MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session May 11, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:05 a.m., on Thursday, May 11, 1995, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews GUEST LEGISLATORS PRESENT: Senator Mike McGinness STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Ronald T. Steele, Program Analyst Jeanne L. Botts, Program Analyst Brian M. Burke, Program Analyst Sue Parkhurst, Committee Secretary OTHERS PRESENT: John Mendoza, Chairman, Public Service Commission of Nevada Judy M. Sheldrew, Commissioner, Public Service Commission of Nevada Thomas G. Tait, Executive Director, Commission on Tourism Tim Carlson, Director, Division of Economic Development, Commission on Economic Development Bob Cashell, Former Lieutenant Governor, State of Nevada Dave Roden, President, Tri-County Development Authority Shirley Walker, Executive Director, Churchill County Economic Development Authority Paul Sutton, Business Consultant, Carson City John Sanderson, Chairman, Lyon County Economic Development Pam Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources Wayne Perock, Acting Administrator, Division of State Parks, State Department of Conservation and Natural Resources Donald J. Mello, Director, Administrative Office of the Courts John C. Comeaux, Director, Department of Administration Senator Raggio presented several bill draft requests (BDRs) for consideration by the committee. BILL DRAFT REQUEST S-1929: Makes appropriation to department of education for development of new high school proficiency examination. SENATOR O'DONNELL MOVED FOR COMMITTEE INTRODUCTION OF BDR S-1929. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.) * * * * * BILL DRAFT REQUEST S-2028: Makes technical correction to provisions of Assembly Bill (A.B.) 387. SENATOR O'DONNELL MOVED FOR COMMITTEE INTRODUCTION OF BDR S-2028. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.) * * * * * BILL DRAFT REQUEST 1-2007: Provide annual cost-of-living increases in benefits for surviving spouses of supreme court justices and district court judges. SENATOR O'DONNELL MOVED FOR COMMITTEE INTRODUCTION OF BDR 1-2007. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.) * * * * * Public Service Commission (Revised Budget) - Page 681 John Mendoza, Chairman, Public Service Commission of Nevada (PSC), reminded the committee that during his State of the State address, Governor Bob Miller recommended a reduction of the commission from five members to three. He also recommended a reduction of 26 positions and the associated expenses, due to deregulation of the transportation industry. As the legislative session progressed and upon reflection it became apparent it would be very difficult to meet the requirements of the Open Meeting Law with only three commissioners, in that no two commissioners could ever confer about any matter coming before the commission without being in violation of the Open Meeting Law. Further, he continued, after reviewing the anticipated work load and the telecommunications rulemaking, together with the anticipated electrical industry modifications pertaining to retail wheeling, it became clear that, even though a downsizing of the agency would occur, five commissioners would be more appropriate than three in terms of handling the commission's work load. Mr. Mendoza said the Governor continued to clearly indicate his intention to downsize the commission. He said the PSC met and made its recommendation, which was forwarded to the Budget Division. The Governor reviewed the recommendation, then recommended modification to the Executive Budget to add two commissioners, two administrative assistants and one Management Assistant III for clerical support to the PSC budget. Mr. Mendoza deferred to Judy M. Sheldrew, Commissioner, PSC, to provide background information and testimony on the revised budget. Referencing a set of documents (Exhibit C) that includes written testimony, revised budgetary calculations and supporting documentation, Ms. Sheldrew presented the highlights of her testimony from the written text. Ms. Sheldrew said the issue of downsizing is reflected in two decision units in the Executive Budget. These are decision unit M-650, Transportation Regulation Preemption (page 684) and decision unit E-901, Program Transfers (page 687). Ms. Sheldrew said the decision to reduce the number of commission numbers came about as the result of passage of the Federal Aviation Administration Authorization Act of 1994, which is Public Law (PL) 103-305. Effective January 1, 1995, PL 103-305 prohibited state regulation of rates, routes, geographic areas in which service is provided and the types of commodities which may be transported. Ms. Sheldrew testified states can continue to require motor carriers that operate within the state's boundaries to assure they are in compliance with safety rules and insurance and financial responsibility standards which the state believes are appropriate. Continuing, Ms. Sheldrew said PL 103-305 does not preempt passenger carrier regulation, and in the opinion of the PSC the law is sufficiently nebulous that it is unknown whether or not it preempts tow car regulation. She said the law does not specifically preempt state regulation of household good carriers. Essentially, Ms. Sheldrew stated, PL 103-305 effects a partial deregulation of the responsibility for regulating motor carriers in the state. Ms. Sheldrew said in reaction to PL 103-305, the PSC formed an internal working group to analyze the impact on the state and the industry. A formal workshop was held to obtain industry input as to what should be done. Consequently, on December 5, 1994, the commission took the following actions: 1. Voted to notify all current certificate holders and contract carriers of property that the PSC has been preempted from regulating these entities. 2. Developed forms for use in a new application process for issuance of certificates of compliance under the new rules. 3. Opened a rulemaking docket to implement changes to the existing regulations as well as future changes to the Nevada Revised Statutes. 4. Voted to continue regulating tow car operators, in view of the nebulous language in PL 103.305; and further, to submit to the current Legislature a proposal to provide additional requirements of tow car operators as they relate to consumers. The measure is Senate Bill (S.B.) 443 and is scheduled for hearing in the Senate Committee on Transportation on May 16, 1995. SENATE BILL 443: Conforms state regulation of motor carriers to new federal law. 5. Decided, in view of the dramatic change and the short time period in which it happened, to direct the PSC's enforcement efforts toward compliance and education as opposed to writing tickets for persons who are in violation of the new rules. 6. Held three information workshops, in Carson City, Elko and Las Vegas, for the purpose of receiving questions and clarifying issues for motor carriers. 7. Submitted a bill draft to align state law with federal requirements. That measure is S.B. 442 and is scheduled for hearing on May 16, 1995 in the Senate Committee on Transportation. SENATE BILL 442: Regulates operation of tow cars. In response to an inquiry from Senator Raggio, Ms. Sheldrew confirmed the state has not been preempted from regulating evidence of insurance, financial responsibility and safety. Senator Raggio inquired if the legislative measures referenced above (S.B. 442 and S.B. 443) can be passed in their existing form, should the committee take the action requested by the PSC at this time. Ms. Sheldrew answered yes. She said the agency has attempted to address in advance any of the concerns people may have with the proposal embodied in the Governor's recommendation. Essentially what the recommendation in the Executive Budget calls for, Ms. Sheldrew stated, is a melding of the PSC process with the registration and enforcement processes in the Department of Motor Vehicles and Public Safety (DMV&PS). Ms. Sheldrew said the PSC will work within the registration process of the motor vehicles department and will perform the additional work believed necessary, as well as the additional work for which the DMV&PS did not receive additional staff as it relates to financial responsibility and safety issues. Seeking clarification, Senator Raggio asked if it is correct the PSC will not have a separate certification procedure, but will work with the DMV&PS. Ms. Sheldrew replied yes. The senator asked if the public has the assurance the necessary standards will still be met in the areas of financial responsibility, insurance and safety. Ms. Sheldrew responded yes. She said the standards will not actually be reduced as they relate to these areas. What will happen is that instead of requiring the motor carriers to go first to the DMV&PS and then to the PSC for a much reduced review, they will go through the DMV&PS and the PSC will work with that agency to assure there is no diminution of standards and the commission still has regulatory authority in the above- stated areas. All other regulatory responsibilities formerly assigned to the PSC have been preempted, Ms. Sheldrew continued, and it remains to be seen whether the preemption will improve the service provided to the entities concerned. She testified the commission has serious concerns about what will happen to service levels in the rural areas. She said apparently there is federal legislation in process that is intended to clarify the nebulous provisions pertaining to tow car regulation. Senator Raggio noted there is also a proposal to eliminate the U.S. Department of Commerce and inquired as to the ramifications to the preemptive laws. Ms. Sheldrew replied the duties and responsibilities formerly held by the state have essentially been transferred to the Interstate Commerce Commission (ICC), which has been "under fire" for a number of years. She voiced the opinion the ICC effectively stopped regulating motor carriers some time ago, and that Congress has taken the position regulation of motor carriers is simply no longer necessary with the exception of the safety, insurance and financial responsibility issues. Addressing the revisions to the commission's budget, Ms. Sheldrew said approximately 60 percent of the carriers formerly regulated by the PSC are preempted with the exceptions previously noted. The commission therefore has attempted to reduce its transportation staff, or those positions formerly supported by the Highway Fund, by approximately 60 percent. Ms. Sheldrew explained the basis for the commission's decisions to reduce staff, as presented on pages 5 through 13 (Exhibit C). She said the tables entitled Employee Salary Allocations, pages 5 through 8, indicate the number of full-time positions directly related to the transportation efforts of the PSC that have been supported by the Highway Fund. Approximately 40 positions out of approximately 120 positions were supported by the Highway Fund, Ms. Sheldrew stated. Continuing, Ms. Sheldrew said pages 9 and 10 indicate the 60 percent reduction using a pro rata basis. Pages 11 and 12, entitled Revised Budget Transportation Preemption, list the positions recommended for elimination in the Executive Budget. Ms. Sheldrew said when the PSC was advised by the Governor's Office of the Governor's intention to reduce the number of commissioners from five to three, the agency requested that "we go ahead and give the reductions that were directly related to the commissioners in lieu of giving other positions and then having the Governor take further cuts with the additional commissioners." She said the ones directly related to the commission are the commissioners themselves, and the assistant or administrative attorney assigned to the individual commissioners. Page 13 indicates the non-salary reductions proposed by the PSC, Ms. Sheldrew stated. Senator Raggio requested clarification of the basis for the amount of reduction with respect to the transportation preemption (page 13, Total Work Program, $334,581). Ms. Sheldrew said the commission calculated the average operating costs associated with all of the positions and multiplied that number by the 26 positions proposed for elimination. That amount was distributed among the non-salary categories. Ms. Sheldrew further explained the 60 percent level of reduction had not yet been achieved with the foregoing calculations, and the commission therefore proposed a further reduction of 1.5 positions (one Utility Operations Specialist and a half-time Public Service Intern) that are funded through the Regulatory Assessment Adjustments. Ms. Sheldrew said the commission had planned to offset the Governor's proposal to reduce the number of commissioners from five to three, with the possibility of having administrative law judges. She pointed out the PSC does not have administrative law judges at present. The commissioners sit at their own hearings, in contrast with the situation encountered by their colleagues in other states wherein administrative law judges sit through the hearings, Ms. Sheldrew continued, and the commissioners believed that with their additional work load they might require the ability to contract for the services of various administrative law judges. She explained the $75,000 budget request was intended for this purpose; however, the proposal was obviated by the recommendation to restore the number of commissioners to five. Referencing the memorandum identified as page 15 (Exhibit C), Ms. Sheldrew said at its April 17, 1995 agenda meeting, the PSC voted to request reinstatement of funding for the two commissioners and the two commissioner's assistants. However, to avoid shifting the costs away from the Highway Fund and into Regulatory Assessments, the PSC proposes offsetting the reinstated funding with vacancy savings, or salary savings. Ms. Sheldrew said the reason the commission is asking that salary savings be allowed to offset the reinstated positions is the agency does not have adequate time to notify personnel whose positions are being eliminated and to attempt to provide alternative state employment. She said the commission has been actively working to reduce the number of field positions that will be eliminated as a result of the preemption, and 2 months is not a sufficient amount of time to accomplish this. The commission is therefore requesting from the Legislature the flexibility to manage the projected level of vacancy savings within the agency's budget over the biennium. Additionally, Ms. Sheldrew stated, the commission believes the management study in the proposed budget would provide the agency with direction in terms of streamlining its operations to respond to the new competitive environment in which the PSC is functioning. Ms. Sheldrew said the proposal was sent to the Governor's Office on a vote of three to one with the PSC chairman dissenting. In an apparent compromise between the majority vote and the chairman's dissent, the Governor recommended reinstating the Management Assistant III position. Ms. Sheldrew indicated the commissioners support the compromise. The Governor's recommendation is presented in the memorandum on pages 19 and 20 of Exhibit C. Senator Coffin suggested legislative action might be appropriate to waive the "cooling- off" period established by the Legislature in an effort to prevent personnel in regulatory agencies from seeking to enhance their future employment opportunities by performing favors for someone in the business they regulate. He said the Legislature had not contemplated the possibility there would be a sudden reduction in force (RIF) of the type being recommended for the PSC. He inquired of Mr. Mendoza whether any action has been requested to waive the provision requiring a cooling-off period for the people who will be affected by the RIF. Mr. Mendoza replied no. He said such a waiver would probably be fair, but he did not believe legislation applies to the personnel who have left or have considered leaving the agency to seek employment in industry. Addressing this question, Ms. Sheldrew remarked it was her recollection the legislation applied only to personnel in a policy-making position and therefore would not apply to the situation at hand. Further, she stated, the PSC has not requested a waiver because the agency stopped filling positions when the preemption was first anticipated and has been actively working with the Governor's Office and the Department of Personnel to find new positions for the employees affected by the RIF. It is believed the agency's efforts to accomplish this will succeed, Ms. Sheldrew said. Senator Coffin said if there is any ambiguity in the "cooling-off" legislation it should be addressed before the Legislature adjourns. Mr. Mendoza indicated the commission will return to the committee with information pertaining to possible impacts of this legislation on the personnel whose positions are being eliminated. Senator Coffin requested Senator Raggio to consider legislative action to address this issue. Senator Raggio asked what the PSC is requesting the committee to do at this time with regard to the agency's budget. Ms. Sheldrew indicated the PSC's request is contained in the memorandum from John P. Comeaux, Director, Department of Administration to the chairmen of the Senate Committee on Finance and the Assembly Committee on Ways and Means, dated April 21, 1995. In further explanation of the budget revisions, Ms. Sheldrew reviewed the tables on pages 21 through 23 (Exhibit C) which contain the numeric changes in the budget. She said the commission's request would not affect the bottom line, taking into account both decision unit M-650 and decision unit E-901. The reinstated positions would be offset by the vacancy savings. Senator Raggio inquired as to whether the commission's proposal and the utilization of the highway funding comports with the constitutional requirements. Ms. Sheldrew said the PSC has not asked the commission's general counsel for an opinion on this issue but offered to obtain it for the committee. Since the regulation of passenger carriers has not changed from current state law and the agency is simply asking for the Highway Fund to continue to support the regulation of tow cars, household goods and passenger carriers, Ms. Sheldrew continued, it is doubtful there would be a problem in terms of legal ramifications. Responding to further questioning from Senator Raggio, she affirmed there have been no indications to the contrary. Concluding her presentation of the revised budget requests, Ms. Sheldrew reiterated the bottom line will not change, as indicated by the amounts shown for Total Reductions on the second page of the spreadsheets identified as pages 26 through 27 (Exhibit C). SENATE BILL 345: Combines commission on economic development with commission on tourism. Thomas G. Tait, Executive Director, Commission on Tourism, introduced Tim Carlson, Executive Director, Commission on Economic Development, and former Lt. Gov. Bob Cashell. Senator Raggio welcomed Mr. Cashell in his appearance before the committee. Mr. Tait deferred to Lieutenant Governor Cashell, as "the person with the most history on the organization of the Commission on Economic Development and [the Commission on] Tourism," to offer his comments first. Lieutenant Governor Cashell testified in support of S.B. 345. He noted the two commissions were created during his tenure as lieutenant governor. He said it was an honor to have been involved in this process and to have served as the first chairman. Mr. Cashell said he has spoken with people in the rural counties and in the two large counties about the proposed consolidation because he would not advocate anything that would harm the rural counties or other entities. He acknowledged some rural county economic development officials are apprehensive about the proposal, but he expressed the opinion the consolidation of the two commissions will probably help educate people in the gaming and tourism industry that they need to put more emphasis on economic diversification and development. Consolidating the two agencies would eliminate some of the duplication that now exists and will create a stronger entity that can facilitate Nevada's economic diversification while promoting tourism in the state, Mr. Cashell testified. He strongly urged support for this measure. Senator Raggio said a surprising number of people have spoken apprehensively of the proposed merger, particularly representatives of the rural county development agencies. He said one of their concerns is the language in the bill appears to lessen the focus on economic development overall and particularly with reference to the rural counties. The senator said the committee requires assurance from persons who have been involved with the commissions, such as Mr. Cashell, that the consolidation of the two agencies will not cause a dilution of those efforts. He noted there was a reason for the bifurcation of the commission's efforts. Mr. Cashell replied if he thought the proposed merger would harm the economic development and diversification efforts in the rural counties, he would not be speaking in behalf of S.B. 345. He said when the two agencies were formed, the main assistance he received as chairman of the two commissions in establishing the development authorities, tourism commissions and the room tax in the rural counties was from the large economic development authorities in the state, including the Economic Development Authority of Western Nevada (EDAWN), the Nevada Development Authority (NDA) and the tourism and convention agencies in the north and south. Mr. Cashell noted Mr. Carlson had been the chairman of the economic development group in Clark County and had spent a good deal of time assisting the state commissions to form the different development authorities in the counties. He predicted the larger entities will remain supportive of the rural counties in their economic development efforts. He said it is his understanding some amendments to the bill have been proposed. This was affirmed by Mr. Tait. Senator Raggio requested Mr. Tait to clarify for the committee whether there will be one commission or two under the proposed consolidation. Mr. Tait replied there will be one commission. The senator inquired as to how the commission will be comprised, under the proposal. Mr. Tait said there would be nine commissioners in addition to the lieutenant governor, who serves as chairman. The nine commissioners would include four members representing tourism, four representing economic development and one representing the film industry. The breakdown by geography would be one member on each commission from Clark County, from Washoe County and from the rural counties; the balance of the commission's membership would be at the discretion of the Governor, Mr. Tait stated. Senator Raggio invited comment from Mr. Carlson, who was not in attendance at the initial hearing on this measure on April 26, 1995. Mr. Carlson said his history with respect to economic development in Nevada began 15 to 18 years ago when he was engaged in the efforts to establish an economic development community within the state. He said the NDA lent its support in helping the rural development authorities, as well as those in Reno and Carson City, to become established by participating in their organizational meetings and activities. Mr. Carlson said he is proud to have been part of these efforts. Speaking to the issue, Mr. Carlson expressed the opinion the time has come to combine the two commissions. The reasons are fairly simple, he stated. First, the organizational structure is in place. The organization of economic development as it currently exists is well organized, well developed and well received, Mr. Carlson stated. However, what is missing is the total support of the state in relationship to its major industry, he maintained. He said this would be accomplished by combining the two commissions. The key to S.B. 345, Mr. Carlson continued, is the name of the commission, which is the Commission on Economic Development and Tourism. He said the name sends a signal and a statement to the citizens of Nevada that this legislative body, along with the Governor, feels strongly that economic development is as important as tourism to this state, that Nevada must diversify its economy and that the state must raise economic development and diversification to the level of its major industry (tourism). With the four commissioners from each branch helping one another accomplish this goal, Mr. Carlson predicted the next few years will see a more improved and better balanced economy with regard to economic development. He said economic development requires this kind of support and energy. Receiving its funding from the state General Fund is appropriate, he maintained, but participating in tourism marketing programs can only increase and benefit economic development in the next decade. Continuing, Mr. Carlson said for the above reasons along with many other reasons based on his personal beliefs, S.B. 345 should be passed and the state should move on to a new generation of combined efforts to consolidate the two primary efforts of tourism and economic diversification. Mr. Carlson said the tourism industry needs to know how important diversification is, and the proposed merger would accomplish this by stating, "from the top down," that "the state believes in this; we've got to get behind it and we've got to do something in relationship to pulling it up." Senator Raggio said Shirley Walker, Executive Director, Churchill County Economic Development Authority, represented the rural development authorities in her presentation before the committee (on April 26, 1995) and presented a list of questions which the committee felt were significant and entitled to a response. Noting the commissions were asked to respond to the questions, he said the opportunity to discuss the responses would be provided, if desired. He said several of the questions pertained to the manner in which the marketing efforts would be combined and would be more cost effective, as proposed in S.B. 345. Senator Raggio said the issue is based on the fact the vehicles, strategies and images used in advertising and promoting tourism are different from those used to promote economic development and diversification. Senator Raggio requested Mr. Tait and Mr. Carlson to elaborate on the projected savings referenced in S.B. 345 to be generated in the advertising and marketing area and to provide details as to how this is to be accomplished. Mr. Carlson said he and Mr. Tait had conferred in preparing the responses to Mrs. Walker's questions. Since Mr. Tait answered the first set of questions, Mr. Carlson said he felt it was important that he himself answer the second set of questions. He called attention to the written responses to the questions as presented in the packet of information identified as Exhibit D. He stated the question as, "How would the marketing be handled in regard to the two different missions of both efforts?" In his opinion, Mr. Carlson stated, the marketing issue is one of the more positive issues that bring the two efforts together. He said the strength of buying is a very important aspect of how a marketing program is developed. Mr. Carlson said the economic development commission's budget for marketing is approximately $300,000 to $350,000, whereas the marketing budget for tourism is several million dollars. The added strength would benefit economic development more than tourism, he contended. Senator Raggio commented the strategy with regard to tourism, simply put, is to persuade people to come to the state for the short-term, whereas emphasis in economic development is to convince people to come for the long-term. Mr. Carlson said this is exactly correct. Senator Raggio asked what would be done differently that will result in greater cost effectiveness through consolidation of the two commissions. He stated he remains concerned about the possibility of diminishing the economic development efforts in Nevada through the proposed consolidation. He said in the long run, with the proliferation of gaming throughout the world, this state needs to be more concerned with economic development and more focused in that direction. Mr. Tait replied that as he said in a letter sent to Mrs. Walker the previous month (page 15, Exhibit D), and as he has firmly believed all along, the image that will be created by the new commission will be one that encapsulates not only the business development opportunities, but also the tourism opportunities in Nevada. He stated his firm belief a new commission will view the marketing budget of more than $3 million as a vehicle not only by which to promote the scenic, cultural, historic and recreational attractions in the state, but also to promote the opportunities for business development in Nevada. He said this is not to say the commission will communicate a mixed message to the effect of "Come here and play and decide to live," but that a new image campaign can be created that encapsulates not only business development but tourism, as well as a combined image that speaks to the quality of life in the State of Nevada. The single commission would have greater buying power in the magazines and publications which provide a presence for the state's economic development efforts, the magazines and publications that promote tourism in the state, and the magazines and publications in which the state needs to have an image presentation that would satisfy the needs of both entities. Mr. Carlson remarked he had met recently with an executive from a firm on the East Coast and was told by this person he had been to Las Vegas before. Mr. Carlson asked him if the visit was on business or pleasure and the gentleman replied, "Always on pleasure." (This exchange took place following a tour of the Las Vegas community.) Mr. Carlson asked his opinion of the town at this time. The executive replied, "Today, I have a whole different view of the situation." Mr. Carlson proposed that if the state's promotional efforts can take advantage of the different types of regular visitors to the state and "mix in" a message that the visitors are also welcome to establish a business in Nevada and might wish to consider such a possibility. He voiced the opinion such a promotional effort would provide a good return. He suggested the combined agency would enable such creative marketing efforts. Continuing, Mr. Carlson said it is not impossible to convey a dual message, which he distinguished from a mixed message. He emphasized the need to communicate the message that the State of Nevada is a good place not only for a recreational experience but to establish a business, and the business opportunities derive from the recreational opportunities in the state. He asserted the marketing issues can be melded together and can benefit and expand economic development in a very creative manner. Mr. Cashell concurred with the comments made by Mr. Tait and Mr. Carlson. He said when the commissions were initially created they essentially went in different directions, and over the 4 years he served as chairman he came to realize the agencies needed to be combined because they were sending out separate messages. He noted tourists are often chief executive officers (CEOs) and other corporate executives, and they do not know the other side of Nevada's lifestyle. He recalled attending an NDA presentation (for prospective clients) at which an impressive 15-minute video was shown that conveys the quality of life in the state. Mr. Cashell commented the majority of executives who visit the state as tourists only see "the Strip, or the glitz and the lights." He said when they see the other aspects of life in Nevada, not only the tourism efforts, but the economic development efforts will be strengthened. Senator Raggio raised the question of whether the tourism industry or other entities will complain later if advertising dollars that ordinarily would be directed toward tourism are diverted to economic development, if this is the intention of the consolidated commission. Mr. Tait said he firmly believes the new commission will contemplate the creation of an entirely new image campaign which would encompass both tourism and economic development and diversification. He said it is his expectation that because of the nature and the construct of the commission, the tourism component will be fully supportive of this image. Senator Raggio repeated his question regarding the possible objection by the tourism industry to the diversion of marketing funds toward economic development efforts. Mr. Tait answered that if it appears substantial funds are being diverted carelessly and without input by the tourist industry, the industry's objections could be anticipated. The senator said this is exactly his concern, that at some point tourism interests will begin complaining too much money is being expended on the promotion of economic development, to the detriment of tourism. Mr. Cashell said in his opinion there has been a deficiency in this area, and the tourism industry must understand that for Nevada to be a viable state in the future, its economy must be diversified. He said the state's two major cities and all of the counties with the room tax have funds (unless they have set the room tax at a lower rate) for development of tourism. He again stressed the need for the gaming and tourism interests to recognize the need for diversification of the state's economy. Mr. Cashell said the new commission must be very sensitive to the tourism efforts, but must also be strongly supportive of the economic development and diversification efforts. He maintained the gaming industry has not been sensitive in this regard and that combining the two agencies "will help focus." Senator Raggio invited Senator McGinness to provide testimony on S.B. 345. Senator McGinness said he represents eight rural counties and has heard from nearly all of them on this issue. He said he spoke with Mr. Tait and has been assured the proposed consolidation will not adversely affect rural Nevada. He expressed appreciation for Mr. Tait's sincerity, but said he still has great concern that rural Nevada would lose programs should the measure pass. He said the rural economic development authorities are concerned they may lose their grant programs, and he maintained that economic development is needed most in rural Nevada. Senator McGinness further testified the current legislation was developed for economic development (for non-gaming, non-tourism efforts), and he opposes any dilution of such efforts. He expressed doubt the focus of the commission can remain clear and asserted the loss of a full-time director for economic development heightens that concern. Senator Raggio requested Senator McGinness to be provided a copy of the proposed amendments to S.B. 345. He inquired whether the representatives from the economic development and tourism commissions had sent copies of the proposed amendments to Mrs. Walker and was assured they had sent them to her as well as to all of the other development authority directors. Senator McGinness suggested that if something is not done with respect to economic development in rural Nevada, the economic problems in those counties will increase. He said rural communities have no ability to invest in capital investment and are even having to reduce maintenance to subsist. Without business and economic development in rural Nevada these communities will crumble, the senator warned, and rural Nevada will become a place merely to drive through en route to Reno, Lake Tahoe and Las Vegas. He said he has heard nothing in this hearing to assure him otherwise. He reiterated he has significant concerns about S.B. 345, but will examine the amendments in the hope they can assuage some of these concerns. He stated, "This was meant for rural Nevada, and I hope we can keep it that way." Senator Raggio requested the representatives from the tourism and economic development commissions to review the proposed amendments (pages 25 through 27, Exhibit D) for the committee. Prefacing his explanation of the amendments, Mr. Tait said they were constructed some time ago at the request of officials in some of the rural communities who had reviewed the legislation before it was actually in bill form and had expressed concerns about the measure. At that point the commissions constructed the amendments to the bill, and S.B. 345 was released prior to their ability to bring them to the attention of the bill drafters in the Legislative Counsel Bureau (LCB). Regarding the amendments in section 2, Mr. Tait said the principal concern is in section 2.1 wherein the words "economic development" were not included in the new language pertaining to the rural programs division. He recalled it had been testified in the previous hearing on S.B. 345 (April 26, 1995) that the rural grants program is intact. He said the confusion arose in that the new language was placed at the beginning of the bill, as is the practice of the LCB bill drafters. It is the way in which the bill was constructed that has caused confusion, Mr. Tait said. To assure the rural development authorities and other interests there is no intention to remove or dilute the economic development support in rural Nevada or elsewhere in the state, the language in the bill has been amended to provide the reference to "economic development" in several places on page 1. Mr. Tait next addressed the proposed change in section 3.1, wherein the term "governmental" has been removed. He said it was brought to the commissions' attention by the economic development agencies that entities other than governmental agencies are involved with development, and the word "governmental" was therefore eliminated. In section 5.3 the amendment provides that videotapes and audio recordings are included within the term "motion pictures." The amendment proposed in section 11.2 concerns grammatical changes, Mr. Tait continued. In section 11.7, it is proposed the language be deleted that pertains to arranging cooperative agreements with local governments to serve as the single agency from which permits are obtained. Mr. Tait explained the reason for the proposal to delete this language is that the development authorities did not regard it as realistic that one agency would provide all of the services that might be required by an emerging or relocating business, and therefore requested the deletion. Continuing, Mr. Tait said there are grammatical changes to section 23. In section 25.3 the amendment would provide a mechanism by which, for publications such as the film directory or industrial directory that receive funding, the commission would be able to receive the funds and credit them toward the division's operating expenses. Senator Raggio inquired if the fiscal analysis staff has any concern with the proposal to change from the fund for the promotion of tourism to a special account within the commission to pay for division expenses. Staff indicated this is not a concern. Senator Raggio invited comment from anyone in the audience wishing to speak to the proposed amendments or to offer additional amendments. Dave Roden, President, Tri-County Development Authority (TCDA), testified in opposition to S.B. 345. He said the TCDA comprises the three counties of Lander, Pershing and Humboldt. He referenced letters from small business owners expressing concern about the proposed consolidation of the two commissions (Exhibit E). He said the original purpose of establishing the Commission on Economic Development (CED) was to be able to enhance economic development and diversification efforts in the rural areas. In 1984, he continued, the TCDA was established, and the tri-county agreement was renewed in April 1994. Mr. Roden voiced the opinion the proposal to consolidate the two commissions has been railroaded through and has excluded the participation of key players. He said the TCDA Board of Directors has not been allowed to be proactively involved and to provide input, but has been in the position of merely reacting to the situation. He expressed disappointment with the manner in which the proposed consolidation has been handled by the Governor's Office. Commenting that on many issues the administration carefully examines the situation and gains an understanding of what is involved before acting, he said that has not been the case with respect to S.B. 345. In his opinion and that of the TCDA Board of Directors, Mr. Roden continued, the CED budget needs to be enhanced and strengthened. He said there has been excellent development in the state, and it is feared the emphasis on economic development will be lost if the commissions are consolidated. In clarification of his position on S.B. 345 Mr. Roden said the TCDA opposes the measure and previously submitted a resolution to that effect (Exhibit F). Mrs. Walker was invited to testify on this measure. Senator Raggio asked Mrs. Walker if she has received a copy of the amendments proposed by the commissions on economic development and tourism. She replied yes. She observed the committee has already been provided a substantial volume of material from the rural economic development authorities. She commented the more closely S.B. 345 is examined, the more it appears the measure is not only harmful to the rural communities but, as written, may not even be beneficial for the urban areas or for tourism, either. Mrs. Walker suggested tourism is being compromised, or will ultimately be compromised, through this measure. She stated she does not oppose the Governor's efforts to implement the proposal, but sees a need for more careful thought, and she suggested a thorough interim study on the issue of consolidation might be the best course of action at this time in order to generate a bill that will benefit both economic development and tourism through consolidation of the two commissions. Senator Raggio expressed appreciation on behalf of the committee for the questions raised by Mrs. Walker and the information provided by the responses to her questions. He noted the present chairman of each of the divisions has not taken a position in support of the proposed consolidation. Paul Sutton, Business Consultant, testified in opposition to S.B. 345. As background information he said he and a partner acquired a manufacturing firm in Carson City. Prior to that time he had a business in Los Angeles for over 25 years that provided consulting services in marketing, general management, planning, capital acquisitions, and mergers and acquisitions (generally of smaller companies). Since divesting himself of ownership in the Carson City company several years ago, Mr. Sutton continued, he has been involved in capital acquisition, general management consulting services and general services to small businesses in and around the area. He voiced the opinion that while S.B. 345 is well intended and would appear to offer some measure of efficiency and more fruitful results, his experience has been that in government and in business, when two entities involved in basically different tasks are combined, the combined entity tends to grow into a much larger, more expensive organization. He said a maxim (Parkinson's Law) pertains to this issue, which expresses the idea that "work will expand to accommodate the space provided." Mr. Sutton said the space provided in this case would be the larger commission. Continuing, Mr. Sutton said in today's world most businesses are downsizing. He said most businesses in the U.S. and other countries have found that while years ago consolidation and the forming of conglomerates was regarded as an attractive means of increasing shareholder value, now the trend is downsizing and decentralization. He noted ITT Corporation is expected to announce shortly its intention to split into three companies instead of one. He reiterated the formation of a larger commission will have a larger impact on the budget and will lead to more spending by the agency. He expressed doubts the anticipated efficiencies will be realized through the proposed consolidation. Secondarily, Mr. Sutton stated, the current development authorities operating out of the CED are doing a very good job. He said he has had many contacts with both EDAWN and NDA, which are providing opportunities for companies to relocate to Nevada. Noting the candidates for relocation are generally manufacturing companies, Mr. Sutton voiced the opinion such companies are the key to true economic development. He said manufacturing companies generally provide more higher paying jobs per square foot of land occupied than any other type of activity. He further expressed the opinion the current Commission on Tourism is also doing a very good job in its efforts to promote tourism. He stated, "As the old maxim [goes], `If it ain't broke, don't fix it,' and I believe in that." Mr. Sutton said that having reviewed the bill with reasonable thoroughness, he perceives the emphasis in S.B. 345 is on tourism, with economic development taking a secondary role. He said he is very concerned that the commission's efforts, as proposed in this measure and as evidenced by historic activities within this state, have been largely geared toward the development of tourism and gaming in Nevada. He again expressed his belief the consolidation of two separate commissions, both of which are currently effective, will create one larger entity that will not realize the efficiencies currently being realized and will be more costly than what exists now. In further testimony against S.B. 345, Mr. Sutton suggested what is needed for effective development in the State of Nevada is the creation of more companies from within the state, as well as attracting companies from outside the state as the development authorities are currently doing. He expressed doubt the proposed consolidation and the anticipated cost savings, through economies of scale of marketing and advertising activities, will facilitate true business development. John Sanderson, Chairman, Lyon County Economic Development Authority (LCEDA), testified some of his concerns have been addressed by the proposed amendments to S.B. 345. He said the issue is that rural Nevada is proud of its efforts in economic development. He further stated rural Nevadans are increasingly concerned and convinced that it is important for economic development efforts to continue to move forward. He said the basic concerns of the rural entities regarding S.B. 345 relate to money. There are concerns regarding whether funding will be cut and whether the development authorities will retain the control they need to bring industry into Nevada. Mr. Sanderson suggested it does not necessarily make a difference to the rural development authorities whether there is one commission or two, but it does make a difference that economic development is given the funding and the tools to accomplish what needs to be done for Nevada in this regard. He stressed this is the key issue. He expressed appreciation for the changes proposed in the amendments. Mr. Sanderson said the rural agencies are seeking assurance from the Legislature that they will be able to continue to function effectively. Continuing, Mr. Sanderson pointed out the urban economic development authorities were not represented at this hearing, and he surmised this is because their interests are provided for in the bill. The proposed amendments would provide coverage of the rural interests, he indicated, but there is a need for assurance by the Legislature regarding funding and control for the rural entities. Senator Raggio stated the letters received in support of and in opposition to S.B. 345 will be included in the record of this hearing. (They are contained within Exhibit D and Exhibit E.) He said one of the concerns remains that consolidation of the commissions into one agency will result in dilution of the economic development efforts across the state. He further stated one of the concepts he has endorsed, and for which he has asked the Senate Committee on Taxation to request a bill draft, would exempt new businesses from the sales tax to the extent allowable with respect to such items as new equipment. He suggested this could have a significant impact on new businesses relocating to Nevada. Mr. Sanderson commented the Legislature enacted a measure in the previous session to foster economic development in the state, pertaining to industry and tax-related issues. He expressed appreciation on behalf of the development authorities for the efforts of the Legislature. He commended the support provided by the Commission on Economic Development and its director, Mr. Carlson. He emphasized the need to retain the level of support provided by the CED and for continued support from the state system, which he said is crucial to the rural areas. ASSEMBLY BILL 233: Makes appropriation to state department of conservation and natural resources for flat file for Nevada Tahoe regional planning agency to store maps. Testimony in support of Assembly Bill (A.B.) 233 was presented by Pam Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources, and Executive Officer, Nevada Tahoe Regional Planning Agency (NTRPA). Ms. Wilcox stated A.B. 233 contains an appropriation of $12,000, which will be charged against the agency's budget. Ms. Wilcox said the appropriation represents the amount of the agency's equipment request. She stated the NTRPA needs another flat file in which to store the accumulating site plans for the projects that are reviewed in the Tahoe basin. Senator Raggio left the meeting for a short time. Senator Rawson presided until the chairman's return. ASSEMBLY BILL 235: Makes appropriation to division of conservation districts of state department of conservation and natural resources for replacement of office equipment and computer hardware and software. Ms. Wilcox, testifying in her capacity as Acting Administrator, Division of Conservation Districts, State Department of Conservation and Natural Resources, spoke in support of this measure, which she said represents the agency's equipment request. The appropriation would be used to provide replacements for a chair, a typewriter and a computer. She indicated the typewriter is old and no longer works, and the computer is outmoded. Senator Jacobsen commented it appears to him in his travels around the state there is less interest in the programs of the conservation districts than there has been in the past. Ms. Wilcox stated she sees increasing interest rather than diminishing interest. She said the conservation district program was proposed for substantial change as part of the reorganization plan that was adopted during the last legislative session. She stated the conservation commission was proposed to be abolished and the staff to be somewhat reduced. The proposal was opposed by conservation district personnel from around the state, Ms. Wilcox said, and the Legislature acted to retain the conservation districts and to keep the agency's budget intact. Ms. Wilcox said the program is having problems because of federal cutbacks. She noted the program works closely with the former Soil Conservation Service, now known as the Natural Resources Conservation Service. That agency has been experiencing significant cutbacks, including a reduction in the number of field offices in the state. Ms. Wilcox suggested it is probably this situation that is fueling the current requests before the Legislature for additional funding for conservation districts on the local level. She said the districts are attempting to pick up some of the slack and to provide some of the service that was previously provided by the federal government. She reiterated that is the only significant problem with respect to this program. The participation has been good and the district programs are growing stronger, Ms. Wilcox asserted. Senator Jacobsen said the reason for his concern is that he previously associated more with the conservation districts, and in recent times the only time he hears from the districts is when they have a problem. He said this is why he assumed the districts might not be as active as they once were. Senator Rawson relinquished the gavel to Senator Raggio upon his return to the meeting. ASSEMBLY CONCURRENT RESOLUTION 24: Directs adjustment of sums of money from issuance of certain state general obligation bonds previously authorized for expenditure for certain purposes related to protection and preservation of natural resources. Wayne Perock, Acting Administrator, Division of State Parks, State Department of Conservation and Natural Resources, testified in support of Assembly Concurrent Resolution (A.C.R.) 24. He provided committee members with a copy of a memorandum presenting the highlights of the measure (Exhibit G). He said A.C.R. 24 was passed by the Assembly and also received the endorsement of the department's Advisory Board on Natural Resources. He said the resolution provides reallocation of Question 5 park and wildlife bond revenues to cover Fiscal Year (FY) 1995 construction management fees for Question 5 projects. A total of $42,208 is requested to be reallocated from remaining Question 5 acquisition funds, Mr. Perock stated, and $53,817 from the Old Las Vegas Mormon Fort, which has a sum of $1.3 million remaining in its budget. The reallocation would allow the state parks division to release seasonal park staff funds that have been on hold until it has been ascertained the construction management fees are covered. He said A.C.R. 24 also increases the amount allocated for the regional visitors center at the Cathedral Gorge State Park by an additional $128,634. The net increase for the project is $129,875. Mr. Perock said bids were received on April 14 that well exceeded the original estimates for the projects. He said the agency has had experience recently with most of its projects coming in well over bid. Continuing, Mr. Perock said funds for the visitors center cost overruns will be obtained from other Question 5 projects, two of which are essentially completed and have had a surplus. The projects are at the South Fork State Recreation Area and at the Valley of Fire State Park. Two other remaining Question 5 projects that have been assigned a lower priority since operating and staffing were not increased in the Governor's recommended budget are at Washoe Lake State Park and Ward Charcoal Ovens State Historic Park. Senator Coffin expressed surprise at the proposal to reduce the funds authorized for the Old Las Vegas Mormon Fort State Historic Park by $53,817. He asked if the agency regards the funds the public voted for that park constitute a bank account for the other projects. Mr. Perock replied he did not believe that to be the intent of the legislation. The senator noted this is not the first request for the reallocation of funds from this facility. He inquired as to the reason for this particular request. Mr. Perock indicated the request was originally intended to enable the division to use the funds for seasonal salaries during the spring. However, because it is relatively late in the legislative session the funds should probably be left intact, he said. Senator Coffin commented as follows: I agree with you. I was thinking, Wayne [Perock], that a close examination of your travel might find an awful lot of funds coming from areas that perhaps might not be, or should not be, taken from. I've heard the possibility of this, that the [Mormon] Fort funds somehow have become an easy target within the agency to move around because it happens to have a lot of money. Well, that money is there for a reason, isn't it? ... and it's not even close to what needs to be spent on that project. Mr. Perock replied that over the long term, much more money than is currently available for the Mormon Fort will be required to make it a viable attraction. Mr. Coffin concurred, stating, "Right, but it will take a lot more if you dip into it more." He was assured by Mr. Perock the funds would be left intact. The senator asked if an amendment to S.B. 345 has been requested to that effect. Mr. Perock replied no. Upon further questioning he said if the funds from the Old Las Vegas Mormon Fort State Historic Park project are left intact, the division would use the seasonal salaries being held in reserve to cover the amount that was requested to be reduced. He also indicated the agency would not oppose an amendment to the bill. Senator Jacobsen questioned the proposed reduction of the funds authorized for the Washoe Lake State Park by $27,667. He said in subcommittee meetings it was indicated the Washoe County Health Department might order the Washoe Lake facility to be closed due to unsanitary conditions at the park. He commented the area is being used more and more frequently and it would therefore be difficult to reduce activities there, but it should not be forced to close, either. Mr. Perock said Washoe County is objecting to the use of portable chemical toilets except as a temporary measure. The county is demanding the construction of full flush systems, he stated, but the remaining Question 5 funds do not provide for such a project. He said the division had been negotiating with the Regional Transportation Commission (RTC) in Washoe County for a grant from the Highway Fund, but the agency's request has not been considered a high enough priority to receive funds from this source. Senator Jacobsen said his concern is to ensure the facility remains operational. Mr. Perock replied the division does not have the capabilities to undertake construction of a full system as proposed by Washoe County. If the agency is ordered to provide the permanent system the park would be closed, he said, but people would still enter the park by various means. Senator Jacobsen said one of his long-range concerns is that the state continues to acquire property for public use, but if access cannot be limited, problems result. Mr. Perock replied, "You've hit the nail right on the head." He said one of the main problems facing the division at present is that the state owns facilities for which staffing and operating funds are not available to provide adequate services. Jeanne L. Botts, Program Analyst, said as per her discussion with Mr. Perock prior to the hearing there is a proposal for Washoe County to relinquish the county's park facility at Washoe Lake to the state. If this occurs and the Division of State Parks were to be able to add a staff person and seasonal help, the park area could be monitored. The same personnel could also monitor Little Washoe Lake, Ms. Botts said. She said revenues could be generated through such an arrangement. Senator Raggio inquired as to the status of this proposal. Mr. Perock replied the proposal is under consideration. He said he has examined the revenue projections, and the county boat ramp has excellent potential for the division if the manpower is available to collect the fees. He stated Little Washoe Lake does not have as much revenue, but if the two are combined it would be possible to nearly offset the staffing and operating costs. Mr. Perock said additional funds would still be necessary for expenditures such as equipment. He said Washoe County has offered in-kind services up to $6,000 per year, which would include performing some of the maintenance and providing supplies. In further discussion on the Washoe County facilities, Mr. Perock said the Division of Wildlife has recently upgraded the boat ramp after receiving a grant. Senator Raggio asked what type of toilet facilities the county has. Mr. Perock said the county facility contains some flush toilets. He said the facilities would be turned over to the state in good working order if an arrangement is made to relinquish them to the state, but the division would first inspect the facilities. Mr. Perock remarked the facilities are fairly new but were heavily vandalized, although they were subsequently repaired, and have never actually been open to the public. He further stated the county has been unable to provide the state parks division with a substantial amount of information pertaining to costs and related matters. Senator Raggio pointed out the legislative session is coming to a close, and the Washoe County State Park is one of the most extensively used facilities in the state park system. Mr. Perock said Ms. Wilcox is looking into whether legislation is necessary for the state to acquire the county's Washoe Lake park. Senator Raggio requested Mr. Perock to prepare a budget and present it to the committee as quickly as possible to enable the proposal to be expedited. Senator Jacobsen proposed utilizing labor from the Division of Forestry at East Lake as well as inmate labor from the honor camps. He indicated the park improvements would be an ideal situation for the use of inmate labor. Mr. Perock replied the Division of State Parks will continue to make the best use of that program. Senator Raggio requested Mr. Perock to return to the committee the following week with the proposal to acquire Washoe County's park facilities at Washoe Lake. Mr. Perock promised to do so. Returning to the subject of the Old Las Vegas Mormon Fort, Ms. Botts said in the original bond issue approved by voters, $1.75 million was authorized for acquisition of the park and $175,000 was to be used for the archaeological study on stabilization of the buildings, exhibits, landscaping and parking of the facilities, for a total of $1,925,000. The current authorization for the program will be $1,758,000, so the amount has been reduced by approximately $166,000. Senator Raggio asked whether, given the fact a new budget is to be prepared, the proposed reduction of the amount authorized for the Washoe Lake State Park should go forward. Mr. Perock replied no. However, he said he intends to reexamine the figures pertaining to this budget. Senator Raggio inquired as to the reason for using a concurrent resolution for the legislation proposed in A.C.R. 24. Ms. Botts responded the legislative measure enacted by the 1989 Legislature to present the bond proposal to the voters, Assembly Bill 189 of the Sixty-fifth Session, contained language stating funds could be moved between the projects with the approval of the Interim Finance Committee (IFC) between sessions and by concurrent resolution during a legislation session. ASSEMBLY BILL 189 OF THE SIXTY-FIFTH SESSION: Makes various changes to provisions governing recovery of certain civil penalties by public service commission of Nevada. Senator Coffin thanked Ms. Botts for updating the committee on the actual amounts that should be in the fund for the Old Las Vegas Mormon Fort State Historic Park, and requested that she and Mr. Perock at some point work together to reconcile the $400,000 difference between the theoretical and actual amounts. Ms. Botts said she was discussing total authorization and does not know what the division may have actually spent from the available funds. Senator Coffin indicated he would like to see the difference reconciled at some point. Supreme Court - Page 103 Brian M. Burke, Program Analyst, presented the subcommittee recommendations on the Supreme Court budgets. He reported on two general notes regarding the subcommittee action on these budgets prior to addressing the individual budgets. Mr. Burke said the Executive Budget recommended General Fund appropriation in several court accounts to fund general salary increases or unclassified pay increases. He stated the subcommittee recommends removing these amounts from the budget request; if the salary increases are granted across the board or through the unclassified pay bill, the court can approach the State Board of Examiners for an allocation from the General Fund salary adjustment account. With reference to the second general note, Mr. Burke said the administrative assessment revenue estimates have been revised upwards to reflect projections prepared by the LCB Fiscal Analysis Division. The subcommittee recommends revenue adjustments to each of the impacted court budget accounts, he continued, and the court administrator has concurred with the new forecast. Mr. Burke said in the Supreme Court budget (page 103), the subcommittee concurs with the recommendation in decision module M-210 to provide six new positions associated with the increase in work load experienced by the Supreme Court. The new positions include one judicial executive secretary for the chief justice, three staff attorney positions for central staff to process increasing caseload and handle special projects, and one staff attorney and a base level management assistant for the court clerk for processing of time-sensitive motions. In module M-220, Mr. Burke continued, the Governor's budget recommended two new justices and an additional 15 support staff. This request was subsequently reduced to two new justices and 10 support staff. Mr. Burke said the Executive Budget also proposed a salary increase for the Supreme Court justices in module E-801. Rather than considering these proposals as part of the Supreme Court budget, the subcommittee recommends deferring the decisions to A.B. 259 and S.B. 16. ASSEMBLY BILL 259: Increases number of justices of Nevada supreme court and authorizes use of panels. SENATE BILL 16: Increases compensation of supreme court justices and district judges. Senator Raggio requested clarification as to whether the Executive Budget recommendations in modules M-220 and E-801 would be eliminated should the committee adopt the subcommittee's recommendation to defer the corresponding decisions to A.B. 259 and S.B. 16. Mr. Burke replied yes. Senator Jacobsen voiced the concern he has had for some time regarding the number of outstanding fines, totaling over $1 million. He said this must be addressed at some point. Senator Raggio noted the committee has submitted bill draft requests toward that end and in connection with suggested changes addressing the committee's concerns in this area, which were presented at a previous hearing by the director of the Administrative Office of the Courts, Donald J. Mello. Senator Raggio requested Mr. Burke to reiterate, for purposes of clarification, the changes in the administrative assessment funding and indicate whether or not the court administration agrees with the changes. Mr. Burke said the Fiscal Analysis Division has developed a projection model similar to the court's. The court had originally made a projection and then reduced the amount by $500,000 per year. Mr. Burke said the fiscal analysis staff worked with the court in developing the current model, with which the court agrees. He said the administrative assessment increases resulting from the new projections total $131,000 for FY 1996 and $120,000 for FY 1997, as reflected on page 23 of the budget closing action sheets (Exhibit H). Senator Raggio asked if the court agrees with these new projections. Mr. Burke answered yes. Senator Rawson inquired if this is the recommendation that leads to an increase in the variable rate assessed to each offense. Mr. Burke replied the Fiscal Analysis Division has not modified the administrative assessment structure, but has merely modified the methodology for projecting the administrative assessments. The senator said it could be argued there is a financial incentive to the courts to levy higher fines because with the higher fines they receive a larger amount of revenue, as a result of the administrative assessment, and this could ultimately lead to a challenge that could significantly impact the current system of financing. He said committee approval should only be done on the basis the issue would be examined during the interim to determine how the system could be revamped in order to obviate a constitutional challenge. He suggested the study could be performed by legislative staff. Senator Raggio invited Donald J. Mello, Director, Administrative Officer of the Courts (AOC), to respond to questions from the committee. Senator Rawson posed to Mr. Mello the question of the constitutionality of having an administrative assessment that may create an appearance of conflict of interest on the part of the court, because the higher the fine the greater return to the court. Mr. Mello indicated agreement with the senator's concern and said most of the judges have a similar concern about this issue, but it is in accordance with the law as it is currently written. Senator Raggio voiced the opinion if the law is ever successfully challenged, the matter could be handled by imposing the administrative assessment and having it go to the General Fund, then having the General Fund in turn fully fund all of the Supreme Court budgets. He expressed doubt there would be significant change in the event of such a constitutional challenge. Mr. Mello said he cannot speak to this possibility in that he cannot anticipate the inclinations of the Supreme Court in this regard. He remarked the point made by Senator Rawson is valid. Senator Raggio asked Mr. Mello if he is familiar with the recommendations of the joint subcommittee. Mr. Mello replied yes. The senator further questioned him as to any objections Mr. Mello might have regarding the recommendations pertaining to the Supreme Court budget. Mr. Mello indicated the court has no objections. Senator Raggio asked if it is understood the committee has reserved any decision on unclassified salaries and salary increases, which will be addressed in legislation that is pending. Mr. Mello answered yes. SENATOR RHOADS MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGES 1 AND 2 OF EXHIBIT H. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Board of Pardons Commissioners - Page 111 Mr. Burke said the subcommittee does not support the Board of Pardons Commissioners as a mechanism through which to grant midterm salary increases for the three Supreme Court justices whose terms expire subsequent to January 6, 1997. Senator Raggio asked if the result of not supporting the midterm salary increases recommended in decision unit E-800 would be that since the terms for which justices serve are staggered, some of the justices would be paid at a different salary than others serving in the same position. Mr. Burke said this is correct; three of the justices would have salaries lower than the two who are eligible. Senator Raggio invited justification for denying the recommendation. Senator O'Donnell said the subcommittee posed this very question in the subcommittee hearing and specifically asked Judge Thomas Steffen whether or not it is constitutional to do what is recommended in the Executive Budget with respect to this issue. The judge stated it is not constitutional and said he finds it difficult to justify using the pardons board as a means to fund salary increases. Senator O'Donnell said the subcommittee considered the issue with the realization the legislators would be in the same situation, should a salary increase for members of the Legislature be proposed, with respect to having staggered terms. The subcommittee subsequently voted not to approve the recommendation for a salary increase, but to eliminate the account altogether. Senator Mathews said it was also brought up in the subcommittee meeting that elected officials enter the election process knowing beforehand what the salaries will be and the potential for newcomers earning more pay. She noted there apparently have been no instances of judges resigning because of the lower salary. Senator Raggio remarked he has never supported the commonly heard argument that the person entering a particular position knew what the salary was from the outset and is therefore not entitled to a salary increase. He questioned the validity of the argument that if people get reelected to office they should never get a raise. He expressed the opinion people in the public sector, whether appointed or elected, should receive reasonable salary increases. Senator Raggio said it disturbs him to keep the salaries of justices of the Supreme Court and at the district court level on an equivalent basis. He noted the use of the pardons board as a mechanism for providing the salary increases has not been challenged in court. The senator suggested the counter argument could be made of "equal pay for equal work." He said he would oppose changing the current concept until it has been successfully challenged and a determination made as to its constitutionality. Senator Coffin requested this budget be held for further consideration. Senator O'Donnell indicated this would be acceptable to the subcommittee. Senator Raggio agreed to hold the budget for a short time. He asked if Senator Coffin's request pertains to the district court judges as well, because their situation is similar. Senator Coffin answered yes. Retired Justice Duty Fund - Page 113 Referencing page 4 of the budget closing action packet (Exhibit H), Mr. Burke said the subcommittee recommends adjusting the court administrative assessment revenue to reflect the revised projections. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 4 OF EXHIBIT H. SENATOR COFFIN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Supreme Court Justices' and Widows' Pensions - Page 115 Senator Raggio reminded the committee a bill draft has been requested (BDR 1-2007) for legislation that would provide cost-of-living increases for retired Supreme Court justices and widows of Supreme Court justices. He indicated this budget should be closed subject to legislative action on the pending bill. Senator O'Donnell commented the adjustment made to this budget pertains to a State Industrial Insurance System (SIIS) adjustment which should not have been included, but was generated by computer. The amount of the SIIS adjustment has been "backed out" accordingly. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE ADJUSTMENTS MADE BY THE JOINT SUBCOMMITTEE. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Law Library - Page 117 Mr. Burke said the subcommittee concurs with the Executive Budget proposal in decision module M-200 to add a new Library Assistant position for the Law Library, which will allow higher level positions to concentrate on more difficult tasks while providing increased public service. He said item 2 of the closing sheet for this budget (page 6, Exhibit H) reflects technical adjustments necessary to eliminate the existing half-time student position in consideration of creating the full-time Library Assistant position. It was noted the half-time position is not necessary in view of the request for the new position. The Governor's budget included the half-time position and the agency had actually requested the position to be deleted. Senator Raggio invited John P. Comeaux, Director, Department of Administration, to voice any comments or objections he might have with respect to the committee's consideration of these budgets. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 6 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Administrative Office of the Courts - Page 123 Senator Raggio invited Mr. Mello to inform the chair of any concerns he might have regarding the committee's proposals relative to this budget. Mr. Burke reported the subcommittee recommends replacing the General Fund appropriation proposed in the Executive Budget with administrative assessment revenue. The General Fund reduction resulting from this change is $49,658 in FY 1996 and $42,261 in FY 1997. Mr. Burke said the subcommittee also concurs with the transfer of the Management Analyst position from the Administrative Office of the Courts (AOC) to the Judicial Education budget. He said the court indicates the sole function of the position is to coordinate and support the education program. Senator O'Donnell informed the committee the subcommittee had been diligent in its questioning with regard to the administrative assessments. He said the subcommittee was hopeful the bill concerning such assessments would be processed, thereby allowing reductions in this particular budget. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 7 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Division of Planning and Analysis - Page 129 Court Improvement Program - Page 149 Mr. Burke said the subcommittee concurs with the recommendation of the judicial assessment commission to create a new Division of Planning and Analysis that would provide research, planning and technical assistance to the various courts in Nevada. New positions recommended in the Executive Budget included a deputy administrator, a management analyst and a management assistant. Mr. Burke said the subcommittee agrees with the creation of three new positions; however, after consultation with the court it is recommended the Deputy Court Administrator be downgraded to a Chief position. The subcommittee also recommends approval of the Court Improvement Program to assess and improve the handling of proceedings related to foster care and adoption, Mr. Burke continued. The program will be separated into assessment and implementation phases, and the implementation phase is funded entirely by the federal Department of Health and Human Services (DHHS). Mr. Burke said the subcommittee concurs with the court's suggestion to merge the two new programs into a single Division of Planning and Analysis. The General Fund savings for the consolidated programs, as compared to the projections in the Governor's budget, total $128,055 in FY 1996 and $90,980 in FY 1997, Mr. Burke stated. SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET FOR THE DIVISION OF PLANNING AND ANALYSIS, MERGED WITH THE COURT IMPROVEMENT PROGRAM, IN ACCORDANCE WITH THE JOINT SUBCOMMITTEE RECOMMENDATIONS AS PRESENTED ON PAGES 8 AND 9 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Uniform System of Judicial Records - Page 131 Directing the committee's attention to page 10 of the budget closing sheets (Exhibit H), Mr. Burke said the subcommittee recommends adjusting court administrative assessment revenue to reflect the revised projections. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 10 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * District Judges' Salary - Page 133 Mr. Burke said the Executive Budget requested seven new district court judges in decision module M-220. Salary increases were also proposed for the district judges, in module E-801. Rather than considering these proposals as part of the district judges' salary budget, Mr. Burke stated, the subcommittee recommends deferring the decisions to S.B. 366 and S.B. 16. SENATE BILL 366: Increases number of judges of family court in eighth judicial district. SENATE BILL 16: Increases compensation of supreme court justices and district judges. Continuing, Mr. Burke said S.B. 366 proposes two new justices in Clark County. The addition of a third new judge in Washoe County has also been discussed in the hearing on this measure. He said the fiscal impact of S.B. 366 is discussed on page 21 of the budget closing packet (Exhibit H). The fiscal impact of S.B. 16 is provided on page 20 of the closing sheets. Senator Raggio asked if it is correct that should the budget be approved with the elimination of the salary increases and the new district judges, this would in effect approve the existing district judges at their existing salary level, and the matter of additional judges or increases in salary will be addressed in the above-stated legislation. Senator O'Donnell replied affirmatively. Mr. Mello said the AOC had attempted, in constructing the agency's budget, to provide the Legislature with a source of funds from which the budget requests could be considered for funding. Senator Raggio said these issues will be discussed in the hearings on S.B. 366 and S.B. 16. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 11 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Board of Law Library Trustees - Page 137 Senator Raggio said this budget will be held at the request of Senator Coffin. District Judges' Travel - Page 139 Mr. Burke said the subcommittee recommends transferring excess peremptory challenge fee revenue from the District Judges' Travel budget to fund the Supreme Court's in-state and out-of-state travel requests. This measure will reduce the need for General Fund appropriation in the Supreme Court budget by $35,248 in each year of the biennium, he stated. The transfer is possible as the result of an unusually large balance of revenue in the District Judges' Travel budget. Mr. Burke said the subcommittee made a special point of noting the transfer should not be viewed as an ongoing source of revenue for the Supreme Court budget. Senator Raggio reminded the committee the fees for peremptory challenge are allocated to this travel fund. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 13 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * District Judges and Widows Pensions - Page 141 Senator O'Donnell explained the adjustment to eliminate SIIS payments is another computer glitch that generated an unnecessary additional cost. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 14 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Judicial Education - Page 143 Mr. Burke said that as noted in the AOC budget, the subcommittee concurs with transferring the management analyst position from the AOC budget to the Judicial Education budget to continue coordination and support of the education program. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 15 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Commission on Racial and Economic Bias - Page 147 Senator Raggio noted this is a new proposal. Mr. Burke said the subcommittee supports funding for the Commission on Racial and Economic Bias to study and make recommendations to prevent racial and economic bias within the Nevada judicial system. Areas of concentration include pre- arraignment, juries, sentencing, post-judgment, assignment of and relationship to appointed counsel, and juvenile matters. The subcommittee recommends dividing the $222,500 General Fund appropriation requested in the Executive Budget equally between each year of the biennium. Mr. Burke said the court testified a report of the findings of the commission will be prepared prior to the commencement of the 1997 legislative session. Senator Raggio inquired if the court has any objection to the proposal to apportion the General Appropriation between the 2 years of the biennium. Mr. Mello replied no. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 16 OF EXHIBIT H. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Judicial Selection - Page 151 SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE GOVERNOR. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Raggio complimented the subcommittee members on their work with regard to the Supreme Court budgets, which he said was "a tough assignment." He expressed appreciation to the staff for their efforts, as well. The meeting was adjourned at 10:28 a.m. RESPECTFULLY SUBMITTED: Sue Parkhurst, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance May 11, 1995 Page