MINUTES OF THE
ASSEMBLY COMMITTEE ON WAYS AND MEANS
Sixty-seventh Session
February 1, 1993
The Assembly Committee on Ways and Means was called to order by Chairman Morse Arberry, Jr., at 8:03 a.m., on Monday, February 1, 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
Mrs. Sandra Tiffany
Mrs. Myrna T. Williams
COMMITTEE MEMBERS ABSENT:
None
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst
Gary Ghiggeri, Deputy Fiscal Analyst
Chairman Arberry yielded to Mr. Mark Stevens, Fiscal Analyst. Mr. Stevens announced the Expanded Program Narrative binders for each committee member would be placed in the committee room following the meeting. The narratives for agencies whose budgets the committee would be reviewing over the ensuing few weeks were included in those binders for review by the committee members. Narratives for the remaining agencies would be added to the binders in approximately a week.
Mr. Stevens noted the fiscal staff had, at Chairman Arberry's request, made two copies of the line item detail information for use in conjunction with the new Executive Budget. That information was included in two sets of binders located on the bookshelf at the back of the committee room.
Mr. Stevens pointed out Budget Highlights were being printed with a larger font style. He asked whether the committee members had a preference for the larger or smaller print. The committee members agreed the larger print was preferable.
Mr. Stevens indicated fiscal staff was receiving information regarding the calculation of the reorganization savings from the Budget Office. He distributed to the committee copies of that information, 3-hole punched for inclusion in the budget books. He noted additional reorganization savings information would be distributed as it was received from the Budget Office.
ARCHIVES - PAGE 1165
Ms. Joan Kerschner, Director of the State Library and Archives, explained revenues to the State Archives included an appropriation from the General Fund; a small amount from federal funds, which was used for travel expenses for the State Historic Records Advisory Board; and other funds typically raised from photocopying and research services. She indicated expenditures were similar to past budgets; however, building and telephone costs had been consolidated into the State Library budget. She explained since the two agencies were now housed in one facility, those expenses were more easily administered by the Library. Additionally, one position had been lost.
Ms. Giunchigliani inquired about the one-shot money. Ms. Kerschner explained the one-shot appropriation for this budget had been to identify records schedules for other state agencies and was included in a separate budget account (#101-1056). She noted this had been a four-year project. Archives staff was currently ahead of schedule, but they had identified several more agencies for inclusion in the project than had originally been anticipated.
Ms. Giunchigliani noted the Governor was not recommending continuation of this one-shot appropriation. Ms. Kerschner explained the agency had not requested continuation of the one-shot appropriation. The agency felt it had accomplished what it had set out to do with that budget.
Ms. Kerschner explained the agency requested an enhancement budget in order to fund the organization of materials; however, the Governor had recommended no enhancement to this account.
NEVADA STATE LIBRARY-LITERACY - PAGE 1169
Ms. Kerschner explained General Fund money would cover the cost of one literacy coordinator and one half-time management assistant. Federal funds in this account were based on the Library Services and Construction Act, Title VI. The Title VI money ($35,000) covered operating expenses. The enhancement and maintenance portions of the budget reflected additional federal funds to expand services slightly.
Ms. Giunchigliani noted the 1991 Legislature had recommended funding in this account for the job training program. She questioned why such funding was not recommended in the 1993-95 Executive Budget. Ms. Kerschner responded job training money had been replaced in this account with General Fund revenue. The carryover money from the 1991-93 budget was no longer available to the agency.
Ms. Giunchigliani asked if there would be a support program through the Job Training and Partnership Act. Ms. Kerschner said there would be no such program; however, there was coordination with the Governor's Literacy Advisory Council, which included a member from job training.
Ms. Giunchigliani inquired as to the rationale for locating literacy within the Department of Libraries rather than the Department of Education. Ms. Kerschner said the reasons were both pragmatic and historical. The federal government had routinely allowed literacy money to flow through many channels such as the Job Training Partnership Act, Human Resources, the Department of Education through the Adult Basic Education Act and through the Department of Education to the Libraries. The money which had been expended to manage this program was dedicated to Library revenues. Title VI revenues could only be expended for library-related programs. Historically, the program was begun with a Gannett Foundation grant to the Library System. In addition, the strongest community-based organizations providing literacy programs were in libraries because their parent organizations provided fiscal agency and assistance.
Ms. Giunchigliani asked if the $35,000 was for the adult literacy program. Ms. Kerschner indicated it was. She further noted the Adult Basic Education Act provided money to the Department of Education for more formal instruction.
Mrs. Williams noted staff and volunteer levels were decreasing. She asked Ms. Kerschner how she intended to keep up with the workload. Ms. Kerschner responded she had hoped volunteer numbers would increase. She noted the volunteer numbers shown in the performance indicators had been calculated differently than in the past. Only volunteers who actually completed 12 hours of instruction time with a client were counted. In addition, the agency would utilize 10 VISTA volunteers throughout the state and would apply for an additional 5 VISTA volunteers to work in Library programs.
NEVADA STATE LIBRARY-CLAN - PAGE 1174
Ms. Kerschner stated revenues to this account were primarily federal funds. Other revenues were comprised of transfers from the 12 counties which were participating members of the Central Libraries Automated Network (CLAN). Originally the CLAN fiscal agency was with the Carson City Library and was transferred to the State Library. She said the Library operated a computer system jointly for the 12 counties, provided all the automation and circulation services to the counties, and linked the computer system between the two universities, Washoe County, and Clark County. Additionally, the CLAN system had been combined with the Elko County system. Federal funding was used for equipment enhancements. County revenues were received from each county in proportional shares to maintain the operating costs of the system. Agency transfers represented the State Library's proportional share.
Mrs. Evans noted the one position requested for this account--the microcomputer specialist--appeared to be a pivotal one. However, the Governor did not recommend funding for that position. She questioned how the program would function without that position.
Ms. Judy Matteucci, Budget Director, explained the microcomputer specialist position was one of several positions being consolidated into a central service delivery area called the Division of Information Technology Services (ITS) in the new Department of Administration. She said it was uncertain whether those positions would actually move physically from where they were currently located.
Mrs. Evans asked whether services would be impaired as a result of removing the position from the State Library. Ms. Matteucci responded the Budget Office was firmly convinced the proposed consolidation would enhance services to the counties. The position would simply be coordinated through the ITS. It would continue to perform the same functions for the State Library and likely would remain physically located within the Library.
Mrs. Evans questioned who the microcomputer specialist would report to. Ms. Matteucci explained the person would be working with Library staff and the member counties but would take direction from the ITS, as would all of the other consolidated data processing and telecommunications positions. She said the organizational change would not be evident to the using agencies in the counties.
Mrs. Evans asked whether Ms. Kerschner would have any supervisory authority over the position. Ms. Matteucci said Ms. Kerschner would not be directing the individual filling the position. The Library would be a using agency working with that individual, who would take the message of the Library's needs back to the ITS, as would every other agency using ITS personnel.
Ms. Giunchigliani questioned whether this would put the employee in an awkward position.
Ms. Giunchigliani then asked whether the member counties would be funding the cost of this position. Ms. Kerschner replied the counties had always borne the operating costs, including personnel costs.
Ms. Giunchigliani inquired about the manner by which any county concerns about the position would be transferred back to the ITS. Ms. Kerschner indicated the matter had not been discussed by the CLAN members.
Ms. Matteucci pointed out there would be a number of immediate savings as a result of the consolidation, which would be passed along to the member counties. Therefore, the counties would be receiving the same level of service, if not better, at a lower cost. She added her staff was prepared to meet with the committee to explain her calculations.
Ms. Giunchigliani agreed that consolidation was required. She questioned, however, whether some of the reorganization was being done simply for the sake of reorganizing and was becoming a centralization rather than a decentralization.
Chairman Arberry called for public testimony.
Mrs. Martha Gould, Director, Washoe County Library System, distributed copies of her prepared testimony (Exhibit C) as well as copies of a letter from Clark D. Lee, former trustee of the Las Vegas-Clark County Library District and current member of the State Advisory Council (Exhibit D). She said while both she and Mr. Lee understood the fiscal constraints facing the State of Nevada, they both felt strongly there was a point beyond which the budget could not be cut without gutting programs, and the State Library's budget was at that point. Without current staffing levels and enhanced book budgets, the Library's ability to serve state agencies as well as libraries throughout the state would be lost. She added Washoe County had attempted without success to make a personnel change similar to that being proposed by the Budget Office. She said she suspected the State Library would experience the same problems which Washoe County had experienced if the microcomputer specialist position was removed from the Library.
Ms. Giunchigliani noted the letter from Mr. Lee (Exhibit D) referenced interlibrary loans. She asked for an explanation of the situation. Mrs. Gould responded there were costs involved with interlibrary loans and those costs were going up. Without the coordination of the State Library, the interlibrary loan network was liable to dissolve. She said the University of Nevada, Reno library--one of the largest net loaners--had begun to withdraw from the program because of lack of resources. If the State Library had money to support the interlibrary loan function, to pay back handling and postage costs to member libraries, then the network would be protected and the cost would be significantly less than each library attempting to purchase the books.
Ms. Carolyn Rawles-Heiser, Director, Douglas County Library, expressed concern about moving the CLAN coordinator position out of the State Library budget. She noted this position required more than a generic computer specialist. The incumbent must have library knowledge. She reiterated the importance of protecting the interlibrary loan network.
INDUSTRIAL RELATIONS - PAGE 373
Ms. Carol Jackson, Director, Department of Industrial Relations, distributed to the committee copies of the Department of Business and Industry Operational Organization (Exhibit E), 1993-95 Biennium Base Budget Highlights (Exhibit F), and Explanation of Program Enhancements 1993-95 Biennium (Exhibit G).
Ms. Rochelle Summers, Principal Budget Analyst, Budget Division, distributed to the committee copies of the reorganization savings for the Business & Industry section of the Department of Commerce and Industry (Exhibit H).
Ms. Jackson explained the agency's mission, statutory authority, staffing levels, sources of funding, current organizational structure, and performance indicators (see Exhibit F, page 1).
Ms. Jackson indicated account number 210-4680 was comprised of the Director's Office, Legal Services, the Medical Audit Unit, and the Divisions of Industrial Insurance Regulation (DIIR) and Administrative Services.
Ms. Jackson noted the number of self-insured employers had increased approximately 51 percent from 86 to 130 since July 1, 1991, resulting in corresponding increases in DIIR audits and investigations.
Ms. Jackson explained the expenditure items. She said personnel expenses covered the cost of 46 full-time employees. Out-of-state travel covered the cost of the Director attending the annual meetings of professional associations (see Exhibit F, page 2). In-state travel covered the cost of departmental travel for the statewide coordination of departmental activities. Operating expenses covered the cost of various professional contracts, printing, rental of non-state owned office space and professional and technical publications. Equipment expenses covered equipment replacement. Data processing would cover the cost of a data processing position which was being moved to the central data processing unit. Training covered continuing training of staff. The state cost recovery plan reflected the charges assessed for the Attorney General's Office and indirect costs, such as planning and budgeting.
Ms. Jackson stated the reorganization savings equaled $81,737 in fiscal year 1993-94 and $111,245 in fiscal year 1994-95. Those savings were based on the elimination from the budget of two positions or the equal dollar amount thereof.
Chairman Arberry asked Ms. Summers to explain the transfer of positions from Administrative Services to the proposed Business & Industry Administrative Services Division. Ms. Summers replied the reorganization plan envisioned consolidation of administrative services functions, including fiscal services and personnel services. Should the new department be established, the Budget Division would request the positions be transferred into that budget with the result being fewer people doing the work in a better fashion. She said this proposal was not yet presented in whole in the Executive Budget. The Budget Office was asking the committee to consider that fiscal and personnel positions would be drawn into the new departments as the result of the reorganization.
Chairman Arberry asked how many positions would be eliminated from the Industrial Relations budget. Ms. Summers said five positions had been earmarked for transfer.
Ms. Giunchigliani asked if this was General Fund money. Ms. Summers said it was not.
Ms. Giunchigliani questioned how a reorganization savings could be assumed. Ms. Summers responded it was anticipated once the administrative services section was organized and positions were transferred into it, costs would be billed back to the agencies on an indirect cost basis.
Ms. Giunchigliani asked if there was a potential for General Fund money being used to cover the costs of the assessments or for employers having to pay extra costs for staffing patterns not actually being delivered to them. Ms. Summers said the reorganization contemplated consolidation of the bill paying and personnel functions. It was anticipated agencies would be billed for the services provided to them.
Ms. Giunchigliani asked Ms. Summers to define personnel functions. Ms. Summers said a personnel position would handle payroll documents, turnaround documents for hiring and firing, employee rights matters, etc. She indicated there were two such positions within the Department of Industrial Relations.
Ms. Giunchigliani requested an explanation of the $81,737 savings in fiscal year 1993-94 and $111,245 in fiscal year 1994-95. Ms. Summers replied the 1993-94 figure was based on the value of two positions--a worker's compensation specialist in the accounting section and an assistant director. She noted positions were not deleted from the Executive Budget. However, values of positions were used as a means of calculating savings. The position value equaled the salary and payroll costs of the position plus any operating or travel expenses associated with the position.
Ms. Giunchigliani asked whether this method of calculation could lend itself to a false assumption for savings if, for example, an agency had budgeted a position for $50,000, the position was transferred to another budget area, and the agency was billed back for those services at the rate of $52,000. She said she found it difficult to track what the value of a position was and questioned why the overall structure of the Department of Industrial Relations was not referenced within the Executive Budget.
Ms. Summers said at the time budget narratives were being prepared the reorganization had not been considered. She pointed out Volume I of the Executive Budget, in which the Department of Industrial Relations budget appears, went to the printer quite early. Volume II did not go to the printer until later.
Ms. Giunchigliani asked if the two positions would be abolished or recommended for transfer to another budget. Ms. Summers responded those two positions might not be abolished, but as a result of the reorganization the Department of Industrial Relations would need two less positions in order to accomplish the necessary savings. The Executive Budget does not specify what two positions.
Mr. Marvel noted the Department of Industrial Relations was funded by assessments rather than by General Fund money. He questioned whether, once the positions were moved out of the agency, the agency would be billed for those services. Ms. Summers said that was the plan.
Mr. Marvel asked if the assessment money would be commingled with General Fund money. Ms. Summers said that would happen in some budgets.
Mr. Marvel said he was concerned that if the money was lost to the General Fund, how it could be determined whether that money was being utilized to fund the functions of the Department of Industrial Relations. He asked if the money would be identified for the agency's utilization. Ms. Summers said she could not answer the question. Mr. Marvel said he would like to receive an answer prior to the end of the legislative session.
Mrs. Williams questioned whether, in formulating the reorganization plan, consideration had been given to the missions of the programs and agencies or only to the dollar savings. She said the committee needed to know how some of decisions about the reorganization were arrived at it terms of the mission statements of the various programs and agencies.
Mr. Price asked if it was good accounting practice to place dedicated monies into a general mix of funds. Ms. Summers replied it was preferable to be able to track funds. She said she understood the committee's concern that the Department of Industrial Relations, which receives its funding from assessments, not be unduly charged for administrative services. She indicated it was expected the agency would realize a savings in cost of administrative services as a result of the consolidation.
Mr. Price questioned whether such savings would be reflected back to assessments to the users. Ms. Summers indicated they would.
Mr. Spitler noted that as funds were commingled, they did not lose their identity within the state accounting system. Ms. Summers said the funds remained traceable.
Ms. Giunchigliani asked if there was a list of positions targeted for inclusion in the proposed Business and Industry administrative services pool. Ms. Summers said she would provide a list of those positions to the committee.
Ms. Giunchigliani queried why the Executive Budget did not reflect the transfer of the targeted positions into the Business & Industry Administration account. Ms. Summers replied there had been a lack of time in preparing the Executive Budget.
Ms. Giunchigliani asked if the agency was pursuing legislation to enhance efforts to collect fines. Ms. Jackson replied the Department of Industrial Relations was contracting with an attorney. Ms. Giunchigliani questioned whether lack of collection was a statutory problem or due to lack of staff. Ms. Jackson indicated it was a staffing problem.
Mr. Marvel asked if the Department of Industrial Relations was close to compliance with the exceptions noted in the legislative audit. Ms. Jackson said the agency was in compliance of all aspects of S.B. 7 of the Sixty-sixth Legislative Session, except the items which had been placed on hold. Ms. Jackson said the agency was actively pursuing fines.
Chairman Arberry asked how many more audits had been completed during the current biennium than during the previous biennium. Mr. Jim Jeppson, Administrator, Division of Industrial Insurance Regulation, explained in fiscal year 1990-91, 22 audits were completed, in fiscal year 1991-92, 37 audits were completed. It was projected 48 audits would be completed in fiscal year 1992-93. Increases were planned for each year due to the increasing number of self-insured employers.
Ms. Giunchigliani asked what factors were looked at by the auditors. Mr. Jeppson responded the auditors looked at compliance with the Nevada Revised Statutes, particularly benefit levels afforded to injured workers--whether the proper amount of compensation was paid and whether it was paid in a timely manner. Solvency of the self-insured employers was measured by the Insurance Commissioner's Office.
Ms. Giunchigliani inquired whether auditors were working from a rotation list to assure the self-insured employers were being audited on a regular basis. Mr. Jeppson indicated each self-insured employer was audited at least once every three years. In addition, follow up audits were performed to address specific areas of compliance.
Chairman Arberry asked what specific fines had been levied as a result of the audits performed thus far, if any of the fines had been waived, and if so, for what reason they were waived. Mr. Jeppson responded very few fines had been assessed as a result of the audit findings. In many cases the two-year statute of limitations had expired during the lengthy audit process and fines could not be assessed for the violations discovered. He said the audit period had now been shortened and fines for violations uncovered in recent audits were currently being processed. He noted the recent audit of the State Industrial Insurance System had demanded the time of all auditors for a period of several months.
ENFORCEMENT FOR INDUSTRIAL SAFETY - PAGE 378
Ms. Jackson referred to page 4 of Exhibit F, which contained a summary of the base budget. She noted revenues were based on assessments levied against workers' compensation insurers, Department of Labor grants, the asbestos program and copying charges. Personnel expenses covered the cost of 50 full-time employees. Out-of-state travel covered attendance at annual meetings required under the conditions of the federal grant. In-state travel covered the cost of statewide travel by the Administrator to coordinate the division activities as well as in-state travel by field staff. Operating expenses covered the cost of printing and mailing regulations, contract services, rental of non-state owned office space, and publications. Equipment expenses covered the cost of specialized equipment and replacement of three vehicles in each year of the biennium. EDP Systems/Programming expenses covered the cost of software updates. Training covered the cost to train field officers pursuant to OSHA requirements. Transfer to DPS reflected the one-time transfer of two positions to the Division of Preventative Safety and associated costs. The state cost recovery plan reflected charges assessed for the Attorney General's office and indirect costs. Projected reorganizational savings in this account were $82,815 in fiscal year 1993-94 and $111,073 in fiscal year 1994-95. Those savings were based on the values of the administrator position and the management analyst position.
Ms. Giunchigliani asked why the two positions were being transferred to the Division of Preventative Safety. Ms. Jackson replied the two positions had not been accurately transferred into the Division of Preventative Safety when the division was created following the 1991 legislative session.
Ms. Giunchigliani questioned how the program would be coordinated if the administrator position was cut. Ms. Jackson said she felt an administrator was needed to coordinate division activities statewide. Therefore, it might not be the administrator position which would be cut but other positions of equal dollar value.
Ms. Giunchigliani asked what budget enhancements the agency had requested. Ms. Jackson referred to page 4 of Exhibit G. She explained the enhancement budget requested additional support staff to handle the increased number of inspections and investigations required to keep pace with growth in Las Vegas.
Ms. Giunchigliani asked Ms. Summers why the Governor did not recommend the enhancement. Ms. Summers replied the agency request did not meet any of the definitions of the critical issues required for funding.
Ms. Giunchigliani noted the performance standards projected 7,322 violations cited while the actual number was only 3,474. She asked why that number had been increased so substantially. Ms. Jackson responded the projected number was based upon having additional enforcement officers in the field looking at construction sites. Without the additional staffing the projection would not be met.
Ms. Jackson noted the agency's budget had been prepared prior to the final draft of the reorganization plan. Therefore, some budget items were not consistent with the reorganization. Exhibit G was prepared to explain the enhancements.
Mr. Marvel inquired about the number of self-insured employers. Ms. Jackson stated there were 130 self-insured employers as of February 1, 1993.
Mr. Marvel asked what impact the number of self-insured employers had on State Industrial Insurance System (SIIS) premiums. Mr. Ron Swirczek, Administrator, Department of Industrial Relations, responded no calculation had been made; however, currently 34 percent of the workforce was covered by self-insured employers, which would have a significant impact on SIIS' premium income. Ms. Jackson noted many of the accounts who were leaving SIIS were employers paying over $1 million in premiums.
PREVENTATIVE SAFETY - PAGE 382
Ms. Jackson referred to page 6 of Exhibit F, which contained a summary of the base budget. She explained the division's sources of revenue were assessments levied against workers' compensation insurers and a Department of Labor grant. Personnel expenses covered the cost of 14 full-time positions. Out-of-state travel covered the cost of attendance at the semi-annual OSHA conferences. In-state travel covered the cost of travel of the administrator to coordinate statewide division activities as well as field staff providing statewide training and consultation services. Operating expenses covered printing costs, postage, contract services, rental of non-state owned office space and publications. Equipment expenses covered the replacement of a typewriter and video and training equipment. Training expense covered staff training required by OSHA. The state recovery plan reflected charges assessed for the Attorney General's office and indirect costs. Projected reorganizational savings were $47,174 in fiscal year 1993-94 and $63,230 in fiscal year 1994-95, based on the value of the administrator's position.
Mrs. Evans asked if the preventative safety program would be moving to Business & Industry. Ms. Jackson responded affirmatively.
Mrs. Evans asked Ms. Jackson to provide a status report on the safety educational program. Ms. Jackson replied an advertising contract with Joyce Advertising was approved by the Board of Examiners in December 1992. The division was currently in the process of printing a pamphlet about workplace safety (see Exhibit I). The pamphlet identified employee and employer rights and responsibilities in promoting safety and health in the workplace. Approximately 400,000 pamphlets would be printed, 370,000 in English and 30,000 in Spanish. Distribution was scheduled for March 1993. Employees would be required to read and sign the pamphlet.
Ms. Jackson said the public relations campaign would be ongoing from February through June 1993. It would be a multi-media campaign, including the development of workshops and seminars in Carson City, Elko, Las Vegas and Reno; radio and television public service announcements; participant recruitment, a speakers bureau; pamphlet promotions; news coverage; billboards and newspaper advertisements; and an awards presentation to employers.
Mrs. Evans inquired whether the program would end in June 1993. Ms. Jackson replied current funding would end in June 1993; however, additional funding would be available.
Mrs. Evans asked if the Governor had recommended additional funding. Ms. Jackson responded the Governor had not made that recommendation.
Mrs. Evans said while she was impressed by the proposed public relations campaign, she questioned the effectiveness of compressing it into such a short period of time. Ms. Jackson explained the division had been holding ongoing seminars and trainings for some time. Funding for the advertising contract was not available to the agency earlier. She agreed it was important to have an ongoing advertising program.
Mrs. Evans asked how the value and effectiveness of the advertising was being evaluated. She questioned whether it was worth the $500,000 cost. Ms. Jackson said she would provide that information. She noted for the record the actual cost of the advertising contract was $350,000.
Mr. Swirczek explained $150,000 had been approved in fiscal year 1991-92 and $350,000 in fiscal year 1992-93. Since the program was delayed and did not go into effect in fiscal year 1991-92, the $150,000 was not expended but was reverted to the employers as refunds to their premium payments.
Ms. Giunchigliani asked if the refunds were deleted from the rate base structure. Mr. Swirczek said the rate was recalculated each year, based upon the legislatively approved expenditures. Ms. Giunchigliani requested a list of the assessments and refunds.
Ms. Giunchigliani inquired about whether the agency needed to continue the advertising contract or if staff would be able to carry on the current advertising program over the long term. Ms. Jackson replied assistance from an advertising agency would be required, but staff could perform many of the program functions.
Ms. Giunchigliani requested a draft of a plan for staff to continue the advertising program.
Mr. Perkins asked if the $27 million reorganization savings was built into the Executive Budget. Ms. Summers responded affirmatively. Mr. Perkins questioned whether it was necessary to delete positions in order to realize the $27 million savings. Ms. Summers said the proposed reorganization savings represented the equivalent value of some positions.
Ms. Giunchigliani noted there would be no savings to the General Fund if the $27 million savings was based on the deletion of positions from non-General Fund agencies. Ms. Summers explained the savings was not solely to the General Fund but also to the taxpayers.
Ms. Giunchigliani inquired about repercussions, if any, to having the employee and employer sign the information pamphlet. Ms. Jackson said she did not anticipate any repercussions. The purpose of the pamphlet was to make the employee and employer aware of their rights and responsibilities, especially in identifying unsafe work conditions in order to prevent accidents. Mr. Swirczek explained when the corresponding regulation became effective on April 1, 1993, the employer would be required to maintain a signed copy of the pamphlet in employee files. If, during an audit, it was discovered the pamphlet was missing from the file, the employer would be subject to a fine.
MINE INSPECTION - PAGE 386
Ms. Jackson referred to page 8 of Exhibit F, which contained a summary of the base budget. She noted revenue was from a Department of Labor-Mine Safety and Health grant. Personnel expenses covered the cost of nine full-time employees. Out-of-state travel covered attendance at the annual Mining Congress and National Association of State Mine Inspector Agencies meetings. In-state travel covered the cost of statewide travel by the Administrator and mine inspectors to conduct training courses. Operating expenses covered the cost of maintenance and repair of audio-visual training equipment, maintenance and repair of vehicles, rental of non-state owned office space and instructional supplies. Equipment expenses covered the cost of additional filing and storage cabinets. Training covered the cost of continued training of mine inspectors. The state cost recovery plan reflected charges assessed for the Attorney General's office and indirect costs. There were no reorganizational changes in this account.
Mr. Marvel questioned whether staffing levels were adequate to keep pace with expanded mining activity in Nevada. Mr. Norton Pickett, Administrator, Division of Mine Inspection, responded some mining operations were phasing out and there would be some offsetting of the increase in mining personnel. He said the division provided for those influxes as well as possible, considering its budget restraints. He indicated the division's capability was restrained by its limited personnel.
Ms. Giunchigliani asked if the grant money would be available in the 1993-95 budget. Mr. Pickett said he expected the grant money would continue to be available but there was no guarantee. The first year's grant had been withdrawn and was only recently reinstated. Ms. Summers noted the reinstated money (approximately $74,000 for fiscal year 1993-94) was not reflected in the Executive Budget. Mr. Swirczek noted some of the $74,000 was included in the assessment process. Ms. Giunchigliani requested a breakdown of the impact on revenue. Mr. Swirczek referred Ms. Giunchigliani to the budget detail distributed by the Budget Office staff (Exhibit J). Ms. Summers noted $16,095 had been included in the base budget to cover expenses which would normally have been covered by the grant money.
Chairman Arberry asked Ms. Jackson if she had any closing remarks. Ms. Jackson replied she was supportive of the Governor's proposed reorganization of state government in order to improve effectiveness and efficiency.
MINING COOPERATIVE FUND - PAGE 1633
Dr. Jonathan Price, Director, Nevada Bureau of Mines and Geology (NBMG) read from a prepared statement (see Exhibit K) and distributed copies of NBMG publications (which will be held on file in the Fiscal Division) for the committee's information. He noted the Mining Cooperative Fund had been, and would continue to be, an excellent investment for Nevada.
Dr. Price indicated the funding request included a base budget with revenues from mining reclamation fees and an enhancement budget request with General Fund revenues (not recommended by the Governor). The enhancement budget would replace General Fund revenues which were cut from the fiscal year 1992-93 budget. Those funds would be used to increase geologic mapping.
Dr. Price introduced Mr. Harold Bonham, who would serve as Acting Director of NBMG beginning February 22, during which time Dr. Price would be on assignment to the Board on Earth Sciences with the National Academy of Sciences.
Dr. Price stated $100,000 of revenue was authorized as mining reclamation fees. In the past, revenues had fluctuated from $69,000 to $92,000. The $30,000 for other revenue in fiscal year 1993-94 reflected excesses above $70,000. If those excesses were received, they would roll into fiscal year 1994-95. Expenditures were to the NBMG and the U.S. Geological Survey.
Mrs. Williams asked if there had been any state surveys to investigate potential mineral resources at Yucca Mountain. Dr. Price replied there had been some surface investigations conducted in the Yucca Mountain area by the state's Nuclear Waste Projects Office. There had been no obvious evidence of mineral deposits below Yucca Mountain. He noted there were studies to investigate the mineral resource potential at the entire Nellis and Nevada test site areas. He indicated there was some serious mineral resource potential within the broad area of federally withdrawn lands in that general vicinity.
Ms. Tiffany asked if the geologic mapping was being done in digital format. Dr. Price replied NBMG was moving into a digital mapping format.
Ms. Tiffany asked why no data processing line items appeared in the budget. Dr. Price responded the major portion of the mapping program was covered by the enhancement budget. Revenue monies would flow through the university, the NBMG and the U.S. Geological Survey. The university would then expend money on the cartographic work.
NEVADA COUNCIL ON THE ARTS - page 1177
Mr. Bill Fox, Director, State Arts Council, introduced Ms. Cheryl Miglioretto, the agency accountant. He reported the Council's function was to use federal funds from the National Endowment for the Arts, with state matching funds, to fund grants to non-profit arts organizations and artists statewide. Primary concerns were increasing the quality of art available to Nevadans and to visitors to the state and assuring access to arts programs to all Nevada citizens. He noted the 1991 Legislature had increased the agency's state appropriation 40 percent; however, that appropriation was reduced approximately 20 percent during the budget cuts. Approximately $100,000 was lost. That $100,000 had been spread throughout the administration of the grants program so no one group was overly burdened. Federal funding had increased by approximately $30,000. Overall, the agency was doing well in maintaining services in comparison to some other state agencies.
Mr. Fox explained revenues were received from the state appropriation and from various federal grants. He noted federal revenue would increase slightly over the 1993-95 biennium.
Mr. Fox noted two personnel changes. The accountant position had been reclassified to a grants analyst position. Additionally, some federal funds were being reallocated to a new staff position to coordinate the arts and education program. This was formerly a contract position.
Mr. Fox pointed out a proposed urban arts program to help the underserved communities in Las Vegas and Reno would be funded with federal money.
Mrs. Williams questioned whether private money could be matched to the federal money. Mr. Fox responded affirmatively.
Mrs. Williams inquired about the Humanities Committee flow through. Mr. Fox stated the money would be used to maintain a statewide resource center.
Mr. Spitler noted a significant change to the funding of the Governor's Arts Award. He asked if it were true funding was from private gifts. Mr. Fox answered most of the funding was from gifts and ticket sales; however, $2,500 per year was spent to commission a Nevada artist to produce the five awards.
Mr. Fox stated the proposed reorganization was a natural outgrowth of the cooperative activities of the agencies which had been ongoing for some time. The only difference for the Council would be relocating from Reno to Carson City.
DEPARTMENT OF MINERALS - PAGE 503
Mr. Russ Fields, Executive Director, Nevada Department of Minerals, explained the department's mission was the encouragement of the responsible development of the state's mineral resources for the benefit of the citizens of Nevada. The department reports to the seven-member Commission on Mineral Resources comprised of representatives from mining, exploration, oil and gas and geothermal development. The Commission sets departmental policies, adopts regulations and advises the Governor and Legislature on minerals-related matters.
Mr. Fields noted the department was entirely funded by revenue received from minerals industries. There was no General Fund money in the department's budget.
Mr. Fields said the department served to perform community education; as liaison between other state and federal agencies; as representative of the state in federal land management policy issues; to regulate drilling and operation of oil, gas and geothermal wells; to enforce state regulations regarding conservation of oil, gas and geothermal energy; and to carry out the abandoned mine lands program to identify and secure sites which could pose hazards to people or animals.
Mr. Marvel expressed concern about Congressionally approved assessments on mining claims. He questioned whether the Executive Budget revenue projections were optimistic. Mr. Fields stated the revenue figure included in the Executive Budget had been provided to the Budget Office by the department and anticipated a 20 percent drop in mining claim revenue from the 1992 actual figure. He noted a $100 mining assessment had become federal law since the budget had been drafted and the actual decrease in revenue would probably be greater than 20 percent. It could be closer to 50 percent, which would result in a budget shortfall of approximately $175,000. On August 31, 1993, miners holding claims would have the choice of either paying the federal assessment or dropping the claim. He said it was difficult to forecast the behavior of the mining industry in dropping claims.
Mr. Marvel asked what the impact of proposed federal royalties on mining profits would be. Mr. Fields explained there was legislation pending in Congress which would impose royalties of 8 percent of gross profits on any mineral production on public lands. Nevada miners produce approximately $2.6 billion in revenue per year, 50 percent of which is produced from public lands. The possibility of that legislation becoming law has already impacted the level of exploration activity. Exploration had decreased significantly since 1988, when the legislation was first introduced in Congress. As a result, new discoveries were not replacing reserves which were currently being mined. Mr. Fields noted the department had been working with the Governor in his opposition of the federal legislation.
Mr. Marvel asked if the proposed reorganization would reduce the department's effectiveness in Washington, D.C. Mr. Fields responded it was only the Governor and the Nevada congressional delegation who could strongly affect federal policy or legislation.
Mr. Marvel questioned what the Commission's role would be following the proposed reorganization. Mr. Fields replied the Commission would serve in an advisory capacity to the Department of Business and Industry but would no longer set policy. Ms. Matteucci said the Commission would continue to have input on policy issues.
Mr. Fields noted the base budget included a reserve balance, which the department was allowed by statute to carry forward from year to year. He pointed out a significant difference in the agency request and the Governor's recommendation for personnel expenses. He explained the difference represented reorganization savings anticipated from deleting the value of the deputy director position. He also noted the department was currently holding three positions vacant and would continue to do so until revenues increased.
Mrs. Williams asked what royalties were currently paid on mining profits. Mr. Fields responded currently there were no royalties on the production of hard rock minerals from public lands pursuant to the federal mining law of 1872, as amended. He noted very few mining operations could afford to pay 8 percent of gross profits.
Mrs. Williams queried whether there were any exemptions allowed under the proposed legislation. Mr. Fields said there were not.
Mrs. Evans inquired about the duties of the deputy director position and who would assume those duties if the position were lost. Mr. Fields answered the deputy director managed education and public awareness programs, oversaw industry relations and public affairs, managed activities in the Las Vegas office, was responsible for compiling the registry of mines required by statute and was involved with department publications. He said there was no one else in the department who could assume those duties.
Mr. Heller noted substantial decreases in the performance indicators. Mr. Fields explained during the first half of fiscal year 1991-92 there had been a resource geologist on staff who was very involved in making presentations. The individual filling that position left the department in January 1992, and the position was not refilled. The duties of the position were distributed among remaining staff members. Therefore, projections of numbers of presentations were decreased. He said he had not been able to reconcile the fiscal year 1991-92 figures for drilling permit applications and inspections. Actual figures should have been 60 drilling permit applications processed and 50 field inspections conducted. Using those corrected figures, the new projections were not significantly different. He explained the focus of the abandoned mine lands program had changed from identifying and ranking hazardous sites to increasing public awareness and securing high risk sites. As a result, numbers of mines identified were reduced. Finally, he indicated the numbers shown on page 507 of the Executive Budget were incorrect. Reports given to county commissioners were actually 17, not 525, and the number of presentations given was actually 60, not 7.
Ms. Giunchigliani asked if all hazardous abandoned mine sites had been identified. Mr. Fields said all hazardous sites had not been identified. However, the highest risk sites had been identified and approximately half of those had been secured. It was believed the public awareness program would serve to protect the public as well as securing sites in some instances.
Ms. Giunchigliani asked Mr. Fields to provide to the committee a synopsis of the department's public education program. Mr. Fields agreed to do so.
Mr. Price asked where the authority for fees on minerals was located in the Nevada Revised Statutes. Mr. Fields replied the fee assessment was authorized by NRS 522.
Mr. Price questioned whether the fee assessment could be considered a tax. Mr. Fields explained it was not considered a tax but an administrative fee to operate the Department of Minerals' regulatory program.
Mr. Perkins noted a compliance audit had found the department had failed to collect some mining and geothermal fees. Mr. Fields explained fees on the mining industry for securing abandoned mines had been imposed as part of the reclamation law adopted in 1989. Miners submitting plans for approval were not aware of the requirement to pay the new fee to the Department of Minerals. Therefore, the department had to institute a program to locate those miners and pursue payment. He explained there was now a billing and collection policy in place. In regard to geothermal fees, the Commission had adopted new regulations to raise geothermal fees from approximately $5,000 per year to approximately $60,000 per year. The $60,000 was commensurate with costs to the department to implement the regulatory program.
Ms. Giunchigliani inquired whether late charges were assessed on past due fee payments. Mr. Fields stated there was no provision in statute for late charges. The department's only recourse was to pursue non-payment through the Attorney General's Office, which, in many cases, was not feasible. He said late charges would make sense.
There being no further business, the meeting was adjourned at 10:55 a.m.
RESPECTFULLY SUBMITTED:
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C. Dale Gray
Committee Secretary
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Assembly Committee on Ways and Means
February 1, 1993
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