MINUTES OF THE JOINT SUBCOMMITTEE MEETING OF SENATE COMMITTEE ON FINANCE AND ASSEMBLY COMMITTEE ON WAYS AND MEANS Sixty-eighth Session May 9, 1995 The joint subcommittee meeting on Public Safety/Transportation/Natural Resources of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman Lawrence E. Jacobsen at 8:13 a.m., on Tuesday, May 9, 1995, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE COMMITTEE MEMBERS PRESENT: Senator Lawrence E. Jacobsen, Chairman Senator William R. O'Donnell Senator Bernice Mathews ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Thomas A. Fettic, Chairman Mr. Larry L. Spitler, Chairman Mr. Morse Arberry, Jr. Mr. John W. Marvel Mr. Jack D. Close Ms. Chris Giunchigliani STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Mark Stevens, Fiscal Analyst Jeanne L. Botts, Program Analyst Judy Jacobs, Committee Secretary OTHERS PRESENT: Peter G. Morros, Director, State Department of Conservation and Natural Resources Mike Nolan, Budget Analyst, Budget Division, Department of Administration Naomi Smith Duerr, State Water Planner, Division of Water Planning, State Department of Conservation and Natural Resources James W. Baetge, Executive Director, Tahoe Regional Planning Agency, State Department of Conservation and Natural Resources Jim Dana, Finance Director, Tahoe Regional Planning Agency, State Department of Conservation and Natural Resources Robert R. Loux, Executive Director, Agency for Nuclear Projects, State Department of Conservation and Natural Resources William A. Molini, Administrator, Division of Wildlife Catherine Barcomb, Executive Director, Commission for the Preservation of Wild Horses Senator Jacobsen invited staff comment on the first budget to be reviewed. Nevada Natural Heritage - Page 1987 Jeanne L. Botts, Program Analyst, advised the committee to turn to page 18 of the highlights (Exhibit C. Original is on file in the Research Library.) to review the budget. She reminded the committee that members of the Senate Committee on Finance had voted to close the budget according to the recommendations made by the staff, whereas members of the Assembly Committee on Ways and Means had not done so. She noted the primary issue is whether General Fund appropriations should be increased by approximately $36,000 in the first year of the biennium, and by $85,000 in the second year of the biennium to make up for the loss of bond funds. Ms. Botts recalled the agency received $100,000 per year for each of 4 years from a Park and Wildlife Bond issue enacted in 1989. The fourth and final $100,000 payment was received in the 1994-1995 Fiscal Year. She said the agency has an unexpended balance which will help fund operations through part of the first year of the coming biennium, but in order to retain two of the agency's five positions, the agency is requesting appropriations from the General Fund. Ms. Botts stated there has been a request to clarify in statute that the Nevada Natural Heritage Program is part of the State Department of Conservation and Natural Resources. Currently, she said, the program is not mentioned in law. Peter G. Morros, Director, State Department of Conservation and Natural Resources, testified he has exercised authority over the program since it was placed in the department during the 1983 session of the Legislature. He said the budget is the only place in which reference is made showing the program is part of his department. He voiced concern at exercising authority over the program without statutory provision to do so, even though no challenge has been made to his authority. Senator Jacobsen noted the program office is located in the building with the State Department of Conservation and Natural Resources. Mr. Marvel asked if a bill draft request (BDR) has been made. Ms. Botts responded she has a proposal for a BDR, and Mr. Morros interjected he sent a request to the bill draft office. Ms. Botts read from the Nevada Revised Statutes (NRS) 232.090, subsection 2, which describes programs within the State Department of Conservation and Natural Resources and suggested a BDR to include the Nevada Natural Heritage Program within that section would be appropriate. Mike Nolan, Budget Analyst, Budget Division, Department of Administration, interjected a BDR was submitted and after review it was returned to the agency by the Budget Division because the draft requested the program be established as a separate division. Senator Jacobsen pointed out a new bill draft will have to be requested. MR. MARVEL MOVED TO REQUEST A NEW BILL DRAFT MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Mr. Close commented he has spoken out against the budget during previous discussions because he is against a policy of making appropriations from the General Fund to an agency which previously has been funded by other means. He acknowledged it appears the program does save the state some construction costs, and he offered to support the budget as proposed. MR. MARVEL MOVED TO APPROVE THE NEVADA NATURAL HERITAGE BUDGET ACCORDING TO THE RECOMMENDATION OF THE STAFF. MR. FETTIC SECONDED THE MOTION. THE MOTION CARRIED. (MR. SPITLER VOTED NO.) * * * * * Senator Jacobsen pointed out the Senate Committee on Finance has already approved the budget. Division of Water Planning - Page 1991 Naomi Smith Duerr, State Water Planner, Division of Water Planning, State Department of Conservation and Natural Resources, explained the agency only has five people, so each person is required to attend conferences, workshops and training sessions out-of-state in order to stay current and "to leverage knowledge." She said, "Our goal is not to reinvent the wheel, but rather take from what other people have developed." Ms. Duerr acknowledged it appears a large increase is being requested because there has been so little budgeted for travel in previous years. She asserted that put a strain on the division in terms of plan development for drought, conservation and water. Water Planning Capital Improvements - Page 1997 Senator Jacobsen asked if the Capital Improvements budget account reimburses the division for the time and expenses incurred for the grant and loan program. Ms. Duerr replied, until the position was filled, the division has been paying for the program out of the General Fund. She said if a letter of intent is sent to the division approximately $35,000 can be moved from the Capital Improvements account into the General Fund account. She indicated $35,000 will pay for approximately 8 months of the time for the engineer who has been working under the grant and loan program. Ms. Duerr explained the problem with such a course of action is that, if the funds are not spent, the funds will revert to the General Fund, with the end result that the overall fund available for capital improvements will have been reduced. Ms. Duerr declared the budget for the division is so small that even a $2,000 reimbursement for actual out-of-pocket expenses for space and telephone will help. She recommended the reimbursement for operating expenses if it is possible to do so without making a corresponding appropriation for salaries. MR. MARVEL MOVED TO HOLD THE WATER PLANNING BUDGETS. MR. FETTIC SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY BY BOTH ASSEMBLY AND SENATE MEMBERS OF THE SUBCOMMITTEE. * * * * * Mining Cooperative Fund - Page 2003 According to Ms. Botts, the remaining issue regarding the fund is whether NRS 514.060 should be amended since funding for the program is no longer provided by General Fund appropriations. She noted the statute declares the state's match to United Stated Geological Survey (USGS) funds shall come from the General Fund, but the match has been provided by a transfer from the Division of Environmental Protection of mining reclamation fees, pursuant to NRS 519A.260 since 1992. The recommendation is that funding be transferred pursuant to NRS 519A.260 from mining reclamation fees. In order to carry out the provisions of the latter statute, she suggested NRS 514.060 should be amended. MR. MARVEL MOVED FOR A BILL DRAFT REQUEST TO AMEND THE STATUTE AS PROPOSED. MR. CLOSE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR O'DONNELL MOVED FOR A BILL DRAFT REQUEST TO AMEND THE STATUTE AS PROPOSED. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * MR. MARVEL MOVED TO APPROVE THE MINING COOPERATIVE FUND BUDGET AS RECOMMENDED BY THE STAFF. MR. FETTIC SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR O'DONNELL MOVED TO APPROVE THE MINING COOPERATIVE FUND BUDGET AS RECOMMENDED BY THE STAFF. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Tahoe Regional Planning Agency - Page 2005 Ms. Botts reported the Tahoe Regional Planning Agency (TRPA) has two unresolved issues. She explained TRPA developed a partnership program with California and Nevada to resolve controversial issues, and it must be decided whether to continue the funding. The problems include air and water quality, restoration of stream environment zones, parking management, forest health and recreation issues. She said the Governor recommends $60,000 be appropriated each year to continue the program as first authorized by the Interim Finance Committee (IFC) in November 1994, but California will not be providing a match for the partnership in Fiscal Year 1995-1996. Ms. Botts noted the issue of funding the partnership is included in Assembly Bill (A.B.) 17. ASSEMBLY BILL 17: Makes appropriation for establishment and operation of program to provide for preparation and implementation of plans for protection and development of Lake Tahoe Basin by all interested participants. She stated the bill will continue the program, but it will require TRPA to obtain funding from the IFC every 6 months in $30,000 installments. Ms. Botts noted traditionally TRPA employees have been provided the same pay raise as that granted to Nevada State employees, provided that California matches the raise. She said the Governor did not include the pay raise in the recommended budget. She said that provision is generally included in any salary bill for state employees. Senator O'Donnell recalled the Senate Committee on Finance resolved the salary issue. He acknowledged the TRPA performs "an incredible" amount of work, and the partnership program has been extremely successful in achieving agreement among diverse interests. He declared the partnership program has mitigated many legal suits, and the $60,000 should result in savings many times that amount by precluding possible litigation. Noting that the Senate Committee on Finance has already closed the budget, he pled with the Assembly subcommittee members to agree, with the proviso the budget can be reexamined if A.B. 17 passes. Senator Jacobsen indicated the Nevada TRPA intends to meet with the California TRPA to open a dialogue on the direction for the committee. James W. Baetge, Executive Director, Tahoe Regional Planning Agency, State Department of Conservation and Natural Resources, echoed the sentiments expressed by Senator O'Donnell. He agreed the forest health and fire suppression issues are moving ahead due to agreements reached through the partnership. He added everyone in the Tahoe Basin is working together to pursue similar state legislative programs and to present a united front to the federal government. He asserted they are the ones "that used to sue each other." He offered to arrange a meeting between legislators of the two states. Mr. Morros related he recently spoke with Douglas Wheeler, the Secretary of Resources for the State of California, concerning California's commitment to TRPA and the Tahoe Basin. While acknowledging that California is undergoing serious economic problems, Mr. Morros attempted to allay rumors to the contrary and said it appears California is committed to continue programs in the Tahoe Basin. Mr. Baetge confirmed the $60,000 will be used for Nevada concerns in the basin. Ms. Giunchigliani voiced the opinion the salaries should be budgeted as proposed. She asked how the salaries are set. Senator O'Donnell responded Nevada should provide just one-third of the funding for salaries rather than use a formula he had outlined in earlier hearings. Ms. Botts said, "When we talk about providing a 4 percent raise ... to TRPA, we pay our third of the 4 percent raise, providing California matches that." She explained the raise is generally based upon the lower percentage offered by either of the two states, and Nevada pays for its one-third share of any raise provided. Jim Dana, Finance Director, Tahoe Regional Planning Agency, State Department of Conservation and Natural Resources, recalled the motion made by Senator O'Donnell last week would provide for a 2 percent cost-of-living adjustment in both years of the biennium without a corresponding California match. Continuing his recollection of the motion, he said, "If California provided for a match, the cost-of-living adjustment in both years of the biennium could go up to a total of 4 percent, but that was predicated on having a match from California. Absent the match, it would only be 2 percent...." Senator O'Donnell agreed that was his motion, but he noted at the time he thought the cost-of-living raise was to be matched by California. Mr. Dana stated that under the existing formula, if a 4 percent cost-of-living adjustment is approved by both states, Nevada pays one-third of the 4 percent and California pays two- thirds. He calculated Nevada will thus pay approximately 1.33 percent of the total cost-of-living adjustment. Senator O'Donnell stated that is probably the best course, and he proposed to change his motion for Nevada to pay its one-third share of whatever cost-of-living adjustment is agreed upon by the two states, not to exceed 4 percent. Mr. Dana pointed out there will be no cost-of-living adjustment from California, which means there will be no cost-of-living adjustment in the first year of the biennium, but, if California funds it, a cost-of-living adjustment can be made in the second year of the biennium. Senator O'Donnell suggested the 1.33 percent should be allocated to TRPA by Nevada in the first year of the biennium to give an incentive to California to match the raise. Mr. Dana agreed to provide estimated salaries computed upon the proposal. Mr. Arberry asked, "What would happen if we just gave them the 4 [percent raise], and then when California kicks in, then they just reimburse that back to the state?" Mr. Dana declared he was not sure he has authority to create an obligation for the State of California. He explained TRPA is only empowered to request funds, it cannot make any guarantee the funds will be appropriated. Senator Jacobsen inquired if discussions have been held regarding the matter. Mr. Dana replied TRPA received instructions last September from the State of California that no request should be made for any General Fund increases for the TRPA budget. He said the funding for cost-of-living adjustments, merit steps and salary increases is derived from the General Fund, which has been foreclosed by California. He pointed out California budgets annually, which means there will be an opportunity in September to make a request for matching funds from California, at which time TRPA plans to do so. Mr. Dana said the structure of the TRPA indicates TRPA must request all funds from the two states based upon the one-third, two-thirds formula. He declared the states retain the ability to modify final appropriations based upon their own discretion. Senator Jacobsen noted there are two issues, the partnership issue and the salary adjustment. Senator O'Donnell pointed out the Senate Committee on Finance subcommittee already approved the partnership funding and the salary increase. MS. GIUNCHIGLIANI MOVED TO RESOLVE THE PARTNERSHIP ISSUE BY THE SAME METHOD AS WAS DONE BY THE SENATE. MR. FETTIC SECONDED THE MOTION. THE MOTION CARRIED. (MR. MARVEL WAS ABSENT FOR THE VOTE.) * * * * * SENATOR O'DONNELL MOVED TO RESCIND THE MOTION TO APPROVE A 2 PERCENT COST OF LIVING ADJUSTMENT FOR TRPA STAFF. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATOR O'DONNELL MOVED FOR THE TRPA STAFF TO RECEIVE A 4 PERCENT COST OF LIVING ADJUSTMENT, TO BE FUNDED ONE- THIRD BY THE STATE OF NEVADA, TO BE MATCHED BY THE STATE OF CALIFORNIA FOR TWO-THIRDS OF THE FUNDING, AND THAT NEVADA SHALL ALLOCATE ITS ONE-THIRD SHARE IN BOTH YEARS OF THE BIENNIUM REGARDLESS OF WHETHER CALIFORNIA FUNDS ITS TWO-THIRDS SHARE, AND A LETTER SHALL BE CONVEYED TO THE STATE OF CALIFORNIA STIPULATING THE NEVADA MOTION AND ENCOURAGING CALIFORNIA TO FUND ITS SHARE OF THE RESPONSIBILITY TO TRPA. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * MS. GIUNCHIGLIANI MOVED FOR ASSEMBLY SUBCOMMITTEE APPROVAL OF THE MOTION AS STATED BY SENATOR O'DONNELL. MR. CLOSE SECONDED THE MOTION. THE MOTION CARRIED. (MR. MARVEL WAS ABSENT FOR THE VOTE.) * * * * * State Climatologist - Page 2013 Ms. Botts reported an error was made in the amount recommended by the Governor to be transferred from the State Climatologist's budget account to the office of the director of the State Department of Conservation and Natural Resources. Also, she said, if the services of the climatologist are to be under contract, a bill to amend NRS 396.595 will be necessary to change the arrangement for services from appointment by the Governor to employment by the department director. She noted the budget is being consolidated into the director's office with the suggestion for a contract between the department and the University of Nevada, Reno, to continue the services of the state climatologist. Mr. Morros concurred in the description of the relationship. He noted John James, State Climatologist, was unable to attend the hearing due to his commitment to a class at the university. Senator Jacobsen acknowledged the committee voiced endorsement of the transfer during earlier discussions. SENATOR MATHEWS MOVED TO APPROVE THE BUDGET ACCORDING TO THE RECOMMENDATION OF THE STAFF AND TO REQUEST A BILL DRAFT AS STATED. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR O'DONNELL WAS ABSENT FOR THE VOTE.) * * * * * MR. FETTIC MOVED TO APPROVE THE BUDGET ACCORDING TO THE STAFF RECOMMENDATION OF THE STAFF AND TO REQUEST A BILL DRAFT AS STATED. MR. MARVEL SECONDED THE MOTION. THE MOTION CARRIED, (MR. ARBERRY WAS ABSENT FOR THE VOTE.) * * * * * High Level Nuclear Waste - Page 1893 Ms. Botts stated the changes are mostly technical with a reduction in a federal Hazardous Waste grant of $1.6 million and a corresponding increase in the balance forward as projected by the Budget Division. She said there is an adjustment for the Statewide Cost Allocation Plan and the Attorney General's Cost Allocation Plan, and there is an adjustment for the rent. Ms. Botts pointed out the issues that are left to be resolved are depicted on the second page of the highlights (Exhibit C). She called attention to item 7, Independent Contractors versus State Employees. She recalled some confusion arose as to whether the employment of four contract employees met the provisions of law regarding independent contractors. She reminded the committee of the request for guidance on the issue from the Legislative Counsel Bureau (LCB) Legal Division. She said the LCB concluded that in many ways the people are not functioning as independent contractors. Ms. Botts voiced concern regarding the way the Internal Revenue Service (IRS) may consider the association. She said the IRS will look at the continuing relationship between the four employees and the agency; having set hours of full-time work; working on the employer's premises; payment by the hour, week or month; payment of business and travel expenses; having the employer furnish equipment, tools, materials and clerical assistance; lack of a completion date, time limit or unit of work; and reporting to a supervisor. Ms. Botts stated a memo from the LCB Legal Division noted factors that, on the other hand, indicate a contractual relationship, include the lack of training or instruction provided and the absence of an order or sequence of work. The LCB advised the interpretation could go either way. She suggested on page 3 of Exhibit C that a letter of intent be directed to the Agency for Nuclear Projects to make necessary adjustments in the contract and the work situations of the four employees to eliminate elements that indicate an employer-employee relationship exists. Ms. Botts pointed out there is an Assembly bill that will change the appointing authority for the executive director of the Agency for Nuclear Projects, which will change the title to administrator and provide that the state director of Conservation and Natural Resources, rather than the Governor, appoint the administrator. ASSEMBLY BILL 130: Revises provisions governing agency for nuclear projects and state department of conservation and natural resources. Ms. Botts opined the salary levels being paid to the four persons preclude them from being considered state employees, so the best option will be to alter the contracts to make it clear they are independent contractors. Mr. Marvel stated he would like to read the information in the memo provided by the LCB Legal Division prior to making a decision. Robert R. Loux, Executive Director, Agency for Nuclear Projects, State Department of Conservation and Natural Resources, remarked he has not seen the memo from LCB. He stated the agency entered into the relationships primarily at the recommendation of the High Level Waste Committee of the Legislature in 1983 and 1985. He declared the reason for the way the contracts were written was purely economic, and if the four people are made solely independent contractors it will increase the costs considerably. Senator O'Donnell asked if the federal government is paying for the costs of the contracts. Mr. Loux responded if the agency has to pay more to the contractors for administrative costs, such as office space and the other items cited, there will be less funding available for the technical work being done by the people. Senator O'Donnell commented a conflict of interest may be involved. He stated if the people appear to be employees rather than independent contractors, it may also appear that the people are unable to give an unbiased opinion. Mr. Loux concurred the perception may be as stated by Senator O'Donnell, but, he said: In truth, they are contractors. We've used the term contract-employee more in the context of federal money to indicate to the federal government that, in fact, some of our operating costs and others are attributable to these people actually having space in our office. They really are independent contractors, even in the current relationship.... They have a contract with the agency, and they operate independently. They're not supervised directly. We don't supervise their progress on the work, it only happens at the very end when they have deliverables. Ms. Giunchigliani asked when the contracts expire and if they are handed out through the bidding process. Mr. Loux replied the contracts are staggered and include a clause that either party can renegotiate after giving 30 day notice. Mr. Fettic inquired if the people are included in the state retirement system and if they were hired by the state personnel office. Mr. Loux answered that they are not part of the retirement system, nor were they hired through the personnel office. Mr. Fettic suggested a way be found to use federal funds for administrative support. Mr. Loux replied that probably can be done, but it may cost the agency more in the long run. Mr. Loux said a meeting has been called for Thursday by Assemblyman Robert Price, who chairs the High Level Nuclear Waste Committee, at which time an overview will be given. Senator Jacobsen advised the committee to hold the budget until after the meeting. He added he was surprised to learn $10 million is earmarked for the project by the federal government, but since only $4 million is being used, the other $6 million is being used as an offset to try to balance the federal budget. Mr. Marvel asked how the contractors, such as the four under discussion, are selected. Mr. Loux replied the four have been in the relationship since the 1980s. He said: We have continued their contracts for concerns over continuity, familiarity with the program, ongoing expertise. It actually probably saves us money in the sense that we don't have to reorient someone and pay them to become more familiar with the program ... so the four in particular have been on board since 1986 and ... 1987. Mr. Loux said they were originally selected through a request for proposal (RFP) process, and since then the contracts have been renewed. In response to a query, he asserted the procedure is legal. Senator O'Donnell referred to an article printed some months ago stating the shipments for the cleanup at Rocky Flats have increased by 300 percent and the cleanup is ahead of schedule. He asked if nuclear waste from the Rocky Flats cleanup is being stored at the Nevada Test Site. Mr. Loux responded some low-level waste is being stored at the test site, and mixed waste is being stored at a private site in Utah. He said the waste is probably equivalent to that at Beatty. In response to Senator O'Donnell's query regarding objections, Mr. Loux responded a lawsuit has been filed by the Office of the Attorney General relative to a new environmental impact statement (EIS) for the Nevada Test Site, and the court has been asked to enjoin shipments of materials until completion of the EIS. He opined the state is doing all it can to insure that most of the waste shipments will be stopped until there is a clear understanding of the environmental situation at the test site. Senator Jacobsen interjected federal officials have been requested to come to Nevada to provide a current update on the Department of Energy, the Nuclear Regulatory Commission and other federal agencies that are involved. Mr. Morros pointed out he has a somewhat different philosophy regarding the agency and appointing authority from the philosophy held by Mr. Loux. Mr. Morros explained, "His position [is] that they're an independent agency, and ... he serves at the pleasure of his commission. All the other administrators in the other divisions and agencies within the department serve at the pleasure of the director." Mr. Morros declared he has no opinion as to whether the agency should be in the Department of Administration or should remain in the State Department of Conservation and Natural Resources. He endorsed the passage of Assembly Bill (A.B.) 130 if the agency is to remain within his department. Mr. Marvel inquired what stipulations were made regarding the Agency for Nuclear Projects in the reorganization bill passed by the last session of the Legislature. Mr. Morros replied the bill stated the agency is within the State Department of Conservation and Natural Resources. Under that measure, he noted, the Division of Wildlife was placed within the conservation department, but the appointing authority for the Administrator of the Division of Wildlife was changed from the Governor to the director of the department. He said the wildlife commission continues to play a role by submitting names to the director for consideration. A similar change for the nuclear projects agency was not included within the reorganization bill. Mr. Morros asserted the position is uncomfortable for both him and Mr. Loux because of some differences of opinion, such as the contracts under discussion. Another unresolved issue, he stated, is whether the director of the department will have final approval over the contracts in the future. He asserted the Office of the Attorney General or legislative legal counsel needs to provide a legal opinion on the issue to bring his "comfort level" up to where it should be. Ms. Giunchigliani asked if the administration has taken a position on A.B. 130. Senator O'Donnell commented to his knowledge it has not. Mr. Marvel suggested a statutory change will be necessary no matter what happens with the bill. Mr. Morros concurred. Senator O'Donnell agreed the issue needs to be resolved. He pointed out the Legislature has the responsibility for oversight of the Nuclear Waste Products Act and should ensure that the state is not going to be negatively impacted by proposals for Yucca Mountain, regardless of opinions as to how to accomplish it. He questioned Mr. Loux regarding his relationship with the director and with the administration. Mr. Loux declared he is not uncomfortable with the situation. Under the current situation, he said, he normally informs Mr. Morros of most activities and the Governor makes contact with him both through Mr. Morros and directly. He said, depending upon the subject matter, he routinely informs Mr. Morros of contact by the federal government and the state administration, although he admitted he may have been contacted at some time by either without informing Mr. Morros. Senator O'Donnell suggested that may put Mr. Morros in an awkward position since he is responsible for the agency. Mr. Loux responded the statutes give the commission much of the responsibility, and it is his understanding he is responsible to the commission even though the agency is housed under the State Department of Conservation and Natural Resources. Ms. Giunchigliani acknowledged the reorganization left the situation unclear, and she disagreed that Mr. Morros is liable for the Agency for Nuclear Projects. She opined the commission and the Governor have final authority until such time as there may be statutory change, which she agrees should be clarified. Senator Mathews asked who evaluates Mr. Loux's performance. Mr. Loux responded he is an unclassified employee, and as such the Commission on Nuclear Projects continues an ongoing evaluation. He explained no formal evaluation of unclassified employees is required by Department of Personnel, and it is up to the discretion of whoever employs unclassified employees as to whether there is a formal evaluation. Senator Jacobsen agreed to hold the budget. Division of Wildlife - Page 1961 Ms. Botts pointed out there are five budgets to be considered for the division. She said the first, on page 5 of Exhibit C, relates to the administration. She explained the adjustments to expenses portrayed include deletions for a number of items which have not been traditionally budgeted in the past, and there have been adjustments to the Statewide Cost Allocation and the Attorney General's Cost Allocation. Those adjustments will save approximately $140,000 in each year of the biennium, she said. Ms. Botts stated the program to require minors to have a permit in order to carry an unloaded hunting firearm in a vehicle which was proposed by the Governor has been abandoned, so the projected $22,290 in revenue with corresponding expenses should be deleted from the budget. Ms. Botts noted the Commission for the Preservation of Wild Horses has agreed to supply equipment and operating costs for a Habitat Biologist position as proposed by the Governor, so equipment costs should be deleted. Ms. Botts recommended General Fund appropriations remain at the work program level of $600,670 for each year of the coming biennium, with the addition of the amounts required for the Habitat Biologist to be assigned to the wild horse commission of $39,360 in the first year of the biennium and $51,859 in the second year of the biennium. Calling attention to the Governor's proposals on page 1966 in the budget, Ms. Botts noted the summary includes a reference to the $1.8 million obligated reserve and $950,000 unobligated reserve, which total $2.7 million reserved in FY 1996-97. She noted only $1.9 million is balanced forward to FY 1996-97, as depicted in the last column for the Governor's proposal, which means $800,000 is not included. She said if an additional $800,000 is carried forward, sufficient money is available to enable the General Fund appropriation to be held at the $600,670 level, with the exception of the cost of the position in the Division of Wildlife's budget that will work on wild horses. Wildlife - Boating Program - Page 1969 Ms. Botts noted two new positions are being recommended by the Governor, a Program Assistant I for the boating program, and the Habitat Biologist to be shared by the Commission for the Preservation of Wild Horses. She said the agency requested the addition of a Conservation Educator, formerly approved by the IFC, and for a Wildlife Installation Specialist to be increased from 75 percent to full-time. She noted the recommended changes in personnel are listed on page 8 of the highlights (Exhibit C), but the chart may need to be recalculated by the Budget Division to include recommended salary increases and to balance transfers from the boating account. Ms. Botts said the agency proposed that an indirect cost rate of 18 percent be provided which is not included in the budget. She called attention to Senate Bill 230 from which an indirect cost rate up to 12 percent will be established. SENATE BILL 230: Establishes wildlife heritage trust account in state general fund. She suggested the committee may wish to assess up to 12 percent against the gifts and grants program. She declared the remaining issue in the Wildlife Heritage Trust Fund is removal of $242,643 from the division's operating account, the institution of a second- chance drawing and an increase in the sale of big game auction tags. Those funds will be put into a trust account and only the interest will be used for operating revenues, she said. Ms. Botts stated there is a bill, A.B. 231, which will provide a onetime appropriation of $250,000 to construct a hangar at the Minden airport. ASSEMBLY BILL 231: Makes appropriation to division of wildlife of state department of conservation and natural resources for construction of airplane hangar at Minden airport. She explained the funding will be used to "co-locate" wildlife division pilots with Division of Forestry pilots to provide backup to each other and share in firefighting duties. She said the department has indicated one of the pilots from the Division of Wildlife may be eliminated if the measure passes. Ms. Botts questioned whether the division's obligated reserve should be placed into a separate budget account. She noted most agencies keep gifts and grants in a separate budget. She also explained the Budget Division will be reviewing rent paid by employees living in state housing in all agencies. To clarify the record, William A. Molini, Administrator, Division of Wildlife, stated the director of the State Department of Conservation and Natural Resources has responsibility over his division. Wildlife Heritage Trust Fund - Page 1977 Mr. Molini said many of the funds in the carry-forward in unobligated reserves from 1995-1996 to 1997 accrued from sources such as the sale of big game auction tags. He stated members of the Legislature and others who have supported his division have been adamant in the method of expenditure of those funds and oppose use of the funds for operating expenses. Mr. Molini asserted there are substantial amounts of indirect costs built into the budget, but they are not charged against the Heritage Trust account or the gift and grant funds. Senator Jacobsen inquired if there is any possibility of a reduction of appropriations from the General Fund. Mr. Molini responded there may be, but the budget does not reflect any cost of living adjustments (COLA) for salary increases. He noted in regular General Fund budgets, the funds are allocated to make up the difference, but it has not happened in his division budget in the past in spite of requests. He said his agency may have to find a way to make up the $900,000 in COLAs calculated at 4 percent and 3 percent for the 2 years of the biennium. He suggested a reserve of $515,000, shown at the end of the biennium, along with increased fees to be gained from proposed Assembly Bill 212, will provide the additional funding through the biennium. ASSEMBLY BILL 212: Makes various changes to provisions governing hunting and fishing licenses. Mr. Molini said the General Fund request is predicated upon the past 2 bienniums. He declared, when General Fund appropriations have been available, no funds from licenses have been expended on the nongame conservation education programs, such as Project Wild and Aquatic Wild programs, in spite of what detractors have claimed. He explained the nongame programs, which also include Endemic Fish and Reptile programs, represent $503,000 from the General Fund appropriation, while the remaining $330,000, not including funds for the position recommended to work on the Wild Horse program, is appropriated as compensation for revenue lost from low-cost licenses. He stated the division estimates it loses approximately $400,000 each year in revenue as a result of issuing reduced-priced licenses to senior citizens, servicemen, Indians, youngsters and the handicapped. Mr. Molini described a proposal for a Pioneer License which requires the holder to be at least 65 years old and to have been a Nevada resident for 25 years. He acknowledged the Assembly Committee on Natural Resources is considering reducing the 25-year residency requirement to 5 years, so the amount of reimbursement the agency might request from the General Fund is subject to change. Senator Jacobsen asked if any adjustments in revenue from hunting and fishing licenses may be necessary through increased fees. Mr. Molini said total collections have been down over the past 5 years, but projected collections will increase due to the increased precipitation over the past winter. He noted fisheries will come back on-line due to full reservoirs, and the wetlands will revive, making for good chukar production, which should lead to an increase of sales in the numbers of both hunting and fishing licenses. Senator Jacobsen asked how revenue bills for wildlife are progressing through the Legislature. Mr. Molini responded a bill for a stamp for two fishing rods has passed and is on the way to the Governor for signature, which will produce a fair amount of revenue. He added the guided deer tag bill, which is close to passage, and a bill pending on bonus points will result in a slight reduction in revenue. He said A.B. 212 will add about $840,000 in revenue. Ms. Giunchigliani inquired if estimated charges for indirect costs has been calculated. Mr. Molini replied that an indirect cost rate approved by the Inspector General has been applied to federal Pittman-Robertson and Dingell-Johnson funds, and that rate is approximately 18 percent. Ms. Giunchigliani voiced concern that a precedent may be set if the Legislature establishes the indirect costs in the Wildlife Heritage Trust Fund account, through S.B. 230, at a set percent, but indirect costs have been determined in the past by the Board of Wildlife Commissioners and the agency based on federal guidelines. Ms. Giunchigliani asked when the new hangar will be completed if approved. Mr. Molini responded the construction will commence upon approval and may take approximately 6 months to complete. He conjectured the position to be eliminated could be deleted before the end of the 6 months. Mr. Morros interjected site preparation work can be commenced as soon as the department knows funding will be forthcoming with the intent to have the hangar operational by the end of summer at the latest. He said the reduction of one pilot's position could take effect July 1. Mr. Molini agreed. Mr. Fettic asked if funding for the new Program Assistant will be derived from the boating program, and the funding for the Habitat Biologist will come from the General Fund. Mr. Molini confirmed his questions. Mr. Fettic inquired into the source of funding for the Conservation Educator. Mr. Molini replied the position is for the Oxbow Nature Study area on the Truckee River west of Reno which is used by the school districts, and some funding comes from Washoe County, some from the City of Reno, and some from federal grants. He said there is no General Fund support for the position. Mr. Fettic remarked fees and licenses pay for the Wildlife Installation Specialist. He wanted an explanation of the position. Mr. Molini stated the position at the Overton Wildlife Management Area on Lake Mead is filled 11 months each year, and the division would like it to be full-time. He declared no General Fund support is involved. Mr. Fettic noted the funds from the Wildlife Heritage Trust Fund and the obligated reserve would be sufficient to cover salary increases if it was not used as pledged. However, he voiced agreement with Mr. Molini that the funds should not be placed into salary increases, because it would displease hunters. He questioned whether those funds should be used for ongoing expenses anyway, since the turnout varies from year to year. Mr. Molini agreed the turnout is unpredictable. Mr. Marvel asked if the appropriations from A.B. 231 would be offset by funds recovered from an insurance loss. Mr. Molini responded the aircraft has been replaced. The insurance reimbursement paid for the replacement plane, and an additional $40,000 was deposited into the General Fund to offset the cost of the hangar. Mr. Marvel wanted to know how much is needed to construct the hangar, to which Mr. Molini replied $250,000. Regarding the elimination of the pilot position, Mr. Morros interjected under personnel rules the division will be required to give a 30-day notice prior to elimination of the pilot position. If no decision is made until after June 1, he said, there will have to be funding sufficient to cover the pilot's salary over the 30-day notice period. Mr. Marvel inquired how much of the budget is predicated upon passage of A.B. 212. Mr. Molini answered much of the budget is based upon the measure. He said, "We added the $5 regular hunting [fee increase], $5 regular fishing [fee increase] and a combination fee increase to that after the budget was built to try to cover what we thought was going to be our shortfall with the cost of living salaries." He estimated $450,000 may be generated by the bill, which is not included in the budget, but, he said, neither are the cost-of-living increases included in the budget. Mr. Marvel suggested it will be difficult to close the budget prior to knowing the outcome of A.B. 212, since the budget is largely dependent upon the measure. If A.B. 212 is defeated, he opined, the budget will have to be reworked. Mr. Fettic asked what will happen if the COLA goes above the projected 4 and 3 percent in each of the 2 years, since they are based upon the fees to be generated through the passage of A.B. 212. Mr. Molini said the fees will not be raised, but it will increase the liability. He pointed out the fee increases include a small cushion. He suggested if the raise is substantial he will not increase fees, but he may have to trim programs. Senator Jacobsen noted most sportsmen are concerned that fees they pay may be used for nongame issues for which no licenses are necessary. Mr. Molini said he did not understand why that should be an issue, because it is based upon misinformation. He stated the programs are normally funded by General Fund appropriations, and in the past some federal aid and wildlife restoration funds, such as Pittman-Robertson funds, have been used for nongame issues. He noted Dingell-Johnson funds can only be used for sport fish projects. Mr. Molini recalled the role played by the division in making the habitat conservation plan for desert tortoises successful. He cited several species which are listed as endangered, or for which petitions are being circulated, and programs for which clarification is available through collection of data by his division. He produced a memo from the Nevada Natural Heritage Program (Exhibit D). He asserted his division understands the applicability of the act and its ramifications, often in a more realistic way than do some of the more narrowly focused biologists of the Fish and Wildlife Service. He declared it benefits the state to maintain a data base on some of those species which enables his division to take proactive measures. Senator Jacobsen inquired if free licenses are still warranted, and Senator Mathews asked what requirements they have. Mr. Molini said the only persons who qualify for free licenses are Native Americans, but there is a substantially reduced fee, $3.50, for fishing licenses for those aged 65 or over regardless of ability to pay. Senator Jacobson requested information on the duties of the proposed Habitat Biologist for the wild horse operation. Catherine Barcomb, Executive Director, Commission for the Preservation of Wild Horses, responded the commission is funded by the interest generated from the Heil Trust and it receives no General Fund appropriations. Ms. Barcomb distributed a list (Exhibit E) of items including land use planning documentation, meetings, and telephone calls which she has produced since the first of the year, and she gave the committee members copies of the program for a forthcoming event at the Reno Livestock Events Center (Exhibit F. Original is on file in the Research Library.). She pointed out she attended 38 meetings in 78 days, for which she spent time in preparation; she reviewed and responded to 116 land use planning documents; and she handled just under 1,000 telephone calls. She noted the statutes mandate other obligations in addition to those cited. She declared the trust fund needs augmentation, but said she does not have time to pursue grant income. With the growth and changes in land use in Nevada, Ms. Barcomb asserted she needs assistance on land use planning. That would allow her to use more time for grant writing, she said, in anticipation of more funding for the commission. She said a nationwide membership drive has been proposed in response to the calls received from people all over the country who are interested in receiving a newsletter. She said implementation of the proposal would generate income. She called attention to a credit card she had produced during the last session which she said should provide sufficient funding for the position within another 1 or 2 years. She concluded funding for the position is requested for less than 2 years. Senator Jacobsen asked who determines the amount to be taken from the Heil Trust account. Ms. Barcomb answered the five commissioners who oversee the trust make recommendations in response to applications for grant funds. She declared administrative costs are purposely kept low, and, to achieve the cost reduction, the commissioners have not received any reimbursement for the past 2 or 3 years for their services. Senator Jacobsen asked how much interest is earned by the trust account. Ms. Barcomb replied during the first few years the fund generated from $104,000 to $120,000, but it has only produced $48,000 to $56,000 during the past few years. Ms. Botts interjected the budget includes funding ranging from $70,000 to $80,000 each year from the Heil Trust fund. Mr. Morros called attention to page 2017 in the budget which shows $78,000 and $72,000, respectively, projected for the coming biennium. Ms. Barcomb surmised that is not a realistic figure since the interest rate has gone down. Mr. Marvel asked how much is the corpus of the account. Ms. Barcomb replied it is not allowed to go below $900,000 without legislative approval, but the principal balance is approximately $1,215,000 for 1995-1996. Mr. Morros pointed out the balance forward is $1,137,000. Mr. Marvel speculated interest is being added to the carry forward, yet the interest income is needed for operating expenses. Ms. Barcomb declared it has been necessary to use some of the reserve in the past few years just to keep up with annual expenses. Senator Jacobsen inquired how many wild horses there are in the state. Ms. Barcomb replied there are between 19,000 and 20,000 at present, but the numbers are decreasing each year. She stated 5,000 to 6,000 horses were gathered from public lands last year. Ms. Botts noted the only costs listed for the Habitat Biologist position included in the closing sheet (Exhibit C) for the Division of Wildlife are salary and fringe benefit costs. Everything else, she said, will be provided from the Wild Horse Commission budget. Senator Jacobsen asked how salary increases for employees of the Division of Wildlife will be met. Mr. Molini responded it is anticipated the fee increases to be provided by A.B. 212 will cover salary increases. Senator Jacobsen remarked the budget for the division needs work. Ms. Botts responded the position roster needs to be updated, and several other changes need to be made to give a more accurate estimate of the cost of the salary increases. She added revenue estimates need to be updated. Mr. Nolan concurred adjustments are needed. In response to a request for clarification by Senator Jacobsen, Mr. Molini explained the Division of Wildlife has statutory authority to borrow from the General Fund, as was done in 1985. He noted the obligated reserve is carefully tracked, and he voiced no opinion as to whether it should be placed into a separate account or not. Mr. Nolan indicated it will be easier to track the detail of the obligated reserve if it is kept in a separate account. He said at the present time the Budget Division relies upon information provided by the Division of Wildlife, but the trends are not as rapidly apparent as if the account were kept separately. Commenting on the proposed hangar, Senator Jacobsen remarked he is disappointed at the recommendation to eliminate one pilot. He voiced his support for the consolidation based upon the advantage of having extra personnel to be utilized in both areas, particularly fighting fires. Mr. Molini stated there are presently three pilots in the Division of Wildlife and two in the Division of Forestry. Because the wildlife pilots are generally available until September, through most of the fire season, both divisions have felt a pool of four will be sufficient as long as they are located together and have been cross-trained, he said. Wildlife - Trout Management - Page 1973 Senator Jacobsen inquired if there is anything regarding the Trout Management budget to be reported. Mr. Molini replied the account is in good order. He acknowledged $100,000 in transfer funds is being used to operate the hatcheries. He noted the cost to pump water in Mason Valley has increased utility costs, yet the production from the hatchery has also grown considerably over the past 5 years. He stated not only is the bonded indebtedness being paid off, but also $100,000 is being put into operations. MR. MARVEL MOVED TO CLOSE THE DIVISION OF WILDLIFE - TROUT MANAGEMENT BUDGET ACCORDING TO THE RECOMMENDATION BY THE GOVERNOR. MR. SPITLER SECONDED THE MOTION. Senator Jacobsen made a request that the committee consider other items prior to taking a vote on the motion. Wildlife Habitat Mitigation - Page 1975 Senator Jacobsen inquired what has transpired with the wildlife habitat reseeding project. Mr. Molini responded the division has been actively involved in an attempt to rehabilitate critical deer winter range in an area which is consistently burned out due to repeated cycles of cheat grass growth followed by fire. He explained his division, in coordination with the Bureau of Land Management (BLM), is trying to create fire breaks, and is disking and seeding big game forage species which may rehabilitate the range that traditionally carries a large part of the deer herd. Senator Jacobsen called for the vote on Mr. Marvel's motion to close the Wildlife - Trout Management budget. THE MOTION CARRIED. (MR. ARBERRY WAS ABSENT FOR THE VOTE.) * * * * * SENATOR O'DONNELL MOVED TO CLOSE THE DIVISION OF WILDLIFE - TROUT MANAGEMENT BUDGET ACCORDING TO THE RECOMMENDATION BY THE GOVERNOR. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * MS. GIUNCHIGLIANI MOVED TO CLOSE THE WILDLIFE HABITAT MITIGATION BUDGET ACCORDING TO THE GOVERNOR'S RECOMMENDATION. MR. MARVEL SECONDED THE MOTION. THE MOTION CARRIED. (MR. ARBERRY WAS ABSENT FOR THE VOTE.) * * * * * SENATOR O'DONNELL MOVED TO CLOSE THE WILDLIFE HABITAT MITIGATION BUDGET ACCORDING TO THE GOVERNOR'S RECOMMENDATION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR MATHEWS WAS ABSENT FOR THE VOTE.) * * * * * Ms. Botts called attention to the Wildlife Heritage Trust Fund on page 13 of the highlights (Exhibit C). She explained it is a new account to be established through S.B. 230. She recommended the budget be closed according to the Governor's recommendation, but contingent upon passage of S.B. 230. MR. MARVEL MOVED TO CLOSE THE WILDLIFE HERITAGE TRUST FUND ACCORDING TO THE GOVERNOR'S RECOMMENDATION, BUT CONTINGENT UPON PASSAGE OF S.B. 230. MR. SPITLER SECONDED THE MOTION. THE MOTION CARRIED. (MR. ARBERRY WAS ABSENT FOR THE VOTE.) * * * * * SENATOR O'DONNELL MOVED TO CLOSE THE WILDLIFE HERITAGE TRUST FUND ACCORDING TO THE GOVERNOR'S RECOMMENDATION, BUT CONTINGENT UPON PASSAGE OF S.B. 230. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Ms. Giunchigliani asked how the funds are to be allocated under S.B. 230. Ms. Botts replied there is an indirect cost of up to 12 percent that will go to the division, but the bulk of the funds will be placed in trust and only the interest may be expended on projects. Senator Jacobsen noted it may be difficult to close the Division of Wildlife budget, yet decisions should be made regarding the Wild Horse position, on the deletion of one pilot, and on the separate obligated reserve account. MR. MARVEL MOVED TO APPROVE THE HABITAT BIOLOGIST POSITION REQUESTED BY THE WILD HORSE COMMISSION. MS. GIUNCHIGLIANI SECONDED THE MOTION. THE MOTION CARRIED. (MR. ARBERRY WAS ABSENT FOR THE VOTE.) * * * * * SENATOR O'DONNELL MOVED TO APPROVE THE HABITAT BIOLOGIST POSITION REQUESTED BY THE WILD HORSE COMMISSION. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * MS. GIUNCHIGLIANI MOVED TO ELIMINATE THE PILOT POSITION, PENDING 30-DAY NOTIFICATION OF CLOSURE OF THE BUDGET. MR. MARVEL SECONDED THE MOTION. THE MOTION CARRIED. (MR. ARBERRY WAS ABSENT FOR THE VOTE.) * * * * * SENATOR O'DONNELL MOVED TO ELIMINATE THE PILOT POSITION, PENDING 30-DAY NOTIFICATION OF CLOSURE OF THE BUDGET. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * The committee decided to hold approval of the obligated reserve issue. Ms. Botts noted the adjustments to the Wildlife - Boating Program account on page 9 of the highlights (Exhibit C) show an additional $90,000 to be received each year from the motorboat fuel tax. She recommended all transfers out of the boating account be consolidated into one category, although there may be a necessity to adjust the transfers to the main operating account after the Budget Division adjusts the payroll and proposed salary increases. MR. MARVEL MOVED TO ACCEPT THE RECOMMENDED TRANSFERS. MR. FETTIC SECONDED THE MOTION. THE MOTION CARRIED. (MR. ARBERRY WAS ABSENT FOR THE VOTE.) * * * * * SENATOR O'DONNELL MOVED TO ACCEPT THE RECOMMENDED TRANSFERS. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Jacobsen adjourned the meeting at 10:55 a.m. RESPECTFULLY SUBMITTED: Judy Jacobs, Committee Secretary APPROVED BY: Senator Lawrence E. Jacobsen, Chairman DATE: Assemblyman Thomas A. Fettic, Chairman DATE: Assemblyman Larry L. Spitler, Chairman DATE: Senate Committee on Finance Assembly Committee on Ways and Means Joint Subcommittee on Public Safety/Transportation/Natural Resources May 9, 1995 Page