MINUTES OF MEETING
ASSEMBLY COMMITTEE ON TAXATION
Sixty-seventh Session
June 29, 1993
The Assembly Committee on Taxation was called to order by Chairman Robert E. Price at 2:15 p.m., Tuesday, June 29, 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 Scott Scherer, District 2
STAFF MEMBERS PRESENT:
Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Sam McMullen, Nevada Broadcasters Association
Mark Smith, Executive Director, Nevada Broadcasters Association
Andrea Engleman, Nevada Press Association
Janice Wright, Deputy Director, Nevada Department of Taxation
Carole Vilardo, Executive Director, Nevada Taxpayers Association
Harvey Whittemore, representing Nevada Resort Association and McLane Co., Inc.
Rossi Ralenkotter, Director of Marketing, Las Vegas Convention/Visitors Authority
Denny Weddle, Las Vegas Chamber of Commerce
C. O. Watson, Nevada Association of Tobacco and Candy Wholesalers
Chairman Price announced the meeting would begin, as a quorum was present.
Chairman Price called for testimony on SB 518. The bill explanation is attached as EXHIBIT C.
SENATE BILL 518 -Clarifies that transmission of radio and television signals and sale of air time are not taxable transactions. (BDR 32-1977)
Sam McMullen, Nevada Broadcasters Association, introduced Mark Smith, Executive Director of the association. Mr. McMullen said SB 518 was the culmination of many months of work between the association, the Department of Taxation, Brenda Erdoes of the Legislative Counsel Bureau, and many others from the industry who were directly affected. The bill clarified the law with regard to the nontaxability of transmission of signals under the sales and use tax laws of Nevada. He said, in the Senate, the Department of Taxation had testified SB 518 was an appropriate statement as to intent. Neither radio nor television transmissions of news or information by data signal would be taxable; either from broadcaster to broadcaster, or broadcaster to the public, or the production and airing of any form of broadcast by radio or television. There would be no fiscal impact because no taxes were currently being charged on those services. The bill would only serve to codify and interpret current law and its application so there would be no question in the future.
Mr. Regan asked if advertising spots were now taxable. Mr. Mark Smith replied they were not, because the broadcasters were only selling transmission time.
Andrea Engleman, Nevada Press Association, testified SB 518 would be consistent with the exemptions presently in effect with the newspaper industry.
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ASSEMBLYMAN MYRNA WILLIAMS MOVED TO DO PASS SB 518.
ASSEMBLYMAN REGAN SECONDED THE MOTION.
THE MOTION PASSED BY UNANIMOUS VOTE OF THOSE PRESENT.
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SENATE BILL 501 (First Reprint) - Requires school district and certain counties to transfer money to other local governments in county to use combined tax rate. (BDR S-1036)
The bill explanation is attached as EXHIBIT D. Chairman Price asked Janice Wright to open testimony.
Janice Wright, Deputy Director, Nevada Department of Taxation, explained she had met with Bob Hadfield, Nevada Association of Counties, Marvin Leavitt, City of las Vegas, and Lorne Malkiewich, Legislative Counsel. The purpose of the meeting had been to develop language to address the White Pine County School District situation. The Nevada Tax Commission had met on June 25 to certify a combined tax rate not to exceed $3.64 for all White Pine County entities. This bill, as amended, stated the school district, out of available resources in the general fund, could transfer sufficient funds to make sure other entities, in aggregate, remained at the $3.64 level. The bill would apply to the City of Ely, and the towns of Ruth, McGill and Lund. The total cost to White Pine School District would be between $150,000 and $166,000.
Ms. Wright also explained provisions within the bill which addressed concerns with respect to any kind of judicial challenge which might stem from using school district monies for other local government purposes.
ASSEMBLYMAN MARVEL MOVED DO PASS SB 501.
ASSEMBLYMAN SCHNEIDER SECONDED THE MOTION.
THE MOTION PASSED BY UNANIMOUS VOTE OF THOSE PRESENT.
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ASSEMBLY BILL 779 - Requires construction of certain school in Mineral County. (BDR S-2108)
Carole Vilardo, Executive Director, Nevada Taxpayers Association, said since her opposition to the original fuel tax bill she had become far more involved in trying to reach an amicable solution in the Mineral County situation. She submitted an amendment which is attached as EXHIBIT E. She explained it amended the "whereas" language of the bill and removed the "hammer" provisions which would have mandated building of the Schurz school without a vote of the Mineral County voters. She reviewed the amendment language and its effect, section by section. In addition to being able to use a property tax levy for construction, this bill would also provide a supplemental allocation from sales tax and motor vehicle privilege taxes. The .5 cent sales tax provision would provide approximately $200,000 ($100,000 each quarter) and the one percent privilege override would provide an additional $100,000. The ability to use those alternative means would lessen the projected burden on the property tax by a twenty-cent offset for sales tax and a ten-cent offset for the privilege tax.
Allowing the county to use the privilege tax to partially fund the school construction also helped to ameliorate the allegation the Indians were not assisting in financing the school project.
Ms. Vilardo said the wording in the amendment provided no other county could utilize this funding mechanism. She noted the county would have to provide for the sales tax and vehicle privilege tax usage by ordinance and then the Department of Taxation forms and the Department of Motor Vehicle forms would have to be modified to reflect the new rates.
If the question was defeated by the Mineral County voters, all the special funding provisions would automatically be voided and would not be available for use at any future time, she said.
Chairman Price commended Ms. Vilardo and Ms. Wright on the extensive amount of work they had dedicated to resolving this matter.
Mr. Marvel asked what the increase in property tax would be, if the other revenue sources were not utilized. Ms. Vilardo said funding the Schurz school at $3.5 million and an estimated seven percent interest rate would add sixty to sixty-five cents to the property tax rate. Therefore, using these other tax revenues was really a once-in-a-lifetime opportunity for Mineral County citizens to buy down the impact on their property tax rate and still be able to build new schools.
Mr. Regan asked if the tribe had offered to invest other monies in the project. Ms. Vilardo replied she had discussed the matter with the representatives of the tribe. The tribe did not want to offer those funds up front because if the bond did not pass those funds would have to be used as a litigation fund. If the bond measure did pass those funds would be used for upgrades and purchase of new computer equipment for the school.
Mr. Neighbors said he felt very strongly about the state intervening in local government issues. To his knowledge the school at Schurz had never been officially condemned, either.
Ms. Wright discussed how much it would cost the Department of Taxation to modify their sales tax return forms, in the event the measure passed. Although such a potential increase had not been built into their budget, the department could go before Interim Finance when, or if, it became necessary. She elaborated the department of data processing charged the taxation department $10,000 to change the computer program when a change was made to any sales tax rate. Additionally, notice had to be made to all sales tax vendors which cost about $7,600. Reprint costs for the sales tax return forms themselves was about $18,000. Ms. Wright also pointed out any change in the sales tax should become effective at the beginning of a quarter only.
Mr. Neighbors noted there was a time lag between the time the ordinances were passed by the voters and the time they were effective.
Carole Vilardo asked, since this was a special measure for Mineral County to address this unique situation, she would request the committee indefinitely postpone AB 458, the Indian fuel tax bill.
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ASSEMBLY BILL 458 - Provides exemption for Indian reservations and Indian colonies from imposition of certain taxes on motor vehicle fuel and special fuel under certain circumstances. (BDR 32-290)
ASSEMBLYMAN NEIGHBORS MOVED TO INDEFINITELY POSTPONE AB 458.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION PASSED BY UNANIMOUS VOTE OF THOSE PRESENT.
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ASSEMBLY BILL 779 - Requires construction of certain school in Mineral County. (BDR S-2108)
ASSEMBLYMAN MYRNA WILLIAMS MOVED AMEND AND DO PASS AB 779.
ASSEMBLYMAN REGAN SECONDED THE MOTION.
THE MOTION PASSED.
ASSEMBLYMAN NEIGHBORS VOTED NO.
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ASSEMBLY BILL 456 - Makes various changes to provisions governing business tax. (BDR 32-93)
Harvey Whittemore, representing Nevada Resort Association, presented amendment number 1141 to AB 456 which is attached as EXHIBIT F. He discussed the proposed amendments and responded to questions from the committee by explaining the developmental process which had taken place during subcommittee meetings.
Mrs. Lambert said Mr. Scherer could explain the full time equivalent (FTE) provisions. The subcommittee had been concerned with an economic development element and a tourism element which could potentially have arisen as a problem in two sections of the bill. The subcommittee had not wanted to scare off either conventions and trade shows or motion picture companies. The motion picture division was, therefore, going to be acting as agent for the taxation department in dealing with those types of companies. She concluded everyone who had looked at the proposed amendments had said they would be easier to deal with than present law and it would be more equitable.
Scott Scherer, Assembly District 2, stated the full-time equivalent provision was very basic. It would provide any full-time employee, over thirty-six hours, would be counted as one employee. All part-time employees' hours would be aggregated for the quarter and divided by 468 (13 weeks times 36 hours) to develop the number of full-time equivalent employees. Then total number of FTE's would be multiplied by the $25 factor.
Mr. Whittemore said, by using the FTE formula, an employer would be using a pure head tax. He explained how the tax scale applied to convention and trade show operations. Mr. Whittemore explained the revenues generated last year in Clark County were about $25,000 compared to projected revenues under the new flat rate proposal of about $50,000. If a company did not choose to use a flat rate, then they could use a "booth day" per exhibition equivalent. The rate for those booth days had been established following discussions with Perry Comeaux of the taxation department. He stated a more equitable method of assessing the tourism related activities would attract more business to both the rural and urban areas of Nevada.
Mrs. Lambert said 36 hours had been used as designation of full time because it was the average work week in Nevada.
Responding to a question from Chairman Price, Ted Zuend said the use of the 36 hour factor for full time would mitigate any revenue loss from the change, although exact figures were not available. He said the national work week average was about 35 hours.
Mr. Marvel asked if there should be an additional fiscal note. Ms. Wright said she did not believe so because any increase in costs to the department could be absorbed or handled through interim finance, if necessary.
Rossi Ralenkotter, Director of Marketing, Las Vegas Convention/Visitors Authority, said his association supported the proposed changes.
Denny Weddle, Las Vegas Chamber of Commerce, also said they supported the amended bill.
ASSEMBLYMAN JOAN LAMBERT MOVED AMEND AND DO PASS AB 456.
ASSEMBLYMAN MYRNA WILLIAMS SECONDED THE MOTION
THE MOTION PASSED BY UNANIMOUS VOTE OF THOSE PRESENT.
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ASSEMBLY BILL 295 - Clarifies provisions governing sale of cigarettes by wholesale dealers. (BDR 32-1181)
Harvey Whittemore, representing McLane Co., Inc., informed the committee a resolution to the conflict on this bill had been attained. An agreement had been reached whereby manufacturer's invoice cost less a stated statutory discount of 2.5 percent would be established as the lowest cost which could be charged. He stated an amendment would be drafted and submitted to Ways and Means. He wanted the committee to be aware, since it was the committee of origin.
C. O. Watson, Nevada Association of Tobacco and Candy Wholesalers, affirmed Mr. Whittemore's remarks.
There being no further business to come before committee, the meeting was adjourned at 3:40 p.m.
RESPECTFULLY SUBMITTED:
LINDA CHANDLER LAW
Committee Secretary
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Assembly Committee on Taxation
June 29, 1993
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