MINUTES OF THE JOINT SUBCOMMITTEE MEETING OF SENATE COMMITTEE ON FINANCE AND ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session May 2, 1995 The joint subcommittee meeting on General Government of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman William R. O'Donnell at 7:40 a.m., on Tuesday, May 2, 1995, in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE COMMITTEE MEMBERS PRESENT: Senator William R. O'Donnell, Chairman Senator Lawrence E. Jacobsen Senator Bernice Mathews ASSEMBLY COMMITTEE MEMBERS PRESENT: Ms. Chris Giunchigliani, Chairman Ms. Sandra Tiffany, Chairman Mrs. Jan Evans Mrs. Maureen E. Brower Mr. Bob Price Mr. Dennis L. Allard STAFF MEMBERS PRESENT: Bob Guernsey, Principal Deputy Fiscal Analyst Ronald T. Steele, Program Analyst Judy Jacobs, Committee Secretary OTHERS PRESENT: Eloise E. Koenig, Self-Insurance Coordinator, Division of Insurance, Department of Business and Industry Rose McKinney-James, Director, Department of Business and Industry Deborah A. Erickson, Budget Analyst, Budget Division, Department of Administration Birgit K. Baker, Administrative Services Officer, Department of Business and Industry Stephanie D. Licht, Rural Services Agriculture Cluster Leader Bryn Armstrong, Executive Director/Secretary, State Dairy Commission, Department of Business and Industry Senator O'Donnell opened the work session on the Department of Business and Industry budgets. Self Insured-Workers Compensation - Page 721 Senator O'Donnell explained the agency has been asked to submit another budget to reflect the changes necessary if significant numbers leave the State Industrial Insurance System (SIIS) and become self-insured as anticipated. He noted the revised budget is attached as page 3 in the Budget Closing Action packet (Exhibit C. Original is on file in the Research Library.). Eloise E. Koenig, Self-Insurance Coordinator, Division of Insurance, Department of Business and Industry, testified the program has been in effect since 1980 and one of the positions being requested is due to rapid growth. She said in 1988 there were 74 self-insured employers, whereas today there are 199. She opined many employers have become dissatisfied with SIIS and are willing to take on the administrative burden of handling their own workers' compensation program in order to leave the system. Ms. Koenig surmised another reason for the growth in the system is probably because most employers have been unaware the option is available to them, but they have learned of the option during recent publicity regarding the difficulties with SIIS. Ms. Koenig reported a new program goes into effect on July 1, 1995, which will allow smaller employers to form associations for self- insurance to provide their own workers compensation coverage and they will leave the system. She stated if no moratorium is placed on the program, she anticipates seven groups will form within the first month with 150 employers, and more will follow. She voiced the need for additional staff to accommodate those leaving the SIIS system. Ms. Giunchigliani denied that employers have not known they could self-insure. Referring to the budget, she stated, "That was predicated as if the moratorium was going to exist, so we have to have a budget that says it may not exist." Ms. Koenig explained the division decides who meets the criteria to become self-insured and then monitors their financial position and performance. They must be audited once every 3 years. She indicated regulations will be heard on May 24 and 25 for those associations. Rose McKinney-James, Director, Department of Business and Industry, pointed out there is statutory authority that was set forth in Senate Bill (S.B.) 316 of the 67th Session. SENATE BILL 316 OF THE SIXTY-SEVENTH SESSION: Makes various changes to provisions governing industrial insurance. She declared this bill has been the basis of the proclaimed regulations to date. She acknowledged a question arose during the tenure of the former commissioner as to whether the statute specifically delineated whether employer associations would be heterogeneous or homogeneous and the consensus was that associations would be required to be homogeneous. Ms. McKinney-James stated: There has been a question with respect to clarity in the statute. However, the regulations which have been promulgated under the current leadership ... are consistent with what she believes to be actuarially sound requirements in terms of substantiating the solvency of these associations and providing just the basic criteria for establishing the associations. Ms. Giunchigliani asserted the outlines established in S.B. 316 of the 67th Session are not as stated. She suggested the regulations to be heard on May 24 must be based upon internal opinion and not upon statutes. She noted there is legislation pending which will set the standards and she asserted, "It's premature to have regulations going prior to legislation, and premature for us to be closing a budget that potentially ... could be impacted." She voiced her understanding new information has come out that five out of five other states with both heterogeneous and homogeneous associations have shut down the programs, and 11 out of 15 have failed. She cautioned Nevada must be extremely careful if the groups are going to be allowed to form associations on their own. Ms. McKinney-James declared the regulations are work-in-progress based upon information received to date, but which will be modified to be consistent with any directive coming from the Legislature. She acknowledged the hearings in various legislative committees will have substantial impact on the substance of the regulations, while, she asserted, "The statute ... requires that the insurance commissioner be at least prepared to move forward and accept those applications and these steps have been taken in an effort just so we're prepared." Ms. Giunchigliani asked if the commissioner has studied the failures in other states. She opined there should be a moratorium and stated small businesses must be safeguarded. Ms. McKinney- James responded the most significant part of the research conducted by the Division of Insurance relates to the experiences of other states that have similar self-insurance arrangements for smaller businesses. She conceded the experience has been limited, and the Nevada plan is different from those in other states. Ms. McKinney-James averred the primary issue is solvency, the protection of the companies that are part of the group, and the assurance they can provide the services to the worker. Ms. Giunchigliani asked if there will be an additional assessment for groups that choose to leave SIIS. Ms. McKinney-James replied that has been discussed, but she is not aware of any provision in the regulations for an additional assessment. Ms. Giunchigliani stated, "We may need to look at that, because if we're so concerned about the solvency of the system that we're going to allow this `flight' to go, then we'd best make sure that we charge them adequately to compensate for that `tail' which was not done in the previous times." Ms. Giunchigliani inquired what impact there may be if a proposal passes the legislature to force governmental entities to return to SIIS. Ms. Koenig responded the measure to which she referred, Assembly Bill (A.B.) 301, has not been heard. ASSEMBLY BILL 301: Prohibits public employer from providing self- insurance against liability for industrial injuries and occupational diseases. Ms. Koenig stated there are 16 public entities that are self- insured, and there is one association of public entities that is considering formation in January 1996 which is not included in her estimates. She stated the budget request does not take into consideration the group of public entities because there is no way to adequately estimate the numbers of members or associations involved. Ms. Giunchigliani asked how funding is obtained. Ms. Koenig responded the Division of Industrial Relations makes an assessment upon the self-insured employers which is based upon the amount expended on claims' costs. Ms. Giunchigliani inquired what impact could result from the 16 public entities which will no longer pay assessments if they return to SIIS. Ms. Koenig replied if staffing remains the same, the amount of funds will be spread over the remaining self-insured employers. Ms. Giunchigliani requested a listing of the annual amounts that are paid by public entities into the Self-Insured Workers' Compensation Fund since some of those entities, such as Clark County, the Clark County School District and Washoe County, include many employees and could have an adverse affect on the agency. In response to a query by Mr. Price, Ms. McKinney-James reiterated the primary consideration will be solvency of the groups, and certain requirements for the individual members involving their financial statements, which will allow the actuary to determine the strength of each group. Mr. Price declared, "One of the things that we are charged with is a much bigger picture than ... any agency or fund...." He read The Constitution of the State of Nevada, article IX, section 2, from which he derived the notion taxes must be levied to fund state expenses including compensation for industrial accidents and occupational diseases. He indicated if entities are allowed to pull out of the existing industrial insurance fund, taxes will have to be raised. Ms. Tiffany asked if the request for $152,000 for expenditures and 3 1/2 positions has been considered by anyone other than the Department of Business and Industry. Ms. McKinney-James replied the numbers were developed by the self-insurance oversight group within the insurance division. Ms. Koenig explained the first position in the request will provide for another Management Analyst II to handle work for the individual self-insured employers. She asserted the increased work load under the auditing and monitoring requirements will more than justify the additional position. Ms. Koenig indicated two other positions being requested will add staff to handle more complicated analyses and monitoring work which will be required for the associations, and there is another half- time actuarial position being requested. She pointed out the associations will have to approve rates and actuarial studies. Ms. Tiffany surmised emphasis will have to be placed on application review by actuaries if there is no moratorium and more entities leave SIIS to become self-insured. Ms. McKinney-James voiced expectation of an increase in applications from health maintenance organizations (HMOs), including a first-time requirement for review of the associations. Ms. McKinney-James and Ms. Tiffany agreed it will be difficult to estimate the numbers to be involved, and that the process will be "front-end loaded" rather than involved in monitoring. Ms. Tiffany questioned which positions will be needed to handle initial applications and whether there will be enough staff to handle the initial load. Ms. McKinney-James responded the Senate Committee on Commerce and Labor has discussed the possibility of making a request for temporary assistance for the insurance division. Ms. Tiffany reiterated her concern there is inadequate staffing for the agency. She acknowledged the difficulty of closing the budget. Senator O'Donnell voiced the intent to hold the budget in anticipation of a decision regarding self-insurance by the Senate Committee on Commerce and Labor. Senator Mathews concurred and acknowledged the difficulty for the agency when the rules keep changing. As a small businessperson, she said, she realizes she may have to either absorb some of the cost or go out of business. Senator O'Donnell remarked that when people are allowed to leave the system, someone else will have to pick up the responsibility for all those injured workers who are still on disability and may remain so for years to come. He suggested one way to resolve the problem may be to assess anyone who wants to leave the system for a portion of long-term liability. He opined the share will decrease over time. Senator O'Donnell decided to hold the Self-Insured Solvency Fund until more information becomes available. Ms. Giunchigliani asked how the amount for the collection of assessments for insolvent associations will be determined. Ms. Koenig responded assessments for the fund will be made on a percentage of the security deposit to be made by each association and computed upon their expected incurred-cost claims for the next 12-month period. Real Estate Administration - Page 771 Senator O'Donnell remembered the agency had made a request for file cabinets. Senator Jacobsen reported there are some file cabinets at the Stewart Indian School that are in poor condition. He stated the file cabinets constructed by the prison industries are nice looking, but more expensive than metal cabinets. He suggested metal cabinets will be more cost-effective. Senator O'Donnell recalled the agency made a request for $2,900 for file cabinets and for one Program Officer II. MS. TIFFANY MOVED TO APPROVE THE BUDGET WITH THE ADDITION OF FUNDING FOR FILE CABINETS AND FOR ONE PROGRAM OFFICER II POSITION. MS. BROWER SECONDED THE MOTION. THE MOTION CARRIED. (MR. PRICE AND MRS. EVANS WERE ABSENT FOR THE VOTE.) * * * * * SENATOR MATHEWS MOVED TO APPROVE THE BUDGET WITH THE ADDITION OF FUNDING FOR FILE CABINETS AND FOR ONE PROGRAM OFFICER II POSITION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Real Estate Education and Research - Page 777 Senator O'Donnell noted funding for one Compliance Training Officer position has been requested. MS. TIFFANY MOVED TO APPROVE THE BUDGET AS THE GOVERNOR RECOMMENDS WITH THE ADDITION OF ONE COMPLIANCE TRAINING OFFICER POSITION. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED. (MR. PRICE AND MRS. EVANS WERE ABSENT FOR THE VOTE.) * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE BUDGET AS THE GOVERNOR RECOMMENDS WITH THE ADDITION OF ONE COMPLIANCE TRAINING OFFICER POSITION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Office of the Labor Commissioner - Page 807 Ronald T. Steele, Program Analyst, distributed copies of a memo from the director of the Department of Administration dated April 27, 1995 (Exhibit D). Mr. Steele reported he contacted Frank McDonald, Labor Commissioner, to determine which four positions could be moved from the northern Nevada office to the southern Nevada office. He said Mr. McDonald suggested positions for an Auditor II, a Compliance/Audit Investigator II, and two Program Assistants be moved. Senator O'Donnell stated his desire to keep the positions as they are. Ms. Tiffany acknowledged she originally proposed the four positions be moved from the north to the south. She stated: I'd like to also be able to give you [the Office of the Labor Commissioner] the ability to come back to IFC [the Interim Finance Committee] ... in 6 months if Commissioner McDonald believes that there is a shortage of staff still in Las Vegas or if there's a problem doing his job, that he come back with performance indicators or reasons for that and we will look at adding staff then during IFC. But I would like to go with this recommendation for now. MS. TIFFANY MOVED TO ADD FOUR POSITIONS TO THE LAS VEGAS OFFICE. MS. GIUNCHIGLIANI SECONDED THE MOTION. Ms. Giunchigliani said, "I believe they need new staff, but I'd rather have them re-shift first and redirect that energy. If not, they can come back to IFC." She noted there were 16 people in the department in 1978 and now there are 15, indicating use of the staff "to the utmost." She declared the employers of the state are receiving a disservice because the audits cannot be done nor can complaints be handled. She charged the lack of service is irresponsible. She asked if the intent is to ask for four additional people at IFC, or for more. Pointing out that the rules are restrictive, Deborah A. Erickson, Budget Analyst, Budget Division, Department of Administration, said any provision to allow the commissioner to return to IFC may have to be made part of the contingency fund because the budget is a General Fund item. Ms. McKinney-James stated: What you propose, if that is the understanding with Commissioner McDonald ...has to be acceptable [to Commissioner McDonald], but I think it is incumbent upon me to at least again state for the record that this is an agency that has substantial responsibility, and has not been able, with the current resources, to do its job properly. This was one of the unusual instances where we were able to make a persuasive argument to the budget office, to the administration, that at least these four positions would be necessary to get the job done. So I can assure you we will be back, because we know going in that those positions are necessary, if we only look at the substantial amount of construction activity and the growth that we've experienced in the southern part of the state. I think that, while pledging to you to work closely with the labor commissioner's office in an attempt to work with them to gain greater efficiency, because I think that there's a necessity to do that, that I would hope when we come back and we were able to present ... the substance, that we'll be able to secure the additional resources for this agency. They're a small agency with a substantial responsibility and that responsibility may shift. It's another one of the agencies that may be caught in shifts of responsibility with respect to what's going on at the federal front. I just don't know how else to implore you to work with this agency, because they need these resources. I can tell that it was very tough for the agencies, even at the department level, to get past with any requests for new staffing unless they were able to make a persuasive argument and demonstrate a need. If this is the agreement that you have with the commissioner, obviously I have to live with it, but I do feel that I need to place on the record my sentiment that they're going to be in some trouble for the next few months. Senator O'Donnell said the state auditor has "uncovered a mess." He stated some of the audit reports have indicated things have been filed which are outside the scope of operations, and that some of the statistics used for calculations and for performance indicators have been erroneous. He suggested Ms. McKinney-James review the operation in an attempt to get the office back "on track" prior to making a request for additional staff. Ms. Tiffany voiced agreement. Ms. Giunchigliani asked if it is possible to set aside a percentage or certain sum to make it easier for the office to request additional funding from IFC rather than making it necessary to go through the contingency fund. Bob Guernsey, Principal Deputy Fiscal Analyst, said the agency could be given a letter of intent to guide them to report to IFC in 6 months regarding the work load, how the operation has been affected by the transfer of four positions to the Las Vegas office, and whether additional staffing is necessary. He pointed out any requests to the contingency fund will require the endorsement of the administration. The only alternative, he said, would be to put funding into a reserve category within the budget, equivalent to the number of positions anticipated, with a requirement that the office return to IFC to gain the authority to transfer the funding from the reserve category to salaries. Ms. McKinney-James inquired how moving expenses will be covered if four positions are moved from the Carson City office to Las Vegas. Senator O'Donnell agreed to look into the matter. Senator Jacobsen commented the audit indicates most problems have arisen from management procedures and nine recommendations were made. He asked if the office has commenced moving forward on the recommendations. Ms. McKinney-James replied there is some indication those are being addressed. She said, "Commissioner McDonald and the auditors ... had a healthy disagreement in terms of the appropriate steps that were necessary." She noted the auditors found that some payroll documents should not continue to be maintained by the labor commissioner because they are being maintained in other places, whereas Commissioner McDonald argued that, in order to maintain credibility, those reports should be kept in his office. Ms. McKinney-James reported Commissioner McDonald feels a compliance team should be established to deal with those issues, but the audit does not provide the proper parameters to do so. Commissioner McDonald asked that one bill draft be submitted to provide funding for the compliance group, although the administration does not agree the bill would be appropriate. Ms. McKinney-James asserted the commissioner has taken steps in response to the audit, but he does not have the resources to take some of the steps he feels are necessary. She listed a person to analyze performance indicators and a person to interpret and implement the management procedures as those needed to assist the commissioner. She acknowledged her office has not had an opportunity to analyze the problem yet. Senator Jacobsen asked if there is any reason for procedures to be any different in Las Vegas than in Carson City. Ms. McKinney-James responded the audit suggests the activities in Las Vegas are more efficient than those in Carson City, which uses different procedures. She concurred there should be uniformity. Senator O'Donnell declared, "If Mr. McDonald is ... filing these reports based upon the fact that he thinks he needs credibility, it may not be the issue. He might think that's the case, but ... he should have come before us and asked for the authority to do that." Senator O'Donnell opined Commissioner McDonald is acting outside the scope of his responsibilities and duties in undertaking an extra job. Ms. McKinney-James agreed and explained part of the difficulty is that the auditors feel local governments should accept more responsibility and the labor commissioner should take an oversight position to assure compliance. She voiced concern that there is a trust or credibility problem as to whether local governments are performing as they should. She said the commissioner has determined that some of the larger cities are not performing as they should, in which case he will have a better ability to challenge them if he receives the reports regarding construction activities. As an example, Ms. McKinney-James noted, there are certain statutory ceilings as to when the labor commissioner's oversight is triggered, and some local governments are developing their projects in phases in order to avoid the oversight. She pointed out the labor commissioner does not have the audit capacity to deal with such ploys. Mrs. Evans pointed out the positions are already included in the budget and are not an addition. She surmised much of the problem deals with work load. She declared she would be reluctant to remove the positions and then require the office to come back to IFC for a request out of the contingency fund, because historically the IFC tries to avoid using the contingency fund more than necessary, and uses it for unforeseen funding. At the same time, she voiced concern for having four people transfer from the north to the south with the possible necessity of having to hire four people to work in the north. She suggested funds for two positions be authorized, and the funding for the other positions be kept in a reserve as suggested to be authorized by IFC if necessary. Mrs. Evans agreed the office has not been provided with proper "tools for the job" in the past. Senator O'Donnell asked if there are any positions open in the office at present. Ms. Erickson replied none of the positions are listed vacant as of February 1994. Senator O'Donnell reiterated the audit indicates that some of the work load is due to the labor commissioner taking on jobs outside the scope of his office. He wondered if the four positions in the budget will actually be additions to the bureaucracy. He opined the public will be better served if the budget can be trimmed and made more efficient wherever possible. He pointed out that any funding put into the reserve category cannot be used for other things. Ms. McKinney-James responded: The labor commissioner has three primary responsibilities. This was prevailing wage on construction sites and public work projects. [He] has an auditing function and then also has to deal with the wage disputes of laborers. The area where I get the greatest number of complaints relates to the wage disputes where workers really have no other recourse. The statute requires them to go through this process, and so they have ... a fairly significant administrative hearings need. Ms. McKinney-James pointed out she asked for the ability to assist the Office of the Labor Commissioner, the Real Estate Division and a variety of other agencies by providing a Senior Hearings Officer to assume some of the work load when she submitted her budget request. She acknowledged the request was not granted, but said she has a person on her staff, Larry Struve, with substantial experience who she has asked to assist in that area. Ms. McKinney-James declared her department uses the resources available and attempts to use personnel in a team fashion wherever there is a need. She stated the Office of the Labor Commissioner has a large volume of activity regarding construction oversight. She said in review of the findings of the audit, which is illustrative of problems within the agency, she found only minor inconsistencies. She opined there is room to give the labor commissioner more benefit of the doubt "because he's the person who has been in the trenches and has ... a better understanding of what the day-to-day requirements are." Mr. Allard voiced concern over earlier statements by Ms. McKinney- James regarding why the commissioner is working outside of his scope. He asked if she has any proof that builders are working in phases in order to avoid review by the commissioner. Ms. McKinney-James replied, "Yes." He asked her to provide the proof, to which she agreed. Mr. Allard inquired if local officials may be in cahoots with builders to allow such avoidance to occur. Ms. McKinney-James replied: I'm not suggesting anything as mysterious or conspiratorial as that. What I'm saying is that in their view, they want to get the ... public works job done. And these rules and requirements, with respect to prevailing wage and some of the other things within the responsibility of the labor commissioner, are simply not necessarily a priority for them. They have people on their staffs who [have] the primary responsibility for this oversight, and the auditors view was that they should accept that responsibility more seriously. The labor commissioner's arguing that they don't seem to, and so what's falling through the cracks, then, is whether or not the statutes, for which the labor commissioner has responsibility, are being adhered to. Mr. Allard restated, "They're building in phases so they won't come under the scrutiny of the commissioner so that they can deal with the more amiable local officials. Is that what you're saying?" Ms. McKinney-James replied, "Yes.... Not the builders, I'm saying local governments." According to the commissioner, she said, there are several examples of local governments structuring public works projects in phases in order to avoid the oversight. Ms. Tiffany reiterated her support for the original premise that the four jobs should be transferred. She said former commissioners and staff have indicated the office could change and become much more efficient. She pointed out the growth, investigations, audits and wage disputes are in the south, while the bulk of the staff is in the north, which causes excessive travel expense. She noted there is one open position which may provide enough vacancy savings to accomodate moving staff to the south. Ms. McKinney-James said: I want to understand, for the record, the nature of the four positions that you have agreed to transfer. If my understanding is correct, it would include an Auditor II, a Compliance Auditor/Investigator I - two of those positions, and a Program Assistant. That would then leave in the Carson [City] office two Program Assistants and the labor commissioner and the chief assistant labor commissioner. Ms. Tiffany noted there are 15 people employed by the office. Ms. McKinney-James said there are nine positions in Carson City at present, and the rest of them are in Las Vegas. Senator O'Donnell suggested the labor commissioner should be able to decide where the employees ought to be deployed. Ms. McKinney- James agreed to work with the labor commissioner to make the adjustments if given the flexibility to do so. Senator O'Donnell reiterated the intention to provide flexibility. Ms. Tiffany interjected the labor commissioner has agreed he can manage with the suggested transfers even though his preference is for additional staff. She said he proposed moving an Auditor II, a Compliance Investigator I, and two Program Assistant I positions to Las Vegas. MS. GIUNCHIGLIANI MOVED TO AMEND THE MOTION TO APPROVE THE STAFF RECOMMENDATION, BUT TO PUT THE FUNDING FOR FOUR POSITIONS IN THE GOVERNOR'S RECOMMENDATION INTO A RESERVE AND ALLOW THE OFFICE TO RETURN TO THE IFC WITH DOCUMENTATION TO PROVE A NEED FOR THE POSITIONS WITHIN THE NEXT 6 MONTHS. MR. PRICE SECONDED THE MOTION. Ms. Giunchigliani commended the efforts of the auditors, but pointed out they can only provide guidelines, and often they are not familiar with the real mission of the agency or how best to accomplish it. She said, "I don't want to dismiss the audit, but I don't want us to misjudge when a manager or someone that's doing the job probably knows best, or the individuals in the field know even more-so, what their job is and how to accomplish it." She acknowledged Mr. McDonald may need assistance to develop performance indicators. Ms. Giunchigliani explained she is recommending putting funding into reserve because it is already in the budget, it will allow flexibility for those who control the office, and it will not set a precedent for a need to ask for additional staff from the contingency fund. She said the amendment to the motion revolves around whether the funding is to come from a reserve fund or from a contingency fund. Mrs. Brower voiced agreement with the first motion because it will allow for a return to IFC with an explanation as to why there is a need for additional staff. Senator O'Donnell commented the agency may not be understaffed if it only performs the duties assigned, but it has been doing more work than necessary. He suggested, whether justified or not, the committee has been informed that the office is performing more work than needed. He said: In that regard, maybe they're not overworked, and maybe by adding four positions, or adding this money to the reserve for them to come back to IFC, let's just guess what they'll do if we put this money in reserve.... Will they realize that they could get four more positions if they went back to IFC? The money is in reserve and wouldn't have to go through the close scrutiny of the Governor, and approval? Probably. But if they had to go through the contingency fund for four positions, they'd really have to make a case. Senator O'Donnell declared he has full faith and confidence in the ability of Ms. McKinney-James, and if she comes back with a request she will have the cooperation of the full committee. Ms. Giunchigliani stated she has notes on which to base a proper measurement which indicate while 1,423 projects were monitored, there were 5,503 contractors and 14,000 subcontractors. She surmised the penetration by the office must be very low. She suggested a number be established and then used as a comparison in 6 months. She declared, "All my motion ... does is ... reserve those positions and then make their case for justifying it. It does not give them a loophole ... and it makes them justify their existence at that time." Senator O'Donnell pointed out that the auditor feels the labor commissioner was, on his own, gathering the information and making reports, when, by existing law, he is supposed to be relying upon local governments to do so. He suggested the commissioner may not believe local governments can be trusted to do the job. Ms. Giunchigliani said she would not trust them, either. She asserted individuals should be credited for finding a way to comply with the direction given by the Legislature. Ms. Giunchigliani declared she is aware local school districts can find methods to get around the bidding process, and from that she hypothesized local public works departments can also find a way around bids. Mrs. Evans asked if the Budget Division and State Board of Examiners, as well as the IFC, will have to approve release of any funds put into a reserve if there is a need in 6 months for the positions. Ms. McKinney-James responded, "We would have to work with budget, we would not have to go through the [State] Board of Examiners." Ms. Erickson said a work program will be required to obtain approval of the Budget Division before going to IFC. Senator O'Donnell clarified that the only approval required of the Budget Division will be to put the item on the agenda for IFC, not to gain approval for the positions. Ms. Erickson concurred. Mrs. Evans inquired if the motion will include the reductions that will be saved from 6-months' salary savings, 6-months' operating expenses and 6-months' travel expenses, which means the expenses will be reduced. Mr. Giunchigliani concurred. Senator O'Donnell asked how much Ms. Giunchigliani suggested be put into a reserve account. Mr. Allard wanted to know if Ms. McKinney-James agrees the labor commissioner is working out of his scope because he does not trust local officials. Ms. McKinney-James responded: I'm hard-pressed to say that he's working outside of his scope. What the audit said is that almost a full position was devoted to the maintenance of these reports, and that, if that went away, he would have additional resources. But the one position that's affected by the audit report doesn't quite reconcile with the four positions that he feels would be necessary for him to do his job.... Do I think he's working outside of his scope? No. Mr. Allard inquired if the four positions, in that capacity, will be needed if the labor commissioner only performs oversight of local government. Ms. McKinney-James replied the labor commissioner feels the positions will deal with not just oversight, but also with wage disputes and audits. Mr. Allard pointed out the labor commissioner is performing the duties without the four positions right now while going into areas with which he is not charged. He repeated his query if the positions will be needed if only oversight is performed. Ms. McKinney-James responded one position might be eliminated, but she conceded she cannot speak for him as to whether scaling back will allow him to do his job. Mr. Allard noted the subcommittee must consider the budgetary concerns, not whether or not the labor commissioner is performing his job properly or whether the law is erroneous. He declared with that in mind he is against the motion. Ms. McKinney-James responded it might be helpful to review the specific language of the audit. Senator O'Donnell made a rough estimate that the amendment will mean approximately $232,000 can be put into the reserve to accommodate four positions. That being the case, he said, there will be $232,000 that will not be available for various other projects. He called for the vote on the amendment from the assembly members of the subcommittee. THE MOTION FAILED. (MRS. BROWER, MR. ALLARD AND MS. TIFFANY VOTED NO.) * * * * * Senator O'Donnell called for the vote on the original motion to delete the four positions and allow for a return to the IFC if need be. THE MOTION FAILED. (MRS. BROWER, MR. ALLARD AND MS. TIFFANY VOTED NO.) * * * * * Senator O'Donnell asked if the senate subcommittee members wished to make a motion. Senator Mathews announced she would not vote on the matter. There was no motion from the senate members of the subcommittee. Senator Jacobsen expressed the desire for the labor commissioner to make a progress report to IFC each time the committee meets. He voiced concern the commissioner might spend too much time trying to justify use of a reserve, if one is set aside. Senator O'Donnell surmised there is a sentiment in the committee not to add four positions, but to allow the agency to go to IFC if necessary. Ms. McKinney-James requested clarity as to whether the commissioner will be able to go to IFC and what measurement indicators will be required. She requested an opportunity to return to the subcommittee for that clarity. Senator O'Donnell accepted her request. Ms. McKinney-James agreed to bring documentation regarding phasing. Consumer Affairs - Page 811 Ms. Erickson reported on the impact of the agency request to transfer three existing positions from Consumer Affairs Telemarketing to the Consumer Affairs Division. She said the changes will affect both revenue and expenses in E-914 as depicted in Exhibit C. Senator O'Donnell asked what the impact will be. He invited comment from the department. Birgit K. Baker, Administrative Services Officer, Department of Business and Industry, explained enhancement E-914 in budget account 101-3811 refers to the Automotive Repair Registration unit which was discussed regarding pending Assembly Bill 462. ASSEMBLY BILL 462: Requires garages that repair motor vehicles to register with consumer affairs division of the department of business and industry. Ms. Baker explained the revenue for that will come from registration fees, and the budget reflects collection of $200 per year per unit. She pointed out it is projected only 50 percent of the estimated number of businesses will register during the first year and this will generate $250,000. Ms. Baker stated expenses delineated by the category include the positions to be transferred from telemarketing, of which personnel costs will amount to approximately $115,000, and operating expenses will be tracked in a separate category. Ms. Baker pointed out the fiscal impact in 1997 projects a balance forward, and it is anticipated approximately 75 percent of the identified businesses will be registered in that year with a projected revenue of $375,000. Ms. Baker explained the reason the category for Automotive Repair Registration funding appears larger in the second year of the biennium is because it will include a projected reserve of approximately $99,000 from the first year. Senator O'Donnell inquired on the status of A.B. 462. Ms. Tiffany responded the question arose during first hearing on the bill as to whether there is anything in the statutes to regulate deceptive trade, and the conclusion from the Office of the Attorney General is affirmative. She reported the consensus that if the $200 fee is not approved, some staff may have to be discharged. She opined there is a feeling that the automotive associations are attempting self-policing, although with the knowledge there are many who still cause problems. She suggested the final question may revolve around whether there can be mutual agreement and whether a fee may be charged. Senator O'Donnell declared he has a problem in targeting just one industry, such as the automotive industry. He stated while the Consumer Affairs Division is charged with handling complaints from any business, it appears that the office seems to be attacking the industry that receives the second-most number of complaints on which to levy fines in order to increase income. He suggested if there are going to be any assessments, the charges should be spread across the board. He opined the proposal in A.B. 462 appears to be an attack on one industry. Ms. McKinney-James acknowledged there is a perception such as that described by Senator O'Donnell. She stated the context under which the Consumer Affairs Division pursued the issue is in recognition that the budget was structured because the telemarketing budget, which historically receives the most consumer complaints, is based on an unstable source of funding. She declared the reality of the performance indicators for the agency suggests that well over 70 percent of the complaints received relate to automotive repair. Ms. McKinney-James reported in an earlier discussion Senator William J. Raggio indicated the budget is inadequate and needs be adjusted to more accurately reflect how the Consumer Affairs Division will deal with the two major areas in which the most complaints are made. Ms. McKinney-James reported meetings are scheduled to begin later in the day with members of the Legislature and the automotive industry. She acknowledged funding has been a concern from the beginning. She stated the recommendation to approve the $200 fee was based upon research conducted by the division into other jurisdictions that have oversight on automotive repair units and which indicate the format of the $200 fee is frequently used. She acknowledged she is exploring other means to fund the Automotive Repair Fraud Unit. While Ms. McKinney-James pointed out those who have been participating are those who do a good and honest job, she said: We cannot ignore the fact that, just like telemarketing has created a black eye for the state, both within the state and outside of the state, automotive repair rip- offs are a substantial issue for us. When I look at it from a completely pure, regulatory format, you go to the industry that's creating the problem, and you assess them. That's to send a signal. It says, if you're not a part of the problem, then you join government in coming up with the solutions that help address the problem. If you are the problem, then you are on notice that now there's going to be government intervention on behalf of the public to try to eliminate this problem. Senator O'Donnell pointed out that is the place where fines should come into the picture, to impose a penalty for breaking the law or defrauding a consumer. He asserted persons engaged in the automotive business are going to be "hammered" by the $200 fee based upon the notion that they might someday be unscrupulous. Ms. McKinney-James denied the intent. She suggested the people in the industry who operate properly are aware and concerned that there are those in the industry engaging in improper activities. She said a substantial number of smaller operators who are concerned have been invited to participate in the discussion and she hopes to come to terms with them on some of the issues. She said: I just don't think the Consumer Affairs Division can turn away from its responsibility to come up with some solution to this, and it was clearly demonstrated that the current structure of their budget, and the substantive structure in terms of how they are performing their mission was not getting that job done. So we're simply trying to find the best way to do that. Ms. McKinney-James asserted A.B. 462 is a separate but companion effort in that regard. Referring to testimony heard in the Assembly Committee on Commerce, Mr. Allard noted there is an attempt by people in the automotive industry to police themselves. He said they have commenced binding arbitration for many complaints using the Better Business Bureau as arbitrators, and they would like to be self-regulated in much the same manner as the Nevada State Contractors Board. Ms. Giunchigliani asserted the majority of those testifying before the commerce committee want licensing through the Department of Motor Vehicles and Public Safety rather than registration. Ms. Giunchigliani asked if the fraud unit for telemarketing under the aegis of the Consumer Affairs Division consists of attorneys from the Office of the Attorney General. Ms. McKinney-James replied the fraud effort is handled through a telemarketing fraud unit from the Office of the Attorney General. She said the registration of telemarketers is the responsibility of the Consumer Affairs Division along with resolution of consumer complaints in that they respond to consumer inquiries, often in conjunction with the Office of the Attorney General. Ms. McKinney-James said the current proposal would reduce the number of staff members from the Office of the Attorney General involved in consumer affairs from the present four attorneys, two secretaries, three investigators and one paralegal to a staff of 4.5 altogether. She stated it will result in a revision of a telemarketing unit consisting of 1.5 attorneys, one paralegal, one investigator and one secretary. She voiced the understanding the Office of the Attorney General is attempting to shift activities into one Consumer Fraud Unit for telemarketing, automotive repairs and other deceptive trade practices. Ms. Giunchigliani suggested the appropriations should come through the General Fund and all the fines and fees should be pooled and used to reimburse the General Fund, at least in part. She proposed the Consumer Affairs Division should be the umbrella under which a Consumer Fraud Unit from the Office of the Attorney General operates rather than have separate units for each type of deceptive trade practice. If A.B. 462 passes, she said, it might be the proper place for enforcement, but it should not restrict a consumer from contacting the Consumer Affairs Division. Ms. McKinney-James stated 70 percent of consumer calls are regarding automotive repair and telemarketing. She said the division has always had statutory responsibility for deceptive trade, but the telemarketing budget was constructed with a dedicated funding source, and the specified positions were not allowed to investigate other forms of deceptive marketing. Ms. McKinney-James said: When the commissioner responded in the [ASSEMBLY BILL] 462 hearing that if the automotive repair unit was not funded and didn't go forward, she would likely have to ... have a reduction in staff. It's because she currently has vacancies on the telemarketing side that she can't pull into deceptive trade, because of the restrictions associated with that dedicated funding. So it doesn't matter whether or not there's an automotive repair unit, that there is a ... horse-drawn carriage unit. The reality is that the way that the telemarketing budget has been built has generated the real problems for this division, and the fact that the enforcement responsibility was shifted to the [Office of the Attorney General] last session has exacerbated that to a point where what would really be helpful is to just clarify what we're doing with telemarketing and allow that agency to work within the broad umbrella of their deceptive trade responsibilities. Ms. Giunchigliani pondered if it is better to segregate the various types of fraud, or if it may be better to have one unit within the Office of the Attorney General to handle any type of fraud, whether Medicaid, SIIS, automotive or telemarketing, and then establish a form of accounting based upon the assessments solely to identify the sources of funds. She asked if the statutes will have to be changed, if the latter is a reasonable policy change, so that the telemarketing funds will not have to be dedicated only to the one area. Senator O'Donnell responded when funds are dedicated to a specific unit there is risk that inefficiencies may be built in. However, he said, the voluminous number of calls "cries out for" a telemarketing fraud unit. He concurred with the proposal by Ms. Giunchigliani on the issue that the budget should no longer be funded predicated upon fines and fees. He opined it will be possible to account for assessments, and if the funds are inadequate, the Legislature can readdress the problem, but he feels it is impractical to fund a budget based upon what may occur in the future. He recalled such a step had been taken 2 years earlier with disastrous results. Senator O'Donnell asserted it is contradictory to the intention of the division to depend upon unscrupulous practices in order to fund the division. He proposed that appropriations come from the General Fund while keeping track of fines levied which should go into a reserve account. After 2 years, he said, an evaluation of the funds in the reserve account can be made to determine if sufficient funds are being collected to support the operation. If the reserve is inadequate, he proposed raising the fines and fees. According to Senator O'Donnell, many of the phone calls to the Office of the Attorney General and other enforcement agencies can be stopped by making a requirement that if an individual is enjoined from doing business or telemarketing in another state, that person will be enjoined from doing business or telemarketing in Nevada. He asserted that will clean up the industry, and it should be addressed prior to the conclusion of the present legislative session. Ms. McKinney-James noted the proposal from the Consumer Affairs Division will work with the existing staff. She expressed doubt that a reduction in staff will be approved by the commissioner of consumer affairs. She stated there will have to be some clarity regarding not only telemarketing, but also regarding deceptive trade in other areas, and probably a bill will have to be drafted regarding the mechanics. She offered to work with the subcommittee to draft appropriate language including budgetary concerns as well as telemarketing. Ms. Tiffany declared she is just as adamant against the use of the General Fund as are those in favor of using it. She agreed the arguments regarding deceptive trade must be reviewed. She asserted no market should be targeted, but a conclusion should be reached to determine how many people will be necessary regarding the entire range of deceptive trade practices. She indicated she has no remorse if there is a backlog and not all contractors are caught and fined as long as a sample of them are being pursued. She insisted the incentive to find perpetrators will be reduced if the division is funded through the General Fund instead of through fines and fees. She opined there has been no incentive for the Office of the Attorney General to move forward on deceptive practices. Mr. Price stated the most important aim should be to serve the constituents. He said the backlog consists of alleged "rip-offs" of the constituency. He suggested Legislators are failing to provide the services for which they are elected if the backlog gets too large and consumer protection is not provided. He recognized there is a difference of philosophy regarding the role of government. Senator O'Donnell declared he is open to other options and the budget should be reviewed later after a conclusion has been reached regarding A.B. 462. He agreed the situation such as that when no funding or enforcement was provided regarding telemarketing 2 years earlier should be avoided. He decided to hold the budget. Senator O'Donnell voiced his intention to hold not only the telemarketing, automotive repair and consumer affairs budgets for review, but also the Consumer Affairs - Restitution budget. Commission for Hospital Patients - Page 823 SENATOR MATHEWS MOVED TO APPROVE CLOSURE OF THE BUDGET ACCORDING TO THE RECOMMENDATION OF THE GOVERNOR. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * MS. GIUNCHIGLIANI MOVED TO APPROVE CLOSURE OF THE BUDGET ACCORDING TO THE RECOMMENDATION OF THE GOVERNOR. MR. ALLARD SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Ms. McKinney-James pointed out the function has been proposed to be moved to the Consumer Affairs Division by the director's office of the Department of Business and Industry since it is already physically housed there. She noted the move will not affect the budget or mission. Energy Conservation - Page 827 Senator O'Donnell called attention to the deletion of $100,000 set forth in Exhibit C. Ms. McKinney-James responded the revenue was included twice in the base budget so the deletion is to correct a technical error and a change in E-126. MS. GIUNCHIGLIANI MOVED TO APPROVE THE BUDGET WITH THE CORRECTION RECOMMENDED BY THE STAFF. MRS. BROWER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE BUDGET WITH THE CORRECTION RECOMMENDED BY THE STAFF. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Housing Division - Page 833 Senator O'Donnell remarked the budget includes an increase in revenue from a transfer from the Down Payment Assistance Program and an expenditure for publications. In response to his query, Ms. Erickson explained the expenditure for publications will provide a service to the Housing Division as well as to the Legislative Counsel Bureau (LCB) and the Budget Division for the W.E.F.A. (Wharton Economic Forecast Associates) Economic Outlook Subscription service, thus spreading the cost of the service among three entities. Senator O'Donnell noted E-125 will provide for a Loan Servicing operation along with the Down Payment Assistance program within the Housing Division. Ms. McKinney-James acknowledged there has been some question with respect to whether the unit will compete with the private sector. She recalled: This was an attempt by the Housing Division to be more responsive to this segment of their financing constituency. That, in many instances, the lending institutions prefer that this function be performed by the Housing Division, because the size of these loans is substantially smaller than some of the others that they participate in, and they want to limit their loan servicing activities to a variety of loans that they do. Ms. McKinney-James acknowledged it is a new responsibility for the Housing Division, and it will generate some revenues. She voiced the understanding it will not compete with the lending institutions and there has been no opposition from them. Mrs. Brower inquired why state government should become involved in the program when neither banks nor mortgage companies want to become involved. Ms. McKinney-James replied the mission of the Housing Division is to provide a variety of products devoted to assisting low- and moderate-income families to secure affordable housing. She said, "This particular unit would deal with ... the lower end of the spectrum." She explained the Housing Division works with lending institutions to provide first-time mortgages and other tools such as United States Department of Housing and Urban Development (HUD) programs. Mrs. Brower wanted to know how a down payment is determined and how it is repaid. Ms. McKinney-James responded it is a loan with a reduced interest rate and often it serves as a basis to establish credit for those who have incomes substantially lower than the average market will bear. She explained research shows the one impediment to getting people into a position to secure housing is usually the down payment required. Ms. McKinney-James said regardless of whether the Housing Division continues to be part of the Department of Business and Industry or not, the loan servicing function is a legitimate activity. Senator O'Donnell suggested the committee close the Housing Division budget with the staff recommendations but with the ability to reopen the budget if at least three members of the Assembly on the subcommittee make the request to do so. MS. GIUNCHIGLIANI MOVED TO RECOMMEND THE BUDGET BE CLOSED ACCORDING TO THE RECOMMENDATIONS BY STAFF AND WITH THE ABILITY TO REOPEN THE BUDGET AS STATED. THE MOTION WAS SECONDED BY MS. TIFFANY. THE MOTION CARRIED. (MRS. EVANS AND MR. PRICE WERE ABSENT FOR THE VOTE.) * * * * * SENATOR MATHEWS MOVED TO RECOMMEND THE BUDGET BE CLOSED ACCORDING TO THE RECOMMENDATIONS BY STAFF AND WITH THE ABILITY TO REOPEN THE BUDGET AS STATED. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Low Income Housing Trust Fund - Page 841 Mr. Steele stated the Welfare Division is no longer involved in low-income housing from which they traditionally receive transfers. He explained the adjustments to the budget will reallocate the funding to enable the Housing Division to use the funds for similar purposes as in the past, but without a direct transfer to the Welfare Division. MS. GIUNCHIGLIANI MOVED FOR BUDGET APPROVAL ACCORDING TO THE RECOMMENDATION OF THE STAFF. MS. TIFFANY SECONDED THE MOTION. THE MOTION CARRIED. (MR. PRICE WAS ABSENT FOR THE VOTE.) * * * * * SENATOR JACOBS MOVED FOR BUDGET APPROVAL ACCORDING TO THE RECOMMENDATION OF THE STAFF. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Division of Minerals - Page 895 MS. GIUNCHIGLIANI MOVED FOR CLOSURE OF THE BUDGET AS RECOMMENDED BY THE GOVERNOR. MS. TIFFANY SECONDED THE MOTION. THE MOTION CARRIED. (MR. PRICE WAS ABSENT FOR THE VOTE.) * * * * * SENATOR MATHEWS MOVED FOR CLOSURE OF THE BUDGET AS RECOMMENDED BY THE GOVERNOR. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Minerals - Reclamation Bond Pool Mr. Steele explained the Reclamation Bond Pool has not previously appeared in the state budgetary system and in the past it was required to obtain authorization from the IFC for all revenue and expenditure activity. It will now be part of the budget as requested. MS. TIFFANY MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED. (MR. PRICE WAS ABSENT FOR THE VOTE.) * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Athletic Commission - Page 903 Mr. Steele reported an adjustment in the budget to reflect that the commission will no longer be charged for costs incurred by the Office of the Attorney General since the commission is now a General Fund agency. He pointed out the executive director of the Nevada Athletic Commission added a list of requests, delineated in Exhibit C. Ms. McKinney-James interjected the added requests include an additional position as well as funding for computer hardware. She explained the commission receives a substantial number of inquiries from members of the public who, due to the name, are unaware the commission has no authority in areas beyond boxing and wrestling. An Administrative Aide position to respond to these inquiries, she said, will allow the professional staff to devote time to boxing and wrestling. She added the commission has expressed an interest in pursuing a name change. Senator O'Donnell asked if changing the name to the Boxing and Wrestling Commission will resolve the problem. Ms. McKinney-James replied the position will not be exclusively devoted to inquiries into other athletic endeavors. She said Marc Ratner, executive director of the Nevada Athletic Commission, expressed a willingness to change the name, but he is not persuaded that the phone calls will abate a great deal. Senator O'Donnell suggested allocating funding for an automated telephone answering system at approximately $8,000 to $10,000 instead of appropriating $17,000 in the first year of the biennium and $24,000 in the second year of the biennium for the new position. He asserted the automated system will serve the purpose of routing calls and informing the public that only boxing and wrestling are served by the commission. Ms. McKinney-James responded Mr. Ratner not only wants help for the telephone, but also for additional clerical duties. She expressed her own bias against an automated system that might frustrate the public regarding an industry that brings $1.7 million into the General Fund. MRS. BROWER MOVED TO APPROVE THE ADDITION OF ONE POSITION AND CLOSE THE BUDGET WITH THE RECOMMENDATIONS MADE BY THE STAFF. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED. (MR. PRICE WAS ABSENT FOR THE VOTE.) * * * * * SENATOR MATHEWS MOVED TO APPROVE THE ADDITION OF ONE POSITION AND CLOSE THE BUDGET WITH THE RECOMMENDATIONS MADE BY THE STAFF. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR O'DONNELL VOTED NO.) * * * * * SENATOR JACOBSEN MOVED TO SUBMIT A BILL DRAFT REQUEST TO CHANGE THE NAME TO THE BOXING AND WRESTLING COMMISSION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY SENATE SUBCOMMITTEE MEMBERS. * * * * * Nevada Beef Council - Page 913 Senator O'Donnell noted the adjustment to the budget represents a 3 percent collection fee to be paid to the Bureau of Livestock Inspection. Ms. McKinney-James commented the adjustment is only technical and will amount to approximately $3,000 in each year of the biennium for transfers of ownership. MR. ALLARD MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED. (MR. PRICE WAS ABSENT FOR THE VOTE.) * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Ms. McKinney-James interjected Mr. Ratner had indicated his belief other members of the Nevada Athletic Commission will be receptive to the name change, and she affirmed his belief. Dairy Commission - Page 917 Ms. Giunchigliani recalled earlier discussions regarding several other commissions. She stated the consensus was "not to do away with them ... but to see if there's legislation that doesn't have as much oversight." She suggested the Dairy Commission may be one of those and asked if any progress is being made to that end. She reported some of the commissions receive an excessive amount of mail from the Department of Business and Industry because they are included on a mailing list that has nothing to do with their projects. She proposed a review of lists for newsletter mailings to see which missives may not be proper. Ms. McKinney-James agreed to look into the matter. She declared, "It's been our view that the information that we have been sending ... for agricultural and rural services ... is critical for them as ... state agencies." She reiterated her department makes sure each agency receives anything they should have as an agency of the state. Stephanie D. Licht, Rural Services Agriculture Cluster Leader, offered to call a cluster meeting to determine what each commission wishes. She stated the State Board of Sheep Commissioners is working closely with the Predatory Animal and Rodent Committee in an effort to follow the recommendations made by the Legislature. Ms. McKinney-James stated: In working with Ms. Licht ... and others that fall into the specific category, we've recognized that it could become somewhat complicated. We are asking for the opportunity over the next couple of years to work through those details, specifically in terms of salvaging the taxing authority for the sheep commission, because that is a critical issue for them. And we will continue to explore it with some of the other agencies. The [Nevada] Beef Council is currently housed within the Division of Agriculture. As you can see from the budget item before you, they have a relationship with the Livestock Inspection Bureau. Ms. McKinney-James acknowledged there are technical issues that need to be addressed. Senator O'Donnell noted a request for four laptop computers, three desktop computers, two printers, hardware costs for Department of Information Services (DIS) support and a request for a business process reengineering (BPR) study. He asked why the equipment is needed. Bryn Armstrong, Executive Director/Secretary, State Dairy Commission, Department of Business and Industry, replied he wanted to equip field auditors with the laptop computers to enable them to commence writing reports while they are on the scene and speed up the auditing and reporting time. He stated at present audits are made on a 3-year cycle, and his aim is to audit all licensees on a 2-year cycle. He explained the laptop computers will enable the auditors to work right in the offices of the entities being audited. Mr. Armstrong stated letters are sent ahead of time to all those to be audited in order to make arrangements for space and to allow them time to assemble documents. Instead of gathering invoices to take back to an office in Reno or Las Vegas, he explained, the laptop will enable the auditor to complete much of the audit right on site. MRS. BROWER MOVED TO CLOSE THE BUDGET WITHOUT APPROPRIATING FUNDS FOR COMPUTERS OR FOR THE BPR. MS. TIFFANY SECONDED THE MOTION. Ms. Giunchigliani noted the Dairy Commission had recently paid a retainer of $19,440 to an outside attorney. She asked if the job could be handled at a lower rate by the Office of the Attorney General. Mr. Armstrong responded the commission must consult with counsel on an almost daily basis, and the Office of the Attorney General is not always available. He felt it more cost-effective to hire outside counsel. Mr. Armstrong stated the auditors are already using their own computers, a practice he would like to eliminate because of the problems that arise when repairs are necessary. He declared it is essential that the commission be aware of the activities of licensees on a daily basis, and laptops will provide that ability. Without daily oversight, he said, delays in auditing result in either a buildup of refunds for improperly paid assessments or underpayment of assessments by licensees. Mr. Armstrong told of a major licensee, one of the top five retail grocers in the United States, that has not been audited for 10 years, and is owed a refund of $5,200 due to use of the wrong conversion tables to arrive at the amount of assessments owed to the commission. On the other hand, he said, another major retailer has been underpaying for 3 years and owes the commission $25,000. Senator Jacobsen pointed out the commission is self-funding and does not use General Fund appropriations. He declared legal counsel must be aware of the situation for the commission and he remembered a time approximately 20 years ago when there were over 100 pending lawsuits with distributors, processors and producers, while now the only pending suit is not connected with the licensees. Senator O'Donnell called for the vote on the motion to delete the computers and the BPR from the budget. THE MOTION FAILED. (MRS. EVANS, MR. ALLARD AND MS. GIUNCHIGLIANI VOTED NO. MR. PRICE WAS ABSENT FOR THE VOTE.) * * * * * MRS. EVANS MOVED TO APPROVE THE BUDGET WITH THE INCLUSION OF THE COMPUTERS BUT WITH THE DELETION OF FUNDING FOR THE BPR. MR. ALLARD SECONDED THE MOTION. THE MOTION CARRIED. (MS. TIFFANY VOTED NO. MR. PRICE WAS ABSENT FOR THE VOTE.) * * * * * SENATOR MATHEWS MOVED TO APPROVE THE BUDGET WITH THE INCLUSION OF THE COMPUTERS BUT WITH THE DELETION OF FUNDING FOR THE BPR. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator O'Donnell asked the committee to consider the budgets for several boards delineated on pages 65 through 68 of Exhibit C. Employees Management Relations Board - Page 923 Nevada Junior Livestock Show Board - Page 927 High School Rodeo Association - Page 931 Rural Housing - Page 941 MRS. EVANS MOVED TO APPROVE THE BUDGETS LISTED ACCORDING TO THE GOVERNOR'S RECOMMENDATION. MS. TIFFANY SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE BUDGETS LISTED ACCORDING TO THE GOVERNOR'S RECOMMENDATION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Sheep Commission - Page 945 Directing attention to a letter on page 72 in Exhibit C, Ms. Licht testified: When we brought our budget before you, there was some question about the large state cost-allocation exceeding our ... reserves in the last biennium.... I would direct your attention to the last paragraph. Senate finance was kind enough to submit a BDR ...requesting that the rest of the debt be forgiven as we have paid $3,000 against that $11,578 debt ... and state cost-allocation and attorney general costs be waived, or we be exempted from that. That will allow us, in the interim, time to restructure ourselves in a fashion where we could bring back solid legislation that would address the problem of holding our taxing authority while operating independently of the budgetary system. Ms. Licht requested speedy committee action on the proposed legislation. Senator O'Donnell suggested the budget be closed according to the Governor's recommendation while acknowledging there are problems in the reserve account which may be addressed by the BDR. He proposed the capability of reopening the budget be reserved if the bill does not pass. MRS. EVANS MOVED TO CLOSE THE BUDGET ACCORDING TO THE GOVERNOR'S RECOMMENDATION WITH THE RESERVATION IT BE REOPENED IF THE BILL REGARDING THE RESERVE DOES NOT PASS. MS. TIFFANY SECONDED THE MOTION. THE MOTION CARRIED. (MR. ALLARD AND MR. CLOSE WERE ABSENT FOR THE VOTE.) * * * * * SENATOR JACOBSEN MOVED TO CLOSE THE BUDGET ACCORDING TO THE GOVERNOR'S RECOMMENDATION WITH THE RESERVATION IT BE REOPENED IF THE BILL REGARDING THE RESERVE DOES NOT PASS. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Taxicab Authority - Page 949 Mr. Steele remarked adjustments provided by the director's office will move the Taxicab Authority Senior Ride program to the Division of Aging Services effective July 1, 1995. He noted the Division of Aging Services budget for the move has already been approved. Ms. McKinney-James said the funding for one Management Assistant I and one Administrative Aide is critical. She pointed out the funding is to be transferred from the Taxicab Authority to the Division of Aging Services, which has no ability to absorb the program without the people to implement it. Ms. Giunchigliani recalled a discussion during the last session that the Taxicab Authority should regulate all taxicabs, which both she and Senator O'Donnell endorsed. Senator O'Donnell announced that will be dealt with by the Senate Committee on Transportation. Mrs. Brower asked if there has been any opposition to that proposal. Ms. Giunchigliani noted it will be difficult to include those in the rural areas, but she speculated Reno will be included. Senator O'Donnell suggested a statewide Taxicab Authority can be phased in. Ms. Brower wanted to know if many structural changes will be necessary to expand the Taxicab Authority. Senator O'Donnell surmised the revenue will be available to accommodate the expansion. Mr. Price agreed the Taxicab Authority should extend to both ends of the state. However, he warned, there had been much dissension when the original authority was established. He pointed out the Division on Aging budget will have to be reopened if the authority is expanded. MS. GIUNCHIGLIANI MOVED TO APPROVE THE BUDGET WITH THE RECOMMENDATIONS MADE BY THE STAFF, BUT WITH THE RESERVATION IT MAY BE REOPENED IF NECESSARY ACCORDING TO THE DISCUSSION. MR. PRICE SECONDED THE MOTION. THE MOTION CARRIED. (MR. ALLARD WAS ABSENT FOR THE VOTE.) * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE BUDGET WITH THE RECOMMENDATIONS MADE BY THE STAFF, BUT WITH THE RESERVATION IT MAY BE REOPENED IF NECESSARY ACCORDING TO THE DISCUSSION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * State Board of Podiatry - Page 2141 MS. GIUNCHIGLIANI MOVED TO APPROVE THE BUDGET WITH THE TECHNICAL CHANGES RECOMMENDED BY STAFF. MRS. EVANS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR MATHEWS MOVED TO APPROVE THE BUDGET WITH THE TECHNICAL CHANGES RECOMMENDED BY STAFF. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator O'Donnell turned to the list of licensing boards' budgets on page 78 of Exhibit C. Board of Accountancy - Page 2061 Board of Architecture - Page 2065 Board of Audiology & Speech Pathology - Page 2069 Barbers' Health and Sanitation Board - Page 2071 Board of Certified Shorthand Reporters - Page 2073 Board of Chiropractic Examiners - Page 2077 Board of Contractors - Page 2081 Board of Cosmetology - Page 2087 Board of Dental Examiners - Page 2091 Board of Dispensing Opticians - Page 2095 Board of Examiners in Veterinary Medicine - Page 2097 Board of Funeral Directors, Embalmers & Operators - Page 2101 Board of Hearing Aid Specialists - Page 2103 Board of Homeopathic Medical Examiners - Page 2105 Board of Landscape Architects - Page 2109 Liquefied Petroleum Gas Board - Page 2111 Board of Marriage and Family Therapists - Page 2115 Board of Medical Examiners - Page 2117 Board of Nursing - Page 2121 Board of Long Term Care Administrators - Page 2125 Board of Occupational Therapy - Page 2127 Board of Optometry - Page 2129 Board of Oriental Medicine - Page 2131 Board of Osteopathy - Page 2133 Board of Pharmacy - Page 2135 Board of Physical Therapy Examiners - Page 2139 Board of Psychological Examiners - Page 2143 Board of Public Health Sanitarians - Page 2145 Board of Registered Engineers and Land Surveyors - Page 2147 Board of Social Worker Examiners - Page 2151 It was pointed out there are no recommendations for changes on any of the boards. Senator O'Donnell asked if any committee members wished to comment. It was agreed to hold the budget on page 2143 for the Board of Psychological Examiners, and Ms. Giunchigliani made a request to hold the budget on page 2081 for the Board of Contractors pending a request from the industry for a measure to allow members of the Office of the Attorney General, rather than district attorneys, to handle prosecution regarding compliance issues. MS. TIFFANY MOVED TO APPROVE THE 28 BUDGETS OF THE BOARDS LISTED ABOVE, EXCLUDING BUDGETS FOR THE BOARD OF CONTRACTORS AND BOARD OF PSYCHOLOGICAL EXAMINERS. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR MATHEWS MOVED TO APPROVE THE 28 BUDGETS OF THE BOARDS LISTED ABOVE, EXCLUDING BUDGETS FOR THE BOARD OF CONTRACTORS AND BOARD OF PSYCHOLOGICAL EXAMINERS. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator O'Donnell opened discussion on the budgets listed in Exhibit E. Plant Industry - Page 845 Mr. Steele commented the first two adjustments represent a direct transfer of positions from the Plant Industry budget into the Gas Pollution budget and to the Registration/Enforcement budget. He noted concern has been expressed regarding the third item relating to the proposed elimination of two other positions. He explained both the Director and Accountant positions were to be eliminated in the 1993 budget under reorganization savings, but neither was eliminated. He said the two positions are recommended to be financed with General Fund appropriations in the next biennium. Ms. Tiffany inquired why the positions cannot be eliminated or financed out of the agriculture budget as was done in the past, rather than fund through the use of General Funds. Ms. Baker responded the reorganization savings were shifted to vacancy savings in 1993. She explained: The agencies were informed that during the biennium they could meet that vacancy savings however they chose ... whether it was cut positions or by some other method. I believe this one and one-half positions that you're transferring out was a way that this agency met the vacancy savings in this budget. The two positions that were designated were the Accountant position and the Director of Plant Industry position, initially. But when it was switched to vacancy savings, that was to give the agency flexibility to make a determination what their needs were, and this is how the agency has determined they would meet that vacancy savings ... by transferring the Agriculturist and the half-time Chemist out of that budget. Those positions were previously funded through the Plant Industry budget. Ms. Baker pointed out the Division of Agriculture has one Accountant and one Account Clerk to monitor 12 or 13 budgets, and both positions are included within the Plant Industry budget. Ms. Tiffany repeated her question as to why the funding cannot be accomplished the same as during the past biennium. Ms. Baker responded the transfer continues the same type of funding, but will be simplified. She stated the result of the transfer out of the one and one-half positions will amount to $72,000 per year in savings for the General Fund. She said previously the way it was done the funds were transferred into the budget, but the transfer out of the positions will reduce the General Fund. Senator O'Donnell indicated the transfer results in a technical adjustment. MS. GIUNCHIGLIANI MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION. MR. PRICE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator O'Donnell requested the committee look at the budgets listed on pages 3 through 6, pages 12 through 14, and pages 16 through 18 of Exhibit E with the intention to accept one motion for all the listed budgets. Grade & Certification of Agricultural Products - Page 851 Alfalfa Seed Research - Page 855 Agriculture Registration/Enforcement - Page 857 Apiary Inspection - Page 863 Veterinary Medical Services - Page 869 Insect Abatement - Page 873 Rural Rehabilitation Trust Fund - Page 875 Predatory Animal & Rodent Control - Page 883 Grazing Board - Page 889 Woolgrowers Predatory Animal - Page 891 MS. GIUNCHIGLIANI MOVED TO APPROVE THE ABOVE STATED BUDGETS ACCORDING TO THE GOVERNOR'S RECOMMENDATION. MS. TIFFANY SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE ABOVE STATED BUDGETS ACCORDING TO THE GOVERNOR'S RECOMMENDATION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Livestock Inspection - Page 865 Mr. Steel explained the changes in the budget were made in response to concerns over the fund balance. He said the changes will entail elimination of one full-time District Brand Inspector, a $10,000 decrease in livestock inspection tax, and some technical corrections. Ms. Giunchigliani asked why the agency requires such a large reserve. Ms. Erickson responded the agency will only receive about $3,000 from the Nevada Beef Council, but the reserve needs to be substantial because the agency is funded by fees. She pointed out the fee for rerecording is made once every 4 years. MS. GIUNCHIGLIANI MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION. MS. TIFFANY SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR MATHEWS MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION. SENATOR JACOBSEN SECONDED THE MOTION, THE MOTION CARRIED UNANIMOUSLY. * * * * * Gas Pollution Standards - Page 879 Senator O'Donnell requested an explanation of the $36,000 adjustment in Fiscal Year 1997. Mr. Steele responded it represents the other half of the entry previously addressed under the Plant Industry budget with the transfer in of one half-time Chemist position. MS TIFFANY MOVED TO APPROVE THE BUDGET ACCORDING TO THE RECOMMENDATION OF STAFF. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED. (MRS. EVANS WAS ABSENT FOR THE VOTE.) * * * * * SENATOR JACOBSEN MOVED TO APPROVE THE BUDGET ACCORDING TO THE RECOMMENDATION OF STAFF. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator O'Donnell adjourned the meeting at 10:58 a.m. RESPECTFULLY SUBMITTED: Judy Jacobs, Committee Secretary APPROVED BY: Senator William R. O'Donnell, Chairman DATE: Assemblywoman Chris Giunchigliani , Chairman DATE: Assemblywoman Sandra Tiffany, Chairman DATE: Senate Committee on Finance Assembly Committee on Ways and Means Joint Subcommittee on General Government May 2, 1995 Senate Committee on Finance Assembly Committee on Ways and Means Joint Subcommittee on General Government May 2, 1995