MINUTES OF THE SENATE COMMITTEE ON GOVERNMENT AFFAIRS Sixty-eighth Session June 29, 1995 The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 3:45 p.m., on Thursday, June 29, 1995, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Ann O'Connell, Chairman Senator Randolph J. Townsend, Vice Chairman Senator Jon C. Porter Senator William J. Raggio Senator William R. O'Donnell Senator Dina Titus Senator Raymond C. Shaffer STAFF MEMBERS PRESENT: Dana Bennett, Principal Research Analyst Teri J. Spraggins, Committee Secretary OTHERS PRESENT: Michael Pitlock, Executive Director, Department of Taxation Thomas J. Grady, Executive Director, Nevada League of Cities Dale Erquiaga, Chief Deputy Secretary of State, Office of the Secretary of State Dean Heller, Secretary of State, Office of the Secretary of State Juanita Cox, Lobbyist, Independent American Party Stephanie Tyler, Lobbyist, City of Sparks Mary Henderson, Director of Government Affairs, Washoe County Although the agenda stated that the meeting would take place on the floor in Senate Chambers, the meeting took place in Room 227. Senator O'Connell began the committee meeting with an announcement of suspension of committee rules. She opened the committee meeting with Senate Bill (S.B.) 57. SENATE BILL 57: Prohibits a member of state militia or his dependents from receiving workers' compensation under certain circumstances. (BDR 36-866) Dana Bennett, Principal Research Analyst, Legislative Counsel Bureau, explained this bill provides if someone is injured while serving the federal government and is collecting benefits, if the injury is aggravated while the person is serving the state, the state will pay for the aggravation portion of the benefits. SENATOR O'DONNELL MOVED TO CONCUR WITH AMENDMENT NO. 1261 TO SENATE BILL 57. SENATOR TITUS SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS RAGGIO AND TOWNSEND WERE ABSENT FOR THE VOTE.) ***** Senator O'Connell closed the hearing on S.B. 57 and opened the hearing on S.B. 575. SENATE BILL 575: Contingently provides for increases in compensation of legislators commensurate with increases in salaries of certain state employees. There was no discussion of the bill. SENATOR TITUS MOVED TO DO PASS S.B. 575. SENATOR SHAFFER SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAGGIO WAS ABSENT FOR THE VOTE.) ***** Senator O'Connell closed the hearing on S.B. 575 and opened the hearing on A.B. 8. ASSEMBLY BILL 8: Authorizes creation of general improvement district to furnish facilities for certain radio transmission. Senator O'Connell provided the amendment to the committee (Exhibit C). SENATOR O'DONNELL MOVED TO AMEND AND DO PASS A.B. 8. SENATOR TOWNSEND SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAGGIO WAS ABSENT FOR THE VOTE.) ***** Senator O'Connell closed the hearing on A.B. 8 and opened the hearing on A.B. 728. ASSEMBLY BILL 728: Revises provisions governing local financial administration. Michael Pitlock, Executive Director, Department of Taxation, testified first on this bill. The bill, he said, represents everything the Department of Taxation and Legislature have learned the last 5 months about what is required when a local government entity finds itself in a severe financial emergency. The experience with White Pine County School District has shown those existing statutes dealing with financial difficulty are not sufficient to deal with a problem of that magnitude. Mr. Pitlock stated A.B. 728 takes the existing financial difficulty statutes and repeals them. It replaces them with a two-tier system. The more extreme tier deals with a severe financial emergency such as White Pine County. It allows for a procedure where the Department of Taxation would take over management of the local government and do everything possible to either reduce expenditures or find new sources of revenue. Under extreme situations, as a last resort, the executive director of the Department of Taxation would go before the Nevada Tax Commission and request that the cap on property taxes be exceeded up to an amount of $4.50. Possible other taxes could be raised on a temporary basis as well. Any tax increases would only be temporary and would be tied to a specific plan of recovery. Mr. Pitlock explained the second part of the two-tier system. The second tier for less severe situations is a request for financial and technical assistance. The local government entity can voluntarily come to the Department of Taxation and request financial assistance in dealing with problems. He prepared a section-by-section review of the bill (Exhibit D) for the committee. Senator Townsend asked if a determination must be made by the Department of Taxation that an emergency exists before the tax rate can be raised? Mr. Pitlock explained that section 3 of the bill sets forth a laundry list of conditions which must be met before the Department of Taxation would request the Nevada Tax Commission allow the tax rate to be raised. SENATOR SHAFFER MOVED TO DO PASS A.B. 728. SENATOR O'DONNELL SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR RAGGIO WAS ABSENT FOR THE VOTE.) ***** Senator O'Connell closed the hearing on A.B. 728 and opened the hearing on A.B. 204. ASSEMBLY BILL 204: Requires one commissioner of each housing authority to be representative of tenants of project of authority. Discussion ensued regarding what would happen if one of the tenants on the board no longer lived in a housing project. Would that person be replaced by someone else? Discussion included the members of the housing authorities, federal funding, and ex-officio membership. SENATOR TOWNSEND MOVED TO AMEND AND DO PASS A.B. 204. SENATOR SHAFFER SECONDED THE MOTION. The committee determined this is a valid concern and since there is a conflict amendment on the bill, this can be added to the amendment. Thomas J. Grady, Executive Director, Nevada League of Cities, testified that different housing authorities are set up in different ways. Nevada Rural Housing Authority handles all counties except for Washoe and Clark counties. Their members are presently appointed by the Governor. With the bill before the committee, they will be appointed by the Nevada League of Cities and by the Nevada Association of Counties. He said if this bill passes, one member of the board would be selected from a list of possible tenants. He stressed they are concerned that the Nevada Rural Housing Authority represents 15 counties, so how do they select that one tenant to serve on the board? Reno has a housing authority, Las Vegas has a housing authority, Clark County has housing authorities, and North Las Vegas has housing authorities. The North Las Vegas Housing Authority is mainly composed of the city council members. Senator O'Donnell asked what type of actions do the housing authorities take? Mr. Grady responded they have full management actions. The members have full voting authority of how to run the housing authority. Senator Townsend stated the reason for having a tenant on the board is to get the input from that group of people. Mr. Grady stated this is the full intent of the bill. Senator O'Connell called for the vote. THE MOTION CARRIED. (SENATOR RAGGIO WAS ABSENT FOR THE VOTE. SENATOR O'DONNELL VOTED NO.) ***** Senator O'Connell closed the hearing on A.B. 204 and opened the hearing on A.B. 517. The work session document is Exhibit E. ASSEMBLY BILL 517: Revises provisions governing reporting campaign contributions and expenses. Dale Erquiaga, Chief Deputy Secretary of State, Office of the Secretary of State, explained the major provisions of the bill to the committee. Section 1 of the bill provides that the reporting forms be simplified. The secretary of the state would consult with elected officials when preparing the forms. It would require additional disclosure for opening balances and interest earned. It clarifies the list of expenditures. Section 2 redefines a political action committee to include petition committees and political caucuses. It clarifies that an individual's political committee is not included, e.g., "The Committee to Elect Senator O'Connell" is not a political action committee. Mr. Erquiaga stated sections 3 and 4 clarify a conflict in terms concerning supreme court justices. He said it is not clear in the existing statutes if they are a state office, or a judicial office. It would remove the exemption from the contribution limits currently given to political parties and their committees. He stressed there is no change in the amount of contributions. It is made clear that a supreme court justice is a statewide office and is therefore entitled to receive the higher amount of contribution limits. When the statute was adopted in 1991, there was one level for judicial offices, and one level for statewide offices. Senator Porter stated he understood that this bill would have the same regulations for all elected officials in state office: Governor, justices, everyone. He asked why the two levels are in the bill? Mr. Erquiaga responded that the justices can now have the same contribution level as the Governor, Lieutenant Governor, attorney general and secretary of state because they run statewide, like those officers. Senator Porter asked if the reporting requirements are the same. Mr. Erquiaga answered that the reporting requirements are the same. Mr. Erquiaga continued his analysis. Section 4 would remove the exemption for political parties and caucuses. Currently political parties and caucuses can give unlimited amounts. He said Secretary of State Dean Heller believes that political parties and caucuses should be on the same level as any corporation or labor union in the state and "should compete on the same playing field." Mr. Erquiaga explained section 5 and section 10 go together. For every campaign report in the laws, there are two places where it shows up; where the candidate/office holder reports contributions and where the candidate/office holder reports expenditures. Section 5 goes with section 10, which deals with candidates. These sections lower the reporting threshold from $500 to $100. Nevada has the second highest reporting level in the nation. Only Georgia exceeds Nevada at $1001. Senator Townsend asked if lowering the contribution limit will cause candidates to need assistance from certified public accountants to complete the forms. Mr. Erquiaga explained the reporting requirements for all federal candidates/office holders. Additionally he explained the reporting requirements for all of the other states. He said, "There is no price too great for public disclosure. If that means when we run campaigns or seek public office, we have to seek the help of an accountant fine. The public has the right to know where that money comes from." Senator O'Donnell asked how the expenses are reported? Mr. Erquiaga stated any expense should be reported as an expenditure which is a separate part of the form. Discussion of bookkeeping and ledgers ensued between Senator O'Donnell and Mr. Erquiaga. Discussions of the various categories of expenditures followed. Mr. Erquiaga explained that the reports do not balance to the candidate/office holder's general ledger. The information is accumulated and reported to the state. He explained there are no audit requirements in the State of Nevada. Senator O'Donnell asked who needs to know what his office expenses are? Mr. Erquiaga stated the theory behind the categories is typically used by opponents and the press. Senator O'Donnell asked if there was public need or public good served by this information. Mr. Erquiaga responded: Absolutely. Campaigns should be an open process. You have raised that money; you are seeking a public office. The feeling of the secretary of state's office is that you should be willing to report where it came from and how it was spent. You are prohibited by law from spending it for personal use. It behooves you to identify how you did spend it so you can never be accused of spending it for personal use. You have an itemized listing of where your money went. Discussion ensued regarding accounting for funds and personal expenditures. Senator O'Donnell stated, "I think this type of disclosure is to get at your opponent, and I don't think that is good public policy." He asked if Mr. Erquiaga would mind if the committee deleted section 1 of the bill? Mr. Erquiaga responded he would mind. He continued his testimony with an analysis of sections 6 and 11 which deals with independent expenditure reports. Political parties and caucuses are now included in where campaign contributions come from. Senator Porter asked if the standards have changed for lobbyists to report for all lobbying activities for all levels of government. Mr. Erquiaga stated that lobbyists report for legislative officers, the Governor, and the Lieutenant Governor. Senator Porter asked if the lobbyist reporting includes the executive branch and the justices. Mr. Erquiaga answered those reporting expenses for lobbyists for the Governor and Lieutenant Governor are covered in another chapter of the Nevada Revised Statutes (NRS). He explained that the Legislative Counsel Bureau handles lobbyist disclosures. The secretary of state's office does not do that. Senator Townsend remarked that any expenditure made on behalf of a legislator by a lobbyist must be reported on a monthly basis. He said those reports come out and everyone is trying to adhere to the policy. He asked if the executive branch has a reporting requirement like that? Mr. Erquiaga stated he understands that those same laws apply to the Governor and to the Lieutenant Governor because they sign or could vote on bills. Lobbyists who lobby legislation must report expenditures for the executive branch. He stated he does not think it applies to the justices of the supreme court, the attorney general, the secretary of state, state treasurer or state controller. He said they could add that to the statutes in chapter 218 of the NRS. Senator Townsend stated this was added to statutes because they have authority to change state policy. He said the executive branch, even when the Legislature is not in session, has the authority to implement regulations and administer the jurisdictions that they have. He suggested that the executive branch should report lobbyist activities on a 12-month basis. Mr. Erquiaga asked, "Are you asking for my opinion, senator?" Senator Townsend responded, "Yes." Mr. Erquiaga nodded his head affirmatively, indicating he was of the opinion that lobbyists should be responsible for a 12-month disclosure for lobbyist activities for the executive branch. Discussion ensued regarding lobbyist disclosure activities for local elected officials. Senator Townsend opined, "Those people should be as accountable as we are." Mr. Erquiaga stated: Disclosure is never a bad thing. The more disclosure that we have, the more we do to restore voter confidence and encourage voter participation. That is something the current secretary of state takes to be a very serious part of his job. Anytime the public has the perception that money is being hidden, whether that is in the form of campaign contributions or lobbyist disclosures, that is a bad thing for the public and it discourages their participation. Discussion again ensued regarding independent expenditures. The definition of independent expenditures was discussed. Mr. Erquiaga provided examples for clarification. Mr. Erquiaga continued his section-by-section analysis with sections 7 and 12. These sections deal with ballot question advocacy. Section 8 defines the term "personal use." It clarifies that the expense cannot be for the benefit of a candidate or a member of his family. Discussion regarding the definition of "personal use" ensued. Senator Raggio opined that the language in the section was restrictive. He provided examples to support his opinion. Mr. Erquiaga explained section 8 also deals with disposition of unspent monies. The law currently leaves out someone who withdraws without ever running. He said it is possible to file for office, raise money, and withdraw without running. This section says that if a person loses the campaign, the money must be given away to another candidate, or a charity. If a person wins, he or she can keep the money for the next campaign. Under the new bill, the person who loses is allowed to keep the money for 4 years and run again, just as if they win. Senator Raggio stated this section needs more clarification. He asked why someone who did not win and was not serving in the office, would be allowed to keep the funds? Discussion ensued regarding reasons why the loser should or should not keep the funds, and how long should the loser or winner be allowed to keep the funds. Senator Raggio suggested there should be a definite date by when a decision could be made. Continuing his testimony with section 9, Mr. Erquiaga explained that this section deals with the disposition report. It is the only report like this. It would change the disposition report to be filed with the officer who originally accepted the declaration of candidacy. He stressed this puts the reports at the local level where the public has access to them. Section 13 deals with the dissolution of a political action committee. He said no methods currently exist. Section 14 and 15 deals with recall elections. It would lower the reporting threshold from $500 to $100. Senator Raggio stated, "I have never had a valid reason for the difference between $500 or $300 or $100. Why is that an important public policy?" Dean Heller, Secretary of State, testified this was his proposal to lower it to $100. He said statutorily if an office holder receives an anonymous gift that he or she may keep up to $100 of the gift. Anything above that has to be deposited to the state treasurer's office or into the General Fund. This is why they chose that specific number. He testified: A reason, more important, that we have chosen to reduce this particular threshold, is the amount of dollars that go unreported in campaigns. We had $2.1 million that was spent in 1994 on Senate campaigns; over a million of it went undisclosed. We had $3.1 million spent in Assembly campaigns in 1994; $2.1 million of that went undisclosed. So over two-thirds of these dollars that are going into these campaigns are undisclosed. As the chief elections officer . . . I have a responsibility to get people enthusiastic, to get people to participate in the process. Right now, as many of you know, only one-half the people in the state are registered to vote. Only one-half of those registered to vote actually go to the polls and vote. It only takes one-half of them to get elected to office. I believe there is a clear connection between campaign reform and the right for the public to know. Senator Raggio asked how lowering the requirement for reporting contributions by name for an amount of $100 instead of for an amount of $500 gets people more involved in the process? Mr. Heller responded the fact that people know that candidates have nothing to hide and are not receiving undisclosed contributions, will encourage more people to vote or get involved. Senator Raggio stated that a lot of people do not want their contributions publicized. Mr. Heller stated that people who are sincere about getting involved in the process are not concerned about publications. Senator Raggio asked if Mr. Heller thought there is something corrupt if someone gives $200 to a candidate rather than $100? Mr. Heller stated he has no problem with the amount of contributions. Senator Raggio asked what the compelling reason is to list the name of someone who gives $200, but not someone who gives $100? He suggested that they leave the amount at $500. Discussion ensued regarding disclosure of campaign contributions. Juanita Cox, Lobbyist, Independent American Party, stated the Independent American Party produces a newspaper with all of the candidates and their information. She cited problems with campaign reports. She said they oppose the change from $500 to $100 because it will hurt challengers. She questioned if the new report forms would require hiring professional help to complete the forms, which would be a real problem for minor parties or challengers. She said it will limit their participation in the system. An exhibit from Jim Hulse, Chairperson, Common Cause of Nevada, was entered into the record (Exhibit F). Senator O'Connell closed the hearing on A.B. 517 and opened the hearing on A.B. 144. ASSEMBLY BILL 144: Revises provisions relating to cooperative agreements concerning insurance. Stephanie Tyler, Lobbyist, City of Sparks, explained the bill adds a list of group insurances for local governments to qualify to be insured. The amendments would allow private sector groups to participate as well. Discussion of the bill and the amendment ensued. Mary Henderson, Director of Government Affairs, Washoe County, explained the amendment to the committee. Ms. Tyler explained they would like to keep the bill as it is with only cooperative agreements for local governments. She said the amendment could be limited to just group health insurance or liability insurance. She said, "It is not our intent to be commingling for workers' compensation with private companies." Ms. Tyler stated the bill, as it is written would allow local governments, who have already qualified to become self-insured for workers' compensation, to come together and bond together for workers' compensation. She stressed it would not impact the workers' compensation market. Senator Townsend reminded the committee and Ms. Tyler and Ms. Henderson what could have happened if this had been allowed and White Pine County had entered into a cooperative agreement. He said the group would be broke. He questioned if this is really what they want to do. Ms. Tyler explained that each cooperative agreement would be evaluated carefully before cooperative agreements are reached. Senator Townsend suggested that they delete the workers' compensation part of the bill. He said he has met with municipality employees who have problems with their third party administrator and employer regarding workers' compensation. He said this is unfair to the worker. Ms. Tyler stated, "Would you entertain an amendment for it just to apply to liability and group health insurance?" Senator Townsend explained he had no problem with that being amended into the bill. Senator Porter asked if there are safeguards in the bill if the insurance companies go out of business? Senator O'Connell apologized to the committee, but stressed all hearings had to be closed immediately because all the senators are due in Senate Chambers for a floor session. The meeting adjourned at 5:55 p.m. RESPECTFULLY SUBMITTED: Teri J. Spraggins, Committee Secretary APPROVED BY: Senator Ann O'Connell, Chairman DATE: Senate Committee on Government Affairs June 29, 1995 Page