MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
March 1, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:03 a.m., on Monday, March 1, 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
Birgit Baker, Program Analyst
Joan McConnell, Committee Secretary
OTHERS PRESENT:
Russell A. Fields, Executive Director, Department of Minerals
Judy Matteucci, Director, Department of Administration
Michael E. Shaughnessy, Director, Clear Creek Youth Center, Department of Administration
F.T. (Frank) MacDonald, Labor Commissioner, Office of Labor Commissioner
Nancyann Leeder, Nevada Attorney for Injured Workers
William X. Smith, Executive Director, State Dairy Commission
Jackie Burris, Senior Accountant, State Dairy Commission
Doug D. Bussleman, Lobbyist, Executive Vice President, Nevada Farm Bureau
Robert R. Barengo, Member, Dairy Commission
Department of Minerals, - Page 503
Russell A. Fields, Executive Director, Department of Minerals, gave an overview of his department.
The Department of Minerals has as its mission the responsible development of the state's mineral resources. We encourage and promote that activity here in the state. We do that through our three divisions. The first is industry relations, public affairs, and administration. Then the regulatory division, which regulates oil and gas, and geothermal development. And, finally our abandoned mine lands division.
Our main office is here in Carson City. We have a two-person office in Las Vegas. As Executive Director, I report to the Commission on Mineral Resources. That commission is made up of seven members, who are appointed by the Governor, and they represent the various aspects of the minerals industry.
The commission sets our policies, adopts our regulations, and advises the Governor and legislature on mineral-related matters.
The Department of Minerals is entirely funded by the industries with which we work. There are no General Funds within the Department of Minerals' budget. With our current staff of 11, we provide the public with information and educational materials on mineral resource development, and we're very active working with the teachers in Nevada schools. We play an important role as a liaison between mineral developers and other regulators. We're active in representing the state's interests in public land management policy. We regulate the drilling of oil and gas, and geothermal wells in the state, and enforce the state's regulations for oil and gas, and geothermal conservation. We carry out the state's Abandoned Mine Lands program.
Senator Raggio asked, "What will be the relationship between the commission under the reorganization and the Bureau of Minerals?"
Judy Matteucci, Director, Department of Administration, replied:
The chart on the boards and commission indicates that the Board of Minerals would be advisory...What we're suggesting is that the Governor appoint the executive director of all boards and commissions...It's under the Division of Industry Development of the Department of Business and Industry. That particular division was set up to try and house agencies that really serve advocacy roles for particular businesses or industries in the state.
Senator Raggio asked, "If that now-called commission becomes advisory, what really will be its function?"
Ms. Matteucci replied, "Essentially the issues they address before them, with the exception of appointment of the executive director and budget authority are intended to remain the same."
Mr. Fields commented:
Even though the Department of Minerals is funded outside of the General Fund, like all other agencies, we've operated during the last 2 years under a very tight budget. Actual FY 92 expenditures were approximately 28 percent less than the approved work program, while revenues came in at approximately 19 percent less. The shortfall in revenue was primarily due to reduced activity in the mining industry's filing and maintaining of mining claims throughout the counties here in the state. We expect that trend to continue, or even worsen. So, we present here a quite conservative budget.
The Base budget, which is shown on page 503, indicates revenues or resources in the 93-94 year approximately $735,000. That includes a number of different sources: mining claims, oil and gas, administrative fees, AML, or Abandoned Mine Lands, fees that are appropriated just for that purpose, geothermal, and oil and gas permitting fees, plus a carryforward from the prior year. By statute we're allowed to maintain a reserve balance and carry that forward into the next year.
The expenses listed are equal to what we actually incurred in 1992 here in the Base budget. Personnel expense represents our staff of 11 and is net of savings of three vacant positions, which we continue to carry.
Mr. Fields called attention to the Enhancements budget on page 505.
We are proposing to the Governor's Budget to extend approximately $119,000 more than was expended in FY 92. In each of those line items, under Expenditures, represents an increase as noted. We anticipate additional travel out-of-state to work on federal issues. Primarily the current effort in congress is to repeal and reform the mining law, as well as BLM wilderness.
Mr. Fields said In-State Travel can be curtailed significantly in 1993, and the department is requesting an increase in FY94 in order to stay in closer contact with mining, oil and gas, and geothermal operations, as well as conduct more extensive field work in the Abandoned Mine Lands program and regulatory programs.
Under Operating, the Enhancement proposal includes increases in legal notices and hearing costs, and a regulatory program for geothermal, and oil and gas, which are growing industries in the state, and an increase in non-state-owned building rent in Carson City.
Under Equipment, we incurred no expenses in FY 92, and we expect none in FY 94.
Senator Raggio asked, "What is the royalty expense item?"
Mr. Fields stated the 1991 session of the legislature adopted what we call the Medallion Law. This created an opportunity for the state to receive some monies from the use of the Great Seal of the State of Nevada on the back side of gold and silver medallions. The 5 percent royalty for the use of the state seal comes to the Department of Minerals. In turn it is distributed back to the counties to secure Orphaned Abandoned Mines, mines for which they cannot find a responsible party. It generates a small amount of money, but a few particular hazardous conditions can be taken care of with that royalty money.
Senator Raggio asked, "What did you actually collect in royalty income?"
Mr. Fields replied, "Approximately $1,300."
Senator Coffin asked, "Apparently it is the recommendation of the budget office to delete the deputy director. What duties does the deputy director perform, and who is going to assume those duties if the position is deleted?"
Mr. Fields responded the deputy director's duties are wide and varied. Because the agency is so small, there is no one, including Mr. Fields, who spends all of their time on administrative activities. The deputy director is the primary person in the agency who deals with the education and public awareness programs. He is a certified teacher, with a master's degree, and works closely with the schools and the mineral education program.
He is responsible for the administration of the office. He is similar to a business manager in the office. He is the responsible party for putting together the mine registry, which is the survey of all mining operations in the state, and then keeping the data and making it available to the public. He is instrumental in all of the agency's publications. Mr. Fields continued:
In discussions with the budget office, I understand that while the position, Deputy Director, was used to establish a value of the reorganization savings, I don't believe they think that necessarily means that will be the position that is lost.
Senator Coffin asked, "Does this deputy director report to the Governor in his span of control?"
Mr. Fields replied, "The deputy director reports to me."
Senator Jacobsen mentioned $120,000 in fees due from mining operations were not collected.
Mr. Fields stated the uncollected $120,000 was in the Abandoned Mine Lands program, Chapter 519A of NRS (Nevada Revised Statutes), the reclamation act from 1989, which said that mine operators had received a plan of operation approval from the BLM (Bureau of Land Management), or approved notice from the BLM, or U.S. Forest Service, to pay $20 per acre, or part of an acre, to the Department of Minerals for the Abandoned Mine Land program.
We expected people to be aware of it and follow through after we had provided them with notice. Over the first couple of years of the program, which was the year of that audit, we constantly were trying to find out who owed us money, and then bill them for that money. As a result of the audit, we've further tightened the program to where we have a very routine process where we contact the BLM and the U.S. Forest Service, find out who has approved plans of operation, or notices. If they haven't paid us, we bill them. If we don't receive payment in 30 days, we bill them again. If we don't receive payment in another 30 days, we ask our deputy attorney general to pursue payment.
The compliance since that audit has just been fantastic. I think we'll collect something like $120,000 this year.
Senator Jacobsen noted responsible parties in counties are not notified about dangerous conditions existing at abandoned mines.
Mr. Fields said, "That was, again, in the Abandoned Mine Lands program." A field inspector goes out in the field and finds the sites. He does the research in the county recorder's office to determine ownership. Then the responsible party is notified, even though the statute says the county commission is notified. Every Friday all of the identified owners during the prior week are notified.
Senator Jacobsen commented there are not effective controls over surety bonds received from oil and gas and geothermal well operators.
Mr. Fields responded, "We do receive a bond with most of our geothermal and oil and gas operations. Those that are not bonded on BLM land, the state holds the bond." The problem was the agency had cash bonds, instruments such as certificates of deposit, and checks, which were located in several places, the treasurer's office vault, files of the office, and most recently in the Bank of America's vault. There is now a listing of all of those, and the agency is cross-checking with the report from the Bank of America.
Senator Jacobsen stated none of the geothermal regulations have been amended or changed since 1985; the agency's estimates were $50,000 and only $3,000 was generated.
Mr. Fields commented:
Yes. On November 26, 1992 the Commission on Mineral Resources adopted new geothermal regulations. The primary focus of those regulations was to increase a variety of permitting fees in cooperation with the geothermal industry. We now expect the funding mechanisms within those regulations to generate about $60,000 per year, and that's reflected in this budget.
Senator Jacobsen stated there were no comprehensive procedures on internal accounting or administrative controls.
Mr. Fields said:
That was the finding of the 1985 audit as well, and we had done everything we thought we were supposed to do, but it turned out there were some other things we could have done, and have done now. We have a policy document that governs all internal controls now.
Senator Jacobsen remarked the agency has poor control over cash receipts, and there had been considerable discussion regarding that subject 2 years ago.
Mr. Fields stated:
What they're pointing to there is the recording process as cash receipts come in the door, and then the subsequent review and approval within the department, signifying the totals are correct, and that they match the deposits actually made. That's part of the internal controls that we've tightened considerably.
Senator Jacobsen mentioned 2 years ago Mr. Fields handed out a sheet showing all the counties and the number of mines in each county, those which had been secured and those still outstanding, and requested an update in writing.
Senator Glomb asked if Mr. Fields has a system of follow-up if the mines are not secured after notification.
Mr. Fields said in response to the audit there is now a system where once an owner is identified through our research in the county records, the administrator of abandoned mine lands sends a notice giving 30 to 60 days, depending on the degree of hazard, to secure the hazard, or contact the agency if there is some mitigating circumstance, such as current operation of the mine.
The state does not have the enforcement authority to fine for noncompliance. The counties do.
Senator Raggio asked, "With your reduced staff are you going to be able to make the Performance Indicators you projected for Fiscal 94-95?"
Mr. Fields replied, "Yes." He distributed some corrected Performance Indicators (Exhibit C) for Executive Budget page 506 and page 507.
Senator Raggio requested Mr. Fields draft a letter to all county commissioners indicating the serious problem existing with the abandoned mine lands in Nevada, and would hope they give it their attention.
Senator Callister was concerned about potential implications of proposed changes in national mining law, with the new presidential administration, and the implication they may have on revenues for mining in Nevada.
Senator Raggio stated, "That deals with the proposed 12 1/2 percent royalty and the energy tax on mining."
Mr. Fields mentioned there are two proposals currently in congress to repeal and reform the 1872 mining law. They both include an 8 percent of the gross value of production royalty. The Office of Management and Budgets proposed the 12 1/2 percent of gross value of production royalty on hard-rock mineral production. A survey is presently being done to find the impact on the State of Nevada. Between 50 and 60 percent of Nevada's mineral production is coming from public lands and could come under this royalty. Mr. Fields stated a questionnaire has been sent out to 49 significant mines in the state to determine what they think the impacts will be on them. The study will be put together and submitted to the committee, hopefully within a week.
Ms. Matteucci said she would sit down with Mr. Fields, and perhaps the Department of Taxation, after the survey is done.
Senator Callister shared his concerns about the two largest sources of revenue for the State of Nevada: the mining and gaming industries, which are both going through an upheaval.
Clear Creek Youth Center - Page 300
Ms. Matteucci stated the Clear Creek Youth Center was built by the federal government for the Job Corps. In 1969 the federal government announced the closing of the center, and in 1970 the State of Nevada obtained a 5-year special use permit to operate it as a state facility. The special use permit was renewed in July of 1980, with 1-year use permits being obtained for Fiscal Year 1985-86, and Fiscal Year 1986-87. In February of 1988 the transfer of the center's ownership was effected.
The center provides meeting space for community groups and organizations such as the Boy Scouts of America and the Girl Scouts of America. A list was distributed of the groups having used the facility (Exhibit D).
Senator Raggio said he would like to hear what was done with the authorized capital improvement projects, what the status of the camp is now, and what is required as far as maintenance.
Michael E. Shaughnessy, Director, Clear Creek Youth Center, Department of Administration, stated capital improvements authorized two sessions ago, and last session, have been completed. The dormitory shower areas have been refurbished with tile showers and new basins throughout. Some flooring was done in the education building, and recently a new heat exchanger and boiler was installed in the kitchen.
Labor Relations - Page 390
F.T. (Frank) MacDonald, Labor Commissioner, Office of Labor Commissioner, stated the labor commission is a General Fund agency. There is one office in Carson City and another office located in Las Vegas. The Office of Labor Commissioner is charged with the responsibility of enforcing all labor laws of the state and is directly responsible for the administration and enforcing of laws regarding compensation for private employment, promoter licensing, employment of minors, apprenticeship programs, regulating and licensing private employment agencies, public works, establishing a prevailing wage and enforcing the prevailing wage on all government projects, as well as supplying lists of mediators and arbitrators to requesting parties involved in labor disputes, and approving on-the-job training for veterans.
The labor commissioner appoints seven members, constituting the Nevada State Apprenticeship Council. Three members represent labor, three members represent management, and one, who acts as chairperson, represents the public.
The office has a direct effect upon private employees in the state, and their employers, who may or may not be located in the state.
Due to the tremendous growth of the state, unpaid wage collections have increased from $620,000 in 1983 to $1.4 million the past year.
Senator Raggio asked Mr. MacDonald to address the proposed reorganization, and how he anticipates assuming the responsibility for the EMRB (Local Government Employee-Management Relations Board) function.
Mr. MacDonald said his agency is scheduled to take over the EMRB, and it is their intent to transfer the present commissioner of the EMRB and place him in the vacated deputy labor commissioner's position.
Senator Raggio asked, "Will you have the staff support to handle that function?"
Mr. MacDonald stated he could manage with his current staff. He was unaware of the present work load of the EMRB.
Ms. Matteucci stated the Performance Indicators on page 393 indicate the projected work load.
Senator Raggio asked, "What is saved by merging these two, instead of leaving them as separate agencies, or bureaus?"
Ms. Matteucci said the real savings is in staff.
Senator Raggio commented he was troubled by the merger, because the Office of Labor Commissioner historically has largely been handling nonpayment of wages and commissions. The EMRB has had an entirely different function, which is to determine which items should be subject to mandatory bargaining, and also conducts hearings on those types of complaints. "It seems to me an inappropriate merger."
Ms. Matteucci remarked, "When this was looked at, both agencies deal in labor issues. One collecting back compensation....
Senator Raggio interjected, "EMRB is strictly in the public sector. The labor commissioner's office is generally in the private sector."
Ms. Matteucci stated:
They really are doing a lot of things in the same area. I think you have to get beyond what the old labor commissioner did. Putting them together you have essentially a labor relations unit that deals with labor issues on a broader scope.
Senator Raggio asked, "Have the EMRB and the units subject to its jurisdiction discussed this, and have they acceded to this proposal?"
Ms. Matteucci said, "I'm told there have been some discussions. We have not heard from Mr. Garmon relative to the EMRB's feelings."
Senator Raggio expressed a desire to hear from Mr. Garmon, and how he envisions this merger to be handled.
Senator O'Donnell noted there were no dollars for data processing in the Base budget. He understood the labor commission is responsible for determining the prevailing wage.
Mr. MacDonald commented, "In the Enhancement there is $5,750 for hardware." Asked how he has managed in the past, Mr. MacDonald said, "We have D-Base 3 on a 286 computer, and it's a very slow process. We're hoping to upgrade."
Nevada Attorney for Injured Workers - Page 455
Nancyann Leeder, Nevada Attorney for Injured Workers, stated:
With a staff of 23 now, we are appointed by the appeals officer and the administrator of the Department [Division] of Industrial Insurance Regulation to represent injured workers when they are seeking benefits, within the workers' compensation system. The entire budget comes from the Workers' Compensation Safety Fund.
Ms. Leeder distributed a handout showing the cases the agency handles (Exhibit E). A pamphlet was also distributed (Exhibit F). Discussion ensued.
Senator Glomb questioned why the Governor is recommending a higher amount than the Agency Request for the State Cost Recovery Plan under Expenditures.
Ms. Matteucci answered:
In the agency instruction, the agencies were told to just put in the amount they would actually pay for say cost allocation, recovery, until we got the final cost allocation plan...then we put in the amounts that are now allocable to the various agencies, based on a much more complete plan than was done last time.
Ms. Leeder pointed out a discrepancy on page 455 in Out-Of-State Travel. "We did not have to do any out-of-state depositions in the last biennium, which is the reason it was not included in the base actual."
Senator Raggio asked if there had to be depositions taken during this biennium, where would the money come from?
Ms. Matteucci said, "If it came up it would be a contingency-type item and they would have to transfer money from one of their other categories."
Senator Raggio asked if Ms. Leeder had established procedures to determine whether a claim is frivolous or lacks merit.
Ms. Leeder stated she had, and the statute is termed in phrases so that she can exercise discretion to remain in a case, or move for withdrawal.
Senator Raggio stated the abolition of the Nevada Attorney for Injured Workers office has been discussed, and he was curious to know the Governor's proposal on the situation.
Ms. Leeder responded the Governor's office has proposed continuing the appeals office and the Nevada Attorney for Injured Workers office.
Ms. Leeder distributed two pages, Case types--Active both in Carson City and Las Vegas (Exhibit G). Discussion ensued.
Ms. Leeder suggested her office remain intact for at least the next 2 years.
We would be getting clients with all of the emotional impact that the hearings office currently gets and diffuses. Secondly, as we have been attempting the increase in caseload...we have gone from being able to handle cases, prepare and present them in approximately 2 to 3 months to currently now we're up to 4, 5 and 6 months to get the hearing actually done. Some are longer than that.
Senator Raggio proposed revisiting this budget when a final decision is made, first at the senate level, and at the legislative level.
Ms. Leeder received accolades from the entire committee for her outstanding work and dedication.
Dairy Control - Page 475
William X. Smith, Executive Director, State of Nevada Dairy Commission, stated the agency is involved primarily in the economics of the dairy industry. There is a staff of 14 people, eight of whom are either auditors or field investigators. There are two auditors in Las Vegas and Reno and also two field investigators in Las Vegas and Reno.
The agency has been around since 1955 at the behest of the farmers. Their mission is to assure an adequate supply of fresh milk and dairy products to citizens of the state at fair and equitable prices. They do assessments on dairy products and issue licenses for the distribution of such products within the state.
Mr. Smith commented that at the last session the legislature approved two positions for the agency, and the commission has filled those positions.
The commission has the right, under the law, to reduce assessments when they are not needed. After the last session, when the two positions were given to the agency, they had also asked for a penny increase in butter, yogurt and cottage cheese, which was not implemented until January 1, 1993. The money was not needed, so they did not collect it. The ice cream assessment was also reduced from $.04 a gallon to $.02 a gallon.
Senator O'Donnell noted an approximate $7,000 reserve increase in the Base budget.
Ms. Matteucci said the prior year's reserve was carried forward.
Senator O'Donnell questioned the purchase of a computer for $14,000 under Enhancements.
Mr. Smith said three computer stations are to be replaced, two in Reno and one in Las Vegas.
Senator O'Donnell also questioned the purchase of FAX machines at a cost of $5,734.
Jackie Burris, Senior Accountant, State Dairy Commission, commented the two FAX machines, which use regular paper that does not fade, one for the Reno office and one for the Las Vegas office, are being purchased for $3,500. The other costs are for the additional monthly telephone line charge, the installation charge, and main-tenance contracts on the equipment.
Senator Raggio asked, "With the change under the proposed reorganization, the dairy commission is no longer going to exist. It's going to merge into Board of Agriculture. Who is going to be setting the rates?"
Ms. Matteucci replied, "Our proposal is to take the dairy commission as it's currently constituted...and make it part of the Board of Agriculture, and it would continue to set all the prices."
Mr. Smith said the industry is extremely upset with the proposal of any merger.
Ms. Matteucci stated no one from the industry has contacted her office, with the exception of one of the board members.
Senator Raggio asked the advisability of having a sub-board. "Why not keep it as a separate board?"
Ms. Matteucci remarked:
Part of the reorganization was to group like-functions. This is definitely an agricultural function...The attempt was to get one board with all the various interests of the agriculture industry together, opposed to four or five separate boards, all doing separate things relative to various segments of the industry.
Doug D. Bussleman, Lobbyist, Executive Vice President, Nevada Farm Bureau, said he heard the proposal on how the dairy commission would be organized within the Board of Agriculture and would prefer it to remain a separate entity.
One of the concerns we have is there is currently a position on the Nevada Board of Agriculture [State Board of Agriculture] that is open. Jack White has asked that he be retired from that board. We've been interested in filling that position on the Board of Agriculture [State Board of Agriculture] representing dairy.
In our contacts with the Governor's Office we've been notified that appointment is presently on hold until such time as reorganization is addressed through the legislative process. The dairy commission itself does not have any dairy farmers on it. The membership of the dairy commission does not cover dairy farmers. It covers the industry side, with accounting, economics and that type of a background.
Our concern would be, as you incorporate the dairy commission into the Board of Agriculture [State Board of Agriculture], the impact on that for representing dairy farmers in the Board of Agriculture's activities is a question that we don't know the answer to. Of course there are a lot things about the reorganization that we don't know the answer to.
I think the point that you made, Senator Raggio, about leaving that board as a separate entity, we would support that kind of a concept. The dairy industry itself finances the operations. We believe it's a very important activity from a dairy farmer perspective in protecting the pricing integrity that we need to remain competitive in this state, and we would very much be concerned should the dairy commission go away.
Senator Jacobsen suggested the committee receive a list of how many dairies are left in Nevada, and he also wanted to know how Nevada was affected by the federal buyout, in order to get a broad picture of what the current dairy industry is all about.
Robert R. Barengo, Member, Dairy Commission, mentioned there had been two hearings in the north and the south on the reorganization, and he has had close contact with Ms. Matteucci regarding same. The commission has taken no public endorsement on the proposal.
Senator Raggio suggested the commission survey itself and get back to the committee as to its position on the proposal.
Mr. Smith said he spoke before the State Board of Agriculture the previous week, and it appeared to him the State Board of Agriculture did not want to absorb the dairy commission under their purview.
Senator Raggio thought it wise to hear from the State Board of Agriculture as well.
There being no further business before the committee, Senator Raggio adjourned the meeting at 9:48 a.m.
RESPECTFULLY SUBMITTED:
Joan McConnell,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
March 1, 1993
Page 1