MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
June 18, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:20 a.m., on Friday, June 18, 1993, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Bob Coffin
Senator Diana Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
GUEST LEGISLATORS PRESENT:
Robert M. Sader, Assembly District No. 32
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Birgit K. Baker, Program Analyst
Marion Entrekin, Committee Secretary
OTHERS PRESENT:
Myla C. Florence, Administrator, Welfare Division, Department of Human Resources
Nancy F. Angres, Chief Deputy Attorney General, Department of Human Resources
Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration
Lorne J. Malkiewich, Legislative Counsel, Legal Division, Legislative Counsel Bureau
Stan Warren, Representative, Sierra Pacific Power Company
Greg Battaglia, Manager, Customer Accounts, Sierra Pacific Power
Company
James P. Hawke, Director, Office of Community Services
Mike Meizel, Administrator, Buildings and Grounds Division, Department of General Services
Joe Johnson, Representative, Sierra Club
Richard S. Knapp, A.I.A., Chief of Design, State Public Works
Board
Senator Raggio opened the hearing by requesting that Senate Standing Rule 92 be suspended for the remainder of the session.
He explained this pertains to providing adequate notice to legislators and the public relative to bills, topics, and public hearings that come before committees. He said he has instructed committee chairmen to still provide whatever adequate notice can be provided until the adjournment of the 1993 session.
SENATOR JACOBSEN MOVED TO SUSPEND STANDING RULE 92 BUT AT THE DIRECTION OF THE CHAIRMAN INSOFAR AS POSSIBLE ADEQUATE NOTICE WILL STILL BE PROVIDED.
SENATOR GLOMB SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio opened the hearing for discussion of Assembly Bill (A.B.) 432.
ASSEMBLY BILL 432: Makes various changes regarding administration of state welfare programs.
Myla C. Florence, Administrator, Welfare Division, Department of Human Resources, introduced Nancy F. Angres from the Office of the Attorney General who will provide testimony and explain the provisions of A.B. 432 with the committee.
Ms. Florence advised the committee that a fiscal note provided by the division regarding A.B. 432 can be accommodated within their budget and will require no additional fiscal impact. She said the fiscal note can be disregarded.
Nancy F. Angres, Chief Deputy Attorney General, Department of Human Resources, stated she would testify in behalf of the Welfare Division. She said A.B. 432 is designed to clean up some provisions in the welfare administration chapter of Nevada Revised Statutes (NRS), delete obsolete provisions, and make the chapter comport with what is actual practice of the State Welfare Board and the Welfare Division.
Ms. Angres began her testimony before the committee by explaining in detail Exhibit C, a section by section overview of A.B. 432.
In response to testimony by Ms. Angres that indicated the State Welfare Board adopted a rule that federal mandated requirements need not come before the board for approval, Senator Raggio asked how the State Welfare Board would then become aware of federal mandates.
Ms. Florence responded if the mandate would involve a significant change, that would become a part of her report before the State Welfare Board.
Ms. Angres continued her coverage of sections 9 through 26 reflected in Exhibit C.
Senator Raggio noted section 26 of A.B. 432 indicates if the United States Congress passes a law increasing federal participation in a Nevada public assistance program, the director may accept the increased benefits with the Governor's approval and the administrator may adopt federally required regulations as a condition of acceptance. He asked, "What if that requires state funding?"
Ms. Florence responded she would then have to come back during session in order to implement the programs since most of their budgets are precluded.
Senator Raggio noted that historically if a federal grant or money is involved, the agency comes before the Interim Finance Committee (IFC) to get approval for the augmentation.
Don Hataway, Chief Assistant Budget Administrator, Budget Division, Department of Administration, said there are still sections in Chapter 353 of Nevada Revised Statutes that control when agencies accept funds.
Ms. Angres concluded her coverage of Exhibit C, sections 27 through 44.
Senator Rawson said he has the impression the Welfare Division regards the proposed changes to A.B. 432 as minor ones whereas he believes them to be major changes. As far as the authority or power to modify the welfare plan, Senator Rawson said at one point the Governor could not legally direct the State Welfare Board to change the plans. He asked if A.B. 432 will change the balance in any way.
Ms. Angres said this bill did not intend to change the balance. She explained many of the state plans are federally mandated. There are also certain elements of the state plan that are optional, and these will continue to go before the State Welfare Board for approval.
Senator Rawson pointed out the state is mandated regarding certain elements of the Aid to Dependent Children (ADC) program. ADC could be handled through a fee for service method, managed care, and a number of different ways. He asked if the State Welfare Board will make that determination.
Ms. Florence answered the State Welfare Board would have the authority to deal with any discretionary ability of the agency. She said if the example Senator Rawson gave would require a state plan change it would have to go before the board.
Senator Rawson asked if this would go through as a ratification. He said up to this point a significant change could not proceed without the board directing the change.
Ms. Angres replied this would continue to be the case.
Senator Rawson said during the reorganization process earlier in the current session there was an attempt to take the State Welfare Board and make it advisory. He asked if this idea has been dropped.
Ms. Florence said she does not know if that idea has been dropped because she has not seen the final reorganization plan.
Senator Rawson said there is a fundamental question that he would like to have answered regarding the federal mandates. He asked:
Do we want to simply ratify everything that comes to us as a mandate or do we want to have the ability to still deal with issues. I have this feeling that as a legislative body we ought to have the ability to react to every mandated right. There are a lot of issues...we might be mandated to take Yucca Mountain...it is out of the welfare area. I would expect the Governor to turn out the National Guard and stand in front of it if there were the case. Just because it is a mandated program does not mean that we should say okay too.
Ms. Angres answered the problem is the division is in a program where they are accepting federal dollars.
Senator Rawson interjected, "I know there is a consequence but there should be some dialogue on those consequences."
Ms. Angres said the division still has that option. In fact in the past they have fought with the federal government about certain interpretations they have had that the division felt were in error. They will continue to fight those.
Senator Rawson asked:
Would you have an objection if we maintained or clarified here that regardless if we do it on the short term that every federally mandated program must become an issue that is decided upon by the legislature and the executive branch within a 2-year period. If we did that then everything that is mandated on us at least will get a public hearing and discussion.
Ms. Angres said there are two issues involved, one is whether or not the state wants to accept another program that contains mandates and the other is there are programs already in existence such as Medicaid, ADC, and Child Support Enforcement with federal mandates already attached.
As an example Senator Rawson said Medicaid is a program that has been foisted on every state yet Arizona has not accepted that. They opted out of that program and developed their own medical indigent program. Because of this they may well serve as a model to the rest of the country as the states solve some of their Medicaid problems. He believes it is healthy for states not to simply accept federal mandates because there may be better ideas available. Senator Rawson added he is afraid some of the changes to A.B. 432 may obligate Nevada into accepting federal funding and federal mandates whether the public would approve or not.
Ms. Florence commented this bill relates to changes made in federal regulations that can be adopted without having to go before the State Welfare Board.
Senator Rawson said there is also the possibility the division will get out-of-touch with policy and decision makers when there is no longer a hearing on changes. He asked if the division has made an allowance for this.
Ms. Florence reiterated any significant changes would be brought before the board as a matter of the administrator's report. She said that is part of the existing process with the State Welfare Board.
Senator Rawson referred to the changes proposed to section 40 of the bill as shown in Exhibit C. He said it appeared this would repeal major sections that deal with the purpose of the bill.
Ms. Angres said the reason for the repeal of the items reflected is instead of having specific definitions of state plans it is proposed to add one generic definition of state plans. She pointed out that all of the items shown as repealed will still be covered since section 41 will grandfather in all of the state plans.
Senator Raggio closed the hearing on A.B. 432 but stated since this bill was heard out of order to accommodate Ms. Florence's schedule, it would be reopened later in the meeting to accommodate those who want wish to testify.
Senator Raggio opened the hearing for discussion by legislative counsel of Assembly Bill (A.B.) 407, Assembly Bill 408, and Assembly Joint Resolution (A.J.R.) 26.
ASSEMBLY BILL 407: Authorizes use of alternative financing for retrofitting of buildings occupied by state or local governmental entities to make use of energy more efficient.
ASSEMBLY BILL 408: Requires establishment of program to track use of energy in buildings owned by state.
ASSEMBLY JOINT RESOLUTION 26:Proposes to amend Nevada constitution to clarify exemption from debt limitation of money borrowed to retrofit state buildings to make use of energy more efficient.
Lorne J. Malkiewich, Legislative Counsel, Legal Division, Legislative Counsel Bureau, said A.B. 407, A.B. 408, and A.J.R. 26 all came out of the IFC's subcommittee to study energy conservation. The subcommittee also worked with the legislative commission's building's subcommittee which considered retrofitting the legislative building.
Mr. Malkiewich first wished to address A.J.R. 26. He stated this is similar to some other measures proposing to amend the exceptions to the debt limitation amending Article 9, Section 3, of Nevada's Constitution. He said during the course of the energy conservation study it was suggested that retrofitting state buildings would save money and would reduce the need to tap into natural resources. Therefore, the retrofitting contracts were contracts for the benefit of protection and preservation of the natural resources of the state. A.J.R. 26 amends the exemption from the debt limits to clarify that the exemption for contracts to protect or preserve the property or natural resources of the state includes contracts for the retrofitting of state buildings to make use of energy in the buildings more efficient.
Mr. Malkiewich now turned the committee's attention to A.B. 407 that provides for the designation of energy retrofit coordinators by each of the three branches of state government to identify appropriate buildings and make recommendations to the State Board of Examiners for proposals to retrofit those buildings.
Mr. Malkiewich also stated A.B. 407 would authorize the use of alternative financing for periods greater than one biennium for energy conservation retrofitting of buildings owned or occupied by state government, providing the contracts are approved by the State Board of Examiners and that a $5 million limitation on the state's bonding capacity is not exceeded at any one time.
Mr. Malkiewich provided a section by section overview of A.B. 407 for the committee.
Senator Raggio noted in section 2 of the bill it appears to be mandatory for the Governor, the Supreme Court, and the legislature to designate an energy retrofit coordinator. In section 4 it appears to be permissive for local government. He asked if this was intentional.
Mr. Malkiewich answered he believed it was intentional. The designation of the energy retrofit coordinators at the executive branch level is to insure that all three branches would have a representative.
Senator Raggio asked if this would contemplate a new specific position to be created in each of the branches.
Mr. Malkiewich said it would involve the designation of an existing person. He pointed out a new position would have to be budgeted. He assumes what the legislature would do is designate someone within the administrative division that has expertise in the area.
In response to a question by Senator Raggio regarding the funding mechanism, Mr. Malkiewich said the way the contracts would be set up the agency would pay for its portion of the retrofit out of its utility budget. The idea would be instead of paying $1,000 per month on utilities they would be spending $900 a month on utilities and $100 a month on repaying the retrofitting. If they did not have the money in their budget to pay it, they would not be able to go forward with their contract. He explained the determination already made by the State Board of Examiners is that the amount of energy to be saved would likely justify the cost of the retrofit.
Mr. Malkiewich said A.B. 408 requires the chief of the Buildings and Grounds Division to establish an energy-tracking program to record and analyze energy consumption in state-owned buildings. He pointed out this goes hand-in-hand with A.B. 407 because the more information available on what kind of energy usage is provided the easier it will be to project whether or not sufficient savings can be generated through one of the contracts.
Stan Warren, Representative, Sierra Pacific Power Company, introduced Greg Battaglia, Manager, Customer Accounts, Sierra Pacific Power Company, who will testify concerning their support of the passage of A.B. 407.
Mr. Battaglia said the passage of A.B. 407 will eliminate a major roadblock to allowing the state and local governments to participate in the power company's incentive and financing
programs. His written testimony (Exhibit D) was read for the
record.
Senator Raggio commented:
I was on a legislative subcommittee which looked at this situation rather hard and long over a period of time, and we were very interested in the program. Where some of the concern arose, which you may want to address, is that the presentations were very informative....There is a cost in doing a study in any building that must be born by somebody. We need to know who would bear the cost of the study. Under your company's proposal how do you finance these projects? The main concern was a reluctance on the part of the expediting contractor to offer any guarantee for the representations that were forthcoming from the study as to the potential savings. I think that was the main concern of the people on the subcommittee. If you could enlighten us on some of that it may be helpful.
Mr. Battaglia said in reference to the payment for the engineering study, depending on the size of the project the Sierra Pacific Power Company will pay up to 80 percent of the cost of the study at no risk to the customer. The other 20 percent can be financed through the shared-savings program. In regard to risks involved, the Sierra Pacific Power Company will hold the contractor at risk for anything over a 5 percent deviation from what they predicted the savings were going to be.
Senator Raggio asked if the power company holds the contractor liable. He gave the example:
If over a period of time the state will save $200,000 and that is the basis on which the state enters into an agreement, what guarantees are there to the state that it will save something significant in that area.
Mr. Battaglia responded there is a detailed engineering study done by a registered professional engineer on the front end of the project to estimate what the savings are going to be. He said a contract is drawn up between Sierra Pacific Power Company and the contractor. The power company then enters into a contract with the customer. There is no contract between the customer and the contractor. The power company holds the contractor liable for 95 percent of their estimated savings and payment is withheld until the power company is satisfied with another engineering study following construction that the savings have been met.
Senator Raggio asked who guarantees the state if the savings are not realized.
Mr. Battaglia said it is a three-part risk. The contractor and the power company are at risk and the customer is partially at risk.
Senator Raggio said that is the part he is troubled about and asked how much the state would be partially at risk. He said:
If the state entered into an agreement with the understanding based upon a study that if we go through the financing arrangement we are going to save $200,000 over a period of time. We get to the end of that period of time and we haven't saved anything. What is our risk? $200,000? Because then we might as well not have entered into the program.
Mr. Battaglia said he could be assured the Sierra Pacific Power Company is not going to enter into a program that is going to put the customer at risk for $200,000 for the cost of that project.
Robert M. Sader, Assembly District No. 32, testified:
This is an important aspect of assurance. I appreciate the fact the power company may run its program a little differently but there is no problem and no question about guarantees in these contracts. They are readily available, they are often asked for...not always...it just depends upon how you do it. If you send out a Request for Proposal (RFP) that requires the bidding contractors to guarantee with a performance bond from an acceptable bonding company, you can obtain those bonds, you can require the bond and you can have a guarantee that the shared savings will be paid for by the insurance company if we do not get them....That is the contract price.
Senator Raggio said that was the issue that was raised during subcommittee hearings. At that time there was a reluctance to address the guarantee. He asked if this is something new that has been developed.
Mr. Sader said it is not new but usually the engineering estimates are of such quality that the customer does not want the guarantee because of an extra cost to the bond. He said if you want a guarantee you can get a guarantee and get the bond and they are available.
Senator Raggio said he hopes the cost of the bond is not the same as the amount of savings.
Mr. Sader said it raises the contract price which changes the formula for payback and that is a factor, but he did not believe the cost of a bond was out of line.
James P. Hawke, Director, Office of Community Services, said he supports the passage of A.B. 407, A.B. 408, and A.J.R. 26. He stated the Office of Community Services is interested and able to assist in the implementation of A.B. 408. They are prepared to issue a grant to the Buildings and Grounds Division in the amount of $10,000 to purchase the hardware and software they will need to implement the system envisioned by this bill. He also met with the regional director of the United States Department of Energy for this area and discussed the interest of the Office of Community Services in applying at the end of the current federal fiscal year for an unsolicited grant. Additionally, his office will be in a position to apply for some funding for the position envisioned by this bill which would pay the salary and operating costs associated with the position for 6 months.
Senator Raggio asked Mr. Hawke what position he was referring to.
Birgit K. Baker, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, said the fiscal note for A.B. 408 submitted by the Buildings and Grounds Division requests a half-time staff level assistant.
Mike Meizel, Administrator, Buildings and Grounds Division, Department of General Services, said the position would be utilized to enter information into the software.
Senator Raggio noted most of the costs associated with A.B. 408 would be expended from the budget of the Office of Community Services. He asked Mr. Meizel if that is all the money it would take to implement this bill.
Mr. Meizel replied the Buildings and Grounds Division has already implemented the program for the buildings within their control. He pointed out it is a pilot program for at least 2 years to get it started.
Senator Jacobsen asked if a comprehensive record of monthly utility bills are maintained and if utility usage has ever been tracked for comparison purposes.
Mr. Meizel said they do track utility usage by the month and also keep track of the average minimum-maximum temperatures for fuel and power consumption purposes.
Ms. Baker referred the committee to Exhibit E, an abstract by the Subcommittee on Energy Conservation Measures. She stated the measures proposed by A.B. 407, A.B. 408, and A.J.R. 26 will implement some of the recommendations made by the subcommittee.
Ms. Baker said the energy-tracking system suggested by A.B. 408 has been modeled after the Washoe County School District's tracking program, and the subcommittee has recommended the state establish a similar program for documentation of the state's utility expenditures. One of the things envisioned from this program is that the tracking program will be used as a vehicle to assist the Buildings and Grounds Division as well as the State Public Works Board in establishing energy targets for the state as well as identifying buildings that would be candidates for the retrofit program proposed by A.B. 407.
Joe Johnson, Representative, Sierra Club, wished to go on record in support of the passage of A.B. 407, A.B. 408, and A.J.R. 26.
Richard S. Knapp, A.I.A., Chief of Design, State Public Works Board, said the State Public Works Board is in favor of the passage of all three of the aforementioned bills. They support energy conservation and are anxious to do all they can to work within the context of the provisions that are contained within these measures.
Senator Raggio closed the hearing on A.B. 407, A.B. 408, and A.J.R. 26.
SENATOR JACOBSEN MOVED TO DO PASS A.B. 407.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN AND SENATOR GLOMB WERE ABSENT FOR THE VOTE.)
* * * * *
SENATOR JACOBSEN MOVED TO DO PASS A.B. 408.
SENATOR CALLISTER SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN AND SENATOR GLOMB WERE ABSENT FOR THE VOTE.)
* * * * *
SENATOR CALLISTER MOVED TO DO PASS A.J.R. 26.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN AND SENATOR GLOMB WERE ABSENT FOR THE VOTE.)
* * * * *
After determining there would be no further discussion regarding A.B. 432, Senator Raggio asked for a motion regarding this bill.
SENATOR RAWSON MOVED TO DO PASS A.B. 432.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN AND SENATOR GLOMB WERE ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio opened the hearing for discussion of Senate Bill (S.B.) 387.
SENATE BILL 387: Establishes additional requirements for financial institutions in which public money may be deposited.
Discussion ensued between the committee members regarding the proposed amendments to this bill.
Senator Raggio said he would like to have additional time to consider S.B 387 since it appears several changes may be required to the amendments or a letter of intent would have to be considered.
Senator Raggio closed the hearing on S.B. 387 and opened the meeting for discussion of Senate Bill (S.B.) 464.
SENATE BILL 464: Authorizes the state to contract for restoration of old state library building.
Senator Raggio said he detected the consensus of the committee was this would not be the appropriate time to contract out for the
restoration of the old library building which would result in a charge against the total debt of the state.
Senator Coffin said he was not aware of a consensus.
Senator Raggio clarified that Senator Callister and Senator Jacobsen met with representatives of the State Public Works Board and the consensus at that time was not to undertake either a plan presented by the private sector or a plan on a state bond for $5 million or $6 million in view of other bonding requirements.
Senator Jacobsen said he is concerned if the project to restore the old library building is not acted on the building will deteriorate.
Senator Raggio requested S.B.464 be held pending action on the capital improvement project.
Senator Raggio asked for a motion on Senate Bill (S.B.) 507.
SENATE BILL 507: Makes appropriation to Nevada racing commission for certain operating expenses.
SENATOR O'DONNELL MOVED TO AMEND AND DO PASS S.B. 507 BY DELETING $63,413 AND SUBSTITUTING AN APPROPRIATION OF $61,413 FROM THE GENERAL FUND FOR FINAL PAYMENT TO CONTRACTORS AND VENDORS.
Senator Coffin asked if the $61,413 claim submitted by the racing commission as the total amount of debts owing contractors and vendors is comprised of legally and timely submitted bills according to legal counsel.
Senator Raggio said the Nevada Racing Commission agreed to send the explanations for their claim to the Budget Division. Also, the claim would have to be approved by the State Board of Examiners before an appropriation would be made.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN VOTED NO.)
* * * * *
Senator Raggio opened the hearing for discussion of Senate Bill (S.B.) 511.
SENATE BILL 511: Revises provision concerning program of accountability for public schools.
Senator Raggio suggested this bill be held an additional day pending the receipt of information from the Fiscal Analysis Division.
Senator Raggio requested the committee review Senate Bill (S.B.) 385.
SENATE BILL 385: Increases required balance of prison revolving account.
Dan Miles, Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, said the Assembly Committee on Ways and Means amended section 1, page 1, by deleting lines 3 and 4 and inserting "it is hereby created" and removing the words "small prison bills".
SENATOR O'DONNELL MOVED TO CONCUR WITH ASSEMBLY AMENDMENT NO. 810 TO S.B. 385.
SENATOR RAWSON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio adjourned the meeting at 10:15 a.m.
RESPECTFULLY SUBMITTED:
Marion Entrekin,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
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Senate Committee on Finance
June 18, 1993
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