MINUTES OF MEETING
ASSEMBLY COMMITTEE ON TAXATION
Sixty-seventh Session
June 17, 1993
The Assembly Committee on Taxation was called to order by Chairman Robert E. Price at 1:15 p.m., Thursday, June 17, 1993, on the floor of the Assembly Chambers of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Robert E. Price, Chairman
Mrs. Myrna T. Williams, Vice Chairman
Mr. Rick C. Bennett
Mr. Peter G. Ernaut
Mrs. Joan A. Lambert
Mr. John W. Marvel
Mr. Roy Neighbors
Mr. John B. Regan
Mr. Michael A. Schneider
Mr. Larry L. Spitler
COMMITTEE MEMBERS ABSENT:
Mr. Haller, Excused
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
None
OTHERS PRESENT:
Edward Presley, Home Rule Coalition
Michael Alastuey, Clark County School District
Carole Vilardo, Nevada Taxpayers Association
Perry Comeaux, Executive Director, Nevada Department of Taxation
Jeanne Douglass, associate, Commission on Economic Development
Janice Wright, Deputy Director, Nevada Department of Taxation
Marvin Leavitt, City of Las Vegas
Sue Wagner, Lieutenant Governor
Chairman Price announced the hearing on AB 100 and AB 734 would be in recess until 3:30 p.m., Friday, June 18, 1993 due to the activities of general session. The hearing would reconvene in Room 332 and an appropriate courtesy notice would be posted, a copy of which is attached as EXHIBIT C.
The bill explanations for AB 100 and AB 734 are attached as EXHIBIT D and EXHIBIT E, respectively.
ASSEMBLY BILL 100 - Extends time within which board of county commissioners may impose tax for enhancing safety and security of public schools within county school district. (BDR 34-697)
ASSEMBLY BILL 734 - Requires commission on economic development to reconsider whether business qualifies for exemption or deferment from taxes upon request by Nevada tax commission.
(BDR 32-1751)
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Chairman Price reconvened the meeting at 3:35 p.m., Friday, June 18, 1993. He then opened testimony on AB 100.
Edward Presley, Home Rule Coalition, spoke briefly in favor of AB 100.
Michael Alastuey, Clark County School District, testified the bill would extend the 1994-95 -- June 30, 1995 deadline for the levy in the bill -- to include 1996-97. He added the Clark County School District had sought passage of a three-cent levy which had failed at the polls. Mr. Alastuey submitted a proposed amendment which is attached as EXHIBIT F. He explained the amendments were based on discussions with the Nevada Taxpayers Association which had been held to address concerns which had arisen with the language in the bill. He noted Line 8 provided a June 30, 1997 sunset provision. He said the Line 23 provision of the proposed amendment would allow the school district to maintain the "level of effort" at the rate of expenditure applicable at the time the new ballot provisions would be approved. Consequently, whatever level of school security was being experienced, such level would be continued forward for the duration of the levy.
In response to a question from Mr. Marvel, Mr. Alastuey explained the three-cent rate proposed in the bill would have brought in about $4.6 - 4.7 million per year. The two-cent rate in the amendment would generate just over $3 million per year or about $7 million over the biennium for Clark County. He also told Mr. Marvel school security now in Clark County was costing about $6.3 million per year and the difference was made up by general fund monies. Mr. Marvel said it was a sad situation.
Mr. Alastuey answered a question from Chairman Price saying they had received support from Metro regarding traffic control in the areas around the schools. The school security patrols recognized the boundaries of their jurisdiction.
Carole Vilardo, Nevada Taxpayers Association (NTA), stated her original objections to the bill had been assuaged by the corrections in the proposed amendment. She submitted additional information for the record which is attached as EXHIBIT G.
There was no testimony in opposition.
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ASSEMBLYMAN NEIGHBORS MOVED AMEND AND DO PASS.
MR. SCHNEIDER SECONDED THE MOTION.
THE MOTION PASSED BY UNANIMOUS VOTE OF THOSE PRESENT.
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Chairman Price called for testimony on AB 734.
ASSEMBLY BILL 734 - Requires commission on economic development to reconsider whether business qualifies for exemption or deferment from taxes upon request by Nevada tax commission. (BDR 32-1751)
Perry Comeaux, Executive Director, Nevada Department of Taxation, reminded the committee of its joint meeting held in January with the tax commission and the Senate. AB 734 had resulted from suggestions made at that meeting by Candace Fox. The tax commission believed they should have some role in reviewing the sales tax deferral approval process relative to economic development projects. This bill addressed the commission's role in the approval process. He, Ms. Fox and Lieutenant Governor Wagner had met in May and come to an agreement whereby the Commission on Economic Development (CED) would provide detailed information on approved businesses and their projects to the tax commission. The tax commission would then review the material, discuss it at their next meeting and relay any comments, concerns or input back to the CED so they could consider such information when reviewing future requests. He said such a procedure would eliminate the necessity for the two-tier approval process which would be set up under AB 734.
Mr. Comeaux indicated the agreement reached at the May meeting would be fine. If there needed to be corrections or changes made to the procedure, they could be addressed by a similar bill in 1995.
Mrs. Myrna Williams asked Mr. Comeaux if he was suggesting the bill be indefinitely postponed. Mr. Comeaux replied he believed the perceived problem had been addressed and a solution had been worked out between the interested parties.
Jeanne Douglass, Associate, Commission on Economic Development, stated the commission concurred with Mr. Comeaux's comments and said the situation had been address internally. She submitted Lieutenant Governor Sue Wagner's prepared remarks as EXHIBIT H.
Chairman Price explained he would handle some other business in anticipation of Mrs. Wagner's arrival to conclude testimony on AB 734.
Chairman Price asked Perry Comeaux to comment on the use tax news article attached as EXHIBIT I. Mr. Comeaux stated, in response to the recent decision of the tax department and the tax commission, an amnesty program had been instituted which provided companies a period of time to come current with their reporting of goods purchased and not taxed outside the state and used within the state. (Chairman Price interrupted Mr. Comeaux's testimony and asked him to resume later in the meeting.)
Chairman Price asked for action on previously heard bills.
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ASSEMBLY BILL 295 - Revises provisions regarding sale of cigarettes by wholesale and retail dealers. (BDR 32-1181)
ASSEMBLYMAN REGAN MOVED DO PASS AB 295.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
ASSEMBLYMAN LAMBERT AND ASSEMBLYMAN ERNAUT VOTED NO.
THE MOTION CARRIED.
Chairman Price noted it was the intention of leadership to sine die on June 28. He felt June 28 was realistic and asked for any other motions which would be in order.
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ASSEMBLY BILL 640 - Makes various changes relating to assessments and liens concerning property owned by Nature Conservancy. (BDR 32-1833)
After a brief discussion of the proposed agricultural amendments:
ASSEMBLYMAN MYRNA WILLIAMS MOVED AMEND AND DO PASS AB 640.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Price assigned review of the amendments to Mr. Zuend.
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ASSEMBLY BILL 545 - Provides manner of determining value of certain possessory interests for imposition of property taxes. (BDR 32-678)
Chairman Price said he would hold AB 545 because it was no longer needed. The situation had been addressed in another bill.
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ASSEMBLY BILL 282 - Authorizes local governments to impose property tax for "pay as you go" financing of public works upon approval of voters. (BDR 31-122)
Mr. Marvel asked Ms. Vilardo if the language had been worked out for the amendments to this bill. Ms. Vilardo stated she did have language which had been developed jointly with Marvin Leavitt which would provide guidelines on the "pay as you go financing" relief for local governments. The proposed amendment is attached as EXHIBIT J. She explained the amendment's provisions and discussed them with members. She read the proposed ballot language and explained there would be a ten-year sunset provision added.
Ms. Vilardo appealed she be allowed to request a bill. She stated during their discussion of this issue, a Lander County agenda had been discovered which included a "pay as you go" issue. A copy of the agenda is attached as EXHIBIT K. In reviewing the agenda item, NTA had learned the Lander County Commission was planning action based on NRS 244.260, enacted originally in 1955 or 1957 and last modified in 1965,to exceed their cap tax rate. She read the statute. It allowed the boards of county commissioners to make a special assessment, outside the statutory cap, for construction and maintenance of public buildings.
Ms. Vilardo concluded this posed an emergency situation which must be met and dealt with immediately because subsequently the agenda item had been approved. She explained this provision of the law had rested in obscurity for years, unrecognized and unused. If repeal or amendment of NRS 244.260 was not addressed this session, severe and/or compounded problems would arise prior to the next session because other counties would try to use the method to raise tax rates over the allowable limit.
Ms. Vilardo stated, alternatively, something might be done within AB 282 to rectify the situation. Otherwise, a new bill would be urgently needed.
In answer to a question from Mr. Marvel, Ms. Vilardo said, as was currently provided, the only review of the commissioners decision was by the board of finance in approving the establishment of a proper account for the pay as you go money: it had no approval power over the levy itself.
Janice Wright, Deputy Director, Nevada Department of Taxation, said the matter had come to the attention of the Department of Taxation recently. She was aware the Lander County Board of County Commissioners had already approved the twenty-five cent levy. In order to levy the twenty-five cents, the commission had reduced the same amount from the school district allocation (under a previous pay as you go plan which was due to expire in 1998) and put it into the county's capital projects fund. Once that was done, the county could then grant money to the hospital district. The money would not go directly into the hospital district budget, however, because the commissioners did not want those monies to be subject to salary and labor negotiations.
Ms. Wright explained Lander County had asked the department to certify its plans. She added the first action would occur on Thursday, June 24 at the meeting of the State Board of Finance, approval of the establishment of the fund. Then, it would go to the Nevada Tax Commission on Friday, June 25, for approval of the twenty-five cent, pay-as-you-go levy with no voter approval which could be used for whatever purpose the commission chose within the capital projects fund.
Ms. Wright said no one else had ever tried to take advantage of this loophole which allowed these levies to exceed the statutory caps. She said there were also other conflicting provisions in the current law which would allow the caps to be easily exceeded. She cited Chapter 350 of NRS, the securities act. She said most of the conflicting provisions were written into the law prior to the institution of the tax cap concept in 1979 and 1981.
Marvin Leavitt, City of Las Vegas, said there were at least two options. First was to delete the provisions of NRS 244.260 entirely. Or, it could be made subject to the cap in Chapter 354 which was, essentially, a 106 percent tax rate which would allow increases only at the direct expense or detriment of the county's own operating fund. He said all governmental subdivisions now had the right to go to a vote of the people for an override, this would not change that situation.
In answer to a question from Mrs. Lambert, Ms. Wright said the situation, in White Pine County and in other counties which had requested short-term financing approval for pay as you go, was the department had denied such use. It was the department's position the use of pay-as-you-go monies was restricted to the same purpose as was designated through voter approval and could be used for short-term financing of such projects.
Ms. Wright said White Pine county had come to the department for approval of about $2 million in bonds which was denied because the department did not believe they had the ability to repay the bond debt. Subsequently, White Pine County requested permission to pledge pay-as-you-go funds and the department denied the request because it believed the funds were not requested for an authorized use. However, bond counsel later persuaded the department the use planned was legally allowed under the circumstance. She explained White Pine County was using those revenues to pay principal and interest on short-term bonds even though it was originally approved by the voters as strictly pay- as-you-go monies.
Mrs. Lambert said it really bothered her to see such use because the taxpayers had passed the levy based on the allegation the money would not be going to pay principal and especially interest on debt. Ms. Wright said Mrs. Lambert was right. Mrs. Lambert said she would like to see that loophole plugged.
Ms. Vilardo stated pay-as-you-go provisions, in current statute, allowed for use to pay off debt, but it could not be used to incur new debt, which, to her, meant it could not be used to sell short-term financing. However, the interpretation had begun to change over time. She thought a Legislative Counsel interpretation might be in order to clarify and overturn what was happening. She said use of the provisions in NRS 244 would resume the infighting within the counties which existed prior to the initiation of the caps. And, entities would attempt to financially freeze out funding for other entities. She added the foregoing was why they were requesting repeal of NRS 244 and why the NTA would be appearing before the Board of Finance and before the tax commission to request Lander County's approval requests be denied.
In answer to a question from Mr. Marvel, Mr. Leavitt stated all those concerns could be addressed in AB 282. He added he agreed with Ms. Vilardo, if something was not done there would be a tax crisis throughout the state. A brief discussion followed regarding the contents of the amendments to the bill. It was agreed Ms. Vilardo and Mr. Leavitt would work out the amendment language with the bill drafter. Mr. Zuend suggested the amendment relative to NRS 244 be effective upon passage and approval.
ASSEMBLYMAN MARVEL MOVED AMEND AND DO PASS AB 282.
ASSEMBLYMAN ERNAUT SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Price invited Lieutenant Governor Sue Wagner to comment on AB 734. She referred to her previously submitted written comments and stated she was in support of the review by the tax commission.
Chairman Price stated because the situation had been worked out to the satisfaction of those immediately affected, it was his intention to hold AB 734 and no action would be taken.
Chairman Price also stated an additional meeting would be held Wednesday, June 23, at 5:00 p.m. The purpose of the meeting would be to hold a work session on all remaining tax matters. Due to end of session being imminent, he would entertain a motion to waive Rule 92.
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ASSEMBLYMAN MYRNA WILLIAMS MOVED TO SUSPEND RULE 92.
ASSEMBLYMAN NEIGHBORS SECONDED THE MOTION.
THE MOTION CARRIED BY UNANIMOUS VOTE OF THOSE PRESENT.
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Ted Zuend submitted a memorandum in reference to proposed ballot question language for AB 173 which is attached as EXHIBIT L.
Chairman Price asked the members to review the ballot language and be prepared to make a decision at the next meeting.
Chairman Price requested Perry Comeaux resume his comments on the news article (EXHIBIT I). In summary Mr. Comeaux stated the new administrative policy would only pertain to the collection of the "use tax" on personal property and it would be applied to companies only, not to individuals. Discussion followed.
There being no further business to come before committee, the meeting was adjourned at 5:10 p.m.
RESPECTFULLY SUBMITTED:
LINDA CHANDLER LAW
Committee Secretary
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Assembly Committee on Taxation
Thursday, June 17, 1993 and
Friday, June 18, 1993
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