MINUTES OF MEETING
ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS
Sixty-seventh Session
June 7, 1993
The Assembly Committee on Government Affairs was called to order by Chairman Val Z. Garner at 9:05 a.m., Monday, June 7, 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:
Senator William Raggio, District 3
STAFF MEMBERS PRESENT:
Dana Bennett, Research Analyst
Lorne Malkiewich, Legislative Counsel
OTHERS PRESENT:
Carole Vilardo, Nevada Taxpayers Association; Howard Barrett, Director of Research, Nevada Taxpayers Association; Ande Engleman, Nevada Press Association; Robert Seale, State Treasurer; Scott Craigie, Chief of Staff, Governor's Office; Judy Matteucci, State Budget Director; Bob Fiore, President, Laughlin Chamber of Commerce, and President/General Manager, Ramada Express, Laughlin; Ozzie Osborn, Assistant to Don Laughlin, Properties & Development Manager, Riverside Resort; Bill Hornbuckle, President, Golden Nugget; Norm Hicks, Executive Director, Laughlin Bullhead Airport; Bob Broadbent, Clark County Director of Aviation.
SENATE BILL NO. 23 - Requires governor to impanel economic forum and creates technical advisory committee to forecast future state revenue to assist in providing balanced state budget.
Senator William Raggio, District 3, gave the committee the background for SB 23 and described the workings and the reasons for the bill utilizing Exhibit C. He explained why budget forecasting was so important to Nevada and said SB 23, in its amended form, was the best effort of all the experiences of all the states dealing with the same problem.
Mr. Bennett commented the projections last session, regardless of who made them, were in no way in the ball park for what actually happened after adjournment; therefore, he questioned how an independent forum would be able to project the revenues better than the system currently being used. Senator Raggio agreed the proposed process was not a guarantee the revenue projections would be met but he suggested, from the experience of other states utilizing forecasts, it prevented political massaging of the revenue projection employed in developing the initial or final budget. Thirty two states required an official forecast and were using the process successfully.
Mr. Neighbors proclaimed he could not believe a governor, regardless of party, would not welcome a forecasting process. Stating his position as a former budget officer, he said he would welcome numbers which would help him submit a balanced budget. Further discussion followed regarding the governor's concern regarding the makeup of the forum.
Mr. Williams asserted SB 23 indicated vision for the state but suggested the bill only stretched half way. He said the forum needed to go beyond what was being proposed, to the point of prioritizing what would be done with funds in a positive budget climate. He then stated the elements he thought contributed to a negative budget condition, stressing the condition would continue unless the forum addressed the issue of prioritizing. He next asked Senator Raggio how he felt about including, within the legislation, the ability for the forum to establish state priorities, and thereby, eliminate some of the spending currently being done. Senator Raggio agreed with Mr. Williams comments but disagreed the economic forum would be the appropriate body to do what Mr. Williams was asking. He stated it would be best for the economic forum to do the one function as specified.
Mr. Williams next referenced federal mandates and said Nevada was by itself as doing only the minimum, giving an illustration as a case in point. Senator Raggio was not sure how to respond but said he supported the concept Congress should not provide mandates to the states without funding and he would support a constitutional amendment to that effect. But he asked the committee not to kill SB 23 by hanging a lot of ornaments on it because that was not the purpose of the economic forum.
Mr. Ernaut queried if it was Senator Raggio's intention to have the deliberations of the forum center on existing revenues or new taxes such as the slot route tax. Senator Raggio explained the forum would be dealing only with existing revenue. It was not intended to tie the hands of the governor or the legislature.
Mrs. Freeman wanted to know the track record of the 32 states which were using the process. Senator Raggio did not have the information with him but said if he could find it he would provide it. He did mention no state had ever repealed it.
Mrs. Freeman then questioned the $15,000 fiscal note and asked if it was accurate. Senator Raggio said the fiscal note had been provided by the fiscal division and was based upon the number of anticipated meetings.
Carole Vilardo, Nevada Taxpayers Association, introduced Howard Barrett, Director of Research, Nevada Taxpayers Association, and said the association supported SB 23 which she felt was structural fiscal reform. She referenced legislation passed last session for the purpose of stopping the use of triggers for ongoing operational expenses and said if SB 23 had been in effect prior to the passage of that legislation the "rainy day" fund, the surplus fund created by that bill, would have kicked in and there would have been no cuts. Further, it allowed for excess money to convert into capital eliminating the need for bonding or looking at increased property taxes to cover bonding for capital needs. Continuing, Ms. Vilardo said economic forecasting would be removed from the political arena and the meetings would be conducted in the open, allowing other expertise and testimony to help in projecting trends. She next gave the experience of the economic forecasting group which leveled out the state of Delaware and has been touted as having helped in saving Delaware from its prior plight of over projecting revenues.
Howard Barrett stated he had been the state's budget director for over 20 years, and as budget director, had SB 23 been proposed during his tenure, he would have opposed it. He said he now knows he would have been wrong because the main thing the bill did was to open up the process, allowing for a public record as to how the revenue estimates were arrived at. He speculated the situation which had occurred two years ago in regard to the budget would probably not have occurred because there would have been a sufficient number of people reviewing those revenue estimates. In conclusion, Mr Barrett supported the passage of SB 23.
Ande Engleman, Nevada Press Association, testified the membership of the association was split on whether or not the forum should exist. However, she said they were unified in one aspect, the openness provision. This would take place in the public arena allowing the public to better learn how the budget process worked, and for the first time, legislators would be receiving input on economic factors which were not readily available to the state forecasters.
Robert Seale, Nevada State Treasurer, rose in support of SB 23 for the purpose of supplying to the treasurer's office how the cash flow was going to go. He said it would tell his office a bit more accurately what to anticipate in terms of what the cash flow was going to be into one of the state's multiple bank accounts. Thereafter, it would allow him to invest the money for longer periods of time in order to generate additional revenue and those additional revenues would easily cover the fiscal note attached to the bill.
Mr. Bennett questioned how the forum, although being able to develop a trend, could predict better than anyone else the roller coaster effect Nevada had with the gaming and sales revenue from one month to the next. Mr. Bennett said, "That is the information you are talking about in trying to determine cash flow and cash management." Mr. Seale replied, "When the projections came out, based on the contacts I had, broader than just the economic community of Nevada, my contacts across the nation, particularly with Wall Street and the economic conditions at that time, I was aware. But the projections we were being given were not achievable, and I believe that a broader spectrum of people looking at what those numbers are and giving input to the process will give you better numbers. Had this economic forum existed in the last session, I can assure you that the numbers that were being looked at would be significantly different. I knew they were not correct, a lot of other people knew they were not correct and by large margins. I think the economic forum would have picked it up....There would have been more eyes on it."
Scott Craigie, Chief of Staff, Governor's Office, testified it was believed Senator Raggio's objectives were sincerely meant and he said the Senator had, in fact, targeted a couple of issues which were needed to make important steps forward, particularly the issue of a revenue projection. Also, Mr. Craigie agreed it would be wise to have open dialogue in an open forum and to have the revenue projections as a consensus document, a consensus among representatives of the legislature and the administration. Finally, he said it would be a good idea to have an official target which would be the focus of the consensus. In the areas of disagreement, Mr. Craigie said Mr. Bennett's question went right to the heart of the issue. The focus of the bill was to arrive at an accurate target but it was folly to say the forum was what was wrong with the establishment of revenue targets. He said as long as the state was subject to the trade winds of the national economy, as long as 75 percent of state's revenue was based on discretionary income, it was going to be virtually impossible to accurately predict what those revenue targets were. He did acknowledge it would be helpful to have outside information added to the dialogue of staff and advisors, therefore, adding people from the private sector might contribute additional information to the process. Continuing, Mr. Craigie said, "Whatever final decision making is done, it must be done by those who are the elected representatives of the people of this state, the legislature and the governor." He said it was important for the elected body to make, effect and take responsibility for any decisions made, e.g., the budget cuts of the last two years, rather than place the blame on an appointed group. He opined the situation would have been worse had the people or the financial community thought the administration was not willing or able to step up and take the responsibility for the decisions which had been made. His next concerns dealt with the economic forum deciding tax revenue and private sector projections which were off as much as, or more, than the two staffs currently performing the function.
Mrs. Lambert asked Mr. Craigie how he proposed to have an open forum, a consensus document and to refrain, at the end of session when the budgets start coming together, from the temptation to monkey with the revenue projections to make it balance. Mr. Craigie responded, "In terms of the way this process is proposed, putting together this technical advisory group and possibly even including some people in the private sector into that advisory would be a good idea." He said they could meet and discuss, in an open forum, how they saw the revenue picture developing, what factors were involved, e.g., the huge construction projects in Las Vegas which dramatically drove the sales tax numbers. Then, after reaching an official consensus the target could be built into the executive budget. He added, "That open forum, that consensus document, that advisory committee work which is similar to the one used around most of those states, and Judy will go through that list that you have there, that's the process that is used in other areas and we think we could mirror that and probably should." Continuing, he stated it would be very healthy for the public to understand the budget process and why revenues were swinging so dramatically, positively and negatively. Finally, he said, "We have such a hard time getting the general public to understand why we face the surpluses just as we do explaining the deficits, but as long as 75 percent of our revenues are on that discretionary income that type of cycle is going to happen."
Mrs. Lambert then asked Mr. Craigie to answer the final part of her question, the temptation to change estimates near the end when the budgets were coming together. His response was, "Right now all of the spending parts of the budget are discussed at length before Senate Finance and Assembly Ways and Means. There is much less time focused on the revenue projections. I think that if we have an official target, a consensus document, from the technical advisory committee, then that will be the subject of the presentation to the money committee, similar to the spending proposals and the budget that is on the table." Although Mr. Craigie admitted public dialogue was very important, he said he and the governor did not believe the people were going to accept a decision made by an appointed group which met two afternoons, every two years, adding it was not good for those who were elected or for the governor.
Mrs. de Braga said, "Everyone keeps referring to this as an advisory committee." Reading the bill, she said, "This would indicate there can't be any deviation from what is being said." Thereafter she asked, "In these other states, are these truly advisory commissions?" Mr. Craigie replied, "That's the heart of the question....I am proposing that it be an advisory group, but one that comes to a consensus on an official target." He agreed SB 23 was not currently written with the open forum as an advisory commission. He then explained what he envisioned the advisory commission doing. He next turned the floor over to Judy Matteucci to define how the other states handled the matter.
Judy Matteucci, State Budget Director, explained SB 23, as written, required the administration and the legislature to live with the recommendations developed by the economic forum. She next referenced Exhibit D, tables which had been devised from the budget processes within the states and compiled by the National Association of State Budget Officers. She said the tables showed only eleven states used commission forecasts to prepare the estimate included in the governor's budget. Ms. Matteucci then described the various processes of the states to the committee and concluded by giving the committee her overall viewpoint on the proposed legislation.
The hearing on SB 23 was closed with no action taken.
SENATE BILL NO. 433 - Makes various changes relating to adoption of administrative regulations.
Lorne Malkiewich, Legislative Counsel, stated SB 433 made three small changes in dates relating to regulations, which he then explained. He added, the reason he had a sense of urgency on the bill was because one of the three changes impacted the work load of the legislative counsel in the next nine days. The proposed change would delay the June 15 date to July 1.
Mr. Ernaut asked Mr. Malkiewich if he was familiar with AB 247 because he said SB 433 would usurp the need to do AB 247 as amended. He next suggested he meet with Mr. Malkiewich later to discuss his question.
ASSEMBLYMAN BACHE MOVED DO PASS ON SB 433.
ASSEMBLYMAN NEIGHBORS SECONDED THE MOTION.
THE MOTION CARRIED.
ASSEMBLY BILL NO. 706 -Authorizes formation of district to defray cost of improving airport.
Assemblyman Gene Segerblom, District 22, said AB 706 was a bill for her constituents in Laughlin. She asked Lorne Malkiewich to explain to the committee what the bill would do, Mr. Malkiewich responded by doing so, section by section.
Chairman Garner asked Mr. Malkiewich if the problem he spoke of was in Section 5, subsection 8, and what needed to be done. Mr. Malkiewich said what needed to be done was to amend Nevada Revised Statute 244.3359 to create an exception for room tax imposed under Sections 2 to 9 of this act.
Mrs. Augustine said she thought the airport in Laughlin was actually in Bullhead City, Arizona. Mr. Malkiewich answered it was, it was one of the preliminary considerations, but research indicated the Interlocal Agreements Act, Chapter 277, currently allowed interlocal agreements with people in other states. He continued, "Our legal research indicated, basically, what is said on line 17 through 20, as long as there is a benefit to the district the money may be spent outside the district. That's why we needed this legislation to allow the creation here to support an airport there. The boundaries of the district would be entirely within Nevada but the money could be spent to improve an airport in Bullhead City."
Mrs. Augustine asked Mr. Malkiewich if he knew exactly what the funds would be used for, Mr. Malkiewich replied there were people present who could testify on the intended use of the money.
Lastly, Mrs. Augustine questioned if the Arizona legislature had moved in the same direction. Lorne Malkiewich said he did not know.
Mrs. Lambert queried Mrs. Segerblom as to whether she would have a problem with limiting the bill to counties over 400,000 in population to make sure there was not an unknown effect elsewhere in the state. Mrs. Segerblom agreed.
Bob Fiore, President, Laughlin Chamber of Commerce, and President/General Manager, Ramada Express, Laughlin, introduced Ozzie Osborn, Assistant to Don Laughlin, Properties & Development Manager, Riverside Resort; Bill Hornbuckle, President and General Manager, Golden Nugget, Laughlin; Ted Fideran, Executive Director, Laughlin Chamber of Commerce; Norm Hicks, Executive Director, Laughlin Bullhead Airport; Bob Broadbent, Clark County Director of Aviation; and Al Lenhart, Director of Community Affairs, Mohave Generating Station and said they were all present to ask the committee's support for AB 706. He talked about the phenomenal growth taking place in Laughlin and said the airport was a very important part in keeping the momentum of the growth. He then outlined how the funds would be used and said all the resort properties in Laughlin supported AB 706.
Ozzie Osborn, brought pictures, explained the different views to the committee and gave the background history of the airport.
Bill Hornbuckle said he believed AB 706 was an integral part of future success in Laughlin. Only 2 percent of the market came through the airport in 1992, the market represented over 5 million visitors. He suggested only 2 percent of 5 million was a gross misuse of an existing entity. He said if the market base was not expanded quickly, the money which was made in Laughlin would be grossly in jeopardy. Even now the market was slowing and Mr. Hornbuckle presented the figures to verify his statement. He too expanded on how the funds would be spent and what was needed to be done to the airport to make it appealing to tourists.
Mrs. Augustine suggested safety was the most important thing but she did not see anyone in the audience to address FAA regulations. She opined installing a control tower was of high importance to safety. A discussion ensued regarding growth or safety as being the most important issue.
Norm Hicks responded all the federal aviation regulations have been complied with as evidenced by three successful years of inspections. He said there were approximately 2,000 commercial airports of comparable size or larger within the United States, of which only 200 had active control towers, so he said the airport was in compliance. However, he added, the region was intimately aware and sensitive to the issue and funds had been allocated to contract to bring in a mobil facility control tower which could be set up in 30 days.
Bob Broadbent said he had been working with the people from Bullhead City for some time to determine what it would take to expand the airport and described all the areas which would be looked at. He concluded by saying, "If the casinos are of the opinion that the way to attract traffic to Laughlin is with a first class air carrier service airport, then I think the Board of County Commissioners would certainly support them because they are a major part of the economic base of Clark County, and indeed, the state."
Chairman Garner asked Mrs. Segerblom to acquire the appropriate amendments to the bill. The hearing on AB 706 was closed with no action taken.
There being no further business to come before committee, the meeting was adjourned at 10:55 a.m.
RESPECTFULLY SUBMITTED:
BETTY WILLS
Committee Secretary
??
Assembly Committee on Government Affairs
June 7, 1993
Page: 1