MINUTES OF THE
ASSEMBLY COMMITTEE ON WAYS AND MEANS
Sixty-seventh Session
Wednesday, January 20, 1993
The Assembly Committee on Ways and Means was called to order by Chairman Morse Arberry, Jr., at 8:05 a.m., on Wednesday, January 20, 1993 in room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
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
TAX AND BUDGET BACKGROUND INFORMATION
Chairman Arberry called the meeting to order at 8:05 a.m., Wednesday, January 20, 1993. Chairman Arberry then turned the meeting over to members of the Fiscal Analysis Division staff for presentation regarding the budget process.
Mr. Gary Ghiggeri, Deputy Fiscal Analyst, distributed a report entitled "Budget Definitions" (Exhibit C), which consisted of terms and definitions the committee would need to become familiar with when reviewing the Executive Budget. Mr. Ghiggeri explained several terms briefly. For example: authorization - is the authority granted by the Legislature that allows state agencies to collect and expend funds from sources other than the General Fund or Highway Fund; supplemental appropriation - an additional appropriation to meet an actual or anticipated deficit in an ongoing program; one-shot appropriation - is an appropriation made for a particular purpose that is anticipated to not be continued; general fund - is the major operating fund of the state and presently receives its income from the Sales Tax, Gaming Taxes, Mining Tax, Insurance Premium Tax, Casino Entertainment Tax, Cigarette Tax, Liquor Tax and miscellaneous sources such as interest, licenses, and fees and fines; highway fund - derives its income from state gasoline taxes and fees on the use and operation of motor vehicles; classified employees - employees who are covered under the state's merit system; unclassified employees - employees not covered by the merit system and are usually appointed by the Governor, some other elected official or an unclassified agency head; Board of Examiners - is established by Art. 5 Sec: 21 of the Nevada Constitution and is comprised of the Governor, Secretary of State, and the Attorney General; Reserve for Statutory Contingency Fund - is administered by the Board of Examiners, was established in 1963 to pay specific claims against the state; and the Interim Finance Contingency Fund - is money in the Contingency Fund which may be allocated and expended for emergency use to supplement regular legislative appropriations which failed to cover unforseen expenses and to meet expenses under the requirements of law.
Mr. Marvel asked for an estimate of monies available for One-shot appropriations. Mr. Stevens, Fiscal Analyst, stated the anticipated fund balance, as of June 30, 1993, would be provided with the Executive Budget, Monday, January 25, 1993.
Mrs. Evans requested an estimated cost of the Distributive School Account supplemental appropriation. Mr. Stevens stated the amount would be approximately $50 million.
Mr. Stevens gave a brief history of the new budget format. Mr. Stevens stated the 1989 legislative session had formed an interim committee to study the budget process. Recommendations from the committee were reviewed and adopted by the 1991 Legislature, including a $300,000 appropriation to the Budget Division to develop the data processing system for the new budget format. The 1991 Legislature also incorporated a two-week recess period for review of the Executive Budget. A subsequent interim committee was established after the 1991 legislative session to monitor systems progress and to define specific categories within the new budget format.
Mr. Stevens distributed sample portions of the Executive Budget (Exhibit D) and explained the new budget format had divided each budget into three sections: (1) base budget, (2) maintenance or current services budget, and (3) enhancement programs. He explained the base budget as actual expenditures from the last fiscal year, for example, the base budget for FY 94 is "based" on actual expenditures in FY 92. The maintenance or current services budget presented the amount needed by an agency to continue the same level of service. Enhancement programs were identified separately in the budget document. Mission statements and program measurement data were included in the new budget format for each budget account and individual line item expenditures and detailed position lists had been eliminated.
Chairman Arberry asked if detailed position lists could be obtained. Mr. Stevens explained the new budget format would not provide the committee with the same level of detail found in the previous budget format; however, the Fiscal Analysis Division staff had access to detailed budget accounts and could provide the information to the committee. Further, the new budget format was designed to focus on the agency's mission and program administration rather than on line item expenditures.
Mr. Stevens referred to a sheet entitled "Definitions" (Exhibit E), which consisted of detailed definitions for the new budget terms base budget, current services budget, and enhancement programs. The terms were defined by the 1989 Interim Committee to Study the Budget Process (SCR 21 of the 66th session), and authorized by the 1991 legislative session. Mr. Stevens explained the base budget began with actual expenditures; for example, the first fiscal year in the next biennium, FY 94, had begun with actual expenditures from FY 92. Some adjustments would be made to the base budget, such as one-time expenditures from non-recurring equipment purchases. Annualized salary adjustments would be made if a position was authorized to begin some time during the first fiscal year of the biennium. For example, a position authorized to begin in November of FY 92 requiring only nine months of salary, would require a 12-month provision for FY 94. Merit salary increases were given to merit classified employees at a rate of 4.5 percent per year. This amount would require adjustment in the base budget. Across-the-board pay increases that do not affect the entire fiscal year, for example the across-the-board pay increase in FY 92 only affected nine months of the fiscal year, would be adjusted upward to meet the 12 month requirement of FY 94. Supplemental appropriations would be added to reach the adjusted base budget.
Mr. Stevens described the current services budget as the level of funding required to maintain the current level of service provided by the agency. Mr. Stevens explained an increase or shift in demographics or caseload may require an agency to hire new caseload workers to maintain the same level of service. The cost of service may also increase because of inflation factors and federal mandates. Further, occupation studies from the Department of Personnel could increase the salary compensation level of certain classified employees. Rate adjustments for fringe benefits usually a change in a group insurance rate could also increase funding requirements for the agency. Mr. Stevens stated enhancement packages were outlined individually within each budget account.
Mrs. Williams asked if the actual expenditures from FY 92 had been adjusted to include the Governor's budget reductions and if so did those reductions limit the agency's ability to accomplish its original mission statement. Mr. Stevens stated the amount each agency received was less the Governor's budget reductions and in certain cases did curtail the agency's ability to achieve their original mission statement.
Again Mr. Stevens referred to the sample budget account (Exhibit D) and explained the various items contained in the new budget format. The name of the department and a 7-digit budget account number appear at the top of the page. The actual year column represents revenue and expenditures for the budget account for the designated year. The work program column shows the amount approved by the previous Legislature for the current fiscal year. The first column for each biennium indicated the amount of the agency's request; the second column for each biennium was the amount the Governor had recommended.
Mr. Stevens noted the first part of the sample budget account was the base budget and consisted of revenues and expenditures. In the past the revenues section had an individual breakdown of each revenue within the budget account. Mr. Stevens indicated committee members would not see the same level of detail in the revenue section because the new Executive Budget combined revenues into general categories, in this case the General Fund and Other were added to show total revenues.
Mr. Stevens said the expenditures section of most budget accounts included 5 categories: personnel expenses, out-of-state travel, in state travel, operating, and equipment; and all subsequent categories would be budget specific. Previously, the personnel category included line items such as position listings and fringe benefit amount. Now these line items would be combined to form a personnel expenses category and the existing positions category would list the total number of positions for the agency. Mr. Stevens said the committee should note the number of positions in the actual column may not be the number of positions approved by the Legislature. Some positions were eliminated in the budget and therefor the position totals may not reflect legislatively approved staffing levels. Instead the column reflects the authorized staffing levels after the Governor's budget reductions.
Mr. Stevens referred to the maintenance section of the budget, which listed the budget requirements for the agency to maintain the same level of service. Mr. Stevens stated the increased caseload section showed the committee a narrative explanation from the agency regarding the additional appropriations needed to maintain current services. Further, the category breakdown on the expenditure side, in this case personnel expenses, operating, and equipment, provided the number of new positions and related costs required to implement the requested maintenance item. Subsequently the committee would find the information by category and appropriations requested. In this case the Governor recommended a General Fund appropriation to provide the funding for the requested new position.
Mr. Stevens focused next on enhancement items. Some agencies may have numerous enhancement items listed while others would have none. Each enhancement item was outlined separately. In this case the computerized index of customer satisfaction and consumer education programs were outlined. The Governor may separately recommend or reject each enhancement item and suggest which funds are to be appropriated.
Mr. Steven highlighted the budget summary area which summarizes the base budget, maintenance budget, and enhancement programs. The budget summary also listed total resources of the total revenues requested by the Governor and total expenditures which were not broken down by category. The percentage increase in the work program column was derived by comparing it to the actual year column; and the percentage increase in the agency's request column was derived by comparing it to the work program column. The budget summary also listed the total existing positions as compared to the new full-time equivalent positions requested by the agencies and recommended by the Governor. At the end of the agency's budget account the mission statement was listed.
Mr. Stevens pointed out the caseload data or performance indicators were an important section of the new budget format. Mr. Stevens advised the committee performance indicators were under a continual process of revision and a more effective means of measurement may be a point of discussion with the agency.
Mr. Spitler asked if the new positions category in the maintenance budget would indicate the percentage of management versus classified employees and would the directors be explaining current staffing levels. Mr. Stevens stated the Executive Budget would identify the number and cost of all new position requests but would not provide position classification. Mr. Stevens remarked the Fiscal Analysis Division staff could provide the information in the budget highlights or the committee could ask the directors.
Mr. Heller asked if all enhancement requests were listed in the Executive Budget even without the Governor's recommendation. Mr. Stevens stated all enhancement requests would be shown although a large list of enhancement requests would be displayed in a different manner.
Mrs. Williams asked if the out-of-state travel category in the new budget format would show the number of employees within the agency using the travel account. Mr. Stevens stated the number of staff using the account was not readily available but individual line items were and the Fiscal Analysis Division staff would research either item if requested by the committee.
Mr. Humke asked if specific information about contracts within operations category would be provided to the committee with the new budget format. Mr. Stevens stated the old format contained line item detail and these line items were available to the Fiscal Analysis Division staff and would be provided to the committee if requested.
Chairman Arberry passed out the subcommittee assignments and asked to meet with each subcommittee chairman prior to the subcommittee's beginning their work.
Mr. Ghiggeri focused on a form titled "General Fund Revenue" (Exhibit F), which displayed the sources of General Fund revenue for FY 92. He stated the bulk of General Fund revenue came from gaming and sales tax and any fluctuations downward which had occurred during the last biennium would have an adverse effect on General Fund revenues.
Mr. Ghiggeri referred to the "Assembly Ways and Means Committee Source of Funds Fiscal Year 1993 Work Program, 1993 Session" (Exhibit G), and "Assembly Ways and Means committee Source of Funds Fiscal Year 1993 Work Program vs. Agency Requests 1993-1995 Biennium, 1993 Session" (Exhibit H), which were derived from the "Pre-session Fiscal Report" all of the committee members had been provided some weeks earlier. He stated the information served the committee members as a source of general information about the use of the General Fund revenues by the various state agencies. Mr. Ghiggeri informed committee members the largest users and increases in requests for the 1993-1995 biennium came from Human Resources, Education, and the Department of Prisons. These three agencies utilized 89-90 percent of the General Fund dollars.
There being no further business before the committee Chairman Arberry adjourned the meeting at 8:35 a.m.
RESPECTFULLY SUBMITTED:
_________________________
Courtnay Berg
Committee Secretary
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Assembly Committee on Ways and Means
January 20, 1993, 1993
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