MINUTES OF MEETING
ASSEMBLY COMMITTEE ON TAXATION
Sixty-seventh Session
March 18, 1993
The Assembly Committee on Taxation was called to order by Chairman Robert E. Price at 1:50 p.m., Tuesday, March 18, 1993, in Room 332 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
Mr. Ken L. Haller
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:
None
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Mr. Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Stephanie S. Tyler representing the Regional Transportation Commission
John R. Mayer, Chairman, Regional Transportation Commission of Washoe County and a Councilman for the City of Sparks
Karen Ogilvie Bryan, member of Regional Transportation Commission and Reno City Council
Granville M. "Bow" Bowman, Executive Director, Washoe County Regional Transportation Commission
Tom Taeloure, Financial Manager, Regional Transportation Commission
David Howard, Vice President of Legislative Affairs for the Reno/Sparks Chamber of Commerce
Carole Vilardo, Nevada Taxpayers Association
Robert L. Crowell representing Grand Rent-A-Car
Chuck O. Saunders, District Manager, Avis Rent-A-Car, Las Vegas, Nevada
Elliott Weinstein, Vice President, Grand Rent-A-Car the Avis franchise for Southern Nevada and Las Vegas
Raymond L. Sparks, Chief, Registration Division, Nevada Department of Motor Vehicles and Public Safety
Bernie Kaufman, President, Abbey Rent-A-Car, Valley Rent-A-Car, Nevada Car Rental Association
Maria Romano representing U.S.A. Rent-A-Car
Kevin O'Callaghan, Budget-Sears Rent-A-Car
Mason Hurst, Alamo Rent-A-Car
Chairman Price opened testimony on AB 103.
ASSEMBLY BILL 103 - Authorizes county to increase rate of tax imposed for public mass transportation and construction of public roads upon approval by registered voters of county.
Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau, provided committee members with a Bill Explanation for AB 103 explaining the proposed amendment (Exhibit C).
Stephanie S. Tyler, representing the Regional Transportation Commission noted a technical amendment to AB 103 provided by the Legislative Counsel Bureau (LCB) (Exhibit D).
Ms. Tyler introduced Mr. John Mayer, Chairman, Regional Transportation Commission of Washoe County, who was also a councilman for the City of Sparks. Mr. Mayer provided committee members a copy of his prepared testimony in support of AB 103 (Exhibit E) and read directly from said testimony.
Mr. Mayer introduced Ms. Karen Ogilvie Bryan, member of the Regional Transportation Commission and Reno City Council.
Mrs. Williams interjected and commended the Regional Transportation Commission of Washoe County on the public transportation system. She expressed the remarkable difference public transportation had made in the lives of many people, including herself. She believed the voters would support AB 103.
Ms. Bryan provided committee members a copy of her prepared testimony in support of AB 103 supporting AB 103 (Exhibit F) and read directly from said testimony.
Ms. Bryan introduced Mr. Granville M. "Bow" Bowman, Executive Director, Regional Transportation Commission of Washoe County. Mr. Bowman provided committee members a copy of his prepared testimony (Exhibit G) and proceeded to read directly from said testimony. He clarified for the committee Citifare was the normal bus system for Washoe County, CitiLift was the paratransit system and TART was the Tahoe Area Regional Transportation system in the Tahoe basin. He continued reading from his prepared testimony (Exhibit G).
Mr. Bowman also provided committee members the short range transit plan recommendations for fiscal years 1994 through 1998 (Exhibit H). Mr. Bowman continued reading from his testimony (Exhibit G) and referred to the charts (Exhibit H) explaining each chart as noted in his prepared testimony.
Ms. Tyler offered to walk the committee through the proposed amendment furnished by LCB (Exhibit D). She explained it was a full rewrite because LCB did not believe the tax would have been legal. On the first page of the amendment, section 1, subsection 2, LCB added the words "increase the rate of the tax or" to clarify the language. Similar language in subsection 3 had been added. Also in section 2, subsection 1(a), LCB recommended making reference to the promotion of tourism tax because it was not addressed in the original bill. Additionally subsection (b) provided for the increase of mass transit tax.
Mrs. Williams referenced the Regional Transportation Commission chart contained in Exhibit H and asked what "other" meant.
Tom Taeloure, Financial Manager, Regional Transportation Commission, iterated the "other" consisted of interest income on the fund balance and advertising revenues.
Mr. Ernaut asked if there were plans for linking Stateline with Incline Village. Mr. Bowman replied RTC had discussions with the Traffic Management Associations and other organizations in the Tahoe area about a total loop transit system around the whole lake. TART only serves between Tahoe City and Incline. RTC was hopeful the loop would be accomplished at some point in time. Mr. Ernaut asked if RTC would expand service to the south valleys of Reno. Mr. Bowman pointed out RTC faced cutting back service and AB 103 would assist in that regard. It had been discussed to extend a line to Galena High School. Mr. Ernaut stressed that section of town had no service and the population was becoming an elderly population. Mr. Bowman conveyed there were discussions about the potential in the future, if RTC had the revenue, about a dial-a-ride program for that area. Mr. Ernaut commended RTC on the Citilift program.
Ms. Tyler indicated Barbara McKenzie from the City of Reno and Mary Henderson from Washoe county were in other hearings but each of them had asked Ms. Tyler to pass along their respective bodies' support for AB 103.
Mr. Mayer represented the City of Sparks had not taken any position as of yet on AB 103, but he suspected the position would be favorable.
David Howard, Vice President of Legislative Affairs for the Reno/Sparks Chamber of Commerce, echoed RTC's support of AB 103 representing all 2,200 members through its Board of Directors fully endorsed the measure.
Carole Vilardo, Nevada Taxpayers Association requested two amendments to AB 103. With regard to the votes, she proposed AB 103 reflect the election be either a regularly scheduled primary, general or extended municipal election, not just any election. The purpose was to stop the use of special elections on issues. The other amendment she proposed was to include a provision with regard to construction contracts entered into prior to passage and approval with a non-escalating clause agreement. She proposed the tax be waived until the end of the contract time. Ms. Vilardo explained it was standard when there was a non-escalating clause construction contract. Ms. Tyler had no problem with either of those amendments.
Ms. Vilardo continued asking clarification with regard to the amendment (Exhibit D) referencing section 2, subsection (a) after the semicolon, she believed the word should be "or" as opposed to "and." Mr. Zuend interpreted either word could work, but would check with bill drafting before amending the bill.
Chairman Price asked for a motion to include the amendment from LCB and the two amendments from the Nevada Taxpayers Association.
ASSEMBLYMAN HALLER MOVED TO AMEND AND DO PASS AB 103.
ASSEMBLYMAN ERNAUT SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Chairman Price opened testimony on AB 323.
ASSEMBLY BILL 323 - Imposes fee on short-term rental of passenger car. (BDR 43-1186).
Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau, provided Committee Members with a Bill Explanation for AB 323 explaining the proposed amendment (Exhibit J).
Robert L. Crowell appearing on behalf of Grand Rent-A-Car, which was the Avis franchisee of Las Vegas, stated AB 323 amended Chapter 42 of the Nevada Revised Statutes. He walked through the bill for committee members. He noted the bill would only affect rental car companies and would not affect companies such as U-Haul or Ryder Truck Rental. Mr. Crowell explained the rental car companies supported the portion of AB 323 allowing the collection of 1 percent to be credited to the state highway fund. There had been previous proposals for amounts collected to be remitted to the state parks fund. He indicated there were similar bill draft requests this legislative session. The rental car industry believed if it was going to be taxed it should be able to design its own tax. The rental cars utilized the highways and the nexuses were clear, the fee collected should go to the highway fund.
Charles O. Saunders, District Manager, Avis Rent-A-Car, Las Vegas, Nevada distributed a handout with regard to AB 323 (Exhibit J). He also distributed a graph portraying the State Licensing Costs (Exhibit K). He pointed out Nevada's registration fees for rental cars were substantially higher than nearly every other state. The graph (Exhibit K) illustrated Nevada was the fourth highest in the country for licensing costs. He noted Arizona and Washington were the highest in the country, but already had enacted a similar bill to AB 323.
Elliott Weinstein, Vice President, Grand Rent-A-Car the Avis franchise for Southern Nevada and Las Vegas, commented the national average for license plate fees was $65 compared to over $300 in Nevada. Nevada had a significant competitive disadvantage and an extremely high cost of doing business as operators in Nevada. States that Nevada competed with for tourism such as Florida and Hawaii as well as most of the other states had a significantly lower cost base for license plates. Mr. Weinstein believed a $300 per unit tax on the product was very significant. He explained why the cost was not passed on was due to the fact the majority of the rates the rental industry had were preset rates. Rates came in the form of bids for commercial accounts and were typically multiple-year contracts whereby the industry agreed to rent a car in the state of Nevada at the same rate it did in the state of Florida, New York or Massachusetts. It was a flat negotiated rate. Mr. Weinstein continued explaining there were other rates that could not be passed on such as association rates, government rates, and foreign inbound rates which were all preset rates or package rates.
Mr. Weinstein said Avis believed it was at a significant competitive disadvantage with the very high costs that could not be passed on. He reiterated Arizona and Washington had enacted legislation allowing the pass-through. California had introduced legislation this year. Listed on Exhibit K were nine other states that had already enacted legislation and there were ten other state capitals considering the legislation. He wanted a level playing field specifically for Nevada rental car companies.
Mr. Weinstein said the 5 percent would, for the most part, recover the cost of the license plate fees. He noted the system would not be changed with regard to the purchase of license plates. There was no potential loss of revenue.
Mr. Weinstein continued stating the on-airport operators (the major companies), for the past two or three years, had been replacing the cars approximately twice a year. He indicated the methods were changing and pointed out most car operators acquire the autos on repurchase agreements with General Motors, Ford and Chrysler. The major companies were requesting longer holding periods on the vehicles, but for the most part at this point in time, the autos were being replaced twice a year. Mr. Weinstein mentioned the license fees were prorated.
Mr. Crowell estimated the fiscal revenues to Nevada by virtue of the extra 1 percent would be approximately $1.5 million.
Mr. Crowell conceded to Mr. Marvel that hopefully AB 323 would deter the passing of other small taxes considered in previous sessions.
Mr. Spitler added AB 323 actually would not stop someone from attempting over and over to assess another fee on rental cars. He believed there was already a bill drafted to be introduced by the Senate. Mr. Crowell reiterated he was hopeful AB 323 would deter any other assessment on the rental car industry. Mr. Crowell believed if a fee had to be levied against an industry, the fee should be related to that industry and paid to the expenses of the cause. Mr. Crowell believed if the fee was levied, it should go to the highway fund. Mr. Crowell pointed out the rental car companies had very little, if any, nexus to state parks, but had a nexus to the highway fund.
Mr. Spitler asked if there was currently any state law that precluded rent-a-car companies from doing a separate line item with the fees. Mr. Crowell did not believe there was anything in state law to prevent a separate line item. Mr. Weinstein added the contract rates would disallow the charge of a line fee on the rental agreement. He reiterated the majority of the business was contractual, preset and long-term. Mr. Spitler concluded when the customer views the fee, the customer would become angry with the state, as opposed to the car company.
Mr. Weinstein clarified for Mr. Spitler the "similar" legislation in Arizona and Washington was actually closer to being "identical."
Mr. Crowell indicated the $1.5 million figure was an industry number and not an Avis number based on the 1 percent figure. Mr. Zuend added the Department of Taxation supplied the Legislative Counsel Bureau with a number based upon the estimate of taxable sales which should be roughly the same tax base. The Legislative Counsel Bureau predicted approximately $1.25 million.
Raymond L. Sparks, Chief, Registration Division, Nevada Department of Motor Vehicles and Public Safety (DMV), spoke in support of AB 323 because it increased revenues into the highway fund. He said there were approximately 17,000-18,000 rental vehicles registered in Nevada and approximately $4.5 million of combined registration fees and privilege taxes collected by Nevada on those vehicles.
Mr. Sparks was not sure what type of audit resource would be required. DMV would be dealing with a relatively small number of businesses. He did not believe there would be any significant audit expense. Mr. Sparks denoted to Mr. Marvel DMV already performed compliance audits and he did not believe AB 323 would require any additional staff, unless there was some widespread problem he was not anticipating.
Mr. Spitler asked if the $1.5 million going to the highway fund would be eligible for a federal match. Mr. Sparks presumed DMV could use the fund to receive the federal match, but he was not sure how the program worked. Mr. Sparks clarified for Mr. Spitler the $1.5 would simply go into the highway fund. Mr. Sparks said a number of expenditures were supported out of that fund. Mr. Spitler noted 22 percent went to DMV and the remainder would be eligible for the $1.38 match, or whatever the federal allocation would be at that time. Mr. Sparks delineated the remainder would go primarily for construction and maintenance of highways.
It was Mr. Sparks understanding AB 323 provided that any excess over the five percent for any calendar year would also be allocated to the state. If the 5 percent withheld by the car rental agencies exceeded their cost to register and title their motor vehicles, the excess would be remitted to the state.
Mr. Spitler asked what percentage of the car rentals were rented by out-of-state tourists. Mr. Crowell had been advised that easily 80 percent of the rentals were from out of state.
Bernie Kaufman, President, Abbey Rent-A-Car and Valley Rent-A-Car, which were two local and family-owned operations and President of the Nevada Car Rental Association, a trade association representing 15 companies both large and small said Nevada's privilege tax and registration fee comprised a sizeable sum of money for the car rental firms. He noted again Nevada's cost for licensing and registration were among the highest in the United States. Additionally, companies were subject to various other fees including airport access fees. AB 323 would authorize companies to charge customers 6 percent of the car rental contracts of which 1 percent would go to the state, 5 percent to the car rental companies and anything in excess of 5 percent would also go to the state. AB 323 also provided on an annual basis the car rental companies must file with DMV a report of fees collected from customers as well as actual costs incurred in registering the vehicles and their fleets. Mr. Kaufman pointed out AB 323 would reduce costs for car rental companies, many of whom were small local operators like he was. Mr. Kaufman urged the committee to support the bill.
Maria Romano representing U.S.A. Rent-A-Car in Las Vegas, Nevada, spoke in support of AB 323. She pointed out a couple of years ago AB 612 was passed. With that bill there were a few regulatory areas capping the rent-a-car companies on certain costs, such as charging additional drivers' fees. There was also a cap placed on the collision damage waiver sales. The industry could only charge up to $10 per vehicle per day. She wanted to see AB 323 passed to help keep the costs down and be able to compete with the large rent-a-car companies.
Kevin O'Callaghan, General Manger, Budget Sears Rent-A-Car of Las Vegas, an independently owned and operated Budget franchise, concurred with other testimony presented and asked for the committee's support of AB 323.
Mason Hurst. Alamo Rent-A-Car, also concurred with the previous testimony and asked the committee's support of AB 323.
ASSEMBLYMAN MARVEL MOVED DO PASS AB 323.
ASSEMBLYMAN WILLIAMS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
There being no further business to come before committee, the meeting was adjourned at 2:50 p.m.
RESPECTFULLY SUBMITTED:
DIANNE LAIRD
Committee Secretary
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Assembly Committee on Taxation
March 18, 1993
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