MINUTES OF THE

      ASSEMBLY COMMITTEE ON WAYS AND MEANS

 

      Sixty-seventh Session

      June 27, 1993

 

 

The Assembly Committee on Ways and Means was reconvened by Chairman Morse Arberry, Jr., at 3:35 p.m., on Sunday, June 27, 1993, in Room 352 of the Legislative Building, Carson City, Nevada.  EXHIBIT A is the Meeting Agenda.

 

 

COMMITTEE MEMBERS PRESENT:

 

      Mr. Morse Arberry, Jr., Chairman

      Mr. Larry L. Spitler, Vice Chairman

      Mrs. Vonne Chowning

      Mr. Joseph E. Dini, Jr.

      Mrs. Jan Evans

      Ms. Christina R. Giunchigliani

      Mr. Dean A. Heller

      Mr. David E. Humke

      Mr. John W. Marvel

      Mr. Richard Perkins

      Mr. Robert E. Price

      Ms. Sandra Tiffany

      Mrs. Myrna T. Williams

 

COMMITTEE MEMBERS ABSENT:

 

      None

 

STAFF MEMBERS PRESENT:

 

      Mark Stevens, Fiscal Analyst

      Gary Ghiggeri, Deputy Fiscal Analyst

     

 

GENERAL APPROPRIATIONS ACT

 

Mr. Stevens distributed copies of the "back language" of the General Appropriations Act, the language following the list of appropriations, for the committee's review.  He explained Section 30 explained the appropriations had to be work programmed in two separate fiscal years and that transfers were subject to the provisions of NRS 353.215 and NRS 353.225.

 

Section 31 listed the 14 budget accounts with the authority to transfer monies between fiscal years.

 

Section 32 would allow the amounts appropriated to the Legislature to be transferred within the various divisions of the Legislative Counsel Bureau.

 

Section 33 would allow the Welfare Division to request additional funding in the event federal participation rates were reduced from those in effect on July 1, 1993; if additional services not funded in the Nevada Medicaid account were mandated by the federal government on or after October 1, 1993; or to cover any revenue shortfall in the net state benefit from amounts budgeted in fiscal years 1993-94 or 1994-95 to be received in the Nevada Medicaid account as a result of the passage of SB 494.

 

Mrs. Evans asked if Section 33 applied to all Welfare Division accounts or only the Medicaid account.  Mr. Stevens replied Section 33 applied to the Food Stamps Program, Aid to Dependent Children, Medicaid and the Employment and Training Program.  Those four budgets would be capped unless any of the circumstances delineated in Section 33 should arise.

 

Ms. Giunchigliani noted other legislation was pending (AB 682) which would allow the Welfare Division could approach the Interim Finance Committee for additional funding for other accounts if there were other financial problems during the interim.

 

Mr. Stevens noted the committee was not bound by this draft language. 

 

Ms. Giunchigliani pointed out the Welfare Division budgets had been hampered by caseload growth.

 

Mr. Stevens noted the 1991 General Appropriations Act had only provided the Welfare Division to approach the Interim Finance Committee for additional funding if the federal government mandated additional Medicaid services.  The 1993 Act would allow the Welfare Division two additional opportunities to appear before the Interim Finance Committee.

 

Section 33 and Section 34 would allow appropriations to the Welfare Division to be transferred within the various budget accounts of the division.

 

Section 35 provided that the amounts appropriated to the Department of Prisons could be transferred within the department's various budget accounts.

 

Section 36 would allow sums appropriated to any budget within a department to be transferred to other budgets within that department, up to the amount listed as vacancy savings within the budget account.

 

Section 37 provided for compliance by the Board of Regents of the University and Community College System with any request by the Governor to set aside appropriations made pursuant to the Act.

 

Mr. Price questioned whether it was appropriate policy for the Governor to be allowed to direct the activity of a constitutionally elected body.  Mr. Stevens explained this provision had been added to the Appropriations Act by the 1983 Legislature and it had been included in the Act since that time.  The purpose of the provision was to indicate the Legislature's position that the Board of Regents should comply with the Governor's request if budgets needed to be cut.

 

Mr. Humke pointed out the Board of Regents had never challenged the provision.

 

Mr. Stevens explained Section 38 was a $12,000 appropriation to the Public Employees Retirement Board for administration of the legislators' retirement system.

 

Section 39 stated that unencumbered balances of appropriations after each fiscal year would revert to the fund of origin.

 

Section 40 would allow the State Controller to advance funds up to $4 million temporarily to the Prison Warehouse account.

 

Section 41 provided the State Controller was to keep the state books open until the last Friday of August.

 

Section 42 provided for designation by the State Controller of up to a $50 million reserve to stabilize the budget.

 

Section 43 would allow the State Controller to transfer monies from one budget account to another with legislative approval.

 

 

Section 44 indicated the State Board of Health would increase fees to a level sufficient to meet revenues projected in the budget.

 

Section 45 would appropriate approximately $3.4 million to restore the Contingency Fund balance to $8 million.

 

Mr. Ghiggeri explained Section 46 would extend the reversion date for the supplies and equipment necessary to expand the Pioche and Indian Springs Conservation Camps from June 30, 1993, to June 30, 1995.  He noted Indian Springs was targeted for completion in June 1994 and Pioche was targeted for completion in March or April of 1995.

 

Ms. Giunchigliani asked what the balance of the appropriation was.  Mr. Ghiggeri responded the original amount of the Pioche expansion was $59,000.  The original amount of the Indian Springs expansion was $39,419.

 

Mr. Stevens said Sections 47 and 48 were included at the recommendation of the court subcommittee.  He explained there had been a shortfall in revenue from administrative assessments in the current fiscal year.  Instead of requesting a supplemental appropriation, the Supreme Court requested that it be allowed to utilize funds remaining from 1991 appropriations to make up the shortfall.

 

Section 49 was a contingent appropriation to the Prison medical budget in the event the compassionate release measure (AB 488) did not pass.

 

Section 50 was recommended by the DMV subcommittee to prohibit the Department of Motor Vehicles and Public Safety from operating an internal affairs program without first obtaining approval from the Legislature or the Interim Finance Committee.  It also provided that if such approval was obtained, the department would not utilize the internal affairs program to conduct investigations on non-commissioned personnel.

 

Mr. Stevens said Section 51 related to AB 409.  AB 409 contained a provision stating the Governor was to follow guidelines established by the Legislature if budgets had to be reduced in the interim period between legislative sessions.  He indicated the Budget Director preferred placing those guidelines in the Appropriations Act.  One of the advantages of doing so would be that the guidelines could be changed biennially.  If the guidelines were placed in statute, subsequent legislation would be required to amend the guidelines.

 

Mr. Stevens explained the guidelines could be triggered either by a shortfall in revenue or by a drop in the projected General Fund balance below a specified level.  He suggested the latter method would be best.  Section 51 stated that if the projected General Fund balance fell below amounts estimated by the 1993 Legislature, the Budget Director could report that information to the Board of Examiners.  If the Board of Examiners then determined the projected General Fund balance would fall below $35 million as of July 1 of either year of the biennium, the Governor could direct the Budget Director to set aside a reserve of not more than 15 percent of the total amount appropriated to any of the budgets within state government.  The reserve could not be set aside unless the Governor, on behalf of the Board of Examiners, submitted a report to the Legislature or the Interim Finance Committee stating the reasons why the reserve was needed and indicating the amount to be reduced from each budget account.  The Legislature or the Interim Finance Committee would then have to approve the setting aside of the reserve.

 

Ms. Giunchigliani asked if it had been determined the legislative guidelines would be included in the General Appropriations Act.  Mr. Stevens responded the guidelines could be included in the General Appropriations Act, in a resolution or the statute could be amended.

 

Ms. Giunchigliani stated another alternative was not to take this action.  Mr. Stevens agreed.  He noted the subcommittee had recommended that this action be taken.

 

Ms. Giunchigliani asked if revenues had been projected yet.  Mr. Stevens answered the slot route tax revenue was still unknown; however, he could provide some basic information about revenue projections and the General Fund balance.  He said fiscal staff projected a 3.5 percent increase in sales tax revenue each year of the biennium.  Gaming percentage fee revenue was projected to increase 6.4 percent in the current fiscal year, 6.3 percent in the first year of the biennium and 6.4 percent in the second year.  He noted the Budget Division and the Gaming Control Board projected increases in gaming revenue of approximately 8 percent in the first year and approximately 6.3 percent in the second year.  Fiscal staff projected an ending fund balance of approximately $56 million, depending on what happened with the slot route tax.

 

Ms. Giunchigliani asked how $35 million had been established to trigger emergency action by the Governor.  Mr. Stevens said the figure was based on the projected ending fund balance of $56 million.  That balance would have to fall $21 million before the Governor could take any action.  He pointed out the state would experience cash flow problems if the balance fell below $35 million.

 

Ms. Giunchigliani questioned how 15 percent had been determined as the maximum reserve to be set aside.  Mr. Stevens stated some guideline had to be provided for the Governor to follow.  He noted in the recent fiscal crisis, the Governor had set aside up to 20 percent of General Fund appropriations in some agency budgets.  Ten percent had been considered by the subcommittee but was not deemed sufficient to produce the level of savings needed.

 

Ms. Giunchigliani asked if the Legislature would be called in for special session if the ending fund balance fell below $35 million or if more than a 15 percent reserve was needed.  Mr. Stevens noted the Governor could not act unless the Board of Examiners determined the fund balance would fall below $35 million.  Then the Governor could not take more than 15 percent out of any one agency's budget.  Additionally, the plan would have to be approved by the Legislature, if it was in session, or the Interim Finance Committee.

 

Ms. Giunchigliani asked what priorities had been set.  Mr. Stevens said this language did not set forth priorities but the Legislature could set priorities if it so chose.

 

Ms. Giunchigliani inquired whether the Governor would be able to set aside reserves from the Distributive School Account.  Mr. Stevens said this provision would not make the current statute stronger or weaker regarding the Distributive School Account.

 

Mr. Stevens said it was important for the committee to decide if the Appropriations Act was the proper vehicle for setting out these guidelines.  He noted, traditionally, the Appropriations Act was not amended.  Therefore, the language had to be drafted to meet the committee's needs or the guidelines would have to be introduced in some other form.

 

Mr. Price noted NRS 353.225 spoke specifically to the Distributive School Account.  He pointed out the Appropriations Act altered NRS 353.225.  Mr. Stevens explained AB 409 proposed amending NRS 353.225 to comply with the Appropriations Act.

 

Ms. Judy Matteucci, Budget Director, stated AB 409 attempted to amend the current statute to direct the Governor to use the guidelines contained in the Appropriations Act and returning any remaining reserves to the agencies.

 

Ms. Giunchigliani said she would not want this issue to make or break the Appropriations Act.  She suggested separating the guidelines from the Appropriations Act.

 

Mr. Lorne Malkiewich, Legislative Counsel, explained during the recent fiscal crisis the Governor had attempted to hold back salary increases for state employees.  Subsequently, the Supreme Court struck down the Governor's action, stating he had no authority for holding back salaries.  The case raised questions regarding the scope of the Governor's authority under NRS 353.225.  The language included in the Appropriations Act was an attempt to add standards to NRS 353.225 to make it more legally defensible.  He indicated statutory authority existed for making the reserves.  He also pointed out the Appropriations Act represented "session law", which would complement the statute or override the statute to the extent it was inconsistent.  He explained the standards would be in effect for the 1993-95 biennium only.

 

Mr. Malkiewich stated the language in the Appropriations Act had been coordinated with NRS 353.225.

 

Mr. Price inquired about the Distributive School Account.  Mr. Malkiewich said NRS 353.225 would allow reserves from all accounts, including the Distributive School Account.

 

Mr. Price asked if the Appropriations Act would override NRS 353.225.  Mr. Malkiewich responded the Appropriations Act would override any inconsistent language in NRS 353.225; however, for the most part, the language was consistent.

 

Mr. Price noted the Legislature or the Interim Finance Committee must approve the setting aside of the reserve.  Mr. Malkiewich stated this process would be similar to budget transfers which were approved by the Interim Finance Committee.  Mr. Price inquired whether this had been the procedure in the past.  Mr. Malkiewich said it had not.

 

Mr. Price pointed out some people questioned the constitutionality of the Interim Finance Committee acting on behalf of the entire Legislature.  Mr. Malkiewich stated the Interim Finance Committee did not initiate any action.  If it did so, it would be usurping legislative and, perhaps, Executive Branch authority.  The Interim Finance Committee merely approved proposals submitted by the Executive Branch.  In the absence of approval by the Interim Finance Committee, the budget would serve as the final legislative word.  The Interim Finance Committee approved legislatively approved exceptions to the budget.

 

Mr. Malkiewich explained Interim Finance Committee approval was the condition for changing the budget.  If there was anything constitutionally defective in that condition, the budget would stand.

 

Mr. Malkiewich said the guidelines proposed in the Appropriations Act were patterned after that procedure.  He said there was a good argument in defense of the procedure and there had never been a constitutional challenge to it.

 

Mr. Price questioned whether the Interim Finance Committee would be more constitutionally sound if its makeup was the same as the Legislature's (one person, one vote).  Mr. Malkiewich said the concern was delegation of legislative authority and any time any body other than the full Legislature was sitting, that concern would remain.  He reiterated the Interim Finance Committee was not taking legislative action but only fulfilling a condition precedent previously approved by the Legislature as a whole.

 

Ms. Giunchigliani asked if the changes proposed in AB 409 and the Appropriations Act would have altered the Supreme Court decision if they had been in effect at the time.  Mr. Malkiewich said that case was based on a different issue--the legislative mandate for a salary increase, for which there was no exception.

 

Ms. Giunchigliani inquired how AB 409 and the Appropriations Act would affect the Distributive School Account.  Mr. Malkiewich said the proposed changes would provide the Governor a stronger legal argument for setting aside a reserve from the Distributive School Account.  He noted the 1983 Legislature had statutorily included the Distributive School Account with other accounts from which reserves could be set aside.

 

Ms. Giunchigliani asked about priorities.  Mr. Malkiewich said the Legislature could establish priorities.

 

Mr. Price questioned whether the Legislature could recess, subject to the call of the Speaker, in anticipation of an emergency session.  Mr. Malkiewich said he believed there was a provision in the constitution which would allow the Governor to send the Legislature home.  He said he knew of no legal prohibition against doing so.  He pointed out; however, if both houses adjourned for more than three days, both houses had to consent to the extended break.

 

There being no further business, the meeting was adjourned at 4:42 p.m.

 

                                                RESPECTFULLY SUBMITTED:

 

 

                                                _________________________

                                                C. Dale Gray

                                                Committee Secretary

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Assembly Committee on Ways and Means

June 27, 1993

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