MINUTES OF THE SENATE COMMITTEE ON TAXATION Sixty-eighth Session April 25, 1995 The Senate Committee on Taxation was called to order by Chairman Sue Lowden, at 1:30 p.m., on Tuesday, April 25, 1995, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Sue Lowden, Chairman Senator Kathy M. Augustine, Vice Chairman Senator Ann O'Connell Senator Dean A. Rhoads Senator Randolph J. Townsend Senator John B. (Jack) Regan Senator Ernest E. Adler STAFF MEMBERS PRESENT: DeLynn Gillentine, Committee Secretary Kevin Welsh, Research Analyst, Fiscal Analysis Division OTHERS PRESENT: M.J. Manning, Director, Clark County Public Works Sam McMullen, Lobbyist, Northern Gaming Industry Association Roger Means, Lobbyist, Washoe County School District David L. Howard, Lobbyist, Greater Reno/Sparks Chamber of Commerce Stan R. Olsen, Lobbyist, Las Vegas Metropolitan Police Department Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association Marvin A. Leavitt, Lobbyist, City of Las Vegas Lucille K. Lusk, Lobbyist, Nevada Concerned Citizens Robert T. Schell, Senior Right-of-Way Agent, Clark County Public Works George E. Harris, Lobbyist, City of Las Vegas Senator Lowden opened the meeting with the introduction of the following bill draft requests (BDRs). BILL DRAFT REQUEST 32-806: Imposes additional tax on special fuels for preservation, maintenance and repair of public roadways. M. J. Manning, Director, Clark County Public Works, testified, "The story that I bring to you today is one of a continuing problem we have had in being able to assure the quality of some of our residential streets. While we have substantial capital programs to expand our arterial program as well as to build beltways, there remains a problem in the area of maintenance for the county in being able to provide and assure good quality streets in the residential areas of our county. We have with us today a couple of exhibits that may help exemplify that." Mr. Manning presented and discussed Exhibit C. Mr. Manning presented a map and discussed it (Exhibit D). Mr. Manning continued, "Our discussion today. . . focuses on the idea of additional revenues that could be devoted to road maintenance for counties and would allow us the opportunity to be able to better address these maintenance problems and to assure that we handle them properly." Mr. Manning discussed and presented Exhibit E. Senator Lowden thanked Mr. Manning for coming to the meeting to explain the reasons for this bill, since she thinks it might have a tough time passing the committee. Senator O'Connell asked, "I wonder if you could tell me, in 1991 we passed a bill . . . that gave the county $100 million per year. It was supposed to be for roads. Now I realize a lot of it was for the beltway, but could you tell me what is your portion of that $100 million a year?" Mr. Manning responded, "For maintenance purposes? Actually the $100 million a year is devoted to transit, then streets and highways and the resort corridor. There is no part of that which is presently being directed towards maintenance activities. What is happening with the funding. Is it being devoted to capital improvements whether they be beltways or Desert Inn super arterial types of projects for the resort corridor or pedestrian separations, or the extension of the counties' arterial road system. Essentially, that is where the money is presently going. The other portion . . . is for the development and extension of the citizens' transit system . . . that is being operated by the regional transportation commission." Senator O'Connell stated, "I think the voters of Clark County know that they pay one of the highest gasoline taxes around and they know they are contributing $100 million a year, and to now give them another tax increase and say you can't even get the roads in your neighborhood fixed. Why don't we take this to a vote of the people? If they want their roads fixed in their neighborhood, I am sure they are going to support it." Mr. Manning said, "That certainly is a possibility. There is another portion of this that might be worth considering. We can understand your sensitivity to the idea of an additional tax increase. . . " Mr. Manning discussed Exhibit F. Senator Lowden asked if they had submitted the other BDRs listed in Exhibit F. Senator Lowden was told that the BDRs should be out by Monday. Mr. Manning stated that the long-term maintenance problem has to be addressed. Senator Rhoads inquired, ". . . [Nevada Revised Statutes] NRS 366-190 is statewide . . . You are just referring to Las Vegas on this bill aren't you?" Mr. Manning replied, "No, I think what we are talking about is the redistribution back to counties, not just to Las Vegas or to Clark County." Senator Rhoads continued, "It would be a statewide tax?" Mr. Manning responded in the affirmative. Senator Regan asked if Mr. Manning would like to consider combining a couple of the BDRs listed on Exhibit F, and if combining them would give them more money to work with? Mr. Manning said the combination Senator Regan suggested would give him more money for street repairs. Senator Lowden stated she would like to wait until the other BDRs are available for the committee to look at, before they take action on this BDR. Senator Lowden introduced Bill Draft Request (BDR) 32-1976. BILL DRAFT REQUEST 32-1976: Revise provisions governing collection of money for issuance of certain business licenses. SENATOR RHOADS MOVED TO INTRODUCE BDR 32-1976. SENATOR REGAN SECONDED THE MOTION. Senator Lowden asked if there was any discussion on this BDR. Since no one wanted to speak, Senator Lowden took the vote. THE MOTION CARRIED. (SENATOR AUGUSTINE WAS ABSENT FOR THE VOTE.) ***** Senator Lowden opened the hearing on Senate Bill (S.B.) 308. SENATE BILL 308: Provides exemption for tax levy of certain taxing districts in certain cities from statutory limit on total ad valorem tax levy. (BDR 32-732) Sam McMullen, Lobbyist, Northern Gaming Industry Association, testified the maintenance would be more in the nature of capital improvements. With respect to notice, the people that will be affected by this bill have been notified three times, but he cannot guarantee their personal knowledge. In terms of precedent, they are using the property tax type of framework. Mr. McMullen said they discussed all sorts of taxes, the outcome was this bill. The affected people know they will pay extra taxes and they want to pay extra taxes. This bill's purpose is to get the funding active. Mr. McMullen suggested the following amendment: Take those voluntary triggered funds out of there . . . and let what is left work as normal up to the $3.64 cap. Our final suggestion would be if you voluntarily initiate a voluntary trigger and voluntarily understand how much is going to be paid, that we cap it to the amount that is currently being driven. . . That we put a cap by amendment in this. . . so that we are doing exactly what we are saying we are doing. Take the funds that are currently being raised, voluntary triggered [and] . . . paid, pull them outside, cap them separately off to the side, so that the amount of funds that are generated by either the maintenance protection vehicle or the police protection vehicle are limited to the 32 cents. . . Senator Lowden stated that a couple of the committee members have appointments during the week concerning this issue and she had been asked to hold a vote on the bill. Senator Rhoads asked, ". . .Would you be willing to amend it further and let the members in the district vote on it?" Mr. McMullen responded he would have to talk to some people, but there is already in place a mechanism by which the districts could be created. Mr. McMullen asked if Senator Rhoads meant a vote as to whether it should be outside the cap, or a vote as to whether the district should be created? Senator Rhoads thinks the people in the district should be asked whether they are willing to pay the 32 cents above the cap. Mr. McMullen said he personally did not have a problem with that, but he would have to talk to others first. Mr. McMullen thinks it would only formalize surveys that have already been taken by their organization. Senator Augustine compared this bill to one in the Las Vegas area where they did take the question to voters. Senator Augustine said she would support the bill if it would be given to the voters to decide. Mr. McMullen and Senator Augustine discussed putting the vote to the people. Senator Regan stated that he thinks other then a few peripheral areas, less then 10 percent of the property owners live within the district being considered. Senator Regan wanted to know how he planned to hold a vote in that district. Mr. McMullen discussed previous experience with holding an election on a special issue. Senator Augustine asked, "What would prevent an area . . . from going in and saying we want more police protection, . . . so they agree to raise their property taxes to create a special policing district there?" Mr. McMullen responded, ". . . This law is specifically crafted to only affect redevelopment areas." Senator Adler stated, "I am pretty sure you cannot have an election under those circumstances of property owners. . ." Roger Means, Lobbyist, Washoe County School District, was next to testify in support of S.B. 308. Mr. Means presented Exhibit G. Mr. Means stated: Our concern is really very simple and . . . self- serving on the part of [the] Washoe County School District. We are preparing for a bond issue in September of 1996. It appears at this point . . . that the bond issue will be in the neighborhood of $200 million. Our bond consultants calculate that if we do a 3-part sale it would have an effect of about 17 cents on the tax rate. You all know that the City of Reno, under current statute, has the authority to implement this tax now. All this bill does is move that tax outside of the cap. The part we are concerned about, if it stays underneath the cap and they proceed with the taxing district, . . . the possibility exists that in order for the school district to take care of its capital improvement program that we would either have to use school district General Fund dollars or school district bond dollars . . . to buy down this tax district so we would have room under the cap. So in effect what we would be doing is we would be using county-wide taxpayers dollars to pay for . . . the police protection district downtown. That is our concern. Senator Lowden said she thinks the committee understands what his concern is. Mr. McMullen said he wants to do a survey or canvas of those people that will be affected by the bill to satisfy Senator Rhoads' concerns. David L. Howard, Lobbyist, Greater Reno/Sparks Chamber of Commerce, stated, "I want to clear up this election thing. [In] 1970-1976, I served as registrar of voters for Washoe County. In 1971 this Legislature passed a law to prohibit . . . having an election for property owners . . . Also, notice provisions for elections are 90 days minimum. . . We know what you want to do Senator Rhoads, but it is impossible under the current law." Senator Raggio sent Exhibit H to be introduced into the record. There was no testimony on the exhibit. Senator Lowden asked if anyone else wanted to testify on S.B. 308. Senator Lowden said that the committee would take a vote on this bill as soon as they can. Senator Lowden closed the hearing on S.B. 308 and opened the hearing on Senate Bill (S.B.) 336. SENATE BILL 336: Provides that proposal for imposition of ad valorem tax for additional officers may be submitted to voters of areas where metropolitan police department has been created. (BDR S-1890) Stan R. Olsen, Lobbyist, Las Vegas Metropolitan Police Department, was first to testify on the bill. Mr. Olsen stated that at the last hearing they spoke on the bill and he was now available for questions. Senator O'Connell stated that she has gotten information she requested since the last hearing on this bill. Senator O'Connell asked Mr. Olsen, "Currently, you are getting . . . 10 cents plus [of the 12 cents]. . . The 12 cents will bring you in $18 million . . . and right now you are asking for another 12 cents. So you are going to be looking at $36 million plus a year. Is that your understanding of the situation?" Mr. Olsen responded, "No, that is not my understanding, and again I was not here so I don't know what the testimony was the other day . . . What is my understanding is to spread it over a period of time . . . and that it would reach a little less then 12 cents. I don't have those numbers." Senator O'Connell interrupted, "We had the tax department run [the numbers] for us, so we are pretty comfortable that those numbers are right, except that they will be more. We were tracking this bill with the bill in the 1987 session . . . As you can see, in the bill itself, we are really not talking about how much or what, but during the testimony they indicated what they were looking for was the 12 cents and that is your understanding as well?" Mr. Olsen responded, "Yes." Senator O'Connell continued, "This is just open- ended right now. It goes on from here after. Do you have any idea about the operating override on this?" Mr. Olsen replied, "No, . . but I can get it for you." Senator Lowden suggested the committee write the language for the ballot question to insure that the question is clear. Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, testified and presented Exhibit I. Ms. Vilardo said the Nevada Taxpayers Association does not support or oppose S.B. 336. Ms. Vilardo discussed Exhibit I and what the voters thought they were voting on. Ms. Vilardo asked the committee to clean up the language of the bill if they choose to pass it. Marvin A. Leavitt, Lobbyist, City of Las Vegas, was next to testify on S.B. 336. Mr. Leavitt stated: . . . The city and the county divide the expenses of the Metropolitan Police Department by a formula which is unrelated to this that we are dealing [with], . . . it is essentially the use of police services, by which the formula is derived. If we were to take the total assessed valuation of the total Metropolitan Police Department area and multiply that by any tax rate . . . we would get an amount. If we divide that amount, then by the proportionate share that the city and county share in the police department expenditures' . . . we would get an amount for the city, if we divide that amount by the city's assessed valuation we get a tax rate. . . Senator Lowden requested Mr. Leavitt help the committee write the ballot question so everyone would understand it. Senator Adler asked, "So you would have, literally, to write a ballot question that says that this would be the average rate, but this rate will change year to year depending upon whether your area uses [a certain] amount of police services?" Mr. Leavitt responded, "And it can change as you well can see. Assessed valuation changes every year . . . and also the police formula changes every year." Senator Adler continued, "So what this says is this is the average rate within Clark County, city and county, but check with where you live to figure out what it is going to be [for you] from year to year." Ms. Vilardo asserted: The problem is that you put on the ballot question a very specific [amount] with no indication that it might be a variable rate. I don't think it is fair to the people who have made a conscious attempt to go out and think they are supporting something based on how they read a ballot question, which is very finite. I don't know if you can . . . levy a tax greater then what is approved. . . I understand the problem, . . . but there has got to be a way to have a taxpayer better informed or at least when you put that . . . on the ballot, putting some proviso that there may be a variation up to [a certain] percentage or the next higher rate. . . Mr. Leavitt expressed concern that if the city residents see that they will pay more taxes then the residents of the county, they would not approve the measure. Senator Lowden said, "Yes, but that is the honest thing to do. I think that is part of the problem with the reputation that government has, that we aren't completely honest. That is why we want to write the questions ourselves." Ms. Vilardo added, "But in the reverse of that, most people in the county . . . thought they voted for 10 cents and had no problem voting for 10 cents. [They] thought that was what they were going to have levied against their rate, and yet it wasn't. . . " Lucille K. Lusk, Lobbyist, Nevada Concerned Citizens, asked if the tax was inside or outside the cap. The committee answered, "Inside." Ms. Lusk said she definitely wants it inside the cap. Senator O'Connell stated: If we decide to take action on this, I think there should be some boundaries or limits on the bill. Because right now they have the ability to tax forever after the 12 cents. . . We have no limits at all on this amount and since we are talking about $36 million, I think . . . we need to say . . . if we are going to give an additional ability to put on the ballot whatever amounts they are wishing, then I think we should have it graduated as we have before or that it . . . be clearly stated that this goes on forever. . . Senator Lowden asked if Mr. Olsen could form a subcommittee and discuss some of the issues the committee is concerned about, then the committee can amend the bill and move on it. Senator Lowden closed the hearing on S.B. 336 and opened the hearing on Senate Bill (S.B.) 338. SENATE BILL 338: Expands authorized uses of proceeds from supplemental vehicle privilege tax. (BDR 32- 1888) Robert T. Schell, Senior Right-of-Way Agent, Clark County Public Works, was first to testify in support of the bill. Mr. Schell discussed and presented Exhibit J. Senator O'Connell stated the committee is being asked to broaden or expand the language in the statute, so they can use money that was voted on by the people and expected to be used to repair roads, to reimburse property owners subject to eminent domain. Senator O'Connell expressed concern that the people did not think they were voting on reimbursing property owners for expenses incurred when new projects go in, but instead were voting on funding to fix the potholes in the streets in front of their house. Senator O'Connell asked how much money is in the fund now. Mr. Schell stated that the southern section of the Las Vegas beltway will displace 65 home owners. Senator O'Connell inquired if the home owners are paid fair market value for their property. Mr. Schell responded that the home owners are paid fair market value, but other expenses are incurred. These expenses, if they were currently reimbursed, would add about 2.3 percent to the acquisition costs. Mr. Schell estimated that for the southern section of the Las Vegas beltway, there would be $280,000 in added expenses, if the home owners were paid for additional expenses incurred because of the acquisition of their property. Senator O'Connell requested Mr. Schell obtain information and provide the committee with the estimated total cost for the entire project. Mr. Schell agreed to do so, but said he would only be able to provide the information in a general way. Senator O'Connell expressed her disgust that the government uses eminent domain and moves people and does not fully finance the move. Senator O'Connell thinks that they should have the authority to finance the entire move, not just the authority to purchase property. Mr. Schell said that he proposed a program to reimburse home owners for additional expenses incurred, but his legal counsel said they did not have the statutory authority to implement the program. Senator O'Connell stated, "Why don't we give you the statutory authority for that kind of expenditure, but not from these funds?" Mr. Schell argued, "The project is causing the displacement." Senator O'Connell and Mr. Schell discussed the eminent domain and where the money should be coming from to fund this bill. Senator Lowden expressed concern over residents that live in apartments, and asked why they do not get reimbursed for moving or displacement expenses. Mr. Schell stated that the language has become more restrictive. Senator Lowden said, "I have a real problem with that because those people could barely make their rent let alone moving expenses, . . . finding a new place, paying for first month and last month. . . and their deposit . . . It was a terrible hardship. . . I was thinking that this [bill] would include that group of people . . . I would have to take another look at this [bill] to see what we can do for those kinds of people." Senator Augustine asked for Mr. Schell to clarify which supplemental tax this money is coming from. Senator Augustine expressed concern over the language used on the ballot question concerning this fund. Senator O'Connell, Senator Augustine and Mr. Schell discussed where the source of the fund comes from. Mr. Schell said 1 percent of the motor vehicle registration fee is the source of this fund. Senator O'Connell requested that Mr. Leavitt discuss how the city handles eminent domain on a redevelopment project. Mr. Leavitt said that the city policy is that they pay for relocation expenses including property and expenses the property owner incurs to relocate. Senator Townsend wanted clarification on the ability to use eminent domain. Senator Townsend reiterated prior testimony. Senator O'Connell and Senator Townsend discussed eminent domain and the city's policy in comparison to the county's. Mr. Schell said he hoped he could treat these expenditures as any other expense of the project, since it is an expense that is essential to the project. Senator Lowden stated, "I think that we are ready to give you statutory authority, but what Senator O'Connell is saying is not out of that fund. What I am saying is why wouldn't you extend that to renters. If that is not how you interpret this, then let's rewrite it so the renters have the same privileges as someone who owns their home." Mr. Schell said he would be happy to rewrite it. George E. Harris, Lobbyist, City of Las Vegas, testified that if a person is an apartment dweller, he or she has no ownership and that is who the eminent domain law is written . . . for. The owner of the property. Senator Augustine discussed lines 9, 10, and 11 of the bill. Senator Augustine wondered why this needs to be in statute and if it gives the county commissioners home rule that they do not already have. Mr. Schell thinks that the language is required. Senator Lowden asked if anyone else wanted to speak on this bill and then stated, "I would say that the direction that I would propose is that we have to clean up some language to make sure that the monies do not come from the bond issue that Senator O'Connell was referring to. I would like to see . . . in statute that we somehow take care of those renters." Mr. Schell declared, "My reading of the statute would not exclude renters. The subject of that change would be `residents' line 7, section 1." Senator Lowden said they will verify that the current language would not exclude renters. Senator O'Connell requested the original ballot question for the bond and said that they should find out what the voters were voting on. Mr. Schell said their counsel advised him that they had no authority to pay this money from any fund. Senator O'Connell stated she would like to have the district attorney's opinion on this matter. Ms. Lusk reiterated prior testimony. Senator Lowden adjourned the meeting at 3:15 p.m. RESPECTFULLY SUBMITTED: DeLynn Gillentine, Committee Secretary APPROVED BY: Senator Sue Lowden, Chairman DATE: Senate Committee on Taxation April 25, 1995 Page