MINUTES OF THE SENATE COMMITTEE ON FINANCE Sixty-eighth Session June 5, 1995 The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:05 a.m., on Monday, June 5, 1995, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator William J. Raggio, Chairman Senator Raymond D. Rawson, Vice Chairman Senator Lawrence E. Jacobsen Senator Bob Coffin Senator William R. O'Donnell Senator Dean A. Rhoads Senator Bernice Mathews STAFF MEMBERS PRESENT: Dan Miles, Fiscal Analyst Bob Guernsey, Principal Deputy Fiscal Analyst Ronald A. Steele, Program Analyst Debbra J. King, Program Analyst Sue Parkhurst, Committee Secretary OTHERS PRESENT: Peter G. Morros, Director, State Department of Conservation and Natural Resources Glenn H. Clemmer, Program Manager, Nevada Natural Heritage Program, State Department of Conservation and Natural Resources Pamela B. Wilcox, Administrator and State Land Registrar, Division of State Lands, State Department of Conservation and Natural Resources John Sarb, Administrator, Division of Child and Family Services, Department of Human Resources Rose McKinney-James, Director, Department of Business and Industry Mary Liveratti, Deputy Administrator, Division for Aging Services, Department of Human Resources Birgit K. Baker, Administrative Services Officer, Department of Business and Industry R. Michael Turnipseed, State Engineer, Division of Water Resources, State Department of Conservation and Natural Resources Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration The hearing was opened with consideration of a bill draft request (BDR). BILL DRAFT REQUEST S-2112: Makes appropriation to Douglas County for repairs or replacement of well and appurtenant equipment at China Spring Youth Camp. SENATOR JACOBSEN MOVED TO INTRODUCE BDR S-2112. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS RAWSON AND COFFIN WERE ABSENT FOR THE VOTE.) * * * * * SENATE BILL 547: Repeals tax on hospitals. Senator Raggio said he has been advised Senate Bill (S.B.) 547 was mis-referred to the Senate Committee on Taxation and should have been referred to the Senate Committee on Finance. The measure is to be re-referred to this committee. Several bills on the agenda were heard out of sequence to accommodate the schedules of state agency administrators wishing to present testimony. Senator Raggio noted Senator Coffin's arrival at this time and the arrival of Senator Rawson a short time later. SENATE BILL 523: Establishes by statute Nevada natural heritage program. Peter G. Morros, Director, State Department of Conservation and Natural Resources, said S.B. 523 is a simple amendment to Nevada Revised Statutes (NRS) 232.090 that identifies the Nevada Natural Heritage Program as being a program within the natural resources department. He said the program has been located in the department for several years. He further stated he has been exercising supervision and appointing authority over the program, but has been uncomfortable with this situation since the statutes do not currently provide for inclusion of the program within the department of natural resources. S.B. 523 was requested to alleviate the problem by identifying the program as one that is contained within the State Department of Conservation and Natural Resources. Glenn H. Clemmer, Program Manager, Nevada Natural Heritage Program, said the agency has been operating within the natural resources department with funds obtained from Question 5. He said S.B. 523 essentially establishes the program as a bona fide agency within the department. Senator Raggio inquired whether the program is referenced elsewhere in the statutes. Mr. Morros replied no. He said it has been included in the Executive Budget as part of the department's budget for the past two legislative sessions. It gives statutory status to the program. SENATE BILL 528: Requires director of state department of conservation and natural resources to employ state climatologist. Mr. Morros said S.B. 528 provides for the director of the State Department of Conservation and Natural Resources to function as the appointing authority with regard to the state climatologist position. Senator Raggio observed it is provided in NRS 396.595 that the Governor appoints the climatologist. This measure would change the current statutory provision as indicated above. Senator Raggio asked the reason for the proposed change. Mr. Morros replied the office of state climatologist has also been located within the department for the last two legislative sessions, and it is felt the appointing authority should therefore be the same as it has been for all other division administrators. He indicated the proposed change is not a result of problems with the present climatologist, and in fact the department intends to enter into a contract for his services with the university. Senator Raggio noted that was provided for in the agency's budget. SENATE BILL 525: Requires certain fees collected by state land registrar to be paid into state treasury for credit to state general fund. Pamela B. Wilcox, Administrator and State Registrar, Division of State Lands, State Department of Conservation and Natural Resources, said the budget for the division has been closed with reinstatement of the agency in the General Fund. S.B. 525 changes the statutes to provide for the deposit of agency revenues directly into the state General Fund. Senator Raggio asked if S.B. 525 removes the separate account. Ms. Wilcox replied yes. The senator further inquired whether this would cause any problems with regard to the administration of this office. Ms. Wilcox answered the proposal would be an improvement because it has been difficult to monitor cash flow. SENATE BILL 522: Requires deposit of money collected for support and maintenance of certain delinquent juveniles in administration account for division of child and family services of department of human resources. John Sarb, Administrator, Division of Child and Family Services (DCFS), Department of Human Resources, testified in support of this measure. He said S.B. 522 accommodates the legislative budget decision to have collections for cost of care in juvenile delinquency cases credited to the agency rather than the state General Fund. Approval of the bill would enable the revenue from those collections to be used to support operations within the division rather than being deposited directly into the General Fund. Senator Raggio asked Mr. Miles if it is correct the funds in the special account must still be expended pursuant to authorization. Mr. Miles replied yes, it would be part of the revenues authorized for collection and expenditure by the agency. He said S.B. 522 is consistent with the recommendations of the joint subcommittee and the budget closing actions of both the Senate Committee on Finance and the Assembly Committee on Ways and Means. It was noted this bill was requested by this committee and that the NRS references in the bill pertain to the Nevada Youth Training Center and the Caliente Youth Center. Senator Raggio asked if S.B. 522 meets with Mr. Sarb's approval. Mr. Sarb said his only concern is in reference to two bills pending this legislative session, Assembly Bill (A.B.) 317 and A.B. 297, which would give the courts the authority to assess restitution, fines and court costs against the parents. ASSEMBLY BILL 317: Makes various changes related to juvenile courts, sentencing, crimes and punishments. ASSEMBLY BILL 297: Requires juvenile court to order counseling for child and parents and to impose civil penalty on parents under certain circumstances upon adjudication of child as delinquent. Mr. Sarb said to the extent the authority is applied, the division's collection efforts would be relegated to a lower position, and this could adversely affect the agency's ability to meet the revenue targets. Senator Raggio said if this occurs the division can submit a work program revision to the Interim Finance Committee (IFC). Mr. Sarb said there is room for improvement on the division's collection efforts, and it is unclear at this time how the new legislation will affect those efforts. SENATE BILL 524: Revises provisions governing funding of certain duties of bureau of mines and geology. Dan Miles, Fiscal Analyst, said S.B. 524 was requested by this committee pursuant to the recommendation of the joint subcommittee on conservation and natural resources. The purpose of the bill is to clarify the funding sources for the Mining Cooperative Fund. Current law specifies General Fund appropriations as the funding source, but for a number of years the funding has instead been obtained through assessments from what is now the Division of Minerals, Department of Business and Industry. SENATE BILL 526: Authorizes director of office of science, engineering and technology to engage in other employment under certain circumstances. Senator Rawson testified the science advisor position was approved in the last legislative session. He said it has been impossible to recruit a science advisor because the Legislature capped the annual salary at $75,000 and prohibited supplementation of income through outside employment. He further stated an amendment to the bill is forthcoming. Senator Raggio noted the bill provides the person in this position can engage in consulting and academic pursuits if the Governor determines they do not conflict with the duties of the director and may further the interests of the state. SENATE BILL 527: Transfers responsibility for administration of program to subsidize transportation by taxicab of elderly and permanently handicapped to aging services division of department of human resources. Senator Raggio inquired whether S.B. 527 conforms with the committee's budget actions. Mr. Miles replied yes. He said the measure allows for the revenues to be transferred from the Taxicab Authority budget to the aging services budget. Rose McKinney-James, Director, Department of Business and Industry, testified the agency supports this measure. She said the bill was proposed as a result of a recommendation from the Taxicab Authority administrator in an effort to provide better coverage for this program as well as greater efficiency. Mary Liveratti, Deputy Administrator, Division for Aging Services, Department of Human Resources, spoke in support of S.B. 527. She said that as the major advocate for seniors in the State of Nevada, the division is in a better position than the Taxicab Authority, which has a regulatory function, to oversee and monitor this program. Senator Coffin said he raised the question in the joint subcommittee hearing as to whether the taxicab industry, which funds this program, has indicated approval of this proposal. He said it his understanding this has occurred. Mrs. McKinney-James affirmed this is correct and said that according to her discussions with the administrator of the Taxicab Authority, the authority supports this bill and intends to continue to provide funding for the program. She said the department wishes to ensure any reversion of funds is made to the Taxicab Authority budget rather than to the General Fund in order to "grow" this account, as currently provided in the statutes. Senator Coffin asked if funds from the account in question would be exempt from the state cost allocation and other allocations used to subsidize the office of the director. Mrs. McKinney-James said this account does not contribute to the director's cost allocation, although the Taxicab Authority does. Senator Coffin inquired if there is an allocation for the Office of the Attorney General or other allocations. Mrs. McKinney- James said she does not believe there are additional allocations, but deferred to Birgit K. Baker, Administrator Services Officer, Department of Business and Industry, to respond further. Ms. Baker asked Senator Coffin if his question specifically is whether the allocations apply to the senior ride program or to the Taxicab Authority in general. The senator indicated his concern is to ensure the overhead costs will not be subtracted from the funds allocated to the senior ride program. Ms. Baker replied there is no overhead cost, except a certain amount of rent expense to accommodate the two positions that will administer the program. Senator Coffin determined to his satisfaction the level of program funds will remain the same. SENATE BILL 539: Reduces number of times notice of application to appropriate water must be published in newspaper. Senator Raggio asked why S.B. 539 was referred to the Senate Committee on Finance. R. Michael Turnipseed, State Engineer, Division of Water Resources, State Department of Conservation and Natural Resources, testified the legislation was introduced in response to complaints from some of the state's major newspapers at the joint subcommittee hearing on the budget for this agency. The newspapers' complaint is that they are not adequately reimbursed, by statute, for the cost of publishing legal notices. Mr. Turnipseed said the bill was drafted to reduce the required number of publications from five times to three times. He referenced a table of publication costs (Exhibit C) that indicates there is a substantial disparity between the costs (charges per line) for the rural newspapers and those of the major newspapers. Continuing, Mr. Turnipseed said S.B. 539 amends NRS 533.360, which dictates the number of times an application to appropriate water or a change application must be published. He said the 28 lines indicated on the table is an average of the number of lines in a change application and the number of lines in an application to appropriate water. He further explained the published notice of a change application lists not only the proposed, but also the existing, point of diversion and place of use. Mr. Turnipseed said the division receives an approximately equal number of both types of applications. Mr. Turnipseed said NRS 533.360 currently provides that $50 of the application fee is allocated for reimbursement to those newspapers which publish a legal notice for water resource applications. ASSEMBLY BILL 254: Makes appropriation to aging services division of department of human resources for equipment. Ms. Liveratti spoke in support of Assembly Bill (A.B.) 254, reading from a prepared text (Exhibit D). She testified the requested equipment is needed to replace antiquated equipment that is functioning poorly. She said the replacement computers would be used extensively to access the National Aging Program Information System (NAPIS) data base mandated by the Federal Administration on Aging. After the hearing on A.B. 254 the committee took action on all of the bills on the agenda except S.B. 526, which was held pending receipt of an amendment that Senator Rawson agreed to obtain. SENATE BILL 522: Requires deposit of money collected for support and maintenance of certain delinquent juveniles in administrative account for division of child and family services of department of human resources. SENATOR MATHEWS MOVED TO DO PASS SENATE BILL 522. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS O'DONNELL AND COFFIN WERE ABSENT FOR THE VOTE.) * * * * * SENATE BILL 523: Establishes by statute Nevada natural heritage program. SENATOR JACOBSEN MOVED TO DO PASS SENATE BILL 523. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * SENATE BILL 524: Revises provisions governing funding of certain duties of bureau of mines and geology. SENATOR MATHEWS MOVED TO DO PASS SENATE BILL 524. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * SENATE BILL 525: Requires certain fees collected by state land registrar to be paid into state treasury for credit to state general fund. SENATOR O'DONNELL MOVED TO DO PASS SENATE BILL 525. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * SENATE BILL 527: Transfers responsibility for administration of program to subsidize transportation by taxicab of elderly and permanently handicapped to aging services division of department of human resources. SENATOR MATHEWS MOVED TO DO PASS SENATE BILL 527. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * SENATE BILL 528: Requires director of state department of conservation and natural resources to employ state climatologist. SENATOR O'DONNELL MOVED TO DO PASS SENATE BILL 528. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 539: Reduces number of times notice of application to appropriate water must be published in newspaper. SENATOR O'DONNELL MOVED TO DO PASS SENATE BILL 539. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * ASSEMBLY BILL 254: Makes appropriation to aging services division of department of human resources for equipment. SENATOR MATHEWS MOVED TO DO PASS ASSEMBLY BILL 254. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Business and Industry Administration - Page 693 Ronald A. Steele, Program Analyst, said the joint subcommittee recommended closing this budget in accordance with the Governor's recommendations as adjusted by staff. He said the adjustment by staff (page 1, Exhibit E) removes the funding in decision unit E-850, which was to have provided a cost allocation plan for the Department of Business and Industry. He explained the joint subcommittee felt the cost allocation plan could be developed with existing resources, with the expected savings to be passed on to the using agencies. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE ADJUSTMENTS RECOMMENDED BY THE JOINT SUBCOMMITTEE. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * B & I Industrial Development Bonds - Page 701 Mr. Steele said the industrial development bond account is new. He said the subcommittee recommended closing the budget as recommended by the Governor with a staff adjustment to separate travel costs from the Cost of Issuance category to improve budgetary control. SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Insurance Regulation - Page 709 Mr. Steele said the joint subcommittee's recommendations with regard to the budgets for the Division of Insurance entailed a total increase in General Fund appropriations of $919,000 in Fiscal Year (FY) 1996 and $756,000 in FY 1997. He stated, "This coincides with the Governor's recommended budget, resulting from a lack of transfers in the examiners' fund." Regarding the Insurance Regulation budget account, Mr. Steele said the subcommittee recommended closing this budget in accordance with the Governor's recommendations, with a staff adjustment that achieves approximately $90,000 in General Fund savings each year of the biennium resulting from savings in rent and other costs (page 3, Exhibit E). He said a proposed letter of intent intended for the Division of Insurance as a whole directs the commissioner of iInsurance to develop a plan for consolidation and reorganization of the entire agency that includes automation requirements. The commission is further directed to present the plan to the 1997 Legislature in the division's budget for the next biennium (page 4, Exhibit E). Senator Raggio asked which budget contains the proposed Consumer Advocate for Auto Insurance position. Mr. Steele replied the cost of this position has in the past been distributed among a number of budget accounts within the insurance division. This situation would be addressed by the proposed letter of intent. Senate Raggio noted the hearing on the legislation pertaining to the auto insurance advocate, S.B. 240, was held March 4, 1995. SENATE BILL 240: Deletes provisions creating or relating to advocate for insurance customers. It was noted the administration recommended, at the hearing on S.B. 240, abolishing this office. Senator Raggio asked if the$126,000 cost per year to retain this position is stated correctly. Mrs. McKinney-James replied yes. She said there are currently two measures pending that would impact the auto insurance advocate position. One is A.B. 628, which would establish for the first time funding for this office through the Insurance Verification Fund. S.B. 240 is the other measure. ASSEMBLY BILL 628: Revises provisions relating to verification of insurance for new motor vehicles. Mrs. McKinney-James said after reconsidering its proposal to abolish this office, the administration requested the Senate Committee on Finance to hold the bill in abeyance. She said in the intervening weeks she has been actively meeting with members of industry in an effort to arrive at a restructured version of the duties and responsibilities of this office. She further testified amendments will soon be presented to the committee that propose to restructure the office. Commenting the committee does not intend to decide this matter at the present time, Senator Raggio asked what portion of this budget relates to the consumer advocate position. Directing the committee's attention to page 14 of the budget closing sheets (Exhibit E), Mr. Steele said the Advocate for Insurance Customers' budget has been established as a separate budget account and is intended to be supported through transfers from the Department of Motor Vehicles and Public Safety (DMV&PS) Verification of Insurance budget account. The office would not be funded with General Fund appropriations. Advocate for Insurance Customers - Proposed New Budget Account Mr. Steele said this budget account represents the aggregation of costs that had been distributed among a number of budget accounts in the Division of Insurance related to the Consumer Advocate for Auto Insurance position. The new account was created for cost accounting purposes. Senator Raggio inquired whether all of the funding for this budget would be obtained from the Verification of Insurance account in the DMV&PS. Mr. Steele replied yes. The senator asked how the funds in that account are currently utilized. Mrs. McKinney-James said the insurance verification revenues are currently being deposited into the Highway Fund. Senator O'Donnell said the revenues in the Verification of Insurance account are derived from fees paid on registration renewal. The funds are deposited into a specialized fund that is used for the specific purpose of verifying insurance. The account is reviewed every 2 years, and when it is determined the amount of the fund exceeds the amount required for insurance verification the overage reverts to the General Fund. Senator O'Donnell estimated the current balance at $500,000. Continuing, Senator O'Donnell noted the Governor has changed his position on this issue more than once. He said Mrs. McKinney-James had appealed to him to retain this position and had made a very good case for doing so. Senator O'Donnell stated that consequently he agreed to support retention of the position, which would be funded from the insurance verification account, with the stipulation the advocate would be housed within the Director's Office of the Department of Business and Industry. He said Mrs. McKinney-James did not respond favorably to the suggestion. Senator Raggio said he has been unimpressed with the case made for retaining the Consumer Advocate for Auto Insurance office and does not intend to support retention of the position either in a bill or in the budget. He suggested political considerations led to the Governor's change of mind on this matter. Mrs. McKinney-James said she had initially testified in support of the bill to abolish the insurance advocate position for three reasons. The first reason was that a significant funding issue was involved. As Mr. Steele indicated earlier, the funding for this office had been distributed throughout the insurance division's budget, and it was not believed the ability existed to identify a solid revenue stream to support this function. Secondly, Mrs. McKinney-James stated, the agency was concerned with respect to the overall responsibilities of this position as possibly duplicative of the responsibilities of the insurance commissioners. The third reason was that an increase in the competitive nature of the automobile insurance industry has been observed. Continuing, Mrs. McKinney-James said the administration determined the office should be retained if another revenue stream could be identified and it was deemed feasible to restructure this office to provide a voice for automobile insurance consumers. She said the department has been encouraging dialogue between the insurance commissioner and members of industry and intends to submit an amendment to S.B. 240 that would outline a restructured area of responsibility for this position. Senator Raggio averred Mrs. McKinney-James' testimony does not comport with the information the chair has received, which indicates the request to the Governor to retain this position was political in nature and was reconsidered on that basis. He stated, "I frankly don't think that justifies spending $126,000 a year, which ultimately is a hit on the General Fund even if it comes out of this source for the moment." He reiterated his previously stated position, but said he would abide by the committee's decision. Senator Coffin remarked the agency's initial budget presentation with respect to this request was clumsy. He said the agency retrenched, apparently in reaction to strong criticism from the committee. He acknowledged politics may have entered into the situation, but he contended that nearly every decision made by the Legislature is to some extent political. He further stated he was not the only person on this committee who had objected to the administration's proposal to delete the position, which he regarded as a mistake. Senator Coffin said he is not concerned with who holds the position and the source of funding, but the need for the position itself, which he said performs a necessary function that ebbs and flows. He equated this office with that of the advocate for the utility rate payers in terms of service provided to consumers. Senator Mathews suggested the committee vote to pass S.B. 240 out of committee with no recommendation. Senator Raggio indicated the committee's action on this budget will be contingent upon the decision whether or not to retain the office of Consumer Advocate for Auto Insurance. Senator O'Donnell noted that extensive hearings have been held on this issue. He said he has been frustrated with the fact that although the appeal has been made to retain the insurance advocate, the proposal to place the position within the Director's Office has not been well received. He suggested retaining the office might not be an appropriate use of state funds so much as the "politically correct" thing to do. Senator Coffin inquired why the joint subcommittee, which recommended continuation of the insurance advocate position, has changed its position. Senator O'Donnell indicated he withdrew his support for the original recommendation when he decided the Director of the Department of Business and Industry was not amenable to having the position, which would be funded at a cost of approximately $122,000 per year from the insurance verification fund, situated within the Director's Office. He voiced ambivalence about retaining the position and said he would acquiesce to the desires of the other committee members with regard to this issue. Senator Raggio said Senator Coffin's question was a fair one which could also be posed to the Governor, who initially decided the position was not necessary but changed his mind, reportedly after being prevailed upon by political interests. He reiterated his concern is not with the individual who would hold the position, but with the justification for the office itself. He said there is apparently no record of great achievement or necessity for the position, which would cost at least $250,000 over the biennium. Although recognizing the funding would be provided by the insurance verification fund and would not entail a direct appropriation from the General Fund, the senator maintained the expenditure of funds which would otherwise go to the General Fund is not appropriate when the request has not been adequately justified. Insurance Regulation - Page 709 Senator Rawson proposed closing this budget without the Consumer Advocate for Auto Insurance position, with the proviso that if S.B. 240 is approved the budget would be automatically adjusted. Senator Raggio said the bill would delete the position, and funding for that office should not be included in the budget until the decision has been made whether or not to retain the position. He stated his intent to proceed with these budgets with the understanding the committee will not at this time act upon the recommendation to retain the Consumer Advocate for Auto Insurance. Mrs. McKinney-James stated as a point of clarification it is her understanding the auto insurance advocate was to have been placed in a separate budget account consistent with the provisions of A.B. 628. Senator Raggio said this is understood. He inquired as to the committee's preference regarding the closing action on the Insurance Regulation budget. SENATOR RHOADS MOVED TO EXCLUDE FROM THIS BUDGET FUNDING FOR THE CONSUMER ADVOCATE FOR AUTO INSURANCE PENDING A FINAL DECISION ON WHETHER OR NOT TO RETAIN THE POSITION. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS COFFIN AND MATHEWS VOTED NO.) * * * * * SENATOR RAWSON MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE ADJUSTMENTS MADE BY STAFF AS PRESENTED ON PAGES 3 AND 4 OF EXHIBIT E. SENATOR RHOADS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Mr. Steele reminded the committee the costs associated with the Consumer Advocate for Auto Insurance position were not built into the Executive Budget and are not in the budgets for the Division of Insurance, with the exception of the proposed new budget account. National Association of Insurance Commissioners - Page 715 Mr. Steele said the joint subcommittee recommends closing the National Association of Insurance Commissioners (NAIC) budget as recommended by the Governor and adjusted by staff. He said the adjustments reflect updated information for the attorney general and cost allocation plans. Additionally, a letter of intent is proposed which suggests the committee consider directing the insurance commissioner to use a portion of the funds available in the NAIC budget for staff training to meet NAIC accreditation standards. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 5 OF EXHIBIT E. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Insurance Cost Stabilization - Page 717 The joint subcommittee recommended closing this budget in accordance with the Governor's recommendations and as adjusted by staff to reflect the most recent information regarding cost allocation plans and non-state owned rent. SENATOR MATHEWS MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 6 OF EXHIBIT E. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Self-Insured Workers' Compensation - Page 721 Mr. Steele reported the joint subcommittee recommended closing this budget in accordance with the Governor's recommendations and as adjusted by staff (pages 7 and 8, Exhibit K). He said the main adjustment is the addition of 3.5 positions. One position is being recommended to address existing caseload increases. An additional 2.5 positions are being recommended for the purpose of handling the formation of self- insured associations as provided for in Senate Bill 316 of the Sixty-seventh Session. The provision becomes effective July 1, 1995. Mr. Steele said the subcommittee recommended funding for these positions based on the assumption the small employers will form the self-insurance associations, but if a proposed moratorium were to be enacted the 2.5 positions would not be funded. SENATE BILL 316 OF THE SIXTY-SEVENTH SESSION: Makes various changes to provisions governing industrial insurance. Senator Rawson asked if the filling of the recommended positions should be left to the discretion of the agency or monitored by the IFC. Mrs. McKinney-James said unless a moratorium on the ability of small employers to self-insure is approved by the Legislature, the positions requested will definitely be needed. SENATOR MATHEWS MOVED TO APPROVE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGES 7 AND 8 OF EXHIBIT K. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Insurance Examiners' Fund - Page 725 Mr. Steele informed the committee that subsequent to the preparation of the Executive Budget the joint subcommittee was notified of the liquidation of a home warranty company that had an effect on this budget in FY 1995. The subcommittee recommends closing this budget in accordance with the recommendations of the Governor, as adjusted by staff, to reflect that unexpected liquidation, which will result in an additional cost of $121,284 in FY 1996 and $67,717 in FY 1997. Mr. Steele said in the past, monies from the examiners' fund have traditionally been transferred to the insurance regulation fund; but as a result of transfers last biennium, there are insufficient resources in this fund to cover the liquidation. The adjustments presented on page 9 reflect the cumulative effect of the liquidation. He said the committee may wish to consider a letter of intent directing the insurance commissioner to report quarterly to the IFC on the status of the examiners' fund. Senator Raggio asked the name of the company that was liquidated. Mrs. McKinney- James said it was First United Home Warranty in Las Vegas. The senator inquired why the costs associated with the liquidation of that company are so substantial. Mrs. McKinney-James said it is her understanding the costs relate to the provision of legal services to assist both the commissioner and the trustee with respect to the liquidation. She said the real emphasis on this particular budget provision concerns the maintenance of the reserves in this account, because the cost associated with paying the examiners requires a lengthy "front loading"; this has made it difficult for the division to maintain the reserve. Senator Raggio further inquired whether the liquidated company had assets that can be recovered. Mrs. McKinney-James replied the initial assessment was that the manner in which this liquidation took place suggested otherwise, but further analysis indicates there may be some assets, "and that reality is reflected in the budget as it has been presented." SENATOR O'DONNELL MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 9 OF EXHIBIT E. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Insurance Education and Research - Page 729 Mr. Steele reported the joint subcommittee recommended closing this budget in accordance with the Governor's recommendations, with staff adjustments to reflect changes in the cost allocation plans and non-state owned rent. He said the committee may wish to consider a letter of intent directing the insurance commissioner to use a portion of the funds available in this budget for staff training to meet NAIC accreditation standards. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AND INCLUDING THE LETTER OF INTENT, AS PRESENTED ON PAGE 10 OF EXHIBIT E. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Insurance Solvency Fund - Page 733 Mr. Steele said the joint subcommittee recommends closing this budget in accordance with the recommendations of the Governor and staff adjustments to reflect changes in the statewide cost allocation plan. SENATOR MATHEWS MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 11 OF EXHIBIT E. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Insurance Recovery - Page 735 Mr. Steele stated the joint subcommittee recommends closing this budget in accordance with the recommendations of the Governor, with a small adjustment for a change in the statewide cost allocation plan. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 12 OF EXHIBIT E. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Self-Insured Associations' Insolvency Fund - New Budget Account Mr. Steele said the joint subcommittee recommended the establishment of this budget, based upon information from the budget office, as a necessary device in the event smaller employers begin to form self-insurance associations beginning on July 1, 1995. The purpose of the budget is to provide for the payment of claims against any insolvent association. If the proposed moratorium on the exiting of these employers from the state insurance system is approved, this budget would not be authorized. Senator Rawson asked what the state's obligation would be if this fund were to be established and there were insufficient funds to pay claims against an insolvent association. Mr. Guernsey said it is his understanding the state would not be held liable in any of these accounts. Senator Raggio said he assumes the limit of liability to the state would be the extent to which there is money in the insolvency fund. Mrs. McKinney-James said that is her understanding of the situation. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 13 OF EXHIBIT E. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Advocate for Insurance Customers - Proposed New Budget Account Senator Raggio said in accordance with the committee's previous motion regarding the Consumer Advocate for Auto Insurance (page 11 of these minutes), the proposal to establish this as a new budget account has not been approved. Office of the Labor Commissioner - Page 807 There was discussion on the one-shot request for computer and office equipment for this agency, as contained in S.B. 208. Senator Raggio noted the amount of the requested appropriation is approximately $105,000. SENATE BILL 208: Makes appropriation to office of labor commissioner of department of business and industry for computer and office equipment. In discussion on decision unit M-200, which includes the request for four new positions, Senator Raggio questioned the need for the positions. Mrs. McKinney- James said the request was based on a substantial increase in the work load. She said the labor commissioner's office has experienced tremendous growth, primarily in construction activity in the southern part of the state. Over a period of time, instead of seeing an increase in the number of positions there has been a decline in the number of positions to handle the work load of this office. Continuing, Mrs. McKinney-James said in discussions with the joint subcommittee on general government a proposal was made which she supports. The compromise proposal would allow the four positions to be placed in the reserve, with the understanding the department and the labor commissioner would appear before the IFC to justify the positions with a work plan indicating how the office would be restructured, in terms of staffing patterns as well as the actual nature of the work to be performed. Senator O'Donnell said there was extensive debate on this issue in the joint subcommittee hearings, and his contention was that the labor commissioner, as indicated in the audit report prepared by Legislative Auditor Gary Crews, was performing functions that are outside the scope of his office. Additionally, he continued, nothing was being done to increase the quality of the prevailing wage reports prepared by that office. He said his recommendation was to use the funds for contract services for the purpose of contracting with a reputable accounting firm to determine the reports necessary for the labor commissioner. However, the labor commissioner wanted the positions for his office, Senator O'Donnell stated. He said the compromise was to delay funding of the positions and to have the agency return to the IFC with a work program. Senator Raggio summarized the subcommittee's recommendation as being that the four positions be set aside in a reserve account and that justification be presented to the IFC for consideration. He noted the one-shot appropriation request for $105,461 on page A-36 of the Executive Budget relates to the positions in question. Mrs. McKinney-James said it also includes a request for a business process reengineering (BPR) effort. There was discussion regarding how S.B. 208 should be processed given the recommendation pertaining to the four positions in this budget. Senator Raggio asked what the bill contains that is unrelated to the four positions. Mrs. McKinney-James said she would need to examine the breakdown in the request, but it was her understanding the measure encompasses more than the four positions. Senator Raggio requested her to provide the information to the committee by the following day and stated the budget would be held pending receipt of the information and the ensuing decision on this matter. Senator Jacobsen said according to his notes there appeared to be excess staffing in the labor commissioner's office in Carson City, and the possibility of transferring some of those positions to southern Nevada was raised in the subcommittee discussion on this issue. Mrs. McKinney-James said part of the discussion did include the possible transfer of positions to provide coverage in the southern part of the state, however, the subcommittee determined it would be better to examine the work load of the office first. She informed the committee the labor commissioner has indicated his intention to retire in the summer of 1995, and it was decided the person who will replace the present commissioner should have some flexibility in this matter. Senator Jacobsen remarked his notes also indicated the committee was somewhat concerned with the findings of the audit report on this agency. Consumer Affairs - Page 811 Mr. Steele said the joint subcommittee heard this budget a number of times and worked on it extensively in an effort to achieve a satisfactory recommendation. The subcommittee recommends two decision units, E-275 and E-914 (pages 17 and 18, Exhibit E). The main thrust of the recommendation is in E-914, which consolidates the Telemarketing budget with the Consumer Affairs account to form a consolidated deceptive trade unit. General Fund appropriation is recommended to fund that unit. Additionally, the subcommittee recommends decision unit E-275, which Mr. Steele explained will enhance the agency operations by filling two vacant positions and providing increased resources for the deceptive trade unit. Continuing, Mr. Steele said consolidating the two budgets for the Consumer Affairs Division (Telemarketing and the main account) and converting the funding source to General Fund will require a General Fund appropriation of approximately $830,000 in FY 1996 and $847,000 in FY 1997. This is contingent upon taking the agency's existing revenues and depositing them directly to the General Fund, which provides an offset of approximately $790,000 in both FY 1996 and FY 1997. Senator Raggio asked if the $790,000 projected amount of the offset revenues is realistic. Mr. Steele replied the amount is based on the agency's historical collections and appears attainable. He said the net cost to the General Fund is projected at approximately $40,000 in FY 1996 and $57,000 in FY 1997. Mr. Steele called attention to a memorandum provided by Mrs. McKinney-James (Exhibit F) that details the proposed consolidation of the two budget accounts. Senator Raggio asked Mrs. McKinney-James if she concurs with the subcommittee recommendation. Mrs. McKinney-James replied yes. She said given that historically this is an agency "that is a result of the manner in which the budget has been built over time" and that has not been able to focus on the significant variety of deceptive trade practices, the department is very pleased with the support secured from the subcommittee to allow the agency for the first time to take the necessary corrective action to substantially place on track this division's budget. She further stated the information provided to the committee (Exhibit F) outlines what is believed to be a solid opportunity for the Consumer Affairs Division to work with the Office of the Attorney General to effectively combat deceptive trade practices. Senator Raggio said it appears the subcommittee has expended a great deal of time on this budget and has attempted to arrive at a solution to the problems indicated in the budget hearings that is not only cost effective, but more productive. He said when the budget was heard by the Senate Committee on Finance (January 30, 1995), the entire committee felt a better effort needed to be put forth to address the numerous complaints received by this agency. He inquired as to the position of the attorney general's office on the proposal at hand. Mrs. McKinney-James responded the attorney general's office has been working with the department on this process, has testified in support of it, and believes the proposal will improve its efforts with regard to curtailing deceptive trade practices. Senator O'Donnell said the subcommittee did not believe certain industries should be targeted to fund the deceptive trade unit and therefore recommended General Fund appropriation, to be offset by the revenues collected by the agency toward the goal of being self-supporting. Senator Raggio inquired whether quarterly reports from the Office of the Attorney General on its efforts pertaining to deceptive trade practices will still be forthcoming. It was ascertained a letter of intent to that effect should be renewed. The senator asked if legislation is required to make the changes in the disposition of Deceptive Trade revenues. Mrs. McKinney-James replied there is such a bill, S.B. 488, which is currently in the Senate Committee on Commerce and Labor and has been amended to reflect the subcommittee's recommendation. SENATE BILL 488: Makes various changes to provisions governing trade practices. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE, INCLUDING CONSOLIDATION OF THE TELEMARKETING BUDGET ACCOUNT WITH THE MAIN BUDGET ACCOUNT FOR THE CONSUMER AFFAIRS DIVISION, AND STAFF ADJUSTMENTS AS PRESENTED ON PAGES 17 AND 18 OF EXHIBIT E. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Consumer Affairs - Restitution - Page 817 SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE GOVERNOR. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Consumer Affairs - Telemarketing - Page 819 It was noted the joint subcommittee's recommendation corresponds with the recommendation to consolidate this budget with the main budget for the Consumer Affairs Division (page 811 of the Executive Budget) and would eliminate this account. SENATOR O'DONNELL MOVED TO ACCEPT THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.) * * * * * Dairy Commission - Page 917 Mr. Steele reported the joint subcommittee recommends closing this budget as recommended by the Governor and with staff adjustments. The first adjustment (page 22, Exhibit E) recognizes the fuel expense associated with automobiles requested in decision units M-201 and E-720. The fuel expense was inadvertently omitted from the Executive Budget. The adjustment was developed in cooperation with the Budget Division. Mr. Steele said the second adjustment reflects the agency's request for additional computer equipment, which has not been recommended in the Executive Budget. The recommended appropriation for this request is $30,256. He said the subcommittee felt the requested computer equipment would enable commission personnel to more quickly perform their field operations. Senator Raggio inquired whether the subcommittee recommendation addresses the concerns expressed by Dr. Jack Armstrong at the initial hearing on this budget regarding the 3-year auditing cycles. Mrs. McKinney-James said the addition of the computer equipment directly responds to Dr. Armstrong's request because it provides the computers for the agency's auditors. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 22 OF EXHIBIT E. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Board of Contractors - Page 2081 SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE GOVERNOR. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Board of Psychological Examiners - Page 2143 SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE GOVERNOR. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Mrs. McKinney-James noted as a housekeeping matter the Department of Business and Industry has provided to the fiscal analysis staff a request that the department be allowed to rerun its cost allocations as a result of the budget closings. Senator Raggio said staff was previously provided blanket authority to make the necessary adjustments on either cost allocations or assessments. Public Service Commission - Regulatory Fund - Page 681 Mr. Steele explained the recommended adjustments to this budget as presented on page 2 of Exhibit G. Regarding adjustment 4, Senator Raggio asked how this recommendation would affect the Administrative Law Judge position. Mr. Steele replied the $75,000 was to have been used to contract for the services of a judge, but if the five positions proposed for reinstatement under adjustments 1 and 3 are retained, the contract funds would not be needed. Senator Raggio asked Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration, if the proposed adjustments have the approval of the budget office. Mr. Hataway replied yes. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGES 1 AND 2 OF EXHIBIT G. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Public Service Commission - Administrative Fines - Page 690 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. * * * * * Internal Audit - Page 473 Debbra J. King, Program Analyst, said the joint subcommittee recommends closing this budget in accordance with the Governor's recommendations pending the outcome of A.B. 24. She explained the impact on this budget should A.B. 24 be approved (explained in the remarks on page 1, Exhibit H). ASSEMBLY BILL 24: Creates office of financial management, training and controls. Senator Raggio requested clarification of the effects of A.B. 24 on this budget, should the measure be approved. Ms. King explained the Governor recommends maintaining the internal audit staff. A.B. 24 would change the function of these personnel from performing audits to training administrative staff on internal accounting controls and administrative controls. There would be no change in the number of personnel or in the costs. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE GOVERNOR PENDING THE OUTCOME OF A.B. 24. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Committee on Benefits - Proposed New Budget Ms. King explained the joint subcommittee recommendations for this budget, delineated on page 2 (Exhibit G). Since the subcommittee did not recommend the position of Executive Director for the Committee on Benefits, this budget account will not be utilized as proposed in the Executive Budget. The subcommittee recommends a letter of intent be issued to the Committee on Benefits directing the committee to develop policies and to work with other self-insured organizations to develop operational policies and objectives of the committee. The subcommittee also recommends the Committee on Benefits develop performance standards for the Risk Manager, complete an evaluation of the Risk Manager and report to the administration and the IFC on the effectiveness of having that position report directly to the Committee on Benefits. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE, INCLUDING THE ISSUANCE OF A LETTER OF INTENT AS DESCRIBED ABOVE. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Benefit Services Fund - Page 481 Ms. King said some of the numerous adjustments recommended for this account (itemized on pages 3 through 5, Exhibit H) are intended to correct technical errors, but the adjustments primarily revise the budget to the amounts projected in the actuarial report dated April 25. She reminded the committee the original budget had used some medical trend indicators which appeared too high; the Risk Management Division was requested to have the actuary revisit the actuarial report and projections. Consequently, the actuary reduced the medical trend rate from 8 percent to 4.5 percent, resulting in significant savings with regard to the state contribution rate. Continuing, Ms. King said the subcommittee also recommends establishment of a new reserve in this account called the "Reserve for Rate Stabilization." The actuary indicates this reserve is intended to protect the employees from drastic increases in dependent premiums or reductions in benefits if the health care trend dramatically changes over the biennium. Ms. King explained the actuary doubts the projected 4.5 percent rate, which is low in comparison with historical rates, will continue over time. Ms. King further explained the subcommittee recommendations outlined on pages 5 and 6 (Exhibit H). Senator Raggio inquired as to the significance of the proposed reduction of the employee co-insurance level from $10,000 to $7,500 in decision unit E-150, Employee Treatment (page 6, Exhibit H), and the associated cost. It was ascertained that as a result of the reduction, any amount of medical costs above $7,500 would be fully paid by the state; the cost of this budget item would be approximately $1.5 million. Senator Raggio noted this recommendation provides a significant benefit to state employees in major medical situations. Senator Raggio invited comment from the Budget Division regarding the proposed adjustments to this budget. Mr. Hataway indicated he had nothing to add to the comments already made. SENATOR MATHEWS MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGES 3 THROUGH 6 OF EXHIBIT H. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Retired Employee Group Insurance - Page 489 Ms. King reported the adjustments in this budget reflect the allocation of costs recommended in the revised Executive Budget and reflects the decrease in the medical trend rate resulting from the revised actuarial report. SENATOR MATHEWS MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 7 OF EXHIBIT H. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Senator Jacobsen asked Mr. Hataway if state facilities are being left vacant as a result of the move of a number of agency offices from state-owned to non-state owned facilities. Mr. Hataway replied no. He explained space is merely being obtained for additions recommended in the Executive Budget. Enforcement for Industrial Safety - Page 743 The joint subcommittee recommended closing this budget in accordance with the recommendations of the Governor, with a technical adjustment to reflect vacancy savings. SENATOR MATHEWS MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 1 OF EXHIBIT I. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Preventative Safety - Page 749 The joint subcommittee recommended approval of the Executive Budget with the technical adjustments itemized on page 2 (Exhibit I). SENATOR MATHEWS MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGE 2 OF EXHIBIT I. SENATOR RAWSON SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Mine Inspection - Page 755 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. * * * * * Industrial Relations - Page 737 Ms. King said this budget and three related budget accounts have not been heard by subcommittee and would be impacted by the proposed reforms of the State Industrial Insurance System (SIIS). Senator Rawson voiced concern with regard to whether a significant amount of state funds will be necessary to stabilize or guarantee these accounts. Ms. King replied no. She said all of the accounts are funded through assessment of the state workers' compensation system or through the insurance assessment of self-insured workers. The Division of Industrial Relations budget is funded through the assessment to employers, Ms. King said. Senator Raggio said the overall question is whether or not the recommendations that appear in these budgets comport with the action of the Senate Committee on Commerce and Labor with reference to industrial insurance; that is, whether they reflect the changes recommended in the Senate's action on the industrial insurance reform measure. Ms. King indicated they do. These budgets were held in abeyance. Narcotics Control - Page 1791 Ms. King said the primary issue with respect to this budget, which was heard in subcommittee and was held in abeyance, was the replacement of grant funds with General Fund appropriations due to the change in the federal crime control bill that reduced the federal funds available to state agencies. Senator Raggio requested comment from Senator O'Donnell, as chairman of the joint subcommittee that heard this budget, with regard to the proposal to replace the grant funds with a General Fund appropriation of $457,697. Senator O'Donnell said the reason for the subcommittee's proposal was that the federal program is targeted for elimination, and if the state does not provide the funds for this budget the narcotics control office will cease to exist. He said the state cannot afford to lose its narcotics control functions. He further stated the subcommittee's recommendation was not predicated on budget constraints, but on the need for law enforcement in the area of narcotics control. Senator O'Donnell said he concurred with the point made by Senator Jacobsen in the subcommittee hearing that narcotics control is a very important function of law enforcement and must be supported. Senator Raggio asked if most of the grant funds in question were federal funds available for distribution to local agencies. Ms. King replied approximately 62 percent of the funds provided by the Byrne Memorial Law Enforcement Program was distributed to local entities and approximately 35 percent was allocated to the Nevada Division of Investigation (NDI) to operate the narcotics control unit. The narcotics control unit operated task forces in conjunction with the local law enforcement agencies, Ms. King said. Senator Raggio questioned staff regarding whether or not the federal funding will definitely be unavailable. Ms. King said the present indications are that the funds will not be available. Senator Coffin asked where the reduction in grant funds is reflected in the budget. Ms. King referred to general ledger (GL) 3584 in the adjustments to revenue on the budget closing action sheets (page 1, Exhibit J), which indicates a reduction of $152,313 in FY 1997. The adjustments are not reflected in the Executive Budget because this budget was recommended for funding on the basis that the federal funds would still be available. Senator Coffin asked when it was learned the federal funds would not be available. Ms. King answered the determination was made in October 1994. She said it was understood at that time there was a possibility the federal crime control bill would be revisited, which might have made additional funds available for the Narcotics Control budget. Senator Coffin observed the Legislature does not normally automatically replace federal funds slated for elimination unless full justification has been provided in the normal legislative process. Senator Raggio voiced agreement. Senator Raggio suggested the adjustment to this budget should be made such that if the federal funds do not become available, the IFC could authorize replenishment of the funds with an appropriation from the state General Fund. Ms. King replied there must be some amount of general funds in the budget to accomplish this. Mr. Miles explained the statutes regarding the contingency fund only allow supplementation of existing appropriations. Senator Raggio proposed replacing the recommended addition of $457,697 in state funds with the amount of $1,000, with the understanding that if the federal funding does not materialize the agency may seek an additional appropriation through the IFC. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE, AS ADJUSTED WITH THE CHANGE IN THE FUNDING LEVEL IN ITEM GL 3584 FROM $457,697 TO $1,000 WITH THE UNDERSTANDING THE AGENCY WILL HAVE THE AUTHORITY TO SEEK STATE FUNDS FROM THE INTERIM FINANCE COMMITTEE FOR THE NARCOTICS CONTROL PROGRAM IN THE EVENT FEDERAL FUNDING FOR THE PROGRAM DOES NOT MATERIALIZE. SENATOR MATHEWS SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Bicycle Safety Program - Page 1809 Ms. King explained the adjustments recommended by the joint subcommittee as delineated on pages 2 and 3 (Exhibit J). She said the subcommittee reached an agreement in principle on this budget that the allocation formula of the 50-cent surcharge on driver's licenses for bicycle safety should be reversed, with 65 percent of the fee going to the driver's education position in the DMV&PS budget and 35 percent of the fee being allocated to the Nevada Department of Transportation (NDOT). The subcommittee also recommends transferring the reserve currently in the NDOT from the bicycle safety surcharge into this account to be used for an enhanced pedestrian safety program. Ms. King said the enhanced revenues that would be derived from reversing the funding percentages for the DMV&PS and the NDOT would be used to fund local programs related to highway safety issues. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGES 2 AND 3 OF EXHIBIT J. SENATOR JACOBSEN SECONDED THE MOTION. Ms. King requested and was granted approval to make the necessary changes in the NDOT budget in the event the revised bicycle safety budget is approved. No vote was taken on the preceding motion. Senator Coffin asked if it is the intent, in reversing the funding percentages in the DMV&PS and NDOT budget accounts, to reduce the bicycle safety funds and to provide new pedestrian safety funds. Ms. King replied this recommendation would provide enhanced funding for the safety education position in the NDOT. She said the planner position at the NDOT has access to federal funds to support the position, and that agency therefore agreed to the reduction in allocation of the bicycle safety surcharge funds. In further discussion it was ascertained by Senator Coffin the bicycle safety funds will probably not decrease, but the funding for pedestrian safety will increase. Senator O'Donnell commented the budget for this program as recommended in the Executive Budget contains an appropriation of approximately $50,000, which funds positions but does not provide the costs of advertising, public service announcements (PSAs) or other means of educating the public regarding safety issues. He maintained the budget was "woefully underfunded" in terms of bicycle safety and that it did not actually provide for a bicycle safety program because while the position was funded, the means of implementing the public education program were not provided. He said the subcommittee therefore was charged with deciding whether to eliminate the position, which with the level of funding provided essentially could not function as intended, or to augment the budget with additional funds for performing the intended functions of the position. Senator O'Donnell pointed out the position is responsible for both bicycle and pedestrian safety, as stated by law. SENATOR COFFIN MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * * Motorcycle Safety - Page 1813 Ms. King said this budget was heard in subcommittee and was held at the request of Senator O'Donnell. Senator O'Donnell called to the committee's attention the amount of funds in the reserve category of this budget, which he said continues to grow. He remarked there is a limit to what can be done with regard to a motorcycle safety program. He suggested the committee might wish to consider reducing the fees charged on motorcycles or taking other action to address the increasing reserve in this budget account. Senator Raggio noted the subcommittee recommendations include funding $2,000 for travel and training, funding half the board travel for motorcycle events and funding the marketing campaign at $20,000 over the biennium. SENATOR O'DONNELL MOVED TO CLOSE THIS BUDGET IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE JOINT SUBCOMMITTEE AS PRESENTED ON PAGES 4 AND 5 OF EXHIBIT J. SENATOR COFFIN SECONDED THE MOTION THE MOTION CARRIED UNANIMOUSLY. * * * * * SENATE BILL 149: Creates interagency panel to make recommendations concerning placement of certain persons with disabilities into foster homes or residential facilities. Senator Raggio said the Assembly has amended this bill (Amendment No. 435) to include the establishment of an interagency panel whose members would be representatives from the Division of Child and Family Services (DCFS), the Division of Mental Hygiene and Mental Retardation (MH/MR), the Director's Office of the Department of Human Resources and the office of the Superintendent of Public Instruction. The panel would review the proposed transfers of clients between agencies. Senator Rawson remarked the State Department of Education wishes to enter into the proposed arrangement on a formal basis whereas the administrator of the DCFS has indicated his preference that the proposal not be as formally structured as the amendment proposes. He said discretion should be provided to reduce the requirements that would be imposed by Amendment No. 435. SENATOR RAWSON MOVED TO NOT CONCUR WITH ASSEMBLY AMENDMENT NO. 435 TO S.B. 149. SENATOR JACOBSEN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. * * * * Senator Raggio appointed Senators Rawson, Coffin and Rhoads to serve on a conference committee to resolve the discrepancies between the Senate Committee on Finance and the Assembly Committee on Ways and Means with regard to S.B. 149. The meeting was adjourned at 10:25 a.m. RESPECTFULLY SUBMITTED: Sue Parkhurst, Committee Secretary APPROVED BY: Senator William J. Raggio, Chairman DATE: Senate Committee on Finance June 5, 1995 Page