MINUTES OF THE
SENATE COMMITTEE ON COMMERCE AND LABOR
Sixty-seventh Session
May 10, 1993
The Senate Committee on Commerce and Labor was called to order by Chairman Randolph J. Townsend, at 8:30 a.m., on Monday, May 10, 1993, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Randolph J. Townsend, Chairman
Senator Sue Lowden, Vice Chairman
Senator Ann O'Connell
Senator Mike McGinness
Senator Raymond C. Shaffer
Senator Leonard V. Nevin
Senator Lori L. Brown
STAFF MEMBERS PRESENT:
Brian Davie, Senior Research Analyst
Sheri Asay, Committee Secretary
GUEST LEGISLATORS PRESENT:
Senator Bill O'Donnell, Clark County, District #5
OTHERS PRESENT:
Harry Bradley, Chief of Benefits, Nevada Employment Security Department
Cecilia Colling, Deputy Director, Commission on Economic Development
Jim Hanna, Employment Security Department
Darrell A. Plummer, Director, Economic Development, Sierra Pacific Resources
Pat Coward, Lobbyist, Economic Development Authority of Western Nevada
Ray Bacon, Lobbyist, Nevada Manufacturers Association
Raymond L. Sparks, Chief, Registration Division, Department of Motor Vehicles and Public Safety, State of Nevada
John Vergiels, Lobbyist, Insur-rite
Robert L. Crowell, Lobbyist, Farmers Insurance
Sam Sorich, Assistant Vice President, National Association of Independent Insurers
Ross Whitacre, Assistant Chief of Benefits, Nevada Employment Security Department
Senator Townsend opened the meeting, and asked if anyone wanted to testify on Senate Bill (S.B.) 431.
SENATE BILL 431: Revises provisions concerning conditions of eligibility for unemployment benefits to comply with federal law. (BDR 53-901)
Harry Bradley, Chief of Benefits, Nevada Employment Security Department, addressed the committee and read from prepared testimony (Exhibit C).
Senator O'Connell asked for an explanation of S.B. 431.
Mr. Bradley responded that the bill addresses the monetary ability test that a person must first pass before receiving unemployment benefits. He elaborated on the criteria involved.
Senator O'Connell asked if Nevada has been penalized for non-compliance of the federal law concerning conditions of eligibility for unemployment benefits. Mr. Bradley said the state has not been penalized, and explained that many states received waivers, because their legislatures were not in session when the law was passed.
Senator O'Connell asked how S.B. 431 would affect employers. Mr. Bradley replied, "It would not, as far as payout, have a significant impact at all. The dollars amount, there would be very little change, if any." He said it would be less than $20,000 a year statewide.
Senator Townsend asked, "What happens if we don't pass this bill?"
Mr. Bradley responded, "The employers would not be given credit for their federal tax, and that would increase then to, I believe, 6.5 percent, until such time as we would come into compliance. That would cost the Nevada employer community a significant amount of money."
There being no further testimony on S.B. 431, Senator Townsend closed discussion on the bill, and opened discussion on S.B. 432.
Senate Bill 432: Allows dissemination of information contained in records of employment security department under certain circumstances. (BDR 53-537)
Cecilia Colling, Deputy Director, Commission on Economic
Development, (CED) addressed the committee and read from prepared testimony (Exhibit D), in favor of S.B. 432.
Senator O'Connell mentioned that there was an interim study done, and legislation is pending, involving what information should be confidential and what is public record. She thought the committee should find out if S.B. 432 is part of that legislation.
There was further discussion on the interim study. Brian Davie, Senior Research Analyst, said, "I think it was more aimed at public records in general, and I don't think they got into the specifics of each agency...."
Ms. Colling added, "It might help to know we are still required to keep the information confidential, much of it, other than the names, addresses and phone numbers."
There was discussion of the incentive programs the CED is using to lure businesses to Nevada, such as the business tax abatement and the quick-start job training program.
Senator Townsend asked what the biggest problems were that the CED faces in trying to get companies to relocate to Nevada. Ms. Colling replied, "There are approximately 20,000 economic developments (nationwide), trying to get 2,000 or less companies per year." She explained what these companies are looking for in a relocation site, and the difficulties the companies encounter in getting information. Senator Lowden asked if it was easier to get the information in other states, to which Ms. Colling answered, "Yes, I believe it is."
Ms. Colling said companies were looking at incentives when making the final decision of where to relocate. She cited the State Industrial Insurance System (SIIS) rates as a negative factor for these businesses.
Darrell A. Plummer, Director, Economic Development, Sierra Pacific Resources, testified about a bill designed to attract recycling companies, which the Arizona Senate recently passed. He said the bill "took their real and personal property taxes from a 25 percent of assessed value to 5 percent of assessed value." Mr. Plummer told the committee that Northstar Steel informed the CED that the extimated tax they would pay in Arizona would be half of what they would pay in Nevada.
Senator Townsend mentioned that Nevada has a constitutional prohibition against unequal taxation, which will not allow Nevada to lure businesses through tax incentives.
In response to a question by Senator Shaffer, Mr. Plummer replied that the Fort Howard Paper Company would employ 1000 people, and Northstar Steel would hire a minimum of 200 employees.
Senator Townsend asked if those two companies had approached Nevada as a possible location. Ms. Colling said that both companies had considered Nevada, and she thought one company was still considering this state. Mr. Plummer explained the efforts that were being made to communicate with Northstar Steel, and mentioned a possible site, 10 miles north of Yerington. He said the Fort Howard project was a large water user, a problem with which Nevada would have a hard time.
Senator Townsend welcomed former Senator Floyd Lamb to the committee meeting.
In response to a question by Senator Brown, Ms. Colling said that the companies they are trying to attract with incentives would pay the average wage. There was discussion on the education of Nevada's work force.
Senator Townsend said that the Senate Committee on Commerce and Labor has been making an effort to assist companies who are in Nevada, as well as to entice other businesses to move here. He explained that the companies they try to attract are those which offer high paying jobs, and are environmentally suitable for Nevada.
Ms. Colling mentioned that Nevada has the second highest rate of high school graduates in the country, and that some Nevada school districts "are testing in the top 200 in the country."
Jim Hanna, Research Director, Employment Security Department, (ESD) testified in answer to a question by Senator Nevin on what qualifies as a "reasonable fee" to cover administrative expenses in S.B. 432. Mr. Hanna replied that there is a minimum fee of $50 for computer runs, and the cost rarely goes over $100. There was further discussion on the requests the ESD gets for information.
Senator McGinness asked about the quick-start program of the CED, if these were companies coming in from out-of-state. Ms. Colling said they usually were. Senator McGinness suggested, "Couldn't you include in their contract, that they would release this information to you, so there wouldn't be a problem...of finding out whether they actually employed the number of people they say they are going to." Ms. Colling said they are doing that now, but are unable to verify the information.
There was discussion on the tax abatement program.
Pat Coward, Lobbyist, Economic Development Authority of Western Nevada (EDAWN), addressed the committee. He thought this was a very important bill, "...because as EDAWN and Nevada Development Authority (NDA) start doing more target marketing towards going out and selecting different type of industries to bring into the area, realizing the environment, realizing the water restraints that we do have, and also looking at the infrastructure and the demand on the infrastructure, wage levels become very important, in not only looking at the type of jobs but to be able to go in there and figure and use this data in the target marketing becomes very important."
There was further discussion on efforts to attract Northstar Steel and Fort Howard Paper Company to Nevada.
Ms. Colling spoke about the industrial directory that the commission is required by statute to provide (page 3 & 4, Exhibit D). She listed other reasons S.B. 432 is important to the CED.
Mr. Hanna, said that S.B. 432 allows the ESD to release general data on employers, specifies that they can release the information when it would benefit the economic development of Nevada, and helps them to assist unemployed people in finding jobs. He said the bill also allows the ESD to provide detailed data on employers to state agencies, for their use, under a guarantee of confidentiality.
Mr. Plummer mentioned the struggle of rural areas to attract businesses.
Senator Townsend talked about economic development efforts in other states.
Mr. Plummer added, "...Historically, the other states have found there's no return, they put out more than they get back from the industry. The promises of the company to employ x amount of people were never held..." He spoke highly of the quick-start program of Nevada. He said the community colleges play an important role in training people for the type of manufacturing jobs for which employers are looking. Senator Nevin thought the program brought in only minimum wage jobs. Mr. Plummer responded that the problem is being addressed.
Mr. Coward elaborated on the methods they are using to resolve the minimum wage problem. He said that the Senate Committee on Commerce and Labor could help in this area through their efforts in SIIS legislation. "That is a very key ingredient to losing some very top-notch companies, the SIIS cost to the employer out there."
There was discussion on the industrial directory published by the Gold Hill Publishing Company. Ms. Colling explained this was an involved and costly process, and often not complete, because
the employer contribution of information is entirely voluntary.
Senator O'Connell clarified, "For the record, the information is available, it is published right now, and for some reason you can give the information out to the publisher, but you can't give the information to these people. And, there are some businesses who aren't published in there, for whatever reason, and we, as yet have not discussed this with the chamber [of commerce]."
Ray Bacon, Lobbyist, Nevada Manufacturers Association, addressed the committee regarding his concerns about S.B. 432. He stated, "This is tending to take an operation which has been privatized, and turning it into a government operation." Mr. Bacon said he would rather see the restrictions on Gold Hill Publishing removed, and keep it a privatized operation. He explained why there is a problem with getting complete information into the directory. Mr. Bacon stated that some employers did not want to be in the directory, because they have no Nevada customers, and do not want to be "prey for every salesman in the world."
Ms. Colling said that the ESD pays for the copies of the directories at a reduced rate. She thought Gold Hill Publishing could continue publishing the directory, and that this bill would make it easier for them. Ms. Colling pointed out that most companies want to access the system electronically, however. Mr. Plummer elaborated on that.
Senator Townsend announced the close of the hearing on S.B. 432, and opened discussion on S.B. 451.
Senate Bill 451: Establishes system for verifying that owners of motor vehicles maintain mandatory proof of financial responsibility. (BDR 43-2053)
Raymond L. Sparks, Chief, Registration Division, Department of Motor Vehicles and Public Safety (DMV), State of Nevada, addressed the committee regarding S.B. 451. He said the bill would cause the department to privatize a portion of the insurance verification program, and explained what that process would entail.
Senator Townsend asked what the penalty would be for being uninsured, when stopped by a police officer. Mr. Sparks estimated about a "few hundred dollars on average." He said his department does not fine just for being uninsured, but suspends the motorists vehicle registration instead. The person would then pay a $100 reinstatement fee to re-register the vehicle.
Mr. Sparks said that a 1991 survey showed a 5.4 percent uninsured rate in Nevada. He said S.B. 451 would not get at the problem of unregistered vehicles, as "this program would still take the currently registered motor vehicle data base, and compare that with the insured data base, to find those that aren't insured."
There was general discussion on whether or not this could be done by the DMV, rather than by a consultant.
Senator Lowden expressed disfavor with the proposed extra registration fee, because of the increase in registration fees during the last legislative session.
In response to a question by Senator O'Connell, Mr. Sparks explained how this bill would be enforced. Senator O'Connell wondered how effective this law would be, if the law could not be enforced "unless there was a violation of another law."
There was further discussion on the process of enforcing the mandatory insurance regulation.
Mr. Sparks commented that the method the state has used for enforcement has been effective, because a "5.4 percent uninsured rate, I think, is enviable among those states who have a mandatory liability insurance requirement."
He added:
We're looking at enforcement at the initial time of vehicle registration with the evidence of insurance card, we enforce the requirements through the provision that a person must carry that evidence of insurance in his vehicle and display it to an officer upon request, and then officers have occasion to enforce that. In the event of a traffic accident, when a person has to file the safety responsibility form...we take a look at whether they're insured in that case, and then also through the insurance verification program.
Senator Nevin mentioned the problem of a motorist who shows proof of insurance when stopped for a violation, and it is later discovered his insurance has lapsed or been cancelled. He explained the problems that result for the person who is involved in an accident with an uninsured motorist.
There was further discussion on this problem, and Mr. Sparks concluded that "there are a number of people that slip through the cracks in the system."
Senator Brown pointed out the section of S.B. 451 that reduces the fine of between $600 and $1000 to $100 if the person gets insurance in 30 days. It was agreed that this would tend to weaken the enforcement of the bill.
Mr. Sparks pointed out that S.B. 451 allows a person to be cited, and then get their insurance after the fact, and have the fine reduced to $100.
There was discussion on the origin of S.B. 451.
Senator Townsend asked what would prevent the insurance company from notifying the DMV with a notice of insurance termination, and then the DMV would notify the person of the fine. Mr. Sparks said that with statutory authorization to impose a fine, there is no reason they could not do that.
Mr. Sparks explained, in response to a question by Senator Nevin, that the statute provides that the driver of the car, if he is not the owner, would not be cited, but the owner would.
Senator Townsend spoke of the problem a bank encounters when it is the legal owner of a car, belonging to an uninsured motorist, that has been damaged. Mr. Sparks responded, "I would presume the financial institutions would be very interested in knowing if it (the car) wasn't insured."
John Vergiels, Lobbyist, Insur-rite, explained that S.B. 451 is Assemblyman Gene Porter's bill. He said there is a companion bill, Assembly Bill (A.B.) 507, currently in the Assembly. Mr. Vergiels thought the 5.4 percent uninsured figure was more like 25 percent.
Assembly Bill 507: Establishes system for verifying that owners of motor vehicles maintain mandatory proof of financial responsibility. (BDR 43-1692)
Mr. Vergiels thought this bill would benefit the insurance companies in the first 2 years, because "the number of uninsured motorists will decline because there's a way to follow up when they do cancellations..." He explained that the officer would be able to find out if the person is uninsured at the time he stops the motorist.
There was discussion of S.B. 193, which Mr. Vergiels said included a provision for a person who cannot afford insurance, to get their the use of their car back and actually drive it uninsured.
Senate Bill 193: Allows department of motor vehicles and public safety to establish more flexible requirements for reinstatement of drivers' licenses. (BDR 43-49)
Senator Nevin clarified that the bill covers hardship for medical reasons. He said when the motorist is not driving, due to hardship, he does not get penalized when he renews his insurance.
Mr. Vergiels stated, "That would affect this somewhat, because you'd have some exclusions in here, which you normally would not have without that bill."
Senator Townsend read a draft form of an amendment:
The owner or operator of a motor vehicle that is involved in an accident, that results in bodily injury or damage to property, is barred from commencing any civil action or proceeding for the recovery of damages resulting from the accident, if at the time of the accident, he did not have proof of financial responsibility set forth in Nevada Revised Statues (NRS) 485.307.
Senator Townsend noted there is a substantial penalty for not having insurance, but it is only triggered if the person has been in an accident.
Senator Nevin reminded the committee about a bill he introduced during the last legislative session. It was called "...no pay, no play, which simply said if you're uninsured and you have an accident, and if you're at fault, the party's over." He said he had received some opposition to it, and that he would look it up for the committee.
Mr. Vergiels pointed out to the committee that he represents a company who will bid on a contract regarding S.B. 451. He said, "...there may be 5 to 10 people bid on this contract, based on competitive bid. So some of the estimates...putting a cost per name or contact, or putting that on the screen for the officer, that has somewhat of a general range, I believe."
There was discussion on how the costs would be borne.
Senator O'Donnell testified regarding S.B. 451. He wanted to give the committee information that the Senate Committee on Transportation has heard. Senator O'Donnell said the insurance companies are not reporting accurate data to the DMV. He explained why this is so, and added, "If you dropped your insurance today, you have a 50-50 percent chance of being caught."
Senator O'Donnell suggested that, "the insurance company be required to send the entire VIN number [Vehicle Identification Number] to the DMV, so we can get a one-to-one match. If they do not...the DMV may...restrict the flow of information from the DMV regarding ticketing, arrests, and traffic infractions back to that individual insurance company that does not report properly." He said the insurance company would then not be able to rate the driver, and that would be the hammer to get the insurance companies to report properly.
Senator Nevin agreed, and thought the companies who do not report properly should be fined.
Senator Townsend wondered why there is not a better interface between the DMV and insurance companies, so that "...the person sitting in the insurance office, who sees the expiration date, just types it in, and hits a button, and it's automatically forwarded electronically..."
Senator O'Donnell explained the delay between the time the insurance company reports, which is anywhere from 45 to 90 days, and the time the DMV knows the person is uninsured. He repeated his suggestion of sending the VIN number to DMV, and how fast the process would be if handled electronically.
Senator Nevin thought the owner should have the responsibility of proving he has insurance, rather than the state tracking them down.
Senator O'Connell said the owner should not be able to cancel one insurance policy without having a new one in effect.
There was further discussion on the cost to the state of tracking down uninsured motorists.
Senator Townsend informed the committee of how Hawaii requires a person to pay "$15 on top of your registration to cover your basic insurance as required by Hawaii law." He said the consumer would then purchase the remainder of their insurance needs. He asked if Nevada has debated that policy issue.
Mr. Sparks said they had not looked at policy issues about mandatory liability. He thought that with the program in the state, there is a "hard-core group of uninsured," and no matter what the state does, that will remain. "It simply boils down to a cost of either putting food on the table for their children, or taking
out a liability insurance policy, and I think in the case of those people, they're always going to choose the former."
Senator O'Donnell explained why S.B. 190, which was passed by the Senate Committee on Transportation, directly conflicts with the language in the last part of S.B. 451. He was against fining the uninsured a large sum of money, because they are usually indigent.
Senate Bill 190: Provides that imposition of fine is discretionary under certain circumstances for driving without insurance. (BDR 43-139)
Senator Nevin thought the importance of S.B. 190 was that it gave the person a policy, which the DMV could be notified about if it was dropped. "Before that we didn't know."
Robert L. Crowell, Lobbyist, Farmers Insurance, spoke against S.B. 451. He read from a prepared statement (Exhibit E). He said the bill requires every insurance agent to divulge their client base to an agency of government or to a contractor.
Sam Sorich, Assistant Vice President, National Association of Independent Insurers, (NAII) addressed the committee in opposition to S.B. 451. He explained that enhanced enforcement has never been shown to eliminate the uninsured driver from the road, and it ends up costing the state, local governments, insurance companies and the consumers.
Mr. Sorich spoke of an enforcement scheme that Arizona put in place in 1992, similar to the one in S.B. 451. He cited the problems that have resulted for drivers, under the Arizona law. Mr. Sorich said that 10 percent of drivers in Arizona are uninsured. He mentioned stolen license plates and counterfeited ID cards, that have resulted from Arizona's legislation. "The easiest way of avoiding the Arizona law, has been to simply not register cars." Mr. Sorich said that Arizona has lost $44 million in registration fees because of the legislation. Last month, the Arizona Legislature decided to let the mandatory insurance law die. He said it has been "an expensive failure in Arizona."
Mr. Sorich said that the governor of Utah vetoed the same legislation as S.B. 451, because of the $1 registration fee, which the governor felt would not be offset by any substantial decrease in the number of uninsured drivers.
There was further discussion on the cost to local government of S.B. 451. Mr. Sorich said the bill contains no muscle, and that in order to make it work, local law enforcement, courts and district attorneys would have to spend more for insurance enforcement.
Mr. Sorich said, "This bill doesn't do anything about making insurance more affordable, and, in fact, I think it has the potential of increasing the price of insurance premiums." He thought the state should focus on the cost of litigation, medical costs, repair costs and insurance fraud, to lower insurance costs.
Senator O'Connell asked what the insurance companies could do to help lower costs.
Mr. Crowell responded:
Farmers [Insurance Company]...may have been part of this problem....It used to be Farmers' practice, when they insured a vehicle, only to write down the last three numbers of the VIN number, inspect the vehicle, and that's what they would report to DMV. Second, DMV will allow an insurance company to report cancellations either manually, or computer tape to tape.
Mr. Crowell further explained the insurance companies electronic reporting procedures. He added:
We also now, in the last 2 years, have been reporting and collecting the entire VIN number, so we have the capability of doing that, and I believe that most other insurance companies also have tape-to-tape capability...plus the entire VIN number, so we can hopefully make the match. And that's what we're trying to do to help DMV in this effort.
Mr. Sorich was concerned about the smaller companies having to comply with sophisticated computer reporting.
Senator Nevin said the insurance companies were the only ones who could make insurance more affordable. Mr. Sorich agreed that there were certain things they could do, but that insurance companies have to operate within the auto insurance system and the civil justice system. He thought that legislative action was required to control factors beyond their jurisdiction.
Mr. Crowell commented that Senator Nevin's "no pay, no play" plan had a lot of merit, and could be helpful in reducing insurance costs.
There was general discussion on frivolous, or nuisance, suits. Senator Lowden inquired about follow-up fraud investigation, after a case is closed. Mr. Sorich explained the fraud investigative unit and the problems they encounter in this regard.
There was further discussion on a no-fault insurance system.
In response to a question by Senator Townsend, Mr. Crowell replied, "Under no-fault system...a costing analysis can be done to actuarily determine a rate reduction." He said the type of reduction depends on the type of no-fault system.
Mr. Sorich added, "I think the Department of Insurance should still have a responsibility under the no-fault scheme to regulate companies, ...to make sure rates are not excessive...I think we all have an interest in trying to make the system in which we earn our living operate as economically and efficiently and as fairly as possible. That's why we support no-fault."
Senator Townsend asked for an analysis from the insurance testifiers and the commissioner. He said, "First, is under a pure no fault system...there is no litigation period...medical costs are in fact covered...no cap...the other thing is, what are you going to do to stop paying bill charge in hospitals, which is what you're currently paying under Med-pay? Basically, you're getting ripped off, which means the consumer is getting ripped off."
Senator Townsend said he objected to the pay-at-the-pump standard for auto repair. "I want the vehicle repaired back to the way it was, not mechanically sound enough to get there."
Senator Townsend announced a discussion on Assembly Bill (A.B.) 436. There was discussion as to whether this bill was included in S.B. 316.
Assembly Bill 436: Precludes persons receiving certain benefits for industrial injuries from receiving unemployment compensation at same time. (BDR 53-1822)
Senate Bill 316: Makes various changes to provisions governing industrial insurance. (BDR 53-1764)
Ross Whitacre, Assistant Chief of Unemployment Insurance Benefits,
Nevada Employment Security Department, addressed the committee and gave prepared testimony (Exhibit F), regarding A.B. 436.
There was general discussion on A.B. 436.
There being no further business, the meeting was adjourned at 10:47 a.m.
RESPECTFULLY SUBMITTED:
Sheri Asay,
Committee Secretary
APPROVED BY:
Senator Randolph J. Townsend, Chairman
DATE:
??
Senate Committee on Commerce and Labor
May 10, 1993
Page 1