found with the General Fund appropriation of $350,000, the division can support the three positions coming out of the telemarketing budget into the deceptive trade budget for six months and within that period of time they should have collected enough money from the registration program (she didn't finish her sentence). The first phase is geared so that CAD can utilize all of their available personnel; no additional money or staff will be requested at this point. Ms. Giunchigliani questioned the business license requirement and pointed out Douglas County did not require such documentation. Ms. Jarman said provisions had been made in the bill for counties not requiring licenses. Ms. Giunchigliani asked whether the division thought the $350,000 from General Fund should accommodate their need to be able to fund the reorganized agency. Ms. Jarman replied they would know in six months whether it would take care of the entire year. Ms. Giunchigliani felt consumer issues were of primary importance and it is the obligation of lawmakers to make sure a budget that protects Nevada consumers is funded. Ms. Jarman said when they initially put the proposal together they were asking for a $200,000 loan which they proposed to pay the state back by the end of the second year. CAD has redone their calculations and think with the $350 General Fund appropriation in budget account 3811, they can fund the three people being transferred from telemarketing to deceptive trade. Ms. Tiffany asked whether automobile repair businesses were regulated in any other way than having business licenses. Ms. Jarman said in counties requiring business licenses, businesses pay sales tax identification fees. Auto salvage/wreckage businesses pay $300 per year and emission control businesses pay $25 per year; a total of 937 businesses. Ms. Tiffany asked whether there was any relationship with DMV; did DMV have any oversight on this type of businesses. Ms. Jarman said not to her knowledge. Ms. Stanish stated DMV registers certain auto- related industry, in particular, those that have been identified as creating potential fraud for insurance (body repair, salvage and towing). Senator O'Donnell asked whether the budget was being predicated on the same telemarketing businesses who circumvented the law by renaming their companies; did CAD have some way of assuring the committee the money would be there by licensure. Ms. Jarman said the anticipated shortfall had more to do with the fact the budget was being based on fines and penalties that would be coming from the telemarketers who had been identified. The telefunders who will be registered are those who have been identified, fit within the statutory limits and CAD believes the numbers will be flat. The hole CAD is trying to fix is not based on any fluctuation in the number of telemarketers who have been registered, but has to do with the fact that the funding mechanism itself was difficult; fines and penalties did not materialize because the enforcement effort was successful. Senator O'Donnell maintained this was not the same testimony as that of the first hearing on this particular budget. Previous testimony indicated telefunders changed their mode of operation and description. Ms. Jarman deferred to Ms. Stanish. Ms. Stanish stated the problem they faced was not being able to rely on being able to get penalties and fines at a level that would be sufficient to fund the combined functions of the CAD and Attorney General's Office. Senator O'Donnell stated the budget was predicated on application fees and asked for a definition. Ms. Erickson, pointing to the work program year for fines showing $275,000, noted only $14,000 came in. Senator O'Donnell instructed Ms. Erickson to move her attention up two lines; the work program was $480,000 in application fees. Ms. Erickson said the intent was to leave it at what was received in the base year instead of the work program year. Senator O'Donnell stated it was his understanding the budget was being based on a number of individuals who were going to be under the new licensure of recovery rooms and charitable solicitations. He asked how confident the division felt that the recovery rooms and charitable solicitors were going to be paying their application fee and paying the $6,000 registration fee knowing these were the same individuals required to pay the fee two years ago and did not. Ms. Stanish said they have an idea based on their complaints and investigations how many existed and have substantially reduced the amount. She testified CAD will hopefully not get into the same predicament where they have a reduction in the projection of registrants. She could not guarantee, however, the same people would not disappear or be found in jail. She felt it was essential they still be registered. Senator O'Donnell agreed with Ms. Stanish and asked what kind of assurance the state had. Ms. Stanish reported they had examined the trends that had developed since 1989 with the licensed and registered companies. Her office noticed there was a decline in the last two years, factored those projections in and, therefore, significantly underestimated the number of new registrants. Senator O'Donnell wanted Ms. Stanish to go on record as to whether the Attorney General's office felt confident CAD could make the projections. Ms. Stanish said they would try to the best of their ability. Ms. Jarman added with the reorganization, the division would go from a support staff of 17 down to 7.5. She noted the industry was volatile and one could not say they would be around tomorrow, next week or next year. With the decline in revenue and adjusted staffing, CAD is more in line to handle the problem. Senator O'Donnell commented the budget had been built on the volatility. Ms. Jarman agreed. Senator O'Donnell said his point was made. Ms. Giunchigliani asked whether or not it was the 1989 Legislature that had asked the division to base their budget on the collection of fees and licenses. Ms. Jarman said to the best of her knowledge this was true (she was not employed with the division at that time). Ms. Guinchigliani concluded this may not be the responsible way to build the division's budget and suggested a cleaner way would be to back out of the budget any presentation of fines and fees, segregate any collections of those, refund the budget with General Fund and based on what the division collects, repay the General Fund. The legislators in this way would be able to see what was collected and where the shifts came about. Ms. Erickson testified this method was considered but not recommended by the administration. Ms. Guinchigliani requested information on what percentage was General Fund and what percentage was fees. Ms. Erickson said she would supply a new summary sheet. Ms. Stanish broached the subject of the metamorphosing of telemarketers. She said the Attorney General's office had focused their attention on criminal actions working with the federal state task force prosecuting telemarketers in federal court. She stressed her office felt comfortable with reducing their staff dedicated to telemarketing due to the federal task force. Ms. Tiffany said she would rather see a regulatory administrative process than an AG process. She stated she would like to see the state license telemarketers, organize a board or commission and establish a middle ground so the process did not go from complaint to litigation. In order to accomplish this organization, the state would have to re-examine the division's budget so they could be repaid for their investigative services. Ms. Jarman responded the industry was vehemently opposed to their livelihood being taken away through complaints levied against them. She said this was the reason the division had chosen the registration process so they would at least be able to identify the businesses. CONSUMER AFFAIRS - TELEMARKETING - PAGE 819 Ms. Tiffany closed the discussion on the Consumer Affairs budget and moved on to telemarketing, budget account 101-3845. She asked what outcome would result from the shift in legal resources. Ms. Stanish said the void would be filled by the office's criminal prosecutions and task force efforts with the federal government. Ms. Tiffany asked whether new policies, regulations, relationships still needed to be defined. Ms. Stanish said the Attorney General had recently signed a Memorandum of Understanding with the federal agencies where the state had specified the allocation of resources that will be devoted to the joint effort. Her figures as of December 1994 pointed to 16 federal court criminal prosecutions underway because of the taskforce efforts. She indicated her investigators physically sat in a federal office a few days a week and work with the federal agents in developing cases. Ms. Stanish felt her office had established a sound working group to address the problem. Senator O'Donnell asked why there was a reduction on page 822 in the Executive Budget from $719,000 to $228,000. Ms. Jarman replied it was the identified shortfall; this was where the Governor had allocated through the Attorney General's Office, $500,000 for consumer protection services. She stressed no state money was applied to telemarketing; it was all fees. Senator O'Donnell asked Ms. Stanish to define how recovery rooms operate. Ms. Stanish replied recovery rooms obtain lists of consumers who have purchased from other telemarketers. Ms. Stanish said fraudulent recovery rooms call up consumers and say something to the effect of, "we're working with the Attorney General's Office. We can get you your money back. Send us $500 and you'll have your check in the mail." She said her office's BDR will mandate recovery rooms do not collect any money from consumers until the recovery room provides money to them. Senator O'Donnell predicted the outcome from the BDR will put recovery rooms out of business. Senator O'Donnell asked whether this was calculated into their conservative budget. Ms. Stanish replied it was. Ms. Tiffany recommended the division establish a contingency plan should the automobile repair bill not pass. Ms. Rose McKinney-James concluded CAD receives substantial numbers of consumer complaints and that all have to be evaluated. Some percentage will rise to the level of requiring the assistance of the Attorney General's Office for prosecution. She did not want to leave the impression on the record that the division was geared toward moving a process to litigation. She stressed the division was mainly geared toward accepting, investigating and evaluating the thousands of consumer complaints received yearly. OFFICE OF THE LABOR COMMISSIONER - PAGE 807 Attorney General Frankie Sue Del Papa testified there was no additional money in the Labor Commissioner's budget relative to AG time. She reported there was a bill being drafted that could result in a full time deputy attorney general being required for Clark County alone. Ms. Del Papa wanted to make it clear her office had not requested the position. Mr. Frank MacDonald, Labor Commissioner, introduced himself to the committee. Ms. Tiffany noted a recent 1994 LCB audit reported the office's staff performed unnecessary procedures by devoting at least one full-time position to preparing and processing reports which served little purpose. She asked Mr. MacDonald to comment and also elaborate on the commission's four requested positions. Mr. MacDonald indicated the unnecessary reports were certified payroll reports that were submitted by construction contractors on public works projects. The reports are required by statute to be submitted by the contractors and include information regarding the number of workers, their classifications, pay rates, and number of hours worked. The reports are necessary in order to audit prevailing wage projects and the four additional staff members will be assigned to processing the payroll reports. Ms. Tiffany asked whether the commission had performed an internal study to examine their efficiency. Mr. MacDonald said they had not. Ms. Tiffany noted the commission was basing their request for positions on caseload and wondered whether the extra staff would be needed if their office did their own reorganization and efficiency studies. Mr. MacDonald said presently under prevailing wage the commission was monitoring 1,423 projects; 733 of the projects are in southern Nevada. One auditor and one investigator assigned to Public Works are based in Carson City. A new deputy commissioner has recently been hired to assist the investigator and auditor. The four new positions will be assigned to Las Vegas and will allow the Carson City personnel to concentrate on northern Nevada projects, 299 of which are in Washoe County. Mr. MacDonald stressed the commission definitely needed assistance. Ms. Tiffany pointed out the audit report recommended the agency research alternative funding such as assessment on Public Works projects. Ms. Erickson said different assessments were discussed during the budget building process and the administration chose to use the General Fund. Ms. Tiffany requested a report outlining other funding options and whether a bill draft request would be necessary. Ms. Erickson believed it needed a bill draft request in order to do the assessment. Ms. Tiffany also requested the commission submit a report regarding the more efficient use of their staff. Ms. Tiffany did not think the commission's computer and software purchases were well thought out and asked Mr. MacDonald to explain the $68,717 one shot. Ms. Tiffany asked whether the commission has researched existing programs used by other states. Mr. MacDonald said due to his lack of knowledge regarding computers, his office was relying on the Department of Information Services (DIS) to determine their needs. Senator O'Donnell suggested the commission contract with a reputable accounting firm to perform impartial, non-influenced, true and accurate prevailing wage. This solution would negate the need for the computer purchase and addition of four auditors. Mr. MacDonald indicated this could be considered. Ms. McKinney-James noted the agencies are limited to working within the parameters that DIS establishes. Agencies are not allowed to investigate, call other states for comparison and are simply required to articulate their needs to DIS who have the responsibility for the follow-through. Ms. Tiffany stated she did not see the justification for adding four staff positions, particularly out of General Fund money nor could she support the one-shot computer purchase. Mr. MacDonald reported the commission had 16 staffers in 1978 when the state's population was 709,000. He noted today's population was 1.4 million and the agency had shrunk. He stated the commission had to maintain their growth in tandem with the state's in order to perform their functions. Ms. Giunchigliani felt the commission's budget had been consistently underfunded. She requested the commission return with numbers justifying the need for the additional staff. Mrs. Evans asked whether contractors would be qualified to handle the monitoring activities performed by the agency. Mr. MacDonald did not think a private firm could monitor projects to see that they were complying with statute. He agreed with Senator O'Donnell that contractors could be hired to handle the actual survey work. Ms. McKinney-James said her understanding of Senator O'Donnell's request was to examine the combined formulation of the prevailing wage status as well as the balance of the work conducted by the four additional employees. She agreed to look at the costs associated with getting professional assistance for deciding the prevailing wage. She questioned the expense associated with contracting outside services and legal ramifications of allowing private contractors to affirm statutory requirements. Ms. McKinney-James stated the commission would have to attempt to achieve a balance between the costs associated with performing the service on a contractual basis versus the cost of underwriting four additional positions. PLANT INDUSTRY - PAGE 845 Ms. Giunchigliani pointed out the committee's major concern had to do with the 350 Capital Hill property. The lease states the division is not to be responsible for repairs yet there is money in the budget to do so. Mr. Bob Gronowski, Bureau Chief of the Plant Industry, Division of Agriculture, stated their Deputy Attorney General reported, according to the lease agreement signed ten years ago, the division was responsible for the repairs amounting to $15,985. Mr. Gronowski indicated the division had secured bids that were guaranteed to match the requested amount. Ms. Erickson noted the $15,985 is only for the two budgets within the division that receive General Funds. The other agencies using the building are anticipated to approach IFC with work programs to pay for their portion during 1995. Ms. Erickson agreed to supply the projected amounts to the committee. Ms. Giunchigliani stated the committee needed the proper perspective of what percentage of the state's budget was going into certain areas and what benefits were reaped. Ms. McKinney- James said she would provide the committee with additional statistical information. She added the committee would probably be surprised to learn the actual percentages of economic activity generated through Nevada's agricultural and livestock industries. LIVESTOCK INSPECTION - PAGE 865 Mr. Steve Mahoney, Bureau Chief, Livestock Identification, was asked to address the reserve. He replied the numbers of livestock have declined primarily due to the drought, increase in population and federal government's withdrawal of grazing rights for certain ranchers. He distributed Exhibit E to the committee. The agency has adjusted the base budget and reduced the amount of income anticipated from livestock head tax. The budget is funded entirely from the industry; no General Fund dollars are received. The increases the industry have imposed upon themselves include an increase for a minimum fee charge, increase in lifetime horse permits, and a reduction of one full-time position. The measures bring the commission's reserve back up to approximately $200,000. PREDATORY ANIMAL AND RODENT CONTROL - PAGE 883 Ms. Giunchigliani informed representatives of the Predatory Animal and Rodent Control agency the committee had no questions regarding their budget. MINERALS DIVISION - PAGE 895 Ms. Giunchigliani questioned the Reclamation Bond Pool Account. Mr. Russ Fields, Administrator, Division of Minerals reported the division presented their budget to the Senate and Assembly full committees and agree completely with the proposal to include the Reclamation Bond Pool in the Executive Budget. He added the materials had been submitted to the Ways and Means Committee staff. TAXICAB AUTHORITY - PAGE 949 Ms. McKinney-James informed the committee Sandra Avants, Administrator of the Authority was unable to testify and would be replaced by Mary Liveratti, Deputy Administrator for the Division for Aging Services. Ms. Giunchigliani asked for more information on the Senior Ride Program. Ms. McKinney-James said the questions generated last session have been identified through the responses to questions from staff provided to the committee. The authority has provided the committee with a schedule of all the costs associated with the transfer of the Senior Ride Program from the Taxicab Authority (TA) to Aging Services. She noted the authority was required on an ancillary basis to include a BDR that deals with the portion of the statute. The funds available for the Senior Ride Program are based on the statutory provision that indicate that anything in excess of $200,000 is set aside for this and leaves the authority with the administrator. The authority will provide language that fully transfers the funds to Aging Services. The Taxicab Authority will maintain the authority as the administrator. Ms. Liveratti said the BDR is an administration bill and she would keep the committee posted regarding its movement through the process. Ms. McKinney-James stated her office had engaged in extensive negotiations in terms of the expenses associated with the program. She indicated the TA has been passing along certain operating money to Aging Services so they have the ability to absorb the program. Ms. Liveratti expressed her enthusiasm for the program. Ms. Giunchigliani asked about transportation discounts for Senior Citizens. Ms. McKinney-James replied there was a separate discount program certain taxi companies provide. The Senior Ride Program is a separate and distinct program. Ms. Liveratti stated her office gave some of their grant funds for transportation to the CAT system in Las Vegas in order to help seniors travel to meal sites. Ms. Giunchigliani requested clarification regarding the BDR. Ms. McKinney-James indicated the funds collected by the Taxicab Authority will be transferred to Aging Services. Her office is exploring the extent to which they may need an interagency agreement. The meeting adjourned at 10:55 a.m. RESPECTFULLY SUBMITTED: Janine Sprout, Committee Secretary Joint Subcommittee Meeting of Assembly Ways and Means and Senate Committee on Finance on General Government April 7, 1995 Page