MINUTES OF THE
SENATE COMMITTEE ON FINANCE
Sixty-seventh Session
June 24, 1993
The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 10:25 a.m., on Thursday, June 24, 1993, in Room 223 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Bob Coffin
Senator Diana M. Glomb
Senator William R. O'Donnell
Senator Matthew Q. Callister
STAFF MEMBERS PRESENT:
Dan Miles, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Birgit Baker, Program Analyst
Dee Crawford, Committee Secretary
OTHERS PRESENT:
Lorne Malkiewich, Legislative Counsel, Legislative Counsel Bureau
Bjorn Selinder, Churchill County Manager
Sam McMullen, Representing Washoe County Manager's Office
Mary Walker, Director of Finance, City of Carson
Kirby Burgess, Representing Clark County
Bob Hadfield, Nevada Association of Counties
Janice Wright, Deputy Executive Director, Department of Taxation
Judy Matteucci, Director, Department of Administration
Senator Raggio opened the hearing on Senate Bill (S.B.) 506.
SENATE BILL 506: Makes various changes relating to supplemental city-county relief tax.
Exhibit C, amendment to S.B. 506, (Exhibit C - Original on File in the Research Library) was distributed to the committee. Lorne Malkiewich, Legislative Counsel, Legislative Counsel Bureau, provided an overview of the amendment to S.B. 506 as outlined in Exhibit C.
Bjorn Selinder, Churchill County Manager, testified provisions developed in the amendment assist Churchill County because it would allow the county to remain in non-guaranteed status.
Senator Coffin asked, "Do you still want to reduce your property tax...this year...because you've reduced the income to Washoe County in this distribution?...."
Sam McMullen, Representing Washoe County Manager's Office, responded, "...We made a commitment to do that, and we're going to live with that commitment...."
Senator Callister asked for affirmation there will be no General Fund appropriation to the measure.
Mr. Malkiewich responded in the affirmative.
Senator Callister mentioned:
The actual target number that is being sought through some redistribution of SCCRT [Supplemental City-County Relief Tax] monies has been reduced from $l million to about $600,000 to Churchill County.
Mr. Malkiewich responded:
...I do know that has been reduced and what is replacing it is the fact that Churchill County is being allowed to continue the taxes it imposed to make up the revenue it lost from l99l to l993.
Mary Walker, Director of Finance, City of Carson, offered the response, "The total amount is $588,000."
Senator Callister queried how that determination was made.
Ms. Walker said:
We went back to the l99l, all of our boxes of data we had back then, and retraced the steps as if the error had never occurred, versus the error being in there. The net amount over a 5-year period, because it compounds over that 5 years, is $588,000.
Senator Callister noted Churchill County was given the opportunity to participate in that recalculation and asked for further details.
Ms. Walker responded:
The $588,000 is being made up through negotiations with the different counties. What we are suggesting here in the bill is that Washoe County would basically pay for 3 of the 5 years of the error. First off, that's $378,000, however, that leaves an extra $2l0,000 and that was proportionately shared to all the exporting counties. The net effect is, Carson City would be paying $7,000...Churchill County would pick up $588,000, Clark County would pay approximately $l44,000, Elko County would pay $7,500, Eureka County would pay $3,400, Humboldt County would pay $4,500 and Washoe County would pay approximately $422,000.
For the record, Senator Callister asked:
Is it accurate to state the $l44,000 for Clark County, at least, is certainly less expensive than were we to turn Churchill County into a guarantee, in perpetuity into a guarantee county, I would add....But if we just use the experience of the last 2 years, how much per year would that have cost Clark County if Churchill [County] moved to the guarantee category?
Ms. Walker answered:
In our figures, what we've looked at is basically they are at a break-even standpoint the first year. But Churchill County has been going through a fairly significant decline in its economy. What we are estimating as exporters, in the long run, is it would be better for us to have them as an exporter rather than a guarantee because then there won't be so much subsidy on the guarantee side. So we're looking at it for the long run.
Mr. McMullen interjected:
There were numbers...that I saw at one point that estimated the potential guarantee amount for this coming year at approximately $250,000. If that is true, then 65 to 70 percent of that would have been Clark County's share, 20 percent would have been Washoe County's share...so it is functionally the equivalent of what you would have paid at least in the coming year.
Senator Callister insisted, "Yes, but it would have gone on forever, it would have been a guarantee county for perpetuity, and I think that's the key."
Kirby Burgess, Representing Clark County, responded, "...It is felt this is a win-win scenario. It favors everybody in the best interest of the state."
Senator O'Donnell joined the meeting at l0:45 a.m.
Senator Raggio asked if the Nevada Association of Counties has agreed with the measure.
Bob Hadfield, Nevada Association of Counties, testified:
This provision of the bill is part of the bill that came out of the NACO [Nevada Association of Counties] bill draft that was unanimously approved by the counties in July l992 and reaffirmed in November l992. I have had discussions with all of the counties since this began, and they all agree going to the actual prior years is the only way to run the formula....
Mr. McMullen offered the information:
We informed the Clark County representatives that this would be heard at 8:00 a.m. this morning. They scheduled meetings accordingly in Las Vegas and had to fly out on the l0:30 a.m. flight. I want that clear for the record that they waited around as long as they could, and they stayed here all day yesterday helping us work that out....
Janice Wright, Deputy Executive Director, Department of Taxation, testified:
In order to implement a sales tax increase, there needs to be an appropriation in this bill for the Department of Taxation, as its budget is already closed. I provided information to the NACO representatives...to outline those charges. The Department of Data Processing does all the programming for the Department of Taxation. If we're going to increase the sales tax on October l, l993, the department, last session, for A.B. l04 implementation, charged us $l0,000 for the programming change to increase the sales tax one-quarter percent.
ASSEMBLY BILL (A.B.) 104
OF THE SIXTY-SIXTH SESSION: Makes various changes relating to taxation.
Continuing, Ms. Wright avowed:
We are also going to, in this bill, have to decrease the sales tax one-quarter percent at the end of the term. The amendment has slightly different language in it than the original bill and unfortunately I just saw that this morning. The times will change, but the programming still needs to be enacted. That will be $20,000 in data processing programming charges, and it's not within the ability of the Department of Taxation to do that.
In addition, the postage is going to cost $l5,200, assuming a l9-cent bulk rate mailing charge. We have 40,000 registered accounts. We are going to have to notify the tax payers to increase the sales tax in approximately 9 counties. Those tax increases are also going to have to be noticed to decrease the amount when that sales tax comes off....We are going to have to reprint the sales tax returns because on each line of the sales tax return, it specifies a sales tax rate per county and those will have to be changed. We have requested $37,200; I've outlined those costs to NACO and I would like to provide that information to this committee.
When you closed the budget for the Department of Taxation, there was no appropriation to do the changes. The charges we are going to incur from the Department of Data Processing and the [State] Printing Office and the postage are not covered in our existing budget. We had worked with NACO and originally discussed maybe taking out sales tax increase as an option. If they had taken that out, then the department would incur no cost. But because that is still one of the options to allow the counties to increase the sales tax, then we are going to have to have the money in order for us to do it.
Birgit Baker, Program Analyst, testified that when the budget of the Department of Taxation was closed, there was some question as to the level of data processing funding considering the extension of the $500,000 one-shot appropriation that was in a separate bill, as well as the amounts that were built in for maintenance of the new automated tax collection system. The subcommittee had questioned at the time if there might be excess money in the data processing category. Ms. Baker noted the Department of Taxation had worked with the Department of Data Processing and they had not been able to give a firm figure. Ms. Baker felt, based on those closings, there may be some flexibility in the department's data processing budget to accommodate S.B. 506.
Additionally, in looking at the department's operating budget as a result of the combined tax audit proposal and some of the closing adjustments recommended by the subcommittee, Ms. Baker indicated there may also be some additional postage funding available in the budget.
Senator Raggio stated:
From what Mrs. Baker is indicating that there is some enhancement in there to deal with this, I think if we gave the Department of Taxation the opportunity to come to the Interim Finance Committee for this kind of an amount, if you find...that you don't already have this, that should be sufficient for your purpose....It doesn't affect this bill, that's my point. I think you have enough in your budget that you ought to be able to accommodate this. I don't think you're here trying to destroy this bill, that would be unwise in view of how this whole thing started in the first place. I suggest we give you the authority to come before the Interim Finance Committee if you find you don't have in your budget this kind of operating expense. That would be my suggestion. Can you handle that?
Ms. Wright responded:
Yes, we can. The Department of Taxation did receive an appropriation last session in A.B. 104 [of the Sixty-sixth Session] for $l8,000 to accomplish this. However, that amount only covered increasing the sales tax, there was no subsequent decrease....
Senator Raggio closed the hearing on S.B. 506.
SENATOR RAWSON MOVED TO AMEND AND DO PASS S.B. 506 WITH A LETTER OF INTENT TO ALLOW THE DEPARTMENT OF TAXATION TO APPROACH THE INTERIM FINANCE COMMITTEE FOR ANY ADDITIONAL REVENUE NECESSARY FOR IMPLEMENTING THE REDUCTION OR INCREASE OF THE SALES TAX.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Exhibit D, Closing Sheet dated June 24, l993, (Exhibit D - Original on File in the Research Library) was distributed to the committee.
Senator Raggio asked for committee introduction of Bill Draft Request (BDR) S-2168 which would extend the effective date of Assembly Bill 407 with respect to the energy savings retrofitting to delay the bonding authority until March l, l995.
ASSEMBLY BILL 407: Authorize use of alternative financing for retrofitting of buildings occupied by state or local governmental entities to make use of energy more efficient.
BILL DRAFT REQUEST
(BDR) S-2168: Delays effective and expiration dates of Assembly Bill 407 of this session.
SENATOR GLOMB MOVED TO INTRODUCE BDR S-2168 AND RECOMMENDED TO DO PASS A.B. 407 AS AN EMERGENCY MEASURE.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Senator Raggio recessed the meeting at ll:00 a.m. and reconvened the meeting at l:40 p.m.
Department of Industrial Relations - Page 373
Birgit Baker, Program Analyst, reviewed the adjustments to this account as outlined in Exhibit D. She recommended restoration of the management analyst position because the Department of Business and Industry Administrative budget does not contain positions for administrative functions as was originally envisioned. Ms. Baker said the Department of Business and Industry Purchasing Assessment will be used to fund the new director's office of the Department of Business and Industry. The adjustment to delete the transfer to data processing offsets part of the microcomputer specialist position, she noted. The transfer to the budget office will be used to fund the position of budget analyst.
Continuing, she reminded the committee, the agency was originally designated to be merged with the Department of Insurance. They will now be two separate divisions, therefore the quality assurance unit placed in the Insurance Fraud budget was removed in other actions taken by the Senate Committee on Finance in closing that budget.
Addressing the additional enhancement for the computer network system, Ms. Baker explained the agency feels with its responsibility in maintaining the data base and statistics, they would like to complete their network system which was started during the last legislative session. Ms. Baker reminded the committee that Senate Bill 7 of the Sixty-sixth Session, provided $140,000 to start the network system. "This $l86,000 will allow them to complete the network between the two offices in the north and south," she proclaimed. In summary, she explained the Assembly Committee on Ways and Means closed this budget in the same manner as reflected in Exhibit D.
SENATE BILL (S.B.) 7
OF THE SIXTY-SIXTH SESSION: Makes various changes relating to industrial insurance and other rights of employees.
SENATOR GLOMB MOVED TO APPROVE THE BUDGET AS RECOMMENDED BY STAFF AND OUTLINED IN EXHIBIT D, PAGE 1.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAWSON WAS ABSENT FOR THE VOTE.)
* * * * *
Enforcement for Industrial Safety - Page 378
Ms. Baker explained reorganization savings were originally placed in this budget for the director and management analyst. Because this agency is not being merged with the Department of Insurance, this program will require a program coordinator as well as management analyst for statistical reporting. Therefore, the reorganization savings would be reversed, she pointed out. The transfer to the Department of Business and Industry is to fund the new director's office. The agency has requested $20,000 in each year of the biennium for contract services due to an anticipated increase in hearing activities as related in the fiscal note for Senate Bill 316, she explained.
SENATE BILL 316: Makes various changes to provisions governing industrial insurance.
SENATOR GLOMB MOVED TO APPROVE THE BUDGET AS RECOMMENDED BY STAFF AND OUTLINED IN EXHIBIT D, PAGES 4 AND 5.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS RAWSON AND COFFIN WERE ABSENT FOR THE VOTE.)
* * * * *
Preventative Safety - Page 382
Ms. Baker referenced page 6 of Exhibit D and explained the adjustments to expenses. She explained the reorganization savings was originally included in this budget for the program coordinator. With the primary emphasis of the new safety program, it was recommended this position be restored. Referencing the fiscal note associated with Senate Bill 316, Ms. Baker said the agency indicated in order to implement the mandates of S.B. 316, they would need additional positions.
Senator Raggio expressed his opinion the Governor's concerns should be accommodated by approving this work program.
SENATOR RAWSON MOVED TO AUGMENT THE BUDGET BY $350,000 IN EACH YEAR OF THE BIENNIUM WITH THE REQUIREMENT THE AGENCY REPORT TO THE INTERIM FINANCE COMMITTEE ON OR BEFORE MAY 1, 1994, REGARDING DISPENSATION OF THE FUNDING AS WELL AS EFFECTIVENESS OF THE PROGRAM; THE REVENUE AUTHORITY FOR THE SECOND YEAR OF THE BIENNIUM WILL BE CONDITIONAL UPON APPROVAL BY THE INTERIM FINANCE COMMITTEE APPROVAL.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS GLOMB AND CALLISTER VOTED NO. SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
* * * * *
SENATOR O'DONNELL MOVED TO APPROVE THE BUDGET AS RECOMMENDED BY STAFF AND OUTLINED IN EXHIBIT D, PAGES 6 THROUGH 10.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
* * * * *
Mine Inspection - Page 386
Ms. Baker reminded the committee at the time the agency testified there was a question whether the Federal Mine Safety grant would be received, and she announced the grant will be secured for FY l994. The Budget Division allocated $l6,000 in anticipation the grant may not be received, therefore, staff recommendation was to remove the $l6,000 and replace it with the Federal Mine Safety grant funds.
SENATOR RAWSON MOVED TO APPROVE THE BUDGET AS RECOMMENDED BY STAFF AND OUTLINED IN EXHIBIT D, PAGE 11.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
* * * * *
Nevada Attorney for Injured Workers - Page 455
Ms. Baker pointed out transfers were made from this budget to the Department of Business and Industry Administration to support the director's office. In response to S.B. 316, the agency submitted a fiscal note, she stated. However, comments by the Department of Administration indicated the estimates in the fiscal note appear to be excessive in relation to current staffing levels and therefore were not approved for recommendation. She stated:
What the budget office did on the assembly side is they will take a look at the Nevada Attorney for Injured Workers statistics and will determine whether or not there really is a need for additional positions. Through the Hearings Reserve budget, which was closed the other day, the agency can come to the Interim Finance Committee with the Department of Administration approval, for additional positions. I think the problems with this particular agency and fiscal note was that the statistics seem to be inconsistent. The comparison is made to FY l989 and FY l990, and the agency has been given several positions since that time. So I think the budget office felt they wanted to review those statistics to determine what the true growth was.
Senator Glomb noted the attorneys in this agency are paid at a lower pay scale than attorneys employed by the State Industrial Insurance System (SIIS) and Office of the Attorney General.
Senator O'Donnell opined:
What this office is, is an office paid for by the employer to represent the employee against the system designed to help and rehabilitate the employee. So her office basically represents the injured worker against the system and the system's attorneys....I can't support it. It shouldn't be done, it shouldn't be this way and if you're going to get private counsel, you should get private counsel and go through the system that way.
Senator Rawson opined, "It certainly drives the cost up."
SENATOR CALLISTER MOVED TO APPROVE THE BUDGET AS RECOMMENDED BY STAFF AND OUTLINED IN EXHIBIT D, PAGE 13.
SENATOR GLOMB SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR O'DONNELL VOTED NO. SENATOR COFFIN ABSTAINED FROM THE VOTE.)
* * * * *
State Industrial Insurance System - Page l652
Ms. Baker distributed Exhibit E, Budget Closing Action dated June 24, l993, (Exhibit E - Original on File in the Research Library) to the committee. She testified the closing recommendations restore the SIIS Base budget as requested by the agency, to implement the combined tax audit proposal and increase SIIS audit coverage from 47 percent to 50 percent, to restore the vocational rehabilitation counselor and nurses for placement back to the claims team structure, and to reflect the revised cash flow projections presented to the Senate Committee on Commerce and Labor and Assembly Committee on Labor and Management as a result of reforms approved in S.B. 316.
Continuing, Ms. Baker stated in development of the closing recommendations and meetings with the agency, SIIS testified before both money committees that the agency's requested items, reflected under enhancement category 799, were actually maintenance items and requested the committee's consideration in approving those items. The agency also requested the premium income, investment income, claims expense and claims reserves be reflected in the Executive Budget as informational items only.
Ms. Baker stated the Assembly Committee on Ways and Means closed this budget in the same manner.
She concluded in compromise to the tax audit proposal that was approved for the Department of Taxation budget, meetings were conducted with SIIS representatives. She said originally the Governor's recommendation was to eliminate all 39 agency field audit services positions. "However, they are in the same situation as the Employment Security Department in that those positions perform functions other than field audit functions," she pointed out. She concluded:
The compromise is the agency will give up 6 of their premium audit positions and the Department of Taxation will do the number of audits that were approved in the combined tax audit proposal, which will also allow SIIS to increase their audit penetration from 47 percent to 50 percent. That's how we arrived at the number of audit positions to be abolished effective October l, l993.
SENATOR RAWSON MOVED TO APPROVE THE BUDGET AS RECOMMENDED BY STAFF AND OUTLINED IN EXHIBIT E.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
SIIS Rehabilitation Center - Page l657
SENATOR O'DONNELL MOVED TO APPROVE THE BUDGET AS RECOMMENDED BY THE GOVERNOR AND OUTLINED IN EXHIBIT E.
SENATOR RAWSON SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
* * * * *
Capital Improvement Projects - Page A27
Mr. Dan Miles, Fiscal Analyst, Legislative Counsel Bureau, distributed Exhibit F, Schedule of Capital Improvement Projects for l993-l995, (Exhibit F - Original on File in the Research Library) and explained the material is a combination of approvals by the Senate Committee on Finance and Assembly Committee on Ways and Means. Mr. Miles provided an overview of the exhibit material.
Senator Jacobsen referenced page 5, Exhibit F, project M and H, regarding construction of a pre-engineered 960 square foot steel building to house a restored locomotive in Virginia City. It was suggested that authorization not be given until determination could be made regarding the ownership and responsibility of the locomotive. The joint subcommittees suggested the project not go forward unless built on state-owned property, it was pointed out.
SENATOR JACOBSEN MOVED TO APPROVE THE CAPITAL IMPROVEMENT PROJECTS, SEPARATE FROM THE CAPITAL IMPROVEMENTS PROJECTS FOR THE UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA, AS OUTLINED IN EXHIBIT F; TO INCLUDE A LETTER OF INTENT THE FUNDING AUTHORIZATION WILL NOT BE AWARDED UNTIL DETERMINATION IS MADE REGARDING THE ENTITY RESPONSIBLE FOR THE LOCOMOTIVE HOUSED IN VIRGINIA CITY; AND TO INCLUDE THE STIPULATION THE PROJECT BE BUILT ON STATE-OWNED PROPERTY.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
SENATOR O'DONNELL MOVED TO APPROVE THE CAPITAL IMPROVEMENT PROJECTS FOR THE UNIVERSITY AND COMMUNITY COLLEGE SYSTEM OF NEVADA AS OUTLINED IN EXHIBIT F.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS GLOMB AND RAWSON ABSTAINED FROM THE VOTE. SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
National Guard Educational Benefits - Page l727
Senator Raggio explained the Assembly Committee on Ways and Means restored this budget and added $45,000 in appropriations in each year of the biennium.
SENATOR RAWSON MOVED TO CONCUR WITH THE ASSEMBLY COMMITTEE ON WAYS AND MEANS.
SENATOR O'DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
Verification of Insurance - Page l346
Senator O'Donnell stated the Department of Motor Vehicles and Public Safety desires to retain a major portion of their reserve in the amount of $l million to effectuate verification of insurance. Senator O'Donnell explained the Assembly Committee on Ways recommended $l50,000 be left in reserve. Senator O'Donnell recommended leaving $l million in the reserve.
SENATOR O'DONNELL MOVED TO ADJUST THE BUDGET BY LEAVING $1 MILLION IN THE AGENCY RESERVE ACCOUNT.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Raggio opened the hearing on Assembly Bill 386.
ASSEMBLY BILL (A.B.) 386: Revises provisions of Senate Bill 97 of this session concerning management of solid waste.
SENATOR O'DONNELL MOVED TO AMEND A.B. 386 TO INDICATE A TAX IS NOT LEVIED WHEN PURCHASING A NEW VEHICLE WITH EXISTING TIRES ON THE VEHICLE.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR CALLISTER WAS ABSENT FOR THE VOTE.)
* * * * *
There being no further information to come before the committee, Senator Raggio adjourned the meeting at 3:00 p.m.
RESPECTFULLY SUBMITTED:
Dee Crawford,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE:
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Senate Committee on Finance
June 24, 1993
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