MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
January 27, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:05 a.m., on January 27, 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 M. Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
STAFF MEMBERS PRESENT:
Daniel G. Miles, Fiscal Analyst
Robert Guernsey, Principal Deputy Fiscal Analyst
Larry L. Peri, Program Analyst
Birgit K. Baker, Program Analyst
Joan McConnell, Committee Secretary
OTHERS PRESENT:
Glenn B. Rock, Director, Department of Personnel
Forrest (Woody) P. Thorne, Deputy Budget Administrator, Budget
Division, Department of Administration
Ellen Townsend, Principal Budget Analyst, Department of
Administration
Judy Taylor, Chief, Administrative Services Division, Department of Personnel
Judy Matteucci, Director, Department of Administration
Robert J. Gagnier, Executive Director, SNEA (State of Nevada Employees Association)
John Perry Comeaux, Executive Director, Department of Taxation
Orland T. Outland, Vice President, Nevada Council of Senior
Citizens
Daniel G. Miles, Fiscal Analyst, distributed a copy of the Governmental Reorganization Plan by Peat Marwick, in addition to a book from the Audit Division, which is a summary of all the audits having occurred since the last session of the legislature, and is indexed to the budget pages for easy reference.
Senator Raggio stated it will be the custom of the chair to call on the chairman of the audit subcommittee, as budgets are reviewed.
Senator Raggio opened discussion on the Executive Budget, page 256.
Personnel - Page 256
Mr. Miles began a review of Executive Budget pages 256-261.
Senator Raggio offered:
Let me indicate the committee [Senate Committee on Finance] is familiar with the new format, and we intend to stay pretty much on that format...and those of you who
have appeared before these committees in the past may find a new net mode of questioning in line with this. We will not be going into the details, which we have previously on items...we will be more interested in the structure of the budget, what the enhancements are or what the needs for enhancements are, how you have performed on your mission statement. That will generally be the plan by which we will approach in this committee. If you can keep that in mind in making presentations we will appreciate it.
Glenn B. Rock, Director, Department of Personnel stated:
Overall, the recommended Personnel Division Budget for category 1363 reflects a hold-the-line, no-growth budget for the next biennium, with no increase in the current personnel or payroll assessment rates of .82 and .31 of 1 percent, respectively. Because of the new format, which includes categories for the Base Budget, Maintenance and Enhancements, I would like to go through each of the categories and explain the major differences between the Agency Request and the Governor Recommends.
Under the Base Budget on [Executive Budget] page 256, under the Personnel Expenses item, under the Expenditures category column, the major difference between the Agency Request of $2,872,511 and the Governor Recommends of $2,599,524 comes primarily from two sources. One is the vacancy savings as it has been built in to that particular expense item of over $39,000 the first year and $40,000 the second year. And also reorganization savings, which total $208,233 the first year and $282,997 the second year. So, those items, if you add those up, pretty much account for the difference in that particular item.
Senator Raggio asked, "Are you going to detail for us how that reorganization savings occurs?"
Mr. Rock said he did not have the information, but he did have a memorandum, which had been distributed to all agency administrators and basically explained a reorganization savings.
Senator Raggio asked the source of the memorandum.
Mr. Rock stated the memorandum was from the Department of Administration, and added:
Essentially what they did is took all of the business and administrative positions, as I understand it, in our agency, and I'm not sure about the actual positions. I assume that is my position and the chief's probably, and they made that a negative line item. But they also clarified that this may not represent what actual positions will be cut, because that will be left up to the new directors in the reorganization plan. So, somehow they will come up with a savings, I'm certain, that will represent that.
Senator Raggio asked, "At this point you have no detail for this committee as to how those reorganization savings are determined?"
Mr. Rock replied in the negative and submitted a copy of the memorandum (Exhibit C) per Senator Raggio's request.
Forrest (Woody) P. Thorne, Deputy Budget Administrator, Budget Division, Department of Administration, commented:
For the most part, the testimony you'll be hearing from the agencies represents their construction of the Governor's Recommended Budget based on targets for expenditure levels. Any issues dealing with the reorganization and how the statements were developed, the analyst who worked on the budgets will be happy to address those for you. Any detailed information on how he arrived at the reorganization we would also be happy to provide to you through the analyst.
Senator Raggio asked, "Are you prepared to do that now?"
Ellen Townsend, Principal Budget Analyst, Department of Administration, responded:
The reorganization savings for the Department of Personnel represent five positions, and I do have the detail on the positions, at least, that were chosen for just salary calculations only. They're representative of just management savings, with the consolidation and the Governor's Recommend of reorganization.
Senator Raggio stated, "As we go through these budgets in this committee, it's my understanding each budget generally will have some reorganization savings. Is that right?"
Ms. Townsend replied, "Yes."
Senator Raggio continued, "And the Governor has indicated in his message to us that the reorganization, if put in place, can be expected, as I recall, was it $28 million over the biennium?"
Ms. Townsend agreed.
Senator Raggio said:
I would ask the Department of Administration to have available, either through your department, or the spokesman for the budget, as we meet, a detail of the anticipated reorganization savings. Now that means, if you're talking about five positions, which positions? I don't want to have to ferret this out. I want it done in an expeditious and timely manner. So, at this point, if you have the detail on the five positions, please indicate it to us, and I think we'll save a great deal of time. If the reorganization is to be considered by this committee, it will be necessary that we have that information as we go through these budgets....Tell us how we are going to save $208,000 - $202,000 each year....Are you deleting existing positions, or are you not filling some authorized positions?
Mr. Thorne responded:
In each of the budgets we have identified management and/or supervisory type personnel, where with the combinations or the changes due to the reorganization, there would most likely be less of a need for the middle and upper management levels. We have identified those positions, and we can give you the position titles that are involved. Then in the first year of the biennium
this is the way we approached it in each of the budgets. Three-quarters of that year, looking at an October 1 implementation, three-quarters of the salary and fringe benefit costs of those identified positions was put in as a credit for reorganization savings within the budget. And, then in the second year the full amount of the salary and fringe benefit costs. In addition, there may be some attendant operating and other costs, as well as the support costs for those positions that may have been credited out as well.
By doing it this way, we don't make the presumption of making the decision for the new directors of which positions actually are deleted, if any. It will be up to the new directors under the proposal to decide, which of these positions to retain and/or eliminate.
Senator Raggio asked, "How does this differ from vacancy savings?"
Mr. Thorne explained vacancy savings is based on the normal turnover rate within a particular budget.
Senator Raggio inquired, "So, this is in addition to vacancy savings?"
Mr. Thorne stated, "That is correct."
Senator Raggio continued:
As I understand what you are saying, you are giving each department...plugging into their budget an item of management reorganization savings, and then you are asking them, within the purview of what you have identified, to make those decisions themselves as to whether you downgrade some positions...or delete a position, actually terminate somebody?
Mr. Thorne replied, "That is correct."
Senator Raggio requested Mr. Thorne be more specific in his facts, and added: "In the case of the Personnel Department [Department of Personnel] then are you, by this budget, directing the director of that department or division?"
Mr. Rock answered, "The department, sir."
Senator Raggio asked, "Are you directing them to somehow present a plan to do this, or have you already outlined to them five positions, or something of that nature?"
Ms. Townsend replied, "Yes."
Senator Raggio stated, "You've told us generally you have given a target amount. Have you already identified those positions to the director?"
Mr. Thorne responded, "No." He added under the Governor's reorgan-ization the current Department of Personnel would become a division within the new Department of Administration. Since there would no longer be a department, there would be no need for a department head. However, there will be a need for a division head.
Senator Raggio asked, "Let's assume Mr. Rock becomes a division head, will there be an adjustment in his salary, downward?"
Mr. Thorne stated he did not know. It would be at the direction of the new department heads. The Department of Personnel will address this in their presentation of development of the new exempt-merit system in the classification structure, to respond to the FLSA (Fair Labor Standards Act) Benzler (Benzler v. State of Nevada) lawsuit.
Senator Raggio commented:
I understand you are proposing a new classification of employee, an exempt-merit-pay employee, and I also understand that flows from the Benzler decision, but before we get into that, does that somehow work into this reorganization savings?
Mr. Thorne replied, "Not into the reorganization savings."
Senator Raggio requested:
Let's stay on that for a minute. If we don't get over this threshold we will never understand any of these budgets. I need to have you, in layman's terms, for this committee, again tell us how this will work. We will have a figure in each of these budgets, generally, of reorganization savings. The Department of Administration apparently, if I understood Ms. Townsend, has compiled, as to each department or division or agency, how they can reach, in your estimate, a fixed number for reorganization savings. But then, it's not clear as to whether you are specifically directing the department head to reach that savings in the way you have analyzed it, or whether there is some flexibility for the department head to do that. What is the approach?
Mr. Thorne answered:
The approach is to allow the new department head, along with the division heads they work with, as much flexibility as possible in how to reach the reorganization savings. What they will have is a salary cap to work with. The composition of the staffing they feel they need to carry out their mission is going to be their decision. The only restriction they will have is living within the salary cap that is arrived at through the application of the reorganization savings. With the change from a department to a division, with personnel for example, you won't have both department and division heads, so you've identified division chiefs for reorganization savings. There will still be a requirement for bureau chiefs. But how that...division head structures his staffing, and how they carry that out will be their decision.
Senator Raggio said:
But you've already done an analysis in some measure to reach the number, according to Ms. Townsend. Are you going to furnish that analysis to the department head, as a guide for that person to reach that reorganization savings?
Mr. Thorne replied, "Yes."
Senator Raggio commented:
As I understand, you are going to give them some flexibility....You have done an analysis apparently, to come up with a cumulative $28 million biennial savings. If that number is approved by the legislature, that will be a reorganization savings target. But, you've already done the internal analysis that you feel would be a proper approach. Is that what you're going to give to your department head as an indicator and then give them some flexibility in the event it doesn't comport fully with their operation? Is that what you're saying?
Mr. Thorne replied in the affirmative.
Senator Callister asked:
How was the magic number five arrived at? That seems to be the underlying basis for the half-million dollars in reorganization savings. Essentially they are going to have five less positions....Was there some rhyme or reason to determining that was the appropriate number of reductions in order to achieve this particular level of savings?
Mr. Thorne responded:
The approach was to review particularly the management staff, with the revised structure of the department and/or division. In this case we're looking at a reduction from a department to a division, so we reviewed the division heads. We no longer have divisions, we have a single division. So, we identified the position of the director. We have three divisions within the existing department. They will now be bureau level as opposed to division. And, there are still bureau chiefs within the current department. So, it was the division heads and then the director of the department.
In addition, with each of the new departments there was a look at administrative support to identify whether or not there could be some savings from the consolidation of...administrative functions. So, as we look at the departments we may have x-number of accounting and clerical staff, counting particular personnel-type support in each of the divisions within the new departments. By consolidating them together we may not need as many to perform the same functions.
Senator Callister commented:
It still seems like it's a presumptive calculation...to simply say these previously, under the old format, division chiefs are now downgraded to a bureau chief under the new division, unless somebody has less work at the end of the day, with radically different duties. Either a) those five positions weren't needed before, or b) we just move the players around on the chart. I think that's the concern of the money committees. We want to see the savings. We now understand, having heard yesterday's budget, that we are in an awful jam if we don't endorse the savings, aren't we? But, the problem is we need to understand how that reduction in force, in this instance, was arrived at.
Mr. Thorne commented there was not just a downgrading. There were also other factors taken into consideration in each of the budgets regarding any changes in function, which may have taken place as a
result of the reorganization. "The idea of the reorganization is to flatten out the management structure."
Senator Rawson said:
Assuming five positions are eliminated here, and they are state employees that have, I guess, some right at this point, what's the obligation to those people that are simply trimmed out of an agency? Will they be put into a pool that then could be used somewhere else in the organization of the state, or are they simply dismissed?
Mr. Thorne replied, "Personnel is working with us on that issue, and I'll defer to Glenn [Rock] on the work that they are doing in that area."
Mr. Rock stated:
What we've been told by the Department of Administration is we will be receiving a list of positions that will be eliminated, and from that we will know who is going to be laid off. As we did in the last go-around, which we had 266 positions eliminated, we replaced everybody with the exception of 13...that was a year ago. It's going to get more difficult, I won't kid anybody, in terms of placing folks, because as you start squeezing the state government down, obviously there becomes fewer and fewer opportunities. That is the plan. We get the list. We will know who is targeted, and we will start working to try and get those individuals placed as vacancies occur.
There is also a freeze, so I don't know exactly how that is going to work, in terms of which positions we will be allowed to work with in terms of filling, with these people who are going to be targeted.
Senator Rawson asked, "Do you presume that this will happen sometime after the legislature has approved this and gone home, that there will be some agency decision on these kinds of things?"
Mr. Rock expressed his opinion the intent was to get started as soon as possible, before the legislature adjourns.
Senator Rawson commented:
But, of course, the real savings aren't targeted until, is it October? So, you wouldn't have to lay anybody off. Nobody's salary has to really stop until October, when all of a sudden it's planned into the budget.
I don't know how the rest of the committee feels about some of this, but we are being asked, essentially, to give a blank check to the administration. Admittedly, it is a reduced blank check, but it is a blank check.... Essentially any policy that has to do with how the services are delivered is simply out of our hands. None of that is presented to us. I have a growing resentment over this, I think, and I predict that this is going to be a more difficult situation as the days go on. I'm simply not going to turn over some of those decisions.
Senator O'Donnell remarked, "Following up on Senator Rawson's comment, I find a mystical part of this presentation today. This list that you talk about, 260, 266 names...."
Mr. Rock interrupted, "I'm not sure of the total number at this point. I think the Governor mentioned in his address that there was an additional 266."
Senator O'Donnell asked, "Out of your department?"
Mr. Rock replied, "No, sir. This would be statewide."
Senator O'Donnell continued, "And when are we going to get this list? Do you have any idea?"
Mr. Rock stated:
I don't have the list. Until I'm given a list by the Department of Administration, which I've been promised I'm going to get, I can't start to place folks. And that's what I was told in one of the meetings I had recently with the director of that department.
Senator O'Donnell said, "I guess my big question is, how do we fit into all of this? Are you just telling us what we need to do, and let's just stamp it, and....?"
Mr. Rock interrupted:
Senator, I'm one director of one department, and I'm afraid I don't have your answers for you. All I know is that I receive a reorganization, and I'm part of it, and I'm supporting it, because I'm to go as a division, and this is what the Governor wants, so I will support it. But, I can't give you the particulars as to the study that took place in terms of all the inter-relationships, of what came out of that in terms of the findings, what was finalized and what wasn't. I know what the reorganization plan looks like, but I don't know all the particulars in terms of how that was brought about. I was interviewed just like everybody else, I assume, by the consultants that did the study.
Senator O'Donnell stated, "Well, if I'm going to ratify this then I'd sure like to know what the government is going to look like before I ratify it."
Senator Raggio interceded:
Well, along those lines, I think you can sense some frustration already as we approach this. And, I think I have to point towards the Department of Administration here, to indicate that we need immediate clarification of this reorganizational savings aspect if we are going to really be able to proceed with this budget. Now, you apparently have, at this point, compilations as to how you have arrived at the reorganization savings in each budget, and the cumulative effect.
So, I will request that you present to this committee, as early as possible, and we will rearrange our schedule so that we have a presentation that allows us to understand where the department is coming from. We are not passing judgment on it at this moment. We need to have, so we don't have this every time we take up a budget, the full outline of what you have done to come up with these amounts. I don't know how we'll proceed if we don't have that. So, that's a request.
Now, when can you comply with that? And by that I mean first an overview as to how you came up with these numbers, and then we're going to have to have, as we get into a budget, your analysis clearly stated as to how you expect or anticipate the savings to be accommodated. Now, this committee didn't bring up the issue. We've had some colloquy within our own committee as to whether the reorganization efforts should be sustained on the issue of whether it is efficient, or whether it is a savings. But the Governor has promised us publicly that the effort will result in a $28 million savings, and that's a very enticing aspect of it, but we need to understand that it has to be, I believe, more specific.
Would you have an opportunity, say, tomorrow when we meet to come in with that specific overview?
Mr. Thorne stated he would check with Judy Matteucci, Director, Department of Administration.
Senator Raggio asked, "Who is going to staff this committee from the Department of Administration?"
Mr. Thorne replied, "There will be coverage of both money committees by myself, Judy Matteucci, and Rochelle Summers [Budget Analyst, Budget Division]."
Senator Callister requested to know how much of the projected savings is a function of reduction in staff, and how much is a function of some other change in format.
Senator Raggio asked Mr. Rock if the methodology to be used in reaching the target of reorganization savings was in any way a violation of any legislation or regulations in existence.
Mr. Rock said, "If you are asking whether or not it is a violation to eliminate positions, no, you can do whatever you want relative to that."
Mr. Rock continued the review of the Executive Budget, page 256, pointing out the difference in Operating Expenses under Expenditures. One, the attorney general, who used to be in that particular item has been moved down to the item called State Cost Recovery Plan. Two, there were rent reductions which caused the figure to go down.
The difference in the item Central Data Processing was due to reduced billing from the Department of Data Processing.
A significant rise in the item Reserve occurred because a number of projects earmarked in Data Processing for the payroll system and built into the last budget, could not be completed due to staffing problems.
Senator Raggio asked, "How are you dealing then with those issues under the current system of payroll? Is the amount that is plugged in here by the Governor sufficient to maintain and operate the cost of your present system?"
Mr. Rock deferred Senator Raggio's question to Judy Taylor, who was previously the payroll manager.
Judy Taylor, Chief, Administrative Services Division, Department of Personnel, stated:
You will notice we did request two items in our enhancements. One, of course, was a re-request of a new payroll system, and in lieu of getting that we did again request additional funding in Data Processing to accommodate those particular projects. In FY [Fiscal Year] 93 we have started. Data Processing is staffed up, and they are currently working on those two issues.
The recommended funding $514,585 in 1993-94, and the $472,079 in 1994-95 will continue a maintenance level on the existing payroll system. But at that funding level we will discontinue work on the on-line project, and we will not attempt to revise the way we calculate overtime payments.
Senator O'Donnell asked for further explanation.
Ms. Taylor continued:
It's kind of a technical issue. We calculate overtime for those employees who are eligible at time-and-one-half times their hourly rate. According to FLSA, if that person receives pay other than their base pay in that week, a longevity payment, they receive some type of callback pay, the overtime then should be calculated based on their total base pay, which would be greater than their normal pay. We don't do that currently. It's a major change to our existing system.
Senator Rawson asked if the state is obligated by law to follow the FLSA.
Ms. Taylor replied, "Yes."
Senator Rawson added, "So, we are presumably...the clock is ticking, so to speak, on the lawsuit that will force us to go back and pay all of this?"
Ms. Taylor answered, "Yes. And we've not even been able really to determine the impact because so many different calculations are involved. Yes, we do have a legal liability there."
Senator Rawson asked how many years the state would have to go back.
Mr. Rock stated it would normally go back 2 years from the time a lawsuit is filed. It could go back a third year if the omission was determined to be deliberate. Then there could be double damages.
Senator Rawson commented:
Presumably, if we continue one more day beyond when this budget is approved, we know what we are doing. This is certainly a public meeting. We have discussed it in the open. We know about it, so there is some obligation to do something about it. That liability would expect to be somewhere in the $150,000 to $300,000 per year.
Ms. Taylor thought Senator Rawson's figures were "somewhat high,"
stating the adjustments are "typically fairly small." She thought $100,000 would be more realistic.
Senator Rawson asked if there is a reserve indemnifying the state.
Mr. Rock explained:
It could come from a number of areas. In this particular case, the main portion of the reserve is being kicked forward, after the end of the fiscal year, because of the projects in [the Department of] Data Processing not being completed. Therefore, that money rolls forward at the end of the fiscal year. It is not reverted back to all of the agencies on their assessments like it used to be 5 or 6 years ago.
Senator Rawson asked, "Does that become a slush fund, then? Is this specifically spelled out for a purpose, or can it be used for any number of things?"
Mr. Rock stated, "You could use it for something. We would have to come to you to request to use it. We can't just use it."
Senator Raggio thought it an appropriate time to be informed about the new category being recommended "exempt-merit employees" and what it would address.
Mr. Rock decided to start with the Benzler case and then go into the exempt-merit employees:
The Benzler case, which was filed against the State of Nevada, essentially came out with two things. Three things, actually, but the two that are important to us right now is [sic] that they found that if you compensate accumulated compensatory time....if you have a policy, a statute, or a regulation that says that you will actually pay cash, and can pay cash....that, in fact, violates the salary test of the Department of Labor, and means that those people are hourly employees rather than salaried.
The other factor that came out of the case was that if you suspend, if you have a statute, which we do, on the books, where you can suspend people, employees, without pay, then that, in fact, indicates that they are set hourly employees instead of salaried. So, essentially, what that decision did is it indicates that every person in the classified service, and some people in the unclassified service, are not really salaried people by DOL [Department of Labor] standards. Therefore, they are considered hourly employees and entitled to time-and-a-half....Doctors, attorneys and teachers are specifically exempted from the FLSA.
There are two tests in the FLSA you need to focus on. One is called the Salary Test, and that's what Benzler was all about. If people are considered to be hourly employees, rather than salaried, then they are, in fact, entitled to time-and-a-half.
Senator Raggio stated:
If I understand what you are saying, even though we may call them salaried employees, if those other rights or perquisites are available, notwithstanding our definition, under that Act (FLSA) are considered hourly.
Mr. Rock mentioned the Department of Labor. Although the department recognizes our definitions of unclassified and classified, it does not mean anything to them. They go by exempt and non-exempt, the two classes of people looked at in determining how they are paid, hourly or salaried.
The other test the Department of Labor applies, is called the Duties Test, which is different, of course, than the Salary Test. What that means is, if you can take classes of people and put them into executive, administrative, or professional definitions within the Department of Labor definition, you can exempt them, provided you also take care of the salary issue, and make sure you don't suspend those folks without pay. Or, that you don't violate any other provisions that would indicate they are hourly.
What we are proposing, because of this, is to come up with something called an exempt-merit class. The reason we are saying "merit" is because the state constitution says that you will provide a statute that will provide a merit system.
...something else to consider, and that is the federal government. Any program where they are supplying federal funds...most of the programs, certainly welfare, the health areas, blind services, all of those programs in the state that are receiving federal funding are required to have a merit system. So, you have to be very, very careful that you don't violate the merit system act of the federal government in those cases, and also our own constitution.
Mr. Rock indicated other states have been queried to find out what they have done relative to exempt classes. He commented the further the salary structure can be broken apart from the hourly-type employee, the better off the state will be. "What comes to mind is a minimum/maximum salary rather than grade levels...no steps...a modified hiring process...a modified discipline process, in terms of terminations."
Mr. Rock added:
We are also recommending, based on a study that was conducted by the same group that did the reorganization study, which has never been finalized, but I met with them and they gave me a very solid recommendation, that we create something called management leave to take the place of all this comp [compensation] time they are no longer to going to....40 hours to be exact. They could use it during the year or be paid for it at the end of the year, and it wouldn't violate the FLSA.
I'm considering something called reduction in salary, within that minimum and maximum....I'm not ready to say whether that could be done....By the way, the number that we are talking about is probably around 2,500 employees [out of a total of approximately 12,000-13,000 state employees].
Mr. Rock distributed a copy of a memorandum entitled "Chronology of Events Involving the FLSA" (Exhibit D), dated December 9, 1992, from Phil Hauck, Supervisory Personnel Analyst, Department of Personnel, to Jim Spencer, Senior Deputy Attorney General.
Senator Raggio asked what was the fiscal impact of the Benzler case?
Judy Matteucci, Director, Department of Administration, referred to page A26 of the Executive Budget, Board of Examiners, which is a recommendation to allow for additional FLSA required cash compensation to employees as a result of the Benzler v. State of Nevada lawsuit.
Senator Raggio asked, "Has that resolved all of the potential issues dealing with this overtime, or are there still some pending...?"
Mr. Rock interjected:
With both of us working together, the Department of Administration and the Department of Personnel, we have determined to go back for those that were not plaintiffs, too, to clear up that whole issue. As of right now everybody is going to get time-and-a-half. The types of people who are getting it are like...a good example would be like the Welfare Administrator. My position would be exempt, because I report to an elected official. But, the Welfare Administrator does not.
Senator Raggio asked, "Is that included in the amounts you are talking about?"
Ms. Matteucci replied, "Yes. The amounts that we've got in there we projected forward based on information as of December 18."
Senator Raggio asked, "Are we at a point where that issue generally has been resolved, and we are not looking at another potential $4,000,000 coming at us after we leave the session?"
Mr. Rock stated, "Correct."
Ms. Matteucci stated all of the people currently being paid time-and-a-half for any hour of overtime worked would be an ongoing liability in the budget if their status was not changed to the exempt-merit proposal.
Senator Raggio requested the proposed effective date of the reclassification.
Ms. Matteucci and Mr. Rock stated approximately 2,500 employees will be placed into the new category (exempt-merit) by October 1, 1993, to coincide with the reorganization.
Senator Coffin asked who is keeping a record of the time worked by the administrators.
Mr. Rock said:
Because of [Assembly Bill] A.B. 576 [of the Sixty-sixth Session], where we tried to fix this once before....that made it to where from absences of less than a day, those people who are administrators, and we try to keep them exempt, don't have to report that, because that was a key area that was a weakness in the Fair Labor Standards Act....They may be keeping time, not properly, if you want to exempt them from the FLSA.
ASSEMBLY BILL 576 OF
THE SIXTY-SIXTH SESSION: Provides for granting of administrative leave with pay to certain public employees.
Senator Coffin asked, "Do we have to wait until October?"
Mr. Rock replied:
We could probably move faster. There are going to be a number of changes....We are going to propose to you some of the things I mentioned...and we are also going to propose to you to eliminate certain statutes as it affects that group. Obviously the suspensions without pay have got to go for that group, or you are going to be in violation.
Senator Coffin asked, "Then would we be using a separate pay bill for the exempt-merit class, somewhat like our unclassified pay bill?"
Ms. Matteucci replied, "We had not intended to do that...but we certainly could."
Senator Raggio urged Mr. Rock to go ahead with his presentation.
Mr. Rock progressed to the Maintenance portion of the Executive Budget pages 256 and 257, Item 100, Inflation.
Senator Raggio requested Mr. Rock address the $93,474 the Governor recommended for Item 300, Occupational Studies. "I think we would like to know...the summary of the Occupational Studies, which you have completed and what is anticipated in this area."
Ms. Matteucci commented, "You realize the $93,000 is the cost of the completed Fiscal Management Study." During the current biennium three studies Engineering and Allied Occupational Studies, Fiscal Management and Staff Services, and Social Services Welfare and Rehabilitation were completed. As a result of the studies it was recommended certain positions be upgraded or downgraded. Personnel was included in the Fiscal Management and Staff Services study.
Senator Raggio asked, "What percent increase does this result in for the affected employees?"
Mr. Rock remarked, "Most of the classes went up one grade (4.6 percent), the upper level ones, particularly the analysts. The technicians at the lower level went up two grades."
Senator Raggio inquired, "What groups...were they compared to?"
Mr. Rock mentioned the study was conducted by Ernest Young, an outside consulting group, as a result of a petition received not to do the study. "I'm sure everybody in the Fiscal Management and Staff Services area were compared against each other in the classification study." There were internal comparisons only.
Senator Glomb asked, "Was this of the Administration Division?"
Ms. Matteucci replied, "All positions that fell under the Fiscal Management and Staff Services occupational grouping. This is something mandated by the legislature how many years ago...." In the old budget format it could not be seen what the cost of the occupational studies were. The new budget format isolates what the cost of the increases are, making it possible to see what the cost of the occupational studies are.
Senator Raggio requested, "Would you remind us in this biennium, as a result of that, what is the total cost of the results of the occupational studies?"
Ms. Matteucci answered, "The total costs, Mr. Chairman, are $8.8 million, as a result of the three occupational studies, about $2.2 million of which is General Fund."
Senator Raggio requested to move on to Enhancement, Executive Budget pages 258 and 259.
Mr. Rock stated there is a significant difference in the Consolidation Personnel/Payroll Systems study the Governor is recommending for $175,000 in the first part of the biennium, and $125,000 the second part of the biennium. "This is the reason, I would assume, that the enhancements we were requesting for a new payroll system were deleted." There are a number of payroll centers at the present time, which need to be looked at for consolidation, and cost effectiveness. Approximately 9,500 people are processed through the current payroll system. Many departments have their own payroll system.
Ms. Matteucci stated the cost looked at for the conversion last biennium was $6-$7 million just for the one payroll center, and it was not thought to be a wise expenditure since it would not be comprehensive to all the payroll centers. She added:
This one can tailor what we've got to the other payroll centers that we decide to consolidate, and then next biennium, if you approve this concept, you would see consolidated payroll centers a proposal for the merger.
Senator Raggio commented:
My interest on that is whether this study, at this cost, I guess it's a total of $300,000 over the biennium...will that amount, in your opinion, accommodate such a study to the point where it can be recommended and included in the next budget, if the study indicates the feasibility of it?
Ms. Matteucci answered, "Yes. We contacted Price Waterhouse, the original contractor with the Department of Personnel, to get an estimate of how much it would take and that is the number they gave us."
Senator Raggio remarked, "Is this study necessary, or is it being delayed only because of the anticipated cost?"
Ms. Matteucci indicated the study is necessary. "This is not a study to see if it is feasible. This is a study to see how to do it."
Senator O'Donnell asked, "Has there been any effort to evaluate whether or not this could be privatized?" He wondered if it were prudent to spend $300,000 on a study of how to do it, when there are private payroll companies already performing this service.
Ms. Matteucci replied, "There are seven different payroll centers, each providing different pieces of information to the agencies that they support. This is a study on how to combine them." Ms. Matteucci stated she is not aware other states are using private services to do their payroll. Private companies will be doing the study and bringing in canned software, which will, hopefully, be merged into the three systems.
Senator Glomb asked which payroll systems would be consolidated.
Ms. Matteucci remarked the study would look at all of the payroll systems, including the university, the highway department, SIIS (State Industrial Insurance System), and PERS (Public Employees' Retirement System) to see which ones should be consolidated.
Senator Raggio asked, "If the $300,000 is appropriated for the biennium, are you prepared to immediately get into that study?"
Ms. Matteucci stated, "...You can see that the study crosses fiscal years, so it would start, probably I would say, January of 1994."
Senator Raggio asked, "Do you think it is going to take that long, or are you just allocating the cost across the biennium?"
Ms. Matteucci stated, "We need the information as late as possible to be as correct as possible. So, we need it right before we build the next budget. That is reflective of the information given us by Price Waterhouse."
Mr. Rock reviewed the Performance Indicators on Budget page 260.
Senator Raggio asked, "You're going to do 290 more occupational studies in 1993?"
Mr. Rock stated, "We're currently working on those."
Senator Raggio added, "And in 1994, 150 in each of the years of the biennium....and that will complete the full cycle?"
Mr. Rock answered in the affirmative and continued reviewing the Performance Indicators on Executive Budget page 260. He noted the number of classification studies performed and plans completed should be on the next page under Field Services, and under number of classes surveyed, the figure of 5 under projected FY 95 should be 72, which stays constant, when benchmarks are chosen.
Senator Glomb stated:
So, Mr. Rock, in terms of your Performance Indicators, you are going to be accomplishing these tests, as well as you are going to have 200-plus employees that you are going to trying to reroute into new positions?
Mr. Rock replied, "You mean the layoffs we are anticipating? Yes."
Senator Glomb added, "You are going to be accomplishing all of this with the reduction of five staff people?"
Mr. Rock stated:
I don't think that will impact it. What you normally experience in a personnel operation is, we're told that the freeze is going to continue, so you will see recruitments down...if the economy turns around the recruitments go back up.
Ms. Matteucci said:
The bulk of the relocations are going to take place prior to October of 1993, so you are only talking one-quarter of the entire biennial picture for that particular activity. This budget doesn't take effect until July of 1993.
Mr. Rock expressed confidence in being able to handle this cut in payroll, as was done in the previous payroll cut.
Senator O'Donnell questioned the $5 million expenditure on Executive Budget page 259, under Item 799, Other Non-Critical Issues, for Central Data Processing.
Mr. Rock stated, "We were requesting a new payroll system."
Senator O'Donnell stated, "If you don't know how you are going to do it, how do you know how much you need to have to pay for it?"
Mr. Rock replied:
This was to pay [for the] new payroll system for the personnel payroll, not the Department of Transportation and not SIIS. This is what we had studied and had done 2 years ago. We actually wanted to do it 2 years ago. What I did was put it back in here because at some point that payroll system is going to fail. We've been told that, and I'm upset about it...so now, we're not going to do it, because we need the consolidation, and the study has already been done....I want to bring out in everybody's mind that this payroll system is archaic.
Senator Raggio agreed the study indicated the payroll system was unreliable.
Ms. Taylor reviewed Executive Budget page 262, State Unemployment Compensation Fund:
This budget account...is only for those employees in the central payroll system. It has nothing to do with Unemployment Comp [Compensation], or SIIS, or for DOT [Department of Transportation]...We take an assessment of gross payroll, we put it into this budget account, and then the Employment Security Department bills us at the close of each quarter for actual expenses incurred. We have estimated that probably $750,000 in authority to receive revenue should be fine for both years of the biennium.
Senator Raggio stated the budget indicates a .22 percent of gross salaries, to which Ms. Taylor agreed, adding it was for 2 years.
Robert J. Gagnier, Executive Director, SNEA (State of Nevada Employees Association) stated:
Just a couple of comments, Mr. Chairman, particularly regarding your initial discussion you had on this budget for the Department of Personnel. We would like to register a deep concern in the manner in which these reorganization savings are going to be made.
Some of you that were on this committee two sessions ago will remember that the administration in a budget-saving process back in 1984 had eliminated the Occupational Assistance Program. We call it EAP, now Employee Assistance Program. That program had been requested to be restored by the Department of Personnel two sessions ago, but it was not included in the budget. We came to the money committees, and we asked you to restore those funds, and to restore that program, and the legislature did, in fact, restore the Employee Assistance Program, and it's working very well.
What we're afraid of, with the type of plan that I heard outlined to you earlier, is that the cuts will be made of personnel later on, without legislative guidance, and what we could do is, programs that the legislature has mandated could be cut, and there would be no recourse at that time...that is a concern that we have.
The other thing that I would like to mention is based upon your extensive discussion of the Fair Labor Standards Act and issues...I would like to ask the chairman that when you hear the supplemental appropriation that we be allowed ample testimony. I will have our lawyer here, who was deeply involved in that case, and what we consider to be some potential cases that may come up because of the proposals being made to you on the exempt-merit class, and what that could lead to, additional lawsuits on discrimination and retaliation.
Senator Raggio assured Mr. Gagnier he would be given the opportunity to testify and will ask staff to notify him of the hearing. "We don't obviously have the bill...and I'd like to see that bill as early as we can." The chairman concluded the hearing on the Department of Personnel and State Unemployment Compensation Fund, Executive Budget pages 256 through 262.
Department of Taxation - Page 205
Senator Raggio opened discussion on Executive Budget pages 205 through 211, the Department of Taxation.
Ms. Matteucci handed out a replacement for Executive Budget page 211, Department of Taxation (Exhibit E).
Senator Raggio requested the staff to replace page 209 in the Executive Budget, Volume I.
Mr. Miles gave an overview of Executive Budget pages 205 through 211, Department of Taxation, based on FY 92 actual expenditures.
John Perry Comeaux, Executive Director, Department of Taxation, handed out a Department Overview (Exhibit F), and general discussion ensued regarding the impact the Executive Budget has on the Department of Taxation.
Senator Glomb asked:
Specifically on the Local Government Finance Section, you say that section is being eliminated, but then yesterday we learned that the local governments were going to be assessed an additional half percent increase in fee for those services?
Mr. Comeaux replied, "No, that fee is in connection with collection of the sales tax."
Senator Glomb continued, "But doesn't this division then analyze those assessments, and how much, and redistribution...."
Mr. Comeaux answered:
That division currently handles the distribution of the sales tax, but those functions would be taken over by the department's accounting section in the future. We'll still continue to collect and distribute the sales tax of local governments.
Senator Raggio asked, "Who did you say is going to assume the function that is presently covered by that local government?"
Mr. Comeaux replied:
The general idea is that the responsibility for preparation of the local government budgets within the existing law, in Chapter 354 [of Nevada Revised Statues (NRS)], would be moved back down to the local government level. My department now, our responsibility is to review those local government budgets, be sure they are within the fine work of the law, and then approve the tax rate that budget calls for. And, then we publish what is referred to as the Redbook, which is a summary of all the tax rates in the state.
Regarding the ratio study, Senator Raggio said it was a very important study and with a delay there would be a potential serious fiscal impact if there are improprieties developed by the ratio study.
Mr. Comeaux stated:
Well, obviously we would be looking at a particular county once every 4 years instead of once every 2 [years], so if there was a problem that developed in the year after we last looked at a county, then it could continue for 4 years instead of the 2 [years].
What we've requested in connection with this change would be that the statute would be changed, and it's specifically, I think, in Chapter 361 [of NRS] that would give the department the flexibility to select our sample for the ratio study in a particular county....As a result of that change four property appraiser positions would be eliminated from our existing staff.
So that's basically, those first two impacts result in the elimination of six positions from the department's budget.
The third impact of the Governor's reorganization plan would be that the responsibility for the administration and collection of the insurance premium tax would be transferred to the Department of Taxation. The Executive Budget provides that three positions would be given to the department for that purpose, plus additional operating equipment, and data processing funds to accomplish that task.
Senator Raggio asked Ms. Matteucci, "Has there been an accompanying reduction in force in the Department of Insurance?"
Ms. Matteucci answered, "There is."
Mr. Comeaux stated, "That transfer would be effective July 1, 1993."
Mr. Comeaux continued:
The fourth and final impact of the Governor's reorganization plan on our budget is that effective October 1, 1993, the department would assume responsibility for implementing combined business tax audits, designed to provide more efficient, less intrusive tax audits of Nevada businesses. Specifically, the department would conduct audits for [the] Employment Security [Department] and the State Industrial Insurance System, as well as the usual sales business and other audits performed now.
Senator Raggio asked, "Is this in response to the general complaint from businesses that they are being visited by a series of auditors from various departments of state government?"
Ms. Matteucci replied, "That is one of the reasons why we think this is one of the certainly more appealing recommendations that we have in the Governor's reorganization plan."
Mr. Comeaux continued, "The department would receive 14 new positions, as well as related operating, travel, training, and data processing expenditure authority to take over that responsibility."
Senator Raggio asked, "Will there be sufficient expertise by transferring in these audit positions?"
Mr. Comeaux stated his audit staff has a high level of knowledge in connection with sales and use tax audits and the business tax audits. With the 14 new positions, there will definitely be some auditors hired from ESD [Employment Security Department] and SIIS.
Ms. Matteucci stated:
We brought over the existing audit positions from SIIS and ESD. There were 20 from ESD and 39 from SIIS that we brought over....We created 14 new [positions] so he can't tell you specifically which people are coming from where, and that will be up to him if this particular proposal is decided....We did not attempt to specifically transfer specific positions from SIIS and ESD.
Senator Glomb asked Mr. Comeaux if ESD and SIIS are being assessed for auditing in the amount of $2.8 million.
Mr. Comeaux replied, "Most of that. There's another item in there as well."
Senator Glomb continued, "But, you're cutting back and yet you're charging more."
Ms. Matteucci stated, "Senator Glomb, instead of ESD or SIIS paying for 59 auditors, they are now being assessed their proportionate value of 14 auditors....So, there is a net savings to all of the agencies involved."
Senator Glomb commented there will be 45 positions eliminated and asked, "What were we charging before?"
Ms. Matteucci replied, "You were paying for all 59 people's salaries and fringe."
Senator Glomb asked, "How is that calculated, 14 positions, $2.8 million?"
Mr. Comeaux answered:
In the first year, which is only three-quarters of the year, the assessment, I believe, to each agency is something just under a million dollars. Most of the rest of that $2.8 million that you see in the first year is related to those 59 positions being transferred into the department's budget for the quarter, for the period July 1 through September 30.
The way that the assessment was arrived at is the department calculated the total cost of its audit operation, including the new functions that we would undertake for SIIS and ESD and basically just split it a third, a third, a third.
In any case, the general idea over this fourth impact of the reorganization plan is to provide more efficient, less intrusive tax audits for Nevada businesses.
Senator O'Donnell asked, "Mr. Comeaux, can you give me a list of the different taxes that they are going to be auditing, these 14 people?"
Mr. Comeaux stated the taxes to be audited would be SIIS tax, sales tax, business tax, net proceeds and minerals tax, gasoline tax, and less frequently for cigarette tax, or liquor tax.
Senator O'Donnell pointed out SIIS is just one tax on payroll and wondered why SIIS would have to pay one-third of the cost of the auditors, which is "basically on the backs of the business people," for one tax.
Mr. Comeaux said every time an auditor goes out he is going to audit for the existing Department of Taxation, SIIS and ESD, which is why the charge was split a third, a third, a third.
Ms. Matteucci addressed Senator O'Donnell, "Also, I think it is important to keep in mind that this approach saves about $800,000-plus for SIIS, so it is not an additional cost to them."
Senator O'Donnell stated if SIIS is going to hire "part of the pool" of these auditors, and the entire pool is being reduced by 45 positions, there should be a savings, but there also should not be an increased charge of a third for one tax for SIIS.
Ms. Matteucci suggested some adjustments may be made in the next biennium.
Senator Coffin offered:
This closely resembles my Senate Bill 604 [of the Sixty-sixth Session] from the last session. And, Judy [Matteucci] you'll recall...you were the only person that came in to support that bill, and when we walked into the government affairs committee we turned around and behind us were about 47 agency chiefs opposed to it, because it was going to steal their turf. And it was impossible to do, they said. Now, then I have this bill being drafted again, so maybe we can run it through again...or maybe you have a bill. Do you feel that your people are behind you on this, this time?
SENATE BILL 604
OF THE SIXTY-SIXTH SESSION: Creates state audit division of department of administration to conduct audits on behalf of state or local government.
Senator Jacobsen commented, "I guess I'm somewhat concerned when we talk about eliminating help to local governments...." He stated he is opposed to "doing away" with local assessors.
Mr. Comeaux said the basic idea was to reduce the state's role and move more of the responsibility back down to the local government level. He admitted there are some risks involved.
Senator Glomb asked, "Then why are you assessing them more?"
Ms. Matteucci replied:
We're increasing the commission for collecting sales tax, from one-half percent to one percent. The commissions for collecting sales tax have nothing to do with the local government advisory function in the Department of Taxation. Nor do they have anything to do with the validation of the assessments.
Senator Raggio commented, "In answer to the Senator's [Glomb] question, isn't it more realistic...isn't it a device to raise some more General Fund revenue?"
Ms. Matteucci said:
Certainly it raises more General Fund revenue, but if you look at the level of commission that we're charging for the one-quarter percent, it doesn't make any sense to have a 1-percent commission on that little bitty tax, and a half-percent on everybody else.
Senator Raggio asked, "What does it raise, another million dollars?"
Ms. Matteucci responded, "No, it raises another $6.8 [million] over the course of the biennium."
Senator Glomb asked, "Could we have a breakdown of what it will cost the counties, local governments, and cities for that?"
Ms. Matteucci replied, "We can't give it to you as to each, but we can give you the sum total."
Mr. Comeaux referred to his exhibits A and B, the last two pages in Exhibit F.
Senator Raggio asked:
In addition to the enhanced fee for your services and allocating the sales tax, and in addition to these two new fees, mines and centrally assessed property, are there any other increased fees or assessments in your budget?
Mr. Comeaux replied, "Aside from the transfers from ESD and SIIS, no sir. All the rest of the administrative fees are those that we have charged for years."
Senator Glomb stated, "So, a statute would be necessary. We'd need a piece of legislation in order to do this. Do we have a bill yet?"
Ms. Matteucci assured Senator Glomb, "...All the bills that affect the budget, which this one will, will be brought over and drafted, and it will be out relatively quickly, I'm sure."
Senator Raggio commented:
I think we need to know, as soon as possible, what the budget does in the way of impacting local entities....The cumulative effect of all of these things, I think we ought to know....I think we're acting under the impression that the local entities are in not much better financial shape than the state, so we're not going to solve the overall problem of the taxpayer by shifting between entities some of these costs.
Ms. Matteucci replied, "That may be somewhat debatable."
Senator Callister said:
Just a brief response. I appreciate that has been a particular concern and focus of yours, but with all candor I'm not certain that it is our obligation to protect Clark County's budget, or Washoe County's budget, or anybody else's in fact. Perhaps it's a function of how we view our obligation and our duty here. That's not the position I ran for, and it's certainly not my first and foremost personal sense of duty to this committee, or to the state. I think it's the state budget and the state concerns that trouble me the most, so I appreciate your effort. I know that's a traditional focus of yours, but I guess, just from my personal point of view, I'm more concerned about reductions in state programs than I am as a result of budgetary reductions, or as a result of this budget, than I am in terms of what it may cost some other entity of government, who has to deal with the very same concerns, the very same limited dollars, the very same taxpayers that we have to represent as well.
Senator Raggio pointed out:
That, however, will be a focus of this committee, and historically has been. I think it's important in view of the question that was on the ballot, and I think received overwhelming support, that the state not balance its budget by pushing financial burdens onto the state, or mandating programs, for example, without properly funding them. So, whether or not that's your personal opinion, that will be the focus of this committee.
Mr. Comeaux commented:
If you look at the department's summary on [Executive Budget] page 209, you'll see that for the first year of the biennium the total resources there are $11,068,439. Of that amount, the General Fund is providing $5,850,000. By my rough calculation that's about almost 53 percent of the total funding for the budget.
The other side of that is that last fiscal year, the Department of Taxation collected $1,323,000,000 total in revenues. Of that amount only 30-1/2 percent went into the General Fund. That means that nearly 70 percent of our tax administration and collection efforts are for non-General Fund. The administrative fees we've proposed here are nothing more than our attempt to try and assess the costs of our total operation in some kind of a manner that relates to the benefits that we're providing to these other entities, or funds.
Senator Glomb asked Mr. Comeaux if his department was receiving a new position of a demographer.
Mr. Comeaux said the Department of Taxation had contracted for the services of a demographer through UNR (University of Nevada, Reno).
Ms. Matteucci stated:
There's a recommended new demographer in my office to centralize my planning...the planning units in the new Department of Finance. It's one of our critical issues. There's also an economist there. We simply are unable, at this point in time, to provide the kind of demographic
and economic information, on a timely basis, to state agencies.
The contract that the Department of Taxation currently has...we utilize some of the services of the state demographer, but frankly her time and attention is directed toward the activities of the Bureau of Business and Economic Research that she works for at the university. Whenever you need additional demographic information you have to pay for it, and pay for it, and she has to schedule it within her own work load. So what we're recommending is that we add a demographer position in the Budget and Planning Division to provide demographic services statewide, and that the Department of Taxation, who needs those demographic services in order to distribute cigarette tax revenues, pay for a large part of it.
Mr. Comeaux said he understood Senator Glomb's question to relate to the demographic survey items included in the base budget on page 205, and not to the maintenance budget.
Senator Raggio urged Mr. Comeaux to move on to the maintenance budget, and then the enhancement budget.
Mr. Comeaux explained the Inflation Item 100 is the standard increase for the increased insurance assessments. Under Item 200, Demographic/Caseload Changes, are the 12 new audit positions for the Department of Taxation showing the personnel and other associated costs. Also included there are necessary increases to cover additional costs in some other areas.
Senator Raggio mentioned, "We will note in passing that the occupational studies affect this budget, $36,000 each year."
Mr. Comeaux continued to the bottom of page 207, Item 702, Enhancement, which he stated is basically data processing enhancements. There is funding provided to enhance our existing business tax system, which gives the capability to account for the business taxes collected, but there are many others things it can and can not do. It would also provide approximately $51,000 in funding to make some language changes in our existing sales tax system. Another small amount of approximately $5,000 is necessary to provide some changes to the audit on-line billing system.
Senator Raggio stated, "Both as to the Department of Personnel and the Department of Taxation, senators will be assigned on a subcommittee dealing more in detail with these departments."
Senator Raggio concluded the hearing on Executive Budget pages 205 through 211, the Department of Taxation.
Senior Citizens' Property Tax Rebate - Page 212
Mr. Comeaux stated:
This is a very straight-forward budget. The Governor's recommended amount of $2,479,785 in each year of the biennium contemplates maintaining the total dollars available for the rebates to senior citizens at our current actual expenditure level. Additional amounts under the maintenance, that the department had originally requested...those additional amounts are what would be necessary to fully fund the program to the maximum extent that the statute allows for. The amounts recommended by
the Governor would hold that funding to its existing level.
Basically we had a phenomenal increase in the number of applicants for that program. In last fiscal year, I think we had a 14 or 15 percent increase in applicants, and...90-some odd percent of those are approved. That was followed in this fiscal year by another 13 percent increase. Based on the language in the statute, we will require to, on a pro-rata basis, reduce the level of the rebates. So we, to this point, have made rebates that total about 75 percent of what the applicants would have been entitled to under the law if we had had the money.
We have an additional, about $176,000 in our budget now. We have asked the local governments if they want to forego the reimbursement that they are entitled to, so we can give all that $176,000 to the senior citizens. Or, if they need their reimbursement...as soon as we know that, we know how much we have to reimburse to the counties who handle part of this program, then we're going to disburse the rest of what we have, and I think we will end up with rebates at about the 80 percent level [which includes both the renters and the owners].
Orland T. Outland, Vice President, Nevada Council of Senior Citizens, from Reno, Nevada, stated he is representing the Washoe County Council of Senior Citizens as well as the Nevada and National Council of Senior Citizens. He said:
Mr. Comeaux mentioned $2,479,000 at about 80 percent. My understanding is that he has two incremental increases here. The base figure is the total number of people in the state in 1991 was 10,333 people. At that time you had about $2,444,000 that was paid out. Now if he has two incremental increases over that, and he was at 75 percent this last year in the rebate, it seems to me that he's going to be substantially less when he gets through with his arithmetic.
I'd like to go back and please invite the committee's attention to NRS 361.803, which are the findings that predicate this tax assistance program. And that is that you want to take into consideration that low-income seniors are being put at a disadvantage at excess tax in relationship to their income, and that's why we have the rebate program. It is a refund program, and the language used in the statute is convoluted in part, because in the beginning of the statute it talks about the tax assistance fund. In the end it talks about the tax assistance fund and the pro-rata data, but in the middle you have a chart that talks about a refund. And the concept out among the constituency is you are talking about a refund, and they are to get a refund according to the table that is presented there.
We feel that it should be 100 percent, and I feel it is now going to be at 80 percent of funding for people who are low-income, struggling to get along....and if his projections are not correct, then he should be permitted to, or actually directed to come back to the Interim Finance Committee to get the supplement. Because, these people that we're talking about have counted on this for a long time, and taxes are increasingly going up. The people on fixed income, and seniors of low income, are really hurting because of this loss of rebate. As I say, in 1991 there were 10,333 recipients, and he has had two incremental percentage increases in application since that time.
Senator Raggio requested Mr. Comeaux to furnish a written response to the chair and to Mr. Outland.
There being no further business before the committee, Senator Raggio adjourned the meeting at 10:58 a.m.
RESPECTFULLY SUBMITTED:
Joan McConnell,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
January 27, 1993
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