MINUTES OF THE
ASSEMBLY COMMITTEE ON WAYS AND MEANS
Sixty-seventh Session
January 27, 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 27, 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
Mr. Spitler excused himself from voting on legislation regarding the Consumer Advocate or Public Service Commission.
Mrs. Evans and Mr. Humke excused themselves from voting on issues regarding the University of Nevada system.
Mr. Price stated his wife was recently elected as a Regent for the University of Nevada system and he would abstain from voting when appropriate.
OFFICE OF THE GOVERNOR - PAGE 1
Chairman Arberry turned the meeting over to Brian Harris, Legal Counsel to the Governor. Mr. Harris stated although responsible for general supervision of the budget for the Governor's Office he was not an accountant and asked Mrs. Matteucci, Budget Director to present the budget to the committee.
Mrs. Matteucci supplied a brief description of the duties and functions of the Governor. Mrs. Matteucci stated base budget allocations of $1.1 million for FY 93-94 and $1.1 million for FY 94-95 for the office of the governor came entirely from the General Fund. Mrs. Matteucci stated a reversion of $260,000 was returned to the General Fund by the agency in FY 92. This reversion was made possible by eliminating 2 positions, leaving current staffing levels at 19 full-time employees. Mrs. Matteucci pointed out to the committee the reversions would be very high in the Executive Budget because two rounds of budget cuts had taken place since the last legislative session. The potential budget cuts for FY 92-93 could be found in the work program phase of the Executive Budgets under reserve for reversion. Mrs. Matteucci commented these funds were tagged as potential cuts in FY 92-93 and the agency should be prepared to discuss them with committee members. The base budget definition, as adopted from SCR 21 committee of the 66th session, included FY 91-92 expenditures adjusted for the FY 92-93 budget cuts to form the base budget recommendations in the Executive Budget.
Mrs. Matteucci pointed out the in-state and out-of-state travel recommended levels were the same as the actual expenditure from FY 91-92. Operating expenses were annualized to reflect the operating lease payment, a copy machine, and an increase in office square footage which all contributed to the increase in operating expenses. Equipment expenses reflect a $3,500 increase which will be used for general equipment needs. Data processing shows a significant decrease from actual expenditure $79,717 to work program $27,257 because the one-shot appropriation needed to start the program was included in FY 91-92.
Mr. Marvel asked for a report of forfeited annual leave paid to state employees in FY 90-91 and FY 91-92. Mrs. Matteucci said she would provide the information.
Mrs. Matteucci addressed the maintenance section of the budget. She informed the committee inflation was only permitted as an adjustment item in specific areas of the budget. The recommendation served to provide for an increase in the tort claim liabilities of $50 and $65 per person; and the fleet payments for two cars increased. The next item in the maintenance budget was rate adjustments for fringe benefits. The substantial increase of the second year of the biennium was to accommodate an increase in the group insurance premium for state employees.
Mrs. Matteucci focused on the enhancement program. The travel expenditures are anticipated to increase as the Governor has become the chairman of several boards and commissions at the national level. Formerly, the Governor used personal airfare coupons for his in-state travel but now the state will have to appropriate funds for this expense. Operating expenses reflected a general increase in the work load done in the Governor's office. Communications and transportation expenses were increased due to a microwave link. The expenditure was recorded in the base budget under telephone expenses and was listed under operating expenses as a point of clarification. There was an increase in cost of printing and copying, $1,500 in FY 93-94 and $422 in FY 94-95, for correspondence to Nevada high school students. Also an increase in dues and registration for the Western Governors Association and the Nevada Governors Association, $7,500 for each fiscal year in the biennium, caused operating expenses to increase.
MANSION MAINTENANCE - PAGE 5
Mrs. Matteucci stated the purpose of the mansion maintenance budget was to provide for the staff, operating, and maintenance expense of the Governor's mansion. Also included were travel allowances for the first lady when accompanying the Governor to official functions and a host fund account to entertain state officials and dignitaries.
The base budget included a general fund allocation for FY 91-92 of $211,104 and a reversion of $48,507 for a total expenditure of $162,597 in FY 91-92. Personnel expenses account did not have specific positions, traditionally the Legislature allocated funds for two positions, a chef and a mansion coordinator. Out-of-state and in-state travel did not differ from actual expenditure in FY 91-92. The increase in operating expenses reflected an augment to the host and food fund for Legislative years.
Mr. Spitler asked if funds for improvements approved by the 66th legislature to the mansion were included or were all allocated monies reverted back to the General Fund. Mr. Harris indicated $17,000 was spent on general refurbishment but very little was done to the mansion. Mr. Spitler stated mansion maintenance should be made a priority not only for the historic value of the structure but to reduce the future cost of repair.
Mr. Spitler asked if the capital improvements plan (CIP) included funds for maintenance at the Governors Mansion. Mrs. Matteucci would ask Tom Stephens, Manager of the Public Works Board to provide the information during the Capital Improvement Program budget presentation.
Mrs. Williams asked if roofing costs were covered under the capital improvements budget. Mr. Harris stated the most recent leaks were fixed but he was not sure if the money came out of the CIP budget. Mrs. Williams stated she could understand the Governor's concern for budget constraints but the cost of repair may increase over time.
Mrs. Williams inquired about the out-of-state travel account under the mansion maintenance budget. Mrs. Matteucci explained the account was for the first lady's travel to official functions.
Mr. Marvel asked if the Public Works Board complied with the recommendation to set up a maintenance schedule for all state owned buildings. Mrs. Matteucci replied that the public works board planned on completing the project as time permitted during this interim period. However, due to the size of the 1991-93 budget very little time has been spent on this project. In the recommended reorganization building maintenance, currently the responsibility of buildings and grounds, will be supervised by the public works board.
Chairman Arberry asked the date of the last resurfacing of the roof at the Governor's mansion. Mrs. Matteucci indicated the CIP's budget listed the roofs in need of repair and the date of the last resurfacing (Exhibit E).
Mrs. Matteucci moved to the maintenance budget. The recommendation for $365 in FY 93-94 and $680 in FY 94-95 provided for utility inflation allowances.
Mrs. Matteucci indicated the enhancement budget provided for additional monies for out-of-state travel due to the increased national profile of the Governor. The increased allocation for in-state travel was a result of the first ladies involvement in many statewide programs. Operating expenses reflected the installation of a fax line and a microwave link, equipment repair costs, host fund expenses, and correspondence and coping.
Ms. Giunchigliani asked if the microwave link was a separate line item from the microwave line item listed in the base budget. Mrs. Matteucci stated there were two separate microwave link ups one for the Department of Administration and the other for the Office of the Governor.
LT. GOVERNOR - PAGE 14
Chairman Arberry asked Sue Wagner, Lt. Governor, to review the Lt. Governor's budget. Lt. Governor Wagner pointed out although her budget was small, a reversion of $11,416 to the General Fund came from her office. The maintenance section of the budget reflected an increase in insurance assessments and fringe benefits due to inflation. The enhancement section reflected an increase in the amount for in and out-of-state travel.
Ms. Giunchigliani asked Lt. Governor Wagner to give a few details about the increase in the travel allocation. Lt. Governor Wagner explained the travel allocation request from last biennium was not fully utilized due to an overestimation of her ability to travel because of injuries sustained in a plane crash. In addition, Lt. Governor Wagner explained she had an out-of-state travel savings of $3,000 and an in-state travel savings of $1,000 in the last biennium. Lt. Governor Wagner stated because her role at the national level had changed, she was required to travel more frequently. Lt. Governor Wagner also anticipated more in-state travel for herself and staff. Each of the state trips averaged four to five days at a cost of $400 to $500 per person.
Ms. Giunchigliani asked in light of the new reorganization would the Lt. Governor's role change. Lt. Governor Wagner stated she was aware of no changes in her role as a constitutional officer.
Mrs. Evans asked since the last biennium had any renovations or improvements to the Lt. Governors office taken place. Lt. Governor Wagner stated since funds from state sources were unavailable private donations had provided office equipment. Mrs. Evans commented the committee should be advised of any equipment needs the Lt. Governor may have to do her job appropriately.
Lt. Governor Wagner commented her office had taken advantage of voluntary furlough to help the Governor during the budget crisis.
Mr. Spitler pointed out public perception of constitutional officers was an important reflection on the state and funding should be provided so private donations would not be necessary.
Mr. Humke and Chairman Arberry concurred with Mr. Spitler's comments.
SECRETARY OF STATE - PAGE 52
Ms. Cheryl Lau, Secretary of State read from prepared testimony (Exhibit C).
Mr. Marvel inquired what fiscal impact would the proposed election law changes would have on the Secretary of State's budget. Secretary Lau anticipated personnel and operating expenses would increase if the election bills passed.
Mr. Humke asked how the expedite fees were being used by the Secretary of State's office. Secretary Lau explained expedite fees were assessed on filings which wanted a 24 hour service guarantee. These funds of $402,115 in FY 93-94 and $404,067 in FY 94-95 were being used according to the mandate of the statutes. Mr. Larry Wissbeck, Chief Deputy to the Secretary of State explained revenues of approximately $700,000 were generated during the last biennium; and approximately $300,000 of the expedite fund was used to subsidize the budget.
Secretary Lau indicated her office had been working very closely with Karen Kavanau, Director of Data Processing in the development of new data processing technology to improve services. Secretary Lau appeared before the Interim Finance Committee (IFC) and asked for funds for this new system. The Secretary indicated funds were now in purchasing awaiting approval and were not reflected in the Executive Budget.
Chairman Arberry inquired whether Secretary Lau would have the proposal ready for the next IFC meeting. She indicated the proposal would be ready for discussion at the next IFC meeting.
Ms. Giunchigliani inquired about the data processing line item in the base budget. Mr. Wissbeck stated the funds for data processing were used for existing programs not for the proposed new system.
Ms. Giunchigliani asked if the use of expedite funds for the new system meet the intent of NRS 225.140 of the 65th session. Ms. Giunchigliani commented the expedite funds should be deposited directly into the General Fund and then allocated to the Secretary of State for expenses and program enhancements. Secretary Lau indicated this question was answered during the 1991 Legislative Session when it was determined that any use of the expedite fund for program enhancements would be strictly monitored by IFC. The Secretary stated she had followed the measures indicated by IFC to assure compliance with the statute. Mr. Wissbeck stated according NRS 225.140 of the 65th session, the expedite fund was to be used to improve the services of the Secretary of State's office. Mr. Wissbeck asserted the new system would provide improved services to the customers of the Secretary of State's office.
Mr. Perkins queried if expedite fees would be added at a later date to the $2.2 million agency request supported by the General Fund. Mr. Wissbeck explained a portion of the expedite fund was used to offset the expenses to the General Fund. The total request from the Secretary of State's budget was $2.2 million and would not be augmented by the expedite fund at a later date.
Mr. Perkins asked how much was currently in the expedite fund. Mr. Wissbeck stated approximately $750,000.
Mr. Humke commented the expedite fund, with IFC approval, was a sound method of funding special services. The expedite fund encouraged incorporation from big business by providing the desired rapid service while also providing a cost effective service for small businesses not limited to rigid timetables.
Ms. Tiffany asked if the request for proposal for the new data processing system included implementation factors such as work flow, data base structuring and training. Secretary Lau asserted a microcomputer specialist was on staff and available to troubleshoot any problems which might occur during the transition to the new system.
Mrs. Williams asked where the microcomputer specialist was listed in the Executive Budget. Mr. Wissbeck explained the position is recommended to be transferred to the new Information Technology Services Division as outlined in the reorganization plan. Funding for the position is included in the data processing category. Mr. Wissbeck commented the microcomputer specialist was an integral part of the implementation of the proposed new technology and loss of control of this position would have a detrimental effect on the entire program.
Chairman Arberry asked Woody Thorne, Deputy Budget Administrator, to explain the change in funding recommended for the microcomputer specialist. Mr. Thorne responded the position would remain where the position is currently used. The intent of the change in funding sources for the position was to improve coordination and to share knowledge of computer systems within the state.
Mrs. Williams questioned whether the Secretary of State had a method of verifying the authenticity of out-of-state application for incorporation. Secretary Lau responded, by statute, her duties were purely ministerial and in cases of fraud would have to direct the complaint to another state agency for investigation.
Mr. Spitler queried about future plans for the use of expedite funds. Secretary Lau responded although a specific plan had not been established, funds would be used to improve the efficiency of the services provided by the Secretary of State. Mr. Wissbeck stated a tentative plan to automate the information services of the entire Secretary of State's office was diagramed pending IFC approval.
Mr. Spitler asked if Mr. Wissbeck felt overly restricted by NRS 225.140 of the 65th session's requirement for IFC approval prior to presentation of a request for proposal to utilize expedite funds. Mr. Wissbeck replied the requirement did put the Secretary's office in a precarious position as approval was required prior to presenting a request for proposal.
Mr. Spitler asked if the new system was approved would the maintenance costs of the new system be charged to the expedite fund. Secretary Lau stated expedite funds would be used.
Mr. Spitler asked if safeguards against the electronic dissemination of information and resale of data compiled by the state were in place within the new technology to be utilized. Secretary Lau replied safeguards were within the collection and access to the data. The resale issue was being looked at by the Attorney General's office. Mr. Spitler commented legislation would be needed in this area in the future, and he would like to be kept abreast of the progress with the resale issue.
Mr. Spitler asked if businesses were permitted to bridge access to the data without payment for services. Mr. Wissbeck replied the only area of direct access permitted was through a subscription service to the data processing department.
Mr. Marvel stated accessibility to the data was a previous concern of the Secretary of State's office and measures had been taken to curtail access to data within the office.
Mr. Heller inquired of Mr. Thorne which agency would be responsible for hiring a new microcomputer specialist, the agency utilizing the position or the agency funded for the position. Mr. Thorne responded the agency funding the position would do the hiring. The intent of the centralization of services was to have several personnel familiar with diverse agencies so in cases of personnel turnover backup services would be available.
Ms. Giunchigliani read NRS 225.140 from the 65th session and suggested the statute was unnecessarily vague. Ms. Giunchigliani requested fiscal staff to prepare a report suggesting what percentage of the total expedite fund should be sustained to fund special services with the remainder being returned to the General Fund. Mr. Wissbeck pointed out approximately 50 percent of the expedite fund was returned to the General Fund and approximately $39,000 to $40,000 was paid to compensate the State for special fund status.
SECRETARY OF STATE SECURITIES - PAGE 57
Secretary Lau read from a prepared statement (Exhibit C) describing the Secretary of State Securities budget.
Mr. Spitler requested the agency to provide support documentation for the four new position requested. Secretary Lau stated she was prepared to give the information orally but would provide written documentation as a supplement to the committee.
Edwin J. Apenbrink, Chief of Registration and Licensing of the Secretary of State's office stated the division was regulatory and charged with administering the Securities Act of the State of Nevada. Services provided by the agency include regulation of broker/dealers, sales representatives, sale of securities, and investor education. The Division generated revenues three times its appropriation in the last biennium. The requested four positions included one securities examiner, two compliance audit investigators, and one legal secretary trainee. The Securities Examiner was requested due to an overall increase of 52.1 percent in registrations and exemptions over the last biennium. Mr. Apenbrink also anticipated increases due to the proposed franchise law. The two compliance officers were requested to work with the franchise and the enforcement staff to investigate investor complaints which were up 79 percent from the last biennium. Mr. Apenbrink requested the Compliance/Audit Investigator Officer I, because of the complexity of the investigations, be upgraded to Compliance/Audit Investigator III.
Mr. Spitler asked if a franchise regulation bill draft request was currently being processed. Mr. Apenbrink stated the bill if passed would regulate the offer and sale of franchises to Nevada residents.
Mr. Spitler requested a business plan be submitted to the committee regarding the projected revenue from franchise regulation. Mr. Wissbeck replied revenue projections from other states were favorable and the Secretary's office would submit a business plan.
Ms. Giunchigliani explained she had drafted a bill about solicitation of the elderly and asked if this would come under the franchise program or the Attorney General's authority. Mr. Wissbeck replied the office had been requested to provide a fiscal note to the bill draft request. Preliminary forecasts indicated the addition of one staff person could provide the overall service required by the bill draft request.
Mrs. Evans inquired about the payment for Attorney General assistance within the budget. Mr. Wissbeck replied in the past approximately $136,000 budgeted for Attorney General Services was taken out of the operating category. However, the new cost allocation plan provides that the Attorney General be funded directly for attorneys assigned to agencies funded completely from the state General Fund. Mr. Thorne explained those agencies with General Fund allocations would not be budgeted funds for Attorney General services, instead these funds would be budgeted directly in the Attorney General's office.
Mrs. Williams queried about the physical location of a full-time Deputy Attorney General for specific agencies. Mr. Thorne stated under the Attorney General's Office Consolidation approved last biennium, all Deputy Attorney's General would be housed in one location; however services for specific agencies would be provided by several attorneys.
Mrs. Williams asked where revenues generated by the agencies could be found in the new budget format. Mr. Thorne replied revenue sources were listed in the front section of volume I of the Executive Budget. Mrs. Williams commented she was frustrated with the lack of detail contained in the new Executive Budget format.
Mr. Marvel asked will the money budgeted for Attorney General services be easily identifiable within the new Executive Budget format. Mr. Thorne state the new format used a statewide cost allocation plan to fund the Attorney General. In the previous budget format the Attorney General was funded through direct agency payment and indirect funding. This combination of funding was unacceptable under federal regulation. Therefor what would appear to be a General Fund increase in the Attorney General's budget was a reflection of the new cost allocation funding. Mr. Marvel commented the new cost allocation funding was very difficult to track within the new budget format. Mr. Thorne stated the Budget Office would supply the new cost allocations for all budgets.
Ms. Giunchigliani asked why a $6,700 enhancement for "general increases necessary to carry out the duties of the office" was recommended by the Governor if the agency had not requested the enhancement. Mr. Thorne explained since the increase was not driven by caseload the new budget format listed the increase in the enhancements section.
There being no further business before the committee Vice-Chairman Spitler adjourned the meeting at 10:05 a.m.
RESPECTFULLY SUBMITTED:
_________________________
Courtnay Berg
Committee Secretary
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Assembly Committee on Ways and Means
January 27, 1993
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