MINUTES OF THE SENATE COMMITTEE ON TAXATION Sixty-eighth Session June 22, 1995 The Senate Committee on Taxation was called to order by Chairman Sue Lowden, at 2:30 p.m., on Thursday, June 22, 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: Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division Kathy E. Cole, Committee Secretary OTHERS PRESENT: Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association Peter Krueger, Lobbyist, Nevada Petroleum Marketers Association Ray Sparks, Acting Deputy Director, Department of Motor Vehicles and Public Safety Mary Henderson, Lobbyist, Washoe County Michael A. Pitlock, Executive Director, Department of Taxation Henry Etchemendy, Lobbyist, Nevada Association of School Boards Chairman Lowden opened the hearing on Assembly Bill (A.B.) 415. ASSEMBLY BILL 415: Revises provisions relating to imposition and collection of tax on special fuel. (BDR 32-368) Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division, addressed this bill by stating where the bill came from and how it was developed through the interim committee on highways. Further, Mr. Zuend explained what the purpose of the bill was. Accordingly, he said it was to move the point of collection of special fuel tax from the retail level to the "rack level" which is the first delivery point within the state. Mr. Zuend continued to testify that there had been considerable testimony during the interim study both from the local people involved as well as the federal entities. The feeling seemed to be that if they would move to the rack level in order to collect taxes then they could cut down on the fraud and it was believed by most authorities that this action would bring in a minimum of $4 million to the state. The committee then asked for more clarification on how it would effect the wholesaler and further discussion revolved around the point of collection. Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, joined this discussion by stating: I believe that there are two distinct positions. . . How [do] you stop some of the evasion [of paying taxes]... In moving this back [the collection point], back to the rack, they are hoping to stop some of this evasion... The second bone of contention...is that split which [would be] arbitrarily made... [That is,] 1 percent would go to the wholesalers and those who would be at the terminal rack level... The committee tried to gain further insights into the problems and possible benefits of moving the collection points from the wholesaler to the rack. At the request of the committee Peter Krueger, Lobbyist, Nevada Petroleum Marketers Association, was asked to draw a diagram of how this complicated bill would work through the point of collection to the wholesaler and consumer. Ms. Vilardo also gave a handout that showed this process (Exhibit C). Another witness stepped into the discussion, Ray Sparks, Acting Deputy Director, Department of Motor Vehicles and Public Safety, relating the differences between the dealer, the wholesaler, the retailer, and so forth. The committee continued to ask questions of these witnesses. SENATOR O'CONNELL MADE THE MOTION TO AMEND AND DO PASS A.B. 415. SENATOR LOWDEN SECONDED THE MOTION. THE MOTION FAILED. (SENATORS ADLER, TOWNSEND, AUGUSTINE AND RHOADS VOTED NO.) ***** SENATOR AUGUSTINE MADE THE MOTION TO DO PASS A.B. 415. SENATOR ADLER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Lowden opened the hearing on Senate Bill (S.B.) 452. SENATE BILL 452: Authorizes local government to acquire property held in trust for use as open space without paying delinquent taxes. (BDR 32-758) Mary Henderson, Lobbyist, Washoe County, said that this bill had been before the committee before. She went on to explain how this bill would clean up delinquent taxes on properties held in trust. Senator Regan asked, "What are the cost savings in just the administrative fees of paying yourselves and bookkeeping?" Ms. Henderson said that they had not put a cost figure on it. SENATOR REGAN MADE A MOTION TO DO PASS S.B. 452. SENATOR TOWNSEND SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Lowden opened the hearing on Assembly Bill (A.B.) 414. ASSEMBLY BILL 414: Requires school district to take certain actions to reduce combined tax rate of another local government under certain circumstances. (BDR 32-947) Michael A. Pitlock, Executive Director, Department of Taxation, spoke in favor of this bill as it would be in place for situations such as the White Pine County School District which is in financial straits. He went on to explain that this bill would be "a general policy to make sure that in the future if it is a debt issuance from a school district that requires the other entities to go up in rate, then the school district would be required to participate in the buy out." SENATOR TOWNSEND MADE A MOTION TO DO PASS A.B. 414. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Lowden opened the hearing on Assembly Bill (A.B.) 698. ASSEMBLY BILL 698: Revises provisions governing disposition of commission for collecting vehicle privilege tax. (BDR 43-2119) Mr. Sparks explained what this bill would do for the Department of Motor Vehicles and Public Safety. It would allow the commission to put the funds they collect from vehicle privilege taxes to be put directly into the department's budget account rather than into the Highway Fund. SENATOR REGAN MADE A MOTION TO DO PASS A.B. 698. SENATOR TOWNSEND SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Lowden adjourned the meeting at 3:50 p.m. RESPECTFULLY SUBMITTED: Kathy Cole, Committee Secretary APPROVED BY: Senator Sue Lowden, Chairman DATE: Senate Committee on Taxation June 22, 1995 Page