MINUTES OF THE JOINT MEETING OF SENATE COMMITTEE ON TAXATION AND ASSEMBLY COMMITTEE ON TAXATION Sixty-eighth Session May 23, 1995 The joint meeting of the Senate Committee on Taxation and the Assembly Committee on Taxation was called to order by Chairman Sue Lowden, at 2:00 p.m., on Tuesday, May 23, 1995, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. SENATE 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 ASSEMBLY COMMITTEE MEMBERS PRESENT: Mr. Bob Price, Chairman Ms. Jeannine Stroth, Chairman Mr. Pete Ernaut, Vice Chairman Mr. Michael A. (Mike) Schneider, Vice Chairman Mr. Morse Arberry, Jr. Mrs. Maureen E. Brower Mrs. Joan A. Lambert Mr. Mark Manendo Mr. John W. Marvel Mr. P. M. Roy Neighbors Mr. Brian Sandoval Mr. Larry L. Spitler STAFF MEMBERS PRESENT: Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division Kathy Cole, Snnate Committee Secretary Nykki Kinsley, Assembly Committee Secretary Carolyn Grabski, Assembly Committee Secretary OTHERS PRESENT: Michael Pitlock, Executive Director, Department of Taxation Robert Hadfield, Lobbyist, Nevada Association of Counties Carole Vilardo, Lobbyist, Nevada Taxpayers Association Marvin Leavitt, Lobbyist, City of Las Vegas Lucille Lusk, Lobbyist, Nevada Concerned Citizens Janine Hansen, Lobbyist, Nevada Eagle Forum Chairman Lowden opened the hearing on Senate Bill (S.B.) 271. SENATE BILL 271: Repeals requirement for prepayment of insurance premium tax. (BDR 57-1804) SENATOR O'CONNELL MADE A MOTION TO AMEND AND DO PASS S.B. 271. SENATOR AUGUSTINE SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Lowden opened the hearing on Senate Bill (S.B.) 320. SENATE BILL 320: Increases statutory limit on total rate of taxes ad valorem. (BDR 32-609) Michael Pitlock, Executive Director, Department of Taxation, said: I'm not here to...provide any testimony with respect to the substance of this bill. I just wanted to let the joint committees know that I have distributed to the members of the committees some summary sheets which will show you what the rates were...last year...(Exhibit C) this will help to put the bill in perspective... Mr. Pitlock continued his testimony with regard to this bill and how it would affect 60 entities with their respective rates. Chairman Price made a comment and followed it with a question for Mr. Pitlock. He said: I was looking at what I believe to be the current blue/red book and I had started jotting down some rates by hand, not realizing you were going to hand out this wonderful document. I thank you very much. But, I am showing, let's start out with Gabbs. I'm showing that Gabbs has a combined rate of $3.64 and your tax commission certification rates are showing $3.91... Now, have they gone to the voters? Mr. Pitlock replied, "What this first page shows is...what the rates would have been had there not been a buy out of some of the entities and negotiations on some of the others. So, those who would have been above the cap are...not actually [at that rate]." Robert Hadfield, Lobbyist, Nevada Association of Counties, stated that he wanted to make some observations with regard to this bill and the tax rate issue and the capping mechanism. Mr. Hadfield then went on to explain the history of this measure and how the problems have or in most cases not been dealt with until the counties are in an emergency situation. He clearly declared this is not what should be happening to the counties and cities in the state as a matter of public policy issue as it affects everyone in the state of Nevada. Chairman Lowden responded by saying: We know the trouble that White Pine [County] has been in and Nye County...obviously the rurals are hurting more than anyone... When you talk about that you need a mechanism to help. These are the four mechanisms you obviously came up with or compromise mechanisms... Have you considered putting them on a ballot and letting the people decide if they want their tax rates raised... Mr. Hadfield confirmed that they have indeed looked at other possible mechanisms and, in past sessions, they have brought these ideas before the Legislature. Assemblyman Marvel continued the discussion with Mr. Hadfield on this issue and how the counties will be paying even more as they need to construct buildings for schools, offices, and so forth. Carole Vilardo, Lobbyist, Nevada Taxpayers Association, wanted to speak first as a member of the interim committee before she spoke to the association's position. As she explained it, the committee entertained various motions before it, basically in search of measures which would allow the counties to go outside the cap. Ms. Vilardo next commented on the proposed bills which are being introduced this session. The association acknowledges that there are problems which need relief and the best way to find relief, she believed, is to raise the cap from $3.64 to $4.00; so, it is within the combined limit and not outside the cap. Senator Rhoads asked, "Do you feel that if we did raise it to $4.00 that there would be a trainload of tax proposals by all the government entities to take advantage of this?" Ms. Vilardo said: You have two different things. A group of proposals to go to the voters, because there would be greater flexibility now on what the voters could approve in some of these counties and cities... You [as the legislative body] could see a passel of proposals come in by the various local governments, come in and say we want 5 cents for this and 3 cents for that... I think what you are looking at is the diversity of the state that have not grown or for whatever reason have reached up above the cap that are suffering this rigidity...that they cannot even go to their voters and ask for additional money on an override... On the other hand, with the larger areas where the rates are down just by nature of growth, there's only so far they can grow because you do have the 106 percent cap. Remember this...there is a little more of a hit beyond the 106 percent due to inflation... It is a serious policy decision that has to be made... It is time to revisit the issue... A general discussion ensued among the committee members and the witness, Ms. Vilardo. They discussed various mechanisms which would meet the needs of the counties, cities, and taxpayers. Indeed, Assemblyman Marvel refreshed the committee's memories in declaring that he has been working on this issue since the late 1970s and Assemblyman Neighbors was also present "when that balancing act" started. The assemblymen related how they tried to address the "cap limitations" and the needs of their constituents, the taxpayers. Marvin Leavitt, Lobbyist, City of Las Vegas, joined this group discussion referring also to the situations which resulted in the need for greater tax flexibility. Mr. Leavitt looked back in time to 1979 and brought them forward to the present. Senator Rhoads asked Mr. Leavitt what the options were for the county governments if the legislature did not do anything. He wanted to know what their choices would be. Mr. Leavitt said, "There aren't too many choices on the rural counties as far as the property tax... We can do the buy down procedure that we talked about... But I have some problems with that..." The discussion continued among the committee members and Mr. Leavitt. Chairman Lowden then asked if there was anyone else who wanted to speak for or against this bill or any of the others on the agenda. Lucille Lusk, Lobbyist, Nevada Concerned Citizens, said, "We strongly oppose S.B. 320 from a citizen's point of view..." Ms. Lusk commented on some earlier studies that show direct and indirect taxes have exceeded more than 50 percent of the individual taxpayer bills. She elaborated on how this bill in particular would affect the taxpayers who are living on a fixed income. Senator Rhoads and other members of the committee asked Ms. Lusk for more ideas that could become solutions to the problems for the rural counties especially. Ms. Lusk clarified her earlier testimony. More suggestions were made by Senator Lowden and Assemblyman Price with regard to amending this bill to be more of a help to the taxpayers. Ms. Lusk finished her testimony by stating that some of the problems with taxes "is that the government does not have to earn its money; it just takes it from us." Janine Hansen, Lobbyist, Nevada Eagle Forum, said they were concerned with the increased burden on taxpayers if this bill were to pass and become law. Further she expressed the situations whereby the government is taking on more and more of the responsibilities of the counties and cities. This in turn leads to greater needs for paying via higher tax rates. She then referred to an article that was handed out to the committees entitled, "Where New York Went Wrong" (Exhibit D). Finally, she impressed upon the committee that whenever taxes had been raised in the past they have never been returned to their former rate. The committee members responded to Ms. Hansen's testimony with various comments and suggestions. Chairman Lowden closed the hearing on S.B. 320. SENATOR AUGUSTINE MOVED TO INDEFINITELY POSTPONE S.B. 350, S.B. 351, AND S.B. 487. SENATOR O'CONNELL SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Lowden said the dialogue will continue on S.B. 320 with its proposal of raising the cap on taxes to $4.00. She then adjourned the meeting at 4:10 p.m. RESPECTFULLY SUBMITTED: Kathy Cole, Committee Secretary APPROVED BY: _____________________________ Senator Sue Lowden, Chairman DATE: ________________________________ Assemblyman Bob Price, Chairman DATE: ___________________________ _________________________________________ Assemblywoman Jeannine Stroth, Chairman DATE: _________________________________ Senate Committee on Taxation Assembly Committee on Taxation May 23, 1995 Page