MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
May 28, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Friday, May 28, 1993, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Bob Coffin
Senator Diana Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
GUEST LEGISLATORS PRESENT:
Senator Leonard V. Nevin, Washoe County Senatorial District No. 2
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Jeanne L. Botts, Program Analyst
Marion Entrekin, Committee Secretary
OTHERS PRESENT:
Cheryl Lau, Secretary of State
Steve Teshara, Representative, Lake Tahoe Gaming Alliance
Pamela B. Wilcox, Administrator and State Land Registrar,
Division of State Lands, State Department of Conservation and
Natural Resources
Lorne J. Malkiewich, Legislative Counsel, Legal Division,
Legislative Counsel Bureau
Colette Rausch, Deputy Attorney General, Consumer Affairs Division
Department of Commerce
Steve Sisolak, Telemarketing Representative, American Distributing Company
Brooke A. Nielsen, Assistant Chief Deputy Attorney General, Office
of the Attorney General
John P. Kuminecz, Commissioner, Consumer Affairs Division, Department of Commerce
J.Patrick Coward, Managing Partner, Carrara Group
Mary F. Santina, Executive Director, Retail Association of Nevada
John E. Jeffrey, Lobbyist, Direct Marketing Association
Senator Raggio opened the hearing for discussion of Senate Bill (S.B.) 386.
SENATE BILL 386: Makes various changes relating to administration of Nevada Tahoe regional planning agency.
Cheryl Lau, Secretary of State, testified against the passage of S.B. 386. She distributed a letter from her office dated May 28, 1993, (Exhibit C) that she read for the record and explained this letter would provide the committee with pertinent background information.
Steve Teshara, Representative, Lake Tahoe Gaming Alliance, said his office represents the gaming properties on the south shore of Lake Tahoe. They fully concur with the statement by the Secretary of State opposing the passage of S.B. 386. He stated there is no statutory fix that is needed. They do support the budget for the Nevada Tahoe Regional Planning Agency (NTRPA) at the statutorily independent level of $l3,000.
The Lake Tahoe Gaming Alliance has great concerns about the ability of the Division of State Lands to respond to their concerns in a timely fashion. He pointed out when the casinos at Lake Tahoe had to accept the regulatory structure of the Tahoe Regional Planning Agency (TRPA) the NTRPA was offered as a way to have expeditious review of projects internal to the casinos. They had to accept many regulations with respect to what they could do outside of the buildings, but internal modifications or changes were thought by the State of Nevada to be appropriate in terms of expeditious review. To that end the NTRPA was established.
The Lake Tahoe Gaming Alliance has been concerned that in time this commitment will be forgotten. They believe a level of funding for the NTRPA of $13,000 in each of the next 2 years would provide the staffing and expertise that has existed there for the last few years and will give will give them a continued commitment to expeditious internal review.
Mr. Teshara believes the Lake Tahoe Gaming Alliance generates enough revenue to the state to justify the $13,000 per year level of funding for the NTRPA. If there is an issue he suggested the committee review the budget of the TRPA to reallocate some monies from that budget to fund the NTRPA since the NTRPA was created as a part of the overall process at Lake Tahoe.
Senator Raggio asked if there has been a contract person utilized to make independent evaluations involving the NTRPA.
Mr. Teshara responded in the affirmative stating the present budget has accommodated the retention of an independent consultant who has amassed a great deal of history and expertise with respect to the complicated projects that come before the NTRPA for review.
Senator Raggio asked if most of the projects that come before the NTRPA involve applications by many of the large casinos in the Lake Tahoe area.
Mr. Teshara said this is correct and pointed out the expertise and history the consultant possesses would be difficult to transfer to staff members in the Division of State Lands due to the complexity involved with most of the issues that come before the NTRPA at peak periods of the year when there is extensive building activity.
Pamela B. Wilcox, Administrator and State Lands Registrar, Division of State Lands, State Department of Conservation and Natural Resources, testified in support of the passage of S.B. 386. She commented during budget hearings it was proposed the budget for the NTRPA be shifted to the Division of State Lands. Although it was proposed the NTRPA would remain as a separate budget account, it was also proposed staff of the division would provide staff services to the NTRPA.
Bringing the committee up-to-date concerning staff services, Ms. Wilcox stated initially these services were provided by the State Department of Conservation and Natural Resources. Connie Sparbel, a former employee of that department assigned to work with projects of the NTRPA, is the consultant for the NTRPA and has provided staff services on a contractual basis to the NTRPA since the early 1980s. The proposal to provide staff services out of the State Department of Conservation and Natural Resources is not a new one but a return to the situation that existed in 1980 when Connie Sparbel provided the services as an employee of that department.
Senator Raggio asked how the present services provided by the consultant for the NTRPA would be changed. He also asked if the same contract person will be utilized.
Ms. Wilcox answered, "No she will not." She explained the major savings of placing staff services into her division would be a salary savings. There would be no salary provided for a consultant. Instead, staff services would be provided by a planner already on her staff whose salary has been budgeted.
Senator Raggio asked, "How do you respond to the concern that person has the kind of expertise and knowledge that is essential to expedited processing?"
Ms. Wilcox replied it is correct Ms. Sparbel is the only person who has ever provided staff services to the NTRPA and she will be unable to instantly reproduce Ms. Sparbel's experience and expertise. She stated there will be a period of time during which the division will be coming up to speed and services will slow down during that period of time. Ms. Wilcox said that Ms. Sparbel has pledged her support and assistance to make the transition, and once this is accomplished there will not be any loss of services. Ms. Wilcox believed since she has a larger staff and clerical support, these services will improve and better response time will be added.
Ms. Wilcox said the savings to the state will amount to approximately $10,000 per annum and she does not believe there will be any loss in the quality of service once the transition period is accomplished. She added that she does not see this change as evidence the state is dropping a commitment but rather that the state is being serious about continuing the commitment as a high priority even in the face of severe budgetary problems.
Senator Raggio said the hotels and casinos are vital to the economy of the Lake Tahoe area and to the state. If they are going to be seriously delayed in their application projects through the NTRPA, it would not be in the best interest of the state.
In response to a question posed by Senator Coffin, Ms. Wilcox said her budget effective July 1, 1993, has been cut by 7 percent for the first year of the biennium and about 18.5 percent for the second year of the biennium.
Senator Coffin asked in light of these cuts, how services would be provided.
Ms. Wilcox said the cuts proposed would not impede upon the work provided by the planner or the clerical staff assigned to this program. The cuts would be imposed on other portions of their programs.
Senator Raggio closed the hearing on S.B. 386 and opened the hearing for discussion of Senate Bill (S.B.) 375.
SENATE BILL 375: Makes various changes relating to regulation of trade practices.
Senator Leonard V. Nevin representing Washoe County District 2 stated the most significant provision of S.B. 375 would require a change from licensure to registration of telemarketers. He explained this change was prompted by the many problems that were encountered with licensing provisions.
According to Senator Nevin another significant change budgetarily is that the enforcement of telemarketing statutes be transferred from the Consumer Affairs Division (CAD) of the Department of Commerce to the Office of the Attorney General.
Lorne J. Malkiewich, Legislative Counsel, Legal Division, Legislative Counsel Bureau, highlighted the major changes that S.B. 375 makes, then outlined the provisions of this bill for the committee. He pointed out that S.B. 375 takes a number of provisions that formerly were in the regulations of the CAD relating to telemarketing and places them in the statutes. He commented although there are a large number of restrictions regarding the conduct of telemarketers reflected in this bill, many of those restrictions are already in effect through regulations of the commissioner of the Consumer affairs Division.
Senator Raggio referenced section 12 of S.B. 375 which contains subpena power and asked how an individual would be required to respond to a subpena received. He explained there has been much concern voiced regarding subpoenas to some officer in the course of an investigation versus a subpena for a hearing of some type.
Colette Rausch, Deputy Attorney General, Consumer Affairs Division, Department of Commerce, said currently the authority to subpoena documents and also compel testimony is currently in the statutes whereby the commissioner can require someone to appear before the commissioner or the hearings officer that he or she designates to present testimony and require the production of any documentation.
Senator Raggio asked where in section 12 of S.B. 375 does it specify that the subpena would be used only in that manner.
Mr. Malkiewich replied he does not believe that it is so limited but the provision can be amended to require that it be before a hearing or hearing officer.
Senator Raggio asked what the difference is between the present law that provides for licensure versus what is now proposed by S.B. 375 as registration.
Mr. Malkiewich said the primary difference between licensure and registration is the preliminary approval. He commented:
Under a registration system you are submitting detail concerning your company....Under a licensure statute you then have the division make the determination of whether these people are entitled to licensure. You would have a background check and investigations to determine whether or not to issue the license. If you determine not to issue the license you have administrative procedures to determine whether or not that denial was appropriate.
Senator Raggio asked:
Suppose somebody walks in and represents a company or an entity that has had a series of violations in another state. Would it be required that an application from this individual or company be accepted?
Ms. Rausch furnished the committee with an analysis of registration versus licensing (Exhibit D) for their review. She said the authority would be to accept the registration application then track and monitor those businesses and if any violations are found, immediately investigate. She stated the emphasis would be on enforcement. She stated registration has been very successful in states that have used this procedure and these states have taken more actions against their licensees than the State of Nevada has under current licensing provisions. A change to registration would be a movement into more effective methods to control telemarketing fraud.
Mr. Malkiewich continued outlining the provisions of S.B. 375 for the committee.
Senator Raggio asked if a company located in another state that solicits in the State of Nevada would have to register their telemarketing activities in Nevada.
Mr. Malkiewich answered if they engaged in what is defined by law to be telephone solicitation, that company would be required to register in the state.
Senator Raggio asked what the penalty will be under the provisions of S.B. 375 for telemarketers that fail to register.
Ms. Rausch replied the penalty remains the same as under present laws for failure to license but the penalty was increased. It is still a felony, but the fine was raised from $25,000 for failure to license as under present law to $50,000 for failure to register as proposed by S.B. 375.
Concluding his coverage of S.B. 375 for the committee, Mr. Malkiewich said section 34 repeals the existing regulations of the commissioner of the CAD. A large number of the regulations regarding advertisements for sales and chance promotions and premiums are now included in the statute rather than in the regulations. This is part of the transfer of the authority for enforcement from the commissioner of the CAD to the Office of the Attorney General.
Steve Sisolak, Telemarketing Representative, American Distributing Company, distributed a packet of material (Exhibit E) to the committee members that included a letter regarding S.B. 375 to Senator Raggio from the president of the Better Business Bureau of Southern Nevada, a synopsis of actions brought against Nevada telemarketing licensees, Nevada licensed telemarketers complaint statistics, and an analysis of licensing versus registration.
Brooke A. Nielsen, Assistant Chief Deputy Attorney General, Office of the Attorney General, distributed Exhibit F for the committee's review. She stated this memorandum sets forth the fiscal request for the Office of the Attorney General under S.B. 375.
Ms. Nielsen reviewed Exhibit F for the committee. She stated this reflects the additional personnel that will be needed in the Office of the Attorney General in order to complete the enforcement investigation work under S.B. 375.
Referring to litigation costs of $45,000 for fiscal year 1994 and fiscal year 1995, Senator Raggio asked how they arrived at this amount.
Ms. Nielsen said the proposed litigation budget of $45,000 was based on expense items such as the need to bring in witnesses from out of state, fees for expert witnesses, and the preparation of depositions.
Continuing her coverage of Exhibit F, Ms. Nielsen said the total cost for the added telemarketing function in the Office of the Attorney General will be $578,521 for fiscal year 1994 and $546,831 for fiscal year 1995. Ms. Nielsen said her office expects more individuals or companies will apply under a registration scenario, and they are estimating annual revenue of $80,000 will be generated. She added that this amount could be more since they will be bringing in some out-of-state telemarketers.
Senator Raggio asked what reduction will be made to the current telemarketing budget in the Consumer affairs Division.
John P. Kuminecz, Commissioner, Consumer Affairs Division, Department of Commerce, distributed Exhibit G, a revision to the existing budget for the CAD and a narrative to accompany the fiscal note for the division under provisions of S.B. 375. He stated this reflects what is currently in the budget for fiscal year 1994 and fiscal year 1995 and the reductions that are proposed to meet this division. The narrative explains the positions that will be needed to handle everything from registration through the complaint and resolution process to the final transfer to the Office of the Attorney General.
Senator Raggio asked what impact this bill, if processed, will have on the CAD.
Mr. Kuminecz said the agency expenditures under the previous budget were $1.4 million and under the proposed budget it will be $1.2 million.
Mr. Kuminecz said currently there are 14.5 positions assigned from the CAD and the Office of the Attorney General that will be assigned to the telemarketing function. Under the proposed budget the positions will increase to 18.5.
Senator Raggio asked, "What will be your function under S.B. 375 insofar as telemarketing is concerned?"
Mr. Kuminecz responded:
I have built the fiscal note and the budget you have based on having the CAD handle registration and procedures involved with registration for in-state and out-of-state sellers and salesmen. In addition, the division will handle the processing of complaints....
Senator Raggio asked if a complaint is made would it go to his office or to the Office of the Attorney General.
Mr. Kuminecz said the complaint would come to his office where an initial evaluation would be made as to whether or not a complaint has validity.
Mr. Sisolak stated the complaint mediation or intake is not as complicated as people may assume it to be. It is just a forwarding of the complaint material to the company who refunds money to the customer. It does not involve an investigation of a possible violation by the company.
Senator Raggio said the Senate Committee on Finance has been dealing with the telemarketing issue and proceeded on the basis of augmenting the CAD budget to deal effectively with it and are now looking at S.B. 375 from another committee with a completely different approach involved. He explained the Senate Committee on Finance will have to make an initial evaluation as to whether they agree with the provisions of the new bill. He explained the committee is not limited to only fiscal considerations but will need to know the basis for the change in approach to the telemarketing issue.
Addressing a question regarding the function of the Office of the Attorney General versus the CAD, Ms. Nielsen commented that under S.B. 375 the attorney general will take on a stronger role in the enforcement and investigation of telemarketing fraud. After a thorough review of the provisions of S.B. 375 and listening to testimony provided regarding the proposals, she said the Office of the Attorney General is in favor of this bill over the previous proposal. She said the handout material distributed today demonstrates that registration is effective where it has been used. In discussing the role of their office she stated they will have the opportunity to determine whether or not there is a criminal or civil action matter that will need to be pursued by her office involving the complaints that will be coming in.
Getting back to the fiscal impact of the change if S.B. 375 is instituted, Senator Raggio asked for an explanation of what the reduction will be in the present budget for the telemarketing unit in the CAD.
Mr. Sisolak responded by referring the committee to Exhibit H, "Telemarketing Budget Savings Under S.B. 375."
Senator Raggio remarked, "If we implement this and there is only $80,000 in revenue generated...the cost to the attorney general will be more than that."
Mr. Sisolak replied the $80,000 is solely for the cost of public service, advertising and education. It is for a separate fund.
There will be a reduction in what was being budgeted for the present telemarketing unit as reflected in Exhibit H.
Referring to Exhibit H, Mr. Kuminecz said:
What you have was an initial cut but the CAD was not consulted of the functions that would have to be performed. In that regard I have submitted Exhibit G based upon the intent of S.B. 375. What you are looking at, that I do not support, is four positions, three clerical and one management positions....That would be fine to handle complaint intake but when you look at registration, complaint intake and processing, and doing some initial evaluation of the complaints so that the attorney general is not flooded with complaints they do not want to handle...and handling the resolution of complaints that are left to us to resolve, and any of them that come back from the attorney general as not being actionable or not being involved with a case they do not want to pursue...handling the bonds, surety, changes in registration and the bond process....Four clerical people cannot handle that much work. That is not the budget I am supporting but is the budget the other committee is supporting.
Mr. Sisolak said Exhibit H is the budget proposed by the Senate Committee on Commerce and Labor.
Senator Raggio referred to $160,784 reflected in Exhibit H to be transferred to deceptive trade and asked for an explanation.
Mr. Sisolak attempted to respond to this question, but Mr. Kuminecz interrupted and stated the $160,784 shown as "Transfer to Deceptive Trade" has been in the budget for the budget cycles the division has been through since the inception of the law in 1989. It covers a number of costs provided by the CAD for total management, administration, and support that the telemarketing unit shares in. Because it is self-funded, part of the costs are paid back to the budget for the CAD to cover those costs.
Senator Raggio noted that Exhibit H indicates the revised budget under S.B. 375 for the CAD budget amounted to $303,805 for fiscal year 1993-1994. He asked the amount of additional funding that would be needed. He pointed out this would have to come from the General Fund.
Mr. Kuminecz referred to page 2 of Exhibit G and said this suggests eight positions instead of four as proposed by the other committee, and the narrative attached to this handout describes exactly what the functions of the positions will involve. He explained the amount of funding that will be required under this proposal.
Dan Miles, Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, referred to page 2 of Exhibit G and pointed out the revision to the budget augmentation for the Office of the Attorney General should be shown as $762,391 instead of $578,521. Mr. Kuminecz acknowledged the error and said it will be necessary for his office to correct page 1 of Exhibit G as well.
Senator Raggio asked Mr. Kuminecz to work with the fiscal division and someone from the attorney general's office to revise the figures in order that the committee will have the correct information for their consideration of the passage of S.B. 375.
He asked specifically for the fiscal costs for the Office of the Attorney General, the additional fees that will be generated, and the adjustment the CAD feels will be required for their budget.
Senator Raggio also asked the Budget Division to advise the committee how the passage of S.B. 375 will impact on the General Fund. Ms. Matteucci said she would provide this information at a later date since she did not have the information immediately available.
Discussion ensued between Senator Callister and Mr. Kuminecz regarding the number of positions the CAD will need to respond to complaints. It was determined four positions would be needed just for the complaint function, but a total of eight positions would be required for the entire process including registration and audit functions.
J. Patrick Coward, Managing Partner, Carrara Group, testified
in behalf of the Retail Association of Nevada. He stated some action had occurred earlier in the week on the senate floor that would eliminate the publicly traded corporation exemption referred to on page 8, paragraph (h), lines 3 through 9, of S.B. 375. Elimination of that exemption has concerned retail businesses such as the J.C. Penney Company, Montgomery Ward and Company, Spiegel, Target stores, Mervyn's Department Store, F. W. Woolworth Company, and K-Mart stores. He stated all of these businesses are publicly traded companies and are all directly or indirectly involved with telemarketing functions.
Mary F. Santina, Executive Director, Retail Association of Nevada, explained what the exemption referred to by Mr. Coward will not do is it will not allow any company that has an exemption from licensing or registering as a telemarketer to engage in a deceptive trade practice. Therefore, the exemption itself does not allow any unlawful activity. It is her understanding that currently a local Las Vegas company that has the exemption is settling a deceptive trade concern with the CAD. The concept that a Securities and Exchange Commission (SEC) exemption would in some way allow improper business practices is not true. She stated fines would apply whether or not the individual or business is registered, so it would not make any difference.
Ms. Santina continued to state that the exemption does create a simple language procedure whereby any legitimate company whose primary business is not telemarketing but who may engage in some form of telemarketing may be exempted. She stated this exemption is a double tier approach that is used in 11 other states that couple their telemarketing law with this exemption to provide the necessary blanket in case a portion of a company does not clearly get defined.
Referring to the existing exemption (j) on page 8 of S.B. 375 Ms. Santina said the words, "seller's merchandise exclusively" shown on line 25 eliminates the major retailers. She also pointed out lines 29 and 31 under exemption (j) as other areas that would not apply to retail businesses and these businesses would not be qualified to be exempted.
Senator Raggio asked what difficulties would these retail stores encounter if they are required to register as a telemarketer.
Ms. Santina responded:
Financial burden. By having to pay registration fees they are being caught up in the regulation and what they are not intended to be. We were involved in the telemarketing law along with the Better Business Bureau to get it in effect. It is aimed at boiler-room operations. It is not aimed at legitimate businesses.
Senator Callister asked, "Has it been your experience that the attorney general of this state or the board of telemarketers have attempted to at anytime focus their efforts on any of your clients?"
Ms. Santina replied, "With the exemption...of course not."
Senator Callister inquired, "Do you believe that at present that is their intention under the guise of this telemarketing law?"
Ms. Santina answered, "I do not know what their intention is."
Senator Callister said he was not aware or prepared to deal with the merits of S.B. 375 in the hearing today. He commented he is not interested in focusing telemarketing efforts on anybody other than telemarketers who run boiler-room operations where individuals use the telephone to sell items by offering some promise of a potential gift or chance to win something. He stated the difficulty with the language of S.B. 375 is a technical one requiring some changes to satisfy the concerns of legitimate retailers.
Directing his question to a representative of the Office of the Attorney General, Senator Callister asked, "Are you absolutely certain that there is no exemption language that could be so artfully crafted as to respond to the legitimate retailers who nobody has an interest in regulating?"
John E. Jeffrey, Lobbyist, Direct Marketing Association, responded there is language that has been proposed to take care of this problem that will allow the larger corporations that have been doing business as legitimate companies to continue to do business as they are. He opined a definition of telemarketing may have to be arrived at to catch the individuals that should be caught. He explained the proposed new language would eliminate the penny-stock companies. It would be for stock listed on the New York Stock Exchange, American Stock Exchange, or NASDAQ (National Association of Security Dealers Automated Quotation), and this would limit the exemptions that should be exempted. He did not have a copy of the proposed language but believed it had been submitted to the Senate Committee on Commerce and Labor.
Senator Callister invited response from a representative of the attorney general's office regarding this issue since this was the first time he had heard this proposal.
Ms. Rausch said what was done differently in S.B. 375 is an intent statement was placed within it. She explained that is an avenue many states have taken because of the difficulty in defining telemarketing. She further said an intent statement will give the state more flexibility to look into business practices and definitions to arrive at legal opinions. Ms. Rausch said it has been her experience with most of these companies that are not already licensed that they will not fall within this law.
Senator Callister mentioned that the entities that are exempt in Nevada by virtue of being publicly traded are now alleging the same exemption in other states. Many of these other states are attempting to address this issue legislatively to eliminate that loophole in their state law. He asked, "Is there a way to craft something so difficult that no one but a legitimate retailer or travel vendor could qualify?"
Ms. Rausch replied:
In talking with Mr. Jeffrey and the language that was proposed....California has looked at the language that was proposed there and they made a few minor revisions. They felt it was a step in the right direction because it got rid of the small-cap NASDAQ. There is a new group that is arising that is under the American Stock Exchange. It is a two-tier system. I would not rule out the possibility that there might be a way to craft the language to where you could bump it up. I would caution that is not going to guarantee that some of these companies will not jump up. However, it would be difficult for many of them because the thresholds would require in one instance over 700 shareholders. You would have to be very careful that you take care of the American Stock Exchange....
Senator Raggio suggested in the interest of time that Ms. Rausch work with Senator Callister, Mr.Jeffrey, and Mr. Kuminecz to come up with some proposal that would resolve this issue.
Senator Raggio closed the hearing on S.B. 375 with the expectation the committee will receive a financial compilation on the overall impact of the registration fee and the effect on the budget for the CAD and the budget in general. He also requested detailed information on the issue just addressed regarding exemption language.
Senator Raggio requested committee introduction of the following bill draft requests (BDRs).
BILL DRAFT REQUEST 32-2088: Makes various changes relating to supplemental city-county relief tax.
SENATOR JACOBSEN MOVED TO INTRODUCE BDR 32-2088.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
* * * * *
BILL DRAFT REQUEST S-2100: Makes appropriation to Nevada racing commission for certain operating expenses.
SENATOR CALLISTER MOVED TO INTRODUCE BDR S-2100.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
* * * * *
Insurance Regulation - Page 339
Bob Guernsey, Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, referred the committee to Exhibit I, Budget Closing Action and commented that under the Governor's reorganization plan the existing Department of Insurance will be placed under the new Department of Business and Industry as a separate division. Mr. Guernsey reviewed the recommended changes for this budget as shown on the budget closing action sheet.
Senator Coffin commented he has notes concerning further testimony at the committee's request from the taxation subcommittee that relates to this budget because of the potential transfer of a position. The testimony the subcommittee received indicated an accounting clerk recommended to be transferred did a lot of work not related to the collection of premium tax, which is the contemplated reason for a transfer.
Mr. Guernsey said it has been recommended to restore a higher level accounting technician position instead.
Jeanne L. Botts, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, clarified that currently the Department of Insurance has three accounting positions. The recommended budget suggested only one accounting position should remain in the Department of Insurance, and to transfer a second accounting position to the Department of Taxation for their premium collection activities and delete the third accounting position due to the reorganization. Since that time the director of the Department of Taxation has indicated he does not need this accounting position. Instead they will retain an Accounting Technician I since they will continue to collect fees and assessments even though they will not be responsible for premium tax collections under the proposed reorganization.
SENATOR COFFIN MOVED TO ADOPT THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS SHOWN ON BUDGET PAGE 339 OF EXHIBIT I.
SENATOR O'DONNELL SECONDED THE MOTION.
Senator Rawson disclosed that he serves on a board of a company, Sierra Health Services, that is regulated by the Department of Insurance. He does not see this as a conflict against voting on this budget.
Senator Coffin disclosed that he is an insurance broker but he will not be influenced in any way by this action.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
* * * * *
Self Insured - Workman's Compensation - Page 355
Mr. Guernsey said this budget operates with three positions, one of which was to be eliminated through reorganization savings. Due to increased activity in this account it is currently recommended that consideration be given to restoring a coordinator position.
SENATOR COFFIN MOVED TO ADJUST THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS SHOWN ON BUDGET PAGE 355 OF EXHIBIT I TO ADD THE COORDINATOR POSITION.
SENATOR O'DONNELL SECONDED THE MOTION.
Senator Raggio disclosed that his law firm represents a number of companies that are self insured and he is on the board of Sahara Resorts that is self insured. He does not regard this as a conflict against voting on this budget.
THE MOTION CARRIED. (SENATOR CALLISTER AND SENATOR RAWSON WERE ABSENT FOR THE VOTE.)
* * * * *
Insurance Examiners - Page 358
Mr. Guernsey said a recommendation had been made regarding a $9 examination fee to be used to provide training for contract examiners. It is the opinion of the Fiscal Analysis Division that with the level of the payment of the examiners it is questionable whether the state should be providing additional training funds at industry expense for those individuals. He stated the reduction of $60,000 shown on the closing action sheet for page 358 of Exhibit I reflects the deletion of the contract examiner education fund.
Ms. Botts commented further that the Department of Insurance proposed adding an additional $9 per day to the examination costs of companies that are being examined to build up a fund to provide training and education to their contract examiners. She stated these examiners do not live in Nevada, travel around the country to examine companies, and earn about $87,000 to $96,000 per year plus daily per diem. She pointed out it would not normally be the state's position to provide training for these independent contractors. It has been recommended to delete $60,000 from both the revenue and expense portions of the budget.
SENATOR O'DONNELL MOVED TO ADJUST THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS SHOWN ON PAGE 358 OF EXHIBIT I.
SENATOR COFFIN SECONDED THE MOTION.
Mr. Guernsey said a letter of intent should be issued to have the agency report to the Interim Finance Committee (IFC) with detailed justification prior to any change in the administrative charge added to examination costs billed to insurers.
Senator Raggio requested the issuance of the suggested letter of intent be included in the motion.
THE MOTION CARRIED. (SENATOR CALLISTER AND SENATOR RAWSON WERE ABSENT FOR THE VOTE.)
* * * * *
Commission for Hospital Patients - Page 361
Senator Glomb stated that due to a scheduling conflict she was unable to meet with Senator Rawson for discussion of issues pertaining to this budget. She requested this budget be held pending the outcome of their discussion, and Senator Raggio concurred with her request.
The meeting was adjourned at 10:27 a.m.
RESPECTFULLY SUBMITTED:
Marion Entrekin,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
May 28, 1993
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