MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
March 9, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Tuesday, March 9, 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
GUEST LEGISLATORS PRESENT:
Senator Raymond Shaffer
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Dee Crawford, Committee Secretary
OTHERS PRESENT:
John Crossley, Director, Legislative Counsel Bureau
P. Forrest (Woody) Thorne, Deputy Budget Administrator, Department of Administration
Terry Page, Director of Regulatory Operations, Public Service Commission
Judy Matteucci, Director, Department of Administration
Jan Thomas, Secretary of the Senate, Legislative Counsel Bureau
Mouryne Landing, Chief Clerk of the Assembly, Legislative Counsel Bureau
Lorne Malkiewich, Legislative Counsel, Legislative Counsel Bureau
Bob Erickson, Research Director, Legislative Counsel Bureau
Gary Crews, Legislative Auditor, Legislative Counsel Bureau
Steve Watson, Chief Deputy Director of Administrative Division, Legislative Counsel Bureau
John Mendoza, Chairman, Public Service Commission
Bill Vance, Commission Secretary, Public Service Commission
Nevada Legislative Interim - Page ll3
Senator Raymond Shaffer, Chairman of the Legislative Commission, distributed Exhibit C, l993-l995 Biennial Budget Request of the Nevada Interim Legislature, to the committee and testified while referencing that document.
Senator Shaffer pointed out the 1991-1993 General Fund appropriation for the operation of the Legislative Counsel Bureau was reduced by $l million, and that $l million is being used to reduce the amount of General Funds necessary to finance this l993 legislature, he proclaimed. Additionally, he pointed out, the agency reverted $ll0,000 to the General Fund from three one-shot l993 appropriations. Concluding, he announced, "The amount of General Fund money to be utilized to construct the budget should be the sum of the General Fund appropriation made available for the l99l-l993 budgets, minus the $l million in savings." Senator Shaffer testified the budget does not contain any maintenance or enhancement items. Additionally, he announced, the funding for the video teleconferencing system and the revenue projection model were both eliminated. The Legislative Commission authorized the director to request the Senate Committee on Finance to restore funding for those two functions, however.
Legislative Counsel Bureau - Page lll
John Crossley, Director, Legislative Counsel Bureau, distributed Exhibit D, 1993-l995 Biennial Budget Requests of the Legislative Counsel Bureau, (Exhibit D. Original on file in the Research Library) to the committee and testified while referencing that document.
Mr. Crossley pointed out the General Fund amount requested for the l993-l995 biennium is 5.l4 percent less than the amount originally provided for the l99l-l993 biennium. The budgets do not provide for any new positions or upgrades throughout the Legislative Counsel Bureau, nor are there any factors included for inflation. No maintenance or enhancement items are included in the budgets. The budgets also include an estimated $791,875 in authorized funding used primarily to finance the operation of the legal division. The High Level Radioactive Waste Committee budget provides for a funding level of $l25,000 each year of the biennium, he testified. He reiterated the budgets do not include $l29,754 for continuation of the video teleconferencing operations, nor $l8,000 for the matching cost for the annual updates of the revenue projection model.
Distributing Exhibit E, Memorandum from Mr. Crossley to the Senate Committee on Finance, Mr. Crossley requested the funding for the video teleconferencing in the amount of $l29,754, and $18,000 for the revenue projection model, be reinstated.
The combined budgets of the Legislative Counsel Bureau do not include adjustments for cost of living or fringe benefits. "Those adjustments are traditionally made during the legislative session by the Senate Standing Committee on Finance and the Assembly Standing Committee on Ways and Means to coincide with those granted to the executive branch of government," he disclosed.
Senator Raggio asked what amount was spent for interim studies during this current biennium.
Mr. Crossley responded $70,000.
Senator Raggio expressed his understanding the amount requested for interim studies for the next biennium was predicated on the $70,000 spent in the current biennium.
Mr. Crossley responded in the affirmative.
Senator Raggio announced the requested $70,000 will limit the number of interim studies the legislature will be able to request.
Mr. Crossley drew the committee's attention to page 4 of Exhibit D, Legislative Commission budget, and pointed out the major expenditure in this budget is in the Operating category. He explained the appropriation includes dues paid to the National Conference of State Legislatures in the amount of $64,000 the first year of the biennium and $67,000 the second year of the biennium; the Council of State Governments in the amount of $56,000 the first year and $60,000 the second year; and the Uniform Commissioner on State Laws totalling $8,900 the first year and $9,500 the second year of the biennium.
Senator Raggio asked for written explanation of the dues relevant to association with the national organizations for the last biennium, as well as anticipated costs for the next biennium.
Turning to the Legal Division budget, Lorne Malkiewich, Legislative Counsel, Legislative Counsel Bureau, testified while referencing Exhibit D, page 8.
Mr. Malkiewich pointed out the difference in the Expenditures category is due to printing of the Nevada Revised Statutes. There are no maintenance or enhancement items for this budget, he recited.
Turning to the budget for the Audit Division, Gary Crews, Legislative Auditor, Legislative Counsel Bureau, testified while referencing Exhibit D, page l2.
Mr. Crews pointed out the agency is requesting $22,000 less than the previous biennium. There are no maintenance or enhancement items for this budget, he remarked.
Senator Raggio drew the committee's attention to the agency performance indicators on pages l5, l6 and l7 of Exhibit D and asked for comments from Mr. Crews.
Mr. Crews expressed his pleasure with the agency's performance. He pointed out the agency performed 42 reports during the current biennium. He explained the primary area used to evaluate the agency's performance is the number of recommendations actually implemented by the various agencies. He pointed out that 97 percent of the agency's audit recommendations have been accepted by various agencies, while 94 percent of prior recommendations to agencies have been either fully or partially implemented. The agency's primary emphasis is on implementation of audit recommendations, improving the quality of state government, he maintained.
Senator O'Donnell suggested the concept of a data processing efficiency audit to "look at the data processing capabilities of the machinery that is in place and determining whether or not that machinery is being used efficiently...."
Mr. Crews cited knowledge of 1988 performance audits conducted on statewide data processing functions. He stated that serious problems were discovered in that audit, resulting in a l00-page report. "I'm not sure all those items have been cleared at this particular point in time. I'm sure a lot of that still exists," he contended.
Senator O'Donnell asked if sufficient staff were available in the Audit Division to perform those particular type of reports.
Mr. Crews replied some support from technical experts is available within the agency. At the time the last audit was performed, the agency contracted for additional service to assist in evaluating the design technology used by the Department of Data Processing. For the most part, he stated, "We can do the work ourselves...."
Senator Jacobsen asked for comments regarding the Governmental Accounting Standards Board [GASB] and queried whether the association "was worth the $l3,000 in dues."
Mr. Crews voiced his opinion that GASB is definitely a worthwhile project. He proclaimed a vast majority of other states contribute to GASB and, without that contribution, "they could not exist."
Turning to the budget for the Research Division, Bob Erickson, Research Director, Legislative Counsel Bureau, testified while referencing Exhibit D, page l9.
Mr. Erickson stated there are no maintenance or enhancement items for this budget.
Senator Raggio asked if the interim studies were kept at the same level, does the agency maintain sufficient staff to accommodate those studies.
Mr. Erickson replied, "At the current level, that would be fine."
Turning to the budget for the Fiscal Division, Dan Miles, Fiscal Analyst, testified while referencing Exhibit D, page 24.
Mr. Miles stated there are no maintenance or enhancement items for this budget. He drew the committee's attention to the 1992 Operating category expenditure of $36,000. The expenditure for the revenue projection model in the amount of $l5,700 was removed, he explained. Mr. Miles pointed out the budget amount for training has also been eliminated.
Senator Raggio asked for input regarding the telecommunications issue and revenue projection model.
Mr. Miles explained the last session of the legislature approved the concept to contract with an economic firm to provide a revenue projection modelling system as outlined in Exhibit E. The information provides an independent look at future revenue projections for the State of Nevada, he explained.
Senator Raggio asked for input from Mr. Crossley regarding his request that funding for the video teleconferencing system be reinstated. He asked whether the requested amount of $l29,754 would continue the operation of the video teleconferencing system between Carson City and Las Vegas, only.
Mr. Crossley responded in the affirmative.
Turning to the budget for the Administrative Division, Steve Watson, Chief Deputy Director of Administrative Division, Legislative Counsel Bureau, testified while referencing Exhibit D, page 30.
Mr. Watson stated the budget does not contain maintenance or enhancement items, other than the video teleconferencing system previously discussed. Mr. Watson mentioned the Out-of-State Travel has been reduced by $4,000, while the In-State Travel has been reduced by $l,300. The Operating category was reduced by $l25,000.
Senator Raggio invited testimony concerning the Nevada Interim Legislature.
Jan Thomas, Secretary of the Senate, Legislative Counsel Bureau, referred back to Exhibit C and testified while referencing that document. She advised the Nevada Interim Legislative budget does not provide for any new positions or inflation factors. She pointed out the Chief Clerk of the Assembly and the Secretary of the Senate share one clerical staff during the interim period. She pointed out the In-State Travel category has been increased to allow for meetings with legislators, interim committees and/or the legislative commission. Turning to the Operating Costs category, Ms. Thomas maintained it reflects the cost of postage, telephones, equipment repairs and maintenance agreements needed to support the interim agency. The Capital Outlay category reflects replacement of two 5-year-old copiers. The Training category reflects amounts deemed necessary to provide for work-related seminars which may be offered during the l993-95 biennium, it was explained.
Senator Raggio asked if any dues were included in the budget.
Mouryne Landing, Chief Clerk of the Assembly, Legislative Counsel Bureau, responded dues and registration are listed under the Travel category.
Senator Raggio requested written documentation indicating the amount of dues which are paid out of the interim legislative budget as well as itemization of anticipated travel.
Senator O'Donnell asked if the copiers would be purchased.
Ms. Thomas responded they are currently under a lease-purchase agreement. Ms. Landing interjected to state the existing copiers would be used as a trade-in toward the purchase of the new machines.
Senator Raggio moved for committee introduction of the following bill draft requests:
BILL DRAFT REQUEST (BDR) S-1724: Makes appropriation to secretary of state to conduct study of election laws of this state.
SENATOR COFFIN MOVED TO INTRODUCE BDR S-1724.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
BILL DRAFT REQUEST S-1729: Makes appropriation to office of state controller for expenses relating to assessment of need for statewide accounting system.
SENATOR O'DONNELL MOVED TO INTRODUCE BDR S-1729.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
BILL DRAFT REQUEST 16-1713: Transfers responsibility for administration of account for aid for victims of domestic violence.
SENATOR O'DONNELL MOVED TO INTRODUCE BDR 16-1713.
SENATOR GLOMB SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
BILL DRAFT REQUEST 16-1718: Authorizes transfer of money from offenders' store fund to prisoners' personal property fund.
SENATOR JACOBSEN MOVED TO INTRODUCE BDR 16-1718.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
BILL DRAFT REQUEST 52-1720: Requires excess money in account for regulation of telemarketing to be transferred to state general fund at end of each fiscal year.
SENATOR RAWSON MOVED TO INTRODUCE BDR 52-1720.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Public Service Commission - Page 331
John Mendoza, Chairman, Public Service Commission, distributed Exhibit F, Adjustments to Public Service Commission and Information Technology Contracting Services. He opined the number of utility rate cases being filed with the Public Service Commission [PSC] has risen annually by approximately 4 percent. Further, he declared the complexities of issues raised by the federal government, such as the Federal Energy Act, will mean the PSC must conduct hearings to examine the conditions set forth in that act to determine its applicability to Nevada. Continuing, Mr. Mendoza explained the position requested will function as a federal liaison. He stated the other requested position would act as counsel in Washington, D.C. and is listed in the budget as an expert consultant.
He stated, as a result of appearances before the Federal Energy Regulatory Commission in Washington, D.C., the agency has saved the ratepayers of Nevada approximately $l4 million. Mr. Mendoza pointed out the agency is now required to attend those meetings.
P. Forrest (Woody) Thorne, Deputy Budget Administrator, Department of Administration, interjected to offer the statement the amount for the increase to support the expert witness is listed in the Enhancement category on page 333 of the Executive Budget.
Mr. Mendoza pointed out the discrepancy of two positions titled as safety engineers and explained one position is in the classified service, while the other is unclassified, with a slight disparity in salaries. Mr. Mendoza suggested the two positions be changed to classified and the salaries remain the same.
Mr. Thorne pointed out the issue of the two safety engineers is outlined in the adjustments to the Base budget.
Senator Raggio asked what is the advantage of the PSC to retain the activity and responsibility of the commission's transportation enforcement activities.
Mr. Thorne explained:
...There was initial confusion of Peat Marwick's understanding of the role of the peace officers in this particular area. It's my understanding that the function is more of economic regulation, as opposed to public safety regulation. Once that additional information was provided by PSC, that recommendation for transfer was not included in the Governor's recommendation.
Mr. Mendoza concurred.
Senator Raggio asked for input regarding the data processing positions being recommended for consolidation.
Mr. Mendoza stated the two positions are somewhat dissimilar to what is seen in a data processing modality. The positions are unclassified status, he pointed out. He recounted the situation wherein the positions were originally requested by the PSC. They were approved by the legislature because the Department of Data Processing was unable to provide the level and type of support the PSC needed to analyze the data processing functions of the regulated companies, nor to provide computer modeling in support of other staff professionals such as economists, engineers and accountants. He stated the PSC has learned that its data processors must be dedicated to part of a multi-discipline, totally integrated, rapid-response team if they are to be effective. Further, Mr. Mendoza pointed out the incumbents glean computer information provided by the rated entities and develop it into economic designs and, therefore, those individuals must also be capable of providing expert testimony at rate hearings.
Senator Raggio remarked that the Governor's Executive Budget did not provide for the transfer of the aforementioned positions. However, the budget director has now recommended these positions be transferred into the Department of Data Processing.
Mr. Thorne explained at the request of the Assembly Committee on Ways and Means, a modified budget for the PSC and Department of Data Processing was prepared. The need for the systems analysts for the utilities and expert witness capability may be overriding concerns, he avowed.
Senator Raggio solicited a recommendation from Mr. Thorne concerning the position transfers.
Mr. Thorne recommended, "It appears to be consistent with the consolidation, and we have submitted the revised budget."
Senator Raggio clarified, "So this is based on recommending the transfer into the new Information Technology Services Division?"
Mr. Thorne responded in the affirmative.
Senator O'Donnell asked, "On a federal tax imposed on energy, is that a direct pass-through, or does the PSC have to hold additional hearings on the tax and on the agencies to distribute the tax?"
Terry Page, Director of Regulatory Operations, Public Service Commission, answered it is the agency's impression there is a probability it can move through the deferred energy process, which would mean it would be a pass-through cost. He summarized, "So the first answer is preliminarily there won't be a major need for rate hearings unless there is some complexity we're not aware of. And, in all practicality, we're trying to facilitate not causing a cashflow problem for the utilities by significant delay from the implementation to the collection [process]."
Senator O'Donnell posed the example of a telephone company that may use a lot of energy, in terms of electrical kilowatts, and asked if that type of example would be considered a direct pass-through cost to consumers. He also asked if sufficient staff were employed at the PSC to undergo the multitude of expected rate hearings with respect to the new BTU [British Thermal Unit] tax.
Using that type of example, Mr. Page explained a rate case would have to be filed. Referring to the energy portion of the expenses, a small increase probably would not demand a rate case, he opined. Continuing, he declared, "We're routinely seeing major utility companies on an annual basis. There is the potential that it could have an impact on them in the short-term. That is, not being able to collect it until they came in for a rate case."
Senator O'Donnell asked, "Is it determined by how high the BTU tax is going to be and what affect it will have on a utility?"
Mr. Page responded in the affirmative and described another significant change that may occur is an increase in the federal income tax rate from 34 to 36 percent, which would require a rate case and would affect all the utility companies.
Senator O'Donnell asked, "Is there enough money in the budget to handle an onslaught of rate cases that may occur because of this BTU tax?"
Mr. Page responded:
I think our budget is okay. Since the chairman came on board, he's proposed some concepts like prefiling conferences, the utilities are guaranteed action by the commission within 6 months from the date they file and with the coordination efforts that the chairman has put forward, we're better able to manage the work load than we were. For example, 2 years ago, we had four major rate cases going at the same time. That was a problem that nobody had anticipated. We didn't know the economy was going to go down. We saw Sierra Pacific Power Company, Nevada Power, Nevada Bell and Centel, all in approximately the same time. If that happened again, it would be devastating. We have asked for some extra money in our consulting budget so we could have some help to get through that....
Senator Jacobsen asked if the PSC uses any of the services offered by the state office located in Washington, D.C.
Mr. Mendoza responded inquiries were made with Mr. Leo Penne, however he was unable to assist.
Senator Coffin asked what is the rate of return currently allowed by the PSC for utility companies.
Mr. Page responded currently Sierra Pacific Power Company is before the commission for a general rate case and has asked for a rate of return of l2.5 percent. The authorized rate of return on the equity profit level for Nevada Power Company is approximately l2.5 percent, he stated, while the stipulated return for Centel is l2 percent. Nevada Bell has a current rate of return of l3 percent. Southwest Gas Corporation has not asked for a rate change in over 6 years, he avowed.
Administrative Fines - Page 337
Senator Raggio asked if this budget was funded by administrative fines.
Mr. Mendoza responded in the affirmative.
Senator Raggio asked if there has been any activity in this account during Fiscal Year l992.
Mr. Bill Vance, Commission Secretary, Public Service Commission, responded payment of court reporters for administrative citations and travel expenses for hearing officers have been paid from this account.
Senator Raggio asked for a written report on the level of activity for this particular division.
Senator Jacobsen complimented the agency on its recent open house and suggested that function continue.
There being no further business to come before the committee, Senator Raggio adjourned the meeting at 9:25 a.m.
RESPECTFULLY SUBMITTED:
Dee Crawford,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
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Senate Committee on Finance
March 9, 1993
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