MINUTES OF THE meeting

of the

ASSEMBLY Committee on Transportation

 

Seventy-Second Session

April 8, 2003

 

 

The Committee on Transportationwas called to order at 1:14 p.m., on Tuesday, April 8, 2003.  Chairwoman Vonne Chowning presided in Room 3143 of the Legislative Building, Carson City, Nevada, and via simultaneous videoconference, in Room 4406 of the Grant Sawyer State Office Building, Las Vegas, 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:

 

Mrs. Vonne Chowning, Chairwoman

Ms. Genie Ohrenschall, Vice Chairwoman

Mr. Kelvin Atkinson

Mr. John C. Carpenter

Mr. Jerry D. Claborn

Mr. Tom Collins

Mr. Pete Goicoechea

Mr. Don Gustavson

Mr. Ron Knecht

Mr. Mark Manendo

Mr. John Oceguera

Mr. Rod Sherer

 

COMMITTEE MEMBERS ABSENT:

 

None

 

GUEST LEGISLATORS PRESENT:

 

Ms. Barbara Buckley, Assemblywoman, District No. 8

 

STAFF MEMBERS PRESENT:

 

Brenda Erdoes, Legislative Counsel, Legislative Counsel Bureau

Marji Paslov Thomas, Committee Policy Analyst

Nancy Elder, Recording Secretary

 

OTHERS PRESENT:

           

Bob St. Louis, Personnel Manager, Lang Exploratory Drilling, Elko, Nevada

Russ Fields, President, Nevada Mining Association

Bill Wahl, Manager and Owner, IMV Nevada

Jonathan Brown, Director of Environmental and Regulatory Affairs, Nevada Mining Association

Russ Benzler, Administrator, Compliance and Enforcement Division, Department of Motor Vehicles

Daryl Capurro, Managing Director, Nevada Motor Transport Association

Anthony Bandiero, Representing the Nevada Petroleum Marketers and Convenience Store Association

Ginny Lewis, Director, Department of Motor Vehicles

Kathy Augustine, State Controller

Colonel David S. Hosmer, Nevada Highway Patrol

Sergeant Carl Johnson, Nevada Highway Patrol

Mark Sullivan, Associated General Contractors, Nevada Chapter

Bill Gregory, Representing Enterprise Rent-a-Car

Keith Duffy, Loss Control Manager, Enterprise Rent-a-Car

Jim Werbeckes, Representing Farmer’s Insurance

Lisa Foster, Representing the American Automobile Association, Nevada

Stephanie Licht, Representing Elko County

Bob Hadfield, Executive Director, Nevada Association of Counties

Shaun D. Carey, City Manager, City of Sparks

Ron Schmitt, City Councilman, City of Sparks

Nicole Lamboley, Representing the City of Reno

Mike Alastuey, representing Clark County

Gaylyn Spriggs, Nevada Taxpayers Association

John Slaughter, AICP, Strategic Planning Manager, Office of the County Manager, Washoe County

Mary Henderson, Lobbyist/Government Consultant, Nevada League of Cities and Municipalities

Darin Conforti, Chief Fiscal Analyst, Washoe County Finance Department

Ralph Felices, Chief Investigator, Compliance Enforcement Division, Department of Motor Vehicles

 

 

Chairwoman Chowning:

Good afternoon. The Assembly Committee on Transportation will come to order.  Madam Secretary, will you please call the roll?  [Roll was called.]

 

We will start as a subcommittee.  Several members are in other committees at the same time and we are starting earlier than our usual time.  Please mark other members present as they arrive.

 

Mr. Carpenter, Assembly Bill 346.

 

Assembly Bill 346:  Revises provisions governing operation or maintenance of vehicles on highways in this state using dyed special fuel.    (BDR 32-180)

 

Assemblyman Carpenter:

[Introduced himself.]  I bring you today Assembly Bill 346 to address a problem in my immediate area in Elko County and also Eureka and Lander Counties in regard to the drillers who have to move their large drill rigs from site to site.  I have with me Bob St. Louis, who is with Lang Exploratory Drilling in Elko.  He can explain the problems they have on a regular basis when they use dyed fuel on the job site and then when they have to move.

 

I also have an amendment to the bill (Exhibit C) that Brenda Erdoes, Legal Counsel, Legislative Counsel Bureau (LCB), says makes the bill comply with federal law, and, hopefully, I’ll have some notes from her later on.  I think also people from the Nevada Mining Association are here and will speak to you about some other situations and problems that they have in some of the mining areas.  I believe they have also researched the federal law, and, with some amendments, A.B. 346 will conform to federal law.

 

Chairwoman Chowning:

The amendment (Exhibit C) is in front of us.  The blueprint on the mock-up amendment is what you would like us to look at.  Correct, Mr. Carpenter?

 

Assemblyman Carpenter:

That’s correct.

 

Bob St. Louis, Lang Exploratory Drilling, Elko: 

[Introduced himself and provided written testimony (Exhibit D).]  I would like to thank Assemblyman Carpenter for introducing this.  I think it could help us a lot.  None of us are trying to get around paying the highway taxes that are due.  The problem is that, in contract drilling, like construction and agriculture, many times we are working in remote locations and the additional cost of purchasing highway fuel for, basically, an industrial application is rather burdensome.

 

It’s also a time-consuming process to take care of all the reporting required to obtain a fuel tax refund. It takes a lot of labor and a lot of record keeping.  If you were to burn highway fuel in an off-road application and then apply to get a refund of the taxes that have been paid because it wasn’t a highway use, it’s quite a burden.  Anyone who has had to keep all the receipts, all the records, the mileage figures, et cetera, knows it’s difficult.  It ties up quite a bit of capital.  I don’t know the exact figure, but the cents per gallon on the highway tax is, I believe, something like 37 cents.  If you have a diesel rig that burns 220 gallons per day, you can see there is a significant magnitude to the amount of tax dollars that will be tied up and are unavailable to that company for utilization.

 

Our jobs can last anywhere from a few days to months.  As a result, we get on a site and could be drilling for a period of 2 months, burning dyed fuel the entire time; now it’s time to move.  This is where the big issue comes in.

 

If we drain that fuel on-site, we are looking at draining a tank, changing fuel filters, running clear fuel through the entire system, enough to purge the return line, and then hope that any residue that was still in the system has been removed.  Doing this requires a person to be exposed to some rather significant safety hazards.  Any time someone is dealing with any sort of fuel in the field, it’s a concern. 

 

Perhaps even more importantly is the issue of the environmental consequences of spills.  Nowadays, we could have a reasonably large spill, or we could have a leaking fuel system as we travel down the road after doing this purging, and we create a whole different set of problems.

 

What we’ve asked is that we would be able to purchase a permit, perhaps through the Transportation Permits Office here in Carson City.  We would pay up front the equivalent taxes that would have been paid had we burned clear fuel so the Internal Revenue Service will get their share.  At the same time we eliminate the problems that are inherent to changing fuel types out in the field.

 

Chairwoman Chowning:

So the intent is not to get by with using less expensive fuel?  About how many miles per year would you estimate that you’d be traveling on the regular roads?

 

Bob St. Louis:

It varies with where the work is.  If we are working in the Elko area, we might only accumulate a few thousand miles in an entire year because the equipment is staying on the mine sites for a very long time.  On the other hand, just yesterday, we moved equipment from Elko to Lockwood to do a job that will last about 1½ weeks and then it will head back. 

 

The highway miles aren’t really a large component of all of this because most of the time the equipment is sitting in a relatively stationary situation.  I could actually give you some research, but I believe we probably travel less than 10,000 miles on the state highways in a year with these units.  The pickup trucks that support them, of course, are back and forth every day.

 

Assemblyman Collins:

Is this equipment overweight, or are we only talking diesel equipment?  Are you just talking about highway-legal haul trucks?

 

Bob St. Louis:

These units are typically either heavy-duty mobile equipment or special mobile equipment.  In some cases the drilling rig itself will have two engines, one to propel it down the road and one to power the drilling functions.  Those are easy because you can have two fuel systems.  The problems become larger with either those drilling rigs where the carrier engine also operates the drilling functions for the support equipment such as boom trucks, winch trucks, or water trucks where there is only a single fuel system on them.

 

Assemblyman Collins:

Is this not equipment you would usually transport on transport units rather than driving them?

 

Bob St. Louis:

No.  We are not in the business of carrying freight for other people.  This is purely to get from Job A to Job B, or back to our maintenance facility.  That is basically the area we are looking at for a permit.  I think it would also apply to construction companies that are facing similar things.

 

Assemblyman Collins:

Scrappers and whatnot are transported most of the time when they’re going across town or across distances, but incidental crossings of the road occurs quite often.

 

Chairwoman Chowning:

You have Ms. Erdoes here.  Committee, you have another sheet for an amendment (Exhibit E) proposed to A.B. 346.

Assemblyman Carpenter:

I have Ms. Erdoes here to explain the amendment, which they feel will make this bill meet the test of being legal with federal law.

 

Brenda Erdoes, Legislative Counsel, Legislative Counsel Bureau:

[Introduced herself.]  The concern was raised to me this morning that this bill (A.B. 346) may violate federal law.  We looked at that, and we found there were two areas of concern.  One is the Clean Air Act.  I don’t believe that’s a problem because the provisions of that Act talk about not using exempt fuel in vehicles that are made for highways, and these vehicles are not, so I don’t believe that’s going to be a problem.

 

The second one is in the Internal Revenue Service (IRS) provisions, and it has to do with the collection of the fuel and trying to appease the concern of the regulators.  They were concerned about violators, people who were using exempt fuel for nonexempt uses.  One of those provisions says that the exempt fuel may not be used for nonexempt purposes.  The way it is worded in Title 26 United States Code (U.S.C.), it is difficult for me to tell for sure that it would not allow this.  I think it is currently being read by the federal regulators not to allow this, because the procedure they provide for getting the money back is for you to actually pay and use taxable fuel and then apply for a refund for the parts of this that you are not using for an exempt purpose.

 

The problem with that, as Mr. Carpenter explained it, is that, since the bulk of the use of the fuel is for an exempt purpose, it seems backwards to have to pay the money up front and then refund the money back.  It’s something that’s not working very well for them.

 

A.B.346 would actually provide a procedure whereby, for the parts that they want to use the exempt vehicles on the highway, they would pay the tax to the Department of Motor Vehicles.  We couldn’t find anything in federal law where this had ever been considered before.

 

What we’re recommending to appease the problem of this being unconstitutional is what you see in that amendment [Exhibit E] before you.  It simply adds language to Section 3 as a precursor to the whole part of Section 3 that says, if it is allowed by federal law, you can do this.  The intent would be that, to the extent this can be worked out with the federal regulators to allow it, then it would go ahead and occur.  Should that not happen soon, perhaps an amendment to this would be sought at the Washington, D.C., level.  Either of those things could occur before this Legislature next meets.  That is why we sometimes give you language that says “to the extent permitted by federal law,” so that, even if today maybe it wouldn’t work, it could come into being during the next two years before this Legislature has a chance to consider it again.

 

Chairwoman Chowning:

That’s very good.  You have that also in Section 1 and Section 3, correct?

 

Brenda Erdoes:

It’s already in the bill.  This just adds it to Section 3.

 

Chairwoman Chowning:

So it is Section 3, subsection 1.  Thank you for your help, as always.  Mr. Carpenter, with the amendment, if you look in Section 3, would you tell us what this would allow to be done. 

 

Assemblyman Carpenter:

We would add to Section 3 “to the extent permitted by federal law.”  If that isn’t permitted by federal law, we would look to ask our representatives in Congress to help us get the federal law amended so that it would apply.

 

That is basically the only amendment being added.  As  Mr. St. Louis explained, they would apply to the Department for a permit and to ascertain what they felt the tax would be compared to the mileage that they would be traveling, and then they would pay the tax up front.  This is not a measure to try to avoid taxation.  This is a measure to make it “user friendly.”  As Mr. St Louis said, every time they have to drain one of these tanks and purge the vehicle of the dyed fuel, it is very time-consuming and costly.

 

Chairwoman Chowning:

This amendment (Exhibit C) says that the permit will be for a short period, that it will be, in essence, a 10-day permit.

 

Assemblyman Carpenter:

I believe in the original bill, we were looking at a short period of time.  I believe that the people from the Nevada Mining Association will be proposing an amendment that will make it for a longer period of time, but they can explain the reasons for that.

 

Chairwoman Chowning:

Russ Fields will testify next.

 

Russ Fields, President, Nevada Mining Association:

[Introduced himself.]  We are here to testify in favor of A.B. 346.  This is a bill that we saw just a few weeks ago, and we determined that this could be very important to one of our member companies who is with me here today.  I would like to introduce two people.  First is Bil Wahl, Manager, IMV Nevada, which is a specialty clay mining operation in the Amargosa Valley.  Seated next to Mr. Wahl is Jonathan Brown of my staff.  Mr. Brown is Director of Environmental and Regulatory Affairs and has worked on the amendment before you (Exhibit E).  I would like to turn it over to Mr. Wahl to explain a situation that A.B. 346 might very well address.

 

Bill Wahl, Manager and Owner, IMV Nevada:

[Introduced himself.]  We have about 40 employees in the Amargosa Valley.  We bought the property about seven years ago.  We operate the mill on the west side of Highway 373, and our mine is on the east side.  We travel about 170 miles per day from the mill to the mine hauling ore back and forth between the water trucks and the haul truck.  The 170 miles per day means we traverse Highway 373 for 320 feet each day.  If we used the clear diesel, we would be paying a tax of approximately $25,000 per year, and then we would apply to the state and federal governments to get back $24,980.   The fuel tax is a total of about $20.  We end up having to total up all our travel miles and everything else just to cross 20 feet of highway.  We do not do any hauling on the highway.  We don’t go up and down the highway.  It’s strictly on our own private haul road, except for crossing Highway 373.

 

Chairwoman Chowning:

Are you going to talk about this amendment?

 

Bill Wahl:

Yes, we would like to have some relief on it.

 

Chairwoman Chowning:

Mr. Fields, there are a couple of changes on this amendment that are not on the one that Mr. Carpenter provided.

 

Russ Fields:

Yes, Madam Chair.  We apologize for the confusion of having to look at two amendments.  We are delighted that Ms. Erdoes has come in to solve what appeared to be a problem last night.  We do have an amendment, and I would like to ask Jonathan Brown to talk about what that amendment does.

 

Jonathan Brown, Director of Environmental and Regulatory Affairs, Nevada Mining Association: 

[Introduced himself.]  The purpose of the amendment language that is before you underlined in the copy before you (Exhibit E) is that we realized that the short-term 10-day permit that was originally proposed in the original amendment (Exhibit C) would not necessarily aid our member companies that are faced with the dilemma as was outlined by Mr. Wahl earlier. 

 

We are proposing that there be two classes of permits:  a Class 1 permit, which would be the short-term 10-day permit, and an annual permit, which would allow Mr. Wahl and other members of companies like him and folks in the construction industry who may have a large airport to build somewhere in Las Vegas, for example, to cross an interstate or some state highways without having to go back to the Department every 10 days and get another permit.  It is just an extension of what we think is a very good bill and provides the relief we’re looking for.

 

Assemblyman Goicoechea:

If you had the long-term permit, then would you calculate the number of miles you ran across the 20 miles of highway and pay on that only and the balance would be red fuel or tax exempt, correct?

 

Jonathan Brown:

That is correct.

 

Chairwoman Chowning:

The long and the short of it is that you want to be able to have, and are happy to pay for, a permit, and, hopefully, there would be two kinds of permits to be able to have these pieces of heavy-duty equipment be able to use dyed fuel for limited uses on limited parts of our highways.

 

Russ Benzler, Administrator, Compliance and Enforcement Division, Department of Motor Vehicles: 

[Introduced himself.]  When we came here today, we were coming to talk about the bill as it was written, and we were going to oppose it and still do, as it is written.  The basis for our opposition was that it did appear to us that it was in violation of federal law with the Internal Revenue Service (IRS).  We were on the phone with the IRS today, all morning long, trying to get some sort of a resolution. The IRS is of the opinion that A.B. 346 violates federal law.  With the amendment by Ms. Erdoes (Exhibit E), once we have a chance to review that, maybe it would change our position on the bill itself.

 

The other issue that concerns us is that it appears we are loosening up the use of dyed fuel at a time when this body and the Executive Branch are trying to tighten down on the uses of that.  I’m sure there are certainly businesses that would use this appropriately, but there are also businesses that would use this 10-day permit as a license to allow them to travel all over the state using dyed fuel.  I am not sure how we would address that issue.

 

Chairwoman Chowning:

Do you think that, when you are granting the permit, you would be able to have explicit enough provisions in that permit that would help address the concerns expressed but keep the “cheaters” off the roads?

 

Russ Benzler:

That is correct.  I am sure none of these gentlemen would be a concern to us.  It’s the other folks we are worried about.  How long would that permit have to be to describe every circumstance that would allow an officer on the street to determine whether or not they were in violation of that permit?  They’re going to tell us where they intend to take that vehicle.  It’s going to be good for ten days, and what occurs in those ten days?  That’s our concern.

 

Assemblyman Carpenter:

I believe A.B. 346 provides that the form is to be determined by the Department (DMV) so that on the form it would be explicit so that, as the bill says, wherever the equipment would start and where it would end and the mileage.  Hopefully, the form that you develop would be very explicit as to where they could go, where they’re from, and the mileage.  It also provides that they would have to carry that permit with them, so if the Highway Patrol stopped them and they weren’t within the area they were supposed to be, then they are going to be liable for a fine or whatever it might be.  I think the form that you people develop would tighten all that up.

 

Chairwoman Chowning:

Mr. Benzler, before you respond, that might be applicable to the short-term permit, but what about this annual permit?  Wouldn’t that be more difficult?

 

Russ Benzler:

Obviously.  I wouldn’t know how you would do an annual permit unless you’re going to estimate how many miles are on there and then try to verify that, particularly for the officer on the street who is trying to determine whether he has somebody in compliance.  I think that’s the problem.  I understand Mr. Carpenter’s statement that we could work this thing out as we’re developing the form.  That’s my concern, is that perhaps we can’t.  What I don’t want is something where somebody thinks they have protection under the law, and we spend the next six, seven, or eight months in administrative hearings.  We don’t want that and we don’t want the users to have to go through that.

 

Assemblyman Goicoechea:

I think the big thing in this is the fact that the tax has been paid.  They’re willing to pay that up front.  In the case of the clay mine in Amargosa, the only place they are crossing would be that particular section of highway.  Clearly, if that truck was down the road 50 miles, it wouldn’t matter if he had an annual permit or not; he would be in violation with red fuel. I think what Assemblyman Carpenter is proposing is definitely workable in those cases that it’s meant to apply to.

 

Russ Benzler:

Again, these aren’t the folks that we’re concerned about.  It is the folks who aren’t going to comply.  The issue that we’re going to have will be enforcement.  What message does that send to your enforcement personnel?  You can’t use it except for this, or when this applies.  That is our concern.

 

Assemblyman Goicoechea:

Again, those people who are going to seek this permit are going to be the people who are going to comply.  The people that don’t are the people who are burning red fuel today.

 

Assemblyman Claborn:

I used to move truck rigs all over southern California and southern Nevada, and I had to have a permit.  We carried it right in the vehicle, and it stipulated what you could do, where you could go, and what you couldn’t do.  I don’t see any problem with that at all.  The permit itself would stipulate what you were doing, and, if you were caught not doing that, you would get a ticket.  It looks very simple to me.

 

Daryl Capurro, Managing Director, Nevada Motor Transport Association:

[Introduced himself.]  My concern with A.B. 346 is two-pronged.  First of all, literally, the way it is drafted, any trucking company could perform the same permitted services as are contemplated by the mining people with their operation.  I have no quarrel with what they are talking about.  Unfortunately when it says “heavy duty equipment,” it means any self-propelled machinery or motor vehicle that is used exclusively, or in part, by the owner thereof in the ordinary course of his business and has a minimum declared gross weight established by the department.  If I am an interstate company that has facilities in both Reno and Las Vegas, literally speaking, I could use this permit to operate and not pay taxes. 

 

Maybe it is a matter of tightening it up to specific types of equipment that they’re talking about, but, literally, the way it’s reading now, it‘s very, broad  and would cause some real concern to everybody.

 

The second thing is there is a difference between off-road diesel and on-highway diesel.  In so far as the EPA [Environmental Protection Agency] is concerned, their standard for off-highway fuel is 5,000 parts per million of sulfur content.  For on-highway fuel, it is 500 parts per million and, as of 2006, that amount drops to 15 parts per million.  There is a significant difference between off-road fuel, which could be used in a dyed fuel application and on-highway fuel, which is heavily regulated.

 

Chairwoman Chowning:

That shows the vast differences currently.  However, in the future, the differences will be much greater: 15 parts per million versus 5,000 parts per million.

 

Daryl Capurro:

From an environmental standpoint, it is a big difference.

 

Assemblyman Gustavson:

I understand what you are saying, and I could read the same thing into the bill, and the bill may state this.  But before the permit could be issued, wouldn’t it have to be pretty specific as to the company’s intent that is applying?  A trucking company could not apply for this permit and get it without a good reason, correct?

 

Daryl Capurro:

There is nothing in A.B. 346 that would prohibit a trucking company from applying for the permit.  In fact, statutorily, if you pass it the way it is here, I could argue in court, if necessary, that I would be entitled to this permit because I am using heavy-duty equipment by the definition, and I am using it exclusively in the ordinary course of my business, and I presume the declared gross weights would be higher weights because the equivalent they’re talking about, I’m sure, isn’t light-weight stuff.  So from a legal standpoint, I would argue that A.B. 346, the way it is worded right now, would apply to anything that is diesel-powered. 

 

Assemblyman Gustavson:

Would you happen to have any language that we could correct this with and make it workable?

 

Daryl Capurro:

I have no idea.  Perhaps the mining people, if it’s specifically a mining problem, might have one.   For instance, if you look in the definition under “special mobile equipment” that’s contained in the law and to which there are some exemptions, they have some specific examples of what is “special mobile equipment.”  They also have the regulatory authority to either exclude additional ones or add additional ones, which they have done in the past.  For instance, water trucks were mentioned.  They used to be special mobile equipment, but are no longer.  They are now required to be registered and use clear fuel.  You must get much more specific in order to exclude unintended consequences which this bill certainly does right now.

 

Assemblyman Goicoechea:

Maybe some language in there that would state if the equipment was legal with off-road fuel in it, then it definitely would fit the terms and conditions of the permit.  It is possible to get dyed fuel that is low sulfur.  Most of our county road departments run on dyed fuel that’s low sulfur.

 

Daryl Capurro:

Simply put, the equipment they are talking about is road legal.  I would presume that they are either registering it, or they are buying a permit for that movement.  Otherwise they are illegal.  If that’s the case, anything that is registered or is required to be registered, must use on-highway fuel.

 

Assemblyman Goicoechea:

I agree, but, technically, at this point, it is also legal for them, if they are on the mine site, to burn off-road fuel.

 

Daryl Capurro:

That is correct.  That is why we have a provision in Nevada law that says it’s not just a refund.  The emphasis has been placed on “refund,” but it is a credit.  All of these companies file fuel reports all the time.  It is not waiting for a refund check; it is simply taking a credit on tax due at the time they file their reports. 

 

Major trucking companies that have some off-road use do that all the time, where they use clear fuel and then take a credit.  The record keeping is just part of doing business.

 

Russ Benzler:

Assuming that we overcome the federal end of it, I would have no problems sitting down and talking with Assemblyman Carpenter or the others regarding the Department’s standpoint to get a better feel for the types of equipment that they are talking about.  As A.B. 346 is written, the DMV is opposed to it.

 

Assemblyman Carpenter:

I believe that we can tighten it up to meet the objections of the people who have been testifying.  This is not a situation of trying to beat the fuel tax.  It’s a situation of more than convenience.  It’s a big deal to try to purge those tanks.    I believe we can tighten it up to meet everybody’s objections.

 

Anthony Bandiero, Representing the Nevada Petroleum Marketers and Convenience Store Association:

[Introduced himself.]  Basically, Mr. Benzler and Mr. Capurro summed it up and we’re opposed to A.B. 346 for those reasons.  We are definitely willing to work with Assemblyman Carpenter and try to get this straightened out if we can.

 

Chairwoman Chowning:

If you will all work with the sponsor of the bill, we would very much appreciate that.

 

Assemblyman Collins:

Since existing law allows incidental access on a highway by that equipment, I think the Amargosa Valley issue wouldn’t matter.  I think they’re already protected by existing law.

 

Secondly, in the case around Elko, I think that the equipment that can run on the road with dual engines is legal to run on the road as it is, and those that are not should be transported.  That would be covered under existing law and then the DMV could look and see if they want to find a way to do those permits.  It’s obviously a problem.  If we want to look at what is practical when driving on the road, the Amargosa issue is exempt with “incident crossings,” because we passed that law two years ago, Nevada Revised Statutes (NRS) 366.200.  It’s part of what allows them to be legal.  In order for the drilling rigs to go on the roads for miles and miles and miles, that equipment should be transported and not self-driven.  That would eliminate the whole problem.

 

Assemblyman Goicoechea:

In response to Assemblyman Collins, I believe they were cited for crossing that road.

 

Chairwoman Chowning:

Everybody work with Assemblyman Carpenter.  We’re opening the hearing on A.B. 477.

 

 

Assembly Bill 477:  Revises provisions governing refund of certain registration fees and governmental services taxes by Department of Motor Vehicles. (BDR 43-1259)

 

Ginny Lewis, Director, Nevada Department of Motor Vehicles:

[Introduced herself.]  I am here to present A.B. 477.  I would remind the Committee that you recently heard testimony and amended and passed A.B. 30, which was sponsored by Assemblywoman McClain.  That legislation accomplished two things.  First, it required that new residents of Nevada register their vehicles before they’re issued a driver’s license.  Secondly, it allowed for a person to receive a refund, if it was for over $100, if the person was a Nevada resident, and if they could provide documentation, which, in the determination of the Department, provides reasonable proof that extenuating circumstances exist.

 

A.B. 477 is very similar, but addresses strictly the refund issue and requests that no refund be allowed on the surrender or turn-in of Nevada license plates.  In light of the fiscal issues facing not only the state Highway Fund, but also the counties and schools, it is critical that the law be changed to stop these refunds.  In calendar year 2002, a total of $4,417,933 was issued in refunds.  A little over $1.3 million was Highway Fund money, and over $3 million was money from the counties and schools.  A total of 1,001 refund checks were actually processed in that calendar year, with the lowest refund check being one penny, and the highest being a little over $5,000.  I would ask the Committee to support A.B. 477 so that the state can expeditiously address some of the refund leaks that we’re currently facing.

 

Chairwoman Chowning:

Would you agree to have the same amendment that we added to A.B. 30? In other words, this will be the same bill as A.B. 30 minus the immediate registration provision?

 

Ginny Lewis:

Yes.  We would absolutely accept the amendment that was proposed on A.B. 30, and this would just be addressing the refund issue and not the registration/driver’s license piece.

 

Kathy Augustine, Nevada State Controller:

[Introduced herself.]  [A copy of Ms. Augustine’s written testimony is attached as Exhibit F.]  I’m here in support of A.B. 477, which eliminates the DMV registration refunds.  This is a sound fiscal move, which will restore the approximate $4.5 million annually to the General Fund to support our state’s services and the General Fund cash balance.

 

My office has been issuing refunds at a rate of almost 400 per day with a 35 day lag on those refunds.  To date, the State Controller’s Office has had to cancel 11,793 of these refund checks that have gone stale because they have not been cashed.  That is about 10 percent of the total refund checks that have been issued to date.  The average cost to produce each check in our office is  $4.86, which includes the cost of check stock, postage, envelopes, et cetera.  The estimated cost for my office to cancel each stale check is about 30 minutes at $14 per hour, which is another cost in personnel of about $82,551. 

 

In calendar years 2001 to 2003, the state will lose almost $2.3 million in Highway Funds, and $5.9 million of the School Fund [the Distributive School Account] as a result of these refunds.  This is not a “do pass” bill without any amendments, because what we are finding is that most of the stale checks and refunds are under that $100 limit.

 

Chairwoman Chowning:

I think the amendment that we had, I’m not sure if you’re aware, is in very, very rare circumstances.  Those circumstances are:

 

• The person has recently relinquished his driver’s license and has sold or otherwise disposed of his vehicle.

 

• The vehicle has been determined to be inoperable and the person does not transfer the registration to a different vehicle.

 

• The owner of the vehicle is seriously ill or has died and the guardians or survivors have sold or otherwise disposed of the vehicle.

 

• Any other event the Department determines is extenuating circumstances.

 

Kathy Augustine:

So there isn’t a monetary amount on there?

 

Chairwoman Chowning:

Yes, on page 7.  The refund has to exceed $100.

 

Kathy Augustine:

That is why I am asking the Committee not to put that $100 figure on there, because most of the stale checks, those 11,000 plus checks that we have had to cancel, are all under $100.  Actually, the majority of them that we have issued are under $1.  The over $100 doesn’t alleviate the personnel costs or the time it has taken in my office to cancel those stale checks.

 

Chairwoman Chowning:

I believe testimony before said that out of the approximately $2 million, this would only be about $100,000, if that.

Kathy Augustine:

What I am saying is that it is just a hard monetary dollar.  That is not taking into account what it costs for my agency’s services, about 30 minutes for every one of those stale checks.  As I said, we have had 11,793 just DMV refunds in stale checks.

 

Chairwoman Chowning:

I think we’re not getting something clear here.  No one would be able to get a refund, period, unless the amount of the refund is over that $100.

 

Kathy Augustine:

You’re eliminating refund checks under $100?

 

Chairwoman Chowning:

Yes. So it’s over $100, plus the extenuating circumstances must be in place.  For example, if someone’s husband died and there was $300 left on the registration, then the person would be able to have a refund of $200.

 

Kathy Augustine:

As long as you have the extenuating circumstances, because the amount of checks that we’re issuing every day has gotten out of hand.

 

Chairwoman Chowning:

Is there anyone else present who wishes to speak for or against A.B. 477?  Seeing none, the Chair will accept a motion.

 

ASSEMBLYMAN SHERER MOVED TO AMEND AND DO PASS A.B. 477.

 

ASSEMBLYMAN GOICOECHEA SECONDED THE MOTION.

 

Chairwoman Chowning:

We have a motion to amend and do pass A.B. 477.  Is there any discussion?

 

Assemblyman Carpenter:

What happens to A.B. 30?

 

Chairwoman Chowning:

A.B. 30 will go forward as well.  This bill does not have the mandatory registration portion to it, and, as I understand it, since this was the Department of Motor Vehicles’ bill, they wanted it go forward as their own department bill.  It will “all come out in the wash”.

 

THE MOTION PASSED WITH ASSEMBLYMAN GUSTAVSON VOTING NO.  (Assemblymen Oceguera and Collins were not present for the vote.)

 

Chairwoman Chowning:

We will open the hearing on A.B. 521.

 

Assembly Bill 521:  Expands title and duties of Section for Control of Emissions from Vehicles of Department of Motor Vehicles to include enforcement of certain matters relating to use of special fuel. (BDR 43-1273)

 

Daryl Capurro:

A.B. 521 moves some positions from the Nevada Highway Patrol to the Compliance and Enforcement Division of the Department of Motor Vehicles.  Approximately 18 years ago, the Department of Motor Vehicles had a Motor Carrier Division, and all the elements with respect to motor carrier fees and taxes, including fuel taxes, registration, auditing, and enforcement were handled in that Motor Carrier Division.  It was moved out.  In fact, the commander of the Highway Patrol who was responsible for it at that time, Mr. Strumpf, has indicated to me that that was a mistake, but it was moved out and set in the Highway Patrol as a Commercial Enforcement Division with the explanation that, instead of having 30 enforcement officers, there would be 300.  What happened was we had none because that was one element of the enforcement situation that just didn’t get done and isn’t being done today.

 

A.B. 521 would transfer that responsibility back to the DMV, placing it in the Compliance Enforcement Division, specifically in NRS 481.0481, which is the section that has responsibility for emission testing.  Those are the people, they are inspectors and they are peace officers, who actually put the smoke testing equipment in the stack to test what the opacity is for vehicles.  There is a statewide requirement on opacity.  This would place those duties, as well as six or seven positions in that section, to carry forth that activity.  So, the team that does the “poking the stack” is also going to poke the tank and use a machine that can tell them within 15 to 30 seconds, whether dyed fuel is in that tank. That’s what this bill is designed to do.

 

One of problems we’re having is that a tracking system was developed for the DMV, and, at one time, there was an indication that there were 40 million gallons of diesel fuel unaccounted for.  Possibly the system was used for off-road or possibly for another situation, but the simple fact is that if that fuel was dyed fuel which ended up being used on the highway, that was $10 million in Highway Funds that was not collected.  Assuming that is the worst case and that it’s somewhere in between, I will tell you that is the reason we need to have effective dyed fuel enforcement and the reason for the bill.

 

[Daryl Capurro continues.]  The current problem is that the Nevada Highway Patrol, because of their other duties with regard to inspections and the like, have not put a lot of effort into dyed fuel enforcement.  I say that because, in the last 6 months of this current fiscal year, from July 2002, to the end of December 2002, there were only two tickets written with respect to dyed fuel.  Those were violations written for vehicles over 26,000 pounds.  Those are heavy trucks.  Even though, there are indications that there is dyed fuel or diesel fuel that has not been accounted for.  The enforcement simply has not been effective.

 

Part of the problem is that enforcement has been concentrated on the interstate.  When you have carriers who have traveled through a number of states and who have gone through a number of ports of entry or have been stopped at other inspection sites, it is highly unlikely that you’re going to get a lot of dyed fuel on the interstate system.

 

We would like to see a higher concentration of checking for dyed fuel on both the primary and secondary systems in the state of Nevada.  We believe that the use of dyed diesel on-highway is a serious problem, and that this change would facilitate a better enforcement strategy.  Let me reiterate that at one time, this entire function was in one agency.  It made it much easier for the enforcement officer, if he wrote a ticket for, in this case it would be for illegal use of dyed fuel, that a copy of that ticket was provided to the auditors, and the auditors within the commercial enforcement division would then audit companies where that truck came from. 

 

The biggest problem may not be with respect to one single truck stopped on the highway.  That could indicate that the company has perhaps 100 trucks, and because that one vehicle was caught on the highway, it’s a fair assumption that the rest of those vehicles are also using dyed fuel and avoiding taxation.  The  important part is to investigate, even beyond the company, and find out where this dyed fuel is coming from.  Who are the suppliers of it?   If we’re going to capture lost revenue to the Highway Fund with respect to this issue, we need more effective enforcement which needs to be spread out on less traveled highways and not simply on the interstate.

 

If you choose to process A.B. 521, it would have to be referred to the Assembly Committee on Ways and Means because, there would be a request for six or seven positions to be transferred from the Nevada Highway Patrol (NHP) to the Department of Motor Vehicles (DMV).  When I say positions, I mean just that. 

 

[Daryl Capurro continues.]  The NHP has a table of organization and equipment that provides for 58 commercial enforcement officers.  They have 16 vacancies.  Those are 16 positions that have been budgeted for but have not been filled.  Part of the reason they have not been filled, is that there has not been an academy run by the Department of Public Safety in over two years, so it is a little difficult to fill positions when you are not having an academy to fill those positions.  These people would require some additional equipment that is currently in the hands of the NHP.  That equipment includes ten of these machines that, when the fuel is drawn and put into a vial and placed in the machine for 15 to 30 seconds, indicates whether dyed fuel has been used in the system.

 

At one time there was a memo from the Chief of the NHP to all personnel to note on their inspection sheet every time they stopped a commercial vehicle this fiscal year to probe the tank.  Unfortunately, that sounds good, but it doesn’t do any good.  The reason is that if you have 12,000 inspections, which consist of little more than popping the cap and peaking in the tank or looking at a fuel filter that is generally covered with oil and other things, you are not going to be able to tell what dyed fuel is.  Without the machine and the use of it, we cannot get a conviction from any court in the state because the testing has to be      on-site not back in a laboratory.  It must be tested on the spot for the court to even accept a citation that’s written for dyed fuel.

 

It is our position that with transferring these positions, we’d get better dispersion with respect to enforcement for dyed fuel and, conversely, we would have better compliance with the law regarding the payment of fuel taxes on diesel fuel.

 

Chairwoman Chowning:

Ms. Thomas, could you tell us what the proposed fiscal note is? 

 

Marji Paslov Thomas:

It looks like the fiscal note for the next biennium is $788,649, budget enhancements.  I believe it is for the positions, five smoke meters, and training costs.

 

Chairwoman Chowning:

Six positions?

Marji Paslov Thomas:

Yes, it would transfer the positions from the NHP budget account to the DMV.

 

Chairwoman Chowning:

Then the fiscal note is approximately $800,000.

 

Daryl Capurro:

That is for positions that are already budgeted under the Highway Patrol budget, at least the last time I looked at it.  The Highway Patrol already has ten of those machines.  If you pass this bill, I would anticipate those should be transferred over to this unit that has primary responsibility for it.

 

With respect to costs, I don’t believe the costs are that much higher than leaving it where it currently is.  You may hear testimony that they do not want to give up those positions, but there has also been testimony on the part of the Highway Patrol that they are able to perform their activities right now with the staff that they have.  If that is the case, they don’t need some of those 16 positions that have already been budgeted and accounted for.  I am not talking about taking specific bodies from them, simply positions.

 

Assemblyman Carpenter:

I am a little confused.  Are you asking that those people be transferred from the Highway Patrol to this other enforcement?

 

Daryl Capurro:

This would transfer positions, not specific bodies.  My understanding is that there were 58 positions under Commercial Enforcement within the Department of Motor Vehicles.  They have only 42 that are filled right now, so you would be transferring 6 of those positions, not people who are currently there, but positions that have already been budgeted for back to the agency that originally did enforcement on-highway.

 

Assemblyman Carpenter:

If they can’t recruit them now, how are they going to recruit them with the passage of A.B. 521?

 

Daryl Capurro:

I’m not sure.  That would be the responsibility of the DMV to be able to fill those positions.  It doesn’t necessarily mean they have to go through the NHP Academy to do that.

 

Assemblyman Carpenter:

If they’re going to be out there on the road, don’t they have to be fully trained?

 

Daryl Capurro:

Yes.  They would be classified as peace officers.  They would be required to be trained as peace officers, in addition to further training for both the dyed fuel testing requirement and the current requirement in this particular section for “sticking the stack” for visible emissions.

 

Assemblyman Carpenter:

Will the emission control be statewide, or is it just for Clark and Washoe Counties?

 

Daryl Capurro:

The laws regarding physical emissions and the smoke-testing standards are statewide.

 

Assemblyman Carpenter:

It would seem to me that we should be giving them more testing equipment.  I’m worried that it will be taking people away from the rural areas.  I know the Highway Patrol out there now, and I don’t know how many tickets they wrote, but I know they’re checking for dyed fuel all the time.  Maybe they need more equipment rather than the transfer of these people.

 

Daryl Capurro:

It would not be taking people.   It would be taking positions that have not been filled, and there has not been an attempt to fill them, and it would give them to an agency that could use them.  I would anticipate there would be coverage in Elko County because I specifically indicated that the smog testing applies in all areas of the state.  We would anticipate there would be coverage in Elko, too.

 

Assemblyman Carpenter:

I believe, in order for these people to be effective, they are going to have to be trained highway patrolmen, and they need to be doing all kinds of duties, especially in rural areas.  Maybe in the urban areas, they could just smog check people and check dyed diesel, but in the rural areas they have to be out there to work the accidents and the “whole nine yards.”  I guess that’s my worry.  If they aren’t fully trained and doing all of the duties that they’re doing now in addition to what’s called for in this bill, I have some concern about it.  I’ve always been under the impression that they’re not able  to fill positions because of all kinds of situations, including pay and where they are assigned.  They would like to fill all these positions, but they have been unable to because of other things.  Maybe they don’t want to work in certain areas, or they’re concerned about the pay, and various other aspects.

 

Daryl Capurro:

Again, we are talking about positions, not bodies that are already out there.  We would not be taking anyone from their duties in Elko.  This would be narrow enforcement, not safety enforcement.  Those people that you’re talking about would still have the responsibility for that out in Elko. Those would not be taken away.  These would simple be ones that would have the specific duties for emission testing and for dyed fuel testing. 

 

I realize there were some pay issues.  This Legislature dealt with those to some extent last session to try to improve, with our support, the monetary requirements for the Highway Patrol. It simply is a fact that they have not had an academy for highway patrol troopers in over two years.  If you haven’t had an academy, it’s very unlikely you can hire a full-blown trooper unless you are stealing them from some other agency with some additional advanced training.  Again, bear in mind that these are positions, not specific bodies.  Those would not change, and their activities in Elko would remain the same.

 

Assemblyman Goicoechea:

The emission standards that you’re imposing outside the urban areas would be federal emission standards, is that correct?

 

Daryl Capurro:

No, that is not correct.  In-use standards are developed by the state of Nevada.  Those were adopted in 1996 and upgraded this last year.  In-use standards are not the same as manufacturing standards which are on the federal level.

 

We have a system of enforcement in Nevada which is on-highway random testing in which the enforcement officer, and in this case the inspector under this section for control of emissions, stops the vehicle, uses a machine in the stack to test the opacity.  If they exceed certain standards that have been set by the Environmental Commission and with the endorsement of the DMV, then they are in violation, and that is a whole different set of laws.

 

Assemblyman Goicoechea:

Who is currently enforcing that?

 

Daryl Capurro:

The Department of Motor Vehicles.  This same section that I’m talking about here.

 

Assemblyman Goicoechea:

So, they are doing that now, as well as sticking fuel tanks?

 

Daryl Capurro:

They are not sticking fuel tanks.  If you pass this bill, they will be doing that as another of their duties.

 

Assemblyman Goicoechea:

Then the Highway Patrol is the only one that is sticking fuel tanks today?

 

Daryl Capurro:

They’re supposed to be, yes.

 

Assemblyman Goicoechea:

You said they had ten machines and I know, in some cases, they are, at least in rural Nevada.

 

Daryl Capurro:

Part of our problem has been it’s one thing to look in there and see.  Trust me, I’ve seen demonstrations of this, I can show you fuel that you think is clear, and it is not clear.  Secondly, without the testing done on-site at the time that the citation is written, there is not a court in Nevada that will hold that citation.

 

Assemblyman Goicoechea:

But you said they had ten machines in place today.

 

Daryl Capurro:

They are in somebody’s trunk someplace.

 

Assemblyman Collins:

To clarify, we are talking about vacancies being transferred from one area to another so we’re not going to take away any jobs.  We’re just going to transfer vacancies that haven’t been filled.  Hopefully where they go to, they will get filled.  I think that’s also the intention.  Is that clear that we’re not taking anybody out of the rurals?

 

Daryl Capurro:

They are budgeted vacancies, but vacancies just the same.

 

Anthony Bandiero, Representing the Nevada Petroleum Marketers and Convenience Store Association:

[Identified himself.]  We wish to go on record in support of A.B. 521.

 

Colonel David S. Hosmer, Nevada Highway Patrol:

[Identified himself.]  I signed in as neutral because the bill did not speak of moving the positions.  We are definitely opposed to moving the positions.  For clarification, I have been the Colonel for 18 months and have attended two graduations in that time: one when I first got here, and one several weeks later.  Albeit small classes, 10 or 11 troopers, but there were two graduations.

 

When I came on board, I immediately asked that we raise our goals and objectives overall, not just dyed fuel.  We went up 134 total citations for weight enforcement, and increased fines from those citations equated to $95,000 plus.  We raised our goals for levels 1, 2, and 3 inspections by 35 percent and met those goals.  Our citations for dyed fuel increased, which increased our fines by $10,500.  We also increased our check-sites from 210 to 230 in that year’s time.

 

Keep in mind that after September 11, 2001, we spent ten weeks guarding infrastructures like the Hoover Dam for which we were reimbursed by the federal government.  We increased 146 HAZMAT terminal inspections and increased patrol on hazardous material shipping.  We did have a 26 percent vacancy rate in commercial enforcement.

 

Some of the other statistics that I would like to point out to you are:

• The dyed fuel program started in October 1999, according to my staff.
• In the first 3 years and 3 months, we dipped 9,100 vehicles.
• In the first 3 months of 2003, we have dipped 5,342 tanks.
• At this pace, in the first six months of 2003, we will surpass everything that we did for 3½ years.

 

Interestingly enough, the violations are not there.  We’re seeing the same violation rate.  We’ve only issued eight citations in the first three months.  We’re checking every tank we can come across out there.  Is it a perfect system?  Absolutely not.  Is it far exceeding what we have done in the past?  Hundreds of times past it.  We are doing the last three years’ worth of work in six months. 

 

With that, I brought Sergeant Carl Johnson up to the table with me.  Sergeant Johnson is trained in commercial enforcement, understands dyed fuel, and I would like him to talk about the process a little bit.  With any misdemeanor citation, you’ve got up to one year to actually issue the citation on it.  Now the practice is normally to issue it right then and there, but with dyed fuel, if we take the same and we question it and have probable cause, we can get it tested, as long as we treat it as any other piece of evidence—chain of custody, control, making sure it’s not tampered with—and then go to that machine and test it later, and issue the citation later, if need be.

 

[Colonel David Hosmer continues.]  One of the other issues here is on a human basis.  If you take positions from the Highway Patrol, even if they are vacant ones, and take all the machines and put them over with DMV, I can tell you, I’ve been a cop for over 26 years, and I know what the effect is going to be on those other commercial guys.  It’s going to be “wash their hands of it.”  That’s not my responsibility anymore, and they’re going to “de-police” that issue.  I think it will have a negative effect.

 

We are not in a perfect world in the area of this dyed fuel.  It is a small portion of what we do.  As a state employee, I work for the Governor and the citizens of this state whom you represent.  Whatever you decide, I will do my best as the Colonel of the NHP, and we will make it work as best we can, no matter what this body decides.

 

Chairwoman Chowning:

It may be a small part, but we’re in an extremely tight budget crisis, and the Governor has stated to us his wishes, and all of us are working day and night to try to find every single dollar that there is.  This is one area where it has been shown that the dollars are not there.  They’re not being sought and found as they were in the past.  It is our duty to look at this.  It is not our duty to simply raise taxes without looking whether it’s fuel tax or sales tax or any other kind of tax without doing a proper job for the citizens by looking in every nook and cranny for every dollar that we can find.  This is an area.  So, for whatever reason, the dollars have not come in as they did in the past.  There are millions of dollars lost, and we need to know how to rectify that.  I don’t know what your solution is.  Are you saying these millions of dollars are going to come back, or are you saying that you are trying to do the best you can, but maybe this “boat” is going to keep on leaking?

 

Colonel David Hosmer:

Point well taken.  When I said a small part, I meant in the number of duties that are assigned to the Highway Patrol.  I did not mean to minimize the importance and the significance of this.  In my first year, I did not fully grasp the dyed fuel problem at first, and that was why I made the mandate to “dip every tank.”  If that is what we can do to help determine exactly what the problem is, then we will do that, clearly not to minimize the problems of the budget or that we should not be checking for dyed fuel.

 

Chairwoman Chowning:

When you’re saying “dip,” you’re saying that they absolutely are testing thoroughly?

Colonel David Hosmer:

I would let Sergeant Johnson explain the process that we’re using out there.

 

Chairwoman Chowning:

The Committee needs to be told, over the last year, how many citations have been given and in what parts of the state.  How many have been in Clark County versus Washoe County versus the rest of the state?

 

Colonel David Hosmer:

Yes, we can get that information.  I can give you a little brief of it right now.  In calendar year, not fiscal year, January 2001 to December 2001, there were 15 violations.  In January 2002 to December 2002, there were 24 violations.  So far this year, there have been eight violations.  I am told by staff  that most of the violations that we find are on secondary roads, not the interstates.

 

Sergeant Carl Johnson, Nevada Highway Patrol:

[Introduced himself.]  I just want to speak to some of the processes in checking for dyed fuel.  I primarily have worked in the Elko area, and we have been mandated recently to check, dip every tank, and that is what we do.  We do have analyzers available to analyze the fuel that we pull from the tanks.  We are not just popping the cap and looking into the tank.  We actually stick a pipette in the tank, pull it out, and, if it appears to be dyed, we run it through the analyzer.  That’s every tank.

 

Chairwoman Chowning:

I am sorry to interrupt, but you said recently.  How recently?

 

Sergeant Carl Johnson:

I don’t know the exact date.

 

Chairwoman Chowning:

Three months, six months, two years?

 

Sergeant Carl Johnson:

I believe within the last six months.

 

Chairwoman Chowning:

For the last six months you have been dipping each and every tank?

 

Sergeant Carl Johnson:

On every truck we inspect, we dip the tanks.

 

We do checks on the interstate and secondary roads; wherever we stop a truck, we dip that tank.  There is a questionnaire that is filled out if we do find a truck in violation.  We fill out the questionnaire, find out where the driver purchased the fuel, where the company purchased their fuel before that for further investigation.

 

We have ten machines, four in the Elko area, so if we do find a violation, we have the ability to test that fuel right there.  We can test it within that day.  We don’t wait a few days or a week or a month to send it in.  The only time we send it in is when it is out of range according to the analyzer, because the analyzer cannot detect whether it is red dyed fuel. 

 

My point is that we are checking the tanks.  We’re checking every truck that we inspect, and the violations just aren’t there.  In the Elko area, when we started this program, we were checking everything moving on the highway including tractors and construction equipment, and we were getting a lot of violations.  Then a change was made, and we weren’t checking special mobile equipment and construction vehicles; it was just commercial vehicles over 26,000 pounds, so the violations went down.  That’s an indication of why, for the last three months, we have eight citations.  It is not like writing seat belt citations.  We check every truck, and we are getting voluntary compliance in the Elko area on a lot of the vehicles from a lot of the companies.  I can’t speak to the other areas.

 

Assemblyman Carpenter:

During the last session, I think a lot of people were using dyed fuel, and some of that was in the ranching community.  The Farm Bureau sent out letters, and I talked to a lot of ranchers and told them they did not want to get caught.  I think that is one reason we’re not seeing use of dyed fuel up there.

 

I carry dyed diesel in my gas station, and I thought I had to put it in because there are other people up there who are selling dyed fuel, and we felt, for competition, we had to have it.  I thought there would be some restrictions on it, so, at the time we put it in, I called the DMV and asked what regulations they had in regard to dyed diesel fuel.  I thought we might have to fill out a form for what we were going to use it for.  At that time, they didn’t seem like they cared at all, and it really surprised me that they took that kind of an attitude.

 

I think, with trying not to use dyed diesel and all of the word that was put out, I don’t think there is a lot of it being used any more.  I know that you can go to some of those stations up there and fill up with it, but I think people are afraid to do it anymore because it’s a pretty hefty fine.  One of my friends got caught, and I think it was $1,000.  There is something going on on the interstate up there, and I don’t know whether I’m right or wrong, but there are a lot of trucks up there that are from other states, and I don’t know if there is any way in the world that they are paying their fair share.  I think they could fill up in Wyoming or whatever, and I don’t think there’s any way in the world we’re ever going to catch those trucks.  That’s where I think the evasion is with those trucks that are filling up in those places where the diesel tax is practically nothing and crossing into Nevada, and I don’t know how you’re going to stop them.  Even if you could go in with Utah or somebody and do the check on the interstate, maybe that would help, but I don’t think there’s any way in the world you could catch them.  There are thousands of trucks going, and you look at the license plates, and they’re all from “Timbuktu.”  That’s where we’re losing our money on the diesel coming across Nevada, not on dyed fuel.

 

Chairwoman Chowning:

That is why I want for the Committee, and the Colonel said he would provide it, the breakdown statewide.  It’s not just the northern part of the state.  There are other vehicles in the southern part of the state also that use dyed fuel, and I want to know where the enforcement is.

 

Mark Sullivan, Associated General Contractors (AGC), Nevada Chapter:

[Introduced himself.]  I would like to thank all of you for your participation and willingness to sacrifice your time.  I’ve never heard anybody thank you, and I know it’s not just a sacrifice of your time, but a sacrifice, too, by your families for the contribution you make.  I know I speak for a lot of Nevadans.

 

I am speaking in opposition to A.B. 521.  We don’t think it is necessary to create a special section at the DMV.  We think the enforcement is best housed within the NHP.  I think it provides efficiency for the state, and we are better served by leaving those positions where they are.  We know DMV already has some budget challenges, and we think this would further exacerbate those challenges.  The fiscal note of $800,000 is a sizeable amount of money.

 

Chairwoman Chowning:

Do you think that $800,000 versus $3 million lost is still sizeable?

 

Mark Sullivan:

The $3 million is referring to the lost revenue from fuel taxes as a result of not being enforced.  [The Chair agreed.]  If there was going to be any increase in efficiency or improvement in collecting those taxes, and I think what you heard in the testimony, what I heard, anyway, is that they have ramped up the enforcement over the last six months.  I think they’re continuing to carry on, but with September 11, there are some challenges with enforcement.  Now they’ve ramped those back up.  I think they’re doing all that they can with those positions, and I think that they are catching the people who are breaking the law.  I think there is a lot more enforcement.  As Mr. Carpenter said, people find out there are hefty fines attached to this, and, once you get caught, you’re not going to do it again, and you hear about somebody else.  I think the enforcement is working.

 

Chairwoman Chowning:

Do you find that in your industry?

 

Mark Sullivan:

Yes.  Every industry, not just ours, but in every industry, you’re going to have people who will always try to cheat the system.  Of course, no AGC members would ever do that.  You will have a problem regardless of what industry it is.  There is always going to be somebody trying to get around the system.  There are exemptions for agricultural equipment and certain special mobile equipment.  I think that’s helped out a lot, too, allowing people not to be criminals because they’re driving a tractor or a backhoe across the street.  We appreciate that.

 

Assemblyman Collins:

I have several questions.  Are you with the north or south AGC? [Mr. Sullivan stated he is with the Nevada Chapter located in Reno.]  I went to my office for a moment for the book that was mailed to all the members that showed what the Department of Public Safety (DPS) has been doing since the last legislative session.

 

If you go back a few years, testing is down, inspections are down, and fines are down.  All those collections and fees and penalties are down.  At the same time, there are anywhere from 40 to 60 vacancies.  As Colonel Hosmer testified, he attended two graduating classes, but both of them were close to 1½ years ago.

 

Were the tests and inspections done in yards where the trucks were parked?  Were they done on the highways?  Where were the tests done and were they Class 1, 2, 3, 4, or 5 tests?  A lot of those things are still unanswered, as far as I am concerned.  What are the vacancies not filled?  I remember a few years ago when the DMV and the law enforcement, and even the Public Utilities Commission (PUC) had some law enforcement.  We’re in sad shape right now, and I’d like to know what kinds of inspections were done.  Were they all done down on Cheyenne and Commerce, for example, where about 18 different construction companies roll in and out, or were they done throughout the state? 

 

[Assemblyman Collins continues.]  Nothing against the individuals.  I think it’s an administrative problem.  We definitely need to do something.  I am a total supporter of Ports of Entry where we could catch a lot of this evasion.  The fact is that the Department of Transportation has built a $200,000 plus facility on Interstate 80, and it is used rarely, even though it is wired for all the technology in the world.

 

We have another serious issue of things coming into this state, not just dyed fuel issue, that could cause millions of dollars in disaster and emergency spending in this state that could be captured on those highways.  We need to have more highway patrolmen on the road doing the things they are required to do.  If they’re not going to do it, then we need to let the DMV do it.  A lot of those questions have been left unanswered; if somebody could bring those answers, it would help.

 

Chairwoman Chowning:

The questions Assemblyman Collins asked, are you prepared to answer those?  I think someone from Highway Patrol needs to answer those.  Or will that be coming in the information that we’ve requested?

 

Colonel David Hosmer:

We made note of that and will get the information to you, hopefully, by noon tomorrow.

 

Chairwoman Chowning:

We will be addressing A.B. 521 on Thursday and would appreciate that.

 

Daryl Capurro:

To set the record straight, Directive 01-03 from Colonel Hosmer to the Commercial Enforcement people was issued on January 16, 2003, to dip all the tanks.  That was about two weeks before the Legislature went into session.  

 

Chairwoman Chowning:

Are you saying that it wasn’t six months ago but only two or three months? 

 

Daryl Capurro:

Yes, ma’am.  That’s according to the directive that I have a copy of here.

 

We had problems with the Canadians with respect to supporting our activities in Iraq, and we’ve heard some of those, so I thought you might enjoy a letter from my counterpart for the Canadian Trucking Association Exhibit G) that expresses his warmth and gratitude to the American people.  It makes  you believe that there are people who are in support of our efforts overseas.

 

Chairwoman Chowning:

There is no connection to A.B. 521, but it is a good message of ambassadorship.

 

Ginny Lewis:

The Department of Motor Vehicles remains neutral on A.B. 521.  This legislation was not solicited by the DMV; however, if it is the decision of this Legislative body, and with the approval of the Governor, to transfer this program to the DMV, we will ensure, given the appropriate resources, that we fulfill our obligation of testing vehicles for dyed fuel. 

 

I would be remiss if I did not provide the Committee with some of my concerns.  This program would be placed within the Compliance Enforcement Division of DMV.  Any new program such as this brings with it its fair share of policy and procedure development, organizational realignment, and transition from one agency to another.  With other program enhancements affecting Compliance Enforcement in the upcoming biennium, administration of this additional program would stretch existing resources. 

 

I am also concerned with the expectation on DMV with such a move and the overall benefit to the program.  What is being accomplished by moving a few trooper positions to DMV to test vehicles for dyed fuel when the NHP has an entire commercial enforcement unit able to test far more vehicles?

 

As written, A.B. 521 does give authority for the positions within our heavy-duty diesel program to dip tanks in conjunction with their emission responsibilities.  Such an approach is logical and seems to be an efficient use of existing resources.  Based on the intent of the bill, the DMV has prepared a fiscal note that addresses the transfer of positions and associated costs from the NHP to the DMV.  Additionally, there is a request to purchase five smoke meters and training for existing DMV staff who would be engaged in the program.  If the decision were made to transfer vacant positions from the NHP to the DMV, we would have to work closely with the Legislative Budget Subcommittee to transfer all associated costs.

 

When the department prepared that fiscal note, we did not have all the detailed costs that are located in the NHP budget, and that is why I said we would need to work closely with the Budget Subcommittee to be sure those costs transferred.

 

Russ Benzler:

I want to echo something that Ms. Lewis went over.  That is the authority that is contained in A.B. 521 as it stands.  As Ms. Lewis put it, and I strongly support it, we are taking no position on these vacancies coming over, but if nothing else, the authority should remain in this bill and that should be approved.  We have peace officers who are out testing, stopping vehicles on the roadway and testing them for emissions as it stands right now.  From an efficiency standpoint, it only makes sense that they would also be checking for dyed fuel.  I would encourage the Committee to consider that and approve it.

 

Chairwoman Chowning:

Very good point.

 

Assemblyman Carpenter:

How many of those people do you have checking now?

 

Russ Benzler:

Right now, we have two teams in Las Vegas and a third team is requested for Reno through the budget process.  There are three sworn officers and an emissions technician with each one of them.

 

Assemblyman Collins:

This is the book that we received [Assemblyman Collins held up a copy of the book.] that will show some increases and some declines in inspections and the types of inspections.  I hope all of our members have looked at it.  In addition, I’ve got enforcement comparison numbers for the DPS [Department of Public Safety] on the particular issues of truck and fuel inspections (Exhibit H).  Nearly all of them have declined over the last four or five years tremendously.  Some of this was reported to the Assembly Committee on Ways and Means recently on the port of entry bill, and I can make this available to anyone who wants this.

 

Chairwoman Chowning:

This is an issue of great concern and, hopefully, everyone realizes that.  I think a strong message needs to be sent that “something must change.”  We will take no action on this bill today but will probably do so on Thursday.

 

We’ll close the hearing on A.B. 521 and open the hearing on A.B. 522.

 

Assembly Bill 522:  Revises provisions governing short-term leases of passenger cars. (BDR 43-1045)

 

Bill Gregory, Representing Enterprise Rent-a-Car:

[Introduced himself.]  I believe, in Las Vegas, we have Keith Duffy who is going to speak to the bill.

Keith Duffy, Loss Control Manager, Enterprise Rent-a-Car:  

[Introduced himself.]  A.B. 522 would modify a few different terms in NRS 482.31535.  We are looking at deleting the term “collision” from the term “physical and mechanical damage.”  We are looking at that because we feel the term is ambiguous, and there are different terms on how people look at the wording of that.  Webster’s Dictionary has it as just an action of striking versus insurance companies who say it has to be two vehicles striking each other.  We just thought it was an ambiguous word, and we’re trying to clarify that.  This would allow rental car customers to have a broader coverage under waiver, but it would not allow us to charge anything extra or collect anything extra from anybody else.  It would just be more of a clarification.

 

Chairwoman Chowning:

Could you go back to your previous statement.  Section 1, line 7, you would be wanting to delete that because you state it is ambiguous.  Then you stated something else we didn’t catch.

 

Keith Duffy:

We felt the term was ambiguous because of the varying definitions of collision.  Webster’s Dictionary declares an impact as just two things striking together versus the insurance companies who view it as two automobiles having to collide in order for there to be a collision.  By doing this, we’re trying to take the ambiguity out of it and say that any kind of collision that would occur would be covered by our waiver, or just make it standard that any kind of damage collision would be covered.

 

Chairwoman Chowning:

Give us a real-life situation here.  It is the people who sign the waiver on the application to rent a vehicle, is it not?  They say, “No, I don’t want to take your insurance because I have my own insurance.”  If they do that, then that short-term lessee will be responsible for all physical or mechanical damage to the car?

 

Keith Duffy:

If they take our waiver, they’re covered for everything.  Here’s an example.  If a party purchases a waiver, according to this, at least how we determined it, and say a windshield is smashed.  According to the insurance industry, that damage would not really be covered because it is not a collision of two vehicles.  It’s more of just an impact.  We are trying to clarify the difference between the two.   This would help support our renters to cover all damage, and it’s just a clarification.

Chairwoman Chowning:

Whether they take your insurance or they have their own insurance, it would cover all situations, not just those where two vehicles collide.

 

Keith Duffy:

Exactly.  Under NRS 482.3115, we are attempting to alter the circumstances by changing the damage waiver on voiding a waiver.  Line 38, “operating outside of the United States” and we want to add “operating outside the state of Nevada.”  Not that we are against having people drive out of the state or out of the country; we just think this should be based more on the action of the rental contract, us giving them permission for them to do that.  It is more of a communication stance in that area.  It helps us to manage our business better, so we can understand where vehicles are going. If someone says they are just going to drive in Nevada, and they end up in New York, and the car is left in that state, it could cost us hundreds of dollars to recover that vehicle.

 

Chairwoman Chowning:

If someone waives the opportunity to have the company’s insurance and they travel outside of the state of Nevada, they won’t be covered?  What if the customer says that they are going to be traveling to Arizona or California, a neighboring state?  Are they covered or would this say they are not covered at all if they waive that liability insurance with your company? 

 

Keith Duffy:

They would be covered.  If they say they want to go to New York and all the states in between, they would be covered for that.  It’s basically if we have an agreement set up that you’re not going to leave the state and then you end up in Florida or some state far away, it is to help protect us under those circumstances. 

 

Chairwoman Chowning:

I will have to check with our Legal Division because I don’t read it that way.  We will keep that thought in mind.  You are saying that this is only if they leave the state of Nevada without saying so on the rental contract?

 

Keith Duffy:

That is correct.  When we initiate a contract, we ask what states they will be going to and it is written on the contract.  It is more of a communication.  At line 40, we’re looking at the same thing, another contract violation.  It’s more for validation of a claim on a vehicle if it has been reported stolen.  If a person comes into the office and they rent a vehicle and they do not furnish the keys and the car is not recovered and they don’t work with the police and do what it takes, we are looking for validation on a contract violation.  We do step up to the plate when people have their car stolen which is rented from us. This is just a way to back up if they are not working with us when a car is stolen.

 

Chairwoman Chowning:

In line 39, what you stated has been substantiated because it says, “unless expressly permitted by the lease.”  [Mr. Duffy concurs.]

 

Go to the top of page 3, subsection 2, and continue from there.  They have to file an official report of the theft within 24 hours.

 

Keith Duffy:

Basically, the renter would be doing everything that they should and what the statute already states.  What we are looking for is if the people are not cooperating with the police officers or not helping in the investigation to help recover the vehicle, it can help us recover the vehicle or prevent fraudulent cases that occur.  We have had many cases where the people have actually cut a key and had a friend say the car was stolen while they are still driving around in our vehicle.  They reported it to the police via the 24-hour police report as stated in statute, but we are just looking for ways to protect ourselves as a business from such fraudulent actions, and if there is something strange about it, maybe we can have a contract violation on it to protect ourselves. 

 

Chairwoman Chowning:

The last portion is on page 3, line 23.

 

Keith Duffy:

This is very basic.  It’s more of a technical modification to clarify our billing mechanism that we have in our rental bays.

 

Chairwoman Chowning:

It would be $15 per day, for example, for a partial rental day for the waiver.  If you rent the vehicle at 6:00 p.m., does that mean that you’re going to be charged the full day because at midnight that day ends?

 

Keith Duffy:

It would depend on the circumstance.  We have different types of qualifications.  We have insurance rentals that ask for calendar day billings versus 24-hour-a-day billings.  It is more of a clarification for billing so we can make it clear on which day is the day.

 

Chairwoman Chowning:

So you can’t charge more than $15 per full or partial rental day? [Mr. Duffy agreed.]

 

Assemblyman Claborn:

If you leave the state of Nevada, do the rates increase for the vehicle?

 

Keith Duffy:

No.  The rate would be the same.  What could change is possibly the mileage if there is a mileage charge, but it does not change the rate of the vehicle.

 

Assemblyman Claborn:

I thought you might charge a different rate for each state.  Sometimes some of these different states’ insurance is more costly than Nevada’s.

 

Keith Duffy:

No, it would not affect the rate at all.

 

Assemblyman Gustavson:

These changes that you’re asking for here, do other states have the same language as you are asking for here?  I’m concerned about that, because, as Assemblyman Claborn says, if I rent a car in Las Vegas and take a drive to Laughlin, I might decide that I’d like to cross the river into Arizona at Bullhead City.  I want to make sure that if somewhere on this application it can be stated that you’re going to take the car out of state or not, but at the time I rent the car I might not have any intentions of taking the car out of state, especially somebody from out of state coming into Reno and then decides to take a ride up to Lake Tahoe and take a drive around the Lake.  The problem is, are they really covered or not?

 

Keith Duffy:

We usually ask what states you’ll be going through, and we’ll pretty much include them.  I guess this is recognizing more for the long-term.  All of Nevada’s major cities border California and Arizona.  What we are looking at is more the very long, half way across the country rentals, that would be part of this situation.  If would be a judgment case.  If you’re in Tahoe, we would consider that pretty much a part of our area, but if you are up in Seattle, Washington, that would be a different situation.  It would be case-by-case scenarios.  A person can always call and say that they want to go out of state, and we can always put that on their contract verbally.  We can fill in the states for them.  So if someone does think they could change or are going to change, we don’t have an issue if they want to go farther.

 

Assemblyman Gustavson:

The first part of my question was whether this language has been adopted by other states.

 

Keith Duffy:

Yes, sir, it is.  There are many states that do have this language included on their contracts.  We would not be the first.  There are many.

 

Assemblyman Sherer:

I have two questions.  On lines 38 and 39, are you looking at fining people if they take the vehicle out of state, and it gets wrecked?  Are you looking at putting a fine or fee on that?

 

Keith Duffy:

We are not looking to add any charges to anything.  In looking at some past histories, we’ve had some people say they are just going to be inside the state, and they may end up doing illegal actions in other states.  It’s a way to possibly protect ourselves from those illegal actions. There are no fees involved.  It could be looked at as more of a protection of us for, maybe, interstate trafficking or something like that. 

 

Assemblyman Sherer:

Since you guys went with this provision on the top of page 3, how many cars are usually stolen in a year?

 

Keith Duffy:

I have about six reported thefts per month, people saying this car has been taken from me.  They don’t have the keys, they are reporting it stolen, but they are not cooperating.  They are just saying that the car is gone, and they don’t know what happened to it, and they don’t have the keys.  At six vehicles a month, it adds up pretty quickly.

 

Assemblyman Carpenter:

My question is along the line of the other speakers.  When you add “state of Nevada,” that is a major change.  The way it reads now, it’s operated outside of the United States, and felonies and things like that are already covered at the top.  I guess I can see your reasoning, but it seems to me that there are a lot to times that these cars are taken out of the state and, maybe, they don’t even know when they were rented, that they know that they might go across the state line and then just come right back.  It seems to me it’s going to be a lot of problems for you and also for the people who rent these cars.

 

Keith Duffy:

We are just looking at this contractually.  We do talk about it and there is a condition box asking if you are going out of state, and we have them sign.  It’s also a tracking tool just so we can monitor our vehicles.  Mileage, time, distance are all costs of the rental business, so if we know someone is going to go to New York or to the East Coast we would prepare for that person to go that way and give them a lower mileage vehicle and make it no problem at all.  We have different types of vehicles that we have to purchase, and we have mileage caps on them when we return them to the dealerships.  We are looking to protect the vehicles better and for monitoring.  If people say they are going one place, but they’re not, and end up 800 or 2,000 miles away, it’s just more protection for us.

 

Assemblyman Claborn:

I would assume if a person were going to steal an automobile, they would not tell you where they were going to go anyway.  They would lie to you, wouldn’t they?

 

Keith Duffy:

That is correct.

 

Chairwoman Chowning:

Assuming that this language passes here, that would mean that in each and every case, each and every one of your employees does ask the person who is renting the vehicle whether or not they are going to go out of the state of Nevada?

 

Keith Duffy:

We do ask that every time.  It is a box on our contract and asks the renter and we have to mark it “yes” or “no” and we actually have them sign that spot.  It is one of our conditions when we ask them about a rental. 

 

Bill Gregory:

It seems reasonable where there are adjoining states such as Lake Tahoe crossing into California where somebody might not even realize they’ve done that or the Laughlin situation, if we might look at some language that would deal with “farther than the adjoining states,” so we would be getting people who weren’t aware of it that if you go farther than past the adjoining state into Oregon from the California side or farther.  I would just throw that on the table as a possibility for an amendment.

 

Chairwoman Chowning:

I think that’s an excellent addition.  Could you submit that in writing, Mr. Gregory?  [Mr. Gregory replied affirmatively.]  The Committee likes that.  It’s a little friendlier.  It has nothing to do with stealing the vehicle.  These are two separate issues.

 

Jim Werbeckes, Representing Farmer’s Insurance:

[Introduced himself.]  I had not planned on speaking on this bill; however, I have some concerns after hearing some of the testimony.  On page 1, line 7, where you’re removing “resulting from the collision,” what happens if you are driving a vehicle and the transmission goes out of the vehicle?  Are you now responsible for that?  What if somebody smashes out a windshield, you’re responsible for that?  I have concerns about taking out “collision.”

 

On page 2, leaving the state of Nevada.  Currently, your own auto policy, as long as you have comprehensive and collision coverage on there, will cover this vehicle if it is stolen.  Now, what they’re doing in here in putting in “state of Nevada,” if you leave the state of Nevada and you go over the border and get involved in an accident or the car is damaged or stolen, they wipe their hands of it and now it’s put back on the insurance company of the person driving the vehicle.  I believe if you purchased a collision damage waiver, you are buying this insurance as the primary coverage from that rental car company.  Now they’re taking that burden and placing it upon the insurance carrier of the person renting the vehicle.

 

Chairwoman Chowning:

Are you saying that the waiver of damages should include circumstances whether inside or outside of the state?

 

Jim Werbeckes:

I believe that this is a policy issue to be set by the Legislature, but the way this is written, once that person leaves the state of Nevada, and they want to go over the border and they didn’t notify the rent-a-car company, they would have no coverage.  I think that is improper, especially for the price they charge for the insurance premium on those rental cars. Sometimes the renter makes a last minute change in plans while you’re in Las Vegas visiting, things change.  I would just have concern over that issue.

 

Chairwoman Chowning:

Your concerns are so noted.

 

Lisa Foster, Representing the American Automobile Association, Nevada (AAA):  

[Introduced herself.]  I won’t reiterate what Mr. Werbeckes said, but, basically, I agree with that.  With Section 1, it seems that it doesn’t protect consumers from some of the “bad” cars that can be in rental companies.  You are talking about consumers being responsible for vehicles that may have some severe mechanical damage or for their own insurance company being responsible for that.  I don’t know that that’s a good policy.

 

Chairwoman Chowning:

It was presented to us in almost the opposite way, that it would help the customer and now we hear an opposing view that  it will not help the customer.  We’ll have to study that. 

 

Bill Gregory:

I have no further remarks, but I would like Mr. Duffy to respond to the concerns for the consumer.

 

Keith Duffy:

The companies were talking about physical and mechanical damage.  It does say that it is covered on line 6.  We are trying to broaden it by taking out the word “collision” so that any kind of damage would be covered, not just collision.  We’re trying to broaden that, not restrict it.

 

Chairwoman Chowning:

Except, if you do read that, it says “a short-term lessor and a short-term lessee may agree that the lessee will be responsible for. . .” which means that they will agree for physical or mechanical damage to the car, which now does not just limit it to what has occurred in a vehicle collision, so if something is wrong with the transmission or the windows, and the person didn’t do anything wrong, now they’re going to be responsible for that.

 

Assemblyman Collins:

If I had a rent-a-car and the transmission quit, I wasn’t quite somewhere where I wanted to get to, I am going to be on the phone raising heck with the rental agency.  They will want my business again so they’re going to be nice and say that they will get somebody right out there and take care of it.  I think the responsible companies and businesses are going to take care of something like that if a transmission fails or you need a tow, and you explain to them those mechanical failures when you report it when you turn in the vehicle.  They want to stay in business, and they’re going to lose their customers if they’re not taking care of it.  They’re not going to tell you that you’ve got to replace a transmission, I don’t think, unless it’s torn off.  Don’t you think so?

 

Chairwoman Chowning:

Except that we’re making a change in statute, and that is something we have to take very seriously.  We’re going to have to get another opinion before we take action on the bill. 

 

We’ll close the hearing on A.B. 522 and we’ll open the hearing on A.B. 523.  We have postponed the hearing on A.B. 197 until Thursday, April 10.

 

Assembly Bill 523:  Authorizes certain counties to use proceeds from county motor vehicle fuel tax for maintenance and repair of streets, highways and various other projects. (BDR 32-574)

 

Stephanie Licht, Representing Elko County:

[Introduced herself.]  The history behind A.B. 523 if you look at the numbers that we’re replacing, once upon a time Elko County was growing very rapidly in population.  However, our gas tax money was not keeping pace.  Somewhere between 1997 and 1999, the smaller counties knocked on the door of the Legislature and said that the rural areas need to use their RTC [Regional Transportation Commission] monies for maintenance, repair, and those kinds of things because they weren’t building too many roads.

 

The Legislature was kind enough to grant that.  As you can see on page 2 of the bill, beginning at line 5, “in a county whose population is less than 50,000,” is how it used to read, “street and highway construction, maintenance, or repair, or any combination thereof . . .”  That meant that we could use our RTC funds to do that maintenance and repair while the larger counties, in Section 1, page 1, line 3, used their RTC money mainly for acquisition of new roadway stuff.

 

We had a growing population and we had a couple of county commissioners eyeballing that money when the county was approaching 50,000 population.  They were kind of panic-stricken, and they were afraid that they wouldn’t be able to repair and improve our roads in the rurals.  Therefore, they proposed that we bump these numbers up by 50,000 people so that we could qualify.

 

Mark Sullivan:

The way I read the bill is it allows counties with up to 100,000 people to divert funds that were for new construction to maintenance.  One of the challenges that we have with that is, when I looked at that initially, I thought it was between 50,000 and 100,000, but the language that I see here today, it says up to 100,000.  The challenge we have with that is, what ends up happening is people are diverting the funds and forming their own construction companies.  A lot of projects that would normally be seen as new construction are being categorized as maintenance. 

 

We have projects like that going on all over the state, and we’re constantly trying to rein in local government entities from performing those types of work.  A lot of times they don’t have the competency to perform certain tasks.  A lot of times they’ll operate under the same efficiencies as a contractor would, so we would try to prevent that from happening.  There were two or three projects in northern Nevada—one was an overlay where a local governmental entity went to perform an overlay on a bridge.   You can’t just overlay a bridge.  There are a lot of structural issues that go with that, and they did not have the in-house competencies to recognize that they shouldn’t have been performing that type of work.

 

In another case, they installed about $800,000 in drainage pipe.  They used to have an open ditch, and they bought $800,000 worth of pipe and put it in the ground and covered it up and called it maintenance.  They said it was a ditch, and they were just maintaining that ditch.  There are a lot of people out there who believe that is called construction.  We would hate to see this extended out further.  I understand there are some challenges in the rurals where you may not have the opportunity for the construction and the division of dollars where there is not enough growth out in those areas to be able to support the maintenance needs that you have.  Maybe there is something we could do in the interim between now and Thursday to address some of those issues.

 

Assemblyman Claborn:

Does the state of Nevada have a “force” account?

 

Mark Sullivan:

I believe so.

 

Assemblyman Claborn:

Wouldn’t this come under that?  Anything over $4,000 would have to be construction, wouldn’t it?

 

Mark Sullivan:

I am not familiar with that portion of the law.  I am familiar with the ones with regard to public works and public bidding.

 

Assemblyman Claborn:

I’m just talking about a “force account.”  Anything that is bid over $4,000, which would be the difference between maintenance and construction.

 

Mark Sullivan:

I am not familiar with that.

 

Assemblyman Claborn:

I’ll try to find out.

 

Chairwoman Chowning:

You’re not opposing Section 1, subsection 1, but you are opposing Section 1, subsection 2?

 

Mark Sullivan:

I think the bill is just raising the threshold of county populations in both sections, is that correct?

 

Chairwoman Chowning:

It’s raising the population in the first subsection, and it’s raising the “less than” in the second part.

 

Mark Sullivan:

So when a county’s population is less than 100,000, and the way I read the bill (A.B. 523), originally it was between 50,000 and 100,000 population.

 

Chairwoman Chowning:

Subsection 2 would be zero to 100,000 population, in other words, under 100,000.  Whereas before it was under 50,000 population.

 

In counties under 100,000 population, they may use the county fuel tax for the maintenance and repair of streets and highways.  Is that the part you are opposing?

 

Mark Sullivan:

Correct.

 

Stephanie Licht:

I apologize for not having the specific information with me, but I seem to recall that either in this Committee or in the Assembly Committee on Government Affairs, this specific issue which he is discussing of making sure that these little repair projects are not some kind of a major construction project, I believe may have had something to do with Mary Walker and Douglas County and Carson City.  Staff might go back to last year, because it seems to me either there was some kind of interim study or Mary Walker got together with AGC and they worked some kind of a deal out where that would not take place.

 

Chairwoman Chowning:

Ms. Licht, I think you are correct, and I think it possibly was through this Committee, and I think it was last session.  We will research that.

 

Assemblyman Carpenter:

I believe A.B. 523 just changes the population cap.  In reality, because Elko County never did reach 50,000 population, the point is mute.  It just changes the population cap so that we can continue to do what we have been.  What was happening before is that when we couldn’t use this money for maintenance or repairs, it took many years in order to try to save the money to get a new project in.  It was more important at that time than at this time to be able to use the monies for maintenance and repair.  I don’t know the situation that the gentleman from the contractors is talking about, but in Elko County, they’re actually looking at using more contractors rather than doing it themselves.  Just recently up there, there was a new road that had to be upgraded with maintenance, so they actually put it out to a bid and a contractor got it.  They’re looking at that with a lot of their projects.  Hopefully, the contractor can do it better than the county can themselves.  I don’t know what the other situations are, but up there, they’re looking at using contractors to do it.  In reality, it’s just changing that population cap so we can continue to do what we have been doing in the rural areas.

 

Assemblyman Claborn:

A “force account” to me is a city, county, or state maintenance account.  Cities or counties are only supposed to do maintenance and not new construction.  If anything is to be new construction, it has to be bid out.  If I remember quite a few years ago, it was $4,000, if it was new construction.  That’s what I say is a “force account.”  New construction is supposed to be bid out if it’s over $4,000, and, if it were under that, it would be maintenance.

 

Assemblyman Gustavson:

I’m wondering how this might affect Carson City, because the figure of a 50,000 cap is being changed.  Carson City is over 50,000 now.  Is it going to affect that in any way?

 

Stephanie Licht:

I would have to check with my colleague, Bob Hadfield, who knows a little more about the population of Carson City than I do.

 

Bob Hadfield, Executive Director, Nevada Association of Counties (NACO):

Carson City is a major metropolitan area now with a population of over 50,000.

 

Stephanie Licht:

If the Committee has some kind of a concern with the number, I am sure we can negotiate something between 50,000 and 100,000.

 

Mark Sullivan:

We did discuss with Mary Walker during the interim session some changes to the public bidding law and moving some of those thresholds.  We recognized they had not been changed in some time and upping the amounts that had to be bid out legally was needed.  I would be happy to provide you with that information.  Certainly what we agreed to is not law yet.  That was specifically the challenge that we had with some of the things that happened in Carson City, and we don’t want to open “Pandora’s box” by allowing more of this to take place.

 

Chairwoman Chowning:

Why don’t all the parties work together, and we will close the hearing on A.B. 523 and address that on another day.  We will open the hearing on the last bill of the day, and then we go into our work session.  I will open the hearing on A.B. 525, presented on behalf of the City of Sparks.

 

Assembly Bill 525:  Revises method by which proceeds from certain taxes on motor vehicle fuel are allocated between local governments in certain counties. (BDR 32-459).

 

Shaun D. Carey, City Manager, City of Sparks: 

[Introduced himself.]  I am joined by Councilman Ron Schmitt, and by the lobbyist for the City of Reno who will speak following our remarks.

 

The City of Sparks has been joined by the City of Reno and both city councils have voted unanimously to support this change in the Tier-Two gas tax distribution only for Washoe County.  I will be frank and point out that Washoe County is opposed to this bill.  They are inclined to stay with the existing funding structures which favor counties and that have imposed a hardship on the two cities in northern Nevada.

 

A.B. 525 is not about increasing gas tax.  This bill is about the fair and equitable distribution of the gas taxes that are currently collected.  We are focusing very much on trying to make sure that the gas tax that is coming to Washoe County is going to the most urgently needed road repairs.  We see roads in the cities which are four-lane roads carrying high volumes of traffic.  Tax revenues are coming to Washoe County but don’t get at our problems, which are located in our two cities.

 

Why the change?  The change in the Tier-Two distribution only affects Washoe County, and it is specifically to draw to these very specific conditions that exist in Washoe County which are not present in the rest of the state.  We believe that you should look at Washoe County as a unique part of the state and look at this bill carefully to make sure our gas taxes that we’re collecting are used equitably for all of our citizens.

 

We have, today, a great amount of backlog in our two cities that is approaching $250 million.  In the City of Reno, it is in excess of $175 million.  In my community, it is about $47 million in round numbers.  In Washoe County that figure is about $60 million.  That backlog can be addressed by a better equalization of the utilization of our existing revenues.

 

[Exhibit I is a PowerPoint demonstration.]  Page 6 (Exhibit I) is a shot of how some of the gas taxes are currently distributed.  You can see that there is a combination of effect.  Sometimes Washoe County is the high percentage and at other times it is not.  It is our position that we need to go to a more equitable distribution that makes taxpayers equal within our community.

 

This is how the current taxes stack up on a per capita basis when using the Tier-Two distribution for the gas tax that flows to Washoe County [Page 8 of Exhibit I].  You get almost $50 going to the county, about $17 going to Reno, and $16 going to the City of Sparks.

 

Our bill draft request for this particular bill asked that it be equalized so that all agencies and all taxpayers were getting the same return.  We think this allows for a shift in what the priorities are in the repair of the existing roadways within the two cities, which needs to be the priority in the coming years.

 

Washoe County is unique.  I bring this up because Tier-Two distribution has been the topic of past interim 557 committees and I’m sure will be a topic in the future.  I want you to understand that Washoe County is different than Clark County.  Seventy-three percent of the population lives in the two cities, Reno and Sparks, in Washoe County, while only 58 percent of Clark County’s population lives in cities within Clark County.  The assessed valuations are markedly different in the northern part of the state.  Sixty-four percent of the assessed valuation is in the two cities, while 48 percent is in Clark County.

 

What I think page 10 of Exhibit I shows is that you need to look at Tier-two distribution on the specific basis of what is in the best interest of an individual county.  We believe Washoe County is unique by its demographics, by its employment centers.  We believe that we need to make this adjustment so that where the jobs are and where the people are living, the road monies follow, so that we are putting the money on the roads which desperately need repair.

 

Population and property values in Washoe County are far more concentrated.  I think 73 percent is one of the largest numbers in the state.  Vehicular traffic takes a greater toll on city roadway surfaces.  We have roads just like they do in Washoe County, but we have many more four-lane roads.  The upkeep of those four-lane roads involves continuous striping.  We’re striping some of our roads every three months.  We have many more traffic lights and urban situations where we are managing traffic on an integrated daily basis, far different than what is occurring in the rural areas.

 

Washoe County is different than the smaller counties.  A.B. 525 is not intended to be a precedent for any other county in the state.  It is not intended to apply to others.  It simply looks at the unique situation in Washoe County.  The dramatic differences between Carson City, which has a population of 54,171 and Clark County at over 1.4 million, show the vast differences in our state.  We think the uniqueness of our communities needs to be considered.

 

We all use the pavement management system developed by the Army Corps of Engineers, and all of our communities today have pavement condition indexes, which are the blue dotted bars on this graph (page 12, Exhibit I), 70 for Reno, 71 for Sparks, and 78 for Washoe County.  The problem is the burden that the agency holds on a paved road-mile basis against the backlog is far different.  The backlog on a per-mile basis in the city of Reno is almost $100,000 per mile, which is twice that in Washoe County.  Sparks is approaching $89,000.  The burden to the taxpayers is what is being shown here, the burden being twice that in the two cities than for the county.  We think that the engineering analysis and the redirecting of existing gas tax revenues is essential to putting the money where it is most urgently needed.

 

Again, this is a look at the number of miles.  Your state gas tax formulas are built on center lane miles, which do not differentiate between the widths of the roadway.  A roadway that is two lanes wide or eight lanes wide is not recognized in our formula.  You can see that while Washoe County has 650 miles of paved streets, the two cities have 754 miles.  We have over 1,000 more lane miles in the two cites as opposed to Washoe County.  That is a dramatic difference which we believe plays into the uniqueness of Washoe County.

 

Regarding traffic signals, just as an example, my agency pays a power bill on traffic lights per intersection in excess of $5,000 per year, just to pay the electric bill.  In Reno and Sparks, we have 318 of these which must be supported by our revenues. Washoe County has 15.  Again, Clark County is a very different situation.  There are 429 traffic lights in Clark County.  We wanted to show you that as a stark difference and something that makes this unique.

 

Washoe County residents, because of our land use patterns, the location of the population and work centers, they drive into the two cities.  It is not like Clark County where you have the Las Vegas Strip and many employment centers.  Assessed valuation is much more balanced. They, frankly, must come to the cities to shop, to work, and to recreate on a daily basis.  You don’t have that same kind of reverse flow that you would have in the interactions in southern Nevada as you do in Washoe County where it’s driven toward the cities. The urban traffic volume requires that increased maintenance that I touched on before.

 

[Shaun Carey continues.] An example of the growth that is coming our way is a roadway that leads into my city from the unincorporated Washoe County.  There are 19,200 cars per day and, in approximately 30 years, we will have over 80,000 cars per day.  We must have some changes that look at Washoe County.

 

We submitted a bill draft request to the Legislative Counsel Bureau that took all of the county gas taxes, and there are four different parts of that.  It created a dynamic shift.  It did change where the spending would take place in the future.  It moved it from the county rural roads to those roadways within the cities which must be repaired because they’re part of a growing backlog.

 

The bill you have before you today is different than our BDR.  It only addresses two portions of the four portions of the Tier-Two, and that is the 2.35 cents and the 1.75 cents.  The overall effect of the bill, as it has come before you today, is less than you saw in our BDR documentation.  It results in a $1 million shift in revenues that would predominately go to the City of Reno, which is appropriate as our largest population center, and my agency would gain additional revenues.  I wanted to point out this change which comes to light from the bill from the Legislative Counsel Bureau.  I want to point out that we’re taking the bill that came out of the Legislative Counsel Bureau and are asking for your approval today in moving these two parts forward on our path to getting road equity.  We think, by using our existing gas taxes more appropriately, we can make an impact of over $1 million per year by moving this money.  The money will go into capital construction in both communities.

 

Interim committees have considered Tier-One distribution.  They moved from old formulas to new formulas.  Two-thirds population/one-third road miles became part of our state distribution plan.  Tier-Two is not going to be the same in every county in the state.  The formulas that are right for Washoe County are not intended to be right for Elko County, Carson City, or even Clark County.  They are intended to fit the unique positions and problems we are facing in Washoe County.  We think Washoe County would best be served by refocusing existing tax dollars to the repair of the roads that are used by a majority of our residents.  This is an issue of taxpayer equity and fairness, and we would ask you to join us in making this bill a reality.

Chairwoman Chowning:

In the interim 557 Committee, did Sparks and Reno bring up these same statistics illustrating this problem to that Committee?

 

Shaun Carey:

As the Committee deliberations got into the spring of last year, we became aware that they were opening discussions by looking at Tier-two distribution mirroring Tier-One distributions, which is the two-thirds/one-third split.  We reacted first to a lengthy memorandum which came from the Clark County Public Works Director, Mr. Marty Manning, which pointed out that Clark County would have problems in an adjusted fuel tax model if it was imposed in that same mode.  Both public works directors from Reno and Sparks responded with a memo of their own, saying that it wasn’t “one size fits all.”  What works in Clark County is not a bad thing when applied to Washoe County.

 

We would support an application of two-thirds/one-third within Washoe County for a distribution of these funds.  We’ve chosen population because of some of the feedback we got from presentations of these materials over the summer to a joint meeting of the Washoe County, Reno and Sparks City Councils, where they chose to focus their support to just population.

 

The deliberations were not concluded last year by the 557 Committee, and I believe they will need to continue to look at this issue.  A.B. 525 is a step that takes us towards equity now and moves $1 million in the right direction to prevent the backlog from growing.

 

Chairwoman Chowning:

But this same information that you presented to this Committee today, you did present in the 557 Committee?

 

Shaun Carey:

Not precisely.  We responded in a letter, which would have made many of the same points.  Some of the information I am presenting to you today was not available to the 557 Committee at that time.  Our bill draft request was a result of nonaction by that Committee as they drew to a close.  We chose to use our single BDR for this purpose.  We have been trying to advance our data set all the way through the BDR to bill processing.  Some of the numbers, necessarily, do change in this environment.  We are a city, and we are several levels of government away from where these distribution formulas are actually applied.  We work closely with the state.  I need to thank Russ Law, Chief Operations Analysis Engineer, from the Nevada Department of Transportation (NDOT), for pointing out the application of A.B. 525 being different than our BDR.  It has very much been a moving target.  I have done my best to present you with factual data from records, and everything that you see here is supported by documentation.

 

Chairwoman Chowning:

You’re saying some of your figures couldn’t be presented because the data was not present.

 

Shaun Carey:

That is correct.

 

Assemblyman Collins:

When you did your road comparisons, did you include roads that were also state roads where they share in the cost of road maintenance and traffic lights, or was it exclusively streets that are Reno or Sparks only and not state roads combined maintenance?

 

Shaun Carey:

The traffic signals would include all the traffic lights whether they are on the intersection of a county road and a state highway, or a city road and a state highway, or a state-to-state intersection.  In Washoe County, we do all of the maintenance of the traffic lights through the local agencies, so those numbers would be reflected there.  The numbers you are seeing in my presentation focus on revenues that come forward and focus on the backlog.  They do not include the backlog of the Nevada Department of Transportation within Washoe County.  It is solely the backlog reported through the pavement management systems of those three agencies.  Again, that is the $175 million for Reno, $60 million for Washoe County, and $46 million for Sparks. 

 

Assemblyman Collins:

The state costs are separated out of that.  How about the mileage of roads?

 

Shaun Carey:

The mileage would not be shown in the figures I presented either.  They are included in some of the Tier-two distribution.  They do affect the distribution to the county, but the mileage I am showing you here is the information obtained from each agency directly.  We asked Washoe County for their road mile information and that is our source.  It does not include state highways.

 

Assemblyman Sherer:

Regarding the presentation concerning traffic lights, was it Washoe County in general, and then just Reno and Sparks?

Shaun Carey:

Reno and Sparks being the two cities, those are the numbers of traffic lights located in the two cities.  The Washoe County figure is the number of traffic lights in Washoe County outside of the two cities.  The Clark County number is the number in Clark County, inclusive, I believe.

 

Assemblyman Sherer:

The Clark County figures included Las Vegas.  I was just surprised by the numbers.  They were pretty close.

 

Shaun Carey:

We did call Clark County to get that number, and that’s their data set that they gave us that there are 429.

 

Ron Schmitt, City Councilman, City of Sparks:

[Introduced himself.]  I am here in support of A.B. 525.  There are two areas I would like to stress here today. 

 

The first is that this is the City of Sparks’ one and only bill draft that we were able to submit.  As you know, with the new rules that went into effect, cities have a limited amount that they can submit.  We felt, as a City Council and staff, that this was the highest priority for our city.  It you look at the bill, our sister city actually benefits more than we do from this bill in terms of dollars.  As City Council and staff, we consider this our highest priority.  We put a lot of thought and emphasis in this bill and chose it as our one and only bill to bring forward.

 

The second area I’d like to address is that this bill is about fairness.  When I was presented the numbers and talked about this bill, I wondered how this could have happened and how these things come about.  I started talking to people in both the county and the cities, as well as receiving phone calls from people in the county and cities, and I asked them one simple question.  For those who lived in the cities, I asked them how often they drove into the county.  Most of the time they drove into the county about once a month.  I asked the residents from the county how often they drove into the cities, and probably 90 percent drove into the cities on a daily basis. 

 

I have two examples in my ward alone.  There is a housing tract with 52 homes that cannot leave their housing tract without driving through the City of Sparks’ streets and streetlights.  There are no revenues generated from that housing tract to pay for those streetlights.  All those residents use those services of the City of Sparks just about for free.  The second area was in Mr. Carey’s slide of the north/south division of the city by the Pyramid Highway.  Today’s traffic counts are 19,200 vehicles.  Most of those vehicles, well over 80 percent, are traveling from the unincorporated area into the incorporated area of the City of Sparks and dispersing throughout the city in different directions.  Parts of the arterials that come from the unincorporated area come directly through the City of Sparks through my ward.  We are trying to maintain streets and streetlights to a standard for traffic that is not paying taxes for those services.  I ask you today to please support A.B. 525.

 

Nicole Lamboley, Representing the City of Reno:        

[Introduced herself.]  It is true that the Reno City Council has endorsed this legislation.  Mr. Carey made a similar presentation at a joint meeting of the two city councils and the county commission in January 2003.  At that time he asked for the City of Reno’s support.  They did support the bill, and our Public Works Director, Steve Varela, has been working with the Sparks Public Works Director and with Mr. Carey on this issue, and I wanted to lend our support for this issue.  We do realize that this is the one BDR the City of Sparks had, and they gave careful consideration to the legislation that they would be bringing forth.  They had asked the Reno City Council for their support, and, in looking at the impact, we offered our support.

 

Chairwoman Chowning:

To the best of your knowledge as well, did the City of Reno bring these same concerns to the interim study 557 Committee?

 

Nicole Lamboley:

Yes, it is my understanding that Steve Varela worked with the City of Sparks in responding to the concerns of that interim committee.  We did express some concerns that the interim committee had determined not to bring any legislation forward.  That is why we gave serious consideration to the Sparks proposal.

 

Chairwoman Chowning:

It was your understanding that the Committee was not going to bring this forward this time or was it your understanding they were going to continue to look at the issue.  What was the understanding?

 

Nicole Lamboley:

I was not employed by the City of Reno at that time, so I cannot answer that.  I would be happy to get that information and get the response from our director of public works.

 

Chairwoman Chowning:

I would appreciate that.  It is something that does need to be made clear for this Committee.

Stephanie Licht:

I would like to bring to light, Murphy’s Law, that everything in the universe is connected to everything else.  While this might not look like it may affect Elko County and it is a Sparks bill, we have the same kind of relationship in our neighborhood between Elko County and the City of Elko.  Lots of roads, lots of potholes, and no money.  Any time you are messing with that formula, even though I don’t understand anything about the formula, I’ve sat through a lot of 557 Committee hearings, and I can tell you those folks have tackled a lot of difficult issues.  In my own mind, that is where the solution to this lies because it seems there are about four different tiers of this tax money and how it goes to whom and where it goes.  To be fair to both the cities and counties, even though Elko County and the City of Elko usually have a good relationship, when it comes to having no money and trying to provide services for your people, it is really tough. 

 

The formulas with the three or four tiers that I don’t really understand are creating problems, and the 557 Committee has been working very hard to try to be fair to everyone.

 

Chairwoman Chowning:

Do you agree, based on what was shown here, that Washoe County and the cities therein are different and unique from other counties in the state?

 

Stephanie Licht:

I have heard that every city and every county is different in this state.  That is all I can testify to.  I know that our problems don’t mirror Washoe’s or Carson City’s.  Esmeralda’s don’t mirror ours.  Everyone is in a unique situation, and that is why I think it has been so difficult for the 557 Committee to try to figure out what these pieces are.

 

Robert Hadfield:

I am present today, at the direction of the full membership of the Nevada Association of Counties [NACO], to oppose A.B. 525.  Our opposition is based on the fact that we have invested eight years of the time of our experts and our county and city people in a process that was set up by the Legislature, which we now refer to as the 557 Committee. 

 

I want to answer the question of the Chair as to why that Committee did not address this issue that is a common issue this session.  It is simply because they recognized it was a very complex issue, and they needed to be very careful to come up with a solution in which they could get the consensus of all the cities and counties. 

 

[Robert Hadfield continues.] You have heard about Tier-One being changed.  Tier-One is the money that goes to the counties.  That was changed, and many counties lost money in that change.  They lost the ability to have additional gas taxes, and they are frozen at their current level of distribution as a result of that legislation, but we did it through consensus.  It was a unanimous consensus of the counties, even those such as Eureka County that lost money and Nye County that loses money, because we took the time necessary to bring together not only the finance people from all the counties, but all of the road maintenance people, the road supervisors, and the public works directors because we felt it was critical. 

 

The problem we have, and I can certainly understand the problem that Sparks and Reno are talking about; everybody will agree that they don’t have enough money.  I am sure Washoe County can tell you they don’t have enough money, and the city’s presentation showed you that the county doesn’t have enough money.  What we are doing is redividing a current pot of money, and, when you do that, you necessarily take money away from somebody.  Their presentation demonstrated that.  No one would care if there was plenty of money and someone could afford to lose it.  That is where the committee process comes in, and that is why we support the process.

 

We urge this Committee to refer them to the process.  That group of people came up with a solution for the county first tier.  The second tier is going to be more difficult, because you’re taking money away from counties.  Some counties will lose still more money, and that is a real problem.  That is why the 557 Committee understood they needed more time to study it.

 

They have had NDOT do studies.  The survey referred to by the cities was a survey of that group to find out and get as much good information as they could about current practice.  They have looked at how we maintain roads.  They have looked at the cost of maintaining gravel roads, dirt roads, four-lane roads, and two-lane roads.  This is an issue that deserves for people to cogitate at great length on these issues. 

 

The process that has been set up is very deliberative, and it is slow.  It may be too slow for some cities or counties, but we have hung in there, and we have agreed that, short of doing it the right way, all we will have is special circumstances like you heard today.

I am going to change my hat.  I sit on the Minden Town Board, and we use property taxes to take care of our roads.  The county doesn’t take care of them.  We don’t get gas taxes.  I could show you that Douglas County is special because we have three unincorporated towns, and we could have another bill just for Douglas County.  That is what this whole process is trying to avoid by bringing everyone together and having solutions come up that can be implemented over time, perhaps in different ways in different communities.

 

I will be honest and tell you that in the First-Tier distribution, we froze the level of funding.  We didn’t take any current funding away from anyone.  The problem is going to be resolved through the growth and the gas tax revenue.  Eureka County is frozen at their current level of revenue.  If more money comes in, they don’t get it.

 

They have inflationary costs.  Their costs of doing business go up so they lose, but they understood and accepted the decision of the group because they did spend a couple years, and they did do it right.  They also used numbers that we all agreed on, and that took a long time.  We have the process in place, and the people are there.  The experts are there. They’ve worked through one problem, and I urge this Committee to let them work through the second-tier problem and not shortcut it because you’ll be opening the door for everybody to say that they are not going to wait, that they are going to do it the way they want to do it.  We will have no logic, rhyme, or reason throughout this state from one entity to another as to how we do this.

 

Chairwoman Chowning:

Do you think that this unique set of circumstances presented here today, along with other unique sets of circumstances, will all be given the attention they deserve through the 557 Committee?

 

Bob Hadfield:

I do.  Everybody is not going to be a winner, but at least we’ll all be at the table and all be part of the discussion.  We’ll all get the information at the same time, and we’ll all be able to work on the solution.  That’s not happening here today.

 

Chairwoman Chowning:

That includes the cities as well as the counties?

 

Bob Hadfield:

Absolutely, because the second-tier is cities and counties, and the cities clearly have an investment in this.  You heard them today.  They want more county money.  It’s that simple.  They will have everybody there, but we’ll have everybody there, too, and reasonable minds can come up with well thought out, reasoned solutions.  I’m convinced the 557 Committee can do it.

 

Mike Alastuey, representing Clark County:

[Introduced himself.]  I’ve been privileged to be a member of the Technical Advisory Committee to the 557 Committee and its statutory predecessors for some years, and, for approximately two decades, privileged also to be a member of a local government finance committee.

 

We’re opposed to A.B. 525, not in terms of self-interest or how it would affect any particular situation, but we’re opposed on the basis that it would be making public policy through a process of exception rather than through a deliberative, iterative way of doing business.  We note that the proposal in this bill would be to reduce the allocations to counties and to make those allocations based on a single factor, that being population.  Currently, there is a multiplicity of factors including population, area, road miles, and vehicle miles traveled. 

 

There was a long process that I believe lasted two interims just for first-tier redistribution alone.  I can recall meetings at McCarran International Airport attended by people of all persuasions and originating from all counties throughout Nevada just to take care of the first-tier distribution.  Mr. Hadfield is right.  It was a tough and painful process, but it was a consensus process and, in the end, the final determination of the 557 Committee was embodied in a bill that went through the Legislature virtually without dissent.  That, we believe, is the way to do business. 

 

We believe that the proposal from the City of Sparks, although we respect their ambitious expansion of their city limits and their plans for growth, is extreme, even according to the testimony.  They would accept other ways of distributing, such as two-thirds/one-third, as was the case in the first tier, but nonetheless they favor the population-only distribution.  My question is, which is it?  I suspect the answer is “whatever we can get.” 

 

The final concern we have is that it does not go through the legislative process that has been established through several bienniums and ratified and continued through several sessions, which is the process carried on by the Legislative Committee for Local Government Taxes and Finance.  I believe there has already come to your attention a letter from Guy Hobbs, a renowned fiscal expert, who is the Chairman of the Advisory Committee to the Legislative Committee for Local Government Taxes and Finance (Exhibit J).  Members of the Committee are public finance practitioners in both the public and private sectors that provide technical foundation and expertise to the Legislative Committee for Local Government Taxes and Finance.  In this letter Mr. Hobbs strongly recommends that you remand this back to the 557 Committee for resolution during the interim. 

 

I also want to advise the Committee that I spoke not only to Mr. Hobbs, but also to Mr. Marvin Leavitt who is a member of the advisory committee as well. I asked for Mr. Leavitt’s input, and I believe I’m authorized to carry to you that, at this time, and particularly with the great investment of effort that has already carried on in this process, we, as members, are not able to support this bill. 

 

Finally, I’m authorized to carry the message of the Chairman of the Legislative Committee on Local Government Taxes and Finance, Assemblyman David Parks, who also respectfully requests that this proposal be routed and remanded to the 557 Committee for further interim study.  Noting your earlier comment, Madam Chair, in seeking assurance that proposals like this will be given every possible airing and the most thoroughly possible analysis, I think that assurance can be given. 

 

Chairwoman Chowning:

Thank you for answering my concern.  I assume that same assurance comes from Assemblyman Parks and from the other members of the 557 Committee.

 

Mike Alastuey:

Yes.  I believe Assemblyman Parks did authorize me to carry that message to you on behalf of him as Chair, and on behalf of myself, Mr. Leavitt, and Mr. Hobbs, I know that the message is sincere and that it is one of concern and dedication to the task.

 

Chairwoman Chowning:

We want to thank all of the members of the 557 Committee for all of their hard work during the interim.  We just don’t want to be back here two years from now with cities in the very same position. That would be unconscionable and not something we could be proud of.  I guess we throw that challenge out to every-one, as well as the message that we don’t want to be back here in this same position again.  We have to look at the bill that is before us.  Yes, there are lots of other cities in the state, but this is the bill that is before us. 

 

We are all citizen legislators, and we come from different backgrounds, and we don’t always have all of the facts before us.  In this case, we have these facts before us.  There are dire needs, and those dire needs do need to be met.  We appreciate the words of assurance, however, and I’ll just state this again.  We don’t want to be back here two years from now with this same set of needs being unmet.

 

Gaylyn Spriggs, Nevada Taxpayers Association:

[Introduced herself.]  We oppose A.B. 525 for the same reasons the previous two speakers do.  There was a lot of work put into those committees, but we believe that if the City of Sparks wants to change the distribution formula within Washoe County only, they should be required to proceed under Nevada Revised Statutes (NRS) 360.730.  Under that statute, local governments within a county are allowed to change distribution formulas for certain taxes by cooperative agreement.  If A.B. 525 was to be passed this time, we believe that, at the very least, it should be amended, to require a cooperative agreement between the local governments on how the distribution formula should be changed.

 

Chairwoman Chowning:

We always appreciate people coming with possible solutions. 

 

John Slaughter, AICP, Strategic Planning Manager, Office of the County Manager, Washoe County:

[Introduced himself.]  Washoe County opposes A.B. 525, but not because we support the current formula, as was stated previously.  We oppose this bill because we support the 557 Committee process.  It is our position that any legislation that proposes to change the formula or methods used to distribute fuel tax should be reviewed by the 557 Committee.

 

I provided to the Committee secretary a description of the 557 Committee, including a list of the members of that Committee so you know who will be deliberating on these matters over the interim.  The document includes a list of those members of the Committee, the Subcommittee, and the Advisory Committee (Exhibit K).  I’ve also provided the minutes of the August 23, 2002, meeting of the 557 Committee (Exhibit L), and I’ve highlighted several statements from Marvin Leavitt, Chair of the Subcommittee. 

 

At that August meeting, Mr. Leavitt stated that the Subcommittee had undertaken considerable discussion and work on the item.  However, as anticipated, it was unable to complete its study of the second-tier formula.  The Subcommittee has considered various formula scenarios using the formula developed for the first-tier distribution, which included population and road miles, but had not finalized a formula that would, and I’ll emphasize “fairly,” reflect the need for funds by the various local entities.  Further Mr. Leavitt stated that, while it was recognized that the formula would require change, the Subcommittee did not want to take final action until it had created a formula that, and again I’ll emphasize “fairly,” represented the need for revenue.  Mr. Leavitt stated he was hopeful that, over the next interim, the formula would be resolved and presented to the 2005 Legislature for consideration.  He pointed out that resolution of the first-tier distribution formula had required five years to complete and that the Subcommittee wanted to present a formula that would stand over the long term and would be fair to all entities. 

 

As you’ve heard from previous testimony, issues of fairness and equity with regard to motor vehicle fuel tax distribution are a complicated issue.  It is not one that is simply fixed.  It is an issue that the Legislature has asked the 557 Committee to review, and it’s a review that is currently underway and will result in recommendations to this body in 2005. 

 

 

Assemblyman Knecht:

Going off of the last witness’s suggestion of a mutually agreed settlement, if, for argument’s sake, we were to conclude that Sparks and Reno have the better part of the technical argument as to what is a reasonable and fair allocation at this time, is there some way that all of you could come up with a negotiated solution?  I’m not asking you to sign on to theirs, but accepting the hypothesis for a moment that we’ve considered the evidence that Sparks presents and that all the other parties have presented, and that we conclude from this that they have the better part of the argument, not that they are absolutely correct as a matter of revealed truth and wisdom.

 

Darin Conforti, Senior Fiscal Analyst, Washoe County Finance Department:

[Introduced himself.]  In terms of the proposal by the speaker from the Nevada Taxpayers Association concerning NRS Chapter 360 in allowing for cooperative agreements to be entered into for the distribution of taxes, I would have to verify that this is applicable to motor vehicle fuel tax.  My understanding is that it is only applicable to the consolidated tax distribution, and I would need to verify that before giving you an answer.

 

Chairwoman Chowning:

He needs to verify whether that is applicable.  Will you get back to our Committee by tomorrow?  [Mr. Conforti indicated that he would.]

 

Assemblyman Knecht:

I’m not so much asking for a legal opinion as to whether the mutual agreement is binding.  I’m asking if you could come up with something, how long would it take, and how would we go about doing that if we were inclined to go down that path?

 

Darin Conforti:

Washoe County’s position on this isn’t so much to enter into agreements as it is to channel this taxation issue through the 557 Committee.  We need to look at the details.  This is a far more complex issue than is presented in the proposal before you. 

 

As someone who has to deal with the Motor Vehicle Fuel Tax quite often, I would almost enjoy it if it were as simple as the proposal makes it out to be to simply distribute this on the basis of population, and that would fairly get the money to who paid it and to who needs it to repair their roads.  Unfortunately, it isn’t that simple. 

 

The current distribution formula takes into consideration four factors as Mr. Alastuey went over earlier.  By way of an example to show how complex a relationship there is between who pays these taxes, who drives on the roads, and who the money gets distributed back to, the Sparks proposal is to distribute these funds based solely on population.  But we need to look at average vehicle miles traveled, which is a fairly good measure of road wear and tear, as well as who is buying gas and paying for these taxes. 

 

Based on the Nevada Department of Taxation’s final revenue projections for FY2003-2004, the City of Sparks has 21 percent of the total population in Washoe County, and they account for 14 percent of the total motor vehicle miles traveled.  The City of Reno has 53 percent of the population and 43 percent of the vehicle miles traveled.  The unincorporated area of Washoe County has 27 percent of the population, yet 43 percent of the vehicle miles traveled. 

 

If we simply try to reduce this down to distribution based on population, we wouldn’t be factoring in these other variables that have been so deliberatively considered into the formula.  We need to channel this to the 557 Committee so that we have more thoughtful consideration of what is the best relationship between how these taxes are generated and the roads that need to be repaired. 

 

Mary Henderson, Lobbyist/Government Consultant, Nevada League of Cities and Municipalities:

[Introduced herself.]  I come before you in support of A.B. 525, at least very strongly in support of the fact that, at minimum, the 557 Committee needs to take a very good, hard look at this issue.  Normally the League would not be appearing before you because the bill is limited to Washoe County and the two cities within, but, because of some of the previous testimony and NACO’s involvement, I thought it was very important that I come forward and speak about this.  I was also a member of, at the time, the A.C.R. [Assembly Concurrent Resolution] 40 Committee, which has been in existence since approximately 1995, and had the honor of sitting on that panel as a representative of the county for a few years and was the lobbyist who actually recommended and got passed the cooperative agreement portion of that law when we changed the formula. 

 

I want to address that first, because I think it might clear up some questions that you have.  It does address the distribution formula, but, at the time, the intent of the county in putting that in was to allow the county to move money through cooperative agreements, if there were inequities within the two cities and the county as we moved forward, knowing that it’s very difficult to come back over a 10-year period and change a formula of distribution.  So, while it does not directly affect the fuel tax piece, it was there to allow the county and the two cities to do some negotiations and hopefully come to some agreements at the regional level on how to allocate dollars. 

 

One of the things that troubles me in what I’m hearing today is something that has nagged at me for the last 12 to 15 years, which is that it’s a tragedy that we’re back to a county versus city issue.  We need to be looking at what’s best for the region and what’s best for our citizens. 

 

The last time I checked, city residents were county residents as well.  I have walked on both sides of that issue.  I’ve represented the city, I’ve represented the county, and now I represent a governing board as well as the League of Cities.  We need to keep that in perspective as we look at this. 

 

The fuel tax piece of what the 557 Committee has done has been long and torturous, and it has taken years to get us to the first-tier level.  The second tier must be looked at at a minimum.  You can look at this in any number of ways.  You can look at it in terms of what the current formula does on a per capita basis, who drives how many miles, and where.  I didn’t know people built walls around cities and counties, or that unincorporated citizens were any different than me as a citizen of Washoe County.  I happen to live in a city and pay an additional layer of taxes on top of that, and that is my choice. 

 

We need to keep that focus and find out what is best for the region, find out what works, and accept the fact that, on the second tier there are differences.  There are differences in Clark County as there are differences in Washoe. 

 

We’ve looked at numbers in the rural counties and the rural cities over the years.  That is something that this Committee, at a minimum, needs to spend some very, very serious deliberative time reviewing, analyzing, and working towards some consensus if this bill does not move forward. 

 

I don’t think that Reno, or especially Sparks, would have brought this forward except for the fact that they are very frustrated at this point.  When I moved to northern Nevada 17 years ago, I think Sparks had the highest paving index of any of the local governments.  Now they’ve dropped down.  We need to think about how we approach that.  We need to come to the table and find a solution that works for all of us, and we need to keep our ears, our minds, and, most importantly, our hearts open on behalf of our citizens. 

 

You can drive from here and not know when you leave Washoe County and enter Washoe County unincorporated nor know when you enter the cities of Reno or Sparks. There is no sign that says that.  I don’t think most citizens think that way. They don’t think that way when they call for police or fire.  They don’t care what color the fire truck is or what uniform they have on; they just want somebody there.  They want to have good streets and good roads.  If this bill does not proceed, we can urge the 557 Committee to find a way to help these local governments come to some solution.  Everyone may not be totally happy with the solution, but at least they can get a bit more equity into the way these dollars are distributed.  That would be an incredible goal for us to try to achieve over the next couple of years.

 

Chairwoman Chowning:

Your testimony shows a lot of research, and we appreciate that.  What difference people will notice is if they’re in the county and the roads are pristine, and if they’re in the city and the roads are full of potholes.  There does need to be regional cooperation.  From what everybody has said today, that’s what the goal is.  The goal of this Committee is for everyone to work together and for these measures to not still be on the table two years from now.

 

Assemblyman Knecht:

I’d like to make a brief comment in response to the testimony we’ve heard.  In my regular job, among the things I do is the kind of cost allocation work that’s involved here, so this is nothing strange or unusual to me.  Because of that, I went through the analysis that the City of Sparks pulled together, and I find it very interesting.  While no one four-factor, two-factor, three-factor, or one-factor allocation is the right allocation, I think that Sparks has the better part of the argument because, when you consider all of the data, it adds up to their proposal has the revenues tracking the costs, and I think that’s an important standard.  I think that fact suggests that Reno and Sparks, and more especially Reno, is being shorted under the current allocation. 

 

On the other hand, there is the procedural question as to the best way to change and remedy these things.  I’ve considered very closely the question of whether Tier-One and Tier-Two allocation methods must be the same and whether they must be the same in various parts of the state.  I’m not convinced that, as a technical or policy matter, they must be or should be.  I’m left in the uncomfortable position, after having done a lot of homework before this meeting and having listened closely to everybody here, that I think Reno and Sparks have the better part of the argument, but I don’t see procedurally how we get here, because I don’t like legislating these kind of matters by exception.  I thought I’d throw that out for my fellow Committee members and for the other parties to respond to.

 

Chairwoman Chowning:

That’s always the dilemma we’re in but also that is why, many times, we have come to solutions over the years.  Mr. Sherer’s predecessor, Mr. Neighbors, was the chair of a similar committee and worked long and hard along with many people in this room for years to get to solutions that are on the table today that were never thought of before.

 

We’re going to close the hearing on A.B. 525.  If anyone has any further thoughts that they want to put to us in writing, we’ll certainly take them before Thursday.  We’re going to open the work session.  The first bill is A.B. 223.

 

Assembly Bill 223:  Requires certain vehicle dealers to provide copies of certain documents translated into Spanish for viewing by purchaser or prospective purchaser of motor vehicle under certain circumstances. (BDR 43-941)

 

Marji Paslov Thomas, Committee Policy Analyst:

A.B. 223 requires certain vehicle dealers to provide copies of documents translated into Spanish for viewing by a purchaser or prospective purchaser of motor vehicles under certain circumstances.  This bill was heard on March 20, and no action was taken.  Among the provisions of the bill, it requires the vehicle dealer who conducts business or advertises that he conducts business in Spanish to arrange for copies of all sales forms used on a regular basis to be translated into Spanish. 

 

If you turn to the next page (page 3 of Exhibit M), it has the proposed amendments.  Assemblyman Atkinson proposed, on page 1, subsection 1 of Section 1, lines 3 and 4, to delete “each vehicle dealer who conducts business in Spanish or advertises that he conducts business in Spanish shall” and to add “each vehicle dealer who has interaction with a prospective customer or customer regarding the sale of a motor vehicle that is conducted in the Spanish language shall. . .”

 

Chairwoman Chowning:

Assemblyman Atkinson, why do you consider this language more definitive than the language that is already in the bill?

 

Assemblyman Atkinson:

I have spoken to a few people concerning this language.  In the hearing that we initially had on A.B. 223, people had concerns about clarifying what “conducting business in the Spanish language” meant, so we felt it necessary to clarify that.  I reviewed this with Kim Morgan from our Legislative Counsel Bureau Legal Division, and this is some language that she suggested and that I was very satisfied with. 

 

I didn’t hear very much other than what Mr. John Sande III said during the hearing were some of his concerns.  This was one of his concerns that has been addressed.  There wasn’t anything else brought up that I was willing to consider at the time.  We just wanted to move forward with the bill. 

 

The only other question that people had, including you, Madam Chair, was the cost associated with translating the contract into the Spanish language.  We recently got a commitment from the Community College foreign language department to assist us.  They have someone on staff who speaks Spanish and who translates documents and is also an attorney.  She would be more than willing to assist us.  I don’t have her name in front of me, but I just received word of this about two hours ago that they have made a commitment to translate the document for us.

 

Chairwoman Chowning:

The bill will now read “each vehicle dealer who has interaction with a prospective customer or existing customer regarding the sale.”  In other words, if the prospective customer or the existing customer regarding the sale of a motor vehicle conducts the transaction in the Spanish language, the vehicle dealer shall arrange for, or otherwise cause the translation into Spanish, a copy of all sales forms. 

 

As was presented in Committee, there were two sides of the contract that would need to be in Spanish.  Mr. Atkinson, I thank you for referencing my question about the cost.  It’s your opinion, then, that the Community College would help us as part of a class project in the translation?  I assume you’re talking the University and Community College System.  That would help; otherwise, the business dealer or the automotive dealers association would have to translate these and then they would have to be approved by the Financial Institution Division of our state.

 

Assemblyman Atkinson:

That’s correct.  That’s exactly the process.  It is the Community College of Southern Nevada that will assist us.

 

Assemblyman Knecht:

I’m glad to see that the standard contract portion of this can be taken care of.  The other part of my question in Committee, which I’m reminded of by the proposed language, was, if I walk in and say, “Buenos dias, Mr. Atkinson,” and he says “Buenos dias,” in response, are we meeting the threshold of conducting business in the Spanish language, even though it isn’t going to go much beyond that?  I’d like to ask staff Legal Counsel if we can have some comfort with this language that it will establish a threshold that people and consumer officials and courts recognize as to when the transaction is conducted in the Spanish language.

 

Chairwoman Chowning:

Assemblyman Atkinson, did you have some further clarification about that?

 

Assemblyman Atkinson:

Kim Morgan in the Legal Division of LCB does believe that putting this language in clears that up.  So, no, it wouldn’t be just someone walking in; it is actually conducting a business transaction.  In other words, if you are translating the contract to the customers in Spanish, then you need to be able to offer that contract in the Spanish language.  It is dealing with the contract part of the transaction.

 

Chairwoman Chowning:

I believe you have to take this sentence further, because if you simply say “Buenos dias,” you are not talking about the sale of the motor vehicle.  All you’ve said is “Good morning.”  But if you continue the conversation in Spanish and get into the specifics of the sale of the motor vehicle, then it seems to me that you are certainly demonstrating to the customer that you’re wanting to conduct the business in Spanish.

 

Assemblyman Atkinson:

I don’t have a problem with amending it and making the language stronger and saying that a business transaction is a sale inside a finance office going over the contract.  I don’t have a problem, because that’s not where the concern is.  The concern is the contract itself being in the language.  If we can clarify that, that’s fine with me.

 

Chairwoman Chowning:

What you were trying to do was to further clarify “conducts or advertises business in Spanish.”

Marji Paslov Thomas:

In response to Assemblyman Knecht’s question, I spoke with the Legal Division, and it would be more in how the motor vehicle dealer responds to the customer.  It’s more involved in the transaction of, “Do you want to purchase a car?” rather than “Hi, how are you?”  That’s the differentiation.  This language currently says that.

 

Assemblyman Knecht:

That satisfies me.  What I was asking for was an opinion of staff Legal Counsel that this kind of language wouldn’t present a problem and wouldn’t be too open-ended and uncertain.  If staff counsel is secure with that, so am I.

 

ASSEMBLYWOMAN OHRENSCHALL MOVED TO AMEND AND DO PASS A.B. 223.

 

ASSEMBLYMAN CLABORN SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Assemblyman Carpenter was not present for the vote.)

 

Chairwoman Chowning:

The next bill is A.B. 299.

 

Assembly Bill 299:  Establishes duties of driver when approaching stopped authorized emergency vehicle under certain circumstances. (BDR 43-184)

 

Marji Paslov Thomas:

Assembly Bill 299 establishes the duties of a driver when approaching a stopped authorized emergency vehicle when a peace officer is not present to direct traffic. This bill was heard on April 3 and no action was taken.  There are no proposed amendments.

 

ASSEMBLYMAN SHERER MOVED TO DO PASS A.B. 299.

 

ASSEMBLYMAN KNECHT SECONDED THE MOTION.

 

Assemblyman Oceguera:

I want to get some clarification.  We had someone from Highway Patrol mention this, but as Assemblyman Claborn said the other day, I would have flunked the driving test because I thought you had to stop when an emergency vehicle was there.  I want to clarify from our Research Division staff that this isn’t the case already, and this would be an enhancement.  Otherwise, it would be a detraction. 

 

Marji Paslov Thomas:

In response to Assemblyman Oceguera’s question, I did look in Nevada Revised Statutes, Section 484.323, and a person is already required to stop or yield right-of-way upon the approach of an authorized emergency vehicle, so I believe that this is an enhancement.

 

 Chairwoman Chowning:

After passing this law, will the Department of Motor Vehicles (DMV) put this in the driver training books and make the change?  They’re saying yes.

 

Assemblywoman Ohrenschall:

If we pass this, we’re making it less strict than it is at the moment.  Is that what I just heard?

 

Assemblyman Oceguera:

No.  I understand it to say the opposite.  There is no law right now, according to our researcher, that says you have to stop when an emergency vehicle is stopped on the side of the road, only when an emergency vehicle is approaching you.  Now there would be a law that says if there is an emergency vehicle stopped on the side of the road, you’ve got to slow down, move to the lane in the center, and go by.

 

Chairwoman Chowning:

It’s clarifying where the law is currently silent and we’re making it clear.

 

THE MOTION CARRIED UNANIMOUSLY.

 

 

Chairwoman Chowning:

Assemblyman Griffin’s bill, A.B. 324.

 

Assembly Bill 324:  Authorizes Department of Motor Vehicles to establish pilot program pursuant to which period of registration for certain motor vehicles is expanded. (BDR 43-1097)

 

Marji Paslov Thomas:

A.B. 324 does two things.  It provides that the owner of a motor vehicle may register his vehicle for a period of 24 months, and it also provides that a person must renew his driver’s license every six years.  Currently a person must renew his driver’s license every four years.  Clay Thomas, Administrator of Field Services with DMV, proposed an amendment to keep the existing language to have a person renew his driver’s license every four years.

 

Chairwoman Chowning:

That’s very straightforward.  Someone can register their vehicle for 24 months, but if they’re going to renew their driver’s license, it still has to be every four years.

 

ASSEMBLYMAN GOICOECHEA MOVED TO AMEND AND DO PASS A.B. 324.

 

ASSEMBLYMAN CARPENTER SECONDED THE MOTION.

 

Assemblyman Collins:

For clarification, this only enables a person, if they choose, to register their vehicle for 24 months instead of annually.  It’s on a voluntary basis.  Their driver’s license registration remains as existing law.

 

Chairwoman Chowning:

Correct.  If you look at line 6 on the first page of A.B. 324, it says, “May choose to register his vehicle for a period of 24 months.”  If someone wants to let go of that hard-earned cash, they can do so.

 

Assemblyman Collins:

How did that affect the smog test issue?  Did that not matter?

 

Marji Paslov Thomas:

The bill requires that the DMV has to work with the State Environmental Commission and with local air pollution control agencies concerning emission testing for vehicles for a 24-month period.  They will determine how they are going to do that.

 

Assemblyman Collins:

So if you register on a two-year basis, you would only have to have a smog test every other year?  That really affects a bill we’ve got in another Committee.

 

Chairwoman Chowning:

Will the Department of Motor Vehicles please come forward.

 

Russ Benzler, Administrator, Compliance Enforcement Division, Department of Motor Vehicles:

I wasn’t involved in this bill other than talking about it at staff level.  My understanding is that there is still going to be annual emission testing required.  We were going to find a way to do the notification to the customer.

 

Chairwoman Chowning:

I am in total agreement, and I agree with my colleague, because we do not want to have this bill used as a vehicle to open the door to smog checks every two years.  I was under the assumption that the DMV would adopt regulations so that, perhaps, this would only apply to new vehicles or vehicles less than five or six years old.  That and other issues would be brought into regulations.

 

Russ Benzler:

Again, I wasn’t involved in this bill.  The only thing I can say is there was no intent by the DMV to go to biennial testing.

 

Chairwoman Chowning:

Very good.  The smog checks will stay in regulation for every year.  That’s your statement.

 

Russ Benzler:

That’s correct as far as my understanding of this, unless somebody has told you something different.  My understanding is that there is no intent by the department to go to biennial testing.

 

Chairwoman Chowning:

The sponsor of the bill did not state otherwise.

 

Assemblyman Collins:

Will the DMV then issue the first decal for one year and then, upon receiving a smog test, mail the decal for the second year even though the registration has already been paid for?  How do you plan on regulating that?  I wanted to comment to the Committee, that Assembly Bill 416, in the Assembly Committee on Natural Resources, Agriculture, and Mining has a proposal to go to two years.  It would cost millions of dollars and a lot of it would go to local health, environmental controls, and dust controls.  That’s why I’m opposing A.B. 324.

 

Russ Benzler:

That’s the portion we have to work out, and we haven’t gotten to the details.  Again, there is no movement that I’m aware of to go to biennial testing.  That wasn’t to be connected to this.  How we actually get the notification to the owner, I don’t know. 

 

Chairwoman Chowning:

I suggest that we hold this bill until there is further clarification on that matter.  We’ll need to talk with the sponsor of the bill.  This bill is held.  Let’s go to A.B. 325.

 

Assembly Bill 325:  Makes various changes relating to motor vehicles that have sustained certain damages. (BDR 43-222)

 

Marji Paslov Thomas:

Assembly Bill 325 makes various changes relating to motor vehicles that have sustained certain damages.  This bill was heard on April 1.  No action was taken. 

 

A.B. 325 imposes certain restrictions and requirements upon the transfer and titling of vehicles that sustain certain damages.  This measure also requires certain notices and disclosures by any person who transfers an interest in a motor vehicle in the state and to disclose in writing any information that the transferor knows concerning whether the vehicle is a salvage vehicle.  The bill also imposes certain civil liabilities and provides criminal penalties for certain violations.  This measure revises provisions governing the registration or licensure of garagemen and body shops. 

 

Behind Tab A (page 10 of Exhibit M) are proposed amendments, and behind the suggested language is a mock-up of the bill beginning on page 18 of Exhibit M.  You will notice where each proposed amendment is in the bill.

 

The first proposed amendment is in Section 1, subsection 2, and this is to delete the words  “certificate of registration or certificate of ownership.”  This amendment was proposed by DMV.  They would like to continue to keep a paper trail of vehicles, and this would allow them to do so.

 

Proposed amendments 2 through 4 would allow an insurance company to determine fair market value by one of four means.  The words “that is the highest of the values” are deleted from Section 5.  In Section 5, subsection 3, change the word “and” to “or,” so it would allow for those four means.  A new subsection would be added that would put in place an independent computerized valuation service used by the insurance industry for the valuation of used motor vehicles.

 

Proposed amendments 5 and 6 are in Section 6 to change “and” to “or” in subsection 1, and in subsection 2, to add the word “total” to “loss settlement resulting from water damage.”

 

Proposed amendments 7, 8, and 9 deal with Section 11, and that is to add, in subsection 1, the language “or should know” to read “the transferor knows or should know concerning whether the vehicle is a salvage vehicle.”  In subsection 2 of Section 11, it is to propose to take out “finalizing” and put in “consummating,” and in subsection 3 of Section 11, to add “a person who knowingly violates” this is guilty of a obtaining property by false pretenses.

 

Proposed amendment 10 in Section 12, subsection 2, is to delete the word “determined” and insert the word “allowed.”

 

Proposed amendment 11 deals with Section 15, subsection 1(a), and is to add the word “actual” after “retail” and before “price,” and to then add a sentence saying “the retail price of new alternative equipment.”  It’s adding an additional piece of equipment that they need to consider.

 

Proposed amendments 12, 13, and 14 are to delete in Section 16, subsections a, b, c, d, e, and f and add “the owner or entity in whose name the vehicle is titled, an insurance company that acquires the vehicle as a result of it having become a salvage, but not a nonrepairable vehicle, and to any person or entity who acquires the vehicle as a result of a lien.”

 

Proposed amendment 14 is to add in Section 16, subsection 3, “within two days of receipt of the application,” so that the state agency would be required to issue a salvage title within two days of the receipt of the application.

 

Proposed amendment 15 would be to delete the entire Section 17 and substitute the following: 

 

In addition to the provisions of NRS 487.563, the department may refuse to issue a registration, or after notice and hearing, may suspend, revoke, or refuse to renew a registration to operate a garage for evidence that the garageman or an employee of the garageman or an applicant or employee of the applicant for garage registration has made any false statement of a material fact regarding the certification of a salvage vehicle required by NRS 487.110 or any false statement or certification of inspection attesting to the mechanical fitness and safety of a salvage vehicle.

 

Chairwoman Chowning:

Ms. Thomas, could you back up to Section 16, line 20?

 

Marji Paslov Thomas:

That was a mistake.

 

Chairwoman Chowning:

Good.  I wondered what a “proposed garage” was.

 

Marji Paslov Thomas:

Proposed amendments 16 and 17 are to insert in line 14 “model” years.  Previously it stated just “Ten years or older.”  It also proposes to add a new subsection that would state that “a motor vehicle which is ten model years old or older as used in the foregoing paragraph means a motor vehicle that was manufactured in a model year beginning at least ten years before January 1 of the calendar year in which the damage occurs.”  This is to give it some sort of definition.

 

Proposed amendment 18 is to delete the entire first subsection of Section 23 and substitute additional language, which is what an insurance company does when it acquires an insured vehicle as a result of it becoming a salvage vehicle (page 26 of Exhibit M).

 

Proposed amendment 19 is a technical change to change the number of the subsection.  There is no change in substance.

 

Chairwoman Chowning:

Could you back up to page 9, Section 22 (page 26 of Exhibit M)?  Why is this reference to the Manufactured Housing Division of the Department of Business and Industry here?

 

Marji Paslov Thomas:

That was in the bill as written, and it was clarifying language because, when they deleted that subsection, you can see the Manufactured Housing Division is located within the Department of Business and Industry.

 

Chairwoman Chowning:

But we’re deleting there that they may issue the licensee’s salvage title?  This is consistent with, not only motor vehicles, but commercial coaches as well?

 

Marji Paslov Thomas:

I believe so.

 

Proposed amendment 19, is a technical change to change the numbers of the subsection; no change in substance.

 

Proposed amendment 20 is to renumber the subsection as subsection 5, take out the existing language and insert “except with respect to a nonrepairable vehicle, an owner who has determined that a vehicle is a salvage vehicle and after obtaining a salvage title as required by this act, may, prior to repair, sell the vehicle with the properly endorsed salvage title to a salvage pool, automobile auction, rebuilder, automobile wrecker, or a new or used motor vehicle dealer.”

 

Proposed amendment 21 is inspections and makes sure that the state agency looks at the VIN [Vehicle Identification Number] to make sure the vehicle was properly inspected and verified.

 

Proposed amendment 22 is a technical change in the numbers; no change in substance.

 

Proposed amendment 23 is to, after the word “agent” and before the word “shall” in Section 23, subsection 7, add “before consummating the total loss settlement.”  This goes back to the earlier section that was changed.

 

Proposed amendments 24 and 25 are technical changes.  Those are changes in numbers, so no change in substance.

 

Proposed amendment 26 is to delete, in Section 25, subsections 2(a), (b), and (c).

 

Chairwoman Chowning:

It says that the certificate of inspection must indicate that the motor vehicle has been repaired to the standards of the manufacturer.

 

Marji Paslov Thomas:

Proposed amendment 27 would be to delete the words “total loss” and insert the word “salvage” in Section 27, subsection 1.

 

Proposed amendment 28 is to add, in Section 29, subsection 4, after the word “vehicle,” the phrase “and if the vehicle is not a nonrepairable vehicle.”

 

Proposed amendment 29 is to delete in Section 31, subsection 2, “certificate of ownership thereto or a salvage title as provided in NRS 487.250, Section 16, of this act” and to add “a title, salvage title, or certificate under the provisions of this act.”

 

Chairwoman Chowning:

These sections deal with the lien provision, so if the vehicle is not reclaimed, the owner of the garage or the automobile wrecker may satisfy his lien by retaining the vehicle, a title, salvage title, or certificate under the provisions.

Marji Paslov Thomas:

Proposed amendment 30 is to amend NRS Section 482.098 to insert that a rebuilt vehicle means a vehicle that has been declared salvage, except a nonrepairable vehicle under the provisions of NRS Chapter 487 or has had one or more of these major components.  They’re adding the salvage language.

 

The last proposed amendment is to add a section to the bill requiring air bags that have deployed in an accident in a car to be replaced and to function according to manufacturers’ specifications.  This would also include safety belts or air bags that need to be repaired to be repaired to manufacturer’s specifications.

 

Chairwoman Chowning:

Ms. Buckley, would you please come forward and state to us with whom you worked on these amendments and summarize the now amended bill?

 

Assemblywoman Barbara Buckley, Assembly District No. 8, Clark County:

[Introduced herself.]  All of these amendments were addressed at the original hearing.  Since the hearing, we have continued to work to make sure the language is perfect so we don’t have to do any work on the Senate side.  This is a consensus of DMV, the insurance companies that I worked with including State Farm and Farmers, consumer advocates, and the like.  We’ll clean up this area of law and do it right so that rebuilt wrecks aren’t on the road.

 

Chairwoman Chowning:

Rebuilt wrecks that are no longer wrecks?

 

Assemblywoman Buckley:

So that rebuilt wrecks that aren’t safe aren’t on the road.

 

Chairwoman Chowning:

Can you again tell us about the $10 fee, the reason for it, what it will provide, and who was in favor of that?

 

Assemblywoman Buckley:

I believe that is existing law and no one has any opposition.  I’ll defer to DMV.

 

Ralph Felices, Chief Investigator, Compliance Enforcement Division, Department of Motor Vehicles:

[Introduced himself.]  The $10 charge is a fee that is regulated by law to provide for the purchase of the salvage title.  At the time of the Committee hearing, we discussed the fiscal note that was attached to this.  It wasn’t determined at that time whether there would be a requirement for a two-day turnaround in the salvage title.  It has been determined that there would be, which led to this amendment.  I have a copy of the fiscal note that we will be submitting to address this.  It involves the hiring of three technicians and a Teletype operator to facilitate the creation of the salvage titles within two days of receipt of the application.

 

Chairwoman Chowning:

Is the $10 charge that is already in law going to be sufficient to cover the expenses incurred in this fiscal note?

 

Ralph Felices:

That’s correct.  It will be, and there will be net revenue reverted to the Highway Fund.

 

Chairwoman Chowning:

Then we need to rerefer this to the Ways and Means Committee?

 

Assemblywoman Buckley:

This is the first I’ve seen of the fiscal note.  I think it was your request to have the two-day turnaround?

 

Chairwoman Chowning:

No.  Someone else made that request.

 

Assemblywoman Buckley:

To you.  That wasn’t mine, and if it were going to stick a fiscal note on the bill and send it to the Assembly Committee on Ways and Means, I’d rather not do that.

 

Chairwoman Chowning:

Where did that request come from?

 

Ralph Felices:

I apologize that you didn’t know about this fiscal note.  This is to generate revenue into the department.  It’s a replacement for the bills-of-sale salvage that were issued.  Other than the wreckers who currently are not charged for this salvage title, the people that now deal with the bills-of-sale salvage will be required to pay the $10 fee.  It will be revenue to the department, which will pay for the positions, and the excess will go back to the Highway Fund.

 

Assemblywoman Buckley:

It’s offset by the fee.  I am happy with this fiscal note.

 

Chairwoman Chowning:

We probably still have to send it to Ways and Means.

 

Assemblywoman Buckley:

If they pull it, they pull it.  I don’t mind.

 

Chairwoman Chowning:

These amendments are fully agreed to by the members of the industry.  They have worked with you, as the sponsor of the bill, as they did with the original bill, correct?

 

Assemblywoman Buckley:

Yes.  I worked with Joe Guild, State Farm Insurance, Jim Werbeckes, Farmers Insurance, consumer advocates, and DMV. 

 

Chairwoman Chowning:

And the people in the auto body shops?

 

Assemblywoman Buckley:

We worked with Bobby Ellis and Jim Gibson, and I think we have 99 percent of the things that they want.  They expressed some last-minute concerns that there was an insurance company they worked for that wasn’t sure they liked a particular sentence, but I never heard who the insurance company was.  I decided to rely on State Farm Insurance and Farmers Insurance expertise since they’d been working with me on the bill for a year.  I thought that, if it were a legitimate insurance concern, they would have had it.

 

Chairwoman Chowning:

We agree.  No one came to this Committee, either, with that concern.  The Chair will accept a motion.

 

ASSEMBLYMAN COLLINS MOVED TO AMEND AND DO PASS A.B. 325.

 

ASSEMBLYWOMAN OHRENSCHALL SECONDED THE MOTION.

 

 

Assemblyman Gustavson:

I’d like to abstain until I read through all the amendments.

 

THE MOTION CARRIED.  ASSEMBLYMAN GUSTAVSON ABSTAINED FROM THE VOTE.  (Assemblyman Knecht was not present for the vote.)

 

Chairman Chowning:

The last bill that we’re going to be doing today is A.B. 358.

 

Assembly Bill 358:  Revises provisions relating to certain special license plates. (BDR 43-1140)

 

Marji Paslov Thomas:

A.B. 358 provides for design preparation and issuance of special license plates by petition to the Department of Motor Vehicles. This was heard on March 27.  No action was taken. 

 

This measure provides that a person may request that DMV design, prepare, and issue a special license plate by submitting an application to DMV. The application must be on a DMV form and must be accompanied by a petition containing the signatures of at least 250 persons who wish to obtain the special plate.  On October 1 of each year, the DMV shall determine the total number of validly registered motor vehicles to which each special license plate is affixed, except those plates that have not been available for more than 12 months.  If, on October 1 of the year immediately succeeding the year in which notice was provided, the total number of validly registered vehicles for a special license plate is less than the number of initial requests required for the design and preparation of that plate, the DMV shall issue an order withdrawing that special license plate from use. 

 

There are some proposed amendments from Assemblyman Perkins.  The first is to amend A.B. 358 to allow DMV to issue up to 25 special license plates.  The bill as written only allows for 20 special license plates. 

 

The second amendment is to add a new section that would create the Commission on Special License Plates.  The commission would be comprised of five members, including the Chairman of the Assembly Committee on Transportation, the Chairman of the Senate Committee on Transportation, the Director of DMV, the Director of the Department of Public Safety, and a representative of the Department of Cultural Affairs.  The members would serve terms of two years.  The Commission would approve applications that are submitted to DMV for the design and production of special license plates. 

 

Proposed amendment 3 amends the bill by deleting, on page 4, subsection 4, of Section 4, lines 10 through 23.  As written, this currently would require the DMV to provide notice to each holder of the special license plate that the plate is being withdrawn from use.  That person would then be required to replace the plate being withdrawn from use when the holder renews the registration of that vehicle or the registration of the vehicle to which the plate is affixed expires, whichever comes first.

 

The fourth amendment is to add a new section allowing that, under the current provisions of NRS 482.1805, which refers to money in the revolving account for the issuance of special license plates, the money could also be used to purchase improvements and upgrades in technology, including but not limited to the digital plate production technology. 

 

Proposed amendment 5 is to add a new section requiring that the design and colors suggested for a special license plate be located in the left-most one-third region of the license.  The remaining two-thirds center and right-most regions of the license plate must be predominately blue and silver and, if silver is not available, then white can be substituted.  Behind Tab B (page 36 of Exhibit M) is the proposed language and a mock-up of the bill with the amendments.

 

Assemblyman Goicoechea:

At the point he surrenders his tag because there aren’t enough of the special license plates, then he would be required to buy a new tag?

 

Chairwoman Chowning:

No. 

 

Marji Paslov Thomas:

That portion is being deleted.

 

Chairwoman Chowning:

That is being deleted, and it is my opinion that this is a good thing.  What it means is if the department found that there were fewer than 250 registrants with the agriculture plate, for example, that plate would no longer be produced, but that person would not have to give that plate up.  They could renew that plate on into the next century if they wished.

 

Assemblyman Claborn:

I highly oppose this bill.  I think Section 3 takes away our Legislative process.  I’ll be voting no.

 

Assemblyman Collins:

Same.

 

ASSEMBLYWOMAN OHRENSCHALL MOVED TO AMEND AND DO PASS A.B. 358.

 

ASSEMBLYMAN ATKINSON SECONDED THE MOTION.

 

THE MOTION CARRIED.  ASSEMBLYMEN CARPENTER, ASSEMBLYMAN CLABORN, ASSEMBLYMAN COLLINS AND ASSEMBLYMAN GUSTAVSON VOTED NO.

 

Chairwoman Chowning:

We have one more item of business.  Let’s look at A.B. 518.

 

Assembly Bill 518:  Makes various changes relating to regulation of certain motor carriers, motor vehicles and limousines. (BDR S-1102)

 

Chairwoman Chowning:

This bill is the regulation of limousines to temporarily prohibit the increase in the number of limousines in operation and directs a Legislative study.  Because of the short window of time, it would not be possible for this bill to be heard in the Assembly Committee on Elections, Procedures, and Ethics.  After conferring with the Chair of that Committee, they decided it would be acceptable if we just moved to amend and do pass this bill.  It will then go to the Floor and then to the Senate.  We need a motion to rescind our previous action whereby we made a motion to amend and do pass and rerefer to the Assembly Committee on Elections, Procedures, and Ethics.  If we keep with our action as stated before, it won’t go directly to the Floor.  It would first have to go to the Assembly Committee on Elections, Procedures, and Ethics to be heard there, and we wouldn’t have time to pass it out of this body.

 

ASSEMBLYMAN OCEGUERA MOVED TO RESCIND THE PREVIOUS ACTION ON A.B. 518.

 

ASSEMBLYMAN ATKINSON SECONDED THE MOTION.

 

THE MOTION CARRIED.

 

********

 

ASSEMBLYMAN MANENDO MOVED TO AMEND AND DO PASS A.B. 518.

 

ASSEMBLYMAN OCEGUERA SECONDED THE MOTION.

 

THE MOTION CARRIED.

Chairwoman Chowning:

I appreciate very, very much the Committee’s patience.  We’ve been here for 4½ hours.  We are adjourned [at 5:36 p.m.].

       

 

 

 

 

RESPECTFULLY SUBMITTED:

 

Pat Hughey

Transcribing Secretary

 

APPROVED BY:

 

                       

Assemblywoman Vonne Chowning, Chairwoman

 

DATE: