MINUTES OF THE SENATE COMMITTEE ON TAXATION Sixty-eighth Session May 2, 1995 The Senate Committee on Taxation was called to order by Chairman Sue Lowden, at 1:40 p.m., on Tuesday, May 2, 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 GUEST LEGISLATORS PRESENT: Assemblyman Lynn C. Hettrick, Assembly District No. 39 STAFF MEMBERS PRESENT: DeLynn Gillentine, Committee Secretary Kevin Welsh, Research Analyst, Fiscal Analysis Division OTHERS PRESENT: Thomas J. Grady, Lobbyist, Nevada League of Cities Dean Heller, Secretary of State Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association Janice A. Wright, Deputy Executive Director, Department of Taxation Steve Teshara, Lobbyist, Executive Director, Lake Tahoe Gaming Alliance Robert L. Allgeier, County Commissioner, Douglas County Senator Lowden opened the meeting with the introduction of the following bill draft requests (BDRs). BILL DRAFT REQUEST 32-669: Allow incorporated cities to implement gas tax under certain circumstances. Thomas J. Grady, Lobbyist, Nevada League of Cities, testified in favor of BDR 32-669. Mr. Grady stated, "If you look at section 1, item 2, I think that will tell you the meat of the bill. It is not asking for any new taxes. . . This is asking [for approval so] a county who [does not levy] the additional 4 cents [available to them] for the fuel tax . . . that the city be allowed to implement that portion of the tax. . . We have a couple of counties that have chosen to sunset that portion of the tax. . . The cities feel they need the money to keep their road project going. . . " Senator Townsend asked if the tax that is not being collected by the county was any part of a bond or special fuel tax. Mr. Grady said it was from the special fuel tax. Senator Lowden inquired which counties this bill would affect. Mr. Grady said the City of Elko, City of Winnemucca, and the City of Ely are considering this bill. SENATOR REGAN MOVED TO INTRODUCE BDR 32-669. Senator Lowden asked the committee if there was a second. Senator Rhoads wondered what the cities thought about the bill. Mr. Grady stated that the cities are all in favor of the bill. Senator Lowden said since there was no second, the committee will consider the bill and discuss it at a future date. Senator Lowden introduced Bill Draft Request (BDR) R-608. BILL DRAFT REQUEST R-608: Direct appropriation committees of 1995 session to require state agencies to use lock boxes unless such use is impractical. Dean Heller, Secretary of State, testified that the lock boxes are mostly a cash management tool and many of the state agencies already use them. SENATOR RHOADS MOVED TO INTRODUCE BDR R-608. SENATOR AUGUSTINE SECONDED THE MOTION. Mr. Heller said he is concerned that the designated post office box not be an out-of-state post office box. Senator Lowden requested Mr. Heller return to the committee and testify on the bill. Senator Lowden asked if Mr. Heller would work on the bill draft request with Kevin Welsh, Research Analyst, Fiscal Analysis Division. THE MOTION PASSED. (SENATORS O'CONNELL AND ADLER WERE ABSENT FOR THE VOTE.) ***** Senator Lowden introduced BDR 32-602. BILL DRAFT REQUEST 32-602: Extend widows' exemption from property tax to widowers. Senator Lowden asked Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, to testify on the bill draft. Senator Lowden requested the committee be prepared to deal with all exemptions, if they decide to hear this bill. Ms. Vilardo stated: . . . There are a series of exemptions . . . orphans, widows, disabled veterans, etc., which do not really have constitutional authority to be exemptions, but according to two of the former heads of LCB (Legislative Counsel Bureau) . . . that until somebody challenges it in the courts it will be constitutional. . . You have got exemptions that shouldn't be [exemptions]. . . Where you have an existing exemption such as for widows, it is totally discriminatory. You do not have it for widowers. If we are not going to . . . eliminate the other exemptions, then at least there should be some equity within that particular one that extends it over to widowers as well as widows. . . I don't believe we should have those exemptions. If by policy decision you think that those exemptions are valid, then I think the constitution should be changed to address those exemptions or to give the Legislature the ability to look at exemptions dealing with property tax based on criteria. . . Senator Lowden said she liked the idea of establishing a consistent policy. Ms. Vilardo agreed with Senator Lowden's statement. Janice A. Wright, Deputy Executive Director, Department of Taxation, testified: There are a series of exemptions that exist in statute today. Many for property tax, many of them for sales and use tax. The issue has always been that the Legislature will have more special interest groups coming before it then you could possibly grant exemptions for. What you need to look at is the issue of whether or not you want to promote an activity or hinder an activity. When you look at exemptions very often that is not one of the things that is considered. A number of organizations have come to the Department of Taxation claiming that the exemptions [which] currently exist in the statutes are not gender neutral and that is true. There are specific ones that are for male or for female or some specified group. Senator Lowden was concerned about the number of groups that may request exemptions. Ms. Wright said she can provide a list of current exemptions to the committee. SENATOR RHOADS MOVED TO INTRODUCE BDR 32-602. SENATOR AUGUSTINE SECONDED THE MOTION. Senator Augustine asked if widowers would be included if the language did not include the word "widows". Ms. Wright said, "No." THE MOTION PASSED. (SENATORS O'CONNELL AND ADLER WERE ABSENT FOR THE VOTE.) ***** Senator Lowden opened the hearing on Senate Bill (S.B.) 337. SENATE BILL 337: Revises provisions governing exemptions from property tax for certain businesses relating to conservation of fossil fuels. (BDR 32-600) Ms. Vilardo testified in favor of S.B. 337. Ms. Vilardo stated the constitution does allow for an exemption for renewable sources of energy, but this bill is required to clean up the law and attract businesses. Ms. Vilardo gave examples of businesses and exemptions that have been created to facilitate a company's move to Nevada. Ms. Vilardo thinks there should be a law that is generic enough to allow any company, who fits a certain criterion, to be able to come to Nevada and get the exemption. Ms. Vilardo urged the committee for their support of the bill. Senator Townsend discussed a request for exemptions that occurred a couple years ago. Senator Townsend brought up the fact that the language of this bill allows for exemptions of personal property, which could equate to a substantial loss of revenue. Senator Townsend asked if the interim committee discussed the Commission on Economic Development going to an independent source for insight as to possible revenue loss from the exemption. Ms. Vilardo said that issue was not addressed in the interim committee. Senator Townsend stated he thought some independent analysis should be done, on whether a company would get exemptions, instead of leaving the decision up to the commission. Ms. Vilardo responded that the Commission on Economic Development is the governing authority for the sales tax deferral and the business tax abatement; therefore, they have already set up the criteria for economic development, wages, medical benefits, etc. Senator Townsend replied that he had no problem with the commission being the final authority, but he would like to see some independent reporting. Ms. Vilardo stated that she agrees with Senator Townsend's point. Ms. Vilardo and Senator Townsend both think that the language of the bill should not be cumbersome. Senator Regan said there are some protections in the bill. Line 30 in section 1 provides a safeguard. Subsection 2, section C, also provides a safeguard. Ms. Vilardo and Senator Regan discussed past experiences the state has had with companies and this exemption. Senator Lowden asked Ms. Vilardo if there is a policy that the commission uses for qualifying businesses for the exemption. Ms. Vilardo said she has a packet, but she is not sure she has a copy of their policies. Senator Lowden requested that the committee be provided a copy of the commission's policy statement. Senator Lowden asked if anyone wanted to speak on S.B 337. Since no one responded, Senator Lowden closed the hearing on S.B. 337 and opened the hearing on Assembly Bill (A.B.) 19. ASSEMBLY BILL 19: Allows proceeds from optional tax on revenues from rental of transient lodging imposed throughout certain counties to be used for public transit system. (BDR 20- 314) Assemblyman Lynn C. Hettrick, Assembly District No. 39, testified: A.B. 19 came out of some direct requests and some consensus by the groups up at Lake Tahoe . . . that are involved with trying to maintain a satisfactory and desirable business climate. Typically, . . . [Transient Occupancy Tax] TOT taxes, residency taxes, hotel [taxes] are used strictly for tourism. The problem we have at Lake Tahoe is that tourism to Lake Tahoe is transportation. We have no major airport, the airport we do have is on the California side. We have no rail service; we have no major bus service; we have no major transportation even within the basin. . . This bill is in agreement by all of the entities saying; Let us take that TOT tax and let us supply it to what does make tourism within the Tahoe Basin. It is that simple. What we have done? If you look at page 2, lines 3 and 4 at the top of the bill and then down at the bottom, line 38; we have limited the use of the TOT tax redistribution to only those transportation districts within a bistate compact. The only bistate compact in the state of Nevada is . . . TRPA (Tahoe Regional Planning Association), so we are not affecting you in other industries as far as TOT tax, we are not affecting any other transportation districts. We have limited this bill very clearly to simply affect the TRPA Lake Tahoe Basin area. Steve Teshara, Lobbyist, Executive Director, Lake Tahoe Gaming Alliance, stated his support for A.B. 19. Mr. Teshara said the alliance's properties are the primary source of the TOT revenue in question, and they support the bill. Senator Lowden asked Mr. Teshara where the proposed routes are for the public transit system. Mr. Teshara stated: There is an existing public system on the south shore. These funds will allow Douglas County and the Tahoe Douglas Transportation District, the entity that will actually be expending these funds, to extend the service that is on the south shore into other parts of Douglas County and Lake Tahoe. Also, to participate in some regional efforts, part of which will tie into the Lake Tahoe Airport and to the north shore of Lake Tahoe. Senator Rhoads inquired where the money is currently used. Mr. Teshara responded the money is being held pending the outcome of this legislation and the action of Douglas County to implement the new transportation district. Senator Rhoads asked where the county will get the money for roads if this money is used for a transportation district. Mr. Teshara deferred the question to Robert L. Allgeier, County Commissioner, Douglas County. Senator Townsend wanted to know what they are going to buy with the $500,000. Mr. Teshara said: There are two sets of adopted plans for transit in the region that this fund would be used to pay for. One is the adopted regional transportation air- quality plan of the Tahoe Regional Planning Agency which . . . local government and members of the public had input on drafting that plan. The other is the adopted transportation plan of Douglas County which incorporates the TRPA elements. There are also some specific projects that were developed as part of the community plans for Stateline, Kingsbury and Round Hill. . . Essentially, it would expand public transit, busses, trolley, theme vehicles, demand responsive transportation services into Nevada. . . Senator O'Connell clairified that this tax is a room tax and is not a bond issue. Mr. Teshara said that is correct. Senator O'Connell asked if the tax would be continued for an indefinite time. Mr. Teshara responded that the tax would be continued indefinitely. Senator O'Connell inquired if the bus route would be tied into the airport. Mr. Teshara replied that it would be tied into the airport on the California side. Senator O'Connell suggested they might consider purchasing White Pine County's busses that are for sale. Senator O'Connell asked if they will have to contend with the ADA (Americans with Disabilities Act). Mr. Teshara said yes they would and they are doing that with the current system. Senator Regan mentioned that this tax was originally voter approved. Mr. Allgeier urged support from the committee for A.B. 19. Mr. Allgeier said that Douglas County established the Douglas Tahoe Transportation District which encompasses the same area of that portion of the TRPA jurisdiction of Douglas County at Lake Tahoe. Mr. Allgeier stated that they worked with the chamber of commerce, gaming alliance, businesses at Lake Tahoe; and imposed the 1 percent TOT tax under the stipulation that the amount raised in the Tahoe Basin would remain for use within that transportation district. Mr. Allgeier said that many roads in the Lake Tahoe area are highways; therefore, there are not many roads within Douglas County in the Lake Tahoe area that they have to maintain. Mr. Allgeier expressed concern that the county needs to provide some kind of public transit within the Tahoe Basin. Senator Lowden said she thought the committee was ready to take a motion on this bill, unless there was someone who wanted to speak on the bill. SENATOR TOWNSEND MOVED TO DO PASS A.B. 19. SENATOR REGAN SECONDED THE MOTION. Senator Lowden asked if anyone wanted to speak against the bill, or for the bill. Since no one responded, Senator Lowden continued with the vote. THE MOTION PASSED UNANIMOUSLY. ***** Senator Regan said that currently there are 25 major exemptions in the law. Senator Lowden adjourned the meeting at 2:30 p.m. RESPECTFULLY SUBMITTED: DeLynn Gillentine, Committee Secretary APPROVED BY: Senator Sue Lowden, Chairman DATE: Senate Committee on Taxation May 2, 1995 Page