MINUTES OF MEETING

      ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS

 

      Sixty-seventh Session

      April 9, 1993

 

 

 

The Assembly Committee on Government Affairs was called to order by Chairman Val Z. Garner at 8:05 a.m. Friday, April 9, 1993, in Room 330 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

      Mr. Val Z. Garner, Chairman

      Mr. Rick C. Bennett, Vice Chairman

      Mrs. Kathy M. Augustine

      Mr. Douglas A. Bache

      Mrs. Marcia de Braga

      Mr. Pete Ernaut

      Mrs. Vivian L. Freeman

      Mr. Lynn Hettrick

      Mrs. Erin Kenny

      Mrs. Joan A. Lambert

      Mr. James W. McGaughey

      Mr. Roy Neighbors

      Mrs. Gene W. Segerblom

      Mr. Wendell P. Williams

 

 

COMMITTEE MEMBERS ABSENT:

 

      None

 

GUEST LEGISLATORS PRESENT:

 

      None

 

STAFF MEMBERS PRESENT:

 

      Ms. Dana Bennett

 

OTHERS PRESENT:

 

      Mr. Keith Ashworth, Nevada Power; Mr. Bob Crowell, Vice Chairman, Colorado River Commission; Mr. Tom Cahill, Colorado River Commission; Mr. Brian Smith, Marvin Smith Construction.

     

 

SENATE BILL 296 - Authorizes Colorado River Commission to issue bonds for acquisition, equipment and improvement of specified system for transmission of electricity.

 

Mr. Keith Ashworth, Nevada Power, testified in favor of SB 296 (Exhibit C).

 

Mr. Bob Crowell, Vice Chairman, Colorado River Commission, indicated he would answer any questions after Mr. Cahill's presentation.

 

Mr. Tom Cahill, Colorado River Commission, referred to the literature (Exhibit C) handed out by Mr. Ashworth.

 

Chairman Garner asked Mr. Cahill if he had testified on the Senate side.  Mr. Cahill indicated he had.

 

Mr. Crowell concluded the bonds would not go against the state cap as they were issued under the exemption of Section 3, Article 9 of the Constitution so it would not affect the state's bonding capacity.  Mr. Crowell pointed out the entire congressional delegation had written to the Bureau of Reclamation asking for the sale or transfer of the assets to the state of Nevada through the Colorado River Commission.

 

Chairman Garner entertained a motion to do pass SB 296.

 

      ASSEMBLYMAN BENNETT MOVED TO DO PASS S.B. 296.

 

      ASSEMBLYMAN MCGAUGHEY SECONDED THE MOTION.

 

      MOTION CARRIED UNANIMOUSLY.  ASSEMBLYMEN HETTRICK, ERNAUT AND WILLIAMS WERE NOT PRESENT FOR THE VOTE.

 

Chairman Garner assigned the bill to Mr. McGaughey and closed the hearing on SB 296.

 

ASSEMBLY BILL 397 - Provides procedure to verify preferences claimed by bidders on public contracts on account of taxes paid.

 

Mr. Brian Smith, Marvin Smith Construction, testified in opposition to AB 397, stating NRS 338.147 gave five percent bidder preferential treatment to out-of-state contractors.  He indicated in order for a contractor to prove he was an in-state contractor, he must pay $5,000 worth of sales and use tax, or $5,000 worth of vehicle privilege tax.  Mr. Smith believed this affected the small contractor.  The taxes had to be paid for five previous years.  If there was a bad year, the five percent preferential was lost.  He thought the intent of the law was lost if a bigger contractor had preferential treatment over a local contractor because the local was not able to meet higher requirements.  Also, the first year in business a contractor had no way to establish five years of paying taxes.

 

Mr. Smith proposed addition of an amendment to add "or a contractor has paid the majority of his sales and use tax to the State of Nevada." 

 

Mr. Smith stated the wording of the law set barriers for small contractors and was unfair. 

 

Chairman Garner asked Mr. Smith if he had his proposed amendments in writing.  Mr. Smith indicated he did not but would be willing to do so.  Mr. Smith stated he would like to know who sponsored AB 397 so he could give them his proposal.

 

Chairman Garner then addressed Mr. Marvin Smith, asking if he had anything additional.  Marvin Smith concurred with the statement of Brian Smith pointing out the 5 percent would cost the state a lot of money. 

 

Brian Smith explained if the low bidder on a contract had not paid the tax but the next lowest bidder had, the job was awarded to the next highest bidder.

 

Mr. Garner posed the question of how to address the desire on the part of the state to give the business to contractors in-state rather than contractors out-of-state. 

 

Brian Smith contended this was another problem.  Many large contractors did the majority of business outside of state but have done some business in Nevada and were able to show they paid the $5,000 when their business was located in another state.  Small contractors were not able to make these cutoffs and did not get the 5 percent advantage.

 

In response to a question by Mr. McGaughey, Brian Smith elaborated on his explanation indicating their main concern was if two contractors, one small and one large, had bid on a project and the small contractor was the low bidder on a job but the larger contractor was able to qualify for the 5 percent, the larger contractor under this law had a 5 percent advantage over the small contractor.

 

Mr. McGaughey indicated he understood.

 

Mrs. de Braga asked Brian Smith if he had attended the hearings on AB 188 or AB 161 which also dealt with amendments to this law.

 

Brian Smith stated they had missed AB 188, and were not aware of the other.  He indicated AB 188 was more agreeable, but they were looking into other bills.

 

Mr. Bache inquired if what they had asked was redefinition of in-state contractor so it was size neutral.  Mr. Brian Smith confirmed.

 

Chairman Garner suggested to Mr. Smith he prepare his proposals in writing and Mr. Garner would advise Mr. Smith who should be contacted.

 

Pam Miller, Associated General Contractors (AGC), came forward to testify.  She confirmed Mr. Smith's statements regarding the history of the bill passed in 1985 and amended every session since.   Every two years AGC ended up in litigation because of this portion of the law.  In 1991 a law was passed which appeared to be more workable.  AGC had not been in court as frequently over this issue since it was tied to Motor Vehicle Privilege Tax and Construction Sales Tax.  The state wanted a threshold to determine at what level it was worthwhile to give a bidders preference and established it at $5,000.  She was aware of the problems of smaller in-state construction companies.  She had a BDR in the Senate to allow a combination of the two taxes currently not available.  It meant they could have $2,500 of each and still comply and meet the $5,000 requirement.

 

Mr. Hettrick inquired if AGC would have a problem with the 75 percent proposal (75 percent of all taxes paid, privilege and sales).  Ms. Miller felt proving 75 percent was objectionable.  It was too cumbersome.  Mr. Hettrick further questioned this.  Ms. Miller explained her concern was the law now seemed workable and had fewer loopholes than previous laws.  She wanted to protect what Nevada now had.

 

Mr. Larry Jepson, Executive Director for Southern Nevada Foundation for Fair Contracting, had no comment on AB 397, he was neutral in that area.  He asked for an amendment to AB 397, attached hereto as Exhibit D.

 

Chairman Garner asked Mr. Hettrick to get together with the testifiers to work on AB 397.  He inquired if there was further testimony.

 

Mr. Brian Hutchins, Attorney General's Office, came forward to present testimony for the Department of Transportation concerning AB 397.  He stated he was not prepared to testify either for or against the bill as he was not sure of the intent of the bill.  However, he felt the wording was confusing.  He noted subsection 1 was questionable as to the intent.  It stated a challenge must be made in writing and delivered to the public body proposing to award the contract, but did not say who could challenge or when the challenge must be submitted.

 

Subsection 2 stated the burden was on the bidder to show from records of the taxing authority he actually paid the taxes.  The Department of Transportation had determined many taxing authorities did not keep records back five years on individual tax-payers.  This subsection could be problematic.

 

Mr. Hutchins stated if the committee was going forward on the bill the Department of Transportation wanted a better idea of the intent.

 

Mr. Jack Jeffrey, Southern Nevada Building and Construction Trades Council, supported the amendment proposed by Mr. Jepsen.  Mr. Jeffrey belived determination of bidders needed further consideration.  He agreed there was a problem.

 

Elaine McNeill, Associated Builders and Contractors, came forward to testify against AB 397.  She agreed with the testimony of Brian and Marvin Smith.  She asked for the opportunity to work with Mr. Hettrick on the bill.

 

Chairman Garner closed the hearing on AB 397.

 

AB 414 -    Makes various changes relating to public works projects.

 

Mr. Jack Jeffrey, Southern Nevada Building and Construction Trades Council, introduced Mr. Michael Busick, representing the local painters union in Reno, to testify on AB 414.  Mr. Busick spoke in favor of AB 414.  He indicated the three reasons he supported the bill were 1) a worker deserved a fair wage; 2) a fair contractor was deprived of the job; and 3) the contracting agency should receive a good job at the end of a contract.  Cheating contractors were not responsive or responsible and should suffer a penalty.  The current law reads the contractor had to be convicted of failing to pay the prevailing wage rate.  To be convicted the Labor Commissioner must be aware of the violation and press charges.  Mr. Busick believed the word "conviction"  should be removed from the bill and replaced with "hearings held by the Labor Commissioner"  and should include an appropriate fine levied against the contractor.

 

Mr. Busick further explained in NRS 338.130, other language submitted required a bid for such a contract to include the0 names of all licensed contractors and licensed subcontractors who would perform work pursuant to the contract.  In Mr. Busick's opinion, the reason for the language change was to prevent situations where not all subcontractors had been listed at the time of the award of bid, but as the work progressed an unlicensed subcontractor had become listed.  The contractor did not have time to call to find out if the subcontractor was licensed.

 

Mrs. Lambert queried Mr. Busick as to what would happen if a subcontractor went bankrupt and could not perform.  Mr. Busick indicated he did not know what the law stated. 

 

Mr. Hettrick read line 2 of AB 414 which stated "The labor commissioner shall hold hearings."  He asked what the hearing would be held on or on whom.  In subsection 2 the language indicated prosecution, where above it indicated fines.  It appeared to be double jeopardy to Mr. Hettrick.  Mr. Hettrick believed the bill needed a lot of work.

 

Mr. Jeffrey explained if the labor commissioner found someone not paying the prevailing wage, he ordered them to pay the prevailing wage.  What it also did not do was allow for conviction, penalty or fine.  This bill had two important elements; 1) conviction needed to be removed and it needed to be done administratively, and 2) the fine needed to more closely track the offense. 

 

Mr. Hettrick expressed his concerns to Mr. Jeffrey regarding the language of the bill, not the intent. 

 

Mr. Jeffrey did not believe there was a problem.

 

Mrs. Lambert inquired if the violation was prosecuted in the civil court, what happened to the project while the case was pending. 

 

Mr. Jeffrey's opinion was the work would continue during this time. 

 

Chairman Garner asked Mr. MacDonald to come forward to testify.

 

Mr. Frank MacDonald, Labor Commissioner, testified in favor of AB 414.  He asked for two minor changes.  On line 4 of the bill, the reference to the labor commissioner "shall hold hearings," he suggested it be changed to "may hold hearings."    The next change was section 2, line 17.  He asked to have section 2, line 17 read "In addition to an assessing against the person the actual amount of the prevailing wage owed, the person may be further assessed an administrative fine that may include any cost incurred by the labor commissioner in investigating and prosecuting the matter and the other penalties as allowed in this chapter."  He explained AB 414 was not meant as a punishment, but as a deterrent.

 

Chairman Garner related a telephone conversation with Mr. Dennis Kist wherein Mr. Kist asked to remove the brackets on line 3, and asked if Mr. MacDonald had problems with this.  Mr. MacDonald indicated he did not. 

 

Mrs. Lambert questioned whether the cost of holding hearings would be paid by the loser.  Mr. MacDonald stated penalties would go to the state.

 

Mrs. Segerblom inquired if more violators are in-state or out-of-state contractors.

 

Mr. MacDonald's opinion was most were out-of-state.

 

Next to testify were Mr. Rich Houts, Building Trades Council of Northern Nevada, and Pam Miller, Associated General Contractors.  Ms. Miller advised the committee the AGC Board of Directors met April 8 and unanimously endorsed AB 414.  She pointed out the AGC Board was comprised of not only union contractors but also open shop contractors.  They would like the opportunity to handle this problem administratively by the labor commissioner's office.  She voiced agreement with Mr. MacDonald's testimony. 

 

Mr. Rich Houts asked to go on record as supporting AB 414.

 

Mr. Herb Stone, Executive Director of National Electrical Contractors Association, came forward to testify in favor of AB 414.  Mr. Stone was in agreement with testimony given by Mr. MacDonald.  He believed this type bill provided quality products be installed by contractors.

 

Mr. Tom Stephens, Manager Public Works Board, came forward to testify in favor of AB 414.  He agreed the labor commissioner should be able to better enforce regulations.  He also agreed with Mr. Hettrick regarding the language of the bill, which might not provide due process.

 

Chairman Garner asked for anyone opposing AB 414 to testify.

 

Ms. Elaine McNeill, representing Sierra Nevada Chapter and Southern Nevada Chapter of Associated Builders and Contractors, testified opposing AB 414.  She stated the bill was too vague.

 

Mr. Garner inquired if Ms. McNeill had suggestions or amendments to clarify the bill.

 

Ms. McNeill responded the bill was unnecessary.  Legislation was on the books to take care of violations, stated Ms. McNeill.  She had nothing available with proposed changes.

 

Concluding no one else was present to testify in opposition to the bill, Mr. Garner closed the hearing on AB 414.  Mr. Garner said he and Mr. Hettrick would examine the bill and determine if amendments were required.

 

A.B. 440  -Revises provision restricting smoking in public buildings.

 

Chairman Garner stated he had been approached by the prime sponsor of A.B. 440, Assemblyman Price, and asked to delay the hearing on this bill.  Therefore, Mr. Garner said he would reschedule this bill.

 

Mr. Garner informed committee members the suggested amendments on A.B. 376 would be discussed on April 13.  He reminded Mr. Bache to meet with individuals concerned with A.B. 138 which was rereferred to committee.

 

Mr. Bache advised Mr. Garner he would bring A.B. 359 before the committee on April 13.  The amendment had been finalized.  Mr. Garner distributed Judy Matteucci's concerns on A.B. 359 to the committee for their review (Exhibit E).

 

Chairman Garner thanked the committee for the hard work they have been doing this session.

 

 

There being no further business to come before committee, the meeting was adjourned at 9:30 a.m.

 

      RESPECTFULLY SUBMITTED:

 

 

                             

      LINDA BLEVINS

      Committee Secretary

 

 

 

 

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Assembly Committee on Government Affairs

April 9, 1993

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