MINUTES OF THE meeting

of the

ASSEMBLY Committee on Ways and Means

 

Seventy-Second Session

May 5, 2003

 

 

The Committee on Ways and Meanswas called to order at 8:17 a.m., on Monday, May 5, 2003.  Vice Chairwoman Giunchigliani presided in Room 3137 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Ms. Chris Giunchigliani, Vice Chairwoman

Mr. Walter Andonov

Mr. Bob Beers

Mrs. Vonne Chowning

Mrs. Dawn Gibbons

Mr. David Goldwater

Mr. Josh Griffin

Mr. Lynn Hettrick

Ms. Sheila Leslie

Mr. John Marvel

Ms. Kathy McClain

Mr. David Parks

Mr. Richard Perkins

 

COMMITTEE MEMBERS ABSENT:

 

Mr. Morse Arberry Jr., Chairman

 

GUEST LEGISLATORS PRESENT:

 

Assemblyman John Oceguera, District No. 16

 

STAFF MEMBERS PRESENT:

 

Mark Stevens, Assembly Fiscal Analyst

Steve Abba, Principal Deputy Fiscal Analyst

Russell Guindon, Deputy Fiscal Analyst

Bob Atkinson, Program Analyst

Mindy Braun, Education Program Analyst

Tracy Raxter, Program Analyst

Carol Thomsen, Committee Secretary

Susan Cherpeski, Committee Secretary

 

Vice Chairwoman Giunchigliani called the meeting to order and opened the hearing on A.B. 249.

 

Assembly Bill 249 (1st Reprint):  Makes various changes concerning Public Employees’ Benefits Program. (BDR 23-549)

 

P. Forrest Thorne, Executive Officer, Public Employees’ Benefits Program (PEBP), advised the Committee that A.B. 249 was the PEBP bill, and he would review the actions intended by the legislation.  Mr. Thorne stated the first intent was to identify the PEBP as the agency of record for payroll deductions.  Currently, there were five major pay centers and, according to the language in the Nevada Revised Statutes (NRS), those centers were required to maintain paper records of the deductions taken.  Mr. Thorne indicated that the bill proposed to make the PEBP the agency of record with one source of information pertaining to the deductions, which would eliminate the duplication of effort. 

 

Mr. Thorne remarked that A.B. 249 proposed timely notice of change in status and an administrative penalty if agencies failed to provide such notice.  The bill would also eliminate the evidence of insurability for reinstating retirees, to bring the PEBP into compliance with the Health Insurance Portability and Accountability Act (HIPAA).  Regarding the state subsidy, stated Mr. Thorne, the PEBP wanted to limit the state retiree subsidy to years of state service, and eliminate the inequity that currently existed.  According to Mr. Thorne, currently if retirees had 20 years of state service and finished their careers with a local entity, those retirees would receive no state subsidy.  The flip side of that situation would be individuals who worked for 20 years for local entities and finished their careers in state service; those retirees would receive credit for the entire time of service, both local and state.  Mr. Thorne stated that the PEBP wanted to revise that stipulation so that the subsidy would be based on years of state service, regardless of where a person was employed upon retirement.

 

Vice Chairwoman Giunchigliani asked what section of the bill addressed that issue.  Mr. Thorne stated it was addressed in Section 24.  Continuing his presentation, Mr. Thorne stated the PEBP wanted to make that section effective July 1, 2004, which would allow both the PEBP and the Public Employees Retirement System (PERS) time to work with payroll and personnel centers to make the determinations and develop the actual years of state service.

 

Mr. Thorne advised that the bill would also retain the two private sector Board member positions that currently sunset as of June 30, 2003.  Their input to the Board had been much appreciated and provided a very valuable perspective.  Mr. Thorne stated the PEBP wanted to repeal the biannual open enrollment after one final open enrollment period in the fall of 2003.  The last open enrollment generated 7,500 notices by PERS, 600 requests for enrollment information, and 20 enrolled.  Mr. Thorne explained that was for the pre-1994 retirees who had not had a chance to join the PEBP at the time of retirement.  The PEBP was seeing a significantly diminishing rate of return on that effort and felt that the point had been reached where it would be equitable to have one final open enrollment, and eliminate that provision.  According to Mr. Thorne, the provision that allowed retirees to reinstate coverage in even numbered years would be retained.  Also included in the bill was clarification of definitions.

 

Vice Chairwoman Giunchigliani asked whether Mr. Thorne was referring to Section 26 of A.B. 249, and Mr. Thorne stated that was correct.  Vice Chairwoman Giunchigliani stated that for persons who retired prior to 1994, there would be one more opportunity to join the state health plan.  She asked how those persons would be notified.  Mr. Thorne replied that the PERS was required by NRS to provide notices in September regarding the open enrollment period to those persons who retired prior to 1994, and that notice directed the person to contact the PEBP and request further information.  The PEBP would send out that information upon request, and those who chose to enroll would be required to submit an enrollment application. 

 

Vice Chairwoman Giunchigliani asked about the effective date; Mr. Thorne indicated the date would be July 1, 2004.  She stated that would allow review of action that might have been taken by the Legislature regarding commingling or approval of a better program for non‑state retirees because it was doubtful that persons would want to join the plan under the current rates.  Mr. Thorne remarked that if any of the bills regarding commingling were to pass during the present session that would affect the plan.

 

Vice Chairwoman Giunchigliani referenced Section 24, and noted that if a current state employee with 20 years of service went to work for another public employer for an additional 5 years, that was not counted as 25 years of state service.  She asked if an employee left state service and joined a different health plan, would that person be provided the option of returning to the state plan upon retirement.  Mr. Thorne advised that the current NRS stipulated that an employee had to retire from state service.  If an employee did not retire from state service, such as a person who had been employed with the state but transferred to a local entity and retired from that entity, that retiree would receive no state subsidy for the years of state service.  The flip side of that situation would be if an employee worked for 15 years for local government, and worked for the state for the remaining 15 years, that employee would receive the full 30 years of credit for state service, as far as the subsidy was concerned.  Mr. Thorne stated the PEBP believed that was an inequity in both directions, and by changing the language to provide the subsidy only for years of state service, regardless of the entity from which a person retired, everyone would be treated the same.

 

Vice Chairwoman Giunchigliani noted that in both instances, the state subsidy was in question, and she asked whether any subsidy was received from the local governments.  Mr. Thorne remarked that no subsidy was recaptured from the local entities and the only subsidy paid by the state was for state retirees.  The bill would clarify that no matter which entity a person retired from, retirement would be based on years of state service.  Mr. Thorne further explained that the state subsidy for health insurance was based on years of service as a public employee.  A.B. 249 corrected the NRS to show that it would be based on a person’s years of state service; the state provided its retirees a subsidy based on the years of state service.  Mr. Thorne stated that regardless of the entity from which a person retired, only those years that a person worked for the state would be credited for subsidy. 

 

Assemblyman Beers opined that the subsidy was a pure benefit to retirees.  Mr. Thorne stated that was correct.  Mr. Beers asked what would occur if a person worked for 20 years for a local government and then worked for the state for two years.  Mr. Thorne explained that person’s subsidy would be based on 22 years of service.  Mr. Beers indicated that was not right, and if a person worked for the state for 20 years and then retired from a local entity, that person would receive no subsidy.  The subsidy was offered to assist in retaining employees in state service.  Mr. Thorne stated that was correct.

 

Vice Chairwoman Giunchigliani asked about the fiscal note attached to A.B. 249.  Mr. Thorne indicated there was no fiscal note, and the PEBP believed the change in the retiree subsidy would be a “wash” because some persons would drop down in subsidy to their actual years of service while others would receive the benefit of the additional years of service. 

 

Vice Chairwoman Giunchigliani asked whether there was further testimony regarding A.B. 249.

 

Ruth Hart stated she was a retired public employee, and would testify as a representative of the Retired Public Employees’ of Nevada (RPEN).  Ms. Hart indicated that the RPEN would support A.B. 249.  Some of the changes dealt with the mechanics of withholding and payment of monies on behalf of those in the plan.  Ms. Hart stated that the RPEN understood that many of the details of that plan were being discussed by the agencies, however, because the program affected many lives, accuracy and timeliness in dealing with the program data was critical.  Presently, stated Ms. Hart, the Committee was dealing with a budget office miscalculation that led to the $5 million shortfall in funding for retiree subsidies.  That underscored the importance of the details of A.B. 249 and why the Committee’s support was needed for funding retiree costs.

 

Ms. Hart remarked that A.B. 249 would also repeal the sunset provision of the PEBP statute regarding the two private sector Board members.  Without that repeal, the positions of those two members would be eliminated.  Ms. Hart explained that the RPEN did not believe that should happen.  The two private sector Board members had served on the Board since 1999 when the PEBP replaced the Committee on Benefits.  Ms. Hart stated that as someone who had attended almost every meeting of the PEBP Board since that date, she believed those two appointees brought an important perspective to the plan.  According to Ms. Hart, the experience of the two private sector Board members had proven invaluable as the challenges of the plan were debated.

 

Finally, stated Ms. Hart, A.B. 249 would eliminate the biannual open enrollment to the plan for non-state retirees.  Although the RPEN had mixed feelings about eliminating that provision, it was recognized that few people had utilized that option recently.  There did appear to be a diminishing response and there was an administrative cost in continuing the open enrollment process.  Ms. Hart indicated that because the provision in A.B. 249 would go into effect in July of 2004, non-state retirees would be given one final opportunity to join the plan.

 

Vice Chairwoman Giunchigliani asked whether there was further testimony regarding A.B. 249, and there being none, declared the hearing closed.  The Vice Chair opened the hearing on A.B. 441.

 

Assembly Bill 441 (1st Reprint):  Enacts provisions relating to ensuring security of State of Nevada and its residents with respect to acts of terrorism and related emergencies. (BDR 19-1139)

 

Speaker Richard Perkins, District No. 23, explained that A.B. 441 was somewhat of a companion bill to the anti-terrorism bill, A.B. 250, and would enact provisions ensuring the security of the state and its residents against acts of terrorism and related emergencies.  According to Speaker Perkins, any mention of an act of terrorism or the definition thereof had been made consistent by the Assembly Committee on Judiciary in passage of A.B. 250. 

 

Speaker Perkins stated that the major provisions of A.B. 441 would: 

 

• Create the Nevada Commission on Homeland Security and set forth the membership duties and staff support of that Commission in Sections 12 through 20, and Section 47. 
• Provide for the confidentiality of certain documents or records including, among other things, drawings, maps, or plans of security systems in important public buildings and facilities. 
• Require each political subdivision to establish a local emergency management organization, and adopt and maintain a plan to respond to acts of terrorism or related emergencies. 
• Establish a plan for continuation of state and local government operations in case of a catastrophic emergency.
• Require utilities to conduct vulnerability assessments and prepare plans.
• Increase the criminal penalties for the fraudulent use of, or application for, driver’s licenses and identification cards, and give the Department of Motor Vehicles (DMV) the authority to refuse to issue driver’s license or identification card to persons presenting driver’s licenses or other identification documents issued by jurisdictions with less stringent standards than those of Nevada.
• Require state and local governments to comply with the state plan with compatibility and interoperability of information and communication systems used by response agencies within Nevada.  State and local governments would be prohibited from purchasing such systems or their components unless they complied with the state plan, which would be established by the Nevada Commission on Homeland Security.
• Require certain governmental entities to place automated external defibrillators (AEDs) in certain buildings and facilities with high pedestrian traffic, or which housed agencies that served large numbers of persons.  There was an appropriation of $170,000 in FY2003-04 and $15,000 in FY2004-05 from the state General Fund to the Health Division in Nevada’s Department of Human Resources, and government entities could apply for a grant of money from that appropriation to purchase the required AEDs.
• The act would become effective on July 1, 2003.

 

According to Speaker Perkins, the fiscal note would address the AEDs and establish the Commission on Homeland Security.  There were various salary costs, committee member costs, travel costs, operating costs, and initial set-up costs, such as furniture, computers, chairs, and phones.  Speaker Perkins noted that the costs would total approximately $118,750 in the first year of the biennium and $111,000 in the second year of the biennium.

 

Assemblyman John Oceguera, District No. 16, believed that the amount could be significantly reduced based on the fact that some buildings already contained AEDs. 

 

Vice Chairwoman Giunchigliani asked which section of the bill pertained to the AEDs.  Speaker Perkins stated Section 33 contained the allocation for establishing the Commission and the granting authority for the AEDs, which Mr. Oceguera opined could be significantly reduced.

 

Vice Chairwoman Giunchigliani asked for clarification regarding the placement of AEDs in state buildings.  Mr. Oceguera indicated that Section 33 of the bill specified the buildings in areas of high population where AEDs would be placed; he noted it was more a preparedness issue.  Mr. Oceguera stated if there should be an act of terrorism, the AEDs would certainly assist the first responders and laypersons in those facilities.

 

Vice Chairwoman Giunchigliani asked about the cost of the AEDs.  Mr. Oceguera indicated that the costs changed daily, however, he believed that purchasing a large quantity of defibrillators would keep the cost below $1,500 each.  Vice Chairwoman Giunchigliani noted that A.B. 441 also mandated that the local governments had to identify five buildings in which to place the AEDs.  Mr. Oceguera stated that had actually already occurred in Clark County, and also at the airports in Reno and Las Vegas. 

 

Assemblyman Goldwater referenced the limited liability legislation, and asked whether training would be required with that limited liability.  Mr. Oceguera testified that Section 33(2)(c) discussed the training requirements. 

 

Vice Chairwoman Giunchigliani asked whether there was further testimony forthcoming regarding A.B. 441.

 

Janine Hansen, State President, Nevada Eagle Forum, noted that there had been several terrorism bills presented during the current session, which had caused much controversy, however, the Forum was very pleased with the definition that had been placed in A.B. 441, as it resolved many of the concerns.  Ms. Hansen stated the bill was very supportive regarding the issue of continuity of governments, which she believed was an important issue that needed to be expanded from Article IV, Section 37 of The Constitution of the State of Nevada.  Ms. Hansen believed that one idea regarding continuity of government might be missing from the bill, and that was the fact that although the bill made provisions for the Legislature to replace the Governor in the event no successor was available, it did not make any provision for the Legislature to call itself into session.  That stipulation was included in other bills, and she believed it should be considered regarding the continuity of government.   

 

Ms. Hansen referenced Section 26(10)(a), which read, “After a catastrophic emergency. . .the Governor. . .shall:  Determine and announce publicly when conditions have normalized within this state or the portion thereof affected by the catastrophic emergency.”  Ms. Hansen believed it might be important to acknowledge some separation of powers and that the Legislature would have the ability to participate in normalizing the catastrophic circumstances that might exist in the state.  According to Ms. Hansen, the state might have a suspension of constitutional rights in a state of emergency or marshal law.  She believed that the lack of a provision for the Legislature to be called into session might be one issue that was missing from the bill. 

 

Ms. Hansen reiterated that the Forum certainly supported the majority of the bill.  She referenced Section 34(5), which read, “The Department may refuse to accept a driver’s license issued by another state or the District of Columbia . . .” and noted that was important because at the present time other states such as California, Oregon, and Utah were issuing driver’s licenses to undocumented, illegal aliens.  Ms. Hansen stated that with the terrorism issue, individuals in the country illegally were definitely an issue, and the Forum believed it was important that the Department of Motor Vehicles (DMV) would have the authority not to accept driver’s licenses from other states that did not maintain the same requirements. 

 

Testifying next before the Committee was Richard Mirgon, Director of Communications for Douglas County, who advised the Committee that Douglas County would oppose A.B. 441 based on Sections 30 and 31.  The county believed those sections would place the unfair burden of an unfunded mandate on local entities.  Mr. Mirgon explained that the language of the bill discussed “components” to a radio or to a system, and the concern was that if standards were set by the Legislature that were different than those utilized by local governments, local entities would be prohibited from purchasing a resistor or transistor to fix a radio that was broken because that would be a “component.”  Mr. Mirgon stated that the county would not be able to purchase a hard drive for a major computer system if there was any data or use of the system for public safety. 

 

In discussing the worst case scenario for local governments, one example would be if the state’s 800 MHz system was selected as a primary system, the 1999 estimate proved that the cost to local government would be well over $100 million.  According to Mr. Mirgon, a recent estimate regarding the handheld and mobile radios for local government indicated that the cost would be in excess of $30 million.  To invest that amount of money in a system that was not even owned by the state did not appear to Mr. Mirgon to be a viable plan. 

 

The other concern to local governments, explained Mr. Mirgon, was the constitutionality of Sections 30 and 31 of A.B. 441 under The Constitution of the State of Nevada, Article IV, Section 20, which read, “The Legislature shall not pass local or special laws in any of the following enumerated cases–that is to say: Regulating county and township business.”  Mr. Mirgon believed the language of Sections 30 and 31 of the bill would fall into that category, and he added that the cost of A.B. 441 to local governments would become a major unfunded mandate.

 

Assemblyman Beers remarked that the question in his mind was to what extent to waste society’s resources on unfunded mandates versus the extent that resources had historically been wasted by “chasing” different systems that were incompatible.  Mr. Beers believed that $10 million to $20 million had been spent on non-compatible communications systems that had been pursued by different branches of government.  He asked how that situation could be “fixed” if not through the stipulations included in A.B. 441.

 

Mr. Mirgon stated he was very familiar with the situation, and had reviewed many of the studies.  One of the last studies had been conducted in 1998 by the Department of Information Technology (DoIT) under the direction of the Legislature, and discussed how to merge the VHF and 800 MHz systems.  Mr. Mirgon noted that the 800 MHz systems being operated within the major metropolitan areas were very easy to interconnect and crosspatch with the VHF systems, however, the state would also be required to have some type of VHF capabilities because federal wildland firefighters were required to scan VHF. 

 

Mr. Mirgon stated that the study which had been conducted proposed a workable solution, however, it had been decided not to take the action recommended by the study.  He noted that the Legislature required the study and had accepted it upon completion, which was why money had been appropriated years ago for the VHF system for the Highway Patrol.  Mr. Mirgon stated the VHF and 800 MHz systems, if funded and supported by local governments, could be tied together quite easily and would be very cost‑effective without requiring the elimination of any system.  According to Mr. Mirgon, the trouble was that the various entities did not want to follow that study because each entity had their own idea regarding the situation.     

 

Mr. Beers asked how the problem could be addressed.  Mr. Mirgon believed that entities should “live by the study.”  He found it amazing that DoIT, along with the Nevada Department of Transportation (NDOT), were taking the position that every entity should be on an 800 MHz system, yet they had been principals in the aforementioned study.  Mr. Mirgon reported that the study had been conducted by an independent engineer, was very workable, and if entities were simply told to live by the decision that was made several years ago, there would be interoperability within the state information systems.  Mr. Beers asked who would tell the entities that they had to abide by the study.  Mr. Mirgon believed it would be the Executive Branch or the Legislature. 

Mr. Beers pointed out that the current system was not working, and perhaps the mechanism in the bill would create a system that worked.  Mr. Mirgon indicated that even if every entity were on the same system and the same frequency or band, it probably still would not work because as individual user radios were programmed they were only programmed to talk to certain other users.  According to Mr. Mirgon, if a disaster suddenly hit there could be a failure in communication because the radios had not been programmed correctly by the technicians.  Interoperability in its totality was probably not an achievable goal, and Mr. Mirgon pointed out that New York City could not achieve that goal even with all the money and resources available to it.  There had been a number of studies performed by organizations that simply stated there should be a reasonable level of interoperability, not total, because that was unachievable.

 

Speaker Perkins asked Mr. Mirgon about the age of the study he had previously referenced.  Mr. Mirgon replied that the study had been conducted in 1998.  Speaker Perkins stated it was his concern that as technology moved forward, VHF became less usable in the public safety arena, particularly when entities were attempting to move data other than simple voice communications.  That was his understanding regarding why entities were moving into either 800 MHz or other frequencies.  Speaker Perkins noted that there was a lack of frequencies available in the VHF area, and the state utilized VHF, 800 MHz, microwave backbone, and many other systems, which meant that entities could not communicate.  The interoperability would never become seamless or perfect, but it certainly needed to be better than the current situation, and Speaker Perkins explained that the bill included language borrowed from the most recent study conducted by the Department of Justice. 

 

According to Speaker Perkins, having dealt in the communications arena, it was apparent that entities were tied to a favorite vendor, and the vendors appeared to have an inordinate amount of influence over the direction in which an entity moved, and would often sell entities a “bill of goods” that only worked in select areas.  Speaker Perkins wondered how it would be possible to move entities toward the “same page” and stop spending millions of dollars on systems that did not work.

 

Mr. Mirgon stated that he agreed with Speaker Perkins in general, and explained that there was much talk about “data.”  He pointed out that Henderson had hired a private carrier for data, Carson City was reviewing that possibility, and state agencies had also used private carriers.  Mr. Mirgon indicated that the public safety spectrum, as it currently stood, could not carry the data requests that were needed to meet the needs of the National Crime Information Center (NCIC), fingerprinting, or photos, but the private sector could.  Mr. Mirgon explained that local entities could not afford to build that data, but could afford to rent it.  He noted that 800 MHz was the only spectrum that allowed enough bandwidth to push the necessary data, which complicated the situation.  Mr. Mirgon commented that the data issue should be set aside and handled by private carriers based on the area of need. 

 

According to Mr. Mirgon, the Homeland Security Committee, which existed under the Governor’s Office, included a Subcommittee for Communications.  One of the problems faced in the past was that such committees contained technicians and mid-level managers, however, the current committee consisted of city managers, county managers, sheriffs, police chiefs, and fire chiefs, because those were the people who signed the purchase orders.  Mr. Mirgon explained their job was to figure out how to build a consensus, and he believed there was a better chance of accomplishing that task because the members of the committee would have an understanding of which entities they needed to communicate with.  Mr. Mirgon believed that was an acceptable way to reach the goal. 

 

Speaker Perkins remarked that the bill would force people to hold discussions in order to provide some consistency regarding the direction in which the information system was moving.  In 1998 the concept had been more difficult to sell, however, that changed after the events of September 11 where many firefighters were lost in the collapse of the World Trade Center because one group was unable to communicate with another group, whether it was firefighters or police officers, to let groups know that the buildings were collapsing and advise them to get out.  Speaker Perkins testified that the events of September 11 really brought the situation “home to roost” and he believed there was more interest, incentive, and cohesiveness in the direction the state was moving. 

 

Mr. Mirgon noted that one thing missing from A.B. 441 was the requirement that the state operate under the Incident Command System, where entities could operate under whatever structure they chose, however, when other entities provided assistance they would operate under the stipulations established by the Incident Command System.  Mr. Mirgon explained that California, along with other states, required operation under the Incident Command System in emergencies, and he believed that requirement, which in itself was a type of interoperability, should be included in the bill.

 

Rick Bareuther, Information Technology Manager, City of Sparks, indicated that the City supported the intent and desires of A.B. 441, but did have some strong concerns with Sections 30 and 31.  The City of Sparks supported the goals of compatibility and interoperability 100 percent, and felt strongly that entities in Washoe County were making tremendous strides in that regard.  Mr. Bareuther informed the Committee that in the near future the public safety entity for the City of Sparks would be the first to utilize a new region-wide 800 MHz system that would encompass 16 different agencies; he explained that interoperability and communication capability was being built-in amongst those agencies.  Mr. Bareuther believed the City of Sparks was a shining example within the state, however, there was concern that if the proposed commission created a narrow plan that did not take the size and geographical difference of the agencies into consideration, the ability to competitively bid any computer or communication system could be eliminated, which could result in additional expenditures of millions of dollars.  Mr. Bareuther advised that the City of Sparks was also concerned that it could potentially “throw away” major investments in infrastructure through the invalidation of working systems by not allowing any additions or maintenance to those systems. 

 

According to Mr. Bareuther, the City of Sparks would request an opportunity to work on the language of Sections 30 and 31 of A.B. 441 to ensure that the best computer and communications systems were available for all the citizens of Nevada.  He suggested that a longer time frame be considered for compliance based on financial hardship or other issues.

 

Vice Chairwoman Giunchigliani asked whether Mr. Bareuther had suggestions regarding the time line for implementation.  Mr. Bareuther noted that the language of A.B. 441 stipulated an effective date of July 1, 2004, and if the City’s computer or communication systems did not meet the terms of the plan, the entity would not be allowed to purchase any components whatsoever for those systems.  Mr. Bareuther explained that the City would not be able to purchase replacement components for broken radios or broken buttons under the current wording of the bill.  He asked that the Committee consider a longer time frame, and opined that the creation of a statewide plan for all systems was an excellent idea.  As indicated by Mr. Mirgon in previous testimony, plans had been developed in the past which Mr. Bareuther believed should be taken into consideration.  He also felt there should be certain considerations built-in, particularly for the smaller agencies that could not afford to purchase multi‑million dollar systems to replace existing systems.  

 

Vice Chairwoman Giunchigliani asked whether it was Sections 30 and 31 that Mr. Bareuther was referring to regarding the time line.  Mr. Bareuther pointed out that both sections included a time line.  Vice Chairwoman Giunchigliani asked about the language pertaining to the repair of existing systems.  Mr. Bareuther stated the language of the bill referred to the purchase of any “system or component,” and his concern was with “component.”

 

Marty Scheuerman, representing the Reno Fire Department, indicated that he was also the Chairman of the Washoe County Regional Radio System Operations Committee and the Incident Commander for the Sierra Front Incident Management Team.  Mr. Scheuerman informed the Committee that the City of Reno was neutral regarding A.B. 441, and he would support and applaud the intent of the bill, but there were some points that caused him great concern.  According to Mr. Scheuerman, the main issue would be cost.  He explained that Sections 30 and 31, both in terms of radio communication systems as well as information systems, contained language that was so stringent it could be construed that it would be impossible to purchase a component necessary to maintain the current Legacy systems until a time line was implemented for a new standardized system.  Approximately $18 million had just been spent to install a new 800 MHz system in Washoe County that many of the public entities were utilizing.  Mr. Scheuerman explained that any one single agency could not install such a system, and the ability of the smaller fire departments in rural areas to reach a set standard would be next to absolutely impossible.  He noted that for those smaller departments, even the replacement of radios would become an issue. 

 

Per Mr. Scheuerman, in dealing with the federal government along the Sierra Front, local entities interacted quite often with the U.S. Forest Service and the Bureau of Land Management.  Those fire fighting agencies were all based on VHF systems, and while there was the intent to create a digital standard within the VHF, Mr. Scheuerman pointed out that still did not answer the questions regarding how Washoe County entities would maintain interoperability with those federal entities.  He did not believe the state could dictate to the federal government regarding radio operation.  Mr. Scheuerman explained that local entities needed to retain the ability to be able to purchase and utilize radios that operated on the federal frequency in order to continue to operate for public safety purposes. 

 

The main issue, stated Mr. Scheuerman, was cost to the local entities.  While interoperability was essential for public safety and was the direction in which to move, entities had to be able to continue business until that point was reached.  What local entities would ask was that the study and standards would allow maintenance of the Legacy systems until entities reached the point of changing to the new standardized system.

 

Mr. Scheuerman indicated he would absolutely support entering into an Incident Command System, and he believed that stipulation would be an incredible boost statewide if added to A.B. 441.  The National Interagency Management System (NIMS) was the standard that was being used nationwide, and was being taught at the National Fire Academy, along with many of the law enforcement academies across the nation.  Mr. Scheuerman indicated that would be a huge boost to the Reno Fire Department, especially in dealing with interagency incident management, where concerns were not only from the aspect of the fire department, but also from the aspect of law enforcement.  Many times, stated Mr. Scheuerman, incidents that started out as a fire incident would transition into a law enforcement incident.  Mr. Scheuerman indicated he had been fortunate to work with some excellent law enforcement personnel in Washoe County who utilized the same incident management system, and he noted it worked extremely well when everyone was working from the “same page.”

 

Mr. Scheuerman noted that Section 12(4) of A.B. 441 referenced the makeup of the Nevada Commission on Homeland Security, and stipulated that ten members could be appointed to the Commission if they possessed any of the 12 different qualifications listed.  There was no guarantee within that text that there would be a fire representative among the members, and there was also no guarantee that there would be a law enforcement representative on the Commission.  Mr. Scheuerman opined that those were critical areas that should be made part of the Commission, for example, that law enforcement and fire representatives would be members of the Commission.  He noted that there was also one area of expertise missing from the list of 12 qualifications, and that was in the realm of telecommunications.  Mr. Scheuerman noted that information technology was listed as a qualification, however, there was no provision for a representative from the area of telecommunications.  While the technologies were similar, they were very different in terms of application and Mr. Scheuerman believed they were also different in terms of viewpoint; he believed it would be very advantageous to add that qualification to the list.

 

Mr. Scheuerman thanked the Committee for the opportunity to testify regarding A.B. 441, and advised that he was familiar with the law enforcement interoperability study that was mentioned earlier.  He referenced the Web site for the Advanced Generation for Interoperability for Law Enforcement (AGILE), which was part of the National Institute of Justice, and noted that the language pertaining to the AGILE standards project was very similar to the bill.  However, language in the standards project indicated that the key effort was the identification and development of interoperability standards that would allow local, state, and federal agencies to communicate and exchange information among organizations, without requiring substantial changes to internal systems or procedures.  Mr. Scheuerman remarked that the Reno Fire Department was very leery of the language of the bill as written because it could find itself in a situation where even the in-station computer system utilized for incident reporting could be construed as an information system used by a first responder.  If, for some reason, that system did not meet the standards established by the Commission, the Department would be required to purchase a new system when an element needed repair.  Mr. Scheuerman emphasized that the Department simply needed to maintain the Legacy systems until a consensus standard was reached and the proper system installed.

 

Clay Thomas, Administrator, Field Services Division, Department of Motor Vehicles (DMV), voiced support for A.B. 441, however, would offer one recommendation pertaining to the effective date for Sections 34 through 37.  Mr. Thomas noted that the actual effective date was July 1, 2003, and he requested that date be extended to January 1, 2004, in order to provide DMV programmers with sufficient time to make necessary computer application changes.  Vice Chairwoman Giunchigliani asked Mr. Thomas to provide his request in writing to the Committee.

 

Mary Walker, representing Carson City, Douglas and Lyon Counties, and North Lake Tahoe Fire Protection District, commended Speaker Perkins because the bill would resolve many problems regarding terrorism and homeland security issues.  She referenced Section 17(4), which read, “Examine the use, deployment and coordination of response agencies within this state. . .” and noted that problems had already been experienced in Carson City.  One example, stated Ms. Walker, was the anthrax scare that occurred over one year ago, which actually fell under the jurisdiction of the State Health Division; however, once the City had received calls regarding the anthrax scare, the Health Division requested that the City handle the situation.  Ms. Walker noted there was definitely a very strong need for coordination and she believed A.B. 441 would provide that coordination.

 

Section 26(9) of the bill discussed where the legislative body would be housed during or following a catastrophic emergency, and Ms. Walker appreciated the fact that the bill addressed that problem.  She voiced the same concerns regarding Sections 30 and 31, and advised that the likelihood of terrorism in rural areas of Nevada was low and local entities were very concerned about the cost.  Ms. Walker pointed out that some rural Nevada jurisdictions had such old communication systems that they could no longer purchase replacement parts.  A statewide system, such as an 800 MHz system, would be unaffordable for the rural entities and Ms. Walker emphasized that rural entities were very concerned regarding that aspect of the legislation.  Ms. Walker stated the local entities would appreciate any consideration that could be provided for the smaller jurisdictions.

 

Jim Linardos, Fire Chief, North Lake Tahoe Fire Protection District, thanked the Committee for the opportunity to provide testimony regarding A.B. 441.  Mr. Linardos echoed previous comments regarding Sections 30 and 31, which created some concerns for the District.  He noted that some of the smaller or volunteer agencies in the state, which compromised the majority of the protection in Nevada, would experience some problems simply because of the cost involved.  Mr. Linardos stated he would support the changes to Sections 30 and 31 as recommended by Mr. Scheuerman.

 

With no further testimony to come before the Committee regarding A.B. 441, Vice Chairwoman Giunchigliani declared the hearing closed and opened the hearing on A.B. 464. 

 

Assembly Bill 464:  Establishes Commission to Review the Compensation of Legislators. (BDR 23-1319)

 

Carole Vilardo, President, Nevada Taxpayers Association, testified in support of A.B. 464.  For the past four sessions, an increase in compensation for legislators had been sought, and the last time there was a bill for increased compensation, it was initiated by a group of trade association lobbyists who approached the Legislative Commission to request a bill on their behalf to increase compensation for legislators.  Ms. Vilardo stated that legislators performed a service for the state of Nevada and the concern was that legislators would not be able to continue running for office, which meant that people from all walks of life and incomes would not be able to afford to run for office.  Ms. Vilardo stated for that reason, it was believed A.B. 464 was very important.  It should also be understood that because it had been so long since legislators had received an increase in compensation, any substantive action would wind up being a double-digit percentage, such as 22, 23, or 24 percent, which would then not “play” well in the press.  Ms. Vilardo pointed out that there was much support for the bill.

Ms. Vilardo indicated that she had recently conversed with lobbyist Lucille Lusk, who indicated that she had made a suggestion to the Committee on Constitutional Amendments that an amendment be proposed to The Constitution of the State of Nevada that would allow legislators to be paid for every day of session.  Ms. Vilardo believed that was a stipulation which should be recognized because, at the present time, legislators were paid only for 60 days.  She stated at the very least, those who had rallied behind the bill during the 2001 session would also rally behind the current proposal.  Ms. Vilardo noted that Ms. Lusk had further suggested that the amendment contain language that allowed the Legislature to address the compensation issues each session.  Ms. Vilardo noted that legislators would not necessarily take action each session, but at least there would be a requirement to review the compensation issue and attempt to increase the level to an appropriate level.  The Legislature would then have the ability to review the issue each session and could recommend small increases that would be somewhere in the realm of reality.  In lieu of other action regarding the appropriate level of compensation, Ms. Vilardo stated that she and the trade association lobbyists would support A.B. 464, but she urged the Committee to also consider the two Constitutional changes that were recommended by Ms. Lusk, as they were extremely viable.

 

Vice Chairwoman Giunchigliani asked whether there were questions or comments from the Committee.

 

Assemblywoman Leslie stated that the idea of legislators receiving pay for every day of session was action that she had promoted for several years because most people did not realize that for the second 60 days of session, legislators received no salary, which was extremely difficult.  Ms. Leslie asked whether the Committee on Constitutional Amendments had taken any action on Ms. Lusk’s recommendations.  Ms. Vilardo stated that it was her understanding that the recommendations had been discussed and Ms. Lusk believed that the Committee was favorably reviewing the recommendations, which was why she would question the redundancy of two bills, if that Committee should process the recommendations.  Ms. Leslie asked whether the recommendations were in bill format, or whether the recommendations would be an amendment to another bill.  Ms. Vilardo believed it would be an amendment to other legislation.  

 

Assemblyman Beers stated he was curious regarding whether it was believed that the Legislature could conduct its business in 60 days, and that was the reason for the stipulation of 60-days pay.  Vice Chairwoman Giunchigliani noted that seemed to be the genesis of the stipulation. 

 

James Richardson, representing the Nevada Faculty Alliance, stated that he would speak as a “voice from the past” because during the years he had been attending legislative sessions, he had argued and lobbied that legislators should be considered state employees for the purpose of health insurance.  He and former Assemblyman Marvin Sedway had made that a cause during Mr. Sedway’s years as a legislator, however, they had not been successful in that endeavor.  Mr. Richardson stated that he was present as an individual rather than a lobbyist, and as the former Chair of the State Group Insurance Committee, to testify in support of A.B. 464 in memory of Mr. Sedway.  Mr. Richardson explained that while he chaired the Committee for six years, several efforts had been made to accomplish such action.  He believed that legislators should be considered state employees for the purpose of health insurance because serving as a legislator would be difficult for some people who did not have other coverage.  According to Mr. Richardson, it was a shame when people had to make a decision regarding running for public office based on the issue of whether they could continue to pay for health insurance while serving.

 

Mr. Richardson stated he had two specific suggestions.  If legislators wanted to make health insurance requirements quite explicit, Section 6(2)(b) could read, “Determine the minimum salary and benefits required to attract and retain experienced and competent persons.”  The second suggestion would be the addition of Section 6(2)(e), which would read, “Consider defining legislators as state employees for the purpose of health benefits.”  Mr. Richardson opined that addition would make it very explicit regarding health insurance.  He stated he offered those two possible amendments in memory of Marvin Sedway, and urged the Committee to consider not only passing A.B. 464, but also amending it to make the stipulation regarding the importance of health insurance very explicit. 

 

Vice Chairwoman Giunchigliani referenced Section 6(3), which she believed was a key component that had been mentioned in the press, and that was if recommendations were made for salary increases, a legislator would have to stand for election first before receiving that increase. 

 

Rick Bennett, speaking as a private citizen, considered A.B. 464 to be a “good government bill.”  As a former legislator, he could think of several legislators from past sessions who had opted not to run again because they simply could not afford to serve as a legislator and had to care for their families first.  Mr. Bennett indicated that while he understood such a decision, the state lost good people because of the salary paid to legislators.  As a former legislative leader, Mr. Bennett commented that he had attempted to recruit people to run for office, however, the salary was a barrier for people considering whether to run for office.  Mr. Bennett believed there were many good people in Nevada’s communities that could make a contribution to the legislative process, but they simply could not afford to consider running for office, which he believed was not a good situation for Nevada. 

 

Lucille Lusk, representing Nevada Concerned Citizens, indicated that her organization was not in favor of a salary commission, particularly one that determined pay which must be included in the budget, and was therefore lost to discussion.  Ms. Lusk informed the Committee that considerable discussion had been held in meetings of the Committee on Constitutional Amendments relative to A.J.R. 1 of the Seventeenth Special Session with regard to some items it was believed would provide assistance and gain public support were they offered.  Ms. Lusk explained that one item would be a requirement that the Legislature fix, by law, every session, the compensation for the county and state officers for whom it was responsible, as well as the legislative salaries, so that the issue would not continue on without attention.  The problem, stated Ms. Lusk, was that too much time had passed so the figures under consideration were so high that they scared both the public and the legislators.  If action were taken every session that perhaps reviewed research provided by the Legislative Counsel Bureau (LCB) regarding comparative compensations, then Ms. Lusk believed the numbers would be reasonable and in accordance with the general public’s perception as well. 

 

According to Ms. Lusk, it was also recommended that a Constitutional amendment should be submitted which required that legislators be paid for every day of service.  Ms. Lusk opined that was only a logical and fair consideration, which she believed would find public support now that the length of sessions was specifically limited.  The reason there were problems in the past was because with unlimited sessions, people perceived that if such a provision were passed, legislators would carry the session on and on, and it would become full time.  Ms. Lusk noted that would not occur now because sessions were limited to 120 days.  That appeared to be the appropriate solution that kept the Legislature functioning in accordance with the Constitution and law, rather than an approach that was almost a circumvention of the law.  Ms. Lusk believed that her suggestions were receiving favorable consideration by the Committee on Constitutional Amendments. 

 

Assemblywoman McClain asked whether Ms. Lusk thought A.J.R. 1 from the Seventeenth Special Session would move through the Committee on Constitutional Amendments without amendments.  Ms. Lusk did not think the bill would go through without amendments and, essentially, would have to start over at the present time, primarily because it included a provision that would allow appointment of county officers. 

 

Ms. McClain noted that A.B. 464 and the constitutional amendment would accomplish the same thing, and asked why an amendment to the Constitution was necessary.  Ms. Lusk explained that the bill and the proposed amendment to the Constitution were not the same and would accomplish different outcomes, even though their purpose was similar, which was to provide adequate compensation for individuals for whom it should be provided.

 

According to Ms. Lusk, Nevada Concerned Citizens would also support a health insurance provision; she would not provide that by way of a recommendation, but had heard it recommended by other organizations.  Her organization would not agree with defining legislators as state employees, but would agree with providing health insurance in a similar manner.

 

Ms. Vilardo explained that the bill and the proposed amendment to the Constitution were two totally different vehicles that did not mesh, and she supported establishment of a Commission.  If the proposed amendment to the Constitution was going to move forward, the Commission could be established and function until such time as the changes were realized, at which time the Commission could be dissolved.  Ms. Vilardo noted at that point the Commission would no longer be necessary; she felt that might be a way to bridge the amount of time needed for the Constitutional amendment.  Ms. Vilardo pointed out that the proposed amendment would have to be passed during the 2005 session and would then go to a vote of the people, which would take approximately seven years.

 

Vice Chairwoman Giunchigliani believed that the salary amount could be changed but not the issue regarding the number of days a legislator was compensated for, which was part of the annual session bill. 

 

Ms. Vilardo stated one of the problems was that if an attempt was made to adjust the salaries based on the rate of inflation, the increase would be somewhere in the vicinity of 26 to 28 percent.  The general public did not understand that type of increase, so it became problematic.  Ms. Vilardo noted that the other proposal was somewhere along the lines of a 6 percent increase with further action during following sessions; she did not believe that would happen.  The bottom line, stated Ms. Vilardo, was that legislators had an obligation to take care of themselves, however, had not seen fit to do that.  The bill and the proposed amendment to the Constitution were the only two vehicles available at the present time and, hopefully, the Commission would not be necessary for a lengthy period of time.  Ms. Vilardo noted that there was much support for legislators receiving pay for every day of session. 

Assemblyman Hettrick indicated that he had commented on a similar bill each session since he became a legislator and he would absolutely support some action.  He believed that legislators were doing everyone a disservice by not taking action.  Mr. Hettrick noted that previous discussion indicated it would take up to a 28 percent increase in pay to bring the level of pay up to inflation, but there was no discussion regarding the fact that even though legislators were offered health insurance, they currently paid a monthly premium of approximately $700.  He indicated that the premium for a legislator’s health insurance had increased over 100 percent since he had become a legislator 12 years ago.  Mr. Hettrick pointed out that legislators paid that premium each and every month, and he was presently paying approximately $8,400 per year for health insurance while earning $7,800 in salary for a two-year period.  Mr. Hettrick emphasized that his salary was not even sufficient to pay his health insurance premium.  He opined that it was a “crazy” situation and if legislators could not step up and take action once and for all to address the problem, no one would be able to afford to serve. 

 

According to Mr. Hettrick, the only persons who could afford to serve would be wealthy retirees and persons who had jobs that allowed them to take time off without losing benefits, otherwise, a person could not afford to serve.  He stated, “It was a shame, was not right, and would create a situation where the state did not have sufficient representation.”  He reiterated that something should be done to “fix” the situation.  People always hesitated and did not want to “step up to the plate” and take appropriate action, but Mr. Hettrick opined that if the problem was ever going to be addressed, legislators had to take the initiative. 

 

Assemblywoman Chowning agreed with the remarks made by Mr. Hettrick.  She referenced a recent televised news report from East Tropicana in Las Vegas where the reporter noted they had not seen many limousines or fancy cars driven by legislators from the airport, which she found quite inappropriate.  Such news coverage fed the image of legislators shared by most people.  Mrs. Chowning stated when people were told that legislators virtually worked for nothing they found it hard to believe because no private sector or public employee would work for nothing.  The definition of that status would be “volunteer” and she asked whether there was any other state in the United States where legislators “volunteered” to create legislation. 

 

Ms. Vilardo indicated that she had not reviewed the status of other states, however, some other states, such as Vermont, New Hampshire, and Maine paid their citizen legislators a very nominal salary.  She believed the problem in Nevada was that there was more awareness on the part of the public because the Legislature was not a full-time body, and because legislators knew their constituents from supermarkets or church visits, and were viewed in a totally different manner. 

 

Mrs. Chowning pointed out there was no other state where legislators served one-half of the session for free with no compensation, which she stated was simply “volunteering.”

 

Vice Chairwoman Giunchigliani believed it was a timely issue and legislators had to have the courage to be leaders.  She believed the public understood that legislators were not compensated properly, however, legislators had to be cautious regarding the amount of the increase.  Vice Chairwoman Giunchigliani believed that establishment of the Commission proposed in A.B. 464 would be a good beginning for the process.

 

David Schumann, representing the Independent American Party (IAP), concurred with Vice Chairwoman Giunchigliani’s statement that legislators had to be leaders and take appropriate action.  He believed that legislators should set their own salaries at $20,000 per year, which was one-third of $60,000, which he thought would be an appropriate pay scale for a full-time legislator.  Mr. Schumann stated it was a nonpartisan issue that would not cause party issues if the amount were set at $20,000 a year, along with an appropriate explanation that legislators served for 120 days rather than 60 days, and could not even pay health insurance premiums on the current salary.  He proposed that every year henceforth, the Legislature would address the issue of compensation so that it would not amount to such a large increase in the future.  Mr. Schumann opined that the initial increase would be large, however, the IAP was against the Commission idea.  He pointed out that Congress had utilized that idea and it totally destroyed accountability.  The Governor would set the Commission, and the members would not be elected or answerable to anyone, however, legislators were. 

 

Mr. Schumann believed there was a great deal of trust for the legislative body and legislators would have to explain the first increase in salary, but after that, increases would be gradual.  He stated legislators should “grab the bull by the horns” and take appropriate action, otherwise, it would be several years before action would be taken.  Mr. Schumann stated that the IAP would support an increase in compensation for legislators.

 

Vice Chairwoman Giunchigliani thanked Mr. Schumann for his support, and stated that the longer the issue was delayed, the more expensive it would become.  At some point, the Legislature simply had to “bite the bullet” and make a decision regarding what would be best for the future of the state.  Many of the current legislators would not be serving long enough to realize an increase, but they needed to prepare for those that would hopefully run for office in the future.  

 

John Wagner, representing a Republican volunteer group known as the Nevada Republican Assembly, advised that his group would not favor the creation of a Commission.  Mr. Wagner indicated that he was not sure A.B. 464 was constitutional since the issue had been discussed by the Committee on Constitutional Amendments.  He stated that he had asked one legislator whether the Legislature had the authority to set the salary for its legislators, and the reply had been that the Legislature did have that authority, however, legislators simply did not have the “guts” to do that. 

 

Mr. Wagner referenced S.B. 391 and stated that one explanation for legislators receiving only 60 days of pay was that perhaps legislators could get out of town faster.  He emphasized that legislators deserved to be paid for their worth.  Mr. Wagner noted that S.B. 391 would be passed out to the Assembly, and recommended a $20,000 yearly salary; he agreed heartedly with that recommendation.  According to Mr. Wagner, S.B. 391 did not contain a provision for health insurance and he believed it should be amended to include that provision.  Mr. Wagner pointed out that the Commission proposed in A.B. 464 would take approximately seven years to produce results.  He opined that an amendment should be made to the appropriate bill that would set legislative salaries for the 2005 session because of the budget constraints experienced during the current session.

Being a partisan and conservative Republican, Mr. Wagner stated he would not speak ill of anyone, whether Democrat or Republican, who voted in favor of setting their own salaries.  Such action was long overdue and legislators deserved an increase in compensation.

 

Janine Hansen, Nevada Eagle Forum, noted that there had been many excellent suggestions offered to the Committee, and it was very important that legislators received an increase in compensation.  Ms. Hansen stated one of the most important reasons for that increase would be to maintain the diversity of the Legislature and the ability for many different people to be able to serve.  She opined that was one of the great strengths of the citizen Legislature.  Ms. Hansen said she had been attending legislative sessions since 1971 and believed there was great strength in the diversity, varied opinions, and experience of Nevada legislators.  There were several suggestions regarding the way to accomplish that salary increase, and Ms. Hansen did not agree with the Commission idea.  She felt there were better ideas to establish the salary, however, no matter how it was done, action should definitely be taken so as not to preclude good people from serving as legislators, and to maintain the diversity of the Legislature.  Ms. Hansen remarked that there was much endorsement regarding a salary increase, and she encouraged legislators to take the appropriate action. 

 

Danny Thompson, representing the Nevada Chapter of the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), stated that he had previously had the honor of serving in the Assembly for ten years, and for those ten years, he made less salary than current legislators.  According to Mr. Thompson, the fact that legislators were not provided health insurance was a crime, and he pointed out that there had been many arguments during the current session regarding the high premiums for health insurance.  Mr. Thompson stated that the irony was that legislators who wrote the law did not have health insurance, which truly was a crime and something should be done.  The AFL-CIO would wholeheartedly support any action taken by the Legislature to correct the inequity. 

 

Mr. Thompson opined that the inequity was especially unfair to those legislators who did not live in the Carson City/Reno area, and had the expense and inconvenience of maintaining two homes during session.  Mr. Thompson acknowledged that previous action regarding salary increases had been politicized, however, the amount of money under discussion was insignificant.  If the current quality of legislators was to be maintained, Mr. Thompson opined that some action had to be taken to correct the situation.  He had heard several arguments that legislators knew what they were getting into when they ran for office, but if it became impossible for some to serve, the state would simply “get what it paid for.”  Mr. Thompson noted that the state should be thankful that there were so many people who were dedicated and wanted to serve, but legislators had to make it possible for others to serve.  Any action taken regarding A.B. 464 would wholeheartedly be supported, and Mr. Thompson urged the Committee to take positive action.   

 

With no further testimony forthcoming regarding A.B. 464, Vice Chairwoman Giunchigliani closed the hearing and opened the hearing on A.B. 490.

 

Assembly Bill 490 (1st Reprint):  Revises provisions governing mortgage brokers and mortgage agents.  (BDR 54-998)

 

Assemblyman David Goldwater, District No. 10, testified that A.B. 490 had unanimously passed out of the Assembly Committee on Commerce and Labor.  What the bill purported was to create a board to direct the Commissioner of the Division of Financial Institutions in regulating mortgage brokers and agents.  Mr. Goldwater explained there had been numerous complaints that the state’s Division of Financial Institutions was not as responsive as it should be to concerns regarding mortgage brokers and agents.  As Nevada continued to grow, stated Mr. Goldwater, the abuses of people in the financial field, particularly in the area of mortgages and mortgage trustee investments, had become burdensome.  Mr. Goldwater noted that the state had promised to regulate the area, however, had not done a very good job.  In other areas that the state had promised to regulate, such as utility regulations, there was either very strong governmental oversight or there was an indirect citizen pseudo government regulatory structure, such as the Real Estate Commission. 

 

Mr. Goldwater explained that the mortgage business was ever changing, which was important, and when complaints were voiced they should be addressed swiftly, which often did not occur under the current structure.  In an effort to create an entity that was somewhat more appropriate for the level of financial regulations needed today, A.B. 490 had been created.  Mr. Goldwater stated it was the intent to make the proposed Board for the Regulation of Mortgage Brokers and Mortgage Agents a self-funded entity.  Mr. Goldwater introduced Leo Davenport, President, Nevada Association of Mortgage Brokers, and John Vergiels, lobbyist for the Association, who would testify that the industry would support that type of regulation and would also support self-funding the regulatory function. 

 

According to Mr. Goldwater, the fee level had been adjusted in the bill to separate not only mortgage brokers, but also what mortgage agents would pay to be registered and regulated.  Mr. Goldwater stated that as a starting point, he had used the regulation fee for real estate agents, and the Division had estimated it would regulate approximately 4,500 agents, at which point a fee level had been established.  He noted that staff of the Legislative Counsel Bureau (LCB), Fiscal Analysis Division, continued to work on that fee level to attempt a more detailed fiscal note for A.B. 490.  The bottom line, explained Mr. Goldwater, was that the proposal was for a self-funded entity, which should occur with the fee level established by the bill.

 

Mr. Davenport informed the Committee that the Nevada Association of Mortgage Brokers would wholeheartedly agree with Mr. Goldwater’s comments, however, he explained that for his three-person office, he paid $500 per year to be a mortgage broker, while a countrywide broker paid $100 per year.  Mr. Davenport believed that was an inequity and the fees currently received by the Division of Financial Institutions could be doubled by making the fees equal, as depicted by Exhibit C, a proposed amendment to A.B. 490.  Mr. Davenport reiterated that the Association did support Mr. Goldwater in his efforts, and noted that legislation had been passed in the 1999 and 2001 sessions that still had not been enacted by the Division; it was hoped that the proposed Board would solve that problem.

 

Vice Chairwoman Giunchigliani referenced Exhibit C, and asked whether the proposed amendments were acceptable to the sponsor of the bill.  Mr. Goldwater noted that the exemption had been deleted from the bill, but the fee structure certainly was something that should be examined.  He had created a fee structure of “up to” set amounts, which would allow the Commissioner to examine the issue and establish the fee that would fund the entity.

Assemblywoman Chowning disclosed that she was a licensed real estate agent and, as such, dealt with mortgage lenders on a daily basis.  She believed that legislation passed by the 2001 session was making some positive difference in the industry.  Mrs. Chowning stated the education that was currently required was also making a positive difference.  She asked whether there were any changes proposed by the bill that would solve the problem of out-of-state brokers misleading the public by advertising extremely low interest rates that were not accurate.  She stated such advertising amounted to a “bait and switch” operation on the part of those brokers, who apparently did not have to “play by the rules.” 

 

Mr. Goldwater pointed out that one of the unique aspects of the mortgage business was that things happened quickly, interest rates changed, and the Division of Financial Institutions was a slow-paced regulator.  What he had envisioned with A.B. 490 was that the proposed Board would recognize the patterns and be able to react to them by directing the Commissioner of the Division of Financial Institutions in investigations, in establishing fines, and determine the appropriate responses to abusive behavior in the industry.  Mr. Goldwater stated that would occur in a timely fashion and he hoped that the new regulatory structure proposed by A.B. 490 would discourage the type of abuse referenced by Mrs. Chowning.    

 

Vice Chairwoman Giunchigliani asked for clarification regarding Section 8.5, Section 9, and Section 10 of the bill.  It appeared that the bill would create a Board to enforce the provisions of the appropriate chapter of the Nevada Revised Statutes (NRS), but would not manage the Division of Financial Institutions.  Apparently, the Commissioner would be required to provide advice, support, assistance, and any records or information deemed necessary by the Board, and the Board would supervise and direct the actions of the Commissioner.  Vice Chairwoman Giunchigliani asked whether a different Commissioner was proposed, other than the current Commissioner of the Division of Financial Institutions.  She noted that the Division was also responsible for other entities, such as banks.

 

Mr. Goldwater replied that the bill would not create a specific Commissioner, but the Board would direct the present Commissioner of the Division of Financial Institutions in the area of mortgage brokers and agents.  The Commissioner would not work only for the Board, because the Commissioner of the Division of Financial Institutions also dealt with banks and credit unions.  Mr. Goldwater explained that the mortgage business was more fluid and faster paced than the banking industry. 

 

Vice Chairwoman Giunchigliani believed that the language of the bill could become problematic because it implied that:

 

·        The Board would supervise and direct the actions and decisions of the Commissioner with regard to the administration and enforcement of the provisions of the NRS

·        The Board would establish policies and standards

·        The Board might adopt regulations as necessary to administer and enforce the NRS

·        The Board might revise or repeal any regulations adopted by the Commissioner pursuant to the NRS

·        The Board would require that the Commissioner provide any records or whatever information deemed necessary by the Board when so requested

 

Vice Chairwoman Giunchigliani noted that the current Commissioner had many other jobs and the Board could dominate the Commissioner at the expense of the other institutions monitored by the Division. 

 

Mr. Goldwater believed that the workload for the Commissioner and his staff could be accomplished at the current level, and he did not believe additional staff would be necessary.  Vice Chairwoman Giunchigliani asked whether the Commissioner could designate someone to comply with the directives from the Board, so that one group would not dominate the functions of the Division.  Mr. Goldwater believed that could be done informally rather than formally in statute.

 

Mr. Vergiels, lobbyist for the Nevada Association of Mortgage Brokers, directed the Committee to the fee structure and explained that regardless of what eventually became of the bill, it was important for the Committee to adopt the fee structure and build it into the budget.

 

Vice Chairwoman Giunchigliani clarified that Mr. Davenport had explained that the whole intent was that exempt mortgage companies performed the same job as licensed mortgage brokers but paid less fees, and the intent would be to equalize those fees, while establishing a self-funded Board.

 

Vice Chairwoman Giunchigliani asked whether there was a budget account included in the bill.  Mr. Goldwater stated that a special fund had been created for the proposed entity. 

 

Cindy Stephens, owner of MCS Mortgage Company, voiced support for A.B. 490 and thanked the Committee on Commerce and Labor for addressing the concerns regarding education.  Ms. Stephens stated that establishing the education criteria and the Board of Regulation was long overdue in the industry, however, she still had concerns regarding the regulations for out-of-state lenders. 

 

Maureen Brower, representing the Mortgage Bankers Association of Nevada, advised that the Association would oppose A.B. 490 as it applied to those who were currently exempt under NRS 645B.015, and she would present a proposed amendment to the Committee later in the day.  Vice Chairwoman Giunchigliani stated the Committee would appreciate receiving that information.

 

With no additional testimony forthcoming regarding A.B. 490, Vice Chairwoman Giunchigliani declared the hearing closed.  The Vice Chair opened the hearing on A.B. 442.

 

Assembly Bill 442 (1st Reprint):  Provides for abatement of property taxes for certain residences to avoid severe economic hardship. (BDR 32-783)

 

Assemblyman Lynn Hettrick, District No. 39, explained that A.B. 442 addressed an issue that had been discussed during the 2001 session when, in fact, a bill had been passed which had been lost in the “shuffle” at the end of session.  According to Mr. Hettrick, A.B. 442 would allow tax assessors in each of the counties to adjust or abate property tax in cases of severe economic hardship.  He noted that Senator Ann O’Connell had initiated the ballot question that allowed an amendment to the Constitution so that taxes could be abated, and, until that amendment had been passed by the voters during the last election, property could not be taxed differently within the state of Nevada.  Mr. Hettrick explained that with the passage of the amendment, taxes could be adjusted if needed. 

Mr. Hettrick emphasized that A.B. 442 addressed only property tax that increased based on land value alone and created a severe economic hardship for the owner of the property.  The example that was provided was a 35-acre parcel of land that was located in the Lake Tahoe basin and had been owned by the same family since approximately 1925.  Mr. Hettrick explained that an 800‑square-foot cabin was located on the property, which was unimproved and could not be improved because it was located in a stream environment zone regulated by the Tahoe Regional Planning Association (TRPA).  The TRPA rules not only would not allow the family to pave the road into the property, but they could never expand the cabin, could never split the property, and could never further develop the property.  Basically, stated Mr. Hettrick, the family could do nothing to the property which was fixed in its present state in perpetuity because of the TRPA rules. 

 

According to Mr. Hettrick, the tax bill on that property was $7,000 per year until 2001 when the bill jumped to $105,000 per year, at which point the family felt it would no longer be economically feasible to retain ownership.  The family was immediately approached by the U.S. Forest Service, who offered to purchase the property from the family at one-half of the assessed value.  Mr. Hettrick stated that the Forest Service would then immediately take the property off the tax rolls by making it exempt property, therefore, Douglas County would totally lose the property tax income from that property.  He noted that the family in question would like to retain their property, did not want to sell it, and would be happy to pay property tax.  Mr. Hettrick said the family had managed to negotiate with Douglas County and, after consideration of all the restrictions placed on the property, the county did lower the tax bill to $35,000 per year, but that was as low as the county could go under existing state law.

 

Mr. Hettrick testified that there were multiple examples in the same vein in the Lake Tahoe region, where families would like to retain their property, but were unable to do so because of severe economic hardship.  Often, it was not because a family was unable to pay the taxes, but rather that it would not make sense to continue to pay such high taxes for the property.  Mr. Hettrick advised that if some abatement of the property tax was not allowed in such situations, property would be sold to the U.S. Forest Service and would be removed from the tax rolls altogether; that would ultimately affect Douglas and Washoe Counties, and Carson City.

 

According to Mr. Hettrick, A.B. 442 would purposely allow assessors to make determinations, but also specified that could only be done based on the value of the land.  That language was included so that persons could not claim hardship to avoid paying higher property taxes.  Mr. Hettrick emphasized that the bill was specifically written that the assessor could only take into account increases in the value of the land; the bill was not to exempt anyone who could afford to pay their property taxes. 

 

Mr. Hettrick noted that the Assembly Committee on Taxation had passed A.B. 442, and it should be understood that no county would want to abate taxes if it did not absolutely make sense to do so.  Counties would not simply wholeheartedly abate taxes; if persons could afford to pay their property taxes, the counties would not abate those taxes.  The bill, explained Mr. Hettrick, was only to address those instances where, indeed, the owner would be forced to sell the property. 

 

Per Mr. Hettrick, there were two sections that applied to the Committee on Ways and Means.  Section 3(2) stipulated that the assessor could determine the limitation, if any, and one of the things that had to be taken into account by the assessor was whether or not the only persons who might purchase the property would be governmental agencies, or other purchasers who would be exempt from property taxes.  Mr. Hettrick indicated it was clear that A.B. 442 was only about alleviating taxes in the aforementioned type of situation.

 

Section 11 was the other section that would be of interest to the Committee, and Mr. Hettrick indicated that the bill asked for the same recapture provisions as currently existed in the agricultural abatement currently allowed under Nevada state law, which was six years of recapture, plus the current tax bill.  Mr. Hettrick noted that under the provisions of A.B. 442, if a person kept such property for a long period of time and ultimately sold it to the federal government or to another party for a profit, that person would be required to pay seven years of recapture tax.

 

In the end, explained Mr. Hettrick, the reason the bill was before the Committee was that if property taxes were abated, there might be some reduction of property tax income to the state of Nevada.  Mr. Hettrick believed that would totally be offset by the fact that if the taxes were not abated, the property would be removed from the tax rolls and all entities would suffer a loss.  It would be impossible for persons to continue paying such high tax rates; they would pay some property tax, but would not pay such a high rate, which would increase automatically if assessors did not have the ability to abate.  Mr. Hettrick stated the situation would continue until persons were forced off their land, which was not the intention of Nevada’s tax law.

 

Mr. Hettrick believed that in the end, the fiscal impact would be nil, if anything.  The legislation would not have an impact on the state of Nevada, and if action were not taken to abate property taxes in certain situations, more money would be lost.

 

Assemblywoman Chowning asked whether A.B. 442 would apply as well to other parts of the state where a person chose to live in their modest dwelling, but the dwellings around them were much more expensive properties and, therefore, their property taxes had increased immensely.  She asked whether that had been factored into the value of the property as well because the overall value could increase while the land portion did not increase significantly. 

 

Mr. Hettrick explained that provisions of the bill would apply statewide, but would only apply to the value of land.  The reason for that was so that a person could not build a million dollar house and then claim economic hardship; the abatement could only be based on the value of the increased assessment on the land.  Mr. Hettrick reiterated that the provisions would be statewide, and if a person could substantiate economic hardship, every assessor would have the opportunity to make a judgment whether to abate the taxes.

 

Assemblyman Marvel asked whether the abatement would be based on the availability of a federal entity willing to purchase the property.  Mr. Hettrick said one of the considerations that was included without limitation was that an assessor had to consider an abatement if the only purchaser for the land was a federal entity.  He further explained that there did not have to be a federal entity willing to purchase the land.  Mr. Marvel asked whether that stipulation would include another tax-exempt entity.  Mr. Hettrick explained that aspect could be considered without limitations, along with the other considerations. 

 

Assemblywoman Leslie stated when she first heard about A.B. 442, she thought of the “little widow” at Lake Tahoe whose property value had skyrocketed.  However, as she read Section 2(1), which stipulated, “Occupied by the owner. . . ,“ she wondered whether the provisions would apply to a person in the Reno area who owned a second or third home at Lake Tahoe, as long as they did not rent or lease that home.  Mr. Hettrick agreed that the stipulations of A.B. 442 could apply to a second or third home, and the reason the bill had been written in its present form was that the aforementioned cabin used as an example was not the primary residence of the family in question, yet it would go off the tax rolls if purchased by the U.S. Forest Service.  Mr. Hettrick indicated that if the provisions were limited to a primary residence it would guarantee that any form of a cabin or summer home at Lake Tahoe that was not a primary residence would at some point be removed from the tax rolls.  At that point, said Mr. Hettrick, Douglas and Washoe Counties, and Carson City stood to lose property tax revenue.  Mr. Hettrick did not believe that a county assessor would grant a tax abatement to a person who owned a second home at Lake Tahoe when they owned another home in a different location on which they paid significant property tax. 

 

Ms. Leslie noted that the bill also would allow the county assessor to utilize any information available to ascertain whether a severe economic hardship existed, however, Section 5(2) stipulated that, “. . . financial information relating to the owner or owners of the property is confidential and must not be released by the county assessor except in defense of his actions in a civil action . . . ,” which would place a great deal of trust in county assessors.  Ms. Leslie asked how the general public would know that a real financial hardship existed relative to a second or third home, which might have a property tax bill of $70,000 or $80,000.  While that amount would be excessive for some persons, for others who owned property at Lake Tahoe, it might not seem to be excessive. 

 

Mr. Hettrick concurred, and pointed out that it should be realized that no county assessor would take a property off the tax rolls simply based on friendship.  The assessors would be required to defend their actions sooner or later, and the abatement had to be listed and filed, and would not be confidential.  Ms. Leslie noted that the information used by the assessors to determine whether to grant an abatement would be confidential, and Mr. Hettrick concurred.  Ms. Leslie stated that stipulation troubled her somewhat.  Mr. Hettrick remarked that assessors would not willingly take property off tax rolls, and would try to tax properties fairly according to state law. 

 

Assemblyman Goldwater stated he did not read anything into A.B. 442 that would adversely affect second or third homes.  The assessment of property truly was broken down into two very easy categories, for example, land and improvements to the land.  Mr. Goldwater noted that the assessment of land was very simple, straightforward, and easy, and a very good case would have to be presented before an assessor would assume real economic hardship in the assessment of land.  He did not see any stipulations in the bill that would change that procedure.  Mr. Goldwater opined that there were no “sneaky” assessors in the state and there would be a natural check by other landowners in the area.  He stated he was quite comfortable with the provisions of A.B. 442 and believed it addressed a unique situation where the assessor’s hands were tied by the universal fairness and equity of property tax assessment. 

 

Vice Chairwoman Giunchigliani pointed out that the issue was property tax and the risk involved when land was purchased was whether the value would go up or down.  Her concern was creating a law that dealt specifically with a person’s choice to purchase property because property tax was part of the risk. 

 

Vice Chairwoman Giunchigliani referenced Section 3(2) which indicated that if an assessor found that, “. . . the last assessments in which the value of the appurtenant land was significantly increased are so high as to cause no prospective purchasers to be willing to buy the property from the owner or owners except governmental or other purchasers who are exempt from property taxes.”  Vice Chairwoman Giunchigliani noted that in the aforementioned case of the family-owned cabin at Lake Tahoe where the U.S. Forest Service was the only purchaser for the property, it appeared that the family could automatically qualify for property tax abatement. 

 

Mr. Hettrick stated that abatements would not be automatic, and the bill also stipulated that the assessor had to make a determination whether or not to grant an abatement.  He referenced Section 3(2) which read, “. . . the county assessor may consider any information the county assessor deems appropriate, including, without limitation, whether property taxes assessed as a result of one or more of the last assessments in which the value of the appurtenant land was significantly increased are so high as to cause no prospective purchasers to be willing to buy the property from the owner or owners except governmental or other purchasers who are exempt from property taxes.”  Mr. Hettrick noted that the language did not stipulate that assessors “must” grant an abatement if the purchaser was tax exempt, but rather that the assessor could include that as one of the reasons considered in the granting of an abatement. 

 

According to Mr. Hettrick, the aforementioned family who owned the land at Lake Tahoe were not arguing that they could sell the land, and frankly make a significant amount of money from that sale, but wanted to retain the land; he noted that the county did not want to lose the tax revenue.  The issue was whether it made economic sense for the family to continue paying the property tax, which it did not.  Mr. Hettrick pointed out that such situations would guarantee that the property was purchased by the federal government, simply because Nevada tax law did not allow an abatement with a seven-year recapture, which was exactly what was done for agriculture. 

 

Vice Chairwoman Giunchigliani agreed that assessors would not take property off the tax rolls, however, sometimes laws were passed where people interpreted the legislative intent and pressure was brought to bear.  She asked whether there was an appeal process included in A.B. 442 if the assessor did not agree that a tax abatement was necessary.  Mr. Hettrick stated that Section 4(3) read, “The county assessor shall grant the abatement if he determines that the facts in his possession indicate to him that the value of the land appurtenant to a single family dwelling has increased at a rate that has created a severe economic hardship for the applicant.  Such a decision is in the sole discretion of the county assessor.”  Mr. Hettrick indicated that if the county assessor refused an application for an abatement, that decision would be final. 

 

Assemblyman Marvel asked whether the bill would lessen the authority of the local Board of Equalization.  Mr. Hettrick stated only in the case of granting tax abatements, but not in any other instance.  Mr. Marvel asked whether the applicant could make an appeal to the Board of Equalization if an abatement was denied.  Mr. Hettrick stated that was not addressed in the bill, and he was unsure how that process worked in the case of an agricultural abatement that was presently granted under state law.  Mr. Hettrick wondered if an assessor did not grant an agricultural exemption or abatement, whether the party could then approach the Board of Equalization to appeal that decision.  

 

Mr. Marvel wondered whether a person could appeal under present law if an abatement was denied.  Mr. Hettrick believed that a party could appeal under present law, however, the language of the bill would make the decision the sole discretion of the assessor.  If the assessor denied an application for abatement, Mr. Hettrick did not believe the Board of Equalization could overturn that decision, based on the language included in Section 4(3).

 

Vice Chairwoman Giunchigliani asked whether the local Board of Equalization or the assessor currently granted the agricultural abatement.  Mr. Marvel stated the assessor granted that abatement, and Mr. Hettrick concurred.

 

Doug Sonnemann, Douglas County Assessor, explained that agricultural abatements were granted at his discretion, however, denials were allowed to be heard by the Board of Equalization. 

 

Assemblywoman Leslie asked for some type of safeguard in the bill, because in recent history there had been some “strange” elected officials who took unexpected action.  She indicated that leaving such a big decision to the sole discretion of the county assessor should be monitored through some type of safeguard.  

 

Mr. Hettrick stated one of the things he had suggested was adding language that stipulated after the assessor made the determination, the application would be reviewed by the Board of County Commissioners, who would approve that decision.  That would provide public notice that an abatement was going to be made and the application would be considered at a public hearing; Mr. Hettrick believed that would be reasonable.  He reiterated that assessors were not trying to take property off the tax rolls.

 

Mr. Marvel asked why the bill had been referred to the Committee on Ways and Means.  Mr. Hettrick stated because the bill would allow tax abatement it would potentially reduce taxes to the state of Nevada as well.  Mr. Marvel opined that the other side of the coin was that if owners sold their property to tax exempt purchasers, the tax revenue would be lost anyway.  Mr. Hettrick concurred, and believed that the situation was a “wash” and the bill would have virtually no impact on the state.

 

Vice Chairwoman Giunchigliani explained that if there was not a fiscal note attached to a bill, sometimes it was a policy matter regarding the fiscal impact, which was why A.B. 442 had been referred to the Committee on Ways and Means.

 

Mr. Sonnemann informed the Committee that he supported A.B. 442.  When the Douglas County portion of Lake Tahoe was reappraised approximately two years ago, various seniors mentioned the hardship that property taxes had created for them.  Mr. Sonnemann explained that many seniors had owned their property for a number of years and were, in fact, being priced out based on the market conditions.  He stated the bill would certainly help those seniors at Lake Tahoe, as well as others within Douglas County.  According to Mr. Sonnemann, assessors tended to get nervous when there was not a set criteria to work from, and additional guidelines would certainly be appreciated.

 

Janine Hansen, representing the Nevada Committee for Full Statehood, stated that the Committee supported A.B. 442 and also supported the constitutional amendment which allowed for abatement in cases of severe economic hardship.  Ms. Hansen indicated that in the aforementioned scenario, the family who owned property at Lake Tahoe did not have a choice because the TRPA had declared that the family could not sell their property and could not improve it, therefore, the value of the property in terms of making a profit from the sale had been destroyed by governmental “taking.”  Ms. Hansen stated that was what had occurred in many cases around the state of Nevada and the ultimate outcome was that rather than providing property taxes for the state, the land was purchased by the federal government or The Nature Conservancy, which eliminated property tax revenue for the state.  No other person would be interested in purchasing the land except the government because nothing could be done with it.  Ms. Hansen reiterated that such a sale would result in a net loss to the property tax rolls. 

 

Ms. Hansen noted that her family had owned property at Lake Tahoe on the California side that was originally purchased by her grandparents over 50 years ago.  The value of the land had increased but the cabin had not been improved, however, was still used by the family.  Ms. Hansen indicated that the same situation was occurring throughout the state with regard to the federal government destroying the value of the property, which constituted a “taking.”  Ms. Hansen suggested that if the Committee did not pass the bill, perhaps the government should pay landowners for the “taking” of their property, the value of which had been stolen from them through the actions of government, which was precisely what had occurred at Lake Tahoe.

 

Carole Vilardo, Nevada Taxpayers Association, testified in support of the concept of the bill, but noted some areas of concern that should be “tightened up.”  Ms. Vilardo pointed out that the bill was in response to Ballot Question No. 8, and there was also a Senate bill that addressed the situation.  She indicated that the Association had supported legislation regarding the proposed abatement from its inception during the 1991 session, where the legislation never made it out of the Taxation Committee.  Ms. Vilardo reported that there was more and more concern that the state would not have use of property taxes, which would become problematic in some cases. 

 

Ms. Vilardo referenced the Huntridge district of Las Vegas, and indicated that she had friends who had lived in that district for over 40 years, and who were now retired on Social Security fixed income.  The idea of the constitutional change was to afford some protection, and Ms. Vilardo explained that persons could appeal the value of their homes, but it could be appealed only based on statutory provisions.  Ms. Vilardo stated that persons had to be able to prove that the value of the home was greater than market value, or that the taxable value exceeded market value.  A review of several areas around the state would reveal that the taxable value, in all probability, had not exceeded market value in the majority of cases.  Ms. Vilardo noted that the potential economic hardship would still be created, and the idea was that whether the person was a senior citizen or a young couple, it would be less expensive to keep persons in their homes than to put those persons on the street. 

 

Ms. Vilardo believed there needed to be an evaluation as long as the provisions of A.B. 442 were open-ended and, conceivably, a person could apply for and receive the abatement over a period of several years, rather than for a time certain.  Ms. Vilardo requested that an amendment be added to A.B. 442, if processed, that required assessors to submit to the Department of Taxation the number of parcels, the reductions, and how many years each of those abatements had been in effect.  At some point, stated Ms. Vilardo, if the majority of the parcels remained on the list for eight or nine years, that would be reason for the Legislature to question some of the practices, or why there had been an ongoing hardship for that length of time, as that would indicate a “glitch” in the formula or some other problem. 

The second amendment, said Ms. Vilardo, dealt with the assessor determining the financial information, and conceivably there could be 17 variations from the ridiculous to the sublime, to something that was very well thought-out.  She suggested that the Tax Commission adopt regulations that would identify the financial information which would be acceptable for use in applying for the abatement, so there would at least be some consistency between the counties regarding what would be acceptable. 

 

Assemblyman Hettrick understood Ms. Vilardo’s concern regarding the length of time a parcel could remain on the abatement list, however, explained that there was a seven-year recapture provision included in the bill, and he did not think notification would be required prior to reaching the seventh year because the taxes would be recaptured.  Mr. Hettrick did not want to force the assessors into the position of making notification every year when there was a seven-year recapture because ultimately, 100 percent of the tax would be realized.  After the seventh year, Mr. Hettrick believed it would be appropriate to review those parcels that had been on the list for seven years. 

 

Regarding set qualifications, Mr. Hettrick stated that was difficult to put into writing, which was why the determination had been left to the discretion of the assessor.  There were varied situations, such as a person who made $200,000 per year but received a $105,000 tax bill for a 35-acre parcel that could never be developed, and the only buyer was the federal government, and that property would go off the tax roll if sold.  Mr. Hettrick pointed out that if qualifications included a set income level and a person’s income level was over that set amount, they would not be eligible for an abatement and that property would be lost off the tax rolls.  Mr. Hettrick reiterated that there was no way to write the qualifications, which was why that was not included in the bill; he believed that set qualifications would ultimately eliminate certain property that would then go off the tax rolls.  Mr. Hettrick stated as soon as guidelines were established, there would be a case where it would be impossible to abate the taxes, and the revenue would be lost. 

 

Ms. Vilardo thought she had been relatively specific in stating that the Tax Commission should identify the financial information that would be acceptable for the assessor to make the determination.  She had not suggested establishment of specific qualifications, such as age, income levels, or ratios, but did believe there should be some consistent documentation, such as federal income tax forms or other forms.  Ms. Vilardo indicated that would at least provide some consistency among the counties in the granting of abatements. 

 

Ms. Vilardo indicated that she had no problem with the seven-year recapture, but her biggest concern was how aggressive some assessors were being in light of budget concerns, and her reason for asking about continuation of parcels on the list was to be able to ascertain why those parcels were on the list.  She believed it was very difficult for some elected officials to divorce themselves from the financial situation in an area, and might become overaggressive in applying factors.  Ms. Vilardo believed that a review every seven years would be appropriate, however, at some point there should be an evaluation to ascertain why a person was on the list for that period of time.  That would start to show a systematic problem that should be identified.

 

Vice Chairwoman Giunchigliani asked what would occur if a person sold a property or gave it to another family member.  Ms. Vilardo referenced Section 13, which indicated that there would be a perpetual lien against the property, so if the property were sold, until the liens were addressed, there would not be a clear title to the property.  Vice Chairwoman Giunchigliani asked about giving the property to a family member as part of a will or estate.  Ms. Vilardo stated that was an interesting issue that was being considered by the Taxation Committee regarding tax exemptions.  In all probability, stated Ms. Vilardo, the lien would transfer over with the estate.

 

Vice Chairwoman Giunchigliani asked Mr. Hettrick to review that situation, as other family members might not qualify for the abatement.

 

Mr. Hettrick pointed out that Section 6(1) of the bill indicated that the county assessor would enter on the assessment roll the assessed valuation until the owner of the property was disqualified for the abatement, and then the bill spoke to the issue regarding whether or not the owner was qualified.  Section 7 of the bill indicated that the property would be assessed anew in the same manner like all property in the county was assessed, if it was determined that the owner was no longer entitled to the abatement.  Mr. Hettrick believed that a review would be appropriate, and the assessor would then have the opportunity to decide whether or not the abatement should continue.  Mr. Hettrick felt that the bill already addressed many of the concerns, but he would be happy to include language that satisfied the Committee that all concerns had been addressed; he emphasized that the provisions of the bill would affect a small number of cases.

 

Vice Chairwoman Giunchigliani asked whether there were further comments or questions regarding A.B. 442 and hearing none, declared the hearing closed.  The Vice Chair opened the hearing on A.B. 68

 

Assembly Bill 68 (1st Reprint):  Revises provisions governing payments for extra duty assignments for purposes of Public Employees’ Retirement System. (BDR 23-725).

 

Vice Chairwoman Giunchigliani explained that the intent of A.B. 68 was to try to narrowly define extra duty assignments and allow teachers to contribute to the Public Employees’ Retirement System (PERS).  She noted that the Committee on Government Affairs had amended the bill to try and narrow its scope so that an employee could opt to have his/her salary reduced in order to pay the employee’s portion of the PERS contribution.  Vice Chairwoman Giunchigliani stated she had not seen a fiscal note since the amendment had been included in the bill.

 

George Pyne, Executive Officer, PERS, testified that the Retirement Board had taken a position in opposition to A.B. 68.  As mentioned by the Vice Chair, the bill had been modified rather significantly from its original format, however, there would still be a cost impact, although it was rather difficult to determine the amount.  Mr. Pyne stated there was a provision in the bill that dealt with the employee’s ability to elect whether or not they wanted certain contributions paid into the PERS, which was an unprecedented action that the PERS believed would lead to greater plan costs over time.

 

Before he addressed the PERS concerns regarding the legislation, Mr. Pyne wanted to review how the benefits were calculated, and called the Committee’s attention to Exhibit D, which basically depicted the calculation benefit formula.  Mr. Pyne explained that the PERS member benefits were based on two major factors: (1) a member’s service time in the system; and (2) the member’s average compensation at retirement.  Service time was defined as the years, months, and days of public service a member had credited in the PERS, and average compensation was the average of a member’s highest 36 consecutive months of earnings.  Mr. Pyne stated that once those two elements of the formula were known, it was easy to determine a member’s benefit at retirement.

 

According to Mr. Pyne, in the example provided to the Committee (Exhibit D), the calculation was based on the years of service times 2.5 percent; if a person had 20 years of service times 2.5 percent, it would result in a 50 percent benefit at retirement.  Mr. Pyne noted that for service after July 1, 2001, the percentage used was 2.67 percent for each year of service.  That 50 percent factor was then multiplied by the member’s average wage, so if the average wage was $2,000 per month, 50 percent of that figure for 20 years in public service would result in a maximum benefit of $1,000 per month.  Mr. Pyne further explained that if either the service time increased, or the average compensation was higher, the member’s benefit would be higher at retirement as well.

 

According to Mr. Pyne, A.B. 68 was really about receiving a greater benefit through receiving a higher average compensation at retirement; it was not really about service time, but rather was about a member’s average compensation at the time of retirement.  Mr. Pyne reviewed the compensation that was presently subject to retirement contribution as defined in Nevada Revised Statutes (NRS) 286.025, and explained that the term “compensation” included the member’s base pay and some other specific forms of compensation, and as found at NRS 286.025 2(c), which stated that payment for extra duty assignments was subject to retirement contributions, “Payment for extra duty assignments if it is the standard practice of the public employer to include such pay in the employment contract or official job description for the calendar or academic year in which it is paid and such pay is specifically included in the member’s employment contract or official job description.”

 

An example of an extra duty assignment, explained Mr. Pyne, would be a math teacher who also was paid to coach the soccer team, and provided that additional assignment of soccer coach was built into that teacher’s job description or employment, the wages would be subject to PERS.  Mr. Pyne stated it was his understanding that most of the extra duty assignments were not made part of the employment contract or job description, and for the most part, much of that type of pay was not subject to PERS at the current time.

 

Mr. Pyne stated that A.B. 68, as amended, proposed to expand the definition of compensation as found in Section 5 and would add a new paragraph (e) to Section 5(2), which would expand the definition of compensation subject to contribution.  Those were the two places in the bill where the definition of compensation subject to the PERS would be changed.  Mr. Pyne remarked that the change to NRS 286.025 2(c) would allow for extra duty assignment payments to be subject to the PERS contribution, regardless of whether those payments were included in the job description or employment contract, so whether or not they were part of the current job description or employment contract would not matter, as the compensation would be subject to the PERS.

 

According to Mr. Pyne, the addition of Section 5(2)(e) would include payments received during the summer months for school district employees who were employed for less than 12 months by contract, and Mr. Pyne stated he was unsure whether that provision was intended to include support staff of the schools or not. 

 

Mr. Pyne referenced Section 2 of the bill, which further defined extra duty assignments to include, without limitation, teaching summer school, adult education, and conducting extracurricular activities.  He did not know if that section would actually change the current provisions, because those activities would likely fit the current view of extra duty assignments.  Section 3(1) stated that employees and employers would share in the cost of any additional contributions that were subject to the PERS.  Mr. Pyne noted that Section 3(2) allowed employees to elect whether they wanted extra duty pay subject to the PERS contribution.  That, explained Mr. Pyne, would lead to the concerns of the PERS regarding the bill as amended.  Allowing employees to elect whether a certain form of compensation would be subject to the PERS would set a dangerous precedent with respect to how benefits were funded. 

 

Nowhere in the Retirement Act, stated Mr. Pyne, was that type of choice permitted at the current time.  For example, all members who worked half-time or more must be enrolled in the PERS and all base pay and other forms of compensation defined by NRS 286.025 must be reported.  Mr. Pyne noted that employees were not given a choice whether or not to enroll in the PERS or elect to which forms of compensation they might choose to contribute.  Those were funding protections that were built into the Retirement Act, without which would lead to what the system’s actuary called “adverse selection” against the plan, resulting in higher plan costs.  In other words, explained Mr. Pyne, the only persons who might elect to take action would be those persons who would take advantage of a particular opportunity to elect a certain benefit form and, therefore, would drive claim costs up.

 

For example, stated Mr. Pyne, the change in Section 3(2) would allow members to choose not to pay into the PERS until such time as it would be beneficial to them.  Most members would elect not to have additional contributions on extra duty assignments reported to the PERS until they were within three years of retirement.  Mr. Pyne noted at that point, members would elect to contribute to the PERS on that additional pay in order to drive up the average compensation and increase benefits. 

 

Vice Chairwoman Giunchigliani asked whether the concern was the adverse selection that could come about based on that provision.  She stated she was not present when the amendment was added to the bill, and asked if Mr. Pyne was aware of the discussion surrounding that amendment.  Mr. Pyne stated he had not been present at that hearing.

 

Mr. Pyne indicated that the adverse selection could result in the creation of an unfunded liability that the PERS would experience when each member who had participated in adverse selection retired.  The main question would deal with the number of people who would actually take advantage of the provision over time.  Mr. Pyne explained that the PERS had worked with the Washoe County and Clark County School Districts, and had determined there were between 7,000 to 9,000 school employees who received some form of extra duty pay every year.  If only a small number of those employees “spiked their benefits” upon retirement, the cost would be relatively low and would not impact contribution rates.  However, stated Mr. Pyne, if several employees took advantage of that provision, it could impact the plan in terms of higher contribution rates; he emphasized that the PERS simply could not predict the outcome.  The PERS actuary estimated the cost to be anywhere from .05 percent to about .09 percent of payroll.  According to Mr. Pyne, a .09 cost would trigger an increase of 25 percent of regular member payroll, or approximately $7.5 million annually. 

 

Vice Chairwoman Giunchigliani believed that Washoe County indicated it offered a program that allowed employees to pay a portion of the PERS contribution.  Dr. Dotty Merrill, Public Policy, Accountability and Assessment, Washoe County School District, stated that there was no such program within the District.  Testimony at the hearing before the Committee on Government Affairs was that one way to defer the fiscal impact might be to have the employee pay half and the employer pay half, but that was not a current program.  

 

Vice Chairwoman Giunchigliani asked what would occur if the PERS simply allowed the employee to contribute a portion of the contribution.  Mr. Pyne believed that by statute, the employee and employer would share in the cost of the additional contribution.  Vice Chairwoman Giunchigliani noted that the Legislature could change that requirement.  Mr. Pyne stated that the original fiscal note was $6 million, and that cost would be shared equally by the employee and employer.  Vice Chairwoman Giunchigliani noted that the bill could be amended to remove the adverse selection and stipulate that the employee would contribute to the PERS as a requirement of the position, with the employee paying only his portion and eliminating participation by the employer.  Mr. Pyne wondered whether the PERS would receive the full contribution under that scenario.  Vice Chairwoman Giunchigliani stated that the extra duty pay earned was approximately $2,000, so it was not a huge dollar amount.  Teachers believed that the money earned for extra duty assignments should count toward their retirement, and Vice Chairwoman Giunchigliani stated she was simply trying to find a reasonable approach to address that concern. 

 

Mr. Pyne stated that it would amount to higher benefits for persons when they retired, and those benefits had to be funded at the full cost regardless of whether the employer or the employee shared the payment.  He emphasized that if the PERS did not receive the full cost, there would be a cost impact to the plan when those employees retired.

 

Al Bellister, representing the Nevada State Education Association (NSEA), voiced support for A.B. 68.  He stated that the amended Section 2 of the bill narrowly defined what an extra duty assignment would be, such as coaches, band or orchestra teachers, and debate instructors.  Those persons were hardworking and worked long hours for little pay in order to supplement their income; many of those persons supplemented their income over the course of their entire career.  Mr. Bellister noted that the coaching activity would essentially become part of their regular assignment, however, a separate contract was issued, thereby circumventing the requirement to pay the PERS contribution on that income. 

 

Another group captured by Section 2 of the bill, stated Mr. Bellister, would be those who had employment that had been created as a result of the Nevada Education Reform Act, such as remediation courses and intercession courses for students in low performance schools.  Mr. Bellister explained that the policy of the Legislature was to create that work, and yet the pay for that work had been exempted from retirement benefits.  Mr. Bellister stated that the bill would simply correct what NSEA believed was an inequity.  The benefit would be chosen at the option of the employee, and Mr. Bellister believed that the increase to the system would not trigger a rate increase. 

 

Craig Kadlub, representing the Clark County School District, stated that, while A.B. 68 would be beneficial for employees, unfortunately, it was not something the school district felt it could afford at the present time.  Currently, explained Mr. Kadlub, the district paid the PERS contributions based strictly on the hours employees worked according to their contracts, and A.B. 68 would expand the district’s PERS obligation to include hours worked by employees outside the scope of their regular job.  Mr. Kadlub stated that according to Section 2 of the bill, the explanation of extra duty assignments would include, at a minimum, teaching during the summer or track breaks, coaching, and supervising extracurricular activities. 

 

For the purpose of illustrating the impact the bill would have on the district, Mr. Kadlub explained that the district had calculated what it had paid in wages for the employees who fell into that category for the 2001-02 school year, and it amounted to $21 million.  According to Mr. Kadlub, had the district been required to pay the entire PERS contribution on those wages, the cost to the district would have been approximately $4.3 million.  Had that cost been shared between the employee and the district, the cost to the district still would have been approximately $2 million, which would amount to a significant unfunded expense to the district. 

 

The district’s other potential concern, stated Mr. Kadlub, was Section 3, where Mr. Pyne adequately conveyed the danger of employees opting in only at the end of their career, thus making the PERS system liable for benefits that would be disproportionate to the contributions made by the employees.  Mr. Kadlub stated the district believed that its employees’ retirement benefits should continue to be tied to their regular contracts, and not include temporary or extra duty assignments that employees might or might not assume as a matter of personal choice.  Therefore, stated Mr. Kadlub, in view of the district’s present budget concerns and the importance of maintaining a sound retirement system in the state, the Clark County School District would remain opposed to A.B. 68. 

 

Dr. Dotty Merrill, representing the Washoe County School District, Board of Trustees and Superintendent, voiced opposition to A.B. 68 as it had been amended.  The district’s concerns were tied into previous testimony presented by Mr. Pyne on behalf of the PERS.  Dr. Merrill stated that primary long-range concern focused upon the potential impact to the plan of between .05 percent of payroll to .09 percent of payroll, with .09 percent having the potential to trigger an increase of .25 percent of regular member payroll.  Dr. Merrill explained that providing the benefit for a few employees might have the overall impact of harming all employees if the rate increased to accommodate the benefits that would be needed.  It was difficult to determine the actual financial impact, as Mr. Pyne had acknowledged, because there was no way of knowing precisely which employees would elect to contribute to the PERS, given the amended language. 

 

According to Dr. Merrill, if all employees of the Washoe County School District, who elected to participate in extra duty assignments, elected to have the PERS benefits paid, the cost to the district would be in excess of $200,000 for 2003‑04 in General Fund contributions; contributions from grant funds would be $207,452 per year.  Dr. Merrill explained those figures were based on the employees paying their portion of the contribution.  Beyond that cost, the bill would also require mandatory PERS payments for summer school assignments, which would be an additional cost to the district of $170,292 from the General Fund. 

 

Dr. Merrill stated the Washoe County School District was concerned regarding that type of additional unfunded mandate at a time when it was facing budget cuts ranging from $6 million to $20 million for the upcoming school year.  The district was concerned about the immediate impact, but also was concerned about the longitudinal impact that might affect all employees and participants in the fund if the contribution had to be increased.

 

Vice Chairwoman Giunchigliani referenced the original fiscal note submitted by Clark County and Washoe County School Districts, and noted that Mr. Pyne had indicated that approximately 7,500 to 9,000 school employees received some form of extra duty pay each year.  She assumed that the fiscal impact had been revised based on action taken by the Committee on Government Affairs and the narrowing of Section 2 regarding the definition.  Vice Chairwoman Giunchigliani asked Mr. Kadlub if he had revised figures.  Mr. Kadlub stated that he did have revised figures and would provide that information to the Committee.  Dr. Merrill stated she would also provide revised figures. 

 

Vice Chairwoman Giunchigliani asked Mr. Pyne about the possibility of revisions to Sections 2 and 3.  She believed that the Committee on Government Affairs had attempted to narrow the scope, and perhaps the Committee on Ways and Means could at least begin to move into the policy decision.

 

Mr. Pyne requested clarification regarding Section 5(2)(e), and asked whether the Committee anticipated retaining that section.  He indicated that paragraph seemed to have some overlap with Section 5(2)(c), and including support staff would result in a much larger dollar amount.  Vice Chairwoman Giunchigliani stated that the original intent of the bill was not to include support staff, but just those persons who assumed other duties outside a teaching contract.  Vice Chairwoman Giunchigliani was unsure of the origin of Section 5(2)(e), and believed it had been added to ensure continuity of service.

 

Vice Chairwoman Giunchigliani closed the hearing on A.B. 68 and opened the hearing on A.B. 267. 

 

Assembly Bill 267 (1st Reprint):  Revises provisions relating to certain fees and surcharges charged and collected in regard to vehicles leased for short term. (BDR 43-961)

 

Assemblyman David Parks, District No. 41, testified as the author of A.B. 267.  He stated that the bill was a follow-up to A.B. 460 of the Seventy-first Session.  Following passage of that bill during the 2001 session, some questions had arisen and a number of meetings had been held with persons from Las Vegas, members from the industry, and the Department of Taxation.  Mr. Parks explained that the issue surrounded the implementation, and he had received a phone call from Carole Vilardo, President, Nevada Taxpayers Association, who indicated that another bill would be required during the 2003 session to complete the action contemplated by A.B. 460 of the Seventy-first Session.  Hence, before the Committee for consideration was A.B. 267, which Mr. Parks stated would attempt to correct and put into place the necessary changes to make the tax source operate properly.  Mr. Parks asked Ms. Vilardo to provide testimony to the Committee.

 

Ms. Vilardo testified in support of A.B. 267.  She believed the bill was extremely important on two counts, and the reason she had contacted Assemblyman Parks was because the membership of the Nevada Taxpayers Association included car rental agencies and accountants who handled car rental agencies.  Ms. Vilardo stated that in an attempt to determine specific definition regarding what the 6 percent car rental tax would be applied to, those members had informed her that the change that resulted from passage of A.B. 460 of the Seventy-first Session, which made the 6 percent strictly a revenue source for the state, never clarified or transferred the regulatory authority for the collection of the tax to the Department of Taxation.  As a result, stated Ms. Vilardo, for the purpose of interpreting a section within statute, the Department of Taxation was relying on a Memorandum to the Department, rather than a regulation. 

 

Ms. Vilardo emphasized that it was incumbent that the agency collecting the revenue had the authority to adopt regulations so that the revenue could be collected, whether that authority dealt with forms or set parameters in language.  Also, stated Ms. Vilardo, there appeared to be quite a bit of confusion regarding what the 6 percent applied to under the language of A.B. 460 of the Seventy-first Session.  In discussion with Mr. Parks and the Legal Division of the Legislative Counsel Bureau (LCB), it was discovered that the way the language had been written was not correct because it was open to interpretation.  The language should specifically identify what was being excluded, rather than included, in the 6 percent charge, and Ms. Vilardo stated that would be accomplished by Sections 7 and 8 of A.B. 267. 

 

Ms. Vilardo noted that even without extensive regulations, or any regulations, the entity that had to collect the tax would understand how to comply with statute.  For the purpose of administration, Ms. Vilardo explained that A.B. 267 would allow more efficient administration for the collection of the tax.  She urged the Committee to support the bill, which she believed would make administration and compliance easier.  Ms. Vilardo stated if there was an understanding regarding what the tax was applied to, there would generally be much better compliance and agencies would be able to efficiently administer the tax.

 

Dino DiCianno, Deputy Executive Director, Department of Taxation, concurred with Ms. Vilardo’s statement and indicated that the Department was in support of A.B. 267.  Mr. DiCianno believed that the bill would provide for clarification from an administrative standpoint, and would also provide clarification with respect to the short-term lessors.  He indicated that it was important to understand that the fiscal note was statistically flawed. 

 

Mr. DiCianno explained that the Department had only been able to survey three short-term lessors in an attempt to determine what the value was with respect to the level of exclusions.  The Department currently had 354 short-term lessors reporting and from that standpoint, stated Mr. DiCianno, the fiscal note might well be overstated with respect to the impact to the General Fund.  He explained that the Department attempted to do the best possible job in completing the fiscal notes, however, the Department had been unable to secure additional information from the short-term lessors.  Mr. DiCianno indicated it would have been advantageous for the Department if it had the opportunity to take prior reports and have those short-term lessors re-report under the current scenario, which would have given the Department a better “feel” regarding the fiscal note.  Begrudgingly, stated Mr. DiCianno, he would admit that the fiscal note might well not be a true reflection of the impact to the General Fund.

 

Speaker Perkins advised Mr. DiCianno that the Committee would have to rely on the Department regarding the fiscal note, and asked whether the Department could provide accurate information.

 

Mark Stevens, Assembly Fiscal Analyst, Legislative Counsel Bureau (LCB), indicated that the fiscal note stipulated, “Recovery surcharge fees are retained by the short-term lessor, so there is no loss to the General Fund.”  Mr. DiCianno stated that was correct.  Mr. Stevens noted that Mr. DiCianno previously stated that the impact to the General Fund might be less, however, the fiscal note indicated that there would be no impact to that Fund.

Mr. DiCianno explained that the surcharge did not have an impact on the General Fund.  That was what the short-term lessor retained as his cost; with respect to the fiscal note submitted by the Department, it dealt with the exclusions to the calculation of the 6 percent tax that went to the General Fund.  According to Mr. DiCianno, A.B. 267 had been amended by the Committee on Transportation to remove the insurance portion, which was the bulk of the majority of the costs to short-term lessors.  Mr. DiCianno stated his concern was that the Department had only been able to secure information from three short-term lessors regarding what the impact would be to them if the language in the bill were to pass.  He pointed out that 3 out of 354 short-term lessors was not a very good sample, and that was the basis for his concern.

 

Vice Chairwoman Giunchigliani noted that the impact would be to the lessor and not to the state.  Ms. Vilardo explained that the car rental tax originally enacted in 1993 roughly allocated one-third to the state General Fund and two-thirds retained by the short-term lessor.  During the 2001 session, the state decided it wanted the full 6 percent and when that percentage was allocated to the General Fund, the short-term lessors had been allowed to enact a recovery surcharge of 3.5 percent which could be imposed if they chose.  Ms. Vilardo believed that the language in the fiscal note referred to the recovery surcharge of 3.5 percent, which might or might not have been applied. 

 

According to Ms. Vilardo, the amount of the fiscal note was uncertain, and   because of the way the original law was written, instead of enumerating specific exclusions, there was interpretation regarding whether or not the 6 percent should be applied to an item.  While A.B. 267 did have a fiscal note attached, and while she agreed that statistically it was flawed, Ms. Vilardo stated it was also flawed to assume that the revenue that had been received by the state since the 2001 session was the correct amount.  She emphasized that there were businesses that did not understand the way the law was written and might not have applied the 6 percent correctly.  That information would not be known without extensive audits.  Ms. Vilardo opined that the bill was extremely important.

 

Vice Chairwoman Giunchigliani asked whether A.B. 267 would address the problem created by the legislation from the 2001 session.  Ms. Vilardo replied in the affirmative and, in addition, it would give full administrative authority to the Department of Taxation because it had never received the regulatory authority that went with the collection of the funds.

 

Assemblywoman Chowning explained that it was the intent of the bill to clarify for the short-term lessor which items could be charged the 6 percent tax.  While there was not an accurate accounting regarding what funds had been received thus far, Mrs. Chowning believed that A.B. 267 would absolutely clarify the issue and provide assistance in the future.

 

Vice Chairwoman Giunchigliani asked whether there was further testimony regarding A.B. 267 and hearing none, declared the hearing closed.  The Vice Chair opened the hearing on A.B. 179.

 

Assembly Bill 179 (1st Reprint):  Revises provisions governing education. (BDR 34-22)

 

Vice Chairwoman Giunchigliani explained that there was no longer a fiscal note attached to A.B. 179 because of the repealed section, however, the intent of the legislation was to deal with the proficiency exam and high school diploma issue.  Vice Chairwoman Giunchigliani pointed out that the main focus of the bill stated that a student must still continue to take the proficiency exam the five times that he/she was allowed to do so, but if at that point a student had not passed all portions of the examination, a standard diploma could be issued.  According to the provisions of the bill, the State Department of Education would list endorsements on the diploma so that a person who was hiring, or the student, could note which portions of the test had been passed, along with advanced classes taken.  Vice Chairwoman Giunchigliani noted that the diploma would contain more of an evaluation along with intent. 

 

According to Vice Chairwoman Giunchigliani, most of the hearings and testimony surrounded the difficulty for students in passing the math portion of the examination, and she believed it was very important, policy-wise, to review that issue.  Vice Chairwoman Giunchigliani noted that the state was requiring students to take portions of a test that tested in a content area that was not required for students.  There were many issues with the test, and much testimony had been heard from students who maintained higher grade point averages and yet were unable to pass the math portion of the examination. 

 

Vice Chairwoman Giunchigliani indicated that a decision had to be made whether the policy that was adopted and the test were really measuring what students were supposed to learn, and should that barrier of not allowing a student to receive a high school diploma continue, based on that test.  Further, there appeared to be a built-in discrimination because a student could be homeschooled and could receive a diploma based on correspondence courses without sitting for proficiency examinations.  That student could enter the military and be admitted into the university system with such a diploma. 

 

Vice Chairwoman Giunchigliani noted that students who received a General Education Diploma (GED) were not required to take a proficiency examination; only public school students were really affected by the examination because other students had different routes or alternatives to pursue in order to receive a diploma.  Vice Chairwoman Giunchigliani noted that an amendment had been proposed by Lucille Lusk, Nevada Concerned Citizens, Exhibit E.  Part of the concern was with the course content, and perhaps taking a different approach for conceptual purposes from that of the Assembly Committee on Education.  Vice Chairwoman Giunchigliani explained that the proficiency exam should really measure courses that the majority of students were required to take.  It should not be assumed that every student would continue their education at the college level and there were approximately 76 percent of the students who did not need to continue their education based on the type of job they would seek.  Vice Chairwoman Giunchigliani emphasized that the testing of students should be based on the average courses students should be passing, and courses such as geometry and calculus were generally not those types of courses.

 

The intent of the bill, explained Vice Chairwoman Giunchigliani, was a delay in the math portion while an analysis was conducted, and there was suggested language in Exhibit E for the Committee’s perusal.  Vice Chairwoman Giunchigliani stated she had recently met with some of the superintendents of the school districts and it was noted that the actual examination had never been audited.  She believed that perhaps the time had arrived to audit those questions and discover what the test was testing versus the content of the curriculum.

 

Ms. Lusk stated that A.B. 179 highlighted the real problem, which was that the math portion of the examination failed to correctly track the subjects that every student was required to learn to graduate from high school and that schools were required to teach to every student.  In addition, the examination incorporated some areas that college-bound students took but not every student was required to take.  Ms. Lusk indicated that since passage of the test was required for a diploma, it should track what every student was required to learn.  The purpose of the amendments delineated in Exhibit E were simply to bring the math portion of the state proficiency examination in line with what every student was required to take to graduate from high school and what the schools were required to teach to each student. 

 

Ms. Lusk stated the amendments proposed in Exhibit E would restore the requirement that pupils had to pass the proficiency examination to obtain a high school diploma.  In addition, there was a new concept which would establish a standard for a pupil to qualify for a Millennium Scholarship based on the results from the American College Testing (ACT) or Scholastic Aptitude Test (SAT) rather than on the grade point average that was currently used.  The amendments were conceptual in nature and Ms. Lusk noted they would change the bill considerably.  As delineated by Exhibit E, the proposed amendments were:

 

1. Require that the proficiency exam test the basic proficiencies in reading, writing, and mathematics that every pupil needed in order to graduate.
2. Require that the proficiency exam must test what schools were actually required to teach to all pupils in the basic proficiencies.
3. Define the basic proficiencies in mathematics that every pupil needed in order to graduate as proficient in addition, subtraction, division, multiplication, fractions, decimals and other basic math concepts, but not including algebra, geometry, or calculus.
4. Restore the requirement that pupils pass the proficiency exam to obtain a standard high school diploma.
5. Keep the new language in Section 9(f) so the pupil may retake only the portion of the exam that the pupil had not previously passed.
6. Require that in order to be eligible for a Millennium Scholarship, the pupil must achieve a passing score on the ACT or the SAT as set by the Board of Regents.

 

Ms. Lusk noted that further discussion might be required regarding the requirements for eligibility for a Millennium Scholarship, but the proposal was to use a standard that related to a college-bound student, and it seemed appropriate that it should also be a criteria used for the Millennium Scholarship.

 

Vice Chairwoman Giunchigliani believed that would be a better measurement than the grade point average, because that average was not always indicative of the skill level of the student.  She believed that most universities required either the ACT or the SAT for admittance.  Even though there was no fiscal note attached to A.B. 179, Vice Chairwoman Giunchigliani believed it would be a valuable discussion policy-wise.  It should be recognized that in Nevada high schools, there were vocational programs that included classes such as carpentry, which counted as a math credit, yet those students were not tested in the same manner as other students. 

 

Vice Chairwoman Giunchigliani believed that an audit of the examination and actual test questions was necessary and a determination should be made whether it was a reading-based test versus an actual operations test.  Vice Chairwoman Giunchigliani indicated that quite a few students had made that point during testimony during a previous hearing.  Those students stated they knew the operations, but did not understand what was being asked of them. 

 

According to Vice Chairwoman Giunchigliani, as the basic proficiencies were redefined, it should be determined what course work would be required and perhaps the math examination could be delayed for two to four years while an audit of the examination was conducted.  She indicated that would not lower the standards, but rather would actually attempt to verify what those standards were, whether or not teachers were truly teaching to the standard, and if not, there should be an accountability to backup that fact.  Vice Chairwoman Giunchigliani stated it should be determined whether teachers were simply “teaching to the test.”  She believed A.B. 179 was a good compromise to move forward and at least consider as a Committee.

 

Assemblywoman Chowning commented that she believed the bill was an excellent compromise and she stated she was still in favor of a tiered diploma because it would more accurately define the students who were in high school.  Some of the questions on the math portion of the proficiency examination included quadratic equations, and Mrs. Chowning stated she had been a college‑bound student and had never heard of a quadratic equation before.  Mrs. Chowning indicated that a student would not fail the proficiency examination if they failed those particular questions, but the point was whether they were relevant.  Mrs. Chowning opined that it set students up for failure because once they attempted and failed those equations it had an effect on their self-esteem. 

 

Unfortunately, stated Mrs. Chowning, a student could not enter the military without a high school diploma, and if a student did not pass the proficiency test and, therefore, did not receive a diploma, then their lives truly were negatively affected or even destroyed.  Mrs. Chowning noted that at the previous hearing before the Committee on Education, students who had completed as many as 27.5 credits and were pre-law students could not pass the math portion of the proficiency examination.  Mrs. Chowning stated it was very problematic and she appreciated the amendments proposed in Exhibit E.  Mrs. Chowning asked about number two that indicated, “. . . test what schools are actually required to teach to all pupils . . .” and asked whether “all pupils” would only apply to the basic proficiencies.  Ms. Lusk replied that was correct.

 

Vice Chairwoman Giunchigliani pointed out that not all students were test takers and once students had taken the test for the third time and their scores were actually worse than the first attempt, it had been determined that a key component would be to require that students only retake the portions of the examination that they had not passed.  That would allow the student to focus on that particular area.

 

Rose McKinney-James, representing the Clark County School District, stated that in its original form the school district had been opposed to A.B. 179 because the district had a fundamental view that the proficiency examination, and the ability to maintain a certain level of standards, was very important.  That being said, as test scores were reviewed it appeared that most scores were in the 90 percent range with the exception of math, which appeared to be in the 88 percent range. 

 

According to Ms. McKinney-James, there was a problem and finding a way to address that problem was something that the district had a strong interest in, as long as it did not result in lowering the standards that the district was trying to maintain.  Ms. McKinney-James stated the district had reviewed the amendments proposed in Exhibit E, and from a conceptual standpoint, it appeared that further exploration was probably a good idea, and the amendments framed an approach that would allow the district to support the bill.  Ms. McKinney-James indicated that reinstatement of the requirement that a pupil pass the proficiency examination before obtaining a high school diploma was an important concept to the district. 

 

Ms. McKinney-James stated that one area the district would like to explore related to number three on Exhibit E, and certainly there was recognition that every student was not required to formally take algebra or geometry, but many of the concepts were included in the math courses that students did take.  She said the district believed that proposed amendment number three was a valuable recommendation, however, one that should be explored further.  Beyond that, Ms. McKinney-James remarked that the district could not find any fiscal implications to the bill, however, from a policy standpoint it was believed that the proposed amendments were worthy of further exploration.

 

David Schumann, representing the Independent American Party, stated that he concurred with some parts of the proposed amendments in Exhibit E, but his basic premise was in support of the standard math test.  Publications indicated that American high school graduates who participated in the Third International Math and Science study came in 15^th and 16^th out of students from the industrialized world who had participated in the study. 

 

According to Mr. Schumann, that had not been the case 40 or 50 years ago when American students had not been at the bottom.  He believed that the reason they were at the bottom was not because students were less “brainy” than those of 40 or 50 years ago, but because the course content had been lowered.  Mr. Schumann opined that the proficiency tests were an attempt to raise the content.  He noted the previous reference to quadratic equations, and explained it was a standard part of algebra.  Mr. Schumann opined that children should learn algebra and geometry, and he believed those subjects should be part of the examination.  The process necessary to arrive at the answers would stay with students for life. 

 

Mr. Schumann believed the lesson was that the school systems needed to revise their curriculum to teach the appropriate information, which the world required of educated people.  He noted that his high school taught vocational and academic education, and those students who attended vocational education studied different skills, but still participated in standard math classes.  Mr. Schumann opined that students were increasingly part of a world where some math would be needed. 

 

Mr. Schumann continued his testimony regarding standards and basic skills needed by students.  He believed that schools should return to teaching math the way it had been taught 40 years ago.  Mr. Schumann believed the proficiency test should be maintained and students should be required to pass the test to receive the diploma.

 

Vice Chairwoman Giunchigliani stated that the intent of the bill was that all students would have the basic skills needed to receive a diploma.  She indicated that she had not taken algebra or geometry classes until she reached high school and they were not required courses for graduation.  Vice Chairwoman Giunchigliani indicated if a student was going to be tested on certain subjects, those subjects should be required classes.  Not all 17 districts required the same courses, and the question often arose regarding the validity of a particular class in relation to what a student needed to know.  Vice Chairwoman Giunchigliani believed that standards had been increased in the past ten years in Nevada.  Those standards had been rewritten over and over, and at some point there should be time to review how those standards were working.  It was also necessary to ensure that qualified people were teaching in those areas, which was a factor to be considered as well.

 

Mr. Schumann believed that the fact the proficiency test was having the negative results in the math portion indicated that, while the standards had been raised, unfortunately, the teaching personnel were not available to teach. 

 

Lynn Chapman, State Vice President, Nevada Eagle Forum, voiced support for the proposed amendments to A.B. 179, Exhibit E.  Speaking as a homeschooled student, she had studied algebra in 1962 and never used it, and then had been required to teach it.  Ms. Chapman believed it was a good idea for students to learn the basics, because as a home school consultant, she dealt with parents who wanted their children to learn the basics. 

 

John Wagner, Nevada Republican Assembly, explained he was a school board member for Capital Christian School in Carson City.  He noted that students attending the school were given the proficiency test and they usually passed it.  Mr. Wagner indicated that his granddaughter would graduate soon and she took the proficiency test during her junior year of high school and passed.  He agreed with the proposed amendments as delineated in Exhibit E, and would support the bill on that basis; he opined that perhaps the test should be reevaluated.  Mr. Wagner related various incidents relative to his employment and hiring employees based on skills. 

 

Vice Chairwoman Giunchigliani pointed out that A.B. 179 would not eliminate the test, however, in some circumstances students would still be granted a diploma.  She believed the amendments would provide a more reasonable approach with some type of delay while an analysis of the test questions was undertaken.

 

Speaker Perkins stated he had struggled with the question of the proficiency examinations for quite some time, and believed that the only thing that had been accomplished with the system was to penalize students for something that was, for the most part, outside of their control.  Speaker Perkins indicated that high standards were necessary and he did not believe the state should be in a position where it was “dumbing down” its students.  Speaker Perkins stated schools needed to teach students the subjects they would be tested on.  He noted that currently schools were setting students up for failure on a number of different levels, whether it was not supplying a sufficient number of textbooks, or being 46^th in the country in the per-pupil expenditures at a time when schools were attempting to raise the bar and require students to do better in education.

 

According to Speaker Perkins, he viewed the proficiency test as a test of the system and the teachers, rather than the students.  Teachers had told him that if schools wanted to test how well they were teaching the students, the teachers should be given the proficiency test.  Speaker Perkins pointed out that students would be penalized when they failed the examination, not the teachers or the system, but the students, which he found difficult to understand.  He dared anyone in the room to take the math portion of the proficiency test and pass it. 

 

Several weeks ago, Speaker Perkins stated, he had received an e-mail in opposition from one of the superintendents, and his response had been that if the superintendent opposed the bill, would he support the creation of a sanction on teachers so they were actually teaching what was supposed to be taught and to the level that it should be taught.  Needless to say, he received no response to that question. 

 

Speaker Perkins acknowledged that the proficiency test was a “sacred cow” for some legislators, however, he believed it was time for legislators to take their heads out of the sand and if the students were going to be accountable, the system had to be accountable, and legislators had to be accountable regarding how education was handled in Nevada.

 

Assemblyman Goldwater concurred with comments made by Speaker Perkins, and noted that the state spent nearly $5 million of Distributive School Account (DSA) money, not just on the referenced math proficiency test, but on proficiency testing overall.  Mr. Goldwater stated there was a trend in a number of state legislatures, California being one, that simply asked why dollars were being spent directly for results that proved the system was not functioning well.  Mr. Goldwater indicated the system was being tracked which cost millions of dollars, and perhaps the money spent administering the tests, along with the days off school, should be put into school days.

 

Vice Chairwoman Giunchigliani stated that was a good point, and something that the Joint Subcommittee on K-12 Education reviewed was the possibility of lengthening the school year because there had been more and more curricular changes and mandates, but no teaching time, which she believed had to be part of the plan.

 

With no further testimony forthcoming regarding A.B. 179, Vice Chairwoman Giunchigliani declared the hearing closed and opened the hearing on A.B. 460. 

 

Assembly Bill 460 (1st Reprint):  Makes various changes regarding manufacture, sale and use of tobacco products. (BDR 15-1283)

 

John Albrecht, Deputy Attorney General, Office of the Attorney General (AG), introduced John Colledge, Resident Agent in Charge, Bureau of Immigration and Customs Enforcement with the Department of Homeland Security, who would address the Committee.

 

Mr. Colledge thanked the Committee for the opportunity to testify regarding A.B. 460.  Mr. Colledge explained that the Bureau enforced the customs and immigration laws of the United States.  Prior to his assignment in Reno, he had been the National Program Manager for International Cigarette Smuggling at the headquarters of the former U.S. Customs Service.  

 

Mr. Colledge stated he was before the Committee at the request of the Nevada Attorney General, and had the pleasure to work on tobacco-related issues with several attorneys and investigators from the AG’s Office and anticipated working with them in the future.  According to Mr. Colledge, one of the components of A.B. 460 was the funding for additional attorneys and investigators for the AG’s staff.  He stated he wanted to share the benefit of his experience of managing many of the U.S. Customs Service investigations of international cigarette smuggling between 1998 and 2002:

 

• Laws enacted by Congress at the request of the cigarette manufacturers in the past several years prohibited the importation of certain U.S. made cigarettes and foreign made cigarettes with U.S. trademark protections that were previously exported from the United States.
• Most states had increased their cigarette taxes in the past two years in an effort to fund budget shortfalls.
• Many countries had cigarette tax rates much higher than those in the United States.

 

Mr. Colledge indicated that legislators might ask why Nevada should be concerned with international cigarette smuggling.  He provided the following information:

 

• Legal prohibitions enacted by Congress and tax increases by the states provided a huge potential source of illegal proceeds from cigarette smuggling and counterfeit state cigarette tax stamps.
• Cigarette smuggling funded international terrorism and transnational organized crime.
• International terrorist groups benefited from cigarette smuggling that included interstate and international schemes.
• Proceeds from international cigarette smuggling were laundered in the United States, including Nevada.
• Approximately three years ago, a container of suspected counterfeit cigarettes under U.S. Customs detention was taken at gunpoint by several armed men from a foreign trade zone warehouse in Las Vegas.

 

Mr. Colledge noted he would cite a few statistics on seizures of counterfeit cigarettes smuggled into the United States:

 

1. 1998 - 1 seizure valued at $845
2. 1999 – 3 seizures valued at $348,705
3. 2000 – 11 seizures valued at $4.2 million
4. 2001 – 11 seizures valued at $4.5 million
5. 2002 – 46 seizures valued at $37.5 million
6. 2003 (first half) – approximately $20 million in seizures

 

Obviously, stated Mr. Colledge, those figures represented cigarettes that were seized and, as with all law enforcement matters, many crimes remained undetected.  The figures also did not include seizures of genuine cigarettes that were smuggled into the United States.

 

In closing, Mr. Colledge reported that the personnel requested by the AG’s Office would provide a well-rounded enforcement program with deterrent, investigative, and prosecutorial elements.

 

Mr. Albrecht advised the Committee that he was the Deputy Attorney General who worked on youth tobacco, as well as Master Settlement Agreement (MSA) enforcement within the Attorney General’s (AG’s) Office.  Mr. Albrecht referenced Exhibit F, which summarized what A.B. 460 would do as far as enforcement against counterfeit cigarettes and enhancing tax collection by the Department of Taxation.  

 

According to Mr. Albrecht, the first page of Exhibit F depicted the adult population of Nevada and the smoking rate of Nevada, and indicated that although there had been a slight decrease in the smoking rate, which might or might not be statistically significant, there had actually been an increase in the number of smokers based on the increase in population.  Exhibit F also depicted that during the same period of time, there had been a decrease in the number of taxed cigarette packages purchased by the same number of people, and depicted the tax rates from different states.

 

Mr. Albrecht noted that page 2 of the exhibit explained why counterfeit cigarettes were cheaper.  He pointed out that those who purchased counterfeit cigarettes:

 

• Avoided the state tax of 35 cents per pack
• Avoided the federal tax of 39 cents per pack
• Avoided the MSA payments of 40 cents to 55 cents per pack
• Avoided the escrow payments of 35 cents per pack (an alternative to the MSA payments)

 

The total of the taxes or payments was $1.09 per pack, and Mr. Albrecht explained that was why the counterfeit cigarettes were cheaper.  Counterfeit cigarettes resulted in an overall reduction in MSA payments through the volume adjustment, which was based upon volume of cigarettes purchased by smokers.  If smokers purchased counterfeit cigarettes, those sales would not be included within the MSA payment, and there actually appeared to be a reduction in smoking.  Mr. Albrecht noted that counterfeit cigarettes still caused adverse health consequences.  He also pointed out that cheap cigarettes were more likely to be purchased by underage buyers who were more price-sensitive.

 

Mr. Albrecht informed the Committee that page 3 of Exhibit F began the explanation of how A.B. 460 would work, and the diagram on page 3 depicted that counterfeit cigarettes could enter the stream of commerce at different places between the manufacturer and the wholesaler, or between the wholesaler and the retailer.  Page 4 explained that the 100+ manufacturers were required to report shipments to wholesale dealers to the Department of Taxation, and the approximately 120 wholesale dealers were required to report shipments to retailers, by brand, to the Department of Taxation. 

 

Continuing his presentation, Mr. Albrecht advised that page 5 of Exhibit F depicted the reports from the Department of Taxation.  If that Department observed a change in the trends of prior cigarette sales, for example, a retailer that previously ordered 30 cartons of a certain brand of cigarettes, and then suddenly stopped ordering that brand, according to Mr. Albrecht, that change in trend would be reported to the AG’s Office, who would use available investigators to investigate the inventory and retail records.  He explained that retail stores were required to maintain records of the purchase of cigarettes and were required to allow the Department of Taxation and AG investigators to investigate their inventory during normal business hours.  If the investigation resulted in evidence of counterfeit cigarettes or other violations of law, Mr. Albrecht explained that the AG could bring criminal or civil action under Sections 34 through 37 of A.B. 460, or other violations of Chapter 370 of the Nevada Revised Statutes (NRS). 

 

Mr. Albrecht indicated that Exhibit F did not describe the fiscal impact of A.B. 460, and he would be happy to address that aspect.  Pages 7 through 9 of the exhibit described provisions in law that strengthened the Master Settlement Agreement (MSA).

 

Mr. Albrecht called the Committee’s attention to a press release contained in Exhibit F issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives, regarding a recent investigation and seizure of over $20 million in cigarettes that were moved from Virginia to California, Nevada, and New York.  The net loss in tax revenue to the state of California was about $5 million.  Mr. Albrecht stated the point was that the price of a pack of cigarettes had increased by $1.09 because of government payments of either tax or MSA payments, and in order to protect that revenue, the AG’s Office requested passage of A.B. 460 and the additional staff necessary to support the legislation.

 

Assemblyman Beers asked whether there was any way for Nevada to receive any portion of the federal or MSA money that was earned by shutting down counterfeit operations.  Obviously, that would prove beneficial to Nevada in that its taxes would be increased, however, Mr. Beers stated there was also a substantial benefit to other states in that the federal and MSA piece would be increased as well.  Mr. Albrecht explained that Nevada was a recipient under the MSA, as well as the other 45 states and 6 jurisdictions, so it would not just benefit the other 45 states and 6 jurisdictions, it would be 46 states, including Nevada.  Mr. Albrecht stated the short answer to Mr. Beers’ question would be no. 

 

Vice Chairwoman Giunchigliani noted that the Legislature had dealt with tobacco legislation off and on for the past eight years, and she asked whether there had ever been language that defined counterfeit cigarettes or counterfeit stamps.  Mr. Albrecht stated there was no current law that prohibited the sale of counterfeit cigarettes, but rather, the law prohibited the sale of cigarettes without stamps or with counterfeit state stamps.  Counterfeit cigarettes were described as the manufacture of a product that imitated a brand name cigarette.

 

Vice Chairwoman Giunchigliani asked for clarification regarding the fiscal note.  Mr. Albrecht explained that the fiscal note for the Attorney General’s (AG’s) Office was $369,370 for the first year of the biennium, and that amount decreased slightly in the second year of the biennium to approximately $342,000.  Vice Chairwoman Giunchigliani noted that the entire fiscal note attached to A.B. 460 was $685,568, and she asked whether the state would capture any revenue, or just capture “bad” people.  Mr. Albrecht emphasized that he would like to capture revenue and discourage “bad” people, which would therefore enhance collections. 

 

By way of example, Mr. Albrecht explained that Exhibit F depicted that revenue from cigarettes decreased by $2.5 million from 2001 to 2002.  Vice Chairwoman Giunchigliani noted that trend would probably continue, with exception of the increase in population that would tend to drive the numbers up.  Mr. Albrecht did not believe there had been a significant decrease in the adult smoking rate, and the 29 percent and the 26.9 percent adult smoking rates included in the exhibit had been provided by the Centers for Disease Control.  The 2.1 percent decrease from 2000 to 2001 would not be statistically significant, as it was within the margin of error.  Mr. Albrecht stated it might have been 26.9 in the year 2000. 

 

Vice Chairwoman Giunchigliani recapped that the fiscal note would be $685,000 for the AG’s Office and $625,000 for the Department of Taxation, for a total of approximately $1.2 million over the biennium.  Mr. Albrecht concurred with those figures.

 

Dino DiCianno, Deputy Executive Director, Department of Taxation, testified it was important to understand that currently the Department had five tax examiners dealing with nine different excise taxes; the Department was already stretched to the limit with respect to caseload.  Mr. DiCianno stated with respect to A.B. 460 it would significantly raise the enforcement bar for the Department and put certain requirements upon the Department to report to the AG’s Office, gather information from the manufacturers, and post that information for review.  He remarked that would have a significant impact on the Department, because it would require review of retailers, review of manufacturers, review of wholesalers, therefore, would be significant.  Mr. DiCianno believed that the Department had proposed a conservative estimate in the fiscal note with respect to the enforcement function. 

 

Vice Chairwoman Giunchigliani asked how many personnel would be included in the fiscal note.  Mr. DiCianno stated it would include one Management Analyst I position, two Revenue Officer III positions, an Auditor I position, and a Tax Examiner position.  That would not include the information technology costs with respect to gathering the information and making that information available.  Vice Chairwoman Giunchigliani noted that during past discussions regarding taxes, the Automated Collection Enforcement System (ACES) had been discussed, and she asked whether the fiscal note would address a new system.  Mr. DiCianno explained that the Department currently kept the necessary information on stand-alone personal computers (PCs) and it was not part of the ACES.  Vice Chairwoman Giunchigliani asked if a new tax collection system was initiated, would it be necessary to ensure that if A.B. 460 was passed the new system would be capable of collecting that data; Mr. DiCianno stated that was correct. 

 

Vice Chairwoman Giunchigliani noted that the Department currently had five examiners for nine excise taxes, and the Legislature was frustrated that the Department only conducted random audits, and the impact to staff should be reviewed.

 

Samuel McMullen, representing the Retail Association of Nevada, indicated that he also lobbied for Philip Morris USA, and wanted the Committee to know that A.B. 460 had been a collaborative effort between business, the AG’s Office, and law enforcement in terms of defining the standards, and defining the holes in the law that needed to be plugged.  Mr. McMullen noted there had been significant experience from the federal point of view and the Eastern Seaboard where cigarette taxes had increased, and those trends had been reviewed to ensure that the holes in Nevada’s law were plugged.  The press release included in Exhibit F also indicated that Nevada was one of the recipient states of the contraband cigarettes that were smuggled across the country. 

 

Mr. McMullen stated that to ensure that business picked up its burden, there were significant additional reporting requirements.  Companies such as Philip Morris USA, which had a brand integrity issue as well as a fiscal issue through payments of the MSA or taxes, had a like interest and actually spent millions of dollars to ensure that investigations were completed and lawsuits filed.  Mr. McMullen thought it was important to assure the Committee that the effort would not fall just on the shoulders of government and law enforcement, but there would be a consortium of interests to the extent that those investigative costs would help make the case.

 

Vice Chairwoman Giunchigliani asked about the dollar amount anticipated for collection or capture.  Mr. Albrecht indicated that the state had collected over $59 million in FY2002 and more in revenue the previous year; there had been a loss in cigarette tax revenue for FY2002, despite the fact that there was an increase in the number of smokers.  Vice Chairwoman Giunchigliani asked about the tax collection.  Mr. Albrecht stated he could not predict that there would be an increase of $2.5 million, however, he could report that there had been a loss of $2.5 million despite the fact that more people were smoking and there were higher taxes in every state but Idaho.  He further explained there had been an increase in cigarette taxes in every state around Nevada and there had been a decreased number of packs purchased, despite the increased number of smokers within the state. 

Vice Chairwoman Giunchigliani noted that the Legislature was discussing the entire tax issue, and she asked how A.B. 460 would affect those discussions.  Mr. Albrecht referenced page 2 of Exhibit F which indicated that a pack of cigarettes currently included $1.09 in state and federal payments.  Whatever was increased above the $1.09 would increase the price per pack of counterfeit cigarettes.  Mr. Albrecht noted that A.B. 460 would ban the sale of counterfeit cigarettes, but that law would require enforcement. 

 

Vice Chairwoman Giunchigliani stated that most companies had branched off into secondary brands that were being sold under different names.  Mr. Albrecht stated that manufacturers would have to be licensed in order to sell cigarettes to a Nevada licensed wholesaler, and the retailer also had to be licensed.

 

Vice Chairwoman Giunchigliani asked who would need to be licensed and pay fees that currently were not being captured.  Mr. Albrecht indicated that Nevada did not require manufacturers to be licensed at the current time, but the Department of Taxation would require licensing of manufacturers under A.B. 460.  Vice Chairwoman Giunchigliani asked whether there would be a fee; Mr. Albrecht stated there was no fee included in the bill at the present time.  Vice Chairwoman Giunchigliani stated she was trying to find additional sources of revenue.  If the bill were passed it would require an offset, and perhaps fees could be considered.  Perhaps the Department of Taxation could determine what the manufacturer license fee would be to offset costs.

 

Peter Krueger, Nevada Petroleum Marketers and Convenience Store Association, stated the Association would support A.B. 460, particularly the revenue issue.  As had been discussed, as the tax portion of the price of a pack of cigarettes increased, the incidents of theft and crime in convenience stores and other retail outlets became a critical factor.  Anything the Association could do through A.B. 460, along with other measures, to prevent and discourage crime would be absolutely essential.  Mr. Krueger believed that the provisions of the bill would essentially capture revenues for the state, which would assist in the budget process.  He implored the Committee to look favorably upon the expenditure, because without it, there would be an increase in crime and a loss of state revenue.

 

Assemblywoman Chowning agreed with the goal of the bill because of the possibility of capturing revenue, however, wondered whether the section pertaining to enforcement by convenience store clerks had been amended out of the bill.  Mr. Krueger stated that section had been removed.

 

Vice Chairwoman Giunchigliani closed the hearing on A.B. 460.  She advised the Committee that there were several bills for consideration, and she would open the hearing on A.B. 13.

 

Assembly Bill 13 (1st Reprint):  Eliminates panel of judges in certain penalty hearings in which death penalty is sought and requires district attorneys to report certain information concerning certain homicides to Supreme Court. (BDR 14-197)

 

Vice Chairwoman Giunchigliani did not believe there was a fiscal note attached to A.B. 13.

 

Assemblywoman Leslie advised that the bill, in its original form, had some fiscal implications because it required additional duties within the Supreme Court.  That requirement had been amended out of the bill by the Committee on Judiciary, and the only testimony Ms. Leslie could recall from a district attorney was that some information would be forwarded to the Supreme Court, however, it would be insubstantial.  Ms. Leslie did not believe there would be a fiscal impact.

 

ASSEMBLYWOMAN LESLIE MOVED TO DO PASS A.B. 13.

 

ASSEMBLYMAN PARKS SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Chairman Arberry and Speaker Perkins were not present for the vote.)

 

********

 

Vice Chairwoman Giunchigliani opened the hearing on A.B. 16.

 

Assembly Bill 16 (1st Reprint):  Provides for genetic marker analysis of certain evidence related to conviction of certain offenders sentenced to death. (BDR 14-200)

 

Vice Chairwoman Giunchigliani believed that the bill would affect a small number of individuals and the Nevada Department of Corrections did not think there would be a fiscal impact. 

 

ASSEMBLYWOMAN LESLIE MOVED TO DO PASS A.B. 16.

 

ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Chairman Arberry and Speaker Perkins were not present for the vote.)

 

********

 

Vice Chairwoman Giunchigliani opened the hearing on A.B. 325.

 

Assembly Bill 325 (1st Reprint):  Makes various changes relating to motor vehicles that have sustained certain damages. (BDR 43-222)

 

Mark Stevens, Assembly Fiscal Analyst, Legislative Counsel Bureau (LCB), advised the Committee that there would be a work program considered by the Interim Finance Committee (IFC) at some point in the future, which would line up revenue sources with the anticipated expenses within the bill.  He noted there would be some additional expenses in the Compliance Enforcement budget within the Department of Motor Vehicles (DMV).  Mr. Stevens explained that the money was actually allocated into the Salvage Records budget, and a transfer would be required in order to pay the additional costs. 

 

ASSEMBLYWOMAN CHOWNING MOVED TO DO PASS A.B. 325.

 

ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Chairman Arberry was not present for the vote.)

********

 

Vice Chairwoman Giunchigliani opened the hearing on A.B. 516.

Assembly Bill 516 (1st Reprint):  Makes various changes to provisions governing

taxes on motor vehicle fuels. (BDR 32-622)

 

Mr. Stevens stated the Committee had heard previous testimony regarding the bill, which indicated that the original bill included an indexing of gasoline tax; he noted that provision had been removed in the first reprint.  The bill, as currently written, would change the allocation of gas tax revenues within local governments.

 

ASSEMBLYMAN MARVEL MOVED TO DO PASS A.B. 516.

 

ASSEMBLYMAN PARKS SECONDED THE MOTION.

 

THE MOTION CARRIED WITH ASSEMBLYWOMAN GIBBONS VOTING NO.  (Chairman Arberry was not present for the vote.)

 

********

 

Vice Chairwoman Giunchigliani opened the hearing on S.B. 396.

 

Senate Bill 396:  Makes supplemental appropriation to Health Division of Department of Human Resources for unanticipated shortfall in money for Fiscal Year 2002-2003 resulting from increased cost of maintenance of effort requirement for Substance Abuse and Treatment Block Grant.  (BDR S-1226)

 

Vice Chairwoman Giunchigliani explained the bill would make a supplemental appropriation to the Health Division of the Department of Human Resources for unanticipated shortfalls.

 

ASSEMBLYWOMAN LESLIE MOVED TO DO PASS S.B. 396.

 

SPEAKER PERKINS SECONDED THE MOTION.

 

THE MOTION CARRIED WITH ASSEMBLYMAN BEERS ABSTAINING.  (Chairman Arberry was not present for the vote.)

 

********

 

Vice Chairwoman Giunchigliani opened the hearing on S.B. 408.

 

Senate Bill 408 (1st Reprint):  Makes supplemental appropriation to Division of Mental Health and Developmental Services of Department of Human Resources for unanticipated shortfall in Fiscal Year 2002-2003 for shortfall in revenue collections and expenditures relating to psychiatric services at rural clinics. (BDR S-1229)

 

Vice Chairwoman Giunchigliani explained S.B. 408 was another appropriation to the Division of Mental Health and Developmental Services of the Department of Human Resources.

 

Mr. Stevens noted the appropriation was for Rural Clinics in the amount of $740,598 because of revenue shortfalls.  The budget had previously been heard by the Committee and Mr. Stevens noted that Rural Clinics was in a cash deficit situation and was paying a few bills with an override.  Mr. Stevens stated that the entity desperately needed the cash, and LCB staff had reviewed the figures and determined that the amount had not changed since the first reprint of the bill.  According to Mr. Stevens, $613,000 was included in The Executive Budget and staff recommended that the Committee do pass S.B. 408.

 

ASSEMBLYMAN MARVEL MOVED TO DO PASS S.B. 408.

 

ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Chairman Arberry was not present for the vote.)

 

********

 

Vice Chairwoman Giunchigliani opened the hearing on A.B. 286.

 

Assembly Bill 286:  Revises provisions governing health insurance for retired officers and employees of local governments. (BDR 23-1124)

 

Vice Chairwoman Giunchigliani explained there were three bills that dealt with segregation of the non-state retirees within the Public Employees’ Benefits Program (PEBP).  A.B. 286 went a step further and stipulated that as of July 2003 those non-state local entities that had participated in the PEBP, and whose members participated in the PERS, would have to begin subsidizing their retirees.  Vice Chairwoman Giunchigliani believed that one of the bills should be passed, and she believed that A.B. 286 was more comprehensive policy-wise; the remaining two bills had different fiscal notes attached.

 

Mr. Stevens opined that the Committee should review the effective date, and was unsure how the PEBP would be affected if the bill had an effective date of July 1, 2003, versus a July 1, 2004, date.  He advised that he would contact the PEBP to ascertain the impact on the program.  Vice Chairwoman Giunchigliani pointed out that action would have to be taken soon, however, indicated that no action would be taken at the present time.

 

Vice Chairwoman Giunchigliani declared the Committee in recess.

 

Vice Chairwoman Giunchigliani called the Committee back to order at 1:11 p.m. and commenced with budget closings.

 

BUDGET CLOSINGS

 

SECRETARY OF STATE (101-1050) – BUDGET PAGE ELECTED-80

 

Russell Guindon, Deputy Fiscal Analyst, Legislative Counsel Bureau (LCB), advised the Committee that decision unit E-301 recommended the authorization to receive $5 million in Title I funds from the Help America Vote Act of 2002 (HAVA).  Decision unit E-300 had recommended funding for an Information Systems Specialist III position and a Computer Network Technician II position from the federal HAVA funds.  Mr. Guindon reported that staff had removed those two units from BA 1050, and would build a special budget account, BA 1051, which would be presented to the Committee for consideration.

 

Mr. Guindon stated that decision unit E-805 recommended a General Fund appropriation of $30,695 in FY2004 and $32,180 in FY2005 for the reclassification of two vacant Administrative Assistant II positions, which would be reclassified to Information Systems Specialist III and Computer Network Technician II positions.  Mr. Guindon reported that the reclassification was an item considered by the Interim Finance Committee (IFC) at its February 8, 2003, meeting when the reclassification was approved, but the positions were approved for funding via the Special Services Fund rather than the General Fund. 

 

According to Mr. Guindon, the Special Services Fund financed approximately 42 percent of the Secretary of State’s positions, as well as associated operating costs.  The Secretary of State had provided information that collection from expedite services which provided funding to the Special Services Fund might not be sufficient to cover the personnel and operating costs over the 2003‑05 biennium.  In fact, stated Mr. Guindon, if the demand for expedite services remained flat over the next biennium, a potential shortfall might occur in FY2005.  According to Mr. Guindon, there were several proposals that considered making changes or increases to the expedite fees, whereupon the problem would not materialize.

 

Continuing his presentation, Mr. Guindon noted that The Executive Budget recommended $255,607 in FY2004 and $383,276 in FY2005 for credit card discount fee expenses.  Actual credit card fee expenses in FY2002 were $113,293, compared to the legislatively-approved $34,566.  Mr. Guindon explained that the significant increase was due to increased use of credit cards by the patrons that were provided services by the Secretary of State.  Also, S.B. 577 of the Seventy-first Session increased the Secretary of State’s filing fees, which also played a significant role in the increased credit card fee expenses. 

 

Mr. Guindon stated that after review of the agency’s request and review of the current fiscal year-to-date expense level, staff met with the Secretary of State’s Office and it was determined that the requested amount could be reduced by $36,607 in FY2004 and $92,411 in FY2005.  Mr. Guindon pointed out that if the Legislature increased the Secretary of State’s filing fees, it could potentially increase the cost of the credit card discount fee expenses.  The Secretary of State’s Office also provided information that its electronic filing system would be online at the end of the current year, which could also be a factor in terms of additional people using the electronic system and credit cards, which would increase the credit card discount fees.

 

Mr. Guindon advised the Committee that if the expedite fees were increased during the current session then the Special Services Fund could probably be used to fund any of those additional credit card expenses that could occur.  It was suggested that the Legislature consider including a provision in any legislation increasing the Secretary of State’s fees that the increased credit card discount fees be funded from the Special Services Fund.

 

Decision unit E-300, stated Mr. Guindon, contained a recommendation from the Governor for an additional General Fund appropriation of $100,000 in FY2005 for an anticipated increase in the cost to reimburse counties for election ballot stock.  The total recommended appropriation for those costs in FY2005 was $227,200, compared to the actual cost in FY2003 of approximately $140,000.  The increase, explained Mr. Guindon, was due to the requirements of the federal Voting Rights Act, which required that certain counties provide voting materials in the language of the applicable minority.  For the 2002 election, Clark County had been required to provide the ballots in Spanish and, based on population trends, it appeared that Washoe County could also fall under that requirement for the 2004 election.

Vice Chairwoman Giunchigliani asked whether the federal government had provided any money for that unfunded mandate.  Mr. Guindon explained that provision was not based on the HAVA, but rather was due to the federal Voting Rights Act.

 

Mr. Guindon stated that in decision unit M-400, the agency requested $10,414 in General Fund appropriation in each year of the biennium to restore training funds that were reverted to the General Fund when several positions that had been approved were left vacant to save General Fund dollars.  It was Mr. Guindon’s understanding that the Secretary of State had provided a Memorandum dated May 1, 2003, to the Chairmen of the Assembly Committee on Ways and Means and the Senate Committee on Finance regarding the positions.  According to Mr. Guindon, staff had no position on that request, but noted that if the Committee approved the $10,414 it would amount to $1,300 less than the current work program amount for FY2003. 

 

Vice Chairwoman Giunchigliani asked whether that would be an added General Fund appropriation.  Mr. Guindon explained there would be an additional General Fund appropriation of $10,414 in each year of the biennium.

 

Under technical adjustments, stated Mr. Guindon, decision unit E-710 recommended adjustments to the agency’s request as well as adjustments for revised computer prices.  The combined adjustments resulted in an additional General Fund appropriation of $8,175 in FY2004 and a General Fund savings of $21,771 in FY2005.

 

Vice Chairwoman Giunchigliani asked for clarification regarding the expedite fees, and asked what would occur if those fees were not increased; she asked whether bills had been drafted to address the fee increase.  Mr. Guindon explained that the expedite fees were placed in the Special Services Fund, but part of those fees were actually placed directly into the General Fund.  The Special Services Fund was utilized to fund the positions for the Secretary of State’s Office.  Mr. Guindon noted that if the expedite fees remained flat over each year of the upcoming biennium, by FY2005 potentially there would not be sufficient money to cover the salaries and operating costs of the agency.  Mr. Guindon explained there were several bills that proposed increasing the Secretary of State’s expedite fees.  Some of the bills actually would change the allocation that went to the Special Services Fund in terms of lowering it, which was not recommended because it would not generate sufficient money to cover the positions.

 

Vice Chairwoman Giunchigliani stated she would accept a motion to close BA 1050 with the following provisions:

 

·        APPROVE DECISION UNIT E-301

·        APPROVE DECISION UNIT E-805 WITH THE UNDERSTANDING THAT IF A BILL DID NOT PASS THAT INCREASED THE SECRETARY OF STATE’S FEES AND IMPACTED THE SPECIAL SERVICES FUND, THE POSITIONS FUNDED BY THE FEES WOULD HAVE TO BE REVIEWED

·        APPROVE FUNDING FOR CREDIT CARD DISCOUNT FEE EXPENSES THROUGH THE SPECIAL SERVICES FUND

·        APPROVE DECISION UNIT E-300 WITH THE APPROPRIATION OF $100,000 FOR ANTICIPATED INCREASES IN THE COSTS TO REIMBURSE COUNTIES FOR ELECTION BALLOT STOCK COSTS

·        APPROVE DECISION UNIT M-400 TO APPROPRIATE $10,414 IN GENERAL FUND APPROPRIATION IN EACH YEAR OF THE BIENNIUM TO RESTORE TRAINING FUNDS REVERTED TO THE GENERAL FUND IN FY2001-02

·        APPROVE DECISION UNIT E-710 AS ADJUSTED AND RECOMMENDED BY STAFF

 

SPEAKER PERKINS SO MOVED.

 

ASSEMBLYMAN HETTRICK SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Chairman Arberry and Assemblyman Goldwater were not present for the vote.)

 

BUDGET CLOSED.

 

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COMMISSION ON ECONOMIC DEVELOPMENT (101-1526) –

BUDGET PAGE TOUR&ECON-1

 

Mr. Stevens explained that the first item for Committee review was the matching grants for the regional development authorities included in the budget for each year of the biennium.  Both rural and urban development authorities were provided funding, and currently The Executive Budget recommended $995,000 in each year of the biennium.  The Committee could determine whether to continue funding at that level.

 

The second item for consideration, stated Mr. Stevens, was the Train Employees Now (TEN) program, which provided funds for short-term training programs for qualified industries creating new jobs in the state.  Funding was granted and administered by the University and Community College System of Nevada (UCCSN) for each approved project, which was approved by the Economic Development Commission.  The company was required to provide at least 25 percent of the costs and the Governor recommended General Fund support of $500,000 in each year of the biennium. 

 

Mr. Stevens pointed out that S.B. 419 of the Seventieth Session provided that those funds balance forward and not revert at the close of the fiscal year.  The agency had spent $230,893 in FY2001, $112,984 in FY2002, and as of April 2003 the agency had expended $135,259 and encumbered $595,730, with a remaining balance of $426,035.  Mr. Stevens said part of the 3 percent budget reduction would revert approximately $105,000 of that total, leaving the agency with approximately $321,000 to balance forward into FY2004.  Funding was recommended by the Governor at $500,000 in each year of the biennium, and the Committee should determine whether to continue to provide the annual appropriation.  The Commission would actually have approximately $821,000 available in FY2004 if it balanced forward the $321,000 and would have $500,000 in the second year of the biennium, based on the Governor’s recommendation.

 

According to Mr. Stevens, there was also a question regarding whether the Committee would choose to remove the non-reverting provision of NRS 231.151 to provide for an annual appropriation lower than the prior year’s expenditures.  The Committee might want to consider lowering the appropriation or removing the non-reversionary clause; there were any number of actions that could be taken by the Committee in that particular area, or the amount could remain as recommended by the Governor.

 

The Commission on Economic Development continued an annual transfer of $20,000 in General Fund revenue to support the Governor’s Washington, D.C. Office, and Mr. Stevens explained that the Committee on Ways and Means had previously voted to eliminate support for that particular office.  Unless that decision had changed, the $20,000 appropriation should be removed from BA 1526. 

 

Mr. Stevens stated that decision unit M-200 provided $500,000 in each year of the biennium for inflation and other increases, which included $387,000 for the TEN program.

 

According to Mr. Stevens, decision unit M-400 provided an additional annual appropriation of $19,000 for out-of-state travel, in-state travel, and training.  The total funding for out-of-state travel would increase from the actual expenditure level in FY2002 of $14,440 to $28,430 in each year of the biennium.  Mr. Stevens noted that in-state travel would increase from $27,317 in actual expense in FY2002 to $37,689 in each year of the biennium. 

 

The final closing issue, said Mr. Stevens, was decision unit E-150, which recommended $1,088 in each year of the biennium for Web services training.

 

Vice Chairwoman Giunchigliani indicated there had been a brief discussion regarding consolidating the Commission on Tourism and the Commission on Economic Development, but keeping the grants intact and letting the two entities in southern and northern Nevada administer the grants, holding the distribution level the same for the rural counties.  She reminded the Committee that the budget might not be completely closed in order to deal with that issue.  Vice Chairwoman Giunchigliani asked whether there were any questions regarding the TEN program.  She believed there was a bill in the Senate that limited the amount of reversions.

 

Mr. Stevens stated it was his understanding that in the Senate Committee on Finance budget closings, the recommendation was to restrict the amount of money from the TEN program that could be maintained by the Commission at any one time to $750,000; however, he had not been present at the hearing. 

 

Berlyn Miller, Vice Chairman, Commission on Economic Development, explained that he had been involved in economic development most of his adult life, and years ago, the number one problem in Nevada in attracting companies was the state’s image and the gaming.  He submitted that today that was no longer the case and the number one problem was whether Nevada could provide the educated work force that the companies would require.  Mr. Miller believed that funding for the TEN program was extremely important and had been put to good use in the past.  Recently, stated Mr. Miller, there had been a request from General Motors Corporation asking for $25,000 from the Commission, and the company would commit $250,000 for training.  According to Mr. Miller, the Commission reviewed the benefit package before a company was granted funding.  Mr. Miller requested that the Committee allow the Commission to balance forward the money from each fiscal year as requests for training funds varied. 

 

Vice Chairwoman Giunchigliani advised that BA 1526, Commission on Economic Development, would be held.

 

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NEVADA FILM OFFICE (101-1527) – BUDGET PAGE TOUR&ECON-7

 

Vice Chairwoman Giunchigliani stated she would accept a motion to close BA 1527.

 

ASSEMBLYMAN HETTRICK MOVED TO CLOSE BA 1527 AS RECOMMENDED BY STAFF.

 

ASSEMBLYWOMAN McCLAIN SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Chairman Arberry, Speaker Perkins, and Assemblyman Goldwater were not present for the vote.)

 

BUDGET CLOSED.

 

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RURAL COMMUNITY DEVELOPMENT (101-1528) –

BUDGET PAGE TOUR&ECON-11

 

Mr. Stevens wanted to ensure that the Committee was aware that there would be a significant increase in the General Fund appropriation in BA 1528 in FY2004.  Also, there would be approximately a $2,000 increase from what had been provided in the current fiscal year in out-of-state travel.  Mr. Stevens pointed out that staff had eliminated $12,717 for statewide cost allocation in each year of the biennium, since that was being funded from the state General Fund. 

 

Vice Chairwoman Giunchigliani asked for clarification regarding the 55.7 percent increase.

 

Robert Shriver, Executive Director, Division of Economic Development, introduced Carl Dahlen, Director, Rural Community and Economic Development, who would address the Committee.

 

Mr. Dahlen informed the Committee that the increase was primarily built around the fact that there were five positions funded in BA 1528, and the increase would be for salary adjustments that came to light as the budget moved through the Governor’s Office.  Vice Chairwoman Giunchigliani asked whether grantees could share in the costs of the services provided to them.  Mr. Dahlen explained that the agency was at the maximum amount it could receive from federal funding, which was $100,000 plus 2 percent of the block grant.  Vice Chairwoman Giunchigliani asked about grantees.  Mr. Dahlen explained the grantees were the small cities and counties of Nevada.  He noted that Clark County and the larger cities all had their own block grant funding, and if the agency attempted to recoup funds from grantees, that would take money from their general fund budgets.  Mr. Dahlen noted that in many cases, there simply would be no funds available. 

 

Vice Chairwoman Giunchigliani indicated that the increase would address the salary adjustments for the first year of the biennium, and asked what would occur during the second year.  Mr. Dahlen explained if there were increases to the salary portion of the budget during the second year of the biennium, the funding would be from the General Fund.  If block grants increased, the agency could increase the amount taken on the percentage. 

 

Vice Chairwoman Giunchigliani asked whether the agency could also reduce the amount of the grants.  Mr. Dahlen stated the federal requirement was that the agency was allowed $100,000 plus 2 percent for administering the program, and that the 2 percent had to be matched.  The agency was significantly over that 2 percent match, and to use any of the other block grant money for administration would not be permitted under federal regulation.  Mr. Dahlen said to go back and charge the entities in some way for the grants would also be contrary to federal regulations. 

 

Vice Chairwoman Giunchigliani indicated that BA 1528, Rural Community Development, would be held for further review.

 

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PROCUREMENT OUTREACH PROGRAM (101-4867) –

BUDGET PAGE TOUR&ECON-15

 

Mr. Stevens explained that the General Fund allocation for statewide cost allocation had been deleted and $100,000 in grant funding had been removed from BA 4867, since it would be discontinued.

 

ASSEMBLYWOMAN LESLIE MOVED TO CLOSE BA 4867 AS RECOMMENDED BY THE GOVERNOR, INCLUDING TECHNICAL ADJUSTMENTS.

 

ASSEMBLYMAN GRIFFIN SECONDED THE MOTION.

 

THE MOTION CARRIED.  (Chairman Arberry, Speaker Perkins, and Assemblymen Goldwater and Marvel were not present for the vote.)

 

BUDGET CLOSED.

 

********

 

Vice Chairwoman Giunchigliani announced that the remaining budget accounts would be considered at a later date, and adjourned the hearing at 1:35 p.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Carol Thomsen

Committee Secretary

 

 

APPROVED BY:

 

 

                                                                                         

Assemblywoman Chris Giunchigliani

Vice Chairwoman

 

 

DATE: