MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
June 14, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:10 a.m., on Monday, June 14, 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
COMMITTEE MEMBERS ABSENT:
Senator Matthew Q. Callister (Excused)
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Birgit K. Baker, Program Analyst
Marion Entrekin, Committee Secretary
OTHERS PRESENT:
Paula Treat, Representing Nevada Judges Association
Robey B. Willis, President, Nevada Judges Association
Robert S. Hadfield, Executive Director, Nevada Association of Counties
John Madole, Representing the Nevada Chapter of Associated General Contractors
Anton Horner, Consultant, Carsonite International Corporation
Garth F. Dull, Director, Department of Transportation
Ashley J. Hall, Representing EnTire Solutions, Incorporated
Wesley Stephenson, Owner-Manager, EnTire Solutions, Incorporated
Verne Rosse, Deputy Administrator, Bureaus of Chemical Hazards, Federal Facilities and Waste Management, Division of Environmental Protection, State Department of Conservation and
Natural Resources
Carl R. Cahill, Director, Environmental Health Services Division,
Washoe County District Health Department
John P. Comeaux, Executive Director, Department of Taxation
Larry D. Struve, Director, Department of Commerce
Pat Coward, Representing Retail Association of Nevada
Rochelle Summers, Principal Budget Analyst, Budget Division, Department of Administration
Senator Raggio opened the hearing for discussion of Assembly Bill (A.B.) 55.
ASSEMBLY BILL 55:Makes various changes to provisions governing disbursement of administrative assessment for violation of misdemeanor.
Paula Treat, Representing Nevada Judges Association, wished to testify in favor of the passage of A.B. 55. She presented a letter (Exhibit C) from Judge Valorie J. Vega of the Las Vegas Municipal Court stating her support of the passage of this bill and advised the committee Judge Vega was unable to be present for today's hearing due to a prior commitment.
Ms. Treat said A.B. 55 was a negotiation between the Nevada Association of Counties (NACO) and the Nevada Judges Association
regarding administrative assessment fees.
Judge Robey B. Willis, President, Nevada Judges Association, testified that A.B. 55 delineates how administrative assessments can be spent. It would provide for training and education of personnel, acquisition of capital goods, and management and operational studies or audits. It would not be used for the day-to-day operational things to which some of the counties object.
Judge Willis said that $2.50 of each administrative assessment collected in the municipal or justice court would be deposited to a special revenue fund for use by the respective court which collected the assessment. Any funds remaining in the special fund after 2 years must be deposited in the county general fund if the funds have not been committed for expenditure.
Robert S. Hadfield, Executive Director, Nevada Association of Counties (NACO), testified in support of the passage of A.B. 55 which he stated is an improvement over the present law that places funds in special accounts in general funds of the county or municipality for use by the courts.
Senator Raggio closed the hearing on A.B. 55 and opened the hearing for discussion of Senate Bill (S.B.) 493.
SENATE BILL 493: Increases fee for purchase of tire to support program to use recycled tires in highway construction.
John Madole, representing the Nevada chapter of Associated General Contractors, stated the association supports the passage of S.B. 493 which would restore the original intent of Assembly Bill (A.B.) 320 of the Sixty-Sixth Session.
ASSEMBLY BILL 320
OF THE SIXTY-SIXTH SESSION: Makes various changes regarding reducing, recycling and disposing of solid waste.
Mr. Madole said at the time A.B. 320 of the Sixty-sixth Session was adopted, there was discussion regarding the use of a $1 fee assessed on tires. The Associated General Contractors thought it should be used to recycle the tires back into road projects. The compromise reached was that on March 15, 1993,the $1 fee collected on the purchase of each new tire would be transferred to the Department of Transportation (NDOT) to support the use of recycled products in the state's highway construction projects.
According to Mr. Madole, S.B. 493 will restore the $1 fee assessment that is presently going to NDOT.
Senator Coffin asked what the revenue expectation is from tires sold in a year.
Mr. Madole replied approximately 1.2 million tires are sold each year which would yield $1.2 million based on a $1 fee assessment.
Senator Jacobsen asked if the $1 fee is charged for the sale of all tires including those used for farm equipment and on motorcycles.
Although not certain, Mr. Madole believed the $1 fee is assessed on the sale of new tires of any type.
Senator Glomb asked if the fee on the original bill (A.B. 320 of the Sixty-Sixth Session) was a $1 or $2 assessment. Mr. Madole responded it was a $1 fee.
Senator Glomb asked if 50 cents of the $1 fee was to be used for a solid waste program and the remaining 50 cents was to go to the highway fund.
Mr. Madole replied the entire $1 was to go to the solid waste program until March 15, 1993, when it was to be transferred to the NDOT.
Senator Glomb inquired if the purpose of S.B. 493 is to double the fee to $2 so that NDOT can continue to receive $1 and the highway fund can receive $1.
Mr. Madole said, "That is one way to look at it, yes."
Anton Horner, Consultant, Carsonite International Corporation, testified this company has been in business for 17 years and manufactures highway products. They are in favor of the passage of S.B. 493.
Senator Raggio noted Nevada Revised Statutes (NRS 408.2810) does not tie into the fee assessment and asked for clarification regarding this.
Garth F. Dull, Director, Department of Transportation, responded he is not certain there is a direct connection of S.B. 493 to the Nevada Revised Statutes (NRS) but the Intermodal Surface Transportation Efficiency Act (ISTEA) requires the department to utilize crumb rubber or recycled tire products in asphalt starting with 5 percent in 1994 and increasing to 20 percent in 1996. There was no additional money provided for this requirement which is why NDOT also supports the passage of S.B. 493.
Senator Raggio asked if there was some tacit understanding at the time the tire fee was added that we are not aware of.
Mr. Dull said when the original bill was passed it was his understanding the $1 fee would be used for recycled products and materials in highway construction which would include tires for use in asphalt products or tires as a byproduct of crumb rubber.
Mr. Horner said because of the requirement that the $1 fee be used by NDOT for recycled products, Carsonite International Corporation has spent considerable effort and research to develop products that use waste products, especially used tires. The company has spent about $250,000 developing products of this nature. They believe in order to avoid illegal dumping of tires or throwing them into dump areas where they will become a problem, it is essential that private industry develop markets for recycled waste materials. He added it costs a lot of money to develop these products so there must be some assurance they will be allowed on projects. Many times there is a negative reaction to the use of recycled products in government projects. Requiring that the fees for old tires be used for buying products that contain recycled products will provide the incentive for private industry to create these products.
Mr. Horner asserted the Carsonite International Corporation believes it is essential to use fees for scrap tires to help create
markets for recycled materials otherwise recycling will fail. They support the passage of S.B. 493 as written to require that a $1 fee be used for NDOT to purchase recycled products.
Senator Jacobsen asked Mr. Horner if his company acquires old tires from a dump site or landfill for use in their recycled products.
Mr. Horner answered in the negative. They purchase the recycled tires from sources that tear them down and shred them first.
Senator Raggio asked Mr. Dull if S.B. 493 is passed what plans the department has for the utilization of the funds.
Mr. Dull replied they are guided by ISTEA and would have to use at least 5 percent of crumb rubber in their asphalt projects. They would also use crumb rubber in other activities such as sound barriers. They have an experimental project in use now in Las Vegas that will utilize a new type of sound barrier containing crumb rubber.
Senator Raggio said $1 will create a large fund if at least 1 million tires are sold every year.
Mr. Dull said it certainly helps but it will not go far enough to supply the extra money mandated by ISTEA for the recycled products they must use. The federal government supplies no additional funds towards the ISTEA mandate other than regular ISTEA funding.
Ashley J. Hall, Representing EnTire Solutions, Incorporated, testified in support of the passage of S.B. 493. He stated this bill is a follow-on bill to Senate Bill (S.B.) 97 approved earlier in the 1993 session.
SENATE BILL 97: Makes various changes regarding regulation of and funding for management of solid waste.
Mr. Hall said S.B. 97 revised the requirement to transfer the balance of funds in the account for recycling to NDOT and stipulated the $1 fee be used by the Division of Environmental Protection to establish a statewide solid-waste management program. The passage of S.B. 97 did not include new funding sources to carry out the use of recycled products in construction of highways. S.B. 493 would provide funding to support such a program.
Mr. Hall introduced Wesley Stephenson, Owner-Manager, EnTire Solutions, Incorporated, who wished to make a proposal to the committee relative to the use of old tires that he feels would be of great benefit to the people of the State of Nevada.
Mr. Stephenson presented the committee with Exhibit D, Nevada Scrap Tire Recycling Proposal, and outlined the contents with them. He also submitted Exhibit E which provides three options for fee amounts and an explanation of problems with S.B. 493 as currently proposed that he covered with the committee.
Senator Raggio asked Mr. Stephenson if his company is the only company in the state involved with the shredding of tires.
Mr. Stephenson said there are other companies in the state that are recycling in the form of retreading and there are companies that buy tires that are shredded already. His is the only company in Nevada that processes shredded tires.
Senator Raggio commented this would be a matter of a contractual agreement between NDOT and a company such as his but it is not
something that would be specifically written in the form of legislation.
Mr. Stephenson pointed out one of the suggestions he has outlined in Exhibit E is an amendment to S.B. 493 that the state purchasers give preferential consideration to Nevada scrap tire products rather than buying the scrap tire products from other states. He stated this suggestion in no way motivates NDOT to do something they are not required to do at the present time as a result of ISTEA regulations.
Senator Jacobsen asked what is done with the large tires used on heavy equipment utilized in the mining industry, and if these tires can also be recycled.
Mr. Stephenson said it is possible to recycle that type of tire but his company has not started the process due to the bulk reduction process that is needed for the giant tires.
Senator Raggio asked the impact of the $1 fee on tire sales.
Mr. Stephenson said there has not been an impact because all companies have to charge the same $1 which does not place any company in an economic disadvantage as far as competition is concerned. He added that most tire dealers feel if this fee is used to address a specific problem and everybody has to charge a fee, it would not matter if it was a $1 or $2 assessment.
Senator Raggio recalled they were told on the senate floor that immediate action had to be taken on an emergency basis regarding S.B. 97 requiring a federal requirement that had to be met. He asked what the basis for this was.
Verne Rosse, Deputy Administrator, Bureaus of Chemical Hazards, Federal Facilities and Waste Management, Division of Environmental Protection, State Department of Conservation and Natural Resources, answered the reason for the emergency passage of S.B. 97 was the result of federal legislation that was to become effective on October 9, l993, requiring local governments to comply with extensive federal regulations on the disposal of solid waste. To obtain flexibility from the federal regulations required the state to make an application and obtain approval prior to that date in order to use state standards of meeting the general environmental protection intent of the federal law.
Senator Raggio asked how this affected funding.
Mr. Rosse replied one of the requirements of obtaining an approved program was the state had to have resources and the staff to implement the federal program. The only funding that was available to the state as well as Washoe and Clark counties was the $1 tire fee. Without that $1 tire fee the state would not have had the resources to implement the federal and state programs.
Senator Raggio asked if the understanding regarding the $1 tire fee being redirected to NDOT was discussed in committee, and Mr. Rosse replied in the affirmative.
Mr. Rosse said the Division of Environmental Protection is in the process of developing a statewide plan to deal with waste tires. It is a problem, particularly in the small landfills, because of the volume of tires involved. The division hopes to have the plan completed soon in order to prepare for legislation that may be needed during the 1995 session of the legislature. He added it is
too early for him to make a statement regarding the progress being made in this regard.
Senator Raggio asked how money from the $1 fee assessment is being utilized by the Division of Environmental Protection.
Mr. Rosse responded S.B. 97 contains specific language regarding the specific percentage of funding that must go to the state as well as to the health districts of Clark and Washoe counties.
Carl R. Cahill, Director, Environmental Health Services Division,
Washoe County District Health Department, testified the division is one of the authorities addressed in S.B. 97. With regard to S.B. 493, he wished to point out a few changes they believe should be made before the bill is passed. He referred to section 1, line 12, and suggested the removal of the language "state highway fund" to be replaced by the language "recycling fund". He suggested the same language changes to line 13. In line 14 he suggested the word "may" be replaced by the word "must", and delete "approved pursuant to NRS 408.281" and insert "for the recycling of tires and other products" in line 15.
If the focus of S.B. 493 is to recycle tires, Mr. Cahill wished to point out that crumb rubber is not currently available in the state making it necessary to purchase this product out-of-state. He thinks in 2 to 4 years the state and the counties will have arrived at some answers that will help them develop a much needed statewide plan to address the problems that now exist and perhaps at that time the tire fee can be eliminated.
Senator Raggio asked Mr. Horner if the Carsonite International Corporation is manufacturing crumb rubber at this time.
Mr. Horner replied the company uses it but does not manufacture it at the present time. They must purchase this product from out-of-state sources. He hopes in the not-too-distant future crumb rubber will be produced in this state.
Mr. Rosse said Assembly Bill (A.B.) 386 is a trailer bill that revises S.B. 97 to provide the funds needed for the Department of Taxation to collect the tire fee.
ASSEMBLY BILL 386: Revises provisions of Senate Bill No. 97 of this session concerning management of solid waste.
Senator O'Donnell referred his question to John P. Comeaux, Executive Director, Department of Taxation, and noted:
NRS 408.281 also specifically deals with S.B. 386. If I could get you on the record...the tax involved in new tires....If a dealership purchases a new tire or four new tires to put on a used vehicle that gets traded in, how would your department handle the tax for the new tires placed on a used vehicle?
Mr. Comeaux replied his current understanding of the applicability of the new tire fee is under the circumstances described, the four new tires would be subject to the fee. The dealer would report those as he reports the sale of any new parts that go through his service department or sales area. However, the new tires would be subject to that fee.
Since no one wished to testify in opposition to the bill, Senator Raggio closed the hearing on S.B. 493 and opened the hearing for discussion of Senate Bill (S.B.) 334.
SENATE BILL 334: Increases compensation to state for collecting certain sales taxes.
Mr. Comeaux said if approved S.B. 334 will increase the compensation to the state for the cost of collecting the local school support and the basic and supplemental city-county relief taxes from one-half of 1 percent to 1 percent effective July 1, 1993. The measure will also equalize the collection allowances for the local government components of the sales tax with the various one-quarter of 1 percent local option components, which already have collection allowances of 1 percent.
According to the Department of Taxation's calculations, Mr. Comeaux said for fiscal year 1991-1992 the state's compensation for collecting these taxes was approximately $1,250,000 short of covering the costs associated with those collections. The department estimates similar shortages in this and future years. S.B. 334 will provide about $3.5 million in additional collection allowances, half of which will come from the local school support tax which will constitute a wash back through the Distributive School Fund. This will net an approximately $1.7 million in additional funds to help offset the cost of collections and will provide additional compensation to cover the costs. Mr. Comeaux is in favor of the passage of S.B. 334.
Senator Raggio asked what efforts are involved in this type of sales tax collection and distribution.
Mr. Comeaux said the department has well over 30,000 registered accounts in the state that collect sales tax for them. They also have additional accounts that collect use tax. The department sends out tax returns on a monthly and quarterly basis to those individuals who pay the tax that is due. The department has delinquencies that must be collected by revenue officers and they also have a fairly significant audit function to audit returns that have been filed to insure the proper amount of taxes has been reported and paid. The department collects the funds that are deposited into the state treasury. At the end of the month when all the returns are processed by their computer system, that system generates records that indicate how the funds are to be distributed. That information is provided to the Office of the State Controller for distribution of the portion that is due the various local governments.
Senator Glomb asked, "This problem has been growing over time that you have not been compensated for the collection of these taxes?"
Mr. Comeaux could not state it has grown over time because it fluctuates with the collections and with the costs associated. If the costs increase over a particular year for such things as an enhancement to a computer function, the shortage would amount to more. If the collections are good in a particular year, then the shortage would be less. He is certain that the one-half percent rate has not been adequate to cover the costs since 1981.
Senator Glomb asked if the department has documentation of the costs associated with the collection process.
Mr. Comeaux said the way it was calculated for this tax is the same way they calculated the cost to collect the other taxes they are involved with and that are distributed to other than the General Fund. The department totals up all of the revenue they collect for a 1-year period. In 1991-1992 that amounted to over $1.3 billion.
The department then calculates the percent that each one of the revenue types bears to the total revenue they collect and applies each one of the percentages to the total costs associated with collection of the taxes. In 1991-1992 that amounted to $9.6 million. That is how the department calculates the level of administrative fees necessary to cover the costs of collecting the other taxes. They used the same methodology to analyze the adequacy of the collection allowance for the sales tax.
Senator Glomb said it would appear the department would have a record of the collection costs. She asked, "Do you have a running record for the last 12 years to show the costs and increases?"
Mr. Comeaux said the department has documentation over the last 8 years that document their calculation of the costs as he described. He said they cannot specifically allocate every position and every dollar they spend on a particular tax because their revenue officers handle all taxes, auditors audit for all taxes, and processing people process returns for all taxes. They allocate the cost based on the percentage of revenues collected to total revenues collected which produces a reasonable result.
Mr. Hadfield stated NACO objects to the passage of S.B. 334. Confining his comments to section 2 of S.B. 334, he said this represents an additional charge to all local governments for the collection of basic and supplemental city-county relief tax which will cost an additional $1.75 million the counties do not have.
With regard to the collection of the taxes, Mr. Hadfield pointed out that the calculation that arrived at the difference between what is being made and what is collected is based upon a depressed economy. He maintains when the economy rebounds that one-half percent will generate a lot more money which he would like the committee to consider if they are going to look at a formula for arriving at an adequate way of compensating for the actual cost of collections. He said if the sales tax collections go up by 1 percent more than estimated, there will be a windfall for the state at the cost of local government.
Mr. Hadfield also drew attention to the fact that county government serves in a similar capacity to the state Department of Taxation as they collect money for the State of Nevada and other government entities for which they are allowed to charge no administrative fee. He added if it is fair for the State of Nevada to collect an administrative fee for collecting their money, it would only be appropriate the counties be allowed to collect an administrative fee to collect money for the state.
Mr. Hadfield urged the committee to take his points into consideration and to understand the counties would like to be treated equally with the state in how business is conducted and would like to share in the revenues appropriate for the counties to have. NACO does not believe S.B. 334 represents equity for the counties and does not believe it will set a good precedent.
Senator Glomb asked if the counties were approached about the need for increased assessment fees.
Mr. Hadfield said the counties were not advised regarding this proposal until NACO became aware of it in the budget process.
Senator Raggio closed the hearing on S.B. 334.
Consumer Affairs - Telemarketing - Page 433
Senator Raggio referred to Exhibit F, data concerning the revised telemarketing budget and asked if this information reflects the last discussion the committee had with the task force on telemarketing.
Bob Guernsey, Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, replied Exhibit F reflects the discussion with the task force with a question still remaining regarding the number of positions that will stay with the Consumer Affairs Division's telemarketing section.
Wishing to set the mode for discussion today regarding this budget, Senator Raggio commented:
The task force...Senator Rawson, Senator Callister, and myself met with the three members of the Assembly Committee on Ways and Means task force, Mr. Arberry, Mrs. Evans, and Mr. Humke. We were concerned about a number of items. One, the amount of the budget in both the attorney general's office and the Consumer Affairs Division and the retention of some money for the General Fund operation. The budget was based originally on about $1.7 million coming into the General Fund. As this committee recalls initially when we dealt with this matter, we instructed consumer affairs' telemarketing section to come back with an enhanced budget. They did so and at that point would have had the consumer affairs' telemarketing unit continue the licensure, investigation, and sanctioning of any violators. In the interim the Senate Committee on Commerce and Labor came back with a proposal which would, like most other states with the exception of Florida, require companies to register rather than to be licensed....The state then was not giving an initial imprimatur on the company, but it would be a registration process, and then the investigation of complaints and the prosecution of complaints would be in the fraud unit of the attorney general's office.
The attorney general and the Consumer Affairs Division discussed the budget between themselves with the directive from the budget office that at least $750,000 be directed toward the General Fund over the course of the biennium. In our discussions we looked at the budgets that were presented by the attorney general who was present, and we have the budget that was proposed by the Office of the Attorney General after these discussions. In the course of the discussions, and the Consumer affairs Division was not at the meeting, it developed afterwards there was some concern their positions were being cut from 8 to 5 under the proposal. The Consumer Affairs Division will retain the registration function as well as the complaint input function. The attorney general definitely wants some kind of an interlocal agreement as to how these complaints will be handled. They will have an opportunity to evaluate them and undertake any investigation or prosecution.
The task force agreed there should be some intergovernmental agreement, but we also wanted to make certain the Consumer Affairs Division had the ability necessary to propose the initial regulations that would be required for the registration process and for the
receipt of complaints. The Consumer Affairs Division came back later and said they did not think they could do the job with five positions. They felt they needed at least two additional positions to properly do the work required.
Senator Raggio asked Mr. Guernsey to advise the committee the number of positions there are in the fraud unit of the Office of the Attorney General.
Mr. Guernsey said they currently have 2.5 positions assigned. Their proposal would add 7 additional positions to the Office of the Attorney General.
Continuing, Senator Raggio said:
The understanding with the attorney general was there are 3 investigator positions, and they would utilize to the extent possible the existing personnel in the Consumer Affairs Division to fill those positions.
Mr. Guernsey reviewed with the committee the proposed budget for telemarketing reflected in Exhibit F. He stated when the telemarketing budget is completed modifications will have to be made to Senate Bill (S.B.) 375.
SENATE BILL 375: Makes various changes relating to regulation of trade practices.
Mr. Guernsey said telemarketing firms doing business in the state of Nevada would pay an additional assessment of $1,000 as a result of the passage of S.B. 375. This would increase the total annual registration fee to $6,000. The bill suggests designating the $1,000 to be used only for an education function. The Fiscal Analysis Division believes this $1,000 should not be designated for that purpose. It should be made a part of the telemarketing budget for the legislature to control by the amount budgeted.
Mr. Guernsey continued his discussion of Exhibit F and called their attention to the last page of this handout, a memorandum from the Office of the Attorney General dated June 10, 1993, outlining their computer requirements for the telemarketing fraud unit.
Senator O'Donnell said the computer requirements seem excessive in cost. He suggested a total cost of about $11,000 should suffice for the personal computers which would lower the cost quoted by the Office of the Attorney General by $6,000. He opined a overall cost of $17,000 should cover their computer hardware needs rather than the $25,157.64 reflected in Exhibit F.
Senator Raggio asked if the end result will be a reversion to the General Fund of $780,669 over the course of the biennium.
Mr. Guernsey answered that was correct. He also pointed out in the second year of the biennium the expenses will be handled by the revenue that will be coming in.
Larry D. Struve, Director, Department of Commerce, said 7 positions would definitely be needed to properly handle the consumer-intake function for the telemarketing unit in the Consumer Affairs Division.
SENATOR RAWSON MOVED TO APPROVE THE BUDGET FOR THE TELEMARKETING FRAUD UNIT AS RECOMMENDED BY STAFF IN EXHIBIT F.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER AND SENATOR COFFIN WERE ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio opened the hearing for discussion of S.B. 375.
Dan Miles, Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, referenced page 2, subsection 5, lines 39 and 40, of S.B. 375 to delete the language, "Money remaining in the account of the division at the end of a fiscal year does not lapse to the state General Fund." He suggested inserting language that allows for an ongoing-fund balance of $250,000 per annum with the excess being placed in the General Fund.
Mr. Miles also suggested section 32 on page 16 of S.B. 375 regarding education expenses be deleted to allow these expenses to be controlled by the amount budgeted.
Pat Coward, Representing the Retail Association of Nevada, distributed to the committee Exhibit G, a proposed amendment to page 8, section 19, line 3 of S.B. 375. He stated this will raise the threshold of members of large corporations that are publicly traded and will provide them an exemption.
Mr. Coward reviewed the provisions of the suggested amendment with the committee.
Mr. Coward expressed this amendment would not exempt any companies even though they are publicly traded that did not meet this criteria.
SENATOR O'DONNELL MOVED TO AMEND AND DO PASS S.B. 375 AS RECOMMENDED BY STAFF AND EXHIBIT G.
SENATOR RAWSON SECONDED THE MOTION.
Senator Coffin asked, "Does this amendment lock in all publicly traded people?"
Mr. Coward answered it does not.
Senator Coffin inquired, "Does the amendment prevent the exemption that exists today or preserve the exemption? I understand there is an exemption for one major company because it happens to be a publicly traded company."
Mr. Coward replied, "Yes. That gets into item 2 of the bill."
Senator Coffin said he would abstain from voting on S.B. 375.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE. SENATOR COFFIN ABSTAINED FROM THE VOTE.)
* * * * *
Attorney General - Page 17
Mr. Miles reviewed the budget closing action and issues reflected on pages 1 through 4 of Exhibit H with the committee.
Referring to the recommendation to change the funding mechanism to appropriate all General Fund charges to the attorney general and
allocate from the agencies all non-General Fund charges, Senator Raggio asked if the budget office agrees with this recommendation.
Rochelle Summers, Principal Budget Analyst, Budget Division, Department of Administration, replied the budget office does recommend this change since it will save the General Fund some dollars. She pointed out the same people that prepared the statewide cost-allocation plan also prepared the cost-allocation plan for the Office of the Attorney General.
Mr. Miles agreed it would save the General Fund dollars since the administrative costs of the department could then be allocated out to the non-General Fund agencies.
Mr. Miles continued his review of Exhibit H.
Senator Raggio noted the positions are supposed to be filled July 1, 1993. He asked if any of the positions could be phased in.
Mr. Miles pointed out it would be impossible to fill the positions by July 1, 1993,since it is now so close to that date. He believed some phasing in may be appropriate. He also said he received a message from the attorney general's office about an Account Clerk II position they would like to have filled in the first year of the biennium instead of the second year which would be an added cost to the first year of the biennium. If positions are phased in this would pay for the added cost of the Account Clerk II position.
Senator Raggio suggested a factor be built into the budget that the majority of the positions would be filled by October 1, 1993. He also suggested vacancy savings of 60 days be factored in as well.
SENATOR RAWSON MOVED TO CLOSE THE BUDGET WITH THE STAFF ADJUSTMENTS REFLECTED IN EXHIBIT H; WITH THE ADDITIONAL READJUSTMENT OF THE TELEMARKETING STAFF CONSISTENT WITH THE COMMITTEE'S PREVIOUS ACTION; WITH THE ACCOUNT CLERK II POSITION BEING MOVED INTO THE FIRST YEAR OF THE BIENNIUM INCLUDING A VACANCY SAVINGS REFLECTIVE OF AT LEAST 60 DAYS BASED ON THE MAJORITY OF THE POSITIONS NOT BEING FILLED UNTIL OCTOBER 1, 1993.
Senator Raggio suggested a letter of intent be added to the motion to be sent to the Office of the Attorney General and the Consumer Affairs Division regarding the hiring of personnel between their units to give preference to any displaced persons in the Consumer Affairs Division. He also wants the letter of intent to include the committee's position regarding the interlocal contract to determine the procedures that are to be followed in connection with the referral and handling of complaints. He added he would like to hear from both agencies whether or not there is a clear understanding regarding this suggestion because he wants the director of the unit in the Consumer Affairs Division to be able to promulgate the necessary regulations for their purposes.
Mr. Struve said this is an important point. It is his understanding that the attorney general wants to have an interlocal agreement that would spell this out. In order for the commissioner to be able to commit resources and staff there has to be a statutory grant of authority to adopt the regulations regarding registration. He suggested this be a part of the motion.
Senator Raggio concurred the aforementioned suggestion by Mr. Struve should be included as a part of the budget closing action
along with the letter of intent above described.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
Department of Taxation -Page 205
Senator Coffin read to the committee (Exhibit I), Senate Committee on Finance Report of the Subcommittee on Taxation dated June 7, 1993.
Senator Coffin stated the subcommittee received word there may be some confusion over the duties of one of three positions recommended to be transferred from the Department of Insurance to the Department of Taxation for administration and collection of insurance premium taxes. There is a possibility of a modification which he suggested be included in a final motion which would allow for a position to remain in the Department of Insurance if there would be no impact to the General Fund.
Senator Coffin continued his testimony by reading from prepared text (Exhibit I).
Senator Coffin stated the narrative (Exhibit I) presented in testimony before the committee refers to the first page of Exhibit J, the budget closing action sheet for this budget account.
Senator Coffin said this was the most difficult assignment that confronted the subcommittee because any changes they wished to make to those recommended by the Governor increased the budget. The process revealed there was almost no consultation among the affected agencies. At the last subcommittee meeting Senator Coffin noted that was the first time all agency heads sat down at the same table to discuss reorganization. He opined secrecy and the lack of communication regarding the Governor's reorganization plan impaired discussions and consideration by the committees regarding this conception. He believed healthy debate within the administration should have been conducted regarding the Governor's reorganization plan before it was brought before the legislature.
Senator Raggio interrupted to mention the record should indicate the problem with getting concurrence from the United States (U.S.) Department of Labor regarding the transfer of expense to the federal budget to help support the state's tax collection efforts.
Senator Coffin pointed out Exhibit J contains three options regarding the tax audit process and asked Birgit K. Baker, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, to review them with the committee.
Turning to page 2 of Exhibit J, Ms. Baker reviewed in detail the provisions of option 1 to adopt the revised recommendations of the Governor. Ms. Baker said page 3 of the handout is the appropriate closing action sheet for the provisions of option 1. She said there would be no cost to the General Fund for this but reiterated that the U. S. Department of Labor specifically indicated that the level of audit coverage that would have been provided under the Governor's proposal is in excess of what they consider to be adequate and may create a potential funding problem.
Continuing her testimony, Ms. Baker turned the committee's attention to page 4 of Exhibit J and provided a detailed explanation concerning option 2 to retain the audit functions at
the Employment Security Department (ESD) and the State Industrial Insurance System (SIIS). She said pages 5 and 6 of the handout are
the appropriate budget closing action sheets for the provisions of
option 2.
Ms. Baker reviewed in depth pages 7, 8, and 9 of Exhibit J with the committee regarding option 3 and alternative suggestions to consolidate the audit functions and reduce the audit coverage for ESD accounts. Page 10 of the handout is the appropriate budget closing action sheet for the provisions of option 3.
Senator Raggio said he could like to commend Senator Coffin, Senator O'Donnell, Ms. Baker and everyone else on the subcommittee for the efforts they put into their report. He noted this has been a troublesome area to deal with.
Senator Coffin wished to draw attention to the fact that if adopted the recommendations by the subcommittee will add about $1.5 million to the General Fund.
SENATOR COFFIN MOVED TO CLOSE THE BUDGET BY ADOPTING THE PORTIONS OF THE SUBCOMMITTEE REPORT CONTAINED ON PAGE 1 OF EXHIBIT J WITH THE POSSIBLE MODIFICATION TO PAGE 1 REGARDING THE TRANSFER OF EMPLOYEES BETWEEN THE DEPARTMENT OF INSURANCE AND THE DEPARTMENT OF TAXATION IN THE EVENT WITHOUT GENERAL FUND IMPACT ANOTHER EMPLOYEE MAY BE FOUND FOR THE DEPARTMENT OF INSURANCE THAT WILL NOT AFFECT THE ALLOCATION TO THE DEPARTMENT OF TAXATION.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
SENATOR COFFIN MOVED TO ADOPT THE SUBCOMMITTEE RECOMMENDATION OF OPTION 3 REFLECTED ON PAGE 7 OF EXHIBIT J WITH THE INCLUSION OF 6 PERCENT AUDIT COVERAGE OF WHICH 3 PERCENT WILL BE FUNDED FROM ESD'S PENALTY RESERVE, FOR A TOTAL COST TO THE GENERAL FUND OF $1.5 MILLION.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
Ms. Baker said there is one additional adjustment she wished to review with the committee regarding the budget that was just closed for the Department of Taxation. She explained this regards the way the Department of Taxation calculates its administrative fees based on an allocation of administrative costs to the amount of tax collected. She distributed Exhibit K, budget closing action sheet, and reviewed the contents with the committee.
SENATOR O'DONNELL TO MAKE A FURTHER ADJUSTMENT TO BUDGET PAGE 205 FOR THE DEPARTMENT OF TAXATION AS RECOMMENDED BY STAFF, EXHIBIT K.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio adjourned the meeting at 10:47 a.m.
RESPECTFULLY SUBMITTED:
Marion Entrekin,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
June 14, 1993
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