MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
February 4, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Thursday, February 4, 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
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Marion Entrekin, Committee Secretary
OTHERS PRESENT:
Judy Matteucci, Director, Department of Administration
Frankie Sue Del Papa, Attorney General
Frederick J. Schmidt, Consumer Advocate, Office of Advocate for Customers of Public Utilities, Office of the Attorney General
Robert R. Loux, Executive Director, Agency for Nuclear Projects
Jonathan G. Price, Director and State Geologist, Nevada Bureau of Mines and Geology, Administrator, Mining Cooperative Fund
Harold F. Bonham, Jr., Geologist, Nevada Bureau of Mines and
Geology
P. Forrest (Woody) Thorne, Deputy Budget Administrator, Budget Division, Department of Administration
Marietta Grass, Chief Financial Officer, Office of the Attorney General
Carol Widmer-Hanna, Secretary to the Board, Private Investigators Licensing Board, Office of the Attorney General
David Thomas, Risk Manager, Risk Management Division, Department of Administration
Senator Raggio requested introduction of the following bill draft request (BDR):
BILL DRAFT REQUEST 37-249: Creates fund for veterans' homes and
makes appropriation to fund.
SENATOR JACOBSEN MOVED TO INTRODUCE BDR 37-249.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR GLOMB AND SENATOR CALLISTER WERE ABSENT FOR THE VOTE.)
* * * * *
Dan Miles, Fiscal Analyst, Legislative Counsel Bureau, reviewed with the committee Exhibit C, "Budget Reduction Details Executive Budget". (Exhibit C. Original is on file in the Research Library.)
Mr. Miles distributed to the committee members a memorandum dated February 1, 1993 from the Department of Administration, subject "Exempt Appointed Positions", (Exhibit D). He explained that under the new budget format, the title was changed from "Unclassified Employees" to "Exempt Appointed Positions". He suggested this handout can serve as a reference with the Governor's Executive Budget.
Senator Raggio asked, "Are these the positions we were talking about as "exempt-merit?"
Judy Matteucci, Director, Department of Administration, answered in the negative. She explained the list refers to the new unclassified or exempt-appointed positions pursuant to the Fair Labor Standards Act (FLSA) definition. She commented:
...in order to meet the definition of the Fair Labor Standards Act regarding positions that are not exempt-merit and could be entitled to time-and-a-half unless you make them salaried...are the personal staff of elected officials, directly appointed by an elected official and accountable to an elected official....Under that definition the chairman and the members of the Gaming Control Board and Public Service Commission do not meet that definition because they are appointed by the Governor but they are appointed for a term...but we have put them in here (Exhibit D) simply because of their policy making role...we think you should have some say about what their salaries are.
Ms. Matteucci referred the committee to the column Reorg. Pay shown on pages 1 - 5 of the handout (Exhibit D). She pointed out that positions not listed in this column have either become exempt-merit positions or the positions have been eliminated entirely.
Senator Glomb arrived for the hearing at 8:17 a.m.
Senator Raggio asked, "We will not be talking about unclassified service any longer, or will we?"
Ms. Matteucci answered, "With our proposal, if you accept it, you will be talking about exempt-appointed service."
Senator Coffin mentioned:
Normally I would not worry about lawsuits because most of the time you win your lawsuits...but there is one organization that keeps beating the state in lawsuits and that is the State of Nevada Employees Association (SNEA). I have an indication from them that they are going to sue in this, and they rarely lose. What do you think our chances are in succeeding against them since they rarely lose?
Ms. Matteucci answered:
I believe you are asking the wrong person. You should ask the attorney general. We have worked with the attorney general on the ways we are working on developing the exempt-merit service in accordance with the FLSA. You heard the discussion about the procedure we are going through in order to assure this really is an objective determination of which positions should be salaried and would meet both the salary and duties test to be in compliance with the FLSA. I have not been informed as to what the basis of the potential SNEA lawsuit would be. Perhaps the attorney general can talk about that more thoroughly. I do not know whether she has been informed. The only thing that I can report to you is that they (attorney general's office) indicate to us they believe this would meet the test and is legally defensible.
Senator Coffin said, "I think before we go home this time we should make sure we really are on sound legal ground. I was told by SNEA they are going to sue, so we have some warning here."
Ms. Matteucci commented the SNEA has not shared with her the basis of their concerns and she also does not know if they have been in touch with the Department of Personnel as to what the procedure is in this regard.
Senator Rawson noted the legislature used to have the ability to adjust on a selective basis unclassified salaries. He asked if the new procedure would eliminate that capability.
Ms. Matteucci responded:
What we are proposing on this list (Exhibit D) is the positions that are shown as exempt-appointed you would still set the salary maximums for....What is happening as a result of the FLSA...both the salary and duty test and the appointment structure, which is critical and under the new reorganization...the Governor will not be making nearly as many direct appointments. They will be made by department directors and division heads. They would not then qualify for being exempt-appointed. Essentially, these would be the positions, if you were to accept our entire structure as we present it to you...in the so-called exempt-appointed pay bill.
Senator Rawson stated in many ways that would probably be better.
Senator Raggio said the committee will be taking a thorough look at the proposal regarding exempt-appointed positions, so this would not be the time for them to make any kind of determination regarding it. Senator Raggio stated, however, he was still not clear on the change that will result from exempt-appointed and exempt-merit.
Ms. Matteucci replied:
According to the FLSA, in order to be exempt-appointed you have to be appointed by an elected official and serve at their pleasure. Therefore, the ones that are listed (Exhibit D)...in addition their personal staff...e.g., all the Governor's staff would be exempt-appointed. That meets the FLSA of not being in the exempt-merit service.
Senator Raggio asked, "Are those in the exempt-merit classification entitled to overtime?"
Ms. Matteucci said the proposal as presented to the legislature by the Department of Personnel attempts to classify those positions as salaried employees not entitled to overtime, and they will establish wide-salary bans as to what those employees should be paid. It will be a restructuring of the classified structure.
Senator Raggio said it appears Exhibit D is a short list of about 50 individuals compared to about 400 they used to have on the unclassified list where they set specific salaries.
Senator Raggio asked, "Are you telling us as a result of this the legislature will not have the authority to set specific salaries, that we must allow a flexible ban for all of the 350 employees that are not on the list?"
Ms. Matteucci replied:
Theoretically right now those that are in the unclassified pay bill which restricts salaries and states certain people cannot earn overtime...are in violation of the FLSA....Therefore, they will then be established, these salary ranges, by the Department of Personnel as opposed to having them set by this body. The ones that should be set by the legislature are the exempt-appointed that meet the definition pursuant to the FLSA.
Senator Raggio stated this proposal will be reviewed in more detail before any decisions are made by the committee.
Consumer Advocate - Page 38
The attorney general's Office of Advocate for Customers of Public Utilities was established in 1981 in response to an initiative petition by Nevada citizens and is authorized to represent the interests of utility ratepayers before the Public Service Commission of Nevada, federal utility regulatory agencies, courts and all other forums with jurisdiction over Nevada public utilities.
Senator Callister arrived for the hearing at 8:35 a.m.
Frankie Sue Del Papa, Attorney General, distributed Exhibit E, "Budget Requests, FY 93-94 & 94-95" to the committee. (Exhibit E. Original is on file in the Research Library.) She pointed out information concerning the Office of Advocate for Customers of Public Utilities (OCA) is contained in this handout.
Frederick J. Schmidt, Consumer Advocate, Office of the Attorney General, Office of Advocate for Customers of Public Utilities, summarized with the committee the information reflected in Exhibit E, after the tab insert, "Budget 1038, Consumer Advocate".
In response to a request from Senator Rawson for clarification, Mr. Schmidt pointed out that his office is a division of the Office of the Attorney General.
Senator Rawson asked, "Do we have any other consumer affair [activities] in the state that should be mentioned? Are there any other agencies that have a similar function?"
Mr. Schmidt responded he believed there are other agencies involved with consumer affairs but he does not believe there are any other offices that are separately established, well funded, and set up by legislation as his office is. He added he believed this is an interesting policy question he would invite Senator Rawson to address because there presently is a consumer advocate that was established last session for the consumer but that consumer advocate functions and exists as part of the Department of Insurance. There is also a Consumer Affairs Division which is part of the Department of Commerce. He said his office only deals with utility matters and is often referred to as the "Consumer Advocate Office" rather than the Office of Advocate for Customers of Public Utilities.
Mr. Schmidt believes his office is very effective in that they are set up under a separate constitutional officer. Most of the other [consumer affairs] offices that have been established are a part of the executive department where they do most of their work. He believes his office has much more independence to aggressively represent consumer interests. He commented if one believes in a strong consumer representation in state government, some form of consolidation in the establishment of consumer representation into one office makes sense, and keeping it separate from the entities from which it has to appear before also makes sense. Therefore, Mr. Schmidt likes the structure of his office but noted the others he previously referred to are not so structured.
Mr. Schmidt said there is also a division for consumer affairs in the Public Service Commission which is about the same size as his office but which uniquely represents an individual consumer complaint before the Public Service Commission. He commented his office does not have the staff and does not try to involve itself in every case. When his office does receive an individual [utility] bill complaint, unless it is a matter that involves a broad class of people, his office refers the complaint to that consumer affairs division because it handles that type of individual complaint.
Senator Rawson said the committee receives complaints about contractors that he believes should be handled by the contractor's board. He asked Mr. Schmidt to put together a list of all the consumer functions within state government that might be considered during the present period of reorganization.
Senator Callister expressed curiosity about what the model is in other states regarding consumer affair functions. He is interested in knowing if all of the consumer affair representation is ever handled entirely in one location (i.e., the attorney general's office) irrespective of whether the complaint involves a utility matter or is for a consumer to be represented generically.
Ms. Del Papa answered consumer protection is one of the top priorities of the National Association of Attorneys General. She said she has the statistics requested by Senator Callister and will provide them to the committee.
Senator Callister stated there is enormous confusion for the public about "who to call" for "what kind of problem".
Ms. Del Papa reiterated that most of the public assumes the attorney general's office represents every state agency, and the State Contractors' Board is a good example. Many complaints come to her office, but they do not represent the State Contractors' Board. She said there are several entities that have counsel of their own that are not necessarily represented by the attorney general.
Senator Raggio said it might be more appropriate if Mr. Schmidt's office be renamed the "Office of the Utility Consumer Advocate".
Mr. Schmidt replied the way the statute is set up at the present time, the title is that and a little bit longer. It is listed as "The Attorney General's Office of Advocate for Customers of Public Utilities". Because of that length, the legislature indicated his title would be "Consumer Advocate" although he constantly has to remind people that his office only represents utility customers.
Senator Raggio noted the Base budget consists of 10 existing positions and asked if he still has the 10 positions filled in his office.
Mr. Schmidt responded although he has been authorized 10, he has only 9 positions filled at this time. He lost his Staff Economist who left to take another job outside of state government.
Senator Raggio asked if Mr. Schmidt's office was in any way affected by the budget reduction, and Mr. Schmidt responded it was not.
Senator Raggio pointed out the Maintenance budget reflects a new position and the indication is that position is necessary due to the complexity and increased number of rate hearings. He asked if this would be a specialist position.
Mr. Schmidt answered he is proposing a financial analyst be added to his staff. He stated his office constantly must deal with mergers and acquisitions such as the current Centel Communications Systems with Sprint wherein the telephone company in southern Nevada will be taken over by a much larger multi-national holding company. The financial matters of evaluating the impact on Nevada from a situation such as this is more complex. Mr. Schmidt said this is the first position he has asked for in over 4 years, and he believes this is a modest growth request in terms of his overall staff level.
Additionally, Mr. Schmidt said the state's utilities, particularly Nevada Power in southern Nevada, suffered through a difficult time in the late 1980s and early 1990s when the rapid change to double digit growth in customers was not estimated. As a result the company was caught playing "catch-up" in having to rapidly construct several power units to ensure an adequate power supply. The pressure on the construction budget of the utility caused substantial re-evaluation and analysis from financial experts on Wall Street and others who began to change their assessment of the utility's bond rating, et cetera. At this time, the state was without a competent staff member and had to spend a good deal of money calling on outside experts for advice. Therefore, it is Mr. Schmidt's belief that a financial analyst who is familiar with such problems is somebody he would like to have on staff.
Mr. Schmidt summarized that his office will have a more consistent work load of general rate cases, they have $80 million pending at the present time with Nevada Power and Sierra Pacific Power Company. He does not see the work load changing but thinks it will increase.
Senator Raggio asked what the general financial situation presently is with respect to the major utilities in the state.
Mr. Schmidt said the Nevada Power Company has been in the most precarious situation. However, he believes they have "turned the corner" as their earnings are up and they have been taken off a credit watch by the three major utility-rating agencies in Chicago and New York. He said although their bond rating is still unacceptably low, he believes they are improving. According to Mr. Schmidt, another utility that may bear watching is the
Southwest Gas Company primarily because of its affiliation with bank activities. He believes that most of the major utilities in the state are in good financial health, particularly with regard to their utility operations.
Mr. Schmidt stated some of the utilities have ventured into and are involved in other businesses which cause some problems. Using the Sierra Pacific Power Company as an example, he said they have lost money every single year since 1980 in the subsidiaries in which they are involved. The utility itself has earned a healthy profit, but the subsidiaries as a whole have lost money each year. He feels most normal business cannot do that and believes the job of his office is to shield utility ratepayers from any effect of that.
On the other hand, he also feels it is the responsibility of his office to encourage the utilities to be involved only in businesses that are going to improve their overall financial health without getting too involved in other activities.
Senator Raggio commented one of the reasons he asked the question is that he has noticed as recently as January 26, 1993 in material from Dain Bosworth, Incorporated (a financial group) that they have given the Nevada Power Company a rating of 4, which is in the unattractive column. Other analysts such as Lehman Brothers or Valu-Line have commented most investors would do well to avoid these shares because earnings have failed to pay out and have fallen short. Senator Raggio stated:
...we do have an obligation not only to protect the consumer, but we also have an obligation to protect the vitality of these companies and obviously the shareholders. The shares have to be attractive and the bonds viable. Do we feel a necessity every time there is a rate increase to just "jump all over it"? These are not necessarily my views but I sense that over a period of time. I was here when we created the Office of Consumer Advocate for Utilities....I do not think it is all a one-sided situation here. It seems to me there is an obligation to understand the effect of what you advocate not only upon the consumer but as well upon the vitality of the state. Certainly utilities are a major employer in the state and the shares have to be protected and the earnings have to be protected. I understand that to be the ultimate decision to be made by the commission itself. I have some level of comfort from what you are indicating about a financial analyst if that is the purpose....Is that what you are saying, that person will give you that capability that apparently you have not had?
Mr. Schmidt emphasized he has not and will not ever ignore the financial health of Nevada utilities when he involves himself in a rate case. He said they do not always attack and try to prevent any rate increase from going forward. As recently as December 1992
his office negotiated a stipulation that allowed Centel Communications System a rate increase even though the evidence showed they could have argued for "no increase" because he thought it was important and fair and allowed Centel to move forward and get some rate relief. Mr. Schmidt said he does not always take the position that "you get nothing" and the consumers are better off from that. He believes his job is more complex and important than that.
Senator Raggio clarified he did not intend to single out a power company to talk about.
Mr. Schmidt said it is important to note that the Nevada Power Company has not released data beyond September 1992 on its financial earnings. However, their earnings have been dramatically up in the last two quarters which is good news. He believes the gloomy picture that has been painted by the analysts is soon going to turn around. Mr. Schmidt said if it does not turn around, he would not like to have the committee think he or his office is solely responsible for that type of thing since he believes other regulatory bodies, such as the Public Service Commission, are involved. More importantly, the business management itself must take responsibility on how it runs its business and how effectively it lives within its budgets that it creates.
Mr. Schmidt reiterated that his office would greatly benefit by having a financial analyst who would be very savvy and knowledgeable about Wall Street matters to assist them on an ongoing basis.
Mr. Schmidt continued his testimony of the Base budget and referred to the Expert Witnesses category. He stated the actual amount spent by the OCA in the last biennium was $382,000. They went to the Interim Finance Committee several times to have the current budget supplemented to handle additional cases. The current budget level for this biennium is $275,000.
Senator Raggio asked what the actual expenses are for 1993, and Mr. Schmidt replied they have already spent $140,000 - $150,000.
Senator Raggio asked if the financial analyst position was filled, would this alleviate some of the expenses anticipated, and Mr. Schmidt answered in the affirmative. He pointed out the Agency Request category for the next biennium is shown at a full $60,000 less than was experienced last year. He attempted to reflect the OCA would have a higher continuing work load but would not need the amount of money they experienced last year, particularly if the new position is approved.
Senator Raggio asked where this total budget, if approved, would fit in the mil amount that is required.
Mr. Schmidt said the budget based on projections that the Public Service Commission has made in concurrence with the OCA is slightly over $l.5 billion in utility revenue in the first year and a slightly higher amount, reflecting some growth, in the second year.
The Total Resources amount shown on the first line of the budget would be covered by a .70 mil level so that the OCA will not have to use the full .75 that is the ceiling.
Mr. Schmidt stated he will not spend money if not needed. He commented the Consultant budget represents a significant portion of expenditures but his office has the unique ability to react to a changing caseload by not charging as much in the mil assessment and by not spending state money when it is not necessary.
Senator Raggio asked if his office will maintain a reserve of about $138,000 to $140,000 under the proposed budget, and Mr. Schmidt replied, "Yes that is my projection." Senator Raggio then asked how the reserve will be used.
Mr. Schmidt said the reserve just carries forward from year-to-year. He has used it in the past to supplement his consultant budget.
Mr. Schmidt wished to discuss one other area that he feels is important. He stated he lost his staff economist in January 1993 when he took a job for the Sierra Pacific Power Company due to higher salary. He referred to a $16,792 request shown in Enhancements in the Governor's Executive Budget. He stated he currently has a staff attorney, staff engineer and a regulatory analyst for which he is seeking a salary increase. He commented these individuals are still salaried below comparable positions at the Public Service Commission and other state agencies. He does not want to lose them due to a transfer to one of these other agencies. He feels the $16,792 Enhancement request will increase the salary of these (three) employees to a more comparable level in the state, not competing with utilities.
Senator Raggio stated at one time salaries were equalized throughout the state agencies and asked if his staff attorney was not involved.
Mr. Schmidt said his staff attorney "missed the boat". The OCA argued for an equal salary for this employee but for some reason it was never set at a comparable level.
Mr. Schmidt suggested the committee refer to Exhibit E, "01 Personnel Services" for a more detailed explanation of his request for salary enhancements. He also said the Governor's budget office told the OCA they would not take a position on other constitutional officers' budgets or on salaried positions, so they would not make a recommendation. He was unsure if that means they were opposed to it as a general policy matter of opposing any state salary increases. He hopes it does not mean the OCA's arguments are not worthy regarding those positions.
Senator Raggio asked if the positions referred to by Mr. Schmidt are exempt-merit positions.
Ms. Matteucci responded in the affirmative but said it would be up to the Department of Personnel to determine where the positions should be. She also said the Department of Personnel in their on-going studies are looking at attorneys and all of the positions in the Gaming Control Board. She will report back to the committee regarding their findings. At the present time, those positions as well as all of the positions in the Office of the Attorney General are in the exempt-merit service.
Senator Callister asked if the Regulatory Analyst position would be considered exempt-merit.
Ms. Matteucci said this would be exempt-merit and reiterated the only positions that are exempt-appointed are those appointed directly by an elected official or body and serving at the pleasure of the elected official or body. If the position would be appointed by Mr. Schmidt, it would fall in the exempt-merit category.
Senator Callister applauded Mr. Schmidt for his work in the OCA and hopes he will continue to be the watchdog not only for the investors in a utility, but also for the consumers in the state.
Senator O'Donnell commented that if the OCA protects the industry and the utility, they will ultimately protect the consumer.
High Level Nuclear Waste - Page 1534
Mr. Robert R. Loux, Executive Director, Agency for Nuclear Projects, testified the mission of the agency is to protect the health, safety and welfare of Nevada's citizens and the state's unique environment and economy with regard to any federal high-level nuclear waste.
Mr. Loux provided the committee with Exhibit F, "Expanded Program Narrative" which includes the statutory authority for the agency as well as its major functions, goals and objectives. In addition to a summary of some of the highlights of the Governor's Executive Budget concerning his agency, it also includes an attached bibliography of some of the reports the agency has produced over its life dealing with the issues of high-level waste disposal.
Mr. Loux said his agency consists of the Commission on Nuclear Projects, a 7-member commission appointed by the Governor and serving 2-year terms, the Division of Technical Programs and the Division of Planning. The executive director of the agency is appointed by the Governor and serves at the pleasure of the commission. The agency is charged primarily with the oversight and evaluation of the [United States] Department of Energy's (DOE) efforts at Yucca Mountain in southern Nevada.
Mr. Loux said it is important to note federal statute provides that if the facility and the DOE recommends the facility go forward, there is a point in time in which the state submits its social and economic impact analysis to the DOE and to the [United States] Congress in a provision that the state would receive, assuming that the facility goes forward, impact assistance based on that social and economical analysis.
Mr. Loux turned to the Governor's Executive Budget and said the agency receives the bulk of its money from a direct congressional appropriation which has been averaging in the $5 million range for the last several years. They currently have an application pending with the DOE and the Congress for some $28 million for federal funding in response to the DOE's budget for site investigation at Yucca Mountain. The DOE are applying for a very significant increase in their budget and consequently the Agency for Nuclear Projects feels they must have additional funding to keep up with the DOE.
Senator Raggio said he realizes it would be federal funding but
asked how the agency would use $28 million.
Mr. Loux replied it would be for an expansion of activities, primarily in the geo-technical and socioeconomic and transportation areas. He added there are a variety of issues that he believes are critical to understanding the safety of Yucca Mountain that they have not been able to devote enough resources to. For example, understanding the unsaturated-zone hydrology above and below the water table. They also would expand their understanding of the geologic issues associated with Yucca Mountain such as the impact of earthquake faults. They are dealing with many of those issues now, but their activities have been restricted to actually reviewing the DOE's work and documents as opposed to their actually engaging in some independent study-data acquisition and analysis.
Senator Raggio said he assumes this has been detailed in their application to the DOE and asked Mr. Loux to furnish a copy of the application to the committee. He also asked for an explanation of the agency's $35,000 General Fund request.
Mr. Loux stated the agency's $35,000 request is primarily for the purpose of lobbying on Capitol Hill, an activity which is prohibited under federal statutes with funding the agency receives from Congress directly.
Senator Raggio asked if the full $35,000 was expended in the last biennium for lobbyist service and Mr.Loux responded they spent approximately $25,000 directly for the lobbyist. The balance of funds was used to finance a trip for Mr. Grant Sawyer, commission chairman, to Washington, D.C., for discussion with various congressional members.
Senator Raggio asked if they anticipate the same need for both years of the biennium and Mr. Loux responded in the affirmative stating Congress has been very active in activities for which Nevada has a paramount interest.
Senator Raggio referred to the item Contracts in the Base budget and noted the amount reflected to be at the same level as the
agency's actual expenditure for 1992. He inquired, "Are those continuing contracts or new contracts?"
Mr. Loux answered they are continuing contracts. He stated they have re-bid some of them as the law requires, and in some cases some of them have been renegotiated with the same parties, but they have gone through a solicitation process usually at the end of 2 years.
Senator Raggio asked for a list of the existing contracts and the agency's proposals for the biennium which will total the $4.5 million reflected in the budget. He also queried, "What amount of that is contracted with the University of Nevada system?"
Mr. Loux responded a rough estimate is about 50 percent of the agency's entire contract budget is with the University of Nevada system which includes the University of Nevada, Reno, the University of Nevada, Las Vegas, and the Desert Research Institute. He will provide the committee with the exact number.
Senator Raggio inquired, "Are you finding that contractual effort to be helpful?"
Mr. Loux said it has been helpful. The agency has found the experience with the university system to be productive not only from the work product they have received, but also by helping to establish expertise within the university system itself.
Senator Raggio asked if Mr. Loux has any comments as to the probability the application to the DOE for increased funding will be granted.
Mr. Loux said the DOE comments and submits through the [United States] Office of Management and Budget not only their budget, the agency's oversight budget, but also that for the local governments and other external groups such as the [United States] Nuclear Waste Technical Review Board. Then the individual appropriations committees take them up based on their viewpoint. He said there is a standing commitment from the DOE, which has yet to be fulfilled, that the state will receive around 5 percent of what the DOE receives for its program. In the last several years the DOE has been receiving very close to $300 million each year. At $5 million, the agency is not at the 5 percent level. Mr. Loux understands that in fiscal year 1994, the DOE will request around $700 million for their budget. Therefore, Mr. Loux believes the $28 million his agency has requested is well within the 5 percent level the DOE committed to providing the state.
Senator Raggio asked, "What is the focus of your effort? Is it merely to oppose it, or is it to insure that, in the event it is finally determined as the site, it will be safe? Or is it a combination of both of these?"
Mr. Loux replied in all fairness he believes it is a combination. He believes the results of some of their technical studies over the last 10 years about the actual physical condition of Yucca Mountain suggests very strongly the site cannot be proven safe or suitable and that there are a number of outstanding geologic defects that will make the site ineligible for a license. He further commented they have people at the site and are doing a great deal of work to look at all of the other issues involved with the program. He believes that would reflect the agency is not only examining the program and representing their viewpoint that the site is unsafe, but they are also looking at how these issues can be dealt with.
Mr. Loux stated in the final analysis if the DOE does make the determination that the Yucca Mountain site is safe, they fully intend to participate in the licensing hearing before the [United States] Nuclear Regulatory Commission. He believes the agency will be instrumental in that arena as well.
Senator Raggio inquired, "Is there money in your budget for the High-Level Nuclear Waste Legislative Oversight Committee?"
Mr. Loux said this is contained in the Base budget and is part of the $4.5 million.
Senator Raggio asked the actual amount the agency will allocate for the legislative oversight committee, and Mr. Loux responded, "$125,000 per year."
Senator Raggio commented Senator Hickey is the chairman of the legislative oversight committee and asked if the $125,000 is the amount that committee requested.
Mr. Loux answered in the affirmative. He added that if the DOE is successful in their enhanced budget with the Congress making the state successful in their $28 million request, he would anticipate the legislative committee's activity would also increase.
Senator Raggio asked if his agency is working closely with Senator Hickey and his committee, and Mr. Loux stated they provide the committee with all of the information that comes before their office both in terms of products they have produced as well as information received from the DOE. He pointed out the committee is also working closely themselves with the DOE and the Nuclear Regulatory Commission.
Senator Raggio said he mentioned this because several sessions ago there appeared to be a lack of communication, and he is hopeful this is not the case at the present time.
Senator Callister stated he is a member of the legislative oversight committee and he can attest to the fact there is no dearth of communication between them. He stated they receive a massive amount of information on a weekly basis on this issue.
Senator Glomb said she also serves on this committee and concurred with Senator Callister. She thanked Mr. Loux for keeping the committee so well informed. Senator Glomb also asked Mr. Loux, "With the change in the federal administration do you see a change in the approach to the Yucca Mountain site?"
Mr. Loux believes the potential clearly exists, but at this point he thinks the agency is in a "wait-and-see" mode due to new staffing patterns and the appointment of the new [United States] Secretary of Energy. He said there have been mixed messages from the new secretary [Hazel O'Leary] wherein she has stated she would like to see the site studies expedited; yet in oral testimony she has indicated she believes further review of the entire policy and program would be in order.
Senator Jacobsen stated he voted in favor of the Yucca Mountain site which he concedes has not been a very popular issue with the public. However, he has had the opportunity to visit the site on several occasions and is concerned the efforts being made by the Nevada Agency for Nuclear Projects will stop the project; yet the DOE maintains they have received permits to proceed with activities at the site.
Senator Jacobsen commented:
When you realize the amount of money the federal government is putting into the site, I do not see it as ever going away. And when you read about the amount of money other states have garnered from these types of things, I think we are just like a bump on a log. We can use the money, and I am not putting it all into economical figures either. If we do not stop, look and listen and try to work in unison with the federal government we might get it (the site) whether we like it or not....I think somewhere along the line we have to be a little more responsible and accept invitations for tours....a couple of members of this committee have had this tour. I think we are wasting our time. When I look at $35,000 General Fund money, in my book that is taxpayers' money, I think that ought to be eliminated. I also wonder who represents the people in Nevada that are for the site. It is pretty apparent all of your efforts go in opposition. The question should be answered by scientific people and not by politicians. I realize your direction comes from a higher level as to where we are going but I think all of us have the responsibility to take a look at this whole project and review it, but I do not know how we do this when you are in opposition and the press, and the general population joins with you. But is it a safe place? I think that is what the study is all about, to make that determination....I am not a scientific person. All I know is what I see but what I have seen I believe is positive.
Senator Raggio asked if all members of the committee have visited the Yucca Mountain site, and it was determined that not all of them have had the opportunity to do so.
Senator Jacobsen stated he had the opportunity to review the agency's budget in depth and was surprised to see one contract for $337,000 to one individual, yet he could not see where this individual's activities, that average $14,000 per month, involved much more than public relations. He asked for a copy of all of the agency's contracts. However, Senator Raggio stated this information had already been requested.
Senator O'Donnell asked who Sam Singer is, and Mr. Loux replied Mr. Singer is a public affairs professional that has a firm in San Francisco.
Senator O'Donnell asked if Mr. Singer worked on Nevada Senator Bryan's campaign, and Mr. Loux replied in the affirmative.
Senator O'Donnell asked if Mr. Singer presently has a contract with
the nuclear agency, and Mr.Loux answered, "The firm does."
Senator O'Donnell referred to the agency's request for $28 million from the DOE and asked if this amount would be enough for their needs.
Mr. Loux answered he believes the agency would be able to perform an adequate job of evaluating the DOE's efforts and their other statutory responsibilities with that amount of money.
Senator O'Donnell asked if his agency would want more than $28 million, but Mr. Loux stated he did not think in the first year of the biennium the agency could actually spend more in an effective way. Potentially in later years he believes should site characterization continue they might be able to spend more and would, therefore, request more funding.
Senator O'Donnell noted the Governor's reorganization plan lists the Department of Environmental Protection, the director, then Mr. Loux is shown underneath the director. He asked:
"If there were federal dollars coming from Washington, D.C., for the nuclear waste study and the Governor determined he needed some of the money for other environmental protection agencies, would you be opposed to that?"
Mr. Loux replied unless the activities of the other environmental protection agencies were wholly related to the high-level waste program, he believes they would have to oppose this funding as he believes it would not be a legal expenditure of the funds under the appropriation.
Senator O'Donnell asked, "You would oppose money from Washington, D.C., designed for environmental protection?"
Mr. Loux answered, "Again, unless it were specifically related to Yucca Mountain and the high-level waste program in some way, I do not think it would be an appropriate expenditure."
Senator O'Donnell asked, "Would you oppose a change in the law to allow more money for environmental protection?"
Mr. Loux asked, "To spend in other areas outside of Yucca Mountain?"
Senator O'Donnell answered, "Yes, for environmental protection."
Mr. Loux replied, "I would not oppose that. Obviously we do need to see adequate funding to review this program."
Senator O'Donnell asked, "Do you think ultimately the repository will be built, speculatively?"
Mr. Loux responded, "No."
Senator O'Donnell asked, "Is it your design to frustrate the efforts of the DOE until such time it is determined that it will not be built."
Mr. Loux replied:
We evaluate their efforts and when we find and see defects either in the methodology they are using or the way in which they represent or misrepresent their information, we point it out to the parties of interest...the Congress, the nuclear utility executives as well as public service commissions nationwide as a part of our public information responsibilities.
Senator O'Donnell remarked, "I am not sure you answered my question. Is it your design to frustrate the efforts of the federal government and delay the project until you feel it will collapse under its own weight?"
Mr. Loux answered, "No, I do not think by design we are doing that."
Senator O'Donnell asked, "You do not think you have a predisposed opinion for that?"
Mr. Loux said he thinks they have an opinion that the mountain is not geologically suitable.
Senator O'Donnell asked, "Do you feel the DOE studies are biased towards the nuclear industry in any way?"
Mr. Loux responded he believes their studies are biased regarding the site. He believes they have a predetermined conclusion as to what they want the outcome of those studies to be.
Senator O'Donnell questioned, "Do you think the studies your office is doing are biased in any way?"
Mr. Loux replied, "No."
Senator O'Donnell referred to Exhibit F and stated:
I notice you have done a shift from technical studies in later years to socioeconomic studies. In fact, I see very few studies in 1991 and 1992 under the technical realm but in the socioeconomic arena you have 19 studies. What are you looking for in the socioeconomic arena? Why are you not concentrating more in the technical side to prove that [the site] is unsuitable if this is what your office's mission is?
Mr. Loux answered:
I do not think the actual sequential listing of the studies that have been published are a reflection of the actual expenditure or activity level relative to our contractors....The socioeconomic studies have reached a point from 5 or 6 years ago to now when many of the studies that were underway have now reached a point of conclusion. The technical studies, on the other hand, have been more of an ongoing nature and there are ongoing studies which produce progress reports which we do not put in here as final reports because of the ongoing nature. There are a variety of technical reports which are currently in printing...there are 10 or 15 of them...which are not reflected here. I do not think you can look at the list of publications as reflective....
Senator O'Donnell asked, "And all of those reports, of course, are unbiased?"
Mr. Loux replied, "I believe they are."
Senator Callister stated:
It is my understanding there have been some recent studies that indicate an enormous perception problem with those who travel to southern Nevada. What kind of studies have you done that address that issue? As a native Las Vegan, I believe more crucial to the economic base of that town is the perception in which it is held to those who visit and spend their dollars which provides the economic base of the community and, indeed, the state. I am interested in what studies you may have that may address that issue of what the impact the opening of the proposed nuclear disposal site may have to their willingness to visit southern Nevada.
Mr. Loux responded they have done extensive work about the issue of public perception and its correlation to behavior. They have looked at the issues relative to the general public coming as tourists and their involvement with gaming. They have also talked with convention planners and other people involved with business relocation. In general, his agency has found that the public's concern or paranoia of new nuclear-type facilities is great, and there are some strong indications that their behavior will correspond as well. The summarization of these reports and conclusions have led them to believe there could be a 5 percent decrease in the number of people visiting southern Nevada. Mr. Loux
said he will make available those reports, some of which are listed in Exhibit F, and some of which are yet to be printed.
Senator Callister asked if any of the economic studies compiled by the nuclear waste projects office address the impact of the building of the site and a potential spill such as may occur in the transportation of waste material. Specifically, he would like information on the impact of the visitor-base in the event an accident should occur someplace in southern Nevada.
Mr.Loux stated his office has looked at the various possibilities that could occur using a variety of scenarios. This information is incorporated in various studies they have made covering issues such as being on the highways when nuclear waste is being transported.
Senator Callister was interested in data that would reflect how the public feels about visiting southern Nevada once there has been an accident. He stated the socioeconomic studies are even more important than technical studies regarding this issue.
Senator Raggio referred to page 1536 of the Governor's Executive Budget and asked Mr. Loux to comment about the expenditure of $80,000 for "Western Governors Association". He specifically asked, "What are the parameters of the study and what is the necessity for the continuance of the study."
Mr. Loux referred the committee to page 4 of Exhibit F that covers in detail the Western Governors Association WIPP (Waste Isolation Pilot Plant) transportation planning project.
Senator Raggio asked if the agency anticipates $1.6 million funding for this project each year, and Mr. Loux stated $80,000 will be the entire amount of this effort and represents an 18-month period of time and may be a one-time shot.
Senator Raggio asked Mr. Loux to delineate what is being proposed as an enhancement in the way of studies and to submit this information to the committee to be reviewed. He advised Mr. Loux he will invite him back at a future date to continue his testimony concerning the budget for his office.
Mr. Loux quickly wished to state their personnel expenditures have decreased in large measure exclusively as the result of a single position being removed from the Salary category and going into the Daily Processing category as a result of the reorganization. He said the position was a Microcomputer III position.
Senator Coffin asked if the money the agency spent in conjunction with his work at the National Conference of State Legislatures to try to blunt the power grab from the [United States] Congress to cancel state rights was taken from the General Fund.
Mr. Loux responded in the affirmative.
Senator Coffin commented if the $35,000 appropriation from the General Fund is the only way the agency can lobby a particular issue such as the eclipse of the states rights of Nevada, that ought to be almost an unlimited fund. He asked, "Are you sure you have enough money to lobby if, in fact, these kinds of issues continue to surround us?"
Mr. Loux replied:
I think we could have done a better job with more money but on the other hand I believe the expenditures were successful in helping defeat the one congressional proposal to strip the state of its environmental permitting authority....I believe that additional monies likely could be spent in trying to enhance our ability to gain more federal dollars in terms of overseeing the project....I think the money was well spent. We could have spent more money but in the short run these funds appear adequate. If we thought there was a large proposal pending in which we would have to really gear up for, we would come before the Interim Finance Committee and ask for more money.
Senator Raggio asked who Mr. Loux will be reporting to under the new reorganization proposal, and Mr. Loux said he will report to the new director of the Department of Environmental Protection.
Mining Cooperative Fund - Page 1633
Mr. Jonathan G. Price, Director and State Geologist, Nevada Bureau of Mines and Geology, Administrator, Mining Cooperative Fund, testified the Mining Cooperative Fund was established in 1955 to finance special resources, topographic mapping and geological projects carried out in cooperation between the United States Geological Survey and the Bureau of Mines and Geology.
Mr. Price submitted Exhibit G, "Testimony Regarding the Mining Cooperative Fund" from which he gave verbatim testimony. Mr. Price also provided Exhibit H, "Detailed Narrative Statement", which outlines various budget categories. Additionally, he provided Exhibit I: "Quarterly Newsletter of the Nevada Bureau of Mines and Geology, Fall and Winter 1992", "The Nevada Mineral Industry 1991", and "Mining Districts of Nevada". (Exhibit I. Originals on file in the Research Library.) Mr. Price said these handouts explain the specific projects supported by the fund.
Mr. Price introduced Harold F. Bonham, Jr. who will be the Acting Director, Nevada Bureau of Mines and Geology, Mining Cooperative Fund, for a 2-year period effective February 22, 1993 during which time Mr. Price will be on an assignment for the University of Nevada.
Senator Raggio suggested Mr. Price will not have to review the handouts with the committee and advised him they will be made a part of the minutes and will be read by the committee members. He asked Mr. Bonham to address the committee concerning the Mining Cooperative Fund.
Mr. Harold F. Bonham, Geologist, Nevada Bureau of Mines and Geology, Mining Cooperative Fund, stated the main issues concerning their budget requests have been included in the handouts, Exhibit H. However, he emphasized that the Mining Cooperative Fund has been an excellent investment for the people of the State of Nevada. Although also covered in Exhibit H, he wished to point out the Carlin, Nevada deposits were discovered as an outgrowth of funding developed through the Mining Cooperative Fund in conjunction with their program with the United States Geological Survey. He stated if Nevada were a country, it would be the third largest producer of gold in the world.
Senator Coffin stated engineers and mining companies throughout the State of Nevada have praised the Mining Cooperative Fund for their geological projects and topographic mapping. He asked if his group has performed seismic research or studies of some nature.
Mr. Price responded they are not focusing on seismic research by looking at earthquake records. However, there is a seismic laboratory at the University of Nevada that focuses on this activity. He said they are reviewing earthquake issues basically to figure out Nevada's earthquake hazards. They analyze small earthquakes from a seismologic standpoint and also review geologic
records. Mr. Price said much of their geologic mapping is focused on these very issues. Determining the ages of deposits that have been displaced by faults and how long the faults are provides an assessment of what the earthquake hazards are like. Mr. Price said on page 5 of the "Detailed Narrative Statement" (Exhibit H) is a paragraph regarding earthquake hazards in Nevada which involves a minor part of their overall work.
Mr. Price said they try through the Nevada Bureau of Mines and Geology, which receives most of its funding through the university system, to get as much money as possible for earthquake issues. They currently have projects funded with federal funds regarding earthquake hazard issues. They also just completed a project for the [Nevada] Department of Transportation in this area as well.
In reviewing the budget, Senator Raggio asked if the group will be able to function appropriately with the recommended amount of $130,000 in each year of the biennium.
Mr. Price replied they will be able to do much of their work with $130,000 funding. However, the reason they made an Enhancement request is to allow them to increase the amount of geologic mapping. He said there is a national geologic mapping program that has recently been authorized by the [United States] Congress and there are pushes being made to increase appropriations for that program. As it builds up in its funding, they will be able to obtain additional federal dollars to help with their mapping projects. They will be able to obtain additional federal dollars to perform geologic mapping in the state which is why the Enhancement request has been made.
Senator Raggio noted the amount of $100,000 for each year of the biennium from the Division of Environmental Protection and asked if that is the money that comes in from the mining industry throughout the state.
Mr. Price responded in the affirmative and said this is money they receive from fees collected under a mining reclamation bill.
Senator Raggio asked if the fees collected have amounted to $100,000 each year.
Mr. Price said 2 years ago that amount was about $69,000 and last year it was $92,000. He stated the reason they have included the category "Other" in the Base budget for $30,000 is they are anticipating the revenue from this source will be at least $70,000. They will take anything between $70,000 and $100,000 and place it in reserve for next year. He explained they are trying to be conservative with their budget to make certain they will not have a shortfall in a given year. He clarified the $30,000 agency request is money needed in excess of $70,000 anticipated up to $100,000. So far in fiscal year 1992 the total revenue was $92,549. They transferred $22,549 into fiscal year 1993 and they are planning to spend just the $22,549 plus the $70,000 anticipated
income from fees. If more than $70,000 is collected from fees, they will take the excess over the $70,000 and move it into the next fiscal year.
Senator Raggio asked if this budget will allow them to do this as presented.
P. Forrest (Woody) Thorne, Deputy Budget Administrator, Budget Division, Department of Administration, replied they will be allowed to do so. However, there appears to be a display error between the categories Operating Expenses and Reserve in the column Governor Recommends for fiscal year 1994. Mr. Thorne said it does not appear the Reserve category was shown properly to enable a carryover to the second year.
Mr. Price clarified this information appears in the Other category. He also said pages 16, 17, and 18 of his handout (Exhibit H), "Detailed Narrative Statement", will explain the budget categories in depth.
Senator Jacobsen asked if in their mapping process, it makes a difference if the land is federal, state, or private land.
Mr. Price answered with new federal geologic mapping programs and the state's mapping advisory committee, they now have a subcommittee that involves individuals from state and local government agencies as well as private industry to prioritize where the bureau should put their focus for geologic mapping.
Attorney General - Page 17
Ms. Del Papa introduced Brooke Nielsen, Assistant Attorney General, Office of the Attorney General, and Marietta Grass, Chief Financial Officer, Office of the Attorney General.
Ms. Del Papa referred to Exhibit E and said this packet of information provides detailed information that should be helpful to the committee during her budget testimony. She explained it contains an organizational chart, an expanded narrative concerning the role of the attorney general which provides a thorough statistical analysis of their activity over the biennium, information about a new litigation unit which is a major priority enhancement, and a summary of their present positions. Of interest to the committee since there have been questions from legislators in the past, Ms. Del Papa said the packet also contains a list of all of her current deputies by position number, the percentage of their time spent on assignments, and how they are currently funded.
Extradition Coordinator - Page 34
Ms. Del Papa said the primary purpose of the extradition budget is to provide funds for the return of felons to Nevada for trial. It is also the responsibility of the extradition officer to return fugitives to other states from Nevada when the executive authority of any other state files an appropriate request for the return of such fugitives.
Ms. Del Papa said the extradition budget had always been a partial budget in the past. Most of the operating expenses had been paid out of Budget 1030, Attorney General Administrative Fund, and Out-Of-State travel had been paid out of the state's travel funds. The request to make this a complete budget is to more accurately state the true cost of the extradition program.
Ms. Del Papa referred the committee to the last tab section of Exhibit E from which she gave her testimony concerning this budget.
Private Investigator's Licensing Board - Page 42
Ms. Del Papa introduced Carol Widmer-Hanna, Executive Secretary,
Private Investigators (PI) Board, Office of the Attorney General. Ms. Del Papa then referred the committee to the tab section for the P.I. Board, Exhibit E, from which testimony was given.
Senator Raggio asked how many board members there are serving on the PI Licensing Board, and how active they are in terms of the number of meetings held each year.
Ms. Widmer-Hanna answered there are a total of five board members. She clarified the attorney general serves as the chairman with four other members. The board is very active, holding four meetings yearly for licensure and two to four additional meetings each year for other areas that might come up as far as regulation or disciplinary hearings.
Senator Raggio asked how many disciplinary hearings have been held over the past 2 years.
Ms. Widmer-Hanna responded they have had approximately four such hearings within the last 2 years.
Senator Raggio asked if the board receives their funding from fees and Ms. Widmer-Hanna replied in the affirmative.
Senator Raggio asked what the board contemplates will be collected in fees this biennium. He referred to the base budget category "Other" and asked if the $203,000 shown is what the board anticipates will be received from fees in this biennium. He noted under the Work Program column a reserve amount is shown of approximately $38,000 but he did not see a reserve amount reflected under the Actual column.
Mr. Thorne answered, "In the Actual year the Reserve has already been carried forward into the Work Program year so that is already
reflected in the Other revenue category in the Work Program year."
Senator Raggio asked if the funding for this board of $203,000 reflected in the budget is the amount required for each year of the biennium.
Mr. Thorne said this amount is included in the Reserve category.
Mr. Thorne distributed a correction to page 42 of the Governor's Executive Budget that was given to each committee member to be placed in their budget books that will clarify the confusion regarding the Reserve category.
Senator Raggio asked if the funding as reflected on the correction sheet is realistic and what has been done to the Reserve category as shown.
Mr. Thorne replied the funding indicated is realistic. He explained:
When the Cost Allocation for the Office of the Attorney General was set up in a separate category, the monies that were shown in the Attorney General Reimbursement category did not get dropped down to the Reserve. The [correction sheet] display corrected this....Their actual fee collections in the Actual year were nearly $170,000 for fiscal year 1992...so you have a one-line revenue source that includes both their fee collections for
licensing and investigations but also includes the balance forward that is carried forward each year from the Reserve.
Senator Raggio asked, "Will there be a reimbursement to the attorney general's account of $63,262 the first year?"
Ms. Del Papa replied that amount should be eliminated as it was replaced by the Attorney General Cost Allocation of $44,305.
Senator O'Donnell noted a 9.2 percent increase over last year's budget that was recommended by the Governor and asked if the caseload for the number of private investigators licensed also increased.
Ms. Widmer-Hanna answered the active licensees have increased by 15 percent and the inactive licensees have increased by 37 percent. She said, "We are on the rise."
Crime Prevention - Page 30
Ms. Del Papa once again referred the committee to the tab section for this budget page in Exhibit E from which she gave testimony.
Senator Raggio asked why personnel expenses increased to approximately $63,000 for the next biennium from $44,588 in 1991 - 1992.
Ms. Marietta Grass, Chief Financial Officer, Office of the Attorney General, answered the increase in the Personnel category has to do with the requested upgrade of the Administrative Aide position to Management Assistant II due to increased responsibilities.
Senator Raggio noted the upgrade amounted to approximately $20,000 and asked if this amount is correct.
Mr. Thorne said the position was not filled for the entire Actual year.
Ms. Grass said the actual amount was $44,588 but the position was only filled for half of the year.
Senator Glomb asked if there has been enough money allocated to fulfill the duties of the missing children's program as well as the other programs for this office.
Ms. Del Papa replied the upgrade for the Management Assistant II position will be critical. They have also requested a deputy attorney general and investigator to assist in this area.
She stated even if she could get a half-time position or a legal researcher it would assist with the program needs in this area greatly.
Attorney General Administrative Fund - Page 17
Ms. Del Papa referred to the first tab section reflected in Exhibit E, "Budget Account 1030, Category 01, Personnel Services," which provides the rationale and reflects at length the funding source for all of the personnel positions not only requested by the attorney general's office, but also what other agencies have requested through her office to help service their agencies.
Ms. Del Papa said their budget had been restructured because most of the money they had received in the past went into another agency's budget then had to be transferred into the attorney
general's budget which caused problems for her office when some of the agencies failed to make the transfer.
Mr. Thorne stated previously the attorney general's budget had been funded by a combination of direct and indirect reimbursements. The portion of the attorney general's budget that was General Fund was included in the calculations for the statewide cost-allocation plan. In addition, there were direct charges to agencies based on the personnel allocated to those agencies. The federal auditors did not like this mix and wanted the state to go one way or the other. Now the attorney general's costs are dropped entirely out of the statewide cost-allocation plan and a separate cost- allocation plan has been done for the attorney general's office. As a result, what is shown in the category Agency Transfers represents all non-General Fund money whereas before there had been money in general-funded budgets for payment to the attorney general's office. That General Fund money is now sitting directly in the attorney general's budget.
Senator Raggio asked if the requested new positions shown in the various budgets are shown under Enhancements or Maintenance depending upon the situation as to each of the budgets.
Mr. Thorne answered in the affirmative. He further said you will note on page 18 of the Governor's Executive Budget there are a number of positions reflected under Maintenance and one position representing the Litigation Division shown under Enhancements.
Senator Coffin asked if the attorney general's office needs additional positions to help them with the Welfare Fraud Program.
Ms. Del Papa said this is one of their most successful programs. They had requested additional funding through a request to the Interim Finance Committee and this assistance has enabled them to successfully manage the Welfare Fraud Program. They are not requesting additional assistance at this time.
Ms. Del Papa reiterated the number one priority of her office is the Enhancement budget where they have asked for the position of Solicitor General. She then referred the committee to the page "Admin - 1" under the first tab section in Exhibit E and proceeded to testify reading from this and following pages.
Senator Callister referred to the request by the attorney general's office for a deputy attorney general position for transportation issues in Las Vegas due to the increased work load experienced in that area resulting from the beltway and other needed highway projects. He said this is a very rapidly evolving area of caselaw and that the position should pay for itself by avoiding extraordinary settlements.
Ms. Del Papa said 94 percent of the judgements received against the state in fiscal years 1990-1992 involved the resolution of condemnation proceedings. She added that this is an area where the state is at tremendous risk.
Senator Raggio interrupted the hearing proceeding to advise Mr. Russell A. Fields, Director, Department of Minerals, that due to time limitations his budget hearing will have to be rescheduled for a later date.
Ms. Del Papa continued with her testimony referencing pages "Admin 2 and 3" of Exhibit E.
In the interest of time Senator Raggio asked Senator Callister to
undertake the analysis of positions requested by the attorney general's office and to report his finding back to the committee.
Senator Raggio noted there was a major adjustment to the Base budget in the area of State-Owned Building Rent category as shown in the Governor's Executive Budget and asked if this was due to the fact they will be expanding into new office space that will be occupied along with their existing space.
Mr. Thorne responded the big adjustment in State-Owned Building Rent is for the remodeled (old) Supreme Court Building.
Ms. Del Papa testified that after consolidation, she will have 79 offices and 36 secretarial stations and will house a total of 155 employees in three buildings.
Senator Raggio asked Ms. Del Papa to discuss her relocation plans with Senator Callister who will share the information with the committee.
Senator Coffin asked if Ms. Del Papa had a rough estimate of what the added construction costs for her new space will be due to the American Disabilities Act.
Ms. Del Papa answered she did not have this information with her today but will provide it to the committee at a later date.
Senator Raggio referred to the Enhancement budget on page 21 of the Governor's Executive Budget and asked for an explanation of the approximately $90,000 request for each year of the biennium that has been recommended by the Governor.
Ms. Del Papa said she believed that is for the Solicitor General position that she stated was a high-priority Enhancement request. She will review this with Senator Callister in more detail.
Senator Raggio stated the committee will be very interested and concerned about the establishment of the Solicitor General position.
Senator Raggio then clarified he was interested in the Enhancement 702 category which provides about $90,000 annually for unidentified increases "necessary to carry out the duties of the office" and asked if a large portion of this was to provide legal research subscriptions to LEXIS and NEXIS. He asked if LEXIS is currently offered by the law library to the attorney general's office at about $12,000 annually.
Ms. Del Papa answered her office only bills through the law library but they still get billed for the service. This is not offered to them free of charge.
Senator Callister asked if her office requires both the LEXIS and NEXIS program and if so, why, and what the procedure is for recovering that cost.
Ms. Del Papa stated today the State of Nevada does not have a tracking system relative to litigation and she feels this information is necessary to enhance performance in her offices. Also, her office is continually growing. She pointed out the Risk Management Division will be shifted to her jurisdiction under the proposed reorganization plans which intensifies her concerns about growth and the need for informational data to assist them with their caseload responsibilities.
Senator Callister said he would review his concern in this area with Ms. Del Papa when he discusses the position issues with her, and he will provide the committee with this information.
Special Fund - Page 28
Ms. Del Papa testified the Attorney General Special Litigation Fund is established for the payment of expenses directly related to the investigation, preparation, prosecution and defense of suits. Some of these expenses are reimbursable by other state or county agencies.
Ms. Del Papa referred to Exhibit E, tab section for Budget 1031, Special Litigation, and the Governor's Executive Budget from which she gave testimony.
Ms. Del Papa said her Litigation budget for 1993 has already been heavily impacted by one case. She estimates this case will cost, out of this particular budget, between $53,000 and $75,000, which illustrates how a complicated case can quickly eat into the Litigation budget.
Tort Claim Fund - Page 24
Mr. David Thomas, Risk Manager, Risk Management Division, Department of Administration, stated the Tort Claim Fund provides for the processing of all actions resulting from third-party claims against the state. The Governor's reorganization proposal will consolidate the tort claims processing function presently housed within the Risk Management Division to the Office of the Attorney General.
Mr. Thomas continued to state the tort claims section receives, reviews, investigates, adjusts and processes all third-party claims against the state which utilizes two staff members, a Management Analyst II and Management Assistant II, to process approximately 1000 claims annually. Mr. Thomas pointed out that both of the positions will be transferred to the attorney general's office.
Mr. Thomas referred to the Governor's Executive Budget, page 24, and pointed out the difference shown in the columns Agency Request and Governor Recommends is due to transferring of the Tort Claim Fund from the Risk Management Division into the attorney general's office.
Mr. Thomas said support of the tort claims function comes from premiums charged to all agencies of the state on a "per head" basis. A recent actuary report revealed this activity has been grossly underfunded over the years and the difference noted, particularly in the establishment of a Reserve category in the Base budget, will begin to remove the reliance of this fund on statutory contingencies. Annually, about this time, money runs out for this fund and all further claims for the remainder of the year must then be paid out of statutory contingencies. Therefore, his office has developed a plan, included in the budget, that over the next 5 years will allow for the payment of claims resulting from current year activity in the same year and begin to establish a reserve account over the next several years.
Senator Raggio asked if the increase the agency has requested for the next biennium is to cover the payment of tort claims or the expenses in connection with the claims.
Mr. Thomas answered it is for both and takes into account the limited liability of the state.
Senator Callister asked Mr. Thomas if he has any idea what the potential presently unfunded liability is in the Tort Claim Fund.
Mr. Thomas said he will have to abstract this information from an actuarial report, but he will provide this information to the committee.
Senator Raggio asked Senator Callister to follow up on his request as a part of the other ancillary matters he has been assigned to obtain from the Office of the Attorney General.
In the interest of time, Senator Raggio requested Senator Coffin to obtain additional information from the attorney general's office concerning the Medicaid Fraud Unit, its purpose and future. He stated he will ask Ms. Del Papa to appear before the committee at a future date to discuss the special matters assigned to Senator Callister and Senator Coffin and will not, therefore, close the hearing on the budgets for the attorney general's office until this information has been discussed.
Ms. Del Papa wished to point out her concern about the Risk Management Division her office will have responsibility for under the Governor's reorganization plan. She feels there are some areas that have been underfunded in this division. Also, she only has two individuals in her accounting office but with all of the additional responsibility that is coming into her jurisdiction, she will need additional assistance in this area. She will discuss this in detail with Senator Callister.
Senator Raggio adjourned the meeting at 11:00 a.m.
RESPECTFULLY SUBMITTED:
Marion Entrekin,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
February 4, 1993
Page 1