MINUTES OF MEETING
ASSEMBLY COMMITTEE ON TAXATION
Sixty-seventh Session
May 11, 1993
The Assembly Committee on Taxation was called to order by Chairman Robert E. Price at 1:35 p.m., May 11, 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:
Assemblyman Christina R. Giunchigliani
STAFF MEMBERS PRESENT:
Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Carole Vilardo, Executive Director, Nevada Taxpayers Association
Perry Comeaux, Executive Director, Nevada Department of Taxation
Peter Krueger, Nevada State Executive, Nevada Western Petroleum Marketers Association
Dr. Thomas Klimo, Las Vegas Paiute Tribe (via telephone link)
Kenny Anderson, Las Vegas Tribal Chairman (via telephone link)
Herman F. Staat, Mineral County Commissioner
Marlene S. Bunch, Mineral County Clerk and Treasurer
Donna Glazier, Mineral County School Board member
Art Hinkley, President, Western Energetix Corporation, Reno Exxon Distributor
Carl Sam, Jr., Manager, Four Seasons Market
Daryl Capurro, The Nevada Motor Transport Association
Brian Wallace, Chairman, Washoe Tribe of Nevada and California
Viola Kennison, Tax Director, Walker River Paiute Tribe
Pam Miller, Government Affairs Director, The Associated General Contractors of America, Reno Office
B. J. Sullivan, President, Clark & Sullivan Contracting, Reno
Sidney Doan, Owner/President, Sierra Sid's Auto/Truck Plaza, Sparks
Jim Pruss, Principal of Schurz Elementary School, Chairman Mineral County School District Bond and Facilities Committee
Stacy L. Stahl, Tribal Chairman, Yerington Paiute Tribe
Thomas C. Barton, Chairman Fallon Paiute-Shoshone Tribes
Chairman Price announced he would continue to take testimony on AB 458. However it was his intention to begin with testimony on AB 423 sponsored by Assemblyman Chris Giunchigliani.
The bill explanation for AB 423 is attached as EXHIBIT C.
ASSEMBLY BILL 423 - Establishes policy for administering taxes.
Chris Giunchigliani, Assembly District 9, as sponsor, testified in support of the bill. She read from her written testimony, attached as EXHIBIT D.
Mr. Marvel asked Ms. Giunchigliani how AB 423 differed from the Taxpayer Bill of Rights passed last session. Ms. Giunchigliani responded the Taxpayer Bill of Rights only established what ought to be known by the public. It had not established taxing policy. This bill in concert with companion legislation, ACR 33, would delineate tax policy by spelling out principles from The Wealth of Nations by which a tax should be judged: whether it was fair, equitably administered, easy to understand, et cetera.
In response to a comment from Chairman Price, Ms. Giunchigliani explained normally policy issued from the executive or legislative branch of government; however, it had not been dealt with by either. Therefore, in order for the legislature to more easily address the policy issues, legislative rules had had to be amended by ACR 33. Then, AB 423 had been drafted to include the Tax Commission in establishment of tax policy and administration thereof by statute.
Mr. Haller asked what else was included in Chapter 360. Ms. Giunchigliani informed Mr. Haller Chapter 360 dealt exclusively with the administrative procedures of the Department of Taxation.
Carole Vilardo, Executive Director, Nevada Taxpayers Association, testified in support of AB 423 and its companion Concurrent Resolution which had been passed out by the Assembly Committee on Elections and Procedures. She stated AB 423 was necessary in order to cause the Tax Commission and the Department of Taxation to effectively and uniformly follow the criteria set forth as to tax administrative procedures. She added this was an extension of the adoption of the Taxpayer Bill of Rights from the 1991 session.
Mr. Spitler said he was not sure tax forms could be made brief or simple enough. He asked what standard of measure would be used to determine compliance with the criteria set forth in AB 423. Ms. Giunchigliani stated there was a bill in Government Affairs currently which would address that issue over the next two years. Its goal was to consolidate city, county, state and federal forms which required the same or similar information relative to fees or taxes in order to overcome the present problem of duplicity. She added various groups were working toward such goal. She also replied to Mr. Spitler's further question that ACR 33 defined some of the terms ... simple and brief and easily understood ... which gave the Tax Commission the philosophical guidance to use in developing a better system. Achieving the solution would be in establishing impetus, part would be setting a philosophy and part would be initiating use of those definitions.
Mr. Haller stated he felt Nevada had some of the country's worst reporting forms.
In response to a question posed by Mr. Regan, Carole Vilardo stated the term "persons", which appeared on page 2, subsection 5, was defined in current law in NRS Chapter 360. It covered all forms of business structure.
Perry Comeaux, Executive Director, Department of Taxation, responded to a question from Mr. Marvel. He stated he thought the department sent out seven or eight different forms: one for each tax administered by the department. He also added he felt they could probably all be combined into a single form. However, what had prevented the department from combining forms in the past was an inability of the data processing system to handle such combination of information. He explained the department was working on combining two or three taxes at this time.
Responding to a question from Mrs. Williams, Mr. Comeaux elaborated the primary difficulty in combining forms had to do with the physical processing of the forms. The information contained within them was used by various departments which were responsible for collecting the revenues and statistics for various purposes. Mrs. Williams did not feel computer readiness was necessarily the criteria by which the decision should have been made to implement a combined reporting form. Mr. Comeaux commented the mechanics dealing with the size of such of report might have caused a handling problem.
Ms. Giunchigliani interjected passage of AB 423 would give the Department of Taxation the opportunity to combine with other agencies to compile and design better forms. There was a difference, she felt, between recognition of problems and having the tools to implement the changes required to solve them.
Ms. Vilardo submitted a copy of the Taxpayer Bill of Rights which is attached as EXHIBIT E.
ASSEMBLYMAN REGAN MOVED DO PASS AB 423.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * * * * * * *
Chairman Price Called for testimony to continue on AB 458.
ASSEMBLY BILL AB 458 - Provides exemption for Indian reservations and Indian colonies from imposition of certain taxes on motor vehicles fuel and special fuel under certain circumstances. (BDR 32-290)
A memorandum submitted by Ted Zuend, Deputy Fiscal Analyst, which responded to a question posed to Lorne Malkiewich (relative to other states which might have similar waivers of fuel tax) at the previous meeting on May 6, is attached as EXHIBIT F.
Peter Krueger, Nevada State Executive of the Nevada Western Petroleum Marketers Association, stated he wanted to inform the committee that the previously referred to smoke shop property located on South Virginia Street in Reno and owned by the Washoe Tribe (Reno-Sparks Indian Colony) was certainly large enough to accommodate a gas station facility, contrary to prior testimony.
Mr. Krueger read from his prepared testimony which is attached as EXHIBIT G. He added, although the school needed to be built for the children in Schurz, he felt using nontraditional methods to accomplish the funding was not the proper answer to the problem, especially to sacrifice the Highway Fund for such use. He said if Mineral County was unwilling to fund the project, perhaps the state should do it.
Chairman Price announced a caller, Dr. Thomas Klimo of the Las Vegas Paiute Tribe, was on-line listening to testimony through the monitoring system in the hearing room. Chairman Price asked Dr. Klimo for his testimony.
Dr. Klimo stated he and Tribal Chairman, Kenny Anderson, wanted to inform the committee it was not the intention of the tribe to develop any large-scale fuel service facility in the Las Vegas area. He said the tribe had obtained two separate studies: one through Bob Cashell's group (formerly Boomtown) and one from independent engineers in Albuquerque, New Mexico. Both studies had concluded the potential for a profitable project was not feasible. Therefore, the tribe had put such a project very much on the back burner.
Dr. Klimo, also an economist, stated he felt it was interesting to note the repeated references to the tribes' activities impacting negatively upon the state's economy. Yet, very rarely did anyone protest the negative impact of state legislation upon the tribes. Although the sovereignty of the tribes had been upheld through the courts, it was insulting, looking at the histories of intergovernmental agreements, for anyone to insinuate the tribes would not live by any agreement into which they entered.
Responding to a question from Mr. Schneider, Dr. Klimo stated the location of the Paiute Reservation in Las Vegas was off Highway 95 between the Kyle Canyon Turnoff and the Indian Springs area.
Chairman Price thanked Dr. Klimo for participating by phone and informing the committee of his position.
Herman F. Staat, Mineral County Commissioner, spoke in opposition to AB 458. His prepared remarks are attached as EXHIBIT H. Mr. Staat interjected he felt it would be more acceptable to put a sales tax on gasoline for all of Nevada and earmark those revenues for new schools and maintenance of those schools. He said that would reduce the burden on the property tax and everyone would pay their fair share.
Chairman Price explained to Mr. Staat, putting a sales tax on gasoline was not constitutional in the state of Nevada, so such was not an option. A brief discussion followed.
Marlene S. Bunch, Mineral County Clerk and Treasurer, read from her prepared text and submitted and reviewed various information relative to the defeated 1988 school bond issue, all of which is attached as EXHIBIT I.
Mrs. Lambert asked Ms. Bunch how many revenue raising issues had been on the 1988 ballot. Ms. Bunch stated there were a total of six questions on the ballot and two of the potentially revenue increasing questions had passed: one which provided for a fire truck in Walker Lake and Mina and one for the Care-and-Share Program.
In response to Mr. Haller, Ms. Bunch said she had polled the majority of county public works departments and had found none in support of the bill. Mr. Haller said he felt employees at public works offices would only express their personal opinions not necessarily the feelings of all the citizens of the county. She stated she had asked only for basic statistics and whether there was land available for expansion of fuel station facilities in the tribal land area.
Mrs. Williams asked Ms. Bunch what other options she felt were available. Ms. Bunch said meetings had been held and would be held with Representative Barbara Vucanovich in pursuit of federal funding possibilities.
Donna Glazier, nine-year member of the Mineral County School Board, stated the board had worked very hard to gain passage of the 1988 bond issue. She said getting support for the measure had been very difficult. She also expressed surprise at some of Ms. Bunch's remarks. She said she lived in Schurz and during the time she had lived there, she had never seen road maintenance done even though the county was responsible for such maintenance. She explained the money which was needed for the Schurz school had been less than the proposed Hawthorne school. However, the rumor was circulated prior to the election the Tribal Council wanted the new school so it could be used for council meetings. She also said the Mineral County Clerk had been one of the people who had not supported passage of the bond issue for the school.
Since the 1988 election, Ms. Glazier said, there had been a committee working on gaining enough support to put the issue on another ballot or find another solution. The economy in Mineral County had deteriorated since 1988 and they did not feel the bond issue had a chance of passage.
Mrs. Lambert asked Ms. Glazier if she was involved in the meeting with Barbara Vucanovich. Ms. Glazier stated, as a school board member, she was not aware of those meetings nor had she been informed of them. She did not believe the superintendent had been involved either. She also doubted federal funds would be forthcoming because the board had extensively researched such sources over the last nine years, without success.
Art Hinkley, President of Western Energetix Corporation, Reno Exxon Distributor, testified his company owned one truck stop on I-80 out of Reno and several gasoline stations in the area. He stated he, too, wanted to find a way to fix the school or do whatever else needed to be done. However, he did not believe AB 458 was the solution. He said his concern was related to what could potentially happen within the petroleum industry. He explained his fears related to predatory pricing and the advantage of the plausibly larger profit margins available (because of the ability to use a portion of their tax revenues to reduce price rather than using it as tax revenue for capital improvements) to the tribal businesses who might reduce their prices to establish a greater market share. He also mentioned his concern over the loss of revenue for the Highway Fund.
Chairman Price reviewed some of the testimony presented in the previous meeting in order for Mr. Hinkley to understand what had been submitted and discussed prior. Chairman Price pointed out any abuse of the revenues generated from passage of this bill could be withdrawn during the next legislative session if any offensive situations arose. Mr. Hinkley said two years would be a long time to wait to address a problem if it occurred.
Mr. Spitler pointed out if there was a sunset provision in AB 458, there would be no guaranteed ability to bond for construction.
Ted Zuend supported Mr. Spitler's comments. He also explained even without a sunset provision, if the bill was repealed in 1995, the school district would be in the same bind with no revenue stream to pay for construction of the school. The bond would become payable immediately in that instance, Mr. Spitler confirmed.
Mr. Neighbors said he could not believe the legislature would even attempt to repeal the measure if it was passed. He said he felt he could not support the bill if any provisions were included which would make it applicable to only counties with certain population requirements because it would be inherently discriminatory.
Mr. Haller interjected the Reno-Sparks Indian Colony's use of sales tax monies for improvements to their reservation had been exemplary. He also stated he did not see a problem with the potential for major fuel sales at the smoke shop location on South Virginia Street.
Carl Sam, Jr., Manager, Four Seasons Market (Washoe River Paiute Tribe's smoke shop) in Schurz, said he had heard significant testimony related to business practices which might occur if AB 458 passed.
Mr. Sam presented and read from prepared testimony attached as EXHIBIT J. There were no questions for Mr. Sam.
Daryl Capurro, The Nevada Motor Transport Association, spoke in opposition to AB 458. He stated many people had asked him about the bill. He wanted to add to his prepared testimony a brief comment. He stated in the short term, if the bill passed, it could be very beneficial to his industry, inasmuch as an increase in sales of petroleum products might occur. However, in the long term, he felt it was bad tax policy for the state of Nevada. He explained 70 percent of the communities in Nevada were served only by truck.
Mr. Capurro thought even though there was a need for a new school in Schurz, the concern for the integrity of the Highway Fund which provided for the care and maintenance of the state's highways needed to be protected. He also reiterated the constitutional prohibition against using Highway Fund moneys for anything other than road-related costs. He stated the Legislature was the guardian of the state's constitution and needed to protect against diverting moneys from the fund.
Mr. Capurro continued to testify from his prepared remarks attached as EXHIBIT K.
In response to Mr. Capurro's charge that Mineral County should handle the construction of the new school with county revenues, Chairman Price pointed out the low property valuations in Mineral County would result in the generation of less than $10,000 per one cent increase in the tax rate. Mr. Capurro said he was referring additionally to the state share in the property tax assessment.
Chairman Price asked Mr. Capurro if the proposed weight/distance tax would also be strictly dedicated to the Highway Fund. Mr. Capurro explained the constitution provided that any tax imposed on fuel, registration or any other motor vehicle purpose tax had to be dedicated to the Highway Fund. Therefore, the proposed weight/distance tax or any form of third structure tax, second structure fuel tax, or first structure registration fee would have to go to the Highway Fund.
Mr. Neighbors interjected he had had staff prepare figures based on construction of a $3.5 million school. Extrapolating from those figures, he offered it would cost the people of the state approximately forty-five cents per person, per year to fund the school construction. He stated he had begun meetings with Nevada Association of Counties, the League of Cities and was going to meet with the Nevada Taxpayers Association to see if some option could be found to build the school. But, he did not support this bill as the proper vehicle.
Mr. Capurro concluded, if the bill passed, there would have to be a concern on the part of truckers purchasing fuel in the state of Nevada. Such concern would be relative to prompt refunds of IFTA monies and compliance with IFTA rules by the applicable tribal authorities. Any hint of a problem in that area could cause severe problems and would cause truckers to buy where they could be assured of compliance.
Brian Wallace, Chairman, Washoe Tribe of Nevada and California, said he felt there had been substantive testimony given supporting passage of the bill. He felt the government-to-government relationship which had built up since 1975 between Nevada and the tribal governments had been considerable and had affirmed their beneficial historical association. He recalled his experience working with the legislature to establish sales tax concessions when Paul May was chairman of the Taxation Committee. He said those and following agreements had lasted the test of time. He felt statutory amendments were an affirmation of those understandings which sprang from the Coleville decision referred to previously.
Mr. Wallace articulated the accommodations found in NRS and the Nevada Administrative Code affirmed those understandings and dealt with jurisdictional matters, internal controls, enforcement and compliance, auditing and marketplace adjustments with regard to pricing and discounting of sales, as well as accountability between the two parties. He explained the tribes, even before Nevada was created as a state, had the authority to impose taxes and that taxing ability had not been altered by the United States Congress.
He suggested this bill was simply an extension of an historical understanding between the affected entities.
Mr. Wallace also indicated this was another step by the tribes to enlarge and strengthen the fledgling entrepreneurial steps being taken on reservations in order to move toward a self-driven, sustainable, private sector economy. He explained a revolving loan fund was only now being established to assist in that development. The reservation-generated monies were also being used, in part, for the creation of educational and vocational scholarships. He said there was also a need for the surrounding populations to recognize the significant contribution of M1 and M2 the tribes made to the local community and counties where they presided.
Mr. Wallace added it was the tribes' intent to study the economic interplay and benefits relative to the cooperative investment between the state and the tribal governments. With regard to previous comments pertaining to private property and the lack of tax base derived from non-Indian institutions; those same institutions did received in-lieu-of impact aid to offset the loss of the tax base revenues, in a real sense. Additionally, the in-lieu-of aid not only applied to Indian reservations but also to federal military reservations and installations. He judged there was significant program money inflows which were channelled through the reservations into the local economies.
Mr. Wallace said he could not believe anyone was taking seriously the issue of competitiveness with other fueling stations. He elaborated markets were driven by the economies of the situation and markets did not fall from heaven, just because of a statutory change. He stated existing businesses on reservations had not driven any other company out of business as yet and he did not see it happening in the future. He said it all really boiled down to who made the bettermouse trap. He said the Washoe Tribal Smoke Shop kept its customers because they liked shopping there, even when prices were comparable elsewhere. He said Wal-Mart had an even more distinct advantage than they did in respect to pricing discounts.
Mr. Wallace briefly discussed reservation pricing structures, sales techniques and reporting requirements. He also added, occasionally costs of doing business on the reservation were more than off-site due to having to comply with federal regulations, such as the Davis-Bacon Act. He stated he could understand those who testified against the bill felt they had to protect themselves to preserve their own markets.
He maintained the interests of consumers also had to be taken into consideration. He asserted the protectionism which had been demonstrated was an attempt to fix competitiveness and fix prices in what was supposed to be a free marketplace. He indicated the market should be open to everybody, not just the elite. He indicated the threat of the loss of millions of dollars was simply sensationalism.
Mr. Wallace pointed our there have been many prejudices against the tribes. They did not receive the right to vote nor enjoy the benefits granted by the Bill of Rights until 1968. They were still fighting in Congress for religious freedom and protection of religious sites. He stated those recent achievements had allowed them to become more politically active. He also noted trust land acquisition off reservation was statutorily prohibited by federal law. Mr. Wallace discussed the tribes' compliance with previous intergovernmental agreements and stated he resented the insinuation the tribes would not adhere to future agreements.
In closing, Mr. Wallace stated he felt it was imperative to invest in the future of the children by building the new school at Schurz.
In answer to a question from Mrs. Lambert, Mr. Wallace stated the tribe had the authority to levy taxes on its own members and did so in the case of personal property. However, they had no real property tax base upon which to levy due to being located on federal reservation lands. Therefore, he did not believe the individuals who lived on the reservation would be able to contribute substantially to the cost of the school.
Viola Kennison, Tax Director for the Walker River Paiute Tribe, also explained there were currently improvements on nontrust lands within the reservation which were an annual tax source of approximately $8,000 for Mineral County.
Mr. Wallace stated, too, one of the reasons alternative financing plans were being explored was that institutional financing was not a valid opportunity due to the land issue. Even though the land was a large, visible asset, it could not be collateralized to acquire credit for tribal projects.
Mr. Spitler stated Mr. Wallace's points regarding the existing good government-to-government relationship, the affirmation of such relationship through this legislation, and current good faith relationships were well taken. Mr. Spitler said he believed in those relationships and wondered if Mr. Wallace would agree there would exist an obligation on the part of the tribes, if AB 458 passed, to help maintain the Nevada roads which carried customers to their establishments.
Mr. Wallace's reply was twofold. First, the roads across most reservations were not built for the benefit of the Indians who lived there. Second, they already made substantial payments for those roads through impositions made by the federal government. However, as to an institutional interest in subsidizing the usage of those roads, he felt there was room for discussion based on some type of an equity system.
Mr. Spitler rejoined he felt participation in maintaining a roadway system was not always an issue of equity because of Nevada's vast system of roads and limited population areas which had to be served by it. Mr. Wallace said he felt discussion would be in order to establish a partnership arrangement.
Chairman Price stated other persons present who wished to add information or testimony could do so by submitting it into the record through the secretary.
Pam Miller, Government Affairs Director, The Associated General Contractors of America, Reno, was next to speak. She introduced B. J. Sullivan, President, Clark & Sullivan Contracting of Reno.
Ms. Miller submitted written remarks for the record which are attached as EXHIBIT L. She explained Mr. Sullivan's company had built many schools within Nevada and was present to give some facts as to the costs and standards which were applicable to construction of those facilities, regardless of location.
B. J. Sullivan explained Clark & Sullivan operated both in Nevada and California. They had constructed $65 million worth of school facilities in Nevada over the past four-year period.
He stated they had been awarded all the construction contracts for the last issue of school bonds in Washoe County. He disclosed the construction cost range, per square foot, for the Washoe County elementary schools ranged from $68 to $71. The average cost was $70 per square foot which included everything from the foundation and footings to the roof and the carpet and blinds, not including the site cost or paving. The per student cost ran approximately $64 per student.
Mr. Sullivan went on to estimate the cost of the school at Schurz at about $900,000 for the building itself. In addition to that cost, there would be another $100,000 to complete the public areas. The costs of books, based again on figures from Washoe County, which would be approximately $500 per student, would add $81,000. Site work, including roads, parking, septic systems and wells, would add another $200,000. Pulling those numbers together, he estimated a total turnkey cost (including landscaping, architectural fees, ADA compliance and those costs previously set out) of $1.2 - $1.5 million for 140 students. He said that would include compliance with all federal regulations.
There were no questions for Mr. Sullivan.
Mr. Neighbors told Mr. Spitler there had been a preliminary meeting with NACO and the League of Cities. He said there would be additional meetings and anyone wishing to be included should advise him of their interest.
Chairman Price concluded the testimony on AB 458; however the following exhibits are made a part of this record:
Testimony of Sidney Doan, Owner and President, Sierra Sid's Auto/Truck Plaza in Sparks, attached as EXHIBIT M.
An article by Jack Peckham, entitled Indian tax-free sales threat seen exploding April 1, attached as EXHIBIT N.
A chart submitted by Assemblyman Regan, entitled Percent of Nevada's Population Per County -- 1990, attached as EXHIBIT O.
Testimony of Jim Pruss, Principal of Schurz Elementary School, Chairman of Mineral County School District Bond and Facilities Committee, attached as EXHIBIT P.
Letter and resolution from Stacy L. Stahl, Tribal Chairman, Yerington Paiute Tribe, attached as EXHIBIT Q.
Statement of Thomas C. Barton, Chairman Fallon Paiute-Shoshone Tribes, attached as EXHIBIT R.
There being no further business to come before committee, the meeting was adjourned at 3:35 p.m.
RESPECTFULLY SUBMITTED:
LINDA CHANDLER LAW
Committee Secretary
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Assembly Committee on Taxation
Tuesday
May 11, 1993
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