MINUTES OF THE

ASSEMBLY COMMITTEE ON WAYS AND MEANS

Sixty-seventh Session

April 16, 1993

The Assembly Committee on Ways and Means was called to order by Chairman Morse Arberry, Jr., at 8:00 a.m., on Friday, April 16, 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

Perry Comeaux, Executive Director, Department of Taxation, stated the purpose of combined tax audit teams was to prevent intrusive audit coverage of Nevada businesses. He explained the average number of audit hours currently required to provide coverage totaled 33 hours; 16 for sales and use tax, 4 for business tax; 6 for the Employment Security Department (ESD); and 7 for the State Industrial Insurance System (SIIS). The Department of Taxation estimated a combined tax audit team could provide the same coverage in 23 hours: 16 for business tax and 7 for payroll based taxes. The combined tax audit team would provide a 30.3 percent efficiency savings.

Mr. Comeaux explained Exhibit C represented a change from the original plan presented in the Executive Budget which called for 14 new positions. The positions included 1 supervising auditor, 1 principal auditor, 10 senior auditors and 2 account clerks. The original proposal also called for budget transfers from the Employment Security Department (ESD) and State Industrial Insurance System (SIIS) totaling approximately $955,667 in FY 94 and $1,350,894 in FY 95 for each agency. Additional monies would be transferred in FY 94 from these agencies to the Department of Taxation for costs associated with the transfer of 59 ESD and SIIS audit positions for the period July 1, 1993 to September 30, 1993. The new plan would eliminate additional transfers for the July 1, 1993 to September 30, 1993 period, change the audit services transfer amounts and reduce the number of new staff for the Department of Taxation from 14 to 11. The new proposal resulted from discussions with ESD and information obtained from SIIS related to desk audits.

Mr. Comeaux stated the total number of audit hours available in each year for each field auditor was 1,792, and had been calculated to allow for leave time and holidays.

Mr. Comeaux stated the total cost of combined audit coverage for 3/4 of FY 94 (beginning October 1, 1993) was $2,776,832 and $3,921,755 for FY 95. The costs were based on salary costs for field auditors, supervisory audit staff and clerical positions. The estimate included related travel, operating, training, data processing and out-of-state audit costs associated with combined audit teams. The estimate did not include an allocation for executive support or administrative costs.

Mr. Comeaux explained in the revised proposal, six auditors transferred from ESD and SIIS would be used to implement the combined tax audit program. An additional eight field auditors were requested by the Department of Taxation to increase the level of audit coverage and allow for growth in accounts. Of the 14 audit positions only 10.5 FTE would be utilized in FY 94 because they were calculated based on 3/4 of a year. Therefore the Department of Taxation would have 42 FTE available in FY 94 and 59 FTE in FY 95. The number of auditors was multiplied by the number of audit hours available, 1,344 in FY 94 and 1,792 in FY 95, which resulted in 56,448 total audit hours available in FY 94 and 105,728 in FY 95. The estimate for non-productive hours due to turnover was calculated at 2.7 percent.

Mr. Comeaux explained in the first year deductions for training were significant because a large number of existing staff would be required to train the new positions. Mr. Comeaux estimated an auditor could be functionally trained by another experienced auditor in approximately four months. In addition to the nonproductive time of the amateur auditor the production for the veteran auditor would also decrease. Therefore approximately 6 months nonproductive time would result. A training factor of 49.5 percent had been estimated for every new position. As a result of the deductions for turnover and training the audit hours available for combined audits totaled 47,373 in FY 94 and 98,871 in FY 95.

Mr. Comeaux continued to explain the assumptions used in estimating the number of hours needed to complete a combined tax audit. In the worst case the Department estimated the average number of hours for a combined audit would be 23; and 21 hours in the best. Mr. Comeaux asserted the best case was likely because the average hours required for sales tax audit would drop from 16 to 14. The drop would occur because of expanded sales tax audit coverage and specific selection criteria for payroll based audits. He commented the number of audits completed in the worst case scenario would be 2,060 in FY 94 and 4,299 in FY 95. In the best case scenario 2,256 audits in FY 94 and 4,708 audits in FY 95 would be performed. The total cost per audit hour was $58.62 for FY 94 (training factor included) and $39.67 for FY 95.

According to Mr. Comeaux the audit hours billed to SIIS and ESD under the worst and best case scenarios were based on the number of hours required to complete the audits multiplied by the hourly cost per audit. Under the best case scenario audit transfers from ESD totaled $793,381 in FY 94 and $1,120,501 in FY 95. The amounts were slightly higher for SIIS, due to the complexity of verifying employee classifications as part of the audit procedures.

The revised proposal accounted for only 6 of 7 requested field auditors, the seventh auditor would be utilized exclusively for SIIS desk audits.

Mr. Comeaux commented the remainder of the schedule, (Exhibit C), was composed of estimates of various levels of audit coverage. Sales and use tax coverage for FY 94 would be approximately 7.13 percent in FY 94 and 10.28 percent in FY 95. The audit coverage provided to SIIS was estimated to be approximately 13.5 percent in FY 94 and 13.25 in FY 95.

Mrs. Evans requested the amount of FY 91-92 sales tax auditing services expenditure. Mr. Comeaux explained the total cost of the audit operation was $1,690,629 in FY 91 and $2,301,204 in FY 92; 95 percent of which had been expended for sales and use tax audits. The total number of field auditors in FY 92 was 33.9 FTE. Therefore the cost per audit hour in FY 92 was $37.88.

Mrs. Evans asked the anticipated expenditure for sales tax audits over the next biennium. Mr. Comeaux replied sales and use tax audit expenditures would total approximately $822,765 in FY 94 and $1,162,001 in FY 95, (Exhibit C).

Mr. Marvel asked if performance audits, currently performed by ESD, would continue. Mr. Comeaux explained the Department of Taxation would perform payroll audits to ensure the correct amount of tax or premium had been paid. Additionally, the Department of Taxation would review employee classification for SIIS and, if necessary, perform wage verification for claims. Mr. Comeaux indicated the audit of obstructed claims for ESD was being reviewed by a combined Department of Taxation/ESD taskforce. However at the present time ESD would continue to audit obstructed claims.

Ms. Giunchigliani asked how frequently businesses were audited. Mr. Comeaux stated generally the Department of Taxation had three years to audit registered companies; non-registered companies could be audited up to eight years. Ms. Giunchigliani asked if every business in the state was audited at least once every eight years. Mr. Comeaux stated that was an incorrect conclusion. The Department of Taxation audited approximately 6.3 percent of the registered sales tax accounts in FY 91.

Ms. Giunchigliani commented the purpose of the consolidated tax audit team was to prevent several agencies from auditing the same business. She asserted consolidated tax audit teams might be premature because: (1) all of the agencies would not audit the same business in the same year; (2) AB 153, which would consolidate fees and collections, may resolve some of the concerns of Nevada business; (3) SIIS reforms; and (4) potential changes in ESD employee reporting methods for unemployment benefits. Mr. Comeaux replied for the most part audit selection should be made on the basis of risk. He contended if selection was based on risk there was a high probability all of the agencies would audit the same business.

Ms. Giunchigliani asked if desk audits were currently performed by the Department of Taxation. Mr. Comeaux explained SIIS currently performs desk audits.

Chairman Arberry asked what percentage of audit coverage was currently achieved by ESD and SIIS. Mr. Comeaux replied ESD provided approximately 2 percent audit coverage and SIIS provided approximately 29 percent audit coverage. Chairman Arberry asked for an estimate of the audit coverage under the new proposal. Mr. Comeaux answered audit coverage for SIIS was estimated at approximately 13.5 percent and ESD at approximately 15 to 20 percent.

Speaker Dini commented the net effect to the business had not been determined. Documentation requirements for consolidated tax audit teams may be more cumbersome to small businesses than their present situation. Mr. Comeaux asserted efficiencies could be achieved by implementing consolidated tax audit teams. Mr. Comeaux explained efficiency could be demonstrated by the reduction in the average number of hours required to perform a sales and use tax audit. ESD, SIIS and business tax audits were all payroll based audits and therefore would access the same set of records. Efficiencies could be achieved if one auditor performed all payroll audits simultaneously. These audits done individually take approximately 17 hours. However, consolidated tax audit teams could complete the audit in 7 hours. One shortfall of the consolidated tax audit proposal was an increased liability to small businesses because all tax liabilities would be assessed in one year rather than spread over a number of years.

Chairman Arberry asked if the federal government would pay for the increased audit coverage provided to ESD accounts. Mr. Comeaux was confident a cooperative agreement between the Department of Taxation and ESD would conform to the federal funding requirements. Mr. Comeaux explained a meeting between ESD, the Budget Office, the Department of Taxation and the Department of Labor had taken place. He explained funding from the Department of Labor was utilized and distributed at the discretion of ESD. The program was required to conform to federal government regulations, and as long as the state conformed to those regulations, he was not concerned about a funding problem.

Mr. Perkins asked why some businesses were registered and others were not. Mr. Comeaux explained sales and use tax registration was not required for non-retail businesses. Presumably non-retail businesses would be registered for payroll purposes if they had employees.

Mr. Perkins asked why a variation existed between the projected audit penetration levels of SIIS and ESD. Mr. Comeaux explained the audit penetration level required for each agency was distinct because of variation in the number of employers reporting to each agency. For example 28,000 employers reported to ESD and 40,000 employers to the Department of Taxation and SIIS for the sales and use tax and workers compensation insurance.

Mr. Price commented the combined tax audit team would force auditors from SIIS and ESD to perform audits in areas they were not familiar with. Mr. Comeaux replied the auditors from the Department of Taxation currently performed sales and use tax audits and were beginning to perform business tax audits. He stated it was an oversimplification to say all auditors could perform all types of audits. However, the basic principles were the same for ESD, SIIS and the Department of Taxation. There were complications which would require specific training and education but he was confident the auditors would be capable of performing combined tax audits.

Mrs. Evans referred to Exhibit C. She commented audit operations for the Department of Taxation totalled $2.3 million in FY 92, of which 95 percent was attributable to sales and use tax audits. Mrs. Evans then referred to projected sales and use tax audit charges for the Department of Taxation under the combined proposal which totaled $822,765 in FY 94 and $1,162,001 in FY 95. Mrs. Evans stated actual expenditures over the last biennium for ESD payroll audit and non-payroll audit functions were $1.5 million, these same functions were projected to cost $2.9 over the next biennium if the consolidated tax audit teams were implemented. She concluded the costs to the General Fund for sales and use tax was projected to decrease substantially while at the same time the costs assigned to ESD were projected to increase by over $1 million. Mr. Comeaux replied Mrs. Evans was correct. He explained all of the benefits derived from the efficiency of the combined audits under the billing scheme would accrue to the General Fund thereby reducing General Fund costs. However, ESD and SIIS would be billed at the appropriate hourly rate for audit services. Mrs. Evans concluded the combined audit team would benefit the General Fund. However, the financial impact, a $1 million increase, on ESD would be significant. Mr. Comeaux interjected the audit penetration rate for ESD would increase from 2 percent to approximately 15 to 20 percent, thereby increasing the amount recovered to ESD's trust fund. Mrs. Evans commented the testimony from the Department of Labor would reveal whether the federal government was willing to pay for the increased audit penetration rate.

DEPARTMENT OF LABOR - JOHN HUMPHREY

John Humphrey, Regional Director for Unemployment Insurance, U.S. Department of Labor (DOL), testified on behalf of the DOL regarding the combined tax audit proposal and its impact on the federal grants received by the state of Nevada (Exhibit D). Mr. Humphrey explained the unemployment insurance (UI) system was a cooperative agreement between federal and state governments. The administrative costs of the unemployment insurance system are paid by the DOL. Nevada received approximately $18.5 million from the DOL for UI administration cost in 1990. Mr. Humphrey asserted General Fund monies were not used to administer the UI program in Nevada.

Mr. Humphrey explained Title III of the Social Security Act established the UI program in the United States and set certain minimum funding requirements to be met by all states. Mr. Humphrey stated explicitly he was a representative of the DOL and any information to follow would not advocate the opinions held by the Department of Administration, Department of Taxation or ESD.

Mr. Humphrey asserted the DOL took exception to the combined tax audit proposal for two reasons: (1) possible misallocation of federal funds; and (2) the proposed audit penetration level was far in excess of what was necessary for proper and efficient administration of the unemployment insurance system.

Mr. Humphrey commented the Labor HHS Education Appropriation Act did not allow money provided for the UI system in Nevada to be used to collect sales and use tax. Further, if the U.S. Congress had intended federal UI funds to be used in this manner it would have been explicitly stated in the Act. Department of Labor unemployment insurance funding could only be used to administer the unemployment insurance program. Mr. Humphrey asserted the background information provided to him indicated there would be efficiency savings as a result of the combined audit proposal. However, all of the savings would accrue to the Department of Taxation and the General Fund; none of the efficiencies would accrue to the UI system. The combined audit proposal would set the state of Nevada up for an audit disallowance. He emphasized the state of Nevada could not use federal UI monies for anything other than the administration of unemployment insurance system. Mr. Humphrey warned if the combined audit proposal was approved the DOL would likely conduct a financial audit. If federal UI monies were spent for purposes other than administering the UI compensation program, an audit disallowance would occur and Nevada would be required to reimburse the federal funds from state resources. Mr. Humphrey stated it was possible to avoid an audit disallowance through an accurate accounting system.

Mr. Humphrey explained the DOL did not feel the proposed 16 percent audit penetration rate was necessary for the efficient administration of the UI system in Nevada or in any other state. The DOL recommended a 2 percent audit penetration rate for Nevada. Mr. Humphrey stated the $18.5 million allocation should be used for more than conducting tax audits. The DOL did not believe mandating $1.3 million annually for activities that currently cost $138,000 was necessary for proper and efficient administration of the UI system. The DOL had informed the Governor that the combined tax audit proposal was in violation of the Social Security Act and out of conformity with Title III. Mr. Humphrey stated the DOL intended to take appropriate action to initiate conformity hearings if the proposal was implemented.

Chairman Arberry asked when the DOL had informed the Governor the tax audit proposal would be out of conformity with Title III. Mr. Humphrey replied March 30, 1993.

Mr. Humphrey stated the DOL became concerned when functions were spread over many agencies. Organizational integrity was of paramount importance to the DOL. In Mr. Humphrey's opinion, the UI system was highly structured and integrated. Therefore, dispersing functions throughout several departments was not conducive to the efficient administration of the UI system.

Chairman Arberry asked if other states had implemented combined tax audit programs. Mr. Humphrey replied other states had implemented similar programs, however, the scope of Nevada's proposal was much larger. Other states had consolidated several of the same types of audits. The California Employment Development Department conducted tax audits for four different taxes; disability insurance, employment training, unemployment insurance and personal income tax. All were payroll based audits with the same rules and codes. Montana combined SIIS and UI audit functions into one organization but have returned to separate audits.

Mrs. Williams commented the Peat Marwick Consulting Group had also performed a study in Iowa. She asked if a combined tax audit proposal had been recommended in Iowa as well. Mr. Humphrey indicated he would gather specific information on the Iowa proposal and provide it to the committee at a later date.

Ms. Giunchigliani referred to Exhibit D page 3, which described shortfalls in Nevada's UI methods of administration over the past two years and asked if the lack of staffing had aggravated the problem. Mr. Humphrey stated a lack of staffing was an important element. In 1989, Secretary Martin wrote a letter to the Governor requesting the hiring freeze be suspended for ESD so the backlog of UI claims could be processed. The ESD made some procedural changes through a corrective action plan and was now very close to conformity.

Ms. Giunchigliani expressed concern if the combined audit program was implemented conformity problems could resurface. She commented the other functions performed by the ESD field auditors would not be maintained. Mr. Humphrey stated this was the heart of the problem. ESD auditors performed other critical functions such as collecting delinquent taxes and clearance of blocked claims. Ms. Giunchigliani commented a net savings to the General Fund would not occur if the combined audit proposal was implemented. An additional concern was the loss of productivity because of training requirements.

Mr. Heller asked if the $1.2 million increase in audit penetration costs would be subject to audit disallowance. Mr. Humphrey stated it was a possibility. If the DOL found the UI administration in the state did not conform with Title III of the Social Security Act, there were a number of actions which could be taken: (1) audit disallowance; or (2) disallow the entire federal grant amount. If the entire grant was disallowed the state would have to provide its own UI system. The employers would have to pay a 6.2 percent unemployment tax rather than .8 percent which was the current level. Mr. Heller commented the committee had two choices; (1) implementing the proposal which would save approximately $3.5 million to the General Fund; or (2) forfeit the entire UI grant. Mr. Heller commented the combined tax audit proposal could be a mistake.

Ms. Tiffany referred to Exhibit D page 3 which stated concerns the DOL had regarding the centralization of ESD's data processing with the proposed Information Technology Services Division. Ms. Tiffany asked if centralizing the data processing functions could also jeopardize UI federal funding. Mr. Humphrey indicated the issues discussed earlier concerning the combined tax audit proposal were also applicable to centralizing data processing: (1) proper allocation of costs and (2) the potential for degradation of services. Ms. Tiffany commented the cost savings would be reverted to a different fund and not be shared with the federal source. Mr. Humphrey stated consolidating data processing was not at issue, however, cost allocation and services provided by the increased costs were at issue. Mr. Humphrey stated it was not difficult to consolidate data processing functions and remain in conformity.

Chairman Arberry commented the committee had concerns about the combined tax audit proposal and thanked Mr. Humphrey for his enlightening information.

Donald Jayne, SIIS General Manager, stated SIIS was a non-General Fund agency with a trust fund designed and set aside for injured workers. Any potential misallocation of the trust fund would deteriorate an already bankrupt insurance company. SIIS estimated 4.1 hours would be required to perform the SIIS portion of an audit. The combined tax audit proposal would charge SIIS 7 hours for the same audit. The proposal would also deplete needed resources from SIIS.

Mr. Jayne stated the approach to the types of audits performed by the Department of Taxation, SIIS and ESD was distinct. Mr. Jayne acknowledged it was possible for the Department of Taxation to learn to perform payroll audits. However, SIIS developed rates for employers within the state, and has had difficulty setting rates in the past because of inadequate statistical information. In Mr. Jayne's opinion revenue collection was not the most important function of an insurance audit. The verification and collection of data was critical to the insurance company. Risk according to Mr. Jayne was the potential loss exposure of claims for injured workers, not revenue collection. If information was eroded it affected the ability to determine proper rates and charge proper premiums for coverage and exposure.

Mr. Jayne supported AB 356 which consolidated forms and limited intrusion on business for audit procedures from all state agencies. He did not however wish to relinquish the internal review of the information gathered for payroll audits. Mr. Jayne was concerned SIIS would not receive the same level of coverage and statistics which were available at this time if the consolidated tax audit proposal was implemented.

Chairman Arberry asked when the revised budget based on the new consolidated tax audit proposal would be completed and available. Mr. Thorne indicated changes in required categories and position listings would be made available by April 21, 1993.

BUDGET CLOSINGS

EXTRADITION COORDINATOR - PAGE 34

Chairman Arberry asked for staff recommendations. Mr. Stevens said he had no recommendations for the budget.

MR. SPITLER MOVED TO CLOSE THE EXTRADITION COORDINATOR BUDGET AS RECOMMENDED BY THE GOVERNOR.

MR. MARVEL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY, MR. HELLER, MS. GIUNCHIGLIANI AND MR. PRICE WERE ABSENT.

BUDGET CLOSED.

DEPARTMENT OF MUSEUMS, LIBRARY AND ARTS - PAGE 1120

Chairman Arberry asked for staff recommendations. Mr. Stevens said a new director of Museums, Libraries and Arts was included in the Administrative Services Budget. The "value of" an accountant was included as reorganization savings within the account. Mr. Stevens pointed out once a decision was made on the status of the "value of" positions, the budget may be revisited.

MR. MARVEL MOVED TO CLOSE THE DEPARTMENT OF MUSEUMS, LIBRARY AND ARTS AS RECOMMENDED BY THE GOVERNOR.

MR. HUMKE SECONDED THE MOTION.

Ms. Giunchigliani noted the public information officer was going to be funded through the room tax. Mr. Stevens stated agency transfers totalling $32,966 would fund the position.

THE MOTION CARRIED UNANIMOUSLY, MR. HELLER WAS ABSENT.

BUDGET CLOSED.

ADMINISTRATIVE SERVICES DIVISION - PAGE 1182

Chairman Arberry asked for staff recommendations. Mr. Stevens said the budget was the new administrative account for the Department of Museums, Libraries and Arts. Enhancement 240 on page 1183 of the Executive Budget provided for the Office of Science and Technology.

MR. HUMKE MOVED TO CLOSE THE ADMINISTRATIVE SERVICES DIVISION BUDGET WITH THE EXCEPTION THE OFFICE OF SCIENCE AND TECHNOLOGY BE TRANSFERRED TO THE COMMISSION ON ECONOMIC DEVELOPMENT.

MS. TIFFANY SECONDED THE MOTION.

MOTION CARRIED UNANIMOUSLY. MR. HELLER WAS ABSENT.

BUDGET CLOSED.

STATE MUSEUM, CARSON CITY - PAGE 1124

Chairman Arberry deferred action on this budget.

NEVADA HISTORICAL SOCIETY - PAGE 1128

Chairman Arberry asked for staff recommendations. Mr. Stevens commented a new $2 admission fee was recommended in the Executive Budget. Staff had no recommendations for the budget.

MRS. EVANS MOVED TO CLOSE THE NEVADA HISTORICAL SOCIETY BUDGET AS RECOMMENDED BY THE GOVERNOR.

MR. MARVEL SECONDED THE MOTION.

Speaker Dini asked which bill proposed the $2 raise in admission fees. Mr. Thorne would report the answer to the committee at a later date.

THE MOTION CARRIED UNANIMOUSLY. MR. HELLER WAS ABSENT.

BUDGET CLOSED.

NEVADA STATE RAILROAD MUSEUM - PAGE 1132

Chairman Arberry asked for staff recommendations. Mr. Stevens said the staff had no recommendations for the budget. He noted the admission fee increased from $1 to $2.

MR. MARVEL MOVED TO CLOSE THE NEVADA STATE RAILROAD MUSEUM BUDGET AS RECOMMENDED BY THE GOVERNOR.

MRS. EVANS SECONDED THE MOTION.

Speaker Dini asked if the Nevada State Railroad Museum would receive a $200,000 agency transfer from the Nevada Commission on Tourism. Mr. Stevens replied an agency transfer of $200,000 in room tax from the Commission on Tourism was included in the account.

Ms. Giunchigliani asked if the budget would be adjusted after the pending bills were passed. Chairman Arberry replied the budget would be revisited after the bills were passed.

THE MOTION PASSED UNANIMOUSLY. MR. HELLER WAS ABSENT.

BUDGET CLOSED.

RAILROAD DEPOT - EAST ELY - PAGE 1136

Chairman Arberry asked for staff recommendations. Mr. Stevens said the staff had no recommendations for the budget.

MRS. EVANS MOVED TO CLOSE THE RAILROAD DEPOT - EAST ELY BUDGET AS RECOMMENDED BY THE GOVERNOR.

MR. HUMKE SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY. MR. HELLER WAS ABSENT.

BUDGET CLOSED.

STATE MUSEUM, LAS VEGAS - PAGE 1139

Chairman Arberry deferred action on the budget.

LOST CITY MUSEUM - PAGE 1143

Chairman Arberry asked for staff recommendations. Mr. Stevens said the staff had no recommendations for the budget. He pointed out the budget did include an admission fee increase from $1 to $2.

SPEAKER DINI MOVED TO CLOSE THE LOST CITY MUSEUM BUDGET AS RECOMMENDED BY THE GOVERNOR.

MR. PERKINS SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY. MR. HELLER WAS ABSENT.

BUDGET CLOSED.

HISTORIC PRESERVATION - PAGE 1147

Chairman Arberry asked for staff recommendations. Mr. Stevens was concerned the 60/40 federal/state match would not be met because of the funding mechanism for the account. Mr. Stevens indicated staff would make a number of recommendations for the budget. He noted staff recommended deleting $1,000 savings in the travel and operating categories for each fiscal year. If the Department of Conservation and Natural Resources was transferred to the Department of Museums, Library and Arts it would relocate in the new library building which represented a rent savings of $3,500 in FY 94 and $5,000 in FY 95. In addition federal funds of $1,467 contained in the reserve category would be eliminated. Mr. Stevens suggested the remaining savings be allocated to survey and planning grants. The allocation would increase the grants to $3,900 in FY 94 and $4,900 in FY 95. He indicated the overall impact to the General Fund from staff recommendations was an additional $352 in FY 94 and savings of $293 in FY 95. Therefore the cost over the biennium would be $60.

Mrs. Evans reminded the committee the budget recommended elimination of the historic markers program which was of interest to tourists. The cost to include the historic markers program in the budget was $10,000 in FY 94 and $5,000 in FY 95. Mr. Stevens confirmed the historic marker program had been eliminated. The cost to fully fund the program was approximately $10,000 per year.

MR. MARVEL MOVED TO CLOSE THE HISTORIC PRESERVATION BUDGET AS RECOMMENDED BY STAFF.

MR. HUMKE SECONDED THE MOTION.

Mr. Perkins reminded the committee no clerical staff had been included in the budget. Mr. Stevens confirmed clerical staff had been eliminated in order to meet the budget target set by the Governor. The Governor's proposal recommended clerical services be provided by the library staff.

Ms. Giunchigliani indicated she would not support the motion if clerical support was not included in the budget.

Chairman Arberry deferred action on the budget.

MR. MARVEL WITHDREW HIS MOTION.

MR. HUMKE WITHDREW HIS SECOND.

COMSTOCK HISTORIC DISTRICT - PAGE 1151

Chairman Arberry asked for staff recommendations. Mr. Stevens said no provision for commissioners salaries had been included in the budget. The cost to include commissioners salaries was $5,860 for each year of the biennium. Testimony indicated the Comstock Historic District would need to reprint brochures by FY 95, however, the funding for the brochure had not been included in the budget. The total cost to reinstate brochure funding was $12,000 in FY 95.

Mr. Price asked how much the commissioners were paid on a daily basis. Mr. Stevens stated the commissioners were paid $80 per day. Mr. Stevens indicated it was possible to pay commissioners a lesser amount.

Speaker Dini indicated the commission was required to meet often because they reviewed and approved all building plans for the Comstock Historic District.

SPEAKER DINI MOVED TO AMEND THE BUDGET TO INCLUDE COMMISSION MEMBERS SALARY, BROCHURE FUNDING, AND RETAIN REGULATORY STATUS AND CLOSE AS AMENDED.

Mr. Stevens stated the cost to include commission salaries and brochure funding was $5,860 in FY 94 and $17,860 in FY 95.

MS. GIUNCHIGLIANI SECONDED THE MOTION.

Ms. Tiffany asked if the commission would be advisory or regulatory. Chairman Arberry indicated the status of the commission would be a separate matter.

Speaker Dini advocated the commission remain regulatory because of the issuance of building permits.

Mr. Humke asked if commissioners who were also county employees received salary compensation. Speaker Dini was unsure.

Mr. Spitler asked if the commission assessed fees for issuance of building permits. Mr. Ghiggeri replied the only funding source for the budget was the General Fund. Mr. Spitler asked if action on the budget could be held until it was determined why the commission did not charge a fee for building permits. Chairman Arberry agreed to defer action on the budget.

NEVADA STATE LIBRARY - PAGE 1159

Chairman Arberry asked for staff recommendations. Mr. Stevens said the Deputy Director position was suggested for elimination. The committee could choose to: (1) approve the Governor's recommendation; (2) reinstate the position; or (3) recategorize reorganization savings as vacancy savings thereby allowing the agency to generate savings from within the entire budget. Additionally, gifts and donations funded the entire $153,000 book budget. Options included: (1) split the cost 1/3 General Fund for a cost of $50,000, 1/3 library development Title I federal funds which were usually awarded to local governments, and 1/3 gifts and donations; (2) allocate $51,000 Title I federal funds and $102,000 grants, gifts and donations. Bookmobile funding was recommended to be $72,000 over the biennium. Previously funding had been approved at $96,000. Mr. Stevens suggested any increase in funding should require local government matching funds.

Mrs. Evans commented the responsibilities of the Deputy Director of libraries included the statewide inter-library loan program, reference program and operations of the library. Therefore the elimination of the position would have severe impact on the library's ability to function. To suggest the gifts and grants as the only source of funding for book funding was ludicrous.

Chairman Arberry deferred action on the budget.

There the meeting was adjourned at 10:00 a.m.

RESPECTFULLY SUBMITTED:

_________________________

Courtnay Berg

Committee Secretary

Assembly Committee on Ways and Means

April 16, 1993

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