MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
June 17, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:25 a.m., on Thursday, June 17, 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:
Assemblyman Jan Evans, Washoe County Assembly District No. 30
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Dee Crawford, Committee Secretary
OTHERS PRESENT:
Larry Struve, Director, Department of Commerce
Stan Warren, Representing Sierra Pacific Resources
Tim Carlson, Director, Commission on Economic Development
Ray Blehm, State Fire Marshal
Judy Matteucci, Director, Department of Administration
Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau
Senator Raggio requested committee introduction of Bill Draft Request 35-2118.
BILL DRAFT REQUEST (BDR) 35-2118: Requires the board of directors of the department of transportation to approve certain purchases of equipment by the department.
SENATOR RAWSON MOVED TO APPROVE COMMITTEE INTRODUCTION OF BDR 35-2118.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio opened the hearing on Assembly Bill 634, Assembly Joint Resolution 35 and Assembly Joint Resolution 36.
ASSEMBLY BILL (A.B.) 634: Delays expiration of certain provisions concerning program for investment in new enterprises.
ASSEMBLY JOINT RESOLUTION
(A.J.R.) 35: Proposes to amend Nevada constitution to allow investment by state to stimulate economic development.
ASSEMBLY JOINT RESOLUTION
(A.J.R.) 36: Urges Congress and President to extend permanently authority of states to issue tax-exempt small issue industrial development bonds and qualified mortgage revenue bonds.
Assemblyman Jan Evans, Washoe County Assembly District No. 30, testified the three legislative measures were an outcome of recommendations heard in April when the Private Sector Steering Committee on the Nevada Development Capital Fund appeared before the joint hearing of the Senate Committee on Finance and Assembly Committee on Ways and Means.
Mrs. Evans explained A.B. 286 of the Sixty-sixth Session appropriated $50,000 to be matched by a like amount from the private sector to hire a consultant to conduct a market study for a business plan on the feasibility of developing a Nevada Development Capital Fund for the purpose of financing small businesses.
ASSEMBLY BILL (A.B.) 286
OF THE SIXTY-SIXTH SESSION: Makes appropriation for development of plan for program for use of public and private money as capital for investment in new enterprises.
Mrs. Evans explained A.B. 634 changes the reversion date of A.B. 286 of the Sixty-sixth Session to allow the completion of work being conducted by the Private Sector Steering Committee on the Nevada Development Capital Fund.
Continuing, Mrs. Evans addressed A.J.R. 35 and explained it is a resolution to amend the Nevada Constitution to allow the investment of state money for economic development. The measure was on the ballot in l992 and failed, she advised.
A.J.R. 36 covers two issues important to the state, she avowed. It urges Congress to permanently extend the authority for the tax-exempt industrial development bonds and the Low Income Housing Trust Fund.
Larry Struve, Director, Department of Commerce, distributed Exhibit C, memorandum from Larry Struve, dated June l6, l993, regarding A.B. 634; Exhibit D, letters from Sue Wagner, Lieutenant Governor and Chair of the Commission on Economic Development; and Exhibit E, memorandum from Larry Struve, dated June l6, l993, regarding A.J.R. 35 and A.J.R. 36, to the committee.
Referencing A.B. 634, Mr. Struve cited elements of a suggested letter of intent to accompany this measure, as outlined in Exhibit C.
Mr. Struve commented briefly in support of the three bills and strongly urged passage of the three measures.
Stan Warren, Representing Sierra Pacific Resources, and Tim Carlson, Director, Commission on Economic Development, testified briefly in support of the three bills.
Senator Raggio closed the hearing on A.B. 634, A.J.R. 35 and A.J.R. 36 and opened the hearing on Assembly Bill 113.
ASSEMBLY BILL (A.B.) 113: Requires state fire marshal to establish mobile training team to train volunteer firemen to respond to incidents involving hazardous materials.
Ray Blehm, State Fire Marshal, provided testimony in support of A.B. 113.
Senator Raggio asked what would be the total cost for the training team.
Mr. Blehm responded $23,400 in the first year of the biennium, and $2l,000 in the second year.
Senator Raggio asked staff if the cost for the training team was included in previous action taken when the agency budget was closed.
Bob Guernsey, Principal Deputy Fiscal Analyst, responded in the affirmative and explained both money committees closed the budget with the necessary funding for the training team.
Senator Raggio asked Mr. Blehm why he felt it was necessary to pass the bill.
Mr. Blehm responded it would accommodate the desires of the fire service and the legislative interim committee.
Senator Jacobsen supported passage of the measure.
Senator Raggio closed the hearing on A.B. 113 and opened the hearing on Assembly Bill 406.
ASSEMBLY BILL (A.B.) 406: Makes appropriation to state board of examiners to restore balance of certain accounts.
Judy Matteucci, Director, Department of Administration, distributed Exhibit F, Financial Statement Emergency Fund, dated May 25, l993, to the committee and provided a summary of that document.
She explained the bill restores the balance of three accounts under the control of the State Board of Examiners. She requested authorization to appropriate $29,883 to restore the emergency account back to its statutory amount of $400,000.
Turning to the contingency fund, Exhibit F, Ms. Matteucci testified this fund is administered by the State Board of Examiners and is established to pay specific claims against the state.
Continuing, Ms. Matteucci provided an overview of the stale claims account as outlined in Exhibit F.
Senator Raggio closed the hearing on A.B. 406.
Senator Raggio asked for an update on the revenue projections and effect of the joint closing actions on agency budgets.
Distributing Exhibit G, Fiscal Analysis Division, State General Fund Revenue Adjustments; Exhibit H, Fiscal Division Comparative Revenue Data 2 Percent Sales and Gaming Percentage Fees; and Exhibit I, DSA/Class Size Reduction Budget Closing, to the committee, Mr. Miles stated:
...I read in the newspaper that we are in the process of massaging revenue estimates, and we have brand new revenue estimates. Neither one of those statements is true. We are not in the process of massaging revenue estimates. The revenue estimates we will show you today are fairly old, actually....
Senator Coffin thanked Mr. Miles for clarifying the issue and added, "I was really concerned when I read that story in the [Las Vegas] Review Journal yesterday. That apparently was rewritten by the editorial board without the consent or knowledge of the person who wrote the story....Did we actually add $l5 million to the education budget?"
Mr. Miles responded:
If you measure it from the level of appropriation, you added a little over $3 million. The $l5 million, a combination of an addition of all the actions internally within the school fund budget, if you add all those things up, there's $l5 million in changes that only cost the General Fund about $3 to $3.5 million.
Senator Raggio declared for the record:
...As I understand the result of our joint closing action, it was to add about $3.5 million in General Fund money to the Distributive School Account (DSA) above what the Senate [Committee on Finance] had closed its action. In addition, there was about another $l million added of estate tax funds in connection with our action on class-size [reduction]. Then there are other adjustments that were made which bring a total addition available to the DSA of about $l5.5 million over the biennium....I think that should be noted in our record here because the chair, like Senator Coffin, is hearing all kinds of comments as a result of our action....
Mr. Miles provided his recollection:
I'm going to go through this quickly and give you the biennial totals. In the joint closing actions, the action was to increase the PERS [Public Employees Retirement System] contributions for employees of school districts. That's the back end of the rate reduction of PERS, and you have to increase the salaries by half that amount, that is worth $l.9 million.
We funded roll-up costs at 2 percent each year and that was about a half a million dollars just to get it up to 2 percent, it was slightly below 2 percent.
There was a pump in the health insurance benefits of about $3 million over the biennium, that line item for school districts. Provided an inflationary increase in instructional supplies of about $500,000 over the biennium. Provided for uniform utility increases throughout the state for the school facilities, that was worth about $500,000. Funded the 22 drug counselors at a full $l million each year, that cost nearly $l00,000. Increased the funding for class-size [reduction] by $3.8 million over the biennium using a higher assumed number of teachers required in increasing the roll-up costs of those particular teachers because they are newer and moving faster on the scale. That was covered by increases in the estate tax funds available, both from this year and projected in the next 2 years.
The closing ignored, basically, the increase in assessed value that has occurred which would provide through the 50-cent portion that goes directly to school districts, an additional $4.5 million over the biennium....Then there is an additional l0 discretionary units worth about $500,000. If you add that up, that's $l5.6 million, but the General Fund expense only went up $3.5 million. Part of that is because some of these changes, like ignoring the 50-cent property tax was internal, was not anticipated. There was a revenue adjustment in the annual slot tax that flows to the DSA that benefitted the state and reduced the need for increasing the General Fund appropriation. Then the class-size reduction portion is covered by the estate tax and doesn't effect the General Fund appropriation. So it's a combination of a number of things.
Going back to the revenue projections, Mr. Miles explained:
Back in January, as you know, we projected revenues to the General Fund as did the Executive Budget. Then later in the session, we...finalized ours on May l7, l993, which was a day or two before the Budget Division came before the joint committee, Senate Committee on Finance and Assembly Committee on Ways and Means, to give us their revised revenue projections.
What has happened is in our projections, overall, even though internally there has been a number of adjustments we suggest making, the overall picture hasn't really changed since January. In l994-l995, our revenue estimates are almost right on exactly what we projected back in January. There is a difference though between the administration's revenue projection and our revenue projection....
First, I direct you to this one page...which shows you the changes we made in May to different revenue items in the General Fund, so you can see what our thinking was...that caused us to make some internal changes. The first one is the mining tax and basically the Department of Taxation came with a new mining tax revenue estimate, and I believe this is the same one that is now in the Governor's proposed revenue piece. Sales tax, we basically had a 7.7 percent increase for this year planned, 5.l percent the next year, and dropping to 4.5 [percent] in the out year in l995. Our new estimate is that it would be 8.2 percent this year. Again, this is an estimate that was made May l7, a month ago. We should probably get a new number today....We have not gotten the report from the Department of Taxation as to what that is. We anticipate it's going to be a good number.
In May we anticipated the sales this year would go up to 8.2 percent. In our initial projection back in January, we had gone with Formetrics, Inc., projections for sales tax and we stayed with Formetrics, Inc. In the second year, Formetrics, Inc., had dropped their mid-spring adjustment...to 4.7 [percent]. This is the Formetrics, Inc., base case scenario. They had about a 7 percent [adjustment] in l995, we were unwilling to do that, we kept it at 4.5 percent in the second year of the biennium.
Senator Raggio declared:
I think it's essential because I think this committee, certainly like the Governor, wants to make as certain as we can that the projections are valid and those we can rely on to the best of our expectations. We don't want a recurrence of what happened during the last biennium where projections went awry and we had to cut back a substantial amount of budgets. Having said that, if I understood what you said, if you followed Formetrics, Inc., you would be plugging in here an even higher number for sales tax, certainly in the second year.
Mr. Miles agreed.
Senator Raggio summarized, "So instead of 7 percent, you're utilizing 4.5 [percent]. I would term that responsible."
Senator Coffin said:
It does show while we did make a mistake in the first year of projections for the current biennium, in fact we were underprojected for the second year. I think that is important and hasn't been reported by anybody. Would that be fair to say?
Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, interjected:
That would be fair to say. I take a trend analysis of the figures. Where we made the big mistake in the biennium was basically in projections for about the first 6 months of the first fiscal year. That has created the entire scope of the problem for this biennium. Starting with about January or February of l992, the projections we made back in May have tracked. In fact, sales have been growing...now for the past l5-l6 months at an annual rate of l0 percent, taxable sales....Gaming has been growing since that time at a rate of about 6 percent....Those are very consistent with the numbers we put into the budget. Our problem was we were 6 months too soon in estimating those.
Senator Coffin interjected, "You did a good job, Ted. I think it's just another argument for annual sessions."
Ms. Matteucci clarified:
Formetrics, Inc., did not provide one scenario. They provided three: a high, a base and a low scenario. When we presented our revenue projections to you...the May projections we did, our revised projections which do put us lower than your staff, we for two reasons chose the Formetrics, Inc., low scenario. The California economy uncertainty is one of our concerns in the out years. Perhaps the biggest concern we have is the impact that we are enjoying right now as a result of the construction of the three mega resorts and the certainty that construction of those three resorts will stop and while there may be ongoing construction forthcoming, it's not to the magnitude that those three areas are contributing to our taxable sales base. So just for the record, there are three scenarios. Neither of us chose the high scenario and your staff, I think, is recommending with some modification the base scenario and we are recommending the low scenario.
Senator Raggio asked Ms. Matteucci, "What percent is the low scenario?"
Ms. Matteucci responded, "It's about 3.3 [percent]....In the second year, it's a 2.8 [percent]...." She continued:
One of the complicating factors that we think you're going to be seeing, and one of the reasons we think you're seeing some good sales tax numbers now, is that...all three of those resorts are ahead of schedule. Which means they are contributing into the taxable sales base now more sooner than what we thought they would be. Again, those two things, the California economy uncertainty and the impact of the construction of those resorts is the reason we chose the lower base.
Senator O'Donnell asked if the national disposable income has been tracked.
Mr. Zuend responded:
...First I will caution, these numbers are subject to revision in the July release of the gross domestic product....The federal government just revised its employment series substantially, which puts a whole new spin on where the recession started, where the recession may have ended and what the recoveries look like since then. What it shows is that if you just look at the employment numbers...it shows the recession was longer, though not as deep, as originally thought. Beginning of about February l992, job growth has been actually pretty good....
Mr. Miles continued his presentation:
The next item on there is the gross gaming revenue and you can see we initially were at 4.5 percent this year and now have jumped it up to 5 percent. This number does not include the April adjustment, the big 22 percent collection...because this was done before that information was available.
What we did in the out years is we did not change our dollar estimates...in gaming because...gaming has tracked erratically. We're now comfortable with how it's tracked. It's an unstable situation with foreign gaming and of course with the California economy, as Judy [Matteucci] has already mentioned, there is some impact on effect on gaming, particularly in southern Nevada. So we were uncomfortable with increasing revenue projections for gaming in the out years and left them at the same dollar amounts we had previously projected in January.
The nonrestricted slots is simply an adjustment the [State] Gaming Control Board provided to both us and the Budget Division, a new estimation of the recalculation of the slots to be affected by the new casinos opening this year in Las Vegas.
We already collected nearly $l million this year so we increased our estimate this year but left it at $750,000 in the out years. The quarterly games is like the non-restricted slots. The [State] Gaming Control Board has given us a recalculation based upon the effect of the new casinos coming in.
Casino entertainment tax is not tracking well, it's currently at about 3.4 percent. Originally we had it at 5.5 percent. Our projection in May was to drop that down to 3.7 percent for the year, costing about $400,000 this year. As you project that across the out years, it reduces the income by $430,000 and $460,000 in l994 and l995, at the same growth rates that were originally in our projections.
Insurance premium tax is very difficult to project...but we have averaged 6 percent growth for the first three quarter collections through the year. We've assumed a 4 percent in the final quarter and for this year that would mean about a $l.4 million increase over our original estimate. There are some refunds going out in that particular area also.
In the second year, we're using Formetrics, Inc., projections for growth and insurance premium tax of 3 percent the first year, and 3.4 percent the second year. However, in the first year, we are reducing it by nearly $l million because of some prior year payments that were made in this year and make this year look very good that we won't get next year. So we had to reduce that for that one-time adjustment.
Liquor tax doesn't grow very well, and our projection is we're dropping it back to what the projections the Department of Taxation made in May so that there would be no growth this year and slight growth in the next 2 years. But that reduces our revenue projections by $300,000-plus annually.
Senator Rawson queried:
...We're talking about $30 million with the insurance premium tax [advance payments] and yet we're seeing $70 million come in, so what rate is that set at, the advance payment, is it just half of the tax?
Mr. Miles explained, "That's just an acceleration of collection of the tax. The tax rate would not change and it would affect Fiscal Year l995 only."
Ms. Matteucci explained to Senator Rawson, "That is a prepayment and collects two quarters of the money earlier than it would, but there is no rate change at all."
Senator Coffin asked why gross gaming was not accelerated instead of the insurance premium tax.
Ms. Matteucci answered:
The insurance premium prepayment actually puts it on the same footing as gross gaming. Gross gaming has to prepay quarterly on its revenue....The last tightening up of our current revenue stream, as we see it, was an insurance premium. The mining tax is prepaid, they have to estimate it prior to it being collected....
Mr. Miles continued his testimony:
Business tax, we originally projected 3 percent growth at $48.4 million. It's tracking right on through the third quarter at $49 or a little above $49 million, which is actually 4.4 [percent] so we've adjusted our revenue up slightly and used 3 percent employment growth in the 2 out years. Right now I think employment growth is exceeding 3 percent in the State of Nevada.
Athletic Commission fees, the agency is estimating $l.5 million this year so we increased our estimate to that and we've increased in the out years to $l million a year. We went back and looked at the last 4, 5, and 6 years and they have been...above $l million in each of those years.
Interest income is where you take the hit because of the lack of funds available to invest and also the reduction in interest rates nationally. Interest income is down. We dropped it this year to the agency's estimate which reduces ours by $l.6 million. We've adjusted slightly into the out years upward because hopefully with the betterment of the economy there will be additional funds to be invested, at slightly additional funds invested, in the out years....The bottom line is the changes in May we would recommend to our revenue estimates is an increase of $2.8 million in this fiscal year, but the 2 out years are virtually unchanged from our revenue projections in January on an overall basis. I'll show you how that stacks up with the Budget Division estimates.
Mr. Miles distributed Exhibit J, Summary Comparison of General Fund Revenue and Reversions for Fiscal Years l993, l994, and l995, Budget Division and Fiscal Analysis Division, to the committee and testified while referencing that document. He highlighted the comparisons of the estimates:
What we tried to do is compare our revenue estimates revised in May to the revisions presented to the joint committee by the Budget Division for all 3 fiscal years, l993, l994, and l995.
The basic revenues in the Budget Division proposal for FY l993, total $959,321,l95. In FY l994, $l,0l6,760,09l, and in FY l995, $l,082,781,ll6. The Fiscal Division revenue estimates, based on existing law, is $96l,892,859 this year, $999,402,864 in FY l994, and $l,039,l02,699 in FY l995. That does not include any of the proposals made in the Governor's budget for changes in tax policy, which are listed in the next section.
The first one is the Slot Route Operators. It doesn't affect this year. The revised Governor's revenue estimates would tax that at $9.9 million, but you've got to subtract the next line, which is the current flat tax that would go away, so it's a net of about $7.9 million per year. That was not in the original budget....
The next is the Sales Tax Commissions. The bill you heard Monday, that would make a l percent constant commission for the administrative cost to collect sales tax for local governments. The next one is the Insurance Premium Tax....In FY l995, it's a $30,300,000 increase available in that year if that legislation is approved.
The next item is Real Estate License fees that were recommended in the Governor's budget. That bill has been approved....
The Telemarketing Licenses in the revised revenue projections of the Governor, they dropped that $l.7 million that was anticipated down to $667,569, as I guess what probably might happen, based upon legislation being drafted at the time.
The statewide Cost Allocation plan, there is going to be more money available from that which we did not have in our revenue estimates, so just to adjust to that, we add that to our side.
Senator Raggio referenced Exhibit J, and asked Mr. Miles to explain why the Governor's New Revenue Proposals were shown as zero under the Budget Division's analysis.
Mr. Miles stated:
They are shown as zero under the Budget Division because they are already in their revenue projection, which is reflected in the number above it....
Now we can make an apples-to-apples comparison and that's that line called Adjusted Totals, the differences are shown on the line called Revenue Difference. You will see in this year, we are about $2.5 million higher than the Budget Division; in FY l994, they are about $4.4 million higher. In FY l995, they are about $l.l million higher. Below that, we add the Controller's Adjustment and Estimated Reversions. The Estimated Reversions for the Budget Division this year were $l25,748,851. That is largely the budget reductions implemented during the fiscal year. We've displayed the number in two pieces: the $129,941,l78 in reversions, but controller's adjustments are basically primarily tax refunds that go back to taxpayers for whatever particular reason and they come out of the General Fund. That number was up to $3.2 million in May....I've added another $500,000 to that because it is currently up to about $3.7 million this year in refunds going back....We've both used $l3 million for ongoing reversions in FY l994. We've used $l3 million in FY l995. There was another revenue proposal in the revised revenue estimates from the Budget Division to revert the Mining Trust Fund monies, 5 percent of the mining tax goes into a trust fund, that was to revert that in the second year of the biennium....
Senator Raggio asked how much does that total over the biennium.
Mr. Miles replied about $800,000 annually. Continuing, he explained:
...I also believe they [Budget Division] added the potential reversion from the purchasing fund for that amount.
Ms. Matteucci responded in the affirmative.
Mr. Miles continued his testimony:
The difference between revenues and reversions...all within the General Fund, we would be $3.5 million higher this year, they would be $4.4 million higher next year and $5 million higher in the following year except that $l.2 million from the purchasing fund won't materialize.
Since sales tax is a major portion of these revenue estimates and the DSA gets sales tax of its own, the only way to really compare overall revenue estimates is to throw that LLST [Local School Support Tax] line in there. There is a difference between the sales tax revenue projections of the Budget Division and our division. There is a reverse difference...in gaming projections. But sales tax, there is an impact in the General Fund and an impact in the school fund, both. So the difference in sales tax in the school fund is $9,260,573 in the first year and $l6,8l3,571 the second year. But you net all of that out and...our revenue estimates would be $3,509,991 higher this year, $4,8ll,530 next year and $ll,736,795 the following year. I think the $l5 million you keep hearing is the addition of the $4.8 million and the $ll million from l994 and l995.
Mr. Miles distributed Exhibit K, Senate Committee on Finance Statistics, and provided a status report to the committee:
This displays all three fiscal years, l993, l994, and l995....The fund balance coming into FY l993, which was down to $33 million. The next line is the revised revenue estimates of the Fiscal Division that we just talked about. In l994, l995, recall those barely changed from our January estimates. The one in the current year did change a little bit, by about $2.8 million.
The reversions are the reversions anticipated from the DSA and then the net reversions from the state agencies. I say net there, because we've taken out the controller's adjustment of $3.2 million....Then we list the revenue adjustments, and these are primarily the adjustments proposed by the Governor...and I've included the slot route operators in here. The original proposal, which is $3.3 million per year gain. The sales tax commissions is the...bill you just heard. The insurance premium tax in the second year....The real estate licenses, and that bill has passed this house. Telemarketing, this is the original proposal of the revenue to come from telemarketing. The reason we've got that in there is because when we set this up, we go from the original Governor's budget, then we make adjustments to that. As long as we're consistent doing that, we will reflect an accurate situation....
Senator Raggio commented, "In that situation, we anticipate the net amount, if the bill passes, will be in the neighborhood of $750,000 to $800,000 over the biennium."
Mr. Miles responded in the affirmative. He continued:
The next is the cost allocation adjustment we made to bring ours up to the Budget Division's estimate. The next is the DSA/LSST difference. Because all the appropriation differences are shown below, the only thing showing here now is the difference in the LSST between the original budget proposed by the Governor and our revenue estimates, that's $9 million in the first year and $l8 million in the second year. That's not the same as that $l5 million because there were other things included in that $l5 million, the difference is in the General Fund. This is exactly the difference between the LSST in the Governor's budget and what we would project under our revenue estimate.
The next section is the appropriations. Those are the Governor's original proposed appropriations for each of the years. The first year, obviously, was the one done in the l99l session. Then there are appropriation transfers, primarily the school fund money moving between years.
Then there's the one-shots proposed in the Governor's budget, the capital improvements, the restored fund balances, the bill you heard this morning, supplemental appropriations which was almost all the DSA and then the cost of the l993 and l995 legislatures. You have appropriated $6,52l,000 which we understand will take the legislature through June 30. Because that includes a spend-down of the legislative fund by about $l million, we've included the cost of the next session of $8 million.
The next line is the finance budget actions and that's the net appropriation actions taken by this committee. It's largely reflective of what the Assembly Committee on Ways and Means has done also. But in this year, you have spent above what the original Governor's recommendation was, $700,000. In the next year, $6.4 million above and $l0.2 million above. That's the net of your budget closing actions and actions to bills to date...through the joint meeting you had on Tuesday. You may recall the air operations for the [Division of] Forestry airplane, that's all in there now....
Senator Raggio asked if those statistics also include the failure to pass the prison early release program and the "add on to the prison budget as well as the addition to the DSA and the unbundling of some of the reorganization."
Mr. Miles responded in the affirmative and added:
More detail of that is included on page 3. Your current fund balance coming out of this year, if you were to stop today, would be $55 million today going up to $56 million next year, but dropping to $42 million in the out year. There are some other actions that haven't taken place yet.
We then list potential revenue adjustments that may occur....A.B. 87, increasing the uniform commercial code fees at the secretary of state's office. That bill...has gone to the Governor. That bill will increase some fees to the General Fund.
ASSEMBLY BILL (A.B.) 87: Increases fees for filing or providing certain commercial documents and provides for searches of certain records for name of secured party.
...Revert the mining trust funds....I've displayed this as $800,000 a year. A.B. 314 is the Division of Water Resources fees. The budget for the Division of Water Resources was closed bringing back a number of deleted positions.
ASSEMBLY BILL (A.B.) 314: Makes various changes regarding appropriation of public waters and increasing certain fees assessed by state engineer.
The next item is A.B. 387 which has passed the assembly and this house which would...increase fees on limited partnerships....
ASSEMBLY BILL (A.B.) 387: Makes various changes concerning corporations and similar entities.
One item that is going to occur...is the treasurer's asset sale is expected to net $4 million-plus. We've plugged in $4 million here....The 22 percent take in April, everything being equal and we get 5 percent in the last month of this fiscal year, results in a bump of $4.8 million in gaming receipts this year. In our revenue estimates, we are not putting that into our model and projecting that out into the next 2 years. We've held our gaming revenue projections constant in Fiscal Years l994 and l995.
Senator Coffin interjected:
...We talk about the Governor's net increase in the budget...you show $6 million and $l0 million. What do we reconcile that to? We've got a number of adjustments, the largest of which is the camps [prison honor]. If we didn't have the camps in there, these figures would be without brackets. It would be about zero. The vote on the education budget, add on to the General Fund, conforms fairly closely to the Governor's budget, one would say.
Mr. Miles responded:
It is a net of hundreds of transactions here. You had them going both ways. If nothing else happened and you added that money to the DSA, you would have been above the Governor's budget....
Senator Coffin commented, "The deficit we've created here is the camps, basically."
Mr. Miles disagreed and explained, "I can't say that because it is the sum total...of 450 budgets, not all of which are General Fund."
Turning to the second page of Exhibit J, Mr. Miles continued his presentation:
This was a list of other potential changes to the budget. Initially this had 40 or 50 items on it. They have all turned to zero because they have been taken care of one way or the other in your budget actions and are netted into that $6 million and $l0 million number of budget actions on the front page. So as they occur, we take them off of here because they are in that other number.
There is still a few things out there hanging....The Rehabilitation Division, when the final administrative assessments are calculated, we anticipate it will cost the General Fund a little bit more money because some of those budgets that now have to pay those adjusted assessments are General-Funded.
...Telemarketing, that's the net reduction to the initially anticipated amount of revenue. If you subtract these numbers, from the numbers on the front page for Telemarketing, you get to that $780,000 number over the biennium.
Then there is the request from the Budget Division. That budget hasn't been closed for $120,000 additional overtime in FY l995.
Judy [Matteucci] mentioned it...that the forestry division has a reversion of reimbursements on fire fighting coming back. There was a reduction in statutory contingency of $l40,000 and we've shown here a reduction of $860,000, the amount that will be needed to be appropriated to Interim Finance Committee to maintain the fund at $8 million. As Judy [Matteucci] mentioned, that money is expected to summer probably in August.
A.B. 406, which you just heard, is $563,000 higher than it was in the initial budget presentation in January, that's a typical situation because they've spent money during the course of the session. In order to get back to their desired levels, they need a little additional money....
The additional tax refunds, as we mentioned on the yellow sheet [Exhibit J] that shows the $3.2 million in tax refunds going back, we're now estimating that at $3.7 million. So that further reduces the numbers of the amount available this year. S.B. 506, that's the initial bill that would appropriate $l,020,000 to Churchill County.
SENATE BILL (S.B.) 506:Makes various changes relating to supplemental city-county relief tax.
Then S.B. 507, which you just heard yesterday for [Nevada] Racing Commission expenses that are unpaid at this point in time, if you add all of those actions into the budgets, your potential fund balance...would jump up to over $62 million this year. Remain at about $65 million in the first year of the biennium and then drop to about $52,800,000 in the second year of the biennium. Everything on these two pages came true.
SENATE BILL (S.B.) 507:Makes appropriation to Nevada racing commission for certain operating expenses.
Senator Raggio reminded the committee the goal is to maintain
a $55 million fund balance for the second year.
Mr. Miles clarified, "The law requires the Governor to submit a budget using a minimum 5 percent fund balance, which would compute to about $55 million."
Senator Raggio clarified the testimony by Mr. Miles indicates the fund balance is a result of proposed action and is based upon anticipating revenues from tax advances.
Senator Glomb commented, "In essence, there is no additional revenue based on all of these projections to restore any of the cuts in higher education or human resources that took place these last 2 years."
Mr. Miles answered:
In this presentation, it runs off of the original Governor's budget and then just puts in things that have happened to date or could happen to date that we are aware of.
Senator Glomb expressed her displeasure at allocating $l6 million to keep the prison honor camps open.
Senator Rawson asked what was the possibility of raising an additional $2.1 million to bring the fund balance up to $55 million.
Senator Raggio stated:
...The insurance premium tax advance payment has to pass both houses. Secondly, some revenue has to be received from the anticipated new proposed slot tax. Those are built into this recap. Thirdly, there may be some adjustments that may be added to FY l993 dependent upon additional revenue from any of the major tax sources. At this point in time, however, this is all we can reflect on these closing sheets.
Senator Rawson commented:
To pursue what Senator Glomb is mentioning here, if we wanted to, as of this point, balance prudently, we would either cut $2 million or raise $2 additional million than what we are proposing if the insurance premium tax did not meet muster in one of these houses, then we would have to cut $32 million, or raise $32 additional million. In any scenario you want to come up with that either takes revenue away or adds more money to this has to be adjusted into it somewhere.
Senator Raggio opined a balanced budget is in sight if the insurance premium advance payment is authorized by both houses.
Mr. Miles referenced the last page of Exhibit K and explained:
The last page is simply a little bit more detail....It details the bills you've passed that were different from what the Governor had proposed and your net budget actions and closings as well as whatever other adjustments that might have occurred out there....
Senator Callister joined the meeting at l0:05 a.m.
Senator Raggio reopened the hearing on A.B. 406.
SENATOR COFFIN MOVED TO DO PASS A.B. 406.
SENATOR RAWSON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio reopened the hearing on A.J.R. 35:
SENATOR JACOBSEN MOVED TO DO PASS A.J.R. 35.
SENATOR GLOMB SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN VOTED NO.)
* * * * *
Senator Raggio closed the hearing on A.J.R. 35 and reopened the hearing on A.J.R. 36:
SENATOR COFFIN MOVED TO DO PASS A.J.R. 36.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio closed the hearing on A.J.R. 36 and reopened the hearing on A.B. 634.
SENATOR COFFIN MOVED TO DO PASS A.B. 634.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio closed the hearing on A.B. 634 and reopened the hearing on A.B. 113.
SENATOR JACOBSEN MOVED TO DO PASS A.B. 113.
SENATOR RAWSON SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS GLOMB, COFFIN AND CALLISTER VOTED NO.)
* * * * *
Senator Raggio closed the hearing on A.B. 113 and opened the hearing on Senate Bill 277.
SENATE BILL (S.B.) 277: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 INDEFINITELY POSTPONE S.B. 277.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio closed the hearing on S.B. 277 and opened the hearing on Senate Bill 299.
SENATE BILL (S.B.) 299:Makes appropriation to School of Medicine of University of Nevada System.
SENATOR RAWSON MOVED TO INDEFINITELY POSTPONE S.B. 299.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio closed the hearing on S.B. 299 and opened the hearing on Senate Bill 333.
SENATE BILL (S.B.) 333:Establishes fee for dealer's report of sale for special permit that enables buyer of motor vehicle to operate motor vehicle for l0 days.
SENATOR O'DONNELL MOVED TO INDEFINITELY POSTPONE S.B. 333.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio closed the hearing on S.B. 333 and opened the hearing on Senate Bill 334.
SENATE BILL (S.B.) 334:Increases compensation to state for collecting certain sales taxes.
SENATOR RAWSON MOVED TO DO PASS S.B. 334.
SENATOR COFFIN SECONDED THE MOTION.
Senators Glomb and Callister expressed their objection to passage of the measure.
Senator Coffin asked Ms. Matteucci if passage of this measure would affect the actions taken by the Senate Committee on Finance .
Ms. Matteucci responded in the affirmative and added:
...Yes, if you do not pass it, you will have to come up with $3.3 million of additional cuts or new revenues in l994, and $3.5 million in FY l995.
THE MOTION CARRIED. (SENATORS GLOMB AND CALLISTER VOTED NO.)
* * * * *
Senator Raggio closed the hearing on S.B. 334 and opened the hearing on Senate Bill 386.
SENATE BILL (S.B.) 386:Makes various changes relating to administration of Nevada Tahoe regional planning agency.
SENATOR RAWSON MOVED TO INDEFINITELY POSTPONE S.B. 386.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio closed the hearing on S.B. 386.
There being no further action to come before the committee, Senator Raggio adjourned the meeting at l0:25 a.m.
RESPECTFULLY SUBMITTED:
Dee Crawford,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
??
Senate Committee on Finance
June 17, 1993
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