MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
January 22, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:30 a.m., on Friday, January 22, 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 Lawrence E. Jacobsen
Senator Diana M. Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
COMMITTEE MEMBERS ABSENT:
Senator Raymond D. Rawson, Vice Chairman (Excused)
Senator Bob Coffin (Excused)
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Judy Jacobs, Committee Secretary
OTHERS PRESENT:
Evelyn Mathis, Local Government Budget Analyst, Fiscal Division, Legislative Counsel Bureau
Senator Raggio invited Evelyn Mathis, Local Government Budget Analyst, Fiscal Division, Legislative Counsel Bureau, to give an overview of the information available regarding taxes and expenditures for cities, counties, special districts and other local governmental entities.
Ms. Mathis asked the senators to refer to the Local Financial Reporting Statewide Total Summary Report (Exhibit C. Original is on file in the Research Library.), prepared by a subcommittee appointed by the Legislative Commission. She called attention to the chart on page 3 which indicates the total resources of all entities considered local governments under Nevada statutes. Those include counties, cities, towns, schools and special districts. She pointed out the report shows total resources attributed to all local governments have reached $7 billion. Ms. Mathis said the data base, established in 1984, includes data from 1976-77, which is reflected in earlier reports.
Ms. Mathis stated comprehensive backup data is available from the Legislative Publications office. She distributed a list of comprehensive studies available from Legislative Publications (Exhibit D). She noted the comprehensive studies would provide information on specific governmental entities.
Ms. Mathis called the report a summary of information on cities, counties and school districts. She outlined the details of the summary report. As an example, she drew attention to page 47 on which begins the summary of expenditures by entities in a format followed throughout the report. To obtain more detail on those line items, she reiterated the information would be included in the Comprehensive County General Fund Breakdown, available from Legislative Publications, which delineates information from each of the counties. The summary report before the committee indicates the totals from each of those comprehensive studies.
Senator Glomb asked for clarification of the ad valorem revenue figures on pages 36 and 37. Ms. Mathis responded the amounts received through ad valorem revenue indicate dollar amounts have gone up, which could be a combination of more taxes as well as of higher assessed value.
Senator Glomb inquired about the fluctuation of the Supplemental City-County Relief Tax (SSCRT). Senator Raggio opined it might be somewhat deceiving. He stated:
As I understand this, it is a percentage of all the total resources that go to the county.... For example, your ending fund ... balances total may distort that so you can't necessarily say it is a larger percentage of real property tax.... So that includes the ending balances as well.
Ms. Mathis reminded the committee the 1993 figures are budgeted amounts, whereas the figures prior to 1991-1992 are actual figures. Senator Glomb wondered if the figures indicated a trend. Ms. Mathis responded:
When you look at 1981-82 as far as ad valorem, and then you look at 1993, it would appear that the ad valorem has doubled as a percentage of the resources. Your opening fund balance for 1981-82 was 9 percent but in 1993 it is shown as ... almost 12 percent.
Regarding the 12 percent projected rate, Ms. Mathis said:
Your ad valorem will probably stand up to be pretty close to that, because it is a set rate set up on an assessed value. These numbers have been certified, so they will probably stand truer than some of the numbers that you are going to find in 1993, but when those other numbers come in it might lower your ad valorem, because that is a percentage of your total resources.
Senator Glomb asked how the percentages were determined. Ms. Mathis called attention to the percent of increase or decrease in county resources over prior years depicted on page 7. She noted the ad valorem had some wide fluctuations over the years, and SSCRT had decreased during 3 years.
Senator Raggio interjected 10 years ago the ad valorem was 10 percent of the total resources available in the general fund, whereas now it is 20 percent. He suggested the property tax could have increased dollar-wise in great amounts, but the other sources of revenue may have changed in various ways to alter the percentage.
Ms. Mathis reminded the committee the ad valorem has increased, there have been tax overrides in that period, new formulas have been enacted, and assessed values have increased tremendously in the state. She pointed out the total assessed value in 1981 was $9 billion, and today it is $27 billion, which is reflected in the receipts of ad valorem taxes.
Senator Callister asked if dependence on property tax had increased or decreased as a percentage over the years. Ms. Mathis turned to page 11, which indicates ad valorem only represents 7.58 percent of all county resources in 1992-93, as compared to 3.07 percent in 1981.
Senator Raggio pointed out a dramatic increase from the tax shift in the biennium 1979-1981. Mr. Mathis agreed 1982 was impacted early in the tax shift. Senator Raggio said, "There is lot of misconception about what revenues are available." He noted real property revenue is only about 20 percent of the average county's general fund, while sales tax brings in around 20 to 22 percent. He opined sometimes real property taxes are credited with bringing in a larger percentage of the average county's revenue than actually occurs.
Ms. Mathis called attention to the line item revenues listed on pages 38 and 39 under intergovernmental revenues and charges for services such as permits and fees. She said other special districts include a wide range such as airport authorities, convention authorities, and small fire districts, not counties, cities, towns or school districts.
Senator Jacobsen asked if any of the figures presented were related to growth factors. Ms. Mathis replied she had not attempted to draw any conclusions due to the impact of growth. She said she had based her report strictly on the budget documents.
Ms. Mathis noted she had eliminated information on SSCRT reserve funds or other types of shortfalls which had been reflected in prior reports. She called attention to the supplemental information on counties, cities and school districts, including such factors as weighted enrollments and distributions of cigarette, liquor and basic county/city relief taxes, included in the summary report. She added assessed values and increases and decreases in population for the past 10 to 13 years are set forth in the back of the report.
The purpose of the summary report, Ms. Mathis said, was to present as much information as possible on local government entities. Senator Raggio asked Ms. Mathis to highlight the information available in the summary report to give the committee an awareness of the source.
Ms. Mathis told the committee the information on local governments was secured from their budget documents and verified through local government financial reports. Tax rates, not included in the summary report, may be obtained from the Redbook (1992-1993 Ad Valorem Tax Rates for Nevada Local Governments), which lists property tax rates throughout the state, she said.
Senator Raggio said he would like a copy of the Redbook and asked which committee members desired a copy. Those responding affirmatively were Senators Glomb, Callister and O'Donnell. Ms. Mathis indicated she would procure the copies from the Department of Taxation.
Ms. Mathis focused on the sources of information in the summary report. Population figures came from the Governor's annual certification or from the United States census. Cigarette tax, city-county relief tax and liquor tax figures were obtained from monthly reports from the Department of Taxation. The Department of Education provided information on school enrollments. She said all of the original documents listed are available from her office for anyone who desires more detailed information.
Ms. Mathis called attention to the introductory passages at the beginning of each section of the summary report. She indicated the pages of introduction include definitions and other general information regarding the following schedules.
According to Ms. Mathis, any information needed in more detail than that appearing in the summary report can be found in the comprehensive reports. She advised the committee the comprehensive reports number over 400 pages each and contain the details of the line items found in the summary report. The comprehensive reports list all the special districts, she said, and all information is set forth alphabetically, first by counties, and then by cities. She noted if a person desired information on a specific local government, the county would first have to be identified.
Senator Raggio stressed the importance of the summary report as an accurate source of statistics on the amount the state distributes to local entities. He turned to page 261 to show how much is allocated to school districts by the state and by other local resources. He suggested the committee members become familiar with the summary report.
Senator Raggio commended the staff on the preparation of the Pre-Session Fiscal Report. (Exhibit E. Original is on file in the Research Library.) Dan Miles, Fiscal Analyst, explained the report is prepared under statutory requirement and is distributed to each member of the senate at the beginning of each legislative session. He pointed out the report does not include any of the Governor's recommendations, since it is comprised of basic data, addressing historical trends and major issues occurring in state government.
Mr. Miles led the committee through the contents of the fiscal report. He commented on the high points of each section, such as the 10-year history of general fund revenues printed on pages 3, 4, and 5. He acknowledged the state general fund revenues increased 149 percent during that period, for an average annual growth of 9.7 percent.
Mr. Miles referred to the chart on page 6, which portrays the general fund appropriations. In response to a question by Senator Raggio, he stated the chart was based on the budget approved by the legislature and had not been adjusted for actual reductions.
Mr. Miles continued his review of the fiscal report, calling attention to footnotes, and actions taken by the Governor for budget reductions and estimated shortfalls in revenue projections.
Senator Raggio offered copies of the fiscal report to those in the audience who wished to follow along with Mr. Miles' review.
Mr. Miles directed attention to the reductions planned by the Governor on page 12. He noted the $181,911,785 reduction includes reversions of special funds allowed under the law, as denoted by the asterisks, which explains the addition to the $173 million planned reduction referred to earlier in the text.
Senator Raggio commented the committee might gain a clearer perspective from considering the actual budget that had been adopted, as set forth on page 11. He voiced his understanding there had been adjustments for school enrollments.
Mr. Miles pointed out the planned reductions on page 12 include a reduction in the general funds going to school districts which will equal an overall reduction of approximately 1-1/2 percent.
Although there will be several changes as the year progresses, he speculated they will parallel those in the estimates.
Senator Raggio asked when a list of actual reductions compared to the planned reductions would become available. Mr. Miles promised the Fiscal Division of the Legislative Counsel Bureau will make the 1993 reduction plans available to the committee very soon.
Senator Glomb inquired about the reductions to schools. Mr. Miles expressed his understanding the school districts had been asked to reserve funds for reversion, with the understanding new legislation will be required to change the basic support number for each district. Senator Raggio remarked all county school districts had been requested to submit a list of 5-percent reductions. Mr. Miles said those reductions would be a portion of the aid the schools receive from the state's general fund. He said the aggregate amount is about a 1.6-percent reduction statewide, because the 5-percent reduction comes from the general fund only.
Mr. Miles turned to pages 13 and 14 in which a brief description of the proposal for reorganization is delineated. He explained the Governor's intention to reduce the number of agencies, to consolidate and strengthen the authority of the Governor, and to consolidate other services through the reorganization.
Senator Glomb asked if the transfer of the Department of Education would change the Board of Education to an advisory committee rather than a policy-making committee. There was some discussion between Mr. Miles, Senator Raggio and Senator Glomb as to whether duties of the board would change. The consensus was that the Board of Education would continue to make policy.
Senator Glomb inquired about the recommended centralization of debt issuance. Mr. Miles replied there are many bonds sold through entities such as the Colorado River Commission or the university system. He said the recommendation would centralize not only the authority for issuing bonds but also the record-keeping of all state bonds.
In response to another query by Senator Glomb, Mr. Miles stated it was felt the thresholds that require an agency to come before the Interim Finance Committee were set too low. He explained the agencies would have more flexibility if the thresholds were raised.
Mr. Miles reminded the committee the economic overview and revenue estimates in the fiscal report would be detailed and updated during the meeting scheduled for Monday. Turning to page 25, he called attention to the summary of budgets requested by agencies, which he said would total about $1.37 billion in the Fiscal Year (FY) 1993-94, and $1.59 billion in FY 1994-95. He pointed out the total requested amounts to $2.9 billion, while estimates of revenue reach just $2 billion under existing sources, leaving a large gap.
Mr. Miles drew attention to the charts on following pages summarizing the amounts requested from the various revenue sources. He indicated the totals presented on page 29. The following pages, he said, list the special or supplemental appropriations, or one-time appropriations requested by agencies.
Mr. Miles outlined the capital improvements projects recommended by the State Public Works Board to the Governor, as commencing on page 35. He stated none of the Governor's recommendations were included. He pointed out the only new construction projects listed on page 38, explaining that the rest of the projects are for major maintenance of existing facilities.
Mr. Miles stated the Pre-Session Fiscal Report is organized according to the existing functions of government. He assured the committee he would compare the new functions proposed under the Governor's reorganization plan to the existing functions. He suggested committee members might want to read the narrative on major issues or requests for general government and for education set out in the report, as well as sections on human resources and projections of caseloads. There are no narratives on agencies which have not requested any substantial changes, he explained.
Mr. Miles singled out the sections on the State Industrial Insurance System (SIIS) and on the Intermodal Surface Transportation Efficiency Act (ISTEA) as being particularly informative. He called attention to the debt limitation calculations included in the report, lists of outstanding general obligation bonds, the county assessed valuations, and debt service requirements. He portrayed the document as a handy reference on state debt.
Senator Raggio emphasized the importance of the growth in tax rates represented on page 131. He said:
In fiscal 1987 the state was utilizing only 2 cents per hundred on ... general obligation bonds. If you remember, the state made a commitment to get out of ad valorem taxes, and the use of it, except for a very limited purpose ... for bond retirement. ... we were very cautious about ever exceeding 2 cents. We now find ourselves ... over 14 cents.
Senator Raggio pronounced it time to reflect on that philosophy.
Mr. Miles stated a new fiscal report would be issued in about 2 weeks which would include the Governor's recommendations, and many agency requests would be dropped. That report, he said, is used by other legislators.
Bob Guernsey, Principal Deputy Fiscal Analyst, distributed copies of a fictitious budget (Exhibit F), he described as similar to those the committee will review each day. Mr. Miles highlighted the fictitious budget in detail to familiarize the committee members with the format they will be using. He elaborated on the specific line items, drew comparisons with previous budgets and the proposed reorganization, pointed out major and technical issues, and offered suggestions on areas which the senators may specifically desire to question.
Mr. Miles said any projected savings from the reorganization plan will be pointed out in the forthcoming fiscal report. Senator Raggio added the new report would delineate any carryover from one agency to another, any division of an agency, a new name, or any other pertinent information.
Senators Raggio and Callister agreed the new format is easier to read.
Copies of the staff assignments (Exhibit G) indicating areas of primary responsibility of members of the Fiscal Analysis Division were supplied. Senator Raggio asked committee members to indicate to him five areas each that are of particular interest so he may make subcommittee appointments accordingly.
There being no further business, Senator Raggio adjourned the meeting at 9:50 a.m.
RESPECTFULLY SUBMITTED:
Judy Jacobs,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
January 22, 1993
Page 1