MINUTES OF THE
SENATE COMMITTEE ON GOVERNMENT AFFAIRS
Sixty-seventh Session
April 12, 1993
The Senate Committee on Government Affairs was called to order by Vice Chairman Sue Lowden, at 2:00 p.m., on Monday, April 12, 1993, in Room 227 of the Legislative Building, Carson City, Nevadaa. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Sue Lowden, Vice Chairman
Senator William J. Raggio
Senator Dean A. Rhoads
Senator Thomas J. Hickey
Senator Leonard V. Nevin
Senator Matthew Q. Callister
COMMITTEE MEMBERS ABSENT:
Senator Ann O'Connell, Chairman (Excused)
STAFF MEMBERS PRESENT:
Caren Jenkins, Principal Research Analyst
Tanya Morrison, Committee Secretary
OTHERS PRESENT:
Bob Hadfield, Executive Director, Nevada Association of Counties
Larry Beck, Chairman, Washoe County Commission and President, Nevada Association of Counties
Roberta Skelton, County Commissioner, Elko County
Dave Humphrey, Chairman, Douglas County Commission
Marv Teixeira, Mayor, Carson City
Wayne Cameron, County Commissioner, White Pine County
Ray Williams, Chairman, Lander County Commission
Wade Barton, Chairman, Esmerelda County Commission
Dave Ayoob, Chairman, Pershing County Commission
Dick Carver, Chairman, Nye County Commission
LeRoy Etchegary, Vice Chairman, Eureka County Commission
Thalia Dondero, County Commissioner, Clark County
Tom Grady, Nevada League of Cities
Dave Humphrey, Vice President, Nevada Association of Counties
Denell Hahn, Director, Clark County Social Services
Ande Engleman, Lobbyist, Nevada Press Association
Howard Barrett, Nevada Taxpayers Association
Tom Tatro, Acting Administrator, State of Nevada Purchasing Division
Larry Osborne, Executive Vice President, Carson City Chamber of Commerce
Ray Bacon, Executive Director, Nevada Manufacturer's Association
Kevin Brazell, President, Hydrotech Corporation
David Howard, Reno Sparks Chamber of Commerce
Denny Weddle, Chairman, Las Vegas Chamber of Commerce
Vice Chairman Sue Lowden opened the meeting on Senate Bill (S.B.) 381.
SENATE BILL 381: Requires specified additional source of revenue for local governments when new or increased program or service is required.
Bob Hadfield, Executive Director, Nevada Association of Counties spoke to the committee on S.B. 381. He stated:
Madam Chairman and members of the committee, we appear before you today on Senate Bill 381 which addresses a very important issue with county government as I am sure with the state government and all other local governments. Today in the audience we have county commissioners from throughout the State of Nevada as well as other city and local government people and concerned citizens who are interested in the issue of unfunded mandates. We have provided you with a booklet (Exhibit C) which is essentially a compilation of all of the materials that we had on the Question 8 campaign. Nevada's counties joined by cities and other entities undertook the Question 8 campaign after twice unsuccessfully appearing before the legislature asking for some assistance, some legislative help in ending the practice of unfunded mandates. It's a very difficult issue. We ourselves, in preparing for the Question 8 campaign did an unofficial telephone campaign of residents in all of our cities and counties and found that the public did not understand the issue. So we felt it was paramount to have a campaign which attempted to bring the issues of unfunded mandates before the public and to take this issue into the public policy arena because it is so important for all of us. We are here today united asking you to support S.B. 381 as a first step in addressing this very difficult issue. Within the booklet [Exhibit C, original in Research Library] we have provided you the election results, a NACO [Nevada Association of Counties] resolution passed in January reaffirming the association of counties support for a mandate measure to be passed by the legislature as well as letters to elected officials which will document our continuing desire to have this issue be a part of the mutual dialogue between state and local government and the public. And then we have also included all the press releases, pro and con, I might add and other documentation. This is something for your benefit so you will understand in depth why we undertook this campaign and what the results were. And with that I would like to turn it over to our president, Larry Beck, to elaborate a little bit more on the issue.
Larry Beck, Chairman, Washoe County Commission and President, Nevada Association of Counties, spoke to the committee on S.B. 381. He stated:
I want to thank the committee for giving me the opportunity to bring this issue before them. Over the last decade there has been an increase of directives from federal state government to local governments without funding to pay for these directives. These are commonly known as unfunded mandates. With competition for funding at all levels of government on the rise, it is becoming more difficult for the cost of these unfunded mandates to be absorbed by local government budgets. Nevada's counties and cities have become increasingly concerned that this practice is continuing at an alarming rate and proposed legislation in 1989 and again in 1991 to end the practice at the state level. With no success in these past years, Nevada's counties decided to take this concern to the public. Question 8 on the November 3, 1992 election ballot asked the public whether the legislature continue the practice of mandating county governments to provide new or expanded services without also providing the funding. While Question 8 was advisory only, it was felt a strong no vote would encourage lawmakers to properly fund programs they felt were important enough to mandate a local government to provide. In addition, we believe that the public rejection of this process would assist our congressional delegates in addressing this problem on the federal level [Exhibit D]. In Washoe County, some of the unfunded mandates that we have to deal with fall under the category of emergency medical services, maternal and child health, home health services, public health nursing, AIDS programs, sexually transmitted diseases, air pollution control, rabies and plaque surveillance, food service sanitation, liquid waste disposal, general environmental health and an immunization program. As a county commissioner I have found that dealing with a constrained budget and whenever an unfunded mandate comes down, I have found myself having to go to the areas of libraries, parks and child care services in regard to recreational programs as well as community development programs where I have got to take the funding out of these areas of service to provide for that mandate that comes down to us. Our concern over unfunded mandates is not primarily on the state level. We also recognize, as state elected officials, that you have federal mandates that come down to you. It is kind of like passing the buck and it seems at the county commission level is where the buck stops. With this concern is one of the main reasons why we stepped forward because it was not an issue of NACO, this was a grassroots issue from our constituents during the budget times. The constituents called up and would say they had a pothole problem which they want addressed, we want a recreational program in Sun Valley, we want more parks equipment and so forth for the regional parks as well as the neighborhood parks. And throughout the county and throughout the state we had an outcry and that is what caused us to take this action. This action is unprecedented in regard to going before the voters of this state and coming back with an 82 percent overall of people who voted no on unfunded mandates. In our audience we have several commissioners and at this time I would like to take the opportunity to have them identify themselves and give the percentage of their counties that voted no on unfunded mandates.
Roberta Skelton, County Commissioner, Elko County, stated her county passed no more mandates by state or federal at 87 percent and she strongly advised the committee to take S.B. 381 under advisement and hopefully for a do pass to protect their interests. She gave the committee members copies of written testimony, see Exhibit E.
Dave Humphrey, Chairman, Douglas County Commission, told the committee Question 8 passed in his county by 90 percent. He stated he is also First Vice President of NACO and they support S.B. 381.
Marv Teixeira, Mayor, Carson City, told the committee the voters of this community voted 85 percent against unfunded mandates in the community as a whole and he added his board of supervisors strongly supports S.B. 381.
Wayne Cameron, County Commissioner, White Pine County, stated the residents of his county voted 89 percent in opposition of unfunded mandates and he asked the committee to support S.B. 381.
Ray Williams, Chairman, Lander County Commission, said the Lander County residents voted 89 percent no for unfunded mandates and he stated they still support that position.
Wade Barton, Chairman, Esmerelda County Commission, stated his county residents voted 93 percent in favor of no more unfunded mandates.
Dave Ayoob, Chairman, Pershing County Commission, told the committee his county voted 93 percent in favor of no unfunded mandates.
Dick Carver, Chairman, Nye County Commission, stated his county voted 86 percent for no unfunded mandates.
LeRoy Etchegary, Vice Chairman, Eureka County Commission, said his county voted 87 percent on the unfunded mandates.
Mr. Beck told the committee Washoe County voted 87 percent against the unfunded mandates.
Thalia Dondero, County Commissioner, Clark County and also a member of NACO, told the committee Clark County voted 78 percent against unfunded mandates. She stated:
I represent NACO on the National Board of County Commissioners and I speak to that today because we are studying the same issue on a national basis and we are studying health issues, mental health issues, welfare issues, prisons and all of the environmental issues that are mandated and it is kind of that trickle down theory that comes down to the local level and where we know no one wants any more taxes. I think that is probably the strong statement of the day because we all agree to that, but we have to find out how to fund what we have got to fund and how we are going to do it with the money we have. Some of the things that happen on a local level are really very difficult to imagine when you are either at the state or federal level and mental health issues are probably a very good example where some of the sub-critical day care or homes for mental health people were closed, that meant that those people went on to another day care center who had no opportunity to have the medication. These are neighborhoods so there are problems within the neighborhoods because they don't have that kind of care. So, those are some of the issues that I think that as a state legislator, you have to look at as to what happens when you go home and how these issues are taken care of. And where I have no prepared statement today, I hope you consider all of us have to go home and live in our neighborhoods and what happens and how we take care of our prisons and some of the mandates that come down as to what we do with the prisoners and what prisoners are let out on the streets because we don't have jails to house them all and these problems just go on and on. But, I think together as a local government official and a state government official and the federal government official, we ought to learn how to spend those tax dollars wisely at our home base.
Senator Rhoads asked what happens if the state is mandated by the federal government to pass a law which affects the counties or cities or causes them to do something.
Mr. Hadfield explained this is the precise reason NACO undertook the campaign. They realized it was not the counties against the executive branch, legislative branch or even the federal government, it was an issue about what NACO considers an unsound practice of government. That is why NACO is taking a very lead role with the United States Conference of Mayors, state governors and the legislative organization in Washington, D.C. to stop the practice at that level. Mr. Hadfield told the committee they recognize the state legislature is in a vise. He explained the counties are where they are because they are at the bottom. He emphasized the state legislature is put in an untenable position and that is why he went to Washington, D.C. recently and hand delivered the strongest letter he could write to the congressional leadership to stop the practice and he pointed out they used the Nevada vote as support. Mr. Hadfield stated they will support any activity and show up at any meeting where they are needed to participate to convince the federal government that they have to stop this. He explained they did have support from the congressional delegation in the last campaign and they understand the problem now. Mr. Hadfield emphasized Nevada's counties have no financial capacity left. He pointed out there are five counties which are already at the 364 cap in this state. He urged the committee if they must have a mandated program they really believe in or they are mandated by the federal government, he asks they identify a revenue source where the county can fund it, otherwise the counties will have to cut back, which essentially takes away the local authority and capabilities of local governments to make decisions for their constituents.
Senator Rhoads stated he would like to see a fiscal note on S.B. 381 before the committee takes any action on it.
Senator Nevin stated one of the problems in state government is that the Congress mandates them to carry a certain policy into the state or they will not get federal funds. But, he stated, realistically, down the road, they do not get the funds, because the state has already started their program and the federal government stops the funding and backs out of the situation.
Senator Callister stated:
I applaud you for this measure. As Senator Raggio or anyone who has served on the money committees can tell you, this is a constant source of extraordinary frustration for those of us who have to experience the pass-the-buck syndrome from the feds [federal government] when they mandate to us everything from the size of a prison cell to how many minutes a day of exercise they are going to get and the caloric content of their meals and the status of their mental health and have three lawsuits at present for noncompliance with some of those provisions, or attempting to come back into compliance. So it is kind of tough to fault the logic behind this. And I guess I really support it for a different reason though that leads to my question. That is this, this seems to me to suggest an awareness on the part of NACO and all of the counties of the obvious fact that sometimes we forget. We all share in that same revenue base. Sometimes because of the nature of the decision making process is rather expediently fragmented, that is to say, my county can come up here and ask for authority to go back and ask the electorate to raise their own taxes for more parks, more schools or more police. But, nevertheless, it is a two part question so we get to say, 'well we just authorized them to go to the vote of the public.' Yet when the question gets asked it is always that question in a vacuum, isn't it? It is not a question cast in terms of do you want to raise $40 million more, $50 million more in Clark County or whatever county, I am just using Clark County as an example because I've got you here. It is not just whether you want to raise that revenue for that motherhood and apple pie issue, because, as Bob [Hadfield] pointed out, you are at or near your caps, but, quite candidly my suspicion is if we added up those instances where we at the state level have compelled you by some mandate in terms of a policy change to spend money and then not funded it, I would suspect that is minuscule to the number of times the counties themselves have come to us and asked for consent to increase for special district funding purposes, their own tax burden. I guess I am just pointing out what I really like about this measure is it acknowledges, at least implicitly that we are all competing for the same dollars, whether the competition occurs at the county level or at the state level. But, I would hate to send the message, Bob, [Hadfield] and I invite your response to this with the commissioners, I hate to suggest the reason why fiscally the state finds itself on such hard times is because we keep passing along mandates to the counties willy nilly. I am kind of like Dean [Senator Rhoads], I would like to see a list of those and what the total dollar value of those is. What I think is the real reason we have inordinate demands which is because of growth. I invite your response on that issue and I am really interested, and maybe you can compel and provide the chairman with a list of those times in the past 4 years when that has happened. When we have mandated something and you have had to pay for it.
Mr. Hadfield stated he agreed with Senator Callister in that you cannot separate mandates from tax capacity. He stated he believes they can stop these mandates if the cities, counties and states join together and go to Washington, D.C. and tell them they will not put up with it any longer. He explained the problem is the tax capacity issue is never addressed. He stated these taxing problems have hit the counties harder and it is more of an issue to the counties because they cannot pass this down to anybody and they have no more tax capacity left in some of the counties to absorb anything without giving something up. Mr. Hadfield said he suspects if nothing is done about this, within a number of years the same thing will occur at the state level and it will eventually get to the point where they will have to address this issue nationally, but he argues it is a much better approach to be proactive. He feels S.B. 381 will enable the legislature to go on record as making a positive statement that this is a practice that must be stopped and he stated together the state has to work on the tax capacity.
Senator Callister stated he would like a dollar amount of the mandates over the past few years. He stated:
The public is going to support parks or whatever the option is. That is $50 million less revenue available to somebody somewhere, that got spent on something that was tough to say no to. Because the question got asked, yes or no, one issue, one time. It is that very enticing way to get the electorate to support something that seems easy to support, but that is money that is not available for juvenile parole, not available for some of the other programs which are just as crucial as are the parks, but the public does not get a right to vote, yes or no, should we increase our property taxes to fund juvenile parole and probation.
Mr. Beck stated that is the issue. He explained the concern is that more than 70 percent of Washoe County's budget is mandated services that they must supply. That leaves them roughly 30 percent to fund the different services that their county provides which are not mandated, such as parks, libraries and additional police protection. He told the committee it is common sense and good government to identify a revenue source for a mandate the county knows will be submitted to them.
Senator Raggio stated:
I feel compelled to make a couple of points. First of all I don't think anybody can argue with the generic purpose of this bill which is that a legislature should not mandate programs to the counties without providing the funding. Unfortunately, that is only part of the puzzle and I do support that part. I will indicate that straight up. As has already been alluded to, the legislature over the years has been cognizant of this concern. Going back to the tax shift, at that time the state removed itself, for intents and purposes from ad valorem taxes. We dedicated that, except for state debt service to the counties and local government and that was the real beginning of this manner of thought. That we would not be competing for the same taxes revenues that were available for local government. Unfortunately, as we continue to bond at the state level, of course we eat into that where we are now at something like 14 or 15 cents and a few years back we were at 2 cents. Otherwise, we have pretty much allowed that revenue to go to counties. The problem already has been identified that we become, if you want, the middle man in this whole situation and without a similar limitation on Congress, it becomes extremely difficult to abide by this type of constraint. Even if we pass this, and I will tell you I will support the passage of it, but even if we do that, how do we, and this is a question not necessarily designed for an answer, but how do we control what some of the senators have set forth as our basic problem. And that is, when Congress mandates these programs, we are compelled to do that. One way is, and I have a bill in this legislature which is Senate Joint Resolution (S.J.R.) 1 which proposes an amendment to the United States Constitution which would prohibit Congress from passing mandates onto states without providing the funding.
SENATE JOINT RESOLUTION 1: Calls for constitutional convention to prohibit unfunded federal mandates.
Now that seems simple enough and it ought to be supported except for those who, for whatever reason, can find 100 reasons why it shouldn't pass, they are going to be out there beating it to death, either because they don't like the procedure of calling for a constitutional convention. That is the device they use to defeat a balanced budget amendment which we almost got through the National Congress. But, there are always those who have their own interest that seem to fit somewhere else and it stops this kind of an effort. Secondly, this bill would only go partially to solve the problem. As some of you know better than those of us sitting up here, the state budget is often balanced on the backs of local government. Now you mention the device this session to transfer the obligation to handle youth parole over the counties and obviously that puts a heavy financial burden on the county. That is the executive branch in its budget recommending that. Now, obviously the legislation would be the one that would have to implement it. But, what about a situation in this budget where the Governor is suggesting that the counties pay an additional $8 million for the privilege of receiving the sales tax which they are otherwise entitled to. They are going to up that percentage from 1/4 to 1/2 percent to do the same service they are now doing for you which is merely sending you the money you are entitled to for sales tax. Now that wouldn't even be covered by this bill because that is not a new program or whatever, but that is the way of balancing a budget. So you are not going to be immune even if you pass this and there will be all kinds of budget directors and others who will figure out some way to get around this. So, I am not suggesting to you that you are going to be rid of the problem and as you may know, I asked for a list from you, I asked for a list from the budget director in the senate finance committee on just how much was being transferred directly or indirectly to counties and it is quite a good list. Some of the items I just referred to. So I am going to end by saying, and I don't expect you to answer because I don't think you necessarily have an answer, but until Congress has a mandate, which it will never impose on itself, I'll guarantee it, to not require mandate services or programs without providing the funding. Even if we pass this we are going to be extremely limited or even difficult to comply with this kind of a mandate and there will be ways to get around it. It won't be mandating services. We may mandate a service and provide the funds, but in order to balance the budget there will be something else that will be extracted, I guarantee, to do that. So, I'm going the long way of saying that it is a complex issue, no one can argue with the premise that is in this bill. We will support it undoubtedly, but I'm suggesting it's only a tip of the iceberg. It is an overwhelming problem that starts with Congress, with the President with Congress and it finds its way down where you say you have the final obligation. So, I guess if I'm asking anything; One, I would like you to support S.J.R. 1 which sends a clear message to Congress to put that mandate on itself. Secondly it needs to be addressed further in here that some other artifice isn't going to be resorted to make this meaningless.
Mr. Hadfield told the committee he sent a letter urging action on S.J.R. 1 prior to his trip to Washington, D.C. because it was his hope they could take it with them when they delivered their message to the federal leadership.
Tom Grady, Nevada League of Cities, told the committee on their last convention there was a unanimous vote by the Nevada League of Cities to support S.B. 381. He pointed out eventually they would get the word to the right people in Washington, D.C. that we cannot stand anymore mandates.
Dave Humphrey, Vice President, Nevada Association of Counties, stated he feels there is an underlying perception that this bill says if you pass something which will cost the counties money you are then required by this law to pay for it and he added he does not feel that is what is being said in this bill. He explained this bill states they must provide a means to fund mandates, which may mean the counties are given that option. Mr. Humphrey told the committee the counties would like to have the same option the state has, which is to provide at a local level the possibility of raising the revenues to pay for the mandate.
Denell Hahn, Director, Clark County Social Services, told the committee she is out there in the trenches daily and could give them a different perspective. She stated:
I think one thing that is important to note is how things are very interconnected in the human services area. We've just gone through some very poor economic times when people want more social services, more mental health services, more medical services than ever before and that is when no one wants to spend any money on health and human services. We've seen the state through some policy decisions and some budget problems having to cut back in many areas and I want to make sure everyone really understands the impacts that we've seen. Mental health is one of the areas that I think you have heard over and over again. My department sees 4,000 people a month for financial and medical assistance. That is walking in the door. The kind of cases we are seeing are people who can't get into medication clinics. It is an 8-week delay to get into medication clinics. As those of you who live in Clark County know, they have closed down mental health clinics in Paradise Valley, Henderson, West Side and North Las Vegas so everyone goes to West Charleston if they can find it. Now it is very easy for me to say when they come into my door that mental health isn't my job and filling their mental health prescriptions isn't my responsibility. But when you have some people who are so out of control they can barely convey to you what they want, you can't turn them away and you can't inflict them on the community or on themselves when they don't have their medication. The kind of people who are coming in, 2 weeks ago I had a woman who cleared the counter at my Nucleus Plaza office because she couldn't get her financial assistance that day. She had to get a rent voucher the next day. Now, she wasn't being denied, but she couldn't understand that she had to wait for a day. I have added two security guards, one at Nucleus Plaza, one at the main office at social service because we have daily incidents. The kind of case we are seeing, a lot of them is the absence of services and a lot of them is that they just take twice the amount of time for my social workers to deal with someone who is a mental health client. It is a very difficult thing to quantify this is a cause-effect relationship between mental health and the fact that it takes us 2 hours to go through an interview that would take 1 hour with another person. Removing a little bit from mental health, some of the other things that have happened is we are seeing people out of jails and out of prisons earlier and I did a down and dirty survey a few months ago and found that fully 25 people in our main office were coming right out of prisons. It used to be to get an early release you had to have a job, now the rule is you have to have a connection with a job locating agency and I qualify, so they send them right to social service and they have no money and no place to stay. They come in looking for financial assistance, which of course, we are the only agency that provides financial assistance. But, it does put in a new dimension in what we are being asked to do. We are also finding, because there are fewer people in state welfare, they have had a reduction in the number of workers processing ADC [Aid to Dependent Children] applications, they come into Clark County twice because it takes 3 weeks to get an appointment at ADC so we serve them one time and then after they get their appointment it takes 45 days plus 2 weeks for the check to get there so we are serving them twice when we once used to serve them one time. Those are the hard things to quantify the relationship. It is easier for me to tell you things like in the Medicaid Match Program we weren't paying the administrative overhead, but we now are because 3 months ago we were advised we must or they would terminate our contract and it does save us some money because of the federal match, but it is costing my budget between $75 and $100,000 a year that I don't have. We are a capped fund. A number of years ago we came to the legislature and asked for 10 cents on the property tax to help us carry our medical responsibilities. The county was willing to do that. It is not a very popular cause, but we did it and Clark County is at the 10 cents. Last year we also saw the state cut back in inpatient TB [tuberculosis] care. Inpatient TB care is on the rise because I think a lot of you have read that TB is on the rise. I think out of my budget, so far we have paid about $50 to $60,000 this year in inpatient TB costs. I have kind of just given you a little laundry list, but I think one of the things that is important is to know that when you see things happening on a state level they may seem insignificant, but when they get to the local level they really are major impacts. I should also point out to you that I am turning away 30 to 40 people a day because we can't see them the same day they come to see me. They come and they start waiting in our parking lot at 4 o'clock in the morning and unless they are one of those people we can fit in with the new application or unless they have an emergency, I can't see them. We have a staff of about, total in all of our programs we have over 150 employees, but we can't fit them in so I am turning them away unless they have children and they are homeless, unless they have an eviction notice in their hand or unless they have a medical emergency. Just being destitute with no money and no job and living in your car isn't a big enough emergency to get in the same day, so I think that is pretty dramatic. It is what I see everyday when I go to work. We open our doors at 7 a.m. and I would invite any of you to come visit us. I think what I would like to convey too is mandates don't always, they are not always that clear. Sometimes they are policy, sometimes they are law and sometimes they are budget decisions, but if they could also include some sort of impact statement maybe from those people who are actually providing the service it would be more meaningful when you do have to make those tough decisions.
Senator Callister stated he did not understand how S.B. 381 would help Ms. Hahn's agency.
Ms. Hahn stated the whole thing works together whether it is federal, state or local. She explained there are some things the state does well on a local level so when they have to make decisions or the federal government makes decisions there are some resources which go along with the responsibility. She pointed out Clark County has done a lot to help themselves. They have implemented a work fair program, they have reduced a lot of the assistance to different categories of individuals unless they do participate in a work fair program and she stated they are implementing some cost-effective things which may result in getting a little more mileage out of the dollar. She iterated the realization needs to be there, whether it is federal, state or local, which mandates they all work together.
Senator Callister asked Ms. Hahn if she was suggesting the lines of people which begin at 4 o'clock in the morning are there because of the mandate.
Ms. Hahn stated that is partially true because of some of the budget reductions. She explained if there are state services which are reduced because of policy or law, those services and the impacts on the local government must be considered.
Senator Callister stated:
I am not certain, that perhaps, and I'll just play the devil's advocate here in front of my dear friends the county commissioners, is the best place to spend $60 million in Clark County to help address those kinds of problems and the crime that it breeds and the additional cost in hospitalization that it breeds. Is the best place to spend it on parks and cops or should the county be participating in attempting to address those issues or if the county says no, that is a state obligation because the feds [federal government] mandate it, so the state has to fund it, then ought we not be saying to the counties, 'no, we're not going to give you authority to spend it on the nice smiley, happy, cheery things when there are real needs that would go unmet because we are not adequately funding you to respond to extraordinary, painful, unhappy demands' that as you just indicated yourself, and I appreciate your candor, are not things that politicians either at the county or state level want to address or raise revenue for because nobody likes them.
Ms. Hahn responded:
Well, obviously I think my responsibilities are the most important in the world or I wouldn't have the job I have, but I do have an appreciation for those other needs we have in our community that helps people not to become my clients in the future. Maybe if they had some better recreational programs and some better things to do with their time, they wouldn't fall into some of the detention services and some of the other child abuse programs that we see.
Senator Callister stated he was not sure parks or police would prevent mental handicaps or create jobs. He stated his question characterizes some of the things Senator Raggio was attempting to address. He explained part of the frustration on the state level is there are no easy decisions to be made. He stated under the present budget the legislators must decide who will get even less than they did 2 years ago.
Ande Engleman, Lobbyist, Nevada Press Association, spoke on S.B. 381, see Exhibit F. She stated the Nevada Press Association is concerned with the broadness of the language in this bill. She told the committee most of the newspapers individually have supported the counties as far as not having mandated services. She explained their problem with the language in the bill and the language on the ballot question covered everything from expenses involved at open meetings to expenses involved with providing public records. Ms. Engleman stated California has a similar statute which was passed in 1973 and they had to create a board of mandated practices to decide the difference between mandates, services and programs. She told the committee the Nevada Press Association's recommendation is if something is going to be voted as far as the mandated programs it be narrowed to some specific programs or some specific types of programs.
Vice Chairman Lowden closed the hearing on S.B. 381 and opened the hearing on Senate Bill (S.B.) 160, Senate Bill (S.B.) 162, Senate Bill (S.B.) 163, Senate Bill (S.B.) 167 and Senate Bill (S.B.) 169.
SENATE BILL 160: Clarifies authority of public bodies to advertise for bids on certain public works.
SENATE BILL 162: Requires consideration of certain previous criminal conduct in determining eligibility of potential contractor for certain state contracts.
SENATE BILL 163: Establishes requirements for awarding contract to private contractor for service provided by state agency.
SENATE BILL 167: Requires chief of purchasing division of department of general services to establish certain standards to be used by state agencies when purchasing new equipment.
SENATE BILL 169: Requires chief of purchasing division of department of general services to establish criteria for state agency to use in determining whether to contract with private contractor to provide services furnished by agency.
Senator Raggio stated:
Maybe I can make an overall statement for the committee. This week we will be hearing a number of bills, all of which are recommendations from the interim committee dealing with the privatization and feasibility of privatizing government services. Today we have five bills out of that series and it would help the committee if they would refer to the interim report which you all should have a copy of. I think to understand these measures you really have to take a look at that and read at least the summary of what the committee recommended. The committee did meet continuously during the interim. We had a rather good mix on the committee including Assemblyman Garner, Senator O'Connell, Senator Rhoads, Assemblyman Haller, Assemblyman Bache, Assemblyman Giunchigliani, Assemblyman Hardy and Assemblyman Lambert. I think we had six meetings and had extensive testimony on all aspects of privatization, if you want to use the term. The committee was quick to note that privatization, perhaps is a shopworn term and what we are talking about generally is the feasibility of contracting out services that are customarily or historically performed by government. This committee dealt primarily with the state level, but the same thing is true of course at other levels of government. The committee also was quick to determine that privatization is not the answer in all cases, it is not a panacea. The committee in the course of their recommendations which are set forth in the various bills that we will be considering this week, set down rather strict criteria to make the determination relying largely on the successes in other jurisdictions. For example, the State of Colorado has a workbook and sets out the various issues or criteria which should be looked at in determining whether or not any particular function should be contracted out. The committee in the course of its deliberations heard from a great many areas, both in the public sector and in the private sector. If you will note in your report, Reno, Sparks, Las Vegas chambers of commerce were very much involved. We received a great deal of input from associations such as Nevada Taxpayers Association, State of Nevada Employees Association and most of what they offered is contained in the report and surprisingly, for the most part, a majority of the recommendations for very diverse groups was accepted by the subcommittee or the interim committee. Representatives of various labor unions appeared and a great deal of this, as I said, is incorporated in the report. The final recommendations are the ones that were adopted by the committee, in most cases unanimously. In a few cases, and they are indicated in the report, there was a minority report. But, it would be helpful, as I said, for you to look at this report when you consider any of these particular bills. So I think with that premise the bills before us today are the ones I think received in all cases unanimous support. I would have characterized these as noncontentious, but after the discussion we had on the floor today on one that I thought was completely innocuous, I'm not so sure I would characterize it that way. I would make that as an opening statement. I will be happy to respond as we go along on any of these particular bills, but I think that pretty much sets the tone.
Senator Hickey asked if the concept behind privatization is to provide competition in order to deliver more efficient government service.
Senator Raggio stated it was much more involved than that, but simply put, the interim committee was attempting to draw on the experiences taken place in other jurisdictions. He explained it is not merely competition, it is an overall question of efficiency and cost effectiveness. He stated the committee made a recommendation there be a 10 percent savings if a private contractor was going to be considered.
Senator Hickey stated his concern is not the contracting, but the management of the contracting and perhaps the contractor becoming the same as the agency it replaced and using the political position it might have as that contractor.
Senator Raggio told the committee all of these concerns Senator Hickey has have been addressed by the interim committee.
Senator Nevin told the committee his concern is that state government has gotten into a lot of different businesses which could be better handled by private organizations, private groups or private business.
Howard Barrett, Nevada Taxpayers Association, told the committee he would like to talk about all of the bills in general. He stated they do support all of the bills and they had discussions with the committee and made recommendations. He explained the committee did not use choose to follow all of the recommendations, but they did have the chance to discuss them with the committee.
Senator Hickey asked Mr. Barrett to point out the different recommendations the committee did not utilize.
Mr. Barrett stated the one that came to mind was in S.B. 160, where it states the contracts of $100,000 do not necessarily have to be advertised and go to bid. He explained the Nevada Taxpayers Association felt this amount should be lowered down to $25,000. He added the new language which is added on lines 11 and 12 are an improvement over the existing law.
Tom Tatro, Acting Administrator, State of Nevada Purchasing Division, spoke to the committee on these bills and presented the committee with written testimony (Exhibit G).
Senator Raggio asked Mr. Tatro if the purchasing division would be able to conform to S.B. 167. Mr. Tatro stated he felt this was a process they would be able to accomplish.
Senator Nevin told Mr. Tatro if the purchasing division does adopt this regulation it should be drafted explicitly so there are no loopholes.
Senator Hickey asked Mr. Tatro about the fiscal note on these bills. Mr. Tatro stated the fiscal note which was prepared addressed the entire package of bills rather than addressing single bills. He explained they tried to look at the total impact on the purchasing division and being able to respond to the total package.
Senator Raggio asked Mr. Tatro to provide a fiscal note on each bill individually.
Larry Osborne, Executive Vice President, Carson City Chamber of Commerce, spoke on these bills. He told the committee his organization is in support of the concept of privatization and they have followed the interim committee. He stated they appreciate the efforts and performance of the state employees and he iterated their support of the privatization is not to be considered a reflection upon their abilities to perform state services. Mr. Osborne explained they are concerned about the increasing cost of government operations at the local, state and national level, therefore, they support and encourage the cooperative efforts of the private and public sectors to provide increased efficiency and productivity of services and to realize immediate and long-term cost savings by the issues of privatization.
Senator Hickey asked Mr. Osborne if he agrees with the criteria which is set up for the contracting.
Mr. Osborne stated the Carson City Chamber of Commerce can accept these criteria. He explained they have studied other issues, studied other states, where this has worked and where it has come from and he iterated they could support this.
Ray Bacon, Executive Director, Nevada Manufacturer's Association, spoke on privatization. He told the committee his organization followed the privatization hearings and they support, in particular, S.B. 163, S.B. 167 and S.B. 169. He explained in his private sector life before taking over the association, purchasing was one of the main areas he had in the private sector as a vice president of manufacturing. He stated in the private manufacturing sector there are only three areas to deal with which are labor, overhead and material cost. He explained when they took a look at total cost they discovered many of the things they were doing in their plant could be done cheaper and better by outside suppliers. Mr. Bacon stated his association believes there is substantial room for improvement in the government, especially in the purchasing sector.
Senator Hickey asked Mr. Bacon if he was in agreement with the provisions of S.B. 169.
Mr. Bacon stated he was in agreement with S.B. 169. He said these provisions follow what was done in Colorado, which was very effective. Kevin Brazell, President, Hydrotech Corporation, spoke to the committee. He stated he is in support of these bills and the privatization effort with some very minor changes. He told the committee he owns a business which maintains the culverts and pipelines under the roadways. He explained he was contracted by the Nevada Department of Transportation and various city, county and state agencies. He told the committee in 1986 he introduced this type of equipment to the Nevada Department of Transportation and up until 1990 provided for all their culvert cleaning needs statewide. At that point, the Nevada Department of Transportation bought their own equipment and basically went into competition with Hydrotech. Mr. Brazell met with the director of the Nevada Department of Transportation (NDOT) who told him they would still need his services, but then Mr. Brazell was told he could have 1 year in competition with the NDOT and at the end of that year they would evaluate which was more cost-effective. Mr. Brazell told the committee his company lost the contract even though, in his opinion, the cost analysis was superficial in the information it provided. He stated his company finally went head-to-head with the NDOT, but Hydrotech prevailed up to this date and the NDOT has agreed to go contract, statewide. He added NDOT has still not given in to selling their truck under the guise that Hydrotech can fully provide for their needs. He pointed out there was no cost evaluation done prior to the purchase of NDOT's equipment.
Mr. Brazell suggested a change on S.B. 163. He asked the committee to allow the contractor to get the 10 percent, because the contractors generate tax revenues back to the state and they are the ones to provide jobs and other revenue sources. He stated another concern was with the cost analysis and how it is evaluated. He requested the committee look at this and make sure it is done fairly for all involved. Another bill Mr. Brazell would like looked at is S.B. 167. He requested an item three be added to this to evaluate whether the service being provided by this equipment can be more efficiently provided by a private contractor.
David Howard, Reno Sparks Chamber of Commerce, told the committee they endorse this effort to economize. He explained they recognize privatization is not a total answer, but they believe it is a tool the state needs to have.
Denny Weddle, Chairman, Las Vegas Chamber of Commerce, stated his group had taken an active role in privatization and he added they have a 40 member privatization committee that has been working over a year and a half to find areas where they can save dollars for the cost of doing government. He explained this is a goal not only for the state, but for the counties and cities. He pointed out the City of Las Vegas
is extremely aggressive and has many, many successes to date, on privatization efforts. Mr. Weddle stated this is a way to save dollars and yet it provides expertise in the needed areas. He declared this endeavor should be aggressive and energetic.
There being no further business, Vice Chairman Lowden adjourned the meeting at 4:00 p.m.
RESPECTFULLY SUBMITTED:
Tanya Morrison,
Committee Secretary
APPROVED BY:
Senator Sue Lowden, Vice Chairman
DATE:
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Senate Committee on Government Affairs
April 12, 1993
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