MINUTES OF THE meeting
of the
ASSEMBLY Committee on Constitutional Amendments
Seventy-Second Session
April 18, 2003
The Committee on Constitutional Amendmentswas called to order at 2:07 p.m., on Friday, April 18, 2003. Chairman Harry Mortenson presided in Room 3161 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
Note: These minutes are compiled in the modified verbatim style. Bracketed material indicates language used to clarify and further describe testimony. Actions of the Committee are presented in the traditional legislative style.
COMMITTEE MEMBERS PRESENT:
Mr. Harry Mortenson, Chairman
Mr. Bob McCleary, Vice Chairman
Mr. Don Gustavson
Mr. William Horne
Mr. Rod Sherer
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Ms. Chris Giunchigliani, Assemblywoman, District No. 9
STAFF MEMBERS PRESENT:
Michelle Van Geel, Committee Policy Analyst
Sheila Sease, Committee Secretary
OTHERS PRESENT:
David Schumann, Independent American Party
Lucille Lusk, Nevada Concerned Citizens
Brian Krolicki, Nevada State Treasurer
Roger Volker, Chairperson, Board of Trustees, Nevada Trust Fund for Public Health
Kendall Stagg, Executive Director, Nevada Tobacco Prevention Coalition
Chairman Mortenson:
The Assembly Committee on Constitutional Amendments shall come to order. Good morning, everybody. Madam secretary, please call the roll. [Roll was called.] A quorum is present. Anyone with cell phones, please turn them off. Remember, when speaking into a microphone, you are live, and you will be broadcasting anything you have to say. Understand that anything you say before the Committee must be truthful, or there are penalties involved. If you haven’t signed up to speak but want to, the sign-up sheet is still there. I’m going to reverse the order of the bills being heard. I’m going to take the ones that I anticipate are the shortest first.
I’ll open the hearing on A.J.R. 12.
Assembly Joint Resolution 12: Proposes to amend Nevada Constitution to provide for staggered elections of District Judges. (BDR C-212)
Is there anyone to speak on A.J.R. 12? I don’t have anyone on the sign-in sheet. In that case, Ms. Van Geel will give a brief introduction to A.J.R. 12.
Michelle Van Geel, Committee Policy Analyst:
A.J.R. 12 was introduced by this Committee. It would simply allow the Legislature to provide for staggered terms of district judges, starting with the November 1, 2008, election. It would stagger the terms. The first few would be just two-year terms, until it was staggered. Then, at the six-year elections, they would be staggered in being elected.
Chairman Mortenson:
Does anyone wish to testify on A.J.R. 12? Are there any comments from the Committee on A.J.R. 12?
Assemblyman Horne:
I have heard testimony in the Judiciary Committee about the need to stagger these elections. Having all your judges up for election at the same time can be problematic. You actually have a “brain drain.” This resolution would mitigate some of that. I think it is a good bill.
Chairman Mortenson:
I agree. Any further comment? The one thing I was thinking is that the way this is worded puts a date in the Nevada State Constitution of November 1, 2008. This could be worded, I am told, so that it just essentially says that judges, as nearly as possible, will be elected every two years. I’m just wondering if we should be date-specific or just be generic in this matter.
Assemblywoman Giunchigliani, District No. 9:
[Introduced herself.] A.J.R. 12 was an attempt to get at staggering the times that district court judges run for office. Several years ago, I had actually worked out a piece of legislation that would have recreated and redone the entire system for a constitutional amendment. One complaint I’ve heard from voters was that they wondered why every single judge was up at the same time. The intent, six years ago, was to try to get an actual staggering going. The district court judges or the Supreme Court judges were a little bit concerned because they felt it would impact their retirement. This time around, I drafted it differently. For new district court judges, the bill requested future legislatures to begin a staggering of terms so that we have some individuals who are not up every single time. That’s really the intent. Regarding the 2008 date, I don’t know exactly why that particular date is included. I don’t know if that was a drafting issue, or if that was a way to kick-start the staggering without anyone being affected currently. We may need to get a ruling on that from the Legal Division.
Chairman Mortenson:
The law is great in that there should be staggered terms, in my opinion. I was just worried about the specific date in the Nevada State Constitution. It’s just a particular penchant of mine. What if we just said the Legislature shall provide for staggered terms of judges and leave out the date. I’m not really strong on that.
Michelle Van Geel:
I just wanted to let the Committee and Ms. Giunchigliani know that I did speak with Brenda Erdoes about this. She said that we could take that date reference out. The Nevada State Constitution could just provide for the staggering, but then, have the Legislature provide in the law, in the regular statutes, a specific date.
Assemblywoman Giunchigliani:
That would be fine with me. I think it would be cleaner, actually, for the Constitution of the State of Nevada not to have a date noticed in there. I think the intent was to let the Legislature set the terms thereafter. If it’s the will of the Committee, that’s fine with me. I think it would be cleaner.
Chairman Mortenson:
So then we have a situation where we may wish to amend this bill to remove the date and just let the Legislature provide for staggered terms. Do I hear a motion?
ASSEMBLYMAN HORNE MOVED TO AMEND AND DO PASS A.J.R. 12.
Assemblyman Gustavson seconded the motion.
It’s been moved to amend to remove the date, if that is feasible and accomplishes the purpose.
The motion CARRIED unanimously.
Chairman Mortenson:
We will close the hearing on A.J.R. 12. We will now open the hearing on A.J.R. 9.
Assembly Joint Resolution 9: Proposes to amend Nevada Constitution to require each board of county commissioners to determine salaries of certain county officers in its respective county. (BDR C-1301)
David Schumann, Independent American Party:
[Introduced himself.] I’m here on behalf of the Independent American Party to testify in support of the bill. It is an elegant and simple way to solve the problems, which many people saw in A.B. 23 and S.B. 23. Even the local paper had an editorial on this, “Solve the Counties’ Salary Problems Soon.” They did a little poll, and they found out that everybody they talked to was in favor of getting a 50 percent raise, but very few of the people they talked to were in favor of paying for it. They added here that it has been eight years, and so there has to be a bigger raise, but this whole thing is very clumsy. Their solution wasn’t as elegant as this, to simply turn it back to the commissioners, which results in transparency and accountability, which are two golden targets of government and always should be. Their solution was a mixture of state and county. So this A.J.R. 9 is a very elegant, simple, rational solution to the problem that the current Nevada State Constitution contains that might have been appropriate in 1864 with the variety of sizes of counties. Please pass this bill.
Chairman Mortenson:
Mr. Schumann, we heard a lot of testimony on a previous bill that dealt with compensation of county officers. There was a lot of opposition to allowing the county commissioners to set the salaries of the sheriffs, the clerks, and so on. These elected offices have some oversight. I remember some testimony in a previous session of the Government Affairs Committee where the clerk gave testimony of how many times he had to chastise the commissioners because they wanted to change the record to remove things they had said. There is some oversight that these officers have on the county commission. We have a situation in county government where there is so little oversight; there is so much power in one group. I would hate to see the commissioners set the salaries of district attorneys, for example, who overlook what the commissioners do.
David Schumann:
I believe that when you do it this way, through the state, you are always going to be referring to some kind of a civil service manual and a commission, which goes out and surveys equivalent jobs in the public and private sector. In my mind, there is no equivalent job in the private sector to sheriff. In listening to testimony on A.B. 23 and S.B. 23, that is so murky, and it’s a mysterious way to come about this. On the other hand, the county commissioners are under the microscope of the voters. I think that, if they start to do some hanky-panky with this sort of a thing, or if the sheriff starts to try to work his will on these people, the voters would be quick to respond.
There is such a difference between a major city like Las Vegas and a town like Pioche. To set these salaries by some kind of textbook thing, as was done with these raises, where the lowest raise was 37 percent, is out of order. It could well be that for years in a row in some of these counties, no raise is due, because life has gotten simpler. I believe that the people who are in those counties are better judges of what these folks should be paid than you could possibly be, sitting here in Carson City, coming from all the counties you come from. It puts the spotlight back where it belongs. The spotlight is on the county voters, who are paying these salaries. If there’s some hanky-panky there, it’s up to the local media and the local stirrer of things to reveal that to people and “raise a little Cain.” There doesn’t seem to be a shortage of them.
I think the process will work itself out on the local level, not because you guys aren’t great, but you’re just removed from these areas. They can make wiser decisions. It just seems natural to me.
Lucille Lusk, Nevada Concerned Citizens:
We have concerns with A.J.R. 9, and, indeed, find it not to be a proposal we can support. I do want to say that the more we listen and the more we learn, the more we realize that something must be done to address the neglected question of salaries for the elected officers, both county and state, and for the Legislature itself, for whom you are responsible. We feel that the 8-year lapse for county officers and the 18-year lapse for legislators have created an almost untenable situation for you to deal with. Although it somehow must be dealt with, we feel A.J.R. 9 is not the way to do it. The reason these county officers are elected is to provide a measure of independence from the county commission, as you previously articulated, Mr. Chairman, so that they can be responsible directly to the people and have the oversight that they’re elected to have.
We, at NCC [Nevada Concerned Citizens], feel that we’ve objected to several of the proposals to address this issue that the Legislature has come up with. We think it’s probably time that we made a positive proposal that we think would have a chance of working in the long term. [Ms. Lusk referred to her handout, Exhibit C.] To some degree, it’s a combination of various things that have been proposed by various legislators. We recommend that you consider a constitutional amendment. You do have two or three resolutions that you could use as a vehicle should you decide to take an approach of this nature.
[Ms. Lusk continues.]
The bottom part of the handout is unrelated to the constitutional amendment and simply contains some suggestions of how to catch up for the years in which there have been no salary increases for the county and state officers. You’re going to see this in various bills in various ways, so these are just thoughts, and not directly connected to the constitutional amendment proposal.
[Ms. Lusk continues by listing the suggestions at the bottom of Exhibit C.]
Chairman Mortenson:
Is there anyone else who wishes to testify on this bill? Does the Committee wish to discuss anything on this bill? We will close the hearing on A.J.R. 9. We will open the hearing on A.J.R. 10.
Assembly Joint Resolution 10: Proposes to amend Nevada Constitution to provide requirements for use of proceeds from certain settlement agreements and civil litigation between State of Nevada and manufacturers of tobacco products and to provide for sale of right to receive those proceeds. (BDR C-300)
Brian Krolicki, Nevada State Treasurer:
[Introduced himself.] I know I stand between you and a very short Easter weekend, so, while we may look daunting in volume, I promise we will keep it short. I’ve gone from prepared remarks to being much more looking forward to answering any questions you may have. If I can, I would just like to give the Committee a brief oversight of where we are, what’s in front of us, and why.
I do not approach tinkering with a state constitution lightly. This is a tremendously important concept. I promise you, if it weren’t for many things that have occurred, both in Nevada and outside of Nevada, I wouldn’t be in front of you today. If I may, I’ll give a little background to set the stage.
[Mr. Krolicki continues.] As many of you already know, Nevada was one of 46 states that entered into a Master Settlement Agreement with four tobacco companies in 1998. Those states, accumulatively, settled for about $206 billion over the next 25 years. Four states negotiated separate agreements. All together, there’s about a quarter of a trillion dollars pledged by these four tobacco companies to the various states for purposes that each state determines for itself. Nevada’s portion of the settlement monies is approximately $1.2 billion, again spread out over the next 25 years approximately. Hopefully, all that money comes. I won’t digress and give a conversation about the Philip Morris situation earlier this week. These monies are subject to many gyrations, bankruptcies, litigation, and volume of smoking domestically.
This is what we’ve got in front of us. Nevada made some very wise choices, I believe, in both the Legislature and by Governor Guinn. As you know this money is used proportionally: 40 percent funds the Millennium Scholarship; 10 percent funds the Trust Fund for Public Health, which can only use interest earnings from their funds to actually pay for programs; 50 percent is dedicated to the Trust Fund for a Healthy Nevada. That money is essentially consumed, in its entirety, annually, and it does things like the Senior Rx Program funding, and, very importantly to many people in the room, as well as to myself, it funds smoking cessation programs here in Nevada. The more people we get to quit smoking, the better we all are. At the same time, the fewer smokers we have, the less money we receive; but we’ll reserve that for another conversation later.
I don’t come before you lightly to amend the Nevada State Constitution, but, because of the programs that are inherently parts of these monies, and because of the monies being so large, a billion dollars plus, that is why I’m in front of you today. One of the more compelling things that has happened around the country to make this request even more profound, I think, is how some states have utilized their settlement monies recently. As you know, Nevada is no different. It’s more fun being State Treasurer when there’s a lot of money than when times are lean. This is the worst fiscal environment that states have faced in over half a century.
Some states, I believe very tragically, have determined to use these long-term resources, essentially present value those payments over time, into an amount of money today and have used that 20-year value to balance budgets in the next few months. That is just a tragic appropriation for these monies. That is how I come in front of you, because of the 17 states that have chosen to take all of this money up front, with 6 of them that have already used much of their monies to balance budgets. There are several transactions, because of the recent Philip Morris events and others, such as in California, New York, Missouri, and Oregon, that would likely be balancing their budgets if they could actually access the market.
[Mr. Krolicki continues.] “Securitization” is the word we use to take the value of these monies over time in today’s dollars. This amendment protects monies, either under a securitization scenario, or just as we receive payments under the Master Settlement Agreement.
There are folks in the room today representing different groups. We know we are on a streamlined agenda, Mr. Chairman. We appreciate that. They may come up and introduce themselves, but they promised to keep it short. If I may, I would just like to mention some of the people in the room. The first is one of the great legal minds in our state from the private sector, Mr. John Swenseid, Roger Volker, who is the chairman of the Trust Fund for Public Health that I mentioned earlier, and we have Elisa Maser and Kendall Stagg from the Nevada Tobacco Prevention Coalition, which has a letter that we’ll introduce to you [Exhibit D], along with the letter from the Trust Fund for Public Health Committee, which is chaired by Senator Rawson [Exhibit E]. They are very interested in this topic, as well. Not to digress into the securitization, but one of the things that they felt was important, if we were to proceed with that procedure, was that this constitutional amendment be passed.
What I’m trying to convey is that there are many groups who utilize these resources in very important and precious ways. They hope monies will be kept for things like the smoking cessation programs, Senior Rx Program, and the Millennium Scholarship Program. Although it has not been discussed during this legislative session, using the funds immediately could come up during the next session or during several sessions down the road. We just want to make sure that these monies that are essentially in perpetuity are not misused to satisfy short-term needs.
Mr. Chairman, I’m delighted to go through the highlights of A.J.R 10 itself, but I’ll let you give me that direction. With that I’m happy to answer any questions.
Chairman Mortenson:
Yes, go through the highlights. I think that would be instructive.
Brian Krolicki:
On the first page of A.J.R. 10, lines 4-12, it talks about using the 40 percent. We don’t say Millennium Scholarship in here, but that’s essentially what it does. It’s protecting the percentage of the monies for scholarships or potentially loans, if someday we want to convert a Millennium Scholarship Program into a student loan program. It’s a broad brush. It just makes sure that we allocate those monies for those purposes.
[Mr. Krolicki continues.] On page 2, line 1, the balance of the proceeds, which in our case is 60 percent, must be essentially used for obtaining and maintaining good health in Nevada. If you go down, some of it’s very clear. The section that I would point out is Section 3(c). If we were to securitize, Nevada’s portion of the $1.2 billion over 25 years, and “present valued” that today, what would be the value today? If you won the lotto and said, “Pay me now instead of over 25 years,” two years ago that would have been about $450 million. Today it’s about $350,000. People are smoking less and the market is somewhat spooked. I regret that we weren’t able to securitize that two years ago, because, at this point, the market left $100 million on the table. But if we were to proceed with securitization, these three trust funds on the percentages, as indicated, would have this $350 million broken into their different funds. As you know, this money is for a very long time.
As a fiduciary of state money, and we all have our personal money, you know that a balanced portfolio is one of the most important things you can have, especially over decades of time. That section essentially allows us to avoid a Supreme Court visit by saying that these monies are eligible to be invested in a balanced portfolio, which would include equities, in the stock market. It would be fixed income in the equity market, just like PERS [Public Employees’ Retirement System] is fixed today. Since these aren’t General Fund monies, so to speak, I can’t do this with a general portfolio. But, if it were separate monies, PERS would be my example. You could have a broad portfolio, because this money is for decades of time. That goes directly to the people to get that blessing.
Section 4 says that if we were to securitize. . . I know this is not the time to get into that. We have a separate piece of legislation that will be discussed a lot, I believe, over on this side. I hope it’s about to pass the Senate in the next few days—these piles of cash flow… The important thing to note is on line 27. “Not more than 15 percent of the net amount received from a securitization may be expended in one fiscal year.” That’s terribly important, especially for the folks in the room and the folks who would benefit from these monies. By using money for education and obtaining and maintaining good health, there could be an argument that K-12 education or other things we do, could legally qualify for this money. If we didn’t put a speed limit, if you will, of 15 percent, you may well use most of this money. Or, a future governor could propose using this money to help balance the budget. By putting the 15 percent there, it is essentially a poison pill, to put in corporate finance terms, where it wouldn’t be big enough to solve the problem. The idea would be that these monies would be preserved for smoking cessation, scholarship programs, or Senior Rx, and things like that.
Assemblyman Horne:
I like the intent, but I’ve got some problems. Particularly, first and foremost, is the investment of money. First, let’s take it in a lump sum. You used the example of the lotto. It seems that currently now, we have, loosely said, “a guarantee” of money over the next 25 years. I know we have less tobacco use in our country, but from things I’ve read, where we decreased it here, tobacco companies have actually increased their sales overseas, particularly in the Asian market. The idea that these four companies that we’re drawing funds from now will go bankrupt is an idea that I haven’t bought into yet.
My question would be that, if we got this money that’s coming in now and take a lump sum, we would have a finite amount. Don’t we risk losing that? If you’ve ever raised dogs, particularly big dogs, they’ll eat what’s in front of them, regardless of how large the portion is, until they make themselves sick. We could very well do that here in a number of different scenarios. If we had gotten this money two years ago, arguably from the market in the last two years, we would have lost that 30 percent on monies we use from this on reinvestment. That seems risky to me.
Brian Krolicki:
I love your questions. They’re terribly important. If we had been sitting down, we would have digressed into those. You’re absolutely right in some of your points, but there are a couple of things I need to point out.
The first is that the Master Settlement Agreement—this is technical, so it’s not something I expect people to know—monies are predicated solely on domestic tobacco consumption. So, while a Philip Morris or an RJR or a Lorillard are getting lots of Chinese or Indians smoking, that has nothing to do with the amount of monies that we would be receiving under the MSA [Master Settlement Agreement]. In the last two years, the domestic market, as you indicated, has declined. In fact, from two years ago, the projections for this year and the next three, on average, are close to 8 percent reduction in smoking. Again, I say, “Hooray! That’s great.”
But, at the same time, it is a critical funding source, and not only under the Master Settlement Agreement. But remember that we get almost $50 million a year in tobacco excise tax currently. Pick your proposal, but we are looking at either doubling or tripling the tobacco tax. I’d say we are looking at possibly up to $200 million a year that Nevada would be relying on from tobacco revenues. This is, in some ways, a way to diversify that risk. Being State Treasurer, if you gave me a billion dollars to manage, and I put a billion dollars in four tobacco companies, you would probably run me out of office real fast. Tobacco is the most litigious industry in the world and one that is subject to so many changes.
[Mr. Krolicki continues.] In just one decision in Madison County, Illinois, two weeks ago, they awarded $10 billion against Philip Morris, and they asked for a $12 billion bond to appeal. It was a bankruptcy event. These monies would have been gone. I look at the risk. Would I rather rely, in perpetuity, or at least over the next 25 years, on four tobacco companies making these payments within the environment in which they operate, or on a broad-based portfolio, fixed income, all the different instruments, and the S&P 500. I know the market is not without its risk, but I would take that broad risk every day as opposed to four stocks, which is essentially what you’re looking at.
Assemblyman Horne:
Even in the domestic market, aren’t there bonds set up with some protection? I’m no financier or accountant. Philip Morris, while we think of cigarettes, is a huge conglomerate that includes food products and the like. If they say their cigarette companies have gone bankrupt, they are still earning revenues from all kinds of other products that they sell in our country. I would think that they would use some of those funds towards the bonds to protect this money that we have been awarded in these settlements.
Brian Krolicki:
The way corporate America structures itself, from a liability standpoint, the Master Settlement Agreement is set up with the tobacco entity. If you look, the mother ship of Philip Morris is Altria. They have their risks separated. If I buy lots of Kraft cheese, that doesn’t mean anything for that individual corporate component that’s liable for these payments. I’d like to say that all of their different entities divvy up and ante up, if the time comes, but that, to my understanding, is not the case.
Assemblyman Horne:
But, on the bond issue, are there not bonds that are present?
Brian Krolicki:
There are bonds now. As I mentioned, about 16 states have securitized these payments going forward. We would have been one of the first. Now we’re kind of on the back curve. Almost $20 billion of tobacco bonds exist today. Some local jurisdictions, and some counties in New York, have also securitized, but almost $20 billion is in the market. It depends on the structure, but in the Nevada approach, as Lucille Lusk and I have discussed establishing a not-for-profit corporation, Nevada would dedicate its future payments under the Master Settlement Agreement to this separate not-for-profit corporation. We would get that, and, by dedicating that right and that stream of money, we would get those proceeds up front.
[Mr. Krolicki continues.] Very clearly, in law and bond lawyering, all the liability and risk would be shifted to that company. The bonds would only be paid off if those payments were sufficient from the tobacco companies to service that debt. In case the bonds were not paid off, or if the funds were insufficient to make full payment, the state of Nevada would absolutely have no moral or lawful obligation of any kind. That’s why I think it’s important that we look at the hypocrisy all of you face every day. We fund smoking cessation programs, and the more successful we are, the less money we get. That is not tenable. That’s crazy. To be able, at least partially, to separate and be happy that people smoke less domestically and not associate it with revenues coming in, I think would be a marvelous thing for all of us to enjoy. That’s my point.
Assemblyman McCleary:
Mr. Krolicki, I’m just curious. What is the tobacco companies’ spin on this? What is their position?
Brian Krolicki:
As you know, many of their representatives wander the hallways of this building. They’re neutral. I don’t think they care. I think they understand the reasons we would be doing it. They know that, as a public policy, we do many things to harm their industry, but, at the same time, we don’t want to harm it enough that we would lose out on that revenue source. They make their payments regardless. So whether we securitize it or not, their obligations are still the same. Whether they’re paying “the second mother lode,” referring to this windfall I teasingly call the Comstock Tobacco Company, with all the liability associated with paying bond holders, or giving it directly to the state of Nevada, I don’t think they have an opinion. In fact, those that I’ve talked to don’t have an opinion about it.
Assemblyman McCleary:
Mr. Krolicki, if I may continue. You don’t think it’s in their interest to go ahead and settle with you now and not have this long-term obligation on their shoulders?
Brian Krolicki:
They still have that same obligation. We’ve just transferred the risk to the market, as opposed to us. I don’t want to patronize anyone. We all are sophisticated people. The conversation is that there is some cost related to doing a securitization. This is regardless of securitization. Under the securitization scenario, $1.2 billion over 25 years is largely the same as $350 million to $400 million today. I can show you cash flows as to where we take this money, and we would have excess money to fund all our current obligations under the current structure. We would have enough money to grow and to earn, assuming we were in the market at some point in time. Twenty-five years from now, if you looked at the amount of cash that was realized by securitizing and having it in a portfolio over 25 years versus receiving cash for 25 years, it’s about the same. Again, if you take the lotto example, I could be a billionaire over 25 years or I can take that lump sum. It’s the same thing. It’s equal. It’s just how you chose to get the value up front.
Assemblyman Gustavson:
Mr. Krolicki, one question I have is on the issue of putting this into the Nevada State Constitution—in subsection 4, anyway. This is going to take five years before it becomes law. In the meantime, what do we do? Couldn’t we just do this by statute, instead? If we were to set this policy, shouldn’t we do it by statute or should we wait five years and do it by the Constitution of the State of Nevada? I realize the Nevada Constitution sets it in stone until we had to change it again.
Brian Krolicki:
We are attempting to do this by law. S.B 448 should be arriving and should be a great source of conversation. This just makes it clear that, from a constitutional application, these monies, if you decide to protect them by a constitutional amendment, could still be used to proceed with securitization. This doesn’t create securitization; it just protects the opportunity. S.B. 448 is coming, and that’s where we can have that debate.
Chairman Mortenson:
I have the same concerns that Mr. Gustavson has. Except for the one provision in here that “the funds may be invested in a company, association, or corporation that is not formed for education or charitable purposes,” that is the only provision in here that could not be established by law. I feel very strongly that the Constitution of the State of Nevada should be a broad document and not have nitty-gritty numbers in it that concern a particular process that’s very short in temporal time. This is a document that should go through the ages without complication. That may not be the feeling of the Committee.
Brian Krolicki:
This money isn’t for the next few decades. It is in perpetuity. We just keep looking at it in 25-year increments. So 10 years from now, there will still be a Master Settlement Agreement and a projection of monies for the next 25 years, so it’s 35 years, it’s 70 years, it’s 100 years. As long as these companies are ongoing concerns, the Master Settlement Agreement is a document that is very important to us. Again, that is why I don’t come lightly to this Committee. It’s a billion dollars over the next 25 years, but it’s $4 billion, in theory, over the next 100 years. I think that is why I was compelled to feel this was meritorious enough to bring in to a constitutional discussion.
Chairman Mortenson:
Generally, I like to alternate pros and cons in testimony. Is there anyone here that opposes this provision? If not, we’ll hear the next bit of testimony.
Roger Volker, Chairperson, Board of Trustees, Nevada Trust Fund for Public Health:
[Introduced himself.] We’ve distributed a letter [Exhibit E] to you as part of the package today. While that letter does not directly address A.J.R 10, it does address, in concept, what we’re here talking about today in terms of a constitutional amendment. As the Treasurer said, our Board is charged with the responsibility for distributing some of the funds that are earned by interest on a portion of the Tobacco Settlement Agreement. We do so to programs across this state to build the public health infrastructure of Nevada. Last week, our committee reviewed applications for over $1 million in program funds that would strengthen public health. We had to distribute approximately one-third of that amount. These funds are extraordinarily precious, very limited, and put to great use across the state in your districts, and everyone else’s communities, by agencies that provide the basis of health care and disease reduction in Nevada.
My point is that our board is on record as saying that we would support securitization. We didn’t tie it, necessarily, to a constitutional amendment, but we said, in the letter that is in front of you, that it would be very important that, if we were going to secure these funds, it be in the best interest of Nevada. There would not be the ability for someone to take those funds for purposes other than they are now being appropriated. If we were to lose the little bit of money that we have from the Trust Fund right now, the crisis that we think we have in public health would get extremely worse. If there’s a measure, and it needs to be constitutional measure, that is going to protect the citizens of our state and allow them to have access to this funding for a long time, then we ask you to perhaps consider this might be one of the methods to do so.
Kendall Stagg, Executive Director, Nevada Tobacco Prevention Coalition:
[Introduced himself.] Let me just say, “And me, too.” The Nevada Tobacco Prevention Coalition is a coalition of more than 45 member organizations, including the American Cancer Society, American Heart Association, American Lung Association, and the list goes on and on. I just wanted to come up here to let you know that we are all in support of the constitutional amendment.
[Mr. Stagg continues.] I would like to address some of the concerns that Committee members had. There are, I will tell you, members of our coalition that are skeptical and are not yet 100 percent on board with securitization. I’d like to say that this proposal deserves to be heard on its merits, absent of securitization. This is not a securitization measure. This is a measure to protect the Master Settlement dollars, regardless of whether or not they are securitized. This constitutional amendment will protect those dollars in perpetuity, even if the state of Nevada chooses not to engage in securitization of the Master Settlement dollars.
There are member organizations that we have with us that might not be 100 percent on board yet with the Treasurer’s proposal for securitization, but are strongly behind this constitutional amendment, and I hope you will be as well. We also want to point out that what the Treasurer said is correct. Master Settlement dollars are in perpetuity, and, therefore, we believe that they warrant a constitutional amendment to discuss how we will deal with those dollars. We would like to see a constitutional lockbox where those dollars are secured for time and all eternity, not a statute that can be overturned with just a vote in one session.
Chairman Mortenson:
Are there any questions for Mr. Stagg? Thank you for your testimony. [He called on Elisa Maser from the audience, and she stated, “Me, too.”]
Committee, do you have any words on this? Is there any discussion you want to make on this? If not, we can do that in a future work session. I would like to remind members that we will have a work session on A.J.R. 7 and A.J.R. 13 at the next session, which would be next Friday.
Brian Krolicki:
Mr. Chairman, just a point of clarification. Does Tuesday’s deadline for “house of origin passage” apply to this?
Chairman Mortenson:
It does not.
Is there any further business to come before this Committee? If not, we are adjourned. [The meeting adjourned at 3:03 p.m.]
RESPECTFULLY SUBMITTED:
Sheila Sease
Committee Secretary
APPROVED BY:
Assemblyman Harry Mortenson, Chairman
DATE: