MINUTES OF THE
ASSEMBLY COMMITTEE ON WAYS AND MEANS
Sixty-seventh Session
June 28, 1993
The Assembly Committee on Ways and Means was called to order by Vice Chairman Larry Spitler, at 8:55 a.m., on Monday, June 28, 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
Ms. Jeanne Botts, Program Analyst
SB476Creates recreational trail advisory board and provides funding for recreational trails.
Mr. Steve Weaver, Chief of Planning and Development for the Division of State Parks, testified the intent of SB476 was indirectly addressed in the study of State Parks (Legislative Counsel Bureau Bulletin 93-6) under the discussion and analysis of Recreational Trails. The study recognized the importance of trails in Nevada and addressed the federal funds which were available to the states for the development, maintenance and management of trails under the provisions of the Symm's National Recreational Trails Fund Act of 1991.
Mr. Weaver stated the Division State Parks supported this bill because it helped meet a growing recreational demand for trails in this state. He explained the Symm's Trail Act was passed by Congress and signed into law by former President Bush in December of 1991. It set up a national trails program which was intended to provide funds to the States to be used for the development and maintenance of recreational trails and trail-related projects.
He indicated the trails program was a federally-assisted, state-administered program. Each State Governor had designated a state agency and official who would administer the program and the program funds. Mr. Weaver indicated, in Nevada, the Division of State Parks had been designated the program administration agency and he was the designated administrative officer. He elaborated the Symm's Act authorized up to $30 million per year to be distributed to the states through 1997. Based on the funding formula, Nevada could receive almost $333,000 per year. For FY93,
however, Congress only appropriated 25 percent of the authorized amount, or $7.5 million. As a result, Nevada would be receiving $83,224 this year.
Mr. Weaver pointed out Nevada was currently eligible for any available funds through December 18, 1994, but in order to maintain eligibility, Nevada must do two things prior to the date: 1) a state recreation trails advisory board (SRTAB) must be established; and, 2) the state must raise its share of funding for the program. He explained SB476 would enable Nevada to meet both requirements.
Mr. Weaver explained SB476 would set up a Governor-appointed five-member citizens' trail advisory board and would provide for the state's share of funding for the National Trails Program. The funding mechanism was modeled after the state's existing motorboat fuel program, but would utilize state fuel taxes already paid by recreationists for off-highway land-based recreational activities instead of water-based activities.
He testified the motorboat fuel program was a time-tested and proven program which had been in effect for over twenty years. From an administrative standpoint, the program affords an ideal model for an efficient and effective user-funded trails program. He pointed out, the proposed state trails program would be not only practical, but also fair to taxpayers.
As defined in the Federal guidelines which interpret the Symm's Act, each state must dedicate an amount of money equivalent to what the state receives from taxes on fuel used for off-road recreational purposes. This represented the state's share of funding for the National Trails Program.
Mr. Weaver emphasized the actual dollar amount of the state's share would depend upon the results of the UNR study authorized in Section 15 of the bill. He stated, based on Federal Highway Administration estimates of off-highway recreational fuel consumption, Nevadans consumed about 1.75 million gallons per year. Based on the 23-cent state motor vehicle fuel tax in Nevada, 1.75 million gallons would general about $407,000 per year to augment the federal funds available.
Vice Chairman Spitler asked if the $12,000 general fund appropriation would be a loan. Mr. Weaver replied yes, it would be paid back in FY95. He explained the total study cost would be approximately $18,000, but $6,000 in federal funds would be used.
Mr. L.D. Bennett, president of the Tahoe Rim Trails Foundation, State Director of Backcountry Horsemen of Nevada, National Director of the Backcountry Horsemen of American and a member of the State Ad Hoc Trails Advisory Committee, testified in support of SB476. He provided the committee with information on the Trails Foundation (see EXHIBIT C) which included a list of organizations and their number of members in support of this legislation.
Vice Chairman Spitler asked, related to the trails currently used, what other funding was available to the organizations. Mr. Bennett explained the majority of funding was through private donations and foundations. Vice Chairman Spitler asked if any of the trails were open to motor vehicles. Mr. Bennett replied no, the Tahoe Rim Trail was strictly for hiking, equestrian and some mountain biking.
Mr. Marvel inquired if there were any constitutional problems in using gasoline tax funds for this purpose. Mr. Weaver replied some questions had been raised, but the usage was based on the use of motorboat fuel tax as determined in 1970. Mr. Marvel asked if the
constitutionality had ever been tested. Mr. Weaver indicated there was an argument for it being unconstitutional, but it was weak and not tested.
Mrs. Evans stated she was not clear on who would be allowed to utilize the trails. Mr. Weaver explained Mr. Bennett was addressing only the Tahoe Rim Trail. SB476 would provide funds for all types of trails and trail users on local, state, federal and private land as long as some guarantee for public use was in place. He explained 30 percent was for motor use, 30 percent was for non-motor use and 40 percent was discretionary. Mrs. Evans commented squabbles do occur related to trail usage and asked how use would be determined. Mr. Weaver explained usage of trails was an evolutionary process and the bill was not to address management of the trails, but to provide public information on the access to trails.
Mr. Bennett explained the Tahoe Rim Trail and the other organizations he was speaking for (see EXHIBIT C) would have to go through the grant process for funds for specific projects just like any other organization. He noted the motorized trail using community also supported SB476. He was not aware of any trail using groups which were not in support of this bill.
Ms. Giunchigliani asked how the department would determine fuel attributable to off-road motor usage each year. Mr. Weaver indicated it would be determined through the study addressed in Section 15 of the bill. It would be completed tri-annually by UNR and included within the scope of work a mechanism for state parks to utilize the most recent study results to apportion funds each successive year.
Ms. Giunchigliani asked who would be deciding what trail would be used for what purpose. Mr. Weaver replied it would be a land management agency, such as the Division of State Parks, which had a master plan for trail types. She asked what the environmental issues were and how they had been addressed. He replied the federal legislation requires that NEPA (National Environmental Protection Agency) regulations be addressed on any allocation of federal funds. He noted private lands were exempt from NEPA regulations.
Ms. Giunchigliani asked what was attempting to be accomplished. Mr. Weaver explained beginning in 1995, based on the UNR study, the state trails program would obtain a portion of the motorfuel tax which would then be utilized as the state's portion of the federally authorized program. Both the state and federal funds would be used for grants as reviewed and distributed by the trails board.
Ms. Giunchigliani inquired if a match would be required. Mr. Weaver replied it would not be required, but was always encouraged.
Ms. Anne Kersten, Toyiabe Chapter of the Sierra Club, testified in support of SB476. She pointed out it was a quality of life issue and emphasized if SB476 failed there would be a loss of federal funds.
Ms. Carole Vilardo, Nevada Taxpayers Association, discussed the creation of another board. She recommended the trails board should be consolidated into an existing board especially in light of the reorganization deleting a number of existing boards. She stated discussions with the Senate Finance Committee indicated they were agreeable to placing the board with another board.
Vice Chairman Spitler asked if there was any concern over the erosion in the highway fund. Ms. Vilardo commented there was a concern related to the need for money, yet the logic was the vehicles discussed in this bill were not the same which utilized the highways. She commented it would be preferable to have no exemption from the highway funds, but it would be a policy question. Mr. Spitler remarked it was understood no vehicle licensed for on-road use would be included in this bill's formula. Ms. Vilardo replied that was the understanding.
Mr. Dini suggested putting this board in with the Natural Resources Board which was a combination of two or three boards under Conservation and Natural Resources area.
Ms. Stephanie D. Licht testified her concern over the issue of the quality of the highways. She stated the monies which go into the highway fund were matched by federal funds. She remarked testimony had stated $400,000 in motor fuel tax would be allocated for trail use to get a federal match of $83,000 while losing a dollar for dollar match on highway dollars. She stated this would be an inequitable situation.
Mr. Tom Bentz testified his concern over the whole trails bill concept. He stated the majority of trails and tracks were originally formed by prospectors, ranchers and timber people throughout history to access their land or claim. He emphasized many of these trails have been cut off from use because they were now in designated wilderness areas. He pointed out an examples of a trail where only one hiker had used it over the Memorial Day weekend, but it had to be surrendered by a miner in order for the land to be designated a wilderness area. Lands were already being shut off by the federal government, especially in the central and southern portion of the state. He voiced his concern that putting this vehicular trail program in place, trails would be designated as inaccessible for people who have previously utilized them. He emphasized this was an inevitable outcome with the receipt of federal dollars.
Mr. Bentz pointed out by taking $400,000 from state funds away from highway use it would take away an additional $800,000 in federal match dollars from highway use. He emphasized this bill would help only a small portion of citizens and would be detrimental to many more.
Vice Chairman Spitler closed the hearing on SB476.
SB551Revises provisions governing approval by board of directors of department of transportation of certain purchases by department of transportation.
Mr. Garth Dull, Director of the Department of Transportation, testified the department could live with the bill, but questioned the need for it. He stated all equipment requests were taken before the board for approval prior to coming to the Legislature. It was his understanding the board could already perform the duties outlined in this legislation.
Mr. Marvel inquired what the genesis of this bill had been. Mr. Dull testified he was not sure. He had just recently been made aware of it. Ms. Jeanne Botts explained this bill originated with the Senate Finance committee as a result of discussions on the NDOT budget. She remarked an issue arose over the biennium regarding the purchase of equipment other than large rolling stock, specifically a culvert cleaner and $500,000 in radio equipment which had not been on the 1991-93 equipment purchase list. These additional purchases had been found through an audit by the Legislative Counsel Bureau and there had not been legislative approval for the purchases. Ms. Botts commented the Senate Finance Committee had concerns about a bill from the last session which required items of equipment of $25,000 or more be approved by the Transportation Board, but the board had delegated the approval authority to Garth Dull. Therefore, the Senate Finance committee requested SB551 be introduced to require all equipment purchases of $50,000 or more be approved by the board and authority could not be delegated.
Mr. Dull replied the hydroflusher (culvert cleaner) had been in the 1989-91 budget, but was not purchased until the 1991-93 biennium. He emphasized the radio equipment was also an ongoing purchase of which the board was well aware.
Ms. Vilardo, Nevada Taxpayers Association, supported the bill, but indicated the preference of having the $50,000 purchase level amount retained at the $25,000 level. She explained SB441 of the Sixty-sixth session raised the state gas tax, diesel tax and registration fees to raise funds for the highway fund and had carried a provision that all contracts for equipment over $25,000 would go to the Transportation Board for approval. The reason it was supported was the Highway Department would spend over a biennium between $10 and $15 million on equipment. She noted the desire was to see the funds raised put into the materials which actually maintained the highways. She explained the Association believed much of the equipment could be rented much cheaper than purchased because housing, maintenance and upkeep costs would not be involved. She reiterated it was preferred to have the approval level retained at $25,000 rather than raised to $50,000.
Vice Chairman Spitler closed the hearing on SB551.
SB562Delays effective and expiration dates of Assembly Bill 407 of this session.
Mr. Stevens explained this legislation came as a result of the Capital Improvements Program (CIP) subcommittee recommendation related to the general obligation bond debt for the upcoming biennium. It was a trailer bill to AB407 which would delay the setting aside of $5 million of the debt limit for one year to eighteen months for energy conservation projects. This was a result of the recommendations of the CIP subcommittee.
Vice Chairman Spitler closed the hearing on SB562.
AB295Clarifies provisions governing sale of cigarettes by wholesale dealers.
Mr. Perry Comeaux, Department of Taxation, explained AB295 amends NRS 370.005, a section of the statute defining the basic cost of cigarettes for purposes of fixing the cost below which a wholesaler could not sell the product. He remarked the Nevada Association of Tobacco and Candy Wholesalers sought this change to strengthen their position in and clarify the statute. He indicated the department's current position on the existing basic cost to the wholesaler provision allowed a wholesaler, in determining the cost below which he could not sell his project, to reduce his cost by all off-invoice discounts available from the manufacturer which were related to the purchase of cigarettes and did not require the wholesaler to perform significant other services. He explained additionally, based on an Attorney General opinion, cash discounts were allowed as reductions to cost. The Attorney General stated the current statutory provisions which prevent cash discounts as a cost reduction would be unenforceable because of the effect on cooperatives.
Mr. Comeaux stated the provision was essentially meaningless because of another Attorney General opinion which concluded since the current statute did not specify the manufacturer's invoice cost, then the invoice cost of cigarettes obtained from an out-of-state wholesaler at whatever price chosen was the benchmark. The price could be set after allowing for all manufacturer's discounts and allowances including cash and electronic fund transfer discounts.
Mr. Comeaux emphasized this was all very complicating and confusing. He stressed since the Department of Taxation was made responsible for enforcing these basic cost statutes, which have nothing to do with revenue collection or tax administration duties, many hours have been expended by himself, his staff, the Attorney General's staff and the Tax Commission in attempting to deal with the conflicting interpretations and the mountains of complaints filed.
Mr. Comeaux testified if AB295 did not pass, the Department would conclude the Legislature concurred with the department's position and the Attorney General's opinion, but there would continue to be frequent complaints which would need investigation. He pointed out, more than likely, litigation from one side or the other would occur. This would continue to use up resources of the department which were allocated for other purposes. He emphasized the department had not been provided additional staff or funding to enforce these provisions.
Mr. Comeaux remarked if AB295 did pass, the department would still face the problem of the Attorney General opinion related to cash discounts and would most certainly be involved with litigation initiated by the Association's competitors, again using up the department's resources.
He pointed out, what previously had been a no-hassle, low-cost, high-revenue tax to administer had turned into a nightmare. He remarked the department had been dealing with this issue for four years and had yet to be resolved. It was a very time consuming issue dealt with on a continuing basis.
Mr. Marvel asked what options were available. Mr. Comeaux remarked the basic purpose of the statute was to prevent predatory pricing in the cigarette wholesaling business. This related to pricing and there were statutes to address this issue. The Department of Taxation would not be involved in pricing violations, because it was not part of tax collection. He was not sure how to write laws which would not be subject to various interpretations and litigation. No matter who handles it, it would continue to be a problem because of the competitive nature of the business.
Chairman Arberry inquired if AB295 would help or hurt the department. Mr. Comeaux replied it would help from a standpoint of eliminating some of the differing interpretations in the existing statute. It would not eliminate all the problems because of the Attorney General's interpretation related to cash discounts.
Speaker Dini asked what would solve the problem. Mr. Comeaux responded absolute, clear language which defined what the basic cost of cigarette was could solve it. He clarified the bill should state the basic cost of cigarettes to a wholesaler was the price the manufacturer stated on the invoice without regard to any discounts or allowances which the manufacturer offered off invoice. Mr. Comeaux conjectured whether or not such language would stand up in court was another issue entirely. Mr. Dini noted there were
statutes which already defined predatory pricing. Mr. Comeaux clarified he did not believe the statutes defined it, but only prohibited it.
Mr. Dini asked what the statutes prohibited. Mr. Comeaux explained it prohibited the selling below cost with the intention of eliminating the competition. Speaker Dini pointed out the consequences of eliminating the competition would be the loss of jobs in the state and the loss of small independent operators.
Speaker Dini asked how out-of-state wholesalers were audited. Mr. Comeaux explained revenue stamps must be affixed to each pack of cigarettes sold within Nevada. The wholesaler must come to the Department of Taxation to purchase the stamps.
Mrs. Williams asked if other industries had these problems with cash rebates, discounts and allowances. Mr. Comeaux indicated none which the Department of Taxation dealt with. Mrs. Williams commented on the falling revenues from cigarette sales and asked if the decreases have been monitored. Mr. Comeaux explained the state had been experiencing a decrease in the cigarette revenues but noted, for a while, because of the state's population growth, there was an offset in the decline in consumption related to health concerns and pricing. He stressed the department had not been able to formulate a direct correlation between an increase in price and a drop in consumption.
Mr. Humke inquired if the department could quantify, in money or number of employees, that spent on the tobacco taxation effort. Mr. Comeaux stated he had not attempted to quantify it fiscally, but one tax examiner handles both tax and investigation of complaints. He estimated a total of seven staff members spent a considerable amount of time on the problems associated with cigarette pricing. The hours specifically have not been tracked.
Mr. Humke asked if there was a split on the time spent by Mr. Comeaux directly on complaints generated internally by audits versus by external complaints. Mr. Comeaux replied there had been virtually no audit connection with the administration of this tax. The revenue officers and auditors spent their time checking revenue stamps while in the field to assure the stamps were properly affixed. Other time was assigned directly as a result of complaints.
Mr. Humke questioned what litigation potential was there. Mr. Comeaux stated litigation was inevitable whether or not AB295 passed.
Mrs. Evans asked how often this industry was audited. Mr. Comeaux remarked there was nothing to audit on the tax portion. She inquired if there had been any instances where a wholesaler had not paid the tax. Mr. Comeaux indicated it had occurred, but minimally. He reiterated the tax portion of this industry was a no hassle, high-revenue generating proposition.
Mrs. Evans questioned if the complaints were spread evenly throughout the industry in terms of all wholesalers or was there a cluster of a few who violated the rules more than others. Mr. Comeaux responded over the last four years the complaints centered on two wholesalers. One was the McLane Company and the other he could not recall. Mrs. Evans asked what was the reply by the wholesaler to the complaints. He stated generally the complaints dealt with the different interpretations of the provisions and rebates. Mrs. Evans asked who made the complaints. Mr. Comeaux replied complaints were usually made by the Nevada Association of Tobacco and Candy Wholesalers.
Speaker Dini commented on the retail vending. He stated twice a year the tobacco companies raised the cost automatically. He asked what the interplay with the retailers and wholesalers related to discounting was. He remarked the price never goes down for consumers. He asked who was getting the money. Mr. Comeaux concurred the savings were not passed on to the consumers. The discounts were at the wholesaler level and there were no laws on what retailers could sell the cigarettes for so there was no protection for the consumers.
Chairman Arberry pointed out this was a fiscal issue, not a taxation issue, and requested all comments be related to the fiscal impact.
Mr. C.O. Watson, Executive Director of the Nevada Association of Tobacco and Candy Wholesalers, submitted information related to the legislation (see EXHIBIT D). He testified the regulations to which AB295 applies became effective October 1, 1989 and approximately $200,000 was expended for the 42 months through May 1993. This would equate to $4,800 per month. He pointed out page 1 of EXHIBIT D was a letter from the Department of Taxation confirming there had been "several complaints" filed against McLane Company. During this 42 month period, he noted 85 to 95 percent of all complaints filed had been against McLane Company which was opposing AB295.
Mr. Watson pointed out the cost of complaints processing related to McLane Company would be approximately $190,000 over the 42 months. He indicated Mr. Comeaux could confirm that McLane Company had on several occasions requested research and information from the Department in its efforts to circumvent the regulations. Therefore all expenditures were not created by this Association.
Mr. Watson stated the purpose of AB295 was to clarify the regulations as directed by the Tax Commission in hearings June 23 and December 15, 1992 and discussions with Mr. Comeaux on several occasions beginning in October 1992 (see page 2 of EXHIBIT D) would reduce considerably, or eliminate the violations by, and complaints filed against McLane Company. As Mr. Comeaux had stated, AB295 would simplify the administration of NRS 370,005 which would reduce the administrative costs considerably.
Mr. Watson testified history confirmed since the Cigarette Excise Tax was enacted in 1947 the state had never lost one cent and the Cigarette Wholesaler did not require regular or any auditing checks based on the system. He noted the Cigarette Excise Tax was one of the most, if not the most cost effective of any taxes for the Department. $88 million was generated by the tax for the state and Indian community, with no audits or loss by unpaid tax liability.
He emphasized the industry was confident the enactment of AB295 would reduce the administrative costs considerably as discussions with Mr. Comeaux have concurred.
Mr. Watson concluded if AB295 were not passed an industry already in the State of Nevada would be destroyed. He pointed out $17 million was brought into the state through jobs related to the industry. He pointed out AB295 was not drafted by the Association.
Speaker Dini asked which version of this bill did the Association support. Mr. Watson stated he supported the unamended version.
Mr. Ray Vega, owner and President of Vega Wholesaler, testified if AB295 was not passed he would be out of business. He stated he has been in Nevada for eighteen years and employed 123 employees. He stressed this was a problem as a result of McLane being bought by Walmart and then underpricing the gross profit of locally-owned businesses. He noted the law included in AB295 was currently in 38 other states. He remarked McLane had hired high-priced attorneys and a big law firm in state in an attempt to put the smaller local businesses out of business.
Mr. Vega explained McLane was currently selling cigarettes 34 cents below the current Nevada law. They had not waited for the law to be clarified, they were selling below cost now. He remarked the industry usually made approximately 3 1/2 to 4 percent gross profit, but as a result of McLane's actions, the current profit level was 2 percent for small companies. He noted he had to layoff 10 employees who lived in Nevada and if AB295 was not passed, he would be out of the cigarette business and another 40 people would be unemployed. He reiterated this was another attempt by McLane, as they have done in other states, to put the local people out of business.
Mr. Vega emphasized he could not compete against McLane because he pays the SIIS rates, the business tax, the gas tax, the property taxes all within the state and he was quite concerned about how to keep his cigarette business going. He remarked if the state would allow out-of-state companies to come into the state and put in-state businesses out of operation, it would be a disgrace. He commented he started his business through the SBA (Small Business Association) and could not compete against high-priced lawyers and lobbyists.
Ms. Giunchigliani inquired if the 34 cents lower than state law was as a result of the cash discounts. Mr. Vega indicated it was 34 cents per carton lower and he would not be able to sell his product that low.
Ms. Marilyn Patton, UNI Distributing, testified it was found through a survey, no retailer had reduced their price to consumers as a result of discounts from McLane. She emphasized there would be a grave impact on the state budget if all these in-state employees were to become unemployed.
Mr. Joseph DiGrazia indicated he had distribution facilities in Wells and Ely to supply Elko, Eureka and Lander Counties. He testified in support of AB295. He commented since 1947 there have been no problems in tax collection until the Attorney General ruled the in-state stamping rule was unenforceable. He stressed the out-of-state stampers were the ones which were trying to destroy the industry in Nevada. He pointed out, as Mr. Vega had stated, the out-of-state businesses do not pay the SIIS, employment, the business tax, etc. Another big item the out-of-state firms do not pay were the "P" vehicle registration plates at the cost of $1,000 per truck. This was why the local distributors could not dip into the cash discount area. He remarked the out-of-state companies do not utilize the local businesses or community enterprises. They do not sell to the small businesses. Rather, the out-of-state companies "cherrypick" the prime, large accounts.
Mr. Harvey Whitemore, representing McLane Company, testified there had been no problem until 1987 when the law was adopted in respect to the cigarette industry as designed to protect against predatory pricing. He stated McLane was against predatory pricing and would support legislation defining predatory pricing. He pointed out currently the trade practice act under NRS598, indicated predatory pricing was actionable. He explained what was occurring here was a wholesale industry trying to set the price of a commodity.
Chairman Arberry requested all parties involved to get together and
find a solution to the differences they had and then come before the committee with amendments to AB295 which could be agreed to.
Chairman Arberry closed the hearing on AB295.
APPROPRIATIONS ACT
Mr. Stevens stated the back language of the Appropriations Act was discussed the day before up to Section 51 and because historically the act was not amended, the final portion would need to be discussed prior to introduction on the floor. He stated the issue in Section 51 related to AB409 where NRS 353.225 was amended indicating the Governor would follow guidelines set by the Legislature should budgets need to be reduced during the 1993-95 interim period. Mr. Stevens remarked this could be done through resolution, amending the statute, or through the Appropriations Act which would terminate at the end of the upcoming biennium.
Ms. Giunchigliani reiterated Section 51 should be separate and dealt with from the Appropriations Act. She noted concern the Governor could go into the DSA and literally affect a guaranteed per pupil expenditure. It changed the standard practice along with the attempt within the school funding bill, Section 15, which would do the same thing.
Mr. Marvel noted this would be a transitory provision and would change at the end of the biennium.
Speaker Dini stated he did not want to see the DSA ever cut. He remarked this language within session law would be abolished after two years and would provide a means to see how the Governor and IFC worked together. This would literally put the Legislature's "oar" into the water with the Governor in the final decision making. He stressed the emphasis was to prevent the Governor from having the power alone.
Ms. Giunchigliani appreciated the Speaker's comments relating to not ever seeing DSA cut, but noted after Mr. Malkiewich's comments, this section could leave room for challenge and could be differently interpreted by the Governor. The fear was seeing the Governor have another avenue to broaden his scope of authority to override NRS 355.225. She stated her attitude was if there was another budget crisis, the Legislature would have the responsibility to come back and either raise the revenue or cut the budget.
Mrs. Williams indicated she too did not want to see a situation where DSA was raided. She noted, on the other hand, she did not think it should go into statute. There was no argument related to lessening legislative power. The attempt was to strengthen the position and indicate the Legislature had control over the process through the Appropriations Act. This would be a transitory action to the Legislature's advantage.
Mrs. Chowning concurred and commented Section 51, subsection 3 did not state the decision would necessarily be a partnership. It would indicate the reduction would not be made unless the governor decided to submit a report to the IFC and the IFC approved it. Mr. Stevens clarified the Board of Examiners would have to determine the projected fund balance at the end of FY94 or FY95 was less than $35 million at which time the Governor may or may not direct the budget director to set aside a reserve of not more than 15 percent in any agency budget. This plan would then have to be submitted to the Legislature or IFC for approval prior to implementation.
Speaker Dini commented if IFC did not approve a request from the Governor, the Governor would have the power to call a special session for Legislative action on the request in order to get approval. This section would work to the Legislature's advantage.
Ms. Giunchigliani stated basically if the Governor had the authority, he would have done it arbitrarily without any Legislative action. She appreciated the check and balance portion which put the IFC within the loop and, therefore, ultimately the Legislature. She emphasized she did not want to be caught, as with this session, in a situation which forced the rubber stamping of any report by the Governor.
Mr. Stevens explained Section 52 was transitory language related to the reorganization and Section 53 indicated the effective date.
Mrs. Chowning asked in Section 49, if the compassionate release bill AB488 was not approved, almost $1 million in state funds would be triggered and wondered where these funds would come from. Mr. Stevens indicated it would come from the state general fund.
Ms. Giunchigliani asked what the status of the DSA bill was. Mr. Stevens replied it would be a Senate introduction. Ms. Giunchigliani inquired where the hospital provider tax was. Chairman Arberry responded it was in the Assembly Ways and means Committee and would be voted on soon.
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MR. MARVEL MOVED TO ADOPT THE LANGUAGE RECOMMENDED BY STAFF FOR THE APPROPRIATIONS ACT.
MRS. TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED BY VOICE VOTE. MS. GIUNCHIGLIANI VOTED NO. MR. PRICE WAS NOT PRESENT AT THE TIME OF THE VOTE.
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AUTHORIZATION ACT
Mr. Stevens explained the back language of the Authorization Act and stated it would be a Senate introduction. He noted any changes would need to be made prior to introduction because it was historically not amended after introduction on the floor. He explained Sections 2 to 15. He pointed out subsection 3 of section 2 reduced the Gaming Control Board appropriation if the slot route tax was not passed or based on a flat rate per slot machine. Section 3 indicated authorized amounts would be appropriated in the category allotments. Section 4 allowed for augmentation upon approval of the Governor and IFC, in some cases. Section 5 provided if additional federal funds were received over the interim above the budgeted amount, state general fund dollars would be reduced unless federal dollars were jeopardized by the reduction.
Section 6 indicated the authorized amounts for the University and Community College accounts. Section 7 provided authority to temporarily advance monies to the wildlife account if necessary. Section 8 was the estate tax appropriation to the University and Community College accounts. Section 9 provided authority to the Budget Director to assess each professional license board. Section 10 directed a statewide allocation plan be conducted. Section 11 authorized the State Public Defender to collect monies from counties which utilized the office's services. Section 12 directed the State Treasurer to divide the motorboat fuel tax evenly between the Department of Wildlife and the Department of State Parks. Section 13 related to the preventative safety fund. Section 14 was transitory language similar to Section 52 of the Appropriations Act allowing the Budget Director to assure money was placed in the proper account from July 1 through September 30 for name changes related to the reorganization.
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MR. HUMKE MOVED TO ADOPT THE LANGUAGE RECOMMENDED BY STAFF FOR THE AUTHORIZATION ACT.
MR. PERKINS SECONDED THE MOTION.
THE MOTION CARRIED BY VOICE VOTE. MR. PRICE WAS NOT PRESENT AT THE TIME OF THE VOTE
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Chairman Arberry adjourned the meeting at 11:10 a.m.
RESPECTFULLY SUBMITTED:
_________________________
Kerin E. Putnam
Committee Secretary
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Assembly Committee on Ways and Means
June 28, 1993
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