MINUTES OF MEETING
ASSEMBLY SUBCOMMITTEE ON TAXATION
Sixty-seventh Session
May 8, 1993
The Assembly Subcommittee on Taxation was called to order by Chairman Robert E. Price at 3:40 p.m. on Saturday, May 8, 1993, in the Main Showroom of the Stockmans Motor Hotel, 340 Commercial Street, Elko, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
SUBCOMMITTEE MEMBERS PRESENT:
Mr. Robert E. Price, Chairman
Mr. Peter G. Ernaut
Mr. Ken L. Haller
Mr. John W. Marvel
Mr. Roy Neighbors
SUBCOMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Mr. John C. Carpenter
Senator Dean A. Rhoads
STAFF MEMBERS PRESENT:
Mr. Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Paul Stevens, a Nevada businessman and resident
Deloyd Satterthwaite, a Nevada resident representing himself
John Moschetti, an Elko County resident representing himself
Al Licht, a Nevada resident representing himself
Ron Billat, a Nevada resident representing himself
Lester Knight, a Nevada resident representing himself
Debbie Murphy, a Carlin, Nevada resident representing herself
Loyd Sorensen, an Elko resident, representing himself
Lorri Kocinski, Elko Chamber of Commerce
Lee Chapman, Chairman, Elko County Commission
Ron Morris, representing the Elko County Food and Beverage Association
Nancy Ernaut, local businesswoman in Elko
Lee Griswold, Mayor, City of Carlin
Caesar Salinski, a Nevada resident
John Wahrenbrock, an independent insurance agent in Elko
Ray Schuckmann, a Nevada citizen representing himself
Ned Eyre, a Nevada citizen representing himself
Hilton Davis, a Nevada citizen and injured worker representing himself
Bill Cavender, a Nevada citizen representing himself
Chairman Price thanked all those present for being there today. He introduced the legislators and staff present and described what committees the legislators served on.
Chairman Price referenced the handouts made available to the public and placed at the door. He referred to the "1993-1994 Guide to the Nevada State Legislature", a copy of which is marked Exhibit C and may be seen in its entirety at the Legislative Counsel Bureau Research Library in Carson City, Nevada. He explained Exhibit C detailed the legislative operation.
Chairman Price noted the booklets the Nevada Department of Insurance published entitled, "Consumers Guide to Automobile Insurance" and "A Comparison Guide to Buying Personal Automobile Insurance," copies of which are marked Exhibit D and Exhibit E, respectively, and may be seen in their entirety at the Legislative Counsel Bureau Research Library in Carson City, Nevada. Chairman Price revealed the booklets were very informative as well as helpful.
Chairman Price then referred to a flyer entitled, "It's Crunch Time for Legislators", a copy of which is attached hereto marked Exhibit F. He explained Exhibit F disclosed 1993's budget proposed by Governor Miller with a pie chart illustrating where Nevada's funds were generated and the appropriation of the funds. Inside of Exhibit F was a twenty year history depicting where Nevada's money in Nevada was generated and where it was spent. Chairman Price alluded to another chart entitled, "Business License Tax Legislation", attached hereto marked Exhibit G, that illustrated the summary of proposed business tax changes before the 1993 legislature.
Paul Stevens, a Nevada citizen and small businessman, did not believe paying the business tax signified a privilege for doing business in Nevada. He expanded stating when he did business in Nevada he hired citizens, had to meet payroll and paid for the employees health benefits. He said the state did not recognize what his company did by creating new jobs. Mr. Stevens iterated the state believed he should be taxed for creating new jobs. It did not seem to be the thing to do.
Mr. Stevens pointed out for committee members Elko really benefitted from the honor camps. It was his understanding it was cheaper to place people in the honor camps as opposed to the penitentiary. The people placed in the honor camps really benefitted each community and that needed to be taken into consideration.
Mr. Stevens voiced his opposition to annual sessions. The legislature needed to get business done in a timely manner. Mr. Stevens believed if he handled his business the same way the legislature did, he would not be in business very long.
Deloyd Satterthwaite, a Nevada citizen representing himself, expressed his concern with a bill in the Natural Resources Committee proposing a felony conviction if one shot a wild horse. He personally did not believe one animal was any more important than another. He did not believe it was a felony to shoot an elk, deer, duck or anything else out of season. He did not think a horse should be classified in the same category as a human being. He knew it was an emotional issue, but still if a person was found innocent of a felony charge, that felony tag would follow that person around for the rest of his life even if he was not convicted.
Senator Rhoads said the bill was in his committee and said it would probably come out of the committee with a six to one vote. Senator Rhoads indicated he would vote against the bill. Senator Rhoads said the bill might be killed on the Assembly Floor.
Mr. Ernaut did not believe there would not be an enormous appetite for that bill in the Assembly.
Senator Rhoads stated the trapping bill was introduced again to change the 74 hour law to a 24 hour law. Senator Rhoads asked Mr. Satterthwaite's association position on that particular bill. Mr. Satterthwaite said the Woolgrower's Association was opposed to that bill. Mr. Satterthwaite remarked 74 hours was not unreasonable at all. Mr. Satterthwaite detailed for committee members the lawsuit filed by the National Humane Society for a complete hold on the animal damage control program.
Mr. Carpenter commented two sessions ago the wild horse bill passed out of the Senate, but on the Assembly floor Mr. Carpenter was able to kill the bill with 23 votes. In the 1991 Legislative Session it was killed in committee. Mr. Carpenter hoped the bill would be killed in committee this year. Mr. Carpenter advised the citizens that Bob Price was a real friend of rural Nevada. Mr. Carpenter conveyed those types of bills just keep coming back every session.
Mr. Carpenter vocalized in the 1993 session the mining industry and agricultural industry were taken out of the Chemical Catastrophe Act. That was the first time in many years there had been any industry taken out of a regulatory scheme. Mr. Carpenter was proud to convey the mining and agricultural industries were prepared to testify and were able to pass the bill in both houses.
Mr. Satterthwaite communicated his appreciation to the committee for coming to Elko.
Mr. Haller relayed he sat on the Judiciary Committee and it was his belief the wild horse bill would not even get close to passing out of the committee. Chairman Price felt the majority of the Assembly members would vote against the wild horse bill.
John Moschetti, Elko County resident, communicated he had resided in Elko for 46 years. He said he was the assessor of Elko County from 1967 to 1980, a time when Elko County and Elko City had the lowest tax rates in Nevada. He articulated that situation was drastically changed with the tax shift (he referred to the "tax shaft"). Mr. Moschetti believed at the present time property was being assessed incorrectly. He was currently a private appraiser and he appraised property at market value because people want to know exactly what the property was worth. He had found many properties were not being assessed at market values.
Mr. Moschetti explained the property tax was a fixed tax. The property tax base was constantly being added to. The property tax was a tax that should be exploited to its fullest. People that own property should pay their fair share of property taxes. Mr. Moschetti said other means to try to circumvent this was not realistic.
Mr. Moschetti was also opposed to the business tax as presently written. The business tax discouraged small business people from getting started and hiring employees. He stressed it was the wrong approach to the tax system.
Mr. Moschetti was opposed to the honor camps closing and said the honor camps did a wonderful job in the rural areas. There has to be a means to keep the honor camps open.
Mr. Moschetti thanked the committee members for coming to Elko. He especially thanked Chairman Price.
Mr. Ernaut agreed with Mr. Moschetti in the way property taxes were currently assessed. Mr. Ernaut hoped, if he was back next session, to take an in depth analysis and look into important and thorough changes to the way property was assessed.
Mr. Moschetti could recall some years back when he had as many as 120 appeals to the assessments. He said now there were no appeals because the residents were getting a break.
Mr. Marvel asked Mr. Moschetti's opinion of the ratio study. Mr. Moschetti felt when he was assessor the ratio study was an effort in futility. Mr. Moschetti said, "I think if an assessor has the funds that he needs to do his job correctly... I think that the counties themselves realize what an important function this is and the money that it raises... and I think that they will do their job correctly... and I think its fine for the state to oversee, but I think they do an overkill." Mr. Marvel added that one of the recommendations Governor Miller had made was to do away with the Local Government Act.
Chairman Price brought to Mr. Moschetti's attention there were some other legislators working on bill drafts to negate the tax shift and various other problems. He mentioned Mayor Pete Sferrazza of Reno had filed a lawsuit on the depreciation system.
Mr. Neighbors concurred with what Mr. Moschetti had said. Mr. Neighbors asked Mr. Moschetti how he felt about the fact that when there were two identical mobile homes, if one was placed on the real estate roll and one was personal property, immediately both homes had different depreciation schedules. Mr. Moschetti believed that was fair due to the fact a trailer that was not put on a permanent foundation was just like a vehicle. If the one would try to sell the trailer, it depreciated and lost value. The fact that the other homes were placed on a permanent foundation made them just as solid as any other house. He supported the depreciation value.
Mr. Ernaut referred to the tax shift and expressed his concern with revamping the tax shift. He said the basic philosophy of the tax shift in 1981 was to change the burden of taxation to the tourists from sales tax, and lessen the burden on the residents by the property tax. In order to do that there had to be some changes made at the county and local level to cap the ability to raise funds. Mr. Ernaut said he was apprehensive in that if the tax shift was revamped there was the possibility of two enormous taxes. Before, when the sales tax was 3 and 4 percent and property tax was higher, there were two medium taxes.
Mr. Moschetti said he wanted to make the assessments fair, assess at market value and make the citizens pay their fair share.
Al Licht, a Nevada resident, testified in favor of the assembly joint resolution dealing with taxing the pensions of persons who lived out of state. Mr. Licht said his main objection to taxation was there was no representation. He pointed out when he was employed, a certain amount of his paycheck was placed into his pension. Now he was being taxed again on the same money. He thought the joint resolution might address some of those items.
Mr. Licht commented on the puppy mill legislation. He was opposed to the Society for the Prevention of Cruelty to Animals (SPCA) acquiring its own private police force. Mr. Licht was an ex law enforcement officer and the legislation frightened him. Any time a private organization was in a position to deputize citizens with policy power was not a good idea. He said the legislation called for 32 hours of training and that was ridiculous. Senator Rhoads mentioned that particular bill was in his committee and he was not sure if would pass out of the committee. He was getting mixed signals, but he said the bill would have a hard time making it through both houses. Mr. Licht said he was not totally against the bill, but opposed to the portion of the bill that gave the SPCA the authority to acquire its own police force.
Mr. Marvel asked Mr. Licht if he knew whether there was any progress being made at the federal level with the pension problem. Mr. Licht said Congresswoman Vucanovich had a proposed bill and the American Association of Retired Persons (AARP) supported the bill. Mr. Marvel mentioned southern Nevada had a large retirement community, most of which came from California. Mr. Marvel felt it was a matter of equity.
Mr. Ernaut said Congresswoman Vucanovich had a bill proposed before Congress for at least the last three sessions. Mr. Ernaut said he had recently spoke with the Congresswoman and she seemed very optimistic.
Ron Billat, a Nevada resident, said he was also being double taxed. He believed his constitutional rights were being violated. He stated he also felt there was taxation without representation. He would like to see a bill where voters would have to be able to vote for any additional taxes before the taxes were imposed. Mr. Billat thought Mr. Carpenter had a bill at one point with regard to taxation matters. Mr. Carpenter clarified there was a bill proposed this session, but there was no support. Mr. Billat said he believed the two-thirds majority resolution would definitely assist.
Chairman Price wanted to communicate both sides of that issue. He said Mr. Gibbons' resolution required a two-thirds majority for taxation matters passed out of the Taxation Committee. Chairman Price illuminated he proposed a bill a few years ago that presented every tax should sunset in ten years to the legislature and then the county or school district would be forced into reconsidering the tax, but the bill never went anywhere. Chairman Price pointed out the other side of the majority matter, stating if there was a regulation requiring more than a majority (like two-thirds), that meant the destiny of that bill would then be considered into a one-third minority group. It was not just a majority anymore, but the concurrence of a minority. He added if a unanimous vote was required, then the destiny was passed into the hands of one person.
Chairman Price said there were 75 or 80 different types of taxes. He pointed out if Nevada always had to go to a vote it could be costly to wait for matters to be brought to the next ballot. Mr. Billat understood there would be emergency situations, but he felt most of the time taxes were planned in advance.
Lester Knight, a Nevada resident representing himself, was employed by Goldfield Mining Company as controller for the Chimney Creek Mine located near Winnemucca, Nevada. He also served as Chairman of the Nevada Mining Association's (NMA) Taxation Committee. NMA and the mining industry had shown time and time again its willingness to pay its fair share. The NMA had maintained a position to support additional taxes if, first through the legislative process, it had been determined there was a real need and secondly, in order to fund the need, it be funded with revenues collected from a broad base of the population and help stabilize Nevada's revenue stream. The NMA believed the state should live within its current means. The NMA welcomed modifications to the current business tax and appreciated the legislators' efforts to make it a more equitable tax. The NMA could not support any change, exemption or credit for a tax that would reduce its broad base nature. The NMA would support any modification that would be broader based and a more stable revenue source.
Mr. Marvel asked if a survey had ever been conducted on what the mining companies paid in business tax. Mr. Knight relayed Lee Chapman indicated 1.4. Mr. Knight conveyed no mines qualified for the cap.
Mr. Knight responded to Senator Rhoads stating the NMA supported eliminating the caps.
Debbie Murphy, a Carlin, Nevada resident representing herself, communicated when her family initially moved to Carlin she was not thrilled with the idea of raising her family in a community where an honor camp was located. She informed the committee that time has shown her exactly how much good the prisoners had done for the community. Her children can now attend a small library in Carlin, thanks to the assistance of the honor camp and city crews. The honor camp crews helped daily with trash pickup. Ms. Murphy believed the honor camps assistance was more evident in the smaller communities.
Mr. Marvel related it was more than just a rural issue. The honor camps saved every Nevada taxpayer money, particularly with the fire suppression crews. The honor camps crews were the first to respond. Mr. Marvel said Nevada would have to go out of state to produce the initial response teams and it would cost millions of dollars. Mr. Marvel just wanted to make the point the honor camps benefitted every citizen in the state of Nevada. It was the cheapest way to incarcerate the felons.
As Mr. Carpenter saw it, it was strictly Governor Miller's budget and was Governor Miller's feelings there was not enough money to fund the honor camps. Mr. Carpenter said the good the honor camps did was just a very small segment of what would happen if the honor camps were closed. The honor camps offered training for the prisoners and Mr. Carpenter felt many of the prisoners that were released might be more inclined to secure employment as opposed to holding up another 7-11 store. More important than in order for the honor camps to close the legislature had to pass the Facilities Capacity Act which would release prisoners earlier. Mr. Carpenter explained that bill would release the prisoners with no supervision and no plan as to what the prisoners would do when released. Mr. Carpenter said it would really affect the large metropolitan areas much more than Elko and other rural communities. The Governor said if the money was found, the honor camps would stay open. Mr. Carpenter said other programs needed to be cut to get the approximate $22 million to keep the honor camps open.
Mr. Carpenter expressed it had been suggested to Governor Miller one way to get the money was through the opening of the Beatty low level nuclear facility. The Governor was adamantly opposed to that. Mr. Carpenter was getting discouraged. He said if the honor camps were closed, two years from now the honor camps would need to be reopened and open up the new facility at Lovelock. He believed the problems would multiply two years from now if the honor camps were closed.
Loyd Sorensen, an Elko resident, representing himself, interjected from the audience, asking if it cost more to keep the prisoners in the honor camps than it would to ship the prisoners back to where they came from. Chairman Price indicated his political sense was the honor camps and early release were two of the major political problems. Chairman Price said the majority of the legislators were not encouraged about closing the honor camps, but it was the funding problem. Chairman Price stated a prisoner could not be paroled, provided a bus ticket and expected to go back home. It just did not work that way. Chairman Price articulated it was less expensive to be housed in the honor camps than the prisons, as well as benefiting the community. He indicated it really was more expensive than actually had been previously anticipated, but was still cheaper than prison. Chairman Price vocalized Governor Miller was very strong on closing the honor camps. Mr. Sorensen could not understand because the camps were already there. Chairman Price said he could not speak for Governor Miller, because he actually did not understand the Governor's reasoning.
Mr. Marvel said he had not spoken with one legislator that would vote for the Facilities Capacity Act (early release). Senator Rhoads said not one of his colleagues supported the early release program.
Mr. Ernaut iterated the budget presented by the Governor was not balanced. He believed another one of the problems was the prepayment of the insurance tax. That was $30 million already included in the budget. If the bill failed there would be a $60 million hole in the budget. He explained the budget was not based on existing revenues but legislation that was currently pending. There needed to be some legislation that would change the budgetary process based on existing revenues.
Lorri Kocinski, Elko Chamber of Commerce, said the best option for all of the Elko businesses would be to repeal the business license tax. She said she knew that would not happen so she would address some other issues with regard to the business license tax. The Elko Chamber of Commerce did not agree with any exemptions for child care or for that matter any other exemptions. She believed the business license tax was a disincentive for economic development. She conveyed the payment schedule of the business license tax should be moved to the same date the quarterly tax payments were due. She also pointed out that the proposal to revoke the business license if the tax was not paid would not have any effect on the establishments outside the Elko city limits, because those establishments were not required to obtain a business license. She really did not agree with that proposal.
Ms. Kocinski relayed the Elko Chamber of Commerce was strongly opposed to the closure of the honor camps. If Elko did not have the first response team as fire fighters, the fire fighters would have to be flown in which would be an expense, and also it could delay fire protection for as long as 24, 36 or even 48 hours, which would mean more damage and destruction. She said it seemed like false economy. She communicated the Chamber was opposed to the early release program. She added there would be the cost of recidivism. The hardened criminals should not be mixed with the prisoners with lesser offenses.
Ms. Kocinski commented she was a member of the Cowboy Poetry Task Force and wanted the legislature to go forth with the bonding for the Cultural Commission to preserve the historical and cultural structures. Mr. Marvel interjected the bill had been passed and was waiting to be heard by the Senate. Senator Rhoads mentioned if the business tax was repealed, Nevada would have a tough time supporting other programs that were not a part of the budget. Ms. Kocinski believed Nevada's zeal to raise revenues from business was really killing the goose that laid the golden eggs. Ms. Kocinski said the Government Affairs Committee of the Elko Chamber of Commerce had considered placing the sales tax back on food to raise revenues.
Ms. Kocinski asked for Mr. Carpenter's views on annual sessions. She said the Elko Chamber believed there was a lot of frivolous and ridiculous legislation. She could not understand why the committees were not working harder on the State Industrial Insurance System (SIIS) issues and the reorganization issues. It seemed the legislators were wasting time with items related to scalping of tickets and other junk items. It seemed all the important items were left to the last two or three weeks of the legislative session. If the frivolous and ridiculous items could be solved, she would be in favor of annual sessions.
Chairman Price wanted to respond to a couple of items Ms. Kocinski mentioned. Chairman Price illuminated with regard to the sales tax on food it was a decision for the entire legislature, looking at a social issue, if it was proper to place a sales tax on food as opposed to a source of revenue. He said even he did not understand at that time the long range impact of a solid tax base. Chairman Price remarked he had learned a lot since that time. To his knowledge only three states have placed the sales tax back on food, once it had been removed. Chairman Price conveyed it was a constitutional amendment and would have to go to a vote of the people. He thought the chances of getting a sales tax put back on food by a vote of the people was slim.
Chairman Price continued and explained to Ms. Kocinski that he was the legislator pushing for annual sessions. Chairman Price explained when the legislature convenes on the third Monday in January of every odd year, the money committees build the budget for Nevada and had to project income all the way through June 30, 1995. He said the legislative branch of government was the citizens branch of government because all the legislators had other jobs and come from all kinds of walks of life. He pointed out the Assembly districts were the smallest political districts in Nevada and in fact that made the legislators accessible. He iterated out of 50 states only three states were left that held the true biennial sessions. Chairman Price proposed the annual sessions would be very limited. If annual sessions were held there would be no need for 1,000 to 2,000 bills.
Chairman Price also wanted to let people know that every bill (no matter how frivolous or ridiculous) was important to some person or some group. Bills came from organizations, people or problems happening in other states. Chairman Price relayed a personal example. He explained the legislature ended up being the source to examine the problems and figure out how the problems should be dealt with. Chairman Price mentioned if his resolution to consider annual sessions actually passed, then it would have to come back to the next session of the legislature and pass both houses, go to a vote of the people in 1996 and 1998 would actually be the first annual session. He added the legislature was trying to budget until June 30, 1995. How could anyone believe the legislature could still be coming close to doing a proper job in 1998 going into the 21st century.
Ms. Kocinski said the great fear from everyone would be the annual sessions would be six months long every year. Chairman Price clarified both resolutions proposing annual sessions contained language cutting off the legislature at a time certain. Chairman Price asserted the language currently contained in the Constitution did not call for a time certain. Mr. Marvel said he voted against annual sessions.
Mr. Carpenter believed the reasons annual sessions were necessary was to put a day certain on the legislature. Mr. Carpenter predicted if something was not done to place a time certain on the legislature, the legislature would be running close to Thanksgiving. There was no incentive to finish the business. It could go on and on and on. There needs to be a time certain. Mr. Carpenter said this was the first year the Assembly had been able to get a time certain resolution passed out of the Assembly. Mr. Carpenter feared it would not pass out of the Senate. Then Nevada would be faced with another year of uncertainty in the future.
Mr. Carpenter explained the constituents were the persons coming to the legislators asking for those bills, not the legislators. All of the bills come from citizens' ideas or problems that needed to be solved.
Mr. Carpenter added he believed annual session legislators would contain many more businessmen due to the fact the person would know exactly what time they would be able to return to work and be able to afford to do so. Not knowing how long one would be away from work was very difficult. Mr. Carpenter said he was not necessarily for annual sessions but for a time certain on the legislature.
Loyd Sorensen interjected from the audience and asked who was actually at the legislature that could make decisions. Chairman Price responded he would like to think the legislators made decisions everyday and the decisions were not easy. Chairman Price explained for Mr. Sorensen that Utah now held annual sessions for 45 days per year. Chairman Price continued stating on the third Wednesday of each month during the interim all of the legislators in Utah came together at the state capital for interim studies and developed legislation in-between sessions. That way on the first day of any of the sessions, bills were actually passed out of committee.
Mr. Neighbors expressed his happiness with the great turnout of Elko concerned citizens on a Saturday afternoon. He said the Taxation Committee did not get near the turnout in Las Vegas. Mr. Neighbors said he voted in favor of annual sessions because of the time certain to end the legislative session. Mr. Neighbors asserted when the money committees had to project a two year budget based on the revenues for the last six months, many problems arose. The real issue was the fact the annual sessions would have to pass the vote of the people.
Mr. Haller mentioned what bothered him was during the interim there were people that took the legislators place. He said in effect there was a government of fewer people during the interim.
Lee Chapman, Chairman, Elko County Commission, welcomed the legislators to Elko. He asked the legislators to carry a message back to Carson City from Elko. The message was one of concern. He said there was a problem with several programs that used to be funded by the state and were being shifted to the local governments. He said then the money that used to fund the programs was not being moved to the local governments, therefore the local governments were being asked to fund many state programs. He recalled in 1981 when Nevada shifted from a property tax base to a sales tax base the reason being the state would run on sales tax because the property tax was intended to support local government. While Nevada saw a trend of local governments being asked to pick up more and more state programs, today the state ad valorem property tax rate was expected to be 15.7 cents on a statewide basis.
Mr. Chapman vocalized what was even more discouraging than additional tax rates and more expenditures was the fact several bills that suggested the answer was to create exceptions to the state mandated property tax limits. The exceptions were for state legislative programs and bonded indebtedness. Mr. Chapman expressed if exceptions were allowed to the property tax rate the system would cease to function. Mr. Chapman provided an example. Mr. Chapman echoed Mr. Moschetti's feelings with regard to assessment rates. Mr. Chapman asked the committee to strike the two words "exceptions" and "exemptions" from the vocabulary when tax policy was addressed.
Mr. Chapman found it disturbing there was not a lot of discussion about efficiency and effectiveness in governmental spending. He mentioned some examples as follows: In Elko County a capital project was just being finished. He submitted two bids, one bid as the county of Elko and another bid as a private corporation that ran the golf course. The bid for the private job was $110,000 and the bid for the public job was $270,000. He provided another example stating Elko County built a building and the private bid was $190,000 and the public sector bid was $275,000. In a county that spent approximately $1 million per year in capital, he said approximately 25 percent of the capital budget was spent on regulation, red tape and bureaucracy.
Mr. Chapman cited Senator Raggio from the newspaper quoting, "We're at impasse." Mr. Chapman said his definition of why Nevada was at impasse was different than Senator Raggio's. Nevada was at impasse because the budget process did not work. The definition of balance was nonexistent in Nevada's budget process. The equation to balance the given budget was more money, increased tax rate and more expense. The system needed to be corrected.
Mr. Chapman asked the committee to return to Carson City and relay the message from Elko County as one of concern, high tax rates, high government spending and no efficiency. He also asked the message be passed along that Elko County did fully support the legislature and would do whatever necessary to assist in the process.
Mr. Marvel asked Mr. Chapman what the combined tax rate would be on Elko County's tentative budget. Mr. Chapman responded it would be $2.58 for the county. The city should be a little higher than that. He expressed Carlin was already at the maximum, but Elko was at approximately $3.12.
Ron Morris, representing the Elko County Food and Beverage Association, spoke in opposition to the business license tax. It was completely unfair and continued to add a burden to businesses. He conveyed the government continued to think that gross profit was the way to tax. He did not believe the government could continue to use gross profit as a guideline and continue adding more taxation. He found it interesting that one of the bills proposed for revocation of business license was for failure to comply with the laws and regulations. Mr. Morris would rather give the licenses back and pay no taxes. He echoed many of the complaints stated through previous testimony.
Mr. Carpenter expressed the newspapers had been driving to increase the business tax for education purposes. Mr. Carpenter believed education took over 60 percent of the budget, education was one of the big drivers of taxes. The legislature had to place approximately $51 million into the distributive school fund just to fund the increase of the children in the state of Nevada. Mr. Carpenter did not agree with the class size reduction as well as a number of other programs. He realized he was a minority in that respect, but he just wanted to let the people know the big tax push was education. Mr. Carpenter alluded to the fact the second big driver of the budget situation was the prison system. He theorized the people in the communities had to get involved and give the legislature direction.
Mr. Carpenter referred back to the SIIS topic Ms. Kocinski had alluded to. He communicated there was an interim committee that worked on SIIS, the Senate Committee worked with the bill for two and one-half months, and the Assembly received the bill on April 1st. He conveyed the Assembly had been holding hearings every day, and sometimes twice a day on the SIIS bill. There was a hearing held the Saturday morning before the hearing in Elko on the SIIS bill. Mr. Carpenter felt the Assembly Labor and Management Committee had just started to get into the "nitty gritty meat of the SIIS reform." He presumed within the next week or week and a half the Assembly would be voting on the various provisions of the SIIS reform bill as it came out of the Senate.
Mr. Carpenter suggested producing a tape for an ordinary Nevada citizen to inform the people of the kinds of pressures and diversity of views that existed with the SIIS bill. He illuminated there were the Nevada Trial Lawyers Association (NTLA), the small and large businesses, the hospitals, the doctors and the physical therapists. He said the list went on and on and everyone was split on what should happen. He wanted the people to know the Labor and Management Committee had heard at least five to eight hours of testimony every day since April 1st. There were hard decisions that needed to be made, amendments to the Senate Bill that had to pass the Assembly Floor and then possibly be heard before a Conference Committee to get a consensus. Mr. Carpenter stated with SIIS there were pressures put on the legislators to try to end up with what every group thought the bill should be. He was hopeful the bill would solve the problem.
Mr. Haller brought to the citizens attention the revocation of the business license appeared in only two of the eight proposed business tax bills. Mr. Haller also mentioned there were only two of the eight proposed bills that provided for exemptions. Mr. Haller referred to the chart (Exhibit G) stating the chart made it extremely easy to see what each of the bills contained.
Nancy Ernaut, local businesswoman in Elko, thanked the committee for bringing the process to Elko. Ms. Ernaut alluded to the hazard elimination project that was being brought to the City of Elko by the Elko City Council. The bottom line was taking the parking away from the downtown business area affecting the downtown business core in a drastically negative way. Ms. Ernaut informed the committee she sat on the hazard elimination project committee representing the downtown businessmen. She wanted to apprise the committee of the situation. She spoke for the City of Elko and the downtown business people stating the downtown tax base would be lost as the businesses closed. Currently Elko had a thriving downtown business core and it was growing. Ms. Ernaut appealed to the committee to listen to the businessmen. The money came from the federal government down to the state level and from there to the city level. Elko wanted to keep the right to have its voice with regard to what happened to its local businesses. She voiced the businessmen wanted to keep the parking in downtown Elko and keep the business community in downtown Elko thriving.
Lee Griswold, Mayor, City of Carlin, was very pleased to see the committee appear in Elko County. Mr. Griswold commented both the federal and state levels of government were mandating more and more regulation, especially in the environmental areas; thus, impacting not only the state, but the cities as well. Mr. Griswold did not think many of the regulations were necessary. He thought the time would come when eventually the governments would strip Elko County of both its livelihood and the agricultural and mining industries. He thought it was a very scary situation in the long haul.
Mr. Griswold was assured the legislature was doing all it possibly could for the honor camps. He felt for the men employed by the honor camps that could be laid off on July 1st. He hoped the issue would be resolved soon. He voiced his problem with the fact $23 million had to be found to fund the honor camps. The honor camps had been funded in every budget. Just because Governor Miller saw fit to delete the funding from his budget did not mean the money was not available. He thought it was a matter of semantics of where the issues were placed.
Mr. Griswold expressed the business tax was in fact an unemployment tax. He said there were small businesses that used to employ many part-time employees in the summer, but rather than hire an extra employee and pay the tax, the employer would not hire the employee and do the best it could with what it had. The tax was a detriment toward creating some of the extra jobs that were needed. He pointed out Carlin was at its tax limit.
Mr. Marvel stated Governor Miller's reorganization plan called for placing the Nevada Environment Commission out in its own separate department. Mr. Marvel said he would fight that because it could be a dangerous thing and would affect agriculture and mining in Nevada. Mr. Marvel believed that was also the consensus of the members sitting on the Ways and Means Committee that the Nevada Environment Commission should be kept under the Department of Conservation and Natural Resources.
Caesar Salinski, a Nevada resident, echoed previous testimony with regard to the honor camps and the early release programs.
John Wahrenbrock, an independent insurance agent in Elko, thanked the committee for coming to Elko. He voiced his support for the honor camps. He mentioned the bill that required the advance payment of insurance premium taxes and stated it was bad fiscal planning. He thought the bill would force insurance companies to leave the marketplace as well as discourage other companies from entering the marketplace.
Mr. Wahrenbrock also discussed the bill which required the professional liability coverage policy for lawyers, doctors, dentists, chiropractors and other professionals provide coverage for sexual molestation acts. He conveyed that was very bad legislation and would drive carriers out of the market. He communicated when an intentional act occurred the individual should be held responsible, not the insurance carrier.
Mr. Wahrenbrock appreciated Mr. Ernaut's earlier comment on the budget and iterated revenues should be forecasted and then budgeted within the revenues.
Mr. Ernaut echoed the fact the prepayment of the insurance premium tax was extremely bad tax policy. The state was passing its cash flow problems onto the backs of the insurance companies.
Nancy Ernaut returned to the podium and asked what the status was on the firing at-will bill. Chairman Price said the bill was still in committee. Mrs. Ernaut wanted to voice her opposition to that bill for the record. She believed it would affect her small business in a negative way. She mentioned a few reasons why she did not support the firing at-will bill.
Ray Schuckmann, a Nevada citizen representing himself, voiced his support for the honor camps. He relayed a personal account commending the honor camp population. He implored the committee to find the money to keep the honor camp program in existence. He stated some of the other existing department budgets might need to be examined. He provided an example stating the two pamphlets provided to the public (Exhibits D and E) relating to insurance were very nicely done and contained excellent information, but he really did not need them. It was a question of what Nevada could get along without. He really thought he could get along without those pamphlets, but not without the honor camps.
Ned Eyre, a Nevada citizen representing himself, said he had been in Carson City sitting in on committee hearings and found he was just beginning his education. He expressed he learned how hard the legislators actually worked. He was amazed from day one and it has continued right on through.
Mr. Eyre conveyed he was concerned about bringing businesses into Nevada. He thought the business tax was a deterrent. He hoped an alternative could be found.
Mr. Eyre emphasized he had an opportunity to sit in the Ways and Means hearings, and he related his feelings for the realness of the needs presented to the legislators. He said the realness left him when he drove down the street and saw four guys sitting around a hole somewhere not doing anything. He observed the people in the state government structure did not have the incentive to produce. That was where Mr. Eyre observed the waste. He did not know what the solutions would be but believed more emphasis should be placed in that area.
Mr. Ernaut responded there was a bill in the Ways and Means Committee that would require program audits and zero based budgeting for state agencies. Hopefully that would get things started.
Hilton Davis, a Nevada citizen and injured worker representing himself, stated he had been dealing with SIIS for almost four years. He believed SIIS had high premiums due to the fact SIIS lost money through the savings and loans. The small business people were having to pay back the money SIIS gambled with.
Mr. Davis testified SIIS did not pay his medical bills. Mr. Davis held up a stack of medical bills SIIS had refused to pay. He received permission to obtain an operation and SIIS refused to pay off the medical bills. The bills had to be written of as an uncollectible debt.
Mr. Davis iterated SIIS did not lose its money through payment of injured workers, but through making bad investments.
Mr. Davis addressed a bill with regard to firing an injured worker. He asserted if a company had unsafe equipment and a person was injured, the company should not be able to terminate his employment. Mr. Davis communicated he was injured on a truck that had been reported unsafe for three months. He said during his stay in the hospital he was terminated. He believed the injured worker needed representation in Carson City.
Bill Cavender, a Nevada citizen representing himself, testified in opposition to the bill requiring the prepayment of the insurance premium tax. He echoed Mr. Wahrenbrock's previous testimony and added there would be a cost associated with the prepayment of the annual tax. The cost would be passed through to the policyholders of Nevada and in effect develop a hidden tax all the policyholders would share. He felt it was an important issue and a point that should be considered when deliberating that piece of legislation. He also pointed out the $30 million was a one shot revenue item. What would happen next year? There would still be the same problem of acquiring another $30 million. Mr. Cavender believed Nevada would only be able to address its fiscal crises by developing sound, consistent tax revenues and not finding a few million here and a few million there.
Mr. Neighbors conveyed the Taxation Committee had already heard testimony with regard to the prepayment of the insurance premium tax bill. According to some of the testimony, it had been indicated the prepayment would in fact be passed along to the consumer. Mr. Neighbors said it would be digging a hole two years down the road.
Paul Stevens approached the podium with a few additional comments to add to his previous testimony. He wanted to know the difference in the cost of holding biennial sessions and annual sessions. Chairman Price revealed the Research Division figured the sixty day and the ninety day version would in fact cost an extra $280,000 over the two year period. Chairman Price pointed out one of the things he found was the legislators receive a $2,800 allowance for telephone calls; therefore, that could be pulled out and in actuality the biennial sessions would only cost a few thousand less than an annual session each year because number of days would be reduced overall and so other types of things would be fit in. The cost would be comparable as long as constitutional language existed to cut off at a specific time.
Mr. Stevens addressed the issue of cutting expenses. It seemed to him Nevada always needed to raise more money, but what about cutting expenditures. Mr. Ernaut stated the budget was based on some major budget cuts.
There being no further business to come before committee, the meeting was adjourned at 6:06 p.m.
RESPECTFULLY SUBMITTED:
DIANNE LAIRD
Committee Secretary
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Assembly Subcommittee on Taxation
Saturday, May 8, 1993
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