MINUTES OF THE
SENATE COMMITTEE ON GOVERNMENT AFFAIRS
Sixty-seventh Session
May 10, 1993
The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 2:00 p.m., on Monday, May 10, 1993, in Room 227 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Ann O'Connell, Chairman
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
GUEST LEGISLATORS PRESENT:
Myrna Williams, Assemblyman, District 10
William A. Petrak, Assemblyman, District 18
STAFF MEMBERS PRESENT:
Lorne Malkiewich, Legal Counsel, Legislative Counsel Bureau
Caren Jenkins, Principal Research Analyst
Tanya Morrison, Committee Secretary
OTHERS PRESENT:
Terry Rankin, Insurance Commissioner, Department of Insurance, State of Nevada
William A. Bible, Chairman, State Gaming Control Board
Charlie Joerg, Lobbyist, Eureka County
Mary Ellen Anderson, Executive Director, Regional Development, Lincoln County
Ron Carrion, Economic Development, Eureka County
William E. Schaeffer, District Attorney, Eureka County
Joan Kerschner, Director, Nevada State Library and Archives
Karen Kavenau, Director, Department of Data Processing
Marvin Leavitt, Lobbyist, City of Las Vegas
Chairman O'Connell opened the meeting on Assembly Bill (A.B.) 90.
ASSEMBLY BILL 90:Restricts employment of certain former public officers and employees of executive branch of government.
Myrna Williams, Assemblyman, District 10, explained A.B. 90 to the committee members. She stated this bill expands the cooling off period beyond gaming control to those people who promulgate regulations. This bill would prohibit an individual to work for an industry which they regulated for at least 1-year following their regulation of that industry.
Chairman O'Connell asked Mrs. Williams if there was any particular set of circumstances that came up which initiated this bill.
Mrs. Williams stated there was no such incident, but for many years it has been discussed that regulators should have a cooling off period before going to work for a particular industry that they have been regulating.
Terry Rankin, Insurance Commissioner, Department of Insurance, State of Nevada, spoke in opposition to A.B. 90. She explained that her concern is the language in this bill does not reflect what Mrs. Williams indicates. She pointed out line 11 on page 1 where it states a business or industry, not the business or industry and she explained in her particular department she has some concerns about her employees. She told the committee she has approximately 40 employees within the Department of Insurance and about 10 or 12 are actively involved in the investigations or audit functions of different licensees in the department. Ms. Rankin stated her department frequently hires from the industry and those individuals frequently go back to the industry. She explained it is an advantage to her agency because they gain people who have that knowledge and many employees in insurance want to work for regulatory agencies for a while to gain additional knowledge themselves. She told the committee this bill does not specify the business. She further explained the 1-year cooling off period really does not indicate if it is in Nevada only or another state and she feels it should not be extraterritorial, but the bill does not indicate that. Ms. Rankin stated she is also concerned there is no appeal right from the decision of the ethics commission when this bill addresses affecting the livelihood and lives of these employees. She agreed this bill should apply to the commissioner and she understands that provision, but she does not feel the other employees down to program assistant II and III should be exempt.
Mrs. Williams explained this bill is clearly intended for the individuals whose principal duties are the formulation of the regulations. She pointed out on page 2 there is an escape clause through the ethics commission and she emphasized Nevada lawmakers cannot pass laws to affect people in other states. She stated this bill is not intended to reach a clerical or management II level.
Senator Lowden asked Mrs. Rankin where the appeals to the ethics commission would be filed.
Mrs. Rankin stated normally in the Administrative Procedures Act an individual can appeal to district court. She explained she is not familiar with what the normal procedures are in the Ethics Commission.
William A. Bible, Chairman, State Gaming Control Board, spoke in support of A.B. 90. He stated the first reprint of this bill does have some concerns in terms of definitions and he does not think it is real clear as to the levels of the employees. He pointed out he agrees with the principle of the bill. He explained there have been occasions within the control board where they have had agents who have been involved with the audit of a licensee who, maybe prior to the completion of the audit or shortly after the completion of the audit has gone to work for a licensee. He also explained he has had investigative staff who have conducted investigations on applicants for gaming licenses and maybe a month after that particular application has processed that individual will end up being an employee of the licensee in their corporate security department. He stated it is never known exactly when employment arrangements were discussed or employment opportunities were discussed. Mr. Bible stated he feels it is appropriate there be some form of cooling off period for employees that are involved in these activities. He did agree the bill needs some definition in terms of employees and the extent of the involvement. He stated the legislation needs to be looked at in terms of the type of involvement of the employee, the degree of involvement of the employee and whether or not it implies only managerial or a professional employees or includes clerical employees. Mr. Bible stated there is an override provision within the proposed bill and he feels that is appropriate.
Senator Raggio stated this is an issue the legislature has looked at for a long time. He pointed out there has already been limitations put on Gaming Control Board members and the Public Service Commission. He stated he would like some comment on the downside of this kind of legislation. He asked if this kind of legislation would have a chilling effect upon the ability of the state to acquire people in some of these positions. Senator Raggio stated most of the positions he feels affected would be those which require some special expertise. He explained in some positions there is limited ability to attract individuals with the kind of expertise and qualifications which are necessary. He continued stating if there is a law on all categories on these type of limitations he wonders if this will make it more difficult to attract well qualified individuals into these positions.
He added if the individual takes the job they know if they leave that position they will have a 1-year minimum hiatus before they can get back into an industry or an area in which they have their expertise.
Mr. Bible stated there would be some increased difficulty in recruiting individuals. He added there would be difficulty if some of the individuals were unable to obtain employment from another group of licensees who they are not involved with, perhaps leaving the jurisdiction and going to some other areas. He stated there are benefits of having individuals from regulatory agencies go to work for the industry in which they regulated. He explained these individuals understand the industry processes and the regulatory approach and the agency hiring them knows about the individuals' attitudes and skills, but he added, this has to be counterbalanced with the effect of a revolving door. He further explained if there is an agent or auditor who has had an extensive long-going contact with a licensee and the agent leaves their agency and goes to work with the licensee, there may be proprietary knowledge of some circumstance which may affect the licensee or other licensees as well. Mr. Bible told the committee there is a laboratory in Nevada which tests gaming devices and the individuals in that laboratory possess the knowledge of the trade secrets of everyone involved in the manufacturing of slot machines which would create difficulty if these individuals went to work for a competitor.
Senator Raggio asked what difference a year would make if the individual in the laboratory already had the trade secrets.
Mr. Bible stated the passage of a year mitigates some of the knowledge particularly now in an era where there is so much technological advancement.
Ms. Rankin stated she has several current employees who were licensed by her agency before they came to work there and they are required to surrender their license under a consent order. She added these individuals can test and receive their license back at the end of their employment should they desire to have it back and not stay with the state permanently. She stated this is a very difficult bill because the insurance department has their own ethics code as well as the ethics commission standards. She explained individuals are benefiting themselves through their job with the government and they are not being allowed to do that and she added even seeking employment while employed with the government crosses the line. She stated she does understand where this bill is going and she agrees with it heartily for managers and upper level employees. Ms. Rankin told the committee, for example, in the self-insurance for worker's compensation there are 130 licensees which have 300 subsidiaries. She stated when the applicant is reviewed for admission or if there is a problem on the audit, other employees in the department other than the two people who deal with those licensees on a daily basis are involved and brought in which gives them knowledge of the financial inter-workings of a casino or trucking company or whatever. She concluded this bill would not allow these individuals who worked on this audit to go to work at a different trucking company and she feels this is objectionable. She explained this is not limited to insurance because her agency deals with a wide range of businesses.
Mrs. Williams stated with every benefit there is a liability, but she added she disagrees with Commissioner Rankin. She told the committee perhaps the language is not clear enough in this bill. She explained with this bill they are not looking at the person who randomly looks through any number of audits per day, but someone who has done a major audit or investigation or had the responsibility of developing the regulation. She further explained this bill does not pinpoint the other level of employees and it is not intended to put anybody out of work. She used an example with the Nevada Gaming Commission which already has a cooling off period. She stated if a representative of the Nevada Gaming Commission was doing an investigation on a major hotel and then left the gaming commission, that individual would not be precluded from going to work in the gaming industry, but they would be precluded from going to work for the specific hotel they just investigated. She explained much of the reason for this is the appearance of such events and as legislators that perception becomes reality.
Senator Hickey stated he tends to lean toward the philosophy of Mrs. Williams because the development of the individual in those departments should be for the benefit of government and not industry. He also stated he sees this as an effective way to retain the employee and the further development of the benefit of government versus industry. He explained he felt the whole idea is to develop some type of career and develop an ethical standard within this system.
Senator Rhoads asked if there would be any types of occupations in state government in which this bill would increase unemployment drastically because of the elimination of places to work.
Mrs. Williams stated this would not affect state agencies or federal government. She explained it would only regulate the private sector.
Chairman O'Connell asked Mrs. Williams if she would work on some clarifying language and submit it back to the committee. Mrs. Williams stated she would be glad to do this.
Chairman O'Connell closed the hearing on A.B. 90 and opened the hearing on Assembly Joint Resolution (A.J.R.) 7.
ASSEMBLY JOINT RESOLUTION 7: Urges Congress to eliminate inequities in payment of social security benefits to "notch babies."
William A. Petrak, Assemblyman, District 18, spoke on A.J.R. 7. He told the committee he would like to support this legislation as they are encouraging the federal legislators and the president to help restore the notch babies to first class citizens in the nation. He explained there are 12 million notch babies left and they happen to have 50,000 notch babies in Southern Nevada and in Northern Nevada there are 30,000. He stated if they were fortunate enough to have this legislation in effect it would generate additional income to the state. He explained the notch babies here in Nevada would get an additional $2.5 million per month in income. Mr. Petrak told the committee the notch baby legislation came about in 1977 when the U.S. Congress was notified by the Social Security Administration that the Social Security Trust Fund was almost bankrupt. He stated this prompted legislation which was signed by President Jimmy Carter which was effective January 1, 1978. He explained this legislation stated all social security contributions made from age 62 to 65 by individuals born between 1917 and 1921 would be put into the almost defunct Social Security Trust Fund to build it up. He added this included all contributions made by employers during this time period. Mr. Petrak told the committee anyone born before 1917 and working between the ages of 62 to 65 would get their contributions from the Social Security Trust Fund in the form of retirement. Mr. Petrak stated in summary the individuals born between 1917 and 1921 would get approximately 15 to 22 percent less benefits than someone born in 1916 even though they paid identical amounts into the trust fund. He explained if the notch babies worked after age 65 they would not receive any credit on their social security retirement at the end of that year even though they and their employer both made contributions to social security. He added a person who worked after age 65 and was born in 1916 would be paid an increased amount on their social security. He maintained this was an unfair law. Mr. Petrak stated according to a survey he received from California, the Social Security Trust Fund has an excess of $1 trillion in the trust fund at this time which is equivalent to the benefits which will be paid out from now until the year 2041 and he feels this fund would be able to handle paying the notch babies that to which they are entitled. He added they are not asking for retroactive pay they just want the increase they deserve now. Mr. Petrak stated it is time to correct this inequity. He stated he has written to every leader in the senate and house or assembly in every state and he encouraged the committee to approve this resolution and then send it to the president, vice president and both the U.S. Congress and U.S. Senate in Washington, D.C., to help with this problem.
Senator Raggio asked if a person born in 1926 had a different amount of social security benefits than a person born in 1927, who paid in exactly the same amount of social security during their employment.
Mr. Petrak stated there is definitely a different amount. He explained the formula in 1926 is a 5-year formula from 1922 through 1926, but the formula from 1927 through the next 5 years would give that individual more of an income than the notch babies from 1917 through 1926 which is two 5-year periods. He explained the individual born in the second session of notch babies (1922 to 1926) will receive more income than the first session, but less than an individual born before 1917. He clarified stating a person born in 1916 and before would receive a greater amount of social security than a person born in 1917 and on even though they paid identical amounts in that 10-year period. He stated the new formula for 1927 on is the fair formula and he feels it would be great if they would use that formula for the two sessions of notch babies. He told the committee the cost to implement this would be around $3 billion which would come out of the trust fund and that, he added, does not come out of taxpayers pockets.
SENATOR HICKEY MOVED TO DO PASS A.J.R. 7.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAGGIO ABSTAINED FROM THE VOTE. SENATOR NEVIN WAS ABSENT FOR THE VOTE.)
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Chairman O'Connell opened the hearing on Senate Bill (S.B.) 309.
SENATE BILL 309: Grants less populous counties more flexibility in using certain money received for economic development and tourism.
Charlie Joerg, Lobbyist, Eureka County, spoke on S.B. 309. He told the committee he would like to substitute the proposed amendment, Exhibit C, and substitute the language from John W. Marvel, Assemblyman, District 34, along with the people from Economic Development who have been working on this bill.
Mary Ellen Anderson, Executive Director, Regional Development, Lincoln County, read from Exhibit D which was a justification for the amendment, as the bonded counties feel it should be, see Exhibit D.
Ron Carrion, Economic Development, Eureka County, spoke on S.B. 309. He told the committee the language they propose will promote effective partnerships between developmental authorities, tourism organizations and chambers of commerce, but it will not threaten the existence of any of those. He stated he wants to make it clear they are working for a partnership for all of the rural counties. He explained the main concern he has is that this will not create any monetary impacts on the budget. He further explained they are not looking for money, but for a more effective way to utilize the money they already have.
William E. Schaeffer, District Attorney, Eureka County, told the committee he supports S.B. 309 with the proposed amendment. He stated he did draft this amendment.
Chairman O'Connell asked if there is an individual or company these counties are currently working on to attract to their area. She also asked them to explain how they would utilize this bill.
Mr. Carrion stated they have guided this proposal by Eureka County. He explained Eureka County has landed a chemical company on the northern end of the county and around the Beowowe area they have attracted Coke Products. He further explained there are three other companies who are looking for relocation in and about the same area and on that basis they have tried to formulate an avenue to continue to use and utilize the money. He pointed out the other end of the county is looking at a different scenario as they do not have the railroad or larger cities and they must look at the tourism factor. He told the committee with the statutes as they are now, Eureka County's hands are tied. Mr. Carrion stated they would like to combine the economic development and tourism end.
Mr. Joerg further explained this bill would permit the smaller communities to use some of the economic development money for nongaming purposes. He stated they would use the money to upgrade their communities so they would be in a position to more appropriately attract companies to relocate into their community. He explained some of those areas do not have the amenities these companies come to expect, but this would provide a basis for the communities to utilize the money for development projects. He iterated the projects would be subject to the county commissioners' approval and all of the other requirements.
Chairman O'Connell asked Mr. Carrion to elaborate on the amenities these rural counties are contemplating.
Mr. Carrion stated the first would be recreational amenities. He stated the economic authorities have to turn in a work plan for the year. He explained within the work plan they add the things needed for economic development, but right now, as the law states, it cannot include tourism. He told the committee the amenities they need are a reservoir and golf course for companies who might want to relocate and create 50 to 100 new employees.
Mrs. Anderson stated Lincoln County has a problem in that they are on the route to everywhere else travelers are going. She explained the jewel of her area is the history of the country. She told the committee there is potential for growth and with the infrastructure in place now the companies interested in locating within Lincoln County will want these amenities. She stated they have four active state parks and one inactive state park all within Lincoln County and they need to maintain and promote these parks. She also stated they need to bring in tourism through economic development. She explained her county has money to advertise events, but no money to put them on.
Mr. Schaeffer told the committee the town of Eureka on U.S. Highway 50 is 70 miles from the nearest town, which is Austin, and it is smaller than Eureka. He explained the next nearest larger town is Ely which is 77 miles away which makes Eureka very remote. He pointed out it is not feasible for any major industry to locate down on U.S. 50 unless there is some need for isolation and therefore in addition to trying to make the county a little more attractive for people, as well as mining, they need to add some amenities. He explained in order to promote the overall economic development as well as tourism, which is the most viable asset they have in rural Nevada, they need this bill with the proposed amendment.
SENATOR HICKEY MOVED TO AMEND AND DO PASS S.B. 309.
SENATOR NEVIN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAGGIO WAS ABSENT FOR THE VOTE.)
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Chairman O'Connell closed the hearing on S.B. 309 and opened the hearing on Senate Bill (S.B.) 433.
SENATE BILL 433: Makes various changes relating to adoption of administrative regulation.
Lorne Malkiewich, Legal Counsel, Legislative Counsel Bureau (LCB) spoke to the committee on S.B. 433. He explained this bill draft was requested by the Legislative Commission, but he stated he recommended the commission propose this bill. He pointed out there are three date changes in the bill and each one has independent significance and each one is proposed for a different reason. He explained the first change which is July 1 on line 10 of the bill. He stated this relates to the time in which administrative regulations are to be submitted and reviewed by LCB. He further explained this first date change speaks to the last date for submission of a proposed permanent regulation which would have a 30-day period within which it had to be reviewed. He pointed out this is a change from August to July. He stated during the last interim when LCB was reviewing regulations with the rapid increase in the number of regulations, they found they did not have time to draft all of the bills. He explained if they move the date from August 1 back to July 1 it would give LCB 1-month extra to draft bills before the beginning of the legislative session. Mr. Malkiewich stated LCB has 30 days to review a bill submitted before July 1 of any even numbered year, he explained, so by August 1 of that same year they should have cleared out all of the regulations and can work full-time on bills. He told the committee the second reference to July 1 on line 10 of S.B. 433 is the end of the period during which they do not accept regulations. He explained, in other words the period during which LCB does not have to review the regulations within 30 days. He pointed out that is currently June 15 of an odd numbered year and he explained during the last three sessions the legislature has still been in session when that date came. Mr. Malkiewich explained theoretically LCB has to start reviewing regulations on June 15 and get them out by July 15 if S.B. 433 does not pass. He told the committee this bill will help LCB's workload out and they will not have to take attorneys off of amendments and bill drafts at the end of the session so they can work on regulations. He concluded with this passage of S.B. 433, LCB could keep the entire staff working on the business of the legislature. Mr. Malkiewich pointed out the reference on lines 16, 17 and 18 is confirming the period during which LCB reviews the regulations. He explained the final change is on page 2, line 5 which indicates the period during which an agency may adopt a temporary regulation. He stated part of this change is to conform to the changes on page 1 which explains the period they can adopt the regulations is between August 1 of an even numbered year and July 1 of the succeeding odd numbered year to correspond to the changes LCB made on when they may submit proposed permanent regulations. He told the committee the other change in these lines is where they changed September to November 1. He explained this gives agencies 2 additional months to turn a temporary regulation into a permanent regulation. Mr. Malkiewich told the committee right now when LCB goes out of the business of reviewing proposed permanent regulations, agencies may adopt temporary regulations so state government does not stop. He explained this helps an agency which needs to adopt a regulation right away and it would then be effective until September 1 following the legislative session. He pointed out right now the agencies have between June 15 and September 1 to adopt a proposed permanent regulation to replace the temporary regulation. Mr. Malkiewich stated this period seems like a long time, but it is not. He explained when a proposed permanent regulation is submitted to LCB on June 15, they will return it to the agency by July 15. He then stated a public hearing is held approximately July 18 and if there are any changes it will get back to LCB later than August 1 and by that time within the 35 days needed by LCB to review regulations, the agency will not get this proposal in by the September 1 deadline. He stated they propose moving this from September to November. He explained 30 days of this is lost because of the change from June 15 to July 1, but the net effect is that agencies will have an additional 1-1/2 months to convert their temporary regulations into permanent regulations. He stated in summary the first change gives LCB an extra month to draft bills before session, the second stops LCB from being required to review regulations before July 1 and the third change from September to November 1 gives agencies an additional 1-1/2 months to turn temporary regulations into permanent regulations. Mr. Malkiewich stated with respect to the last change he mentioned to the commission this is particularly difficult for entities that have review boards.
SENATOR NEVIN MOVED TO DO PASS S.B. 433.
SENATOR HICKEY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman O'Connell closed the hearing on S.B. 433 and opened the hearing on Assembly Concurrent Resolution (A.C.R.) 28.
ASSEMBLY CONCURRENT RESOLUTION 28: Urges Department of Data Processing and Division of Archives and Records of State Library and Archives to take certain actions regarding public records stored on electronic media.
Joan Kerschner, Director, Nevada State Library and Archives, spoke to the committee on A.C.R. 28. She told the committee this bill was the result of two actions, the most recent being the Interim Study Committee on Public Records which proposed two additional studies be taken as well as the study just completed. She explained this bill is the result of a study which was commissioned by the State Library and Archives to look at what some of the problems would be for scheduling electronic records. She stated the biggest problem they encountered when doing the study was dealing with new technology. She explained the law at this time does not address electronic records and yet she stated they feel with so many records being created in that format they have the same level of responsibility for the electronic records as they do for paper records. Ms. Kerschner stated her agency commissioned a study from an individual in New York who is a private consultant and an expert on electronic records and record scheduling and she provided the State Library and Archives with a report of recommendations (Exhibit E.). She explained some of the recommendations from Exhibit E to the committee members. She told the committee this list is what her agency would like to accomplish in the interim with the cooperation of the Department of Data Processing.
Karen Kavenau, Director, Department of Data Processing, stated her agency completely supports A.C.R. 28. She told the committee creating and maintaining an inventory of information systems regardless of what the component parts are is something this state has needed for a long time. She referred to the first recommendation of Exhibit E which talks about feeding directly into data sharing and data repositories, but she stated before they can talk about data sharing they must find out what every agency is keeping. She added it would also help in public access when they start determining what records need to be opened and which ones need to be closed. Ms. Kavenau told the committee on the second recommendation in Exhibit E it states they should develop an integrated system of hardware and software for use by all state agencies and she stated it is probably a simple statement of the Department of Data Processing's total mission in life. She explained they are working for a totally integrated simplified network and she stated they would continue to work for that.
Senator Rhoads asked how this would impact the state fiscally. Ms. Kavenau stated most of this could be done without money.
Senator Nevin asked how they would handle the parts for which money was needed. Ms. Kavenau stated they feel they have the staff on hand to begin these recommendations. She did add the one item they felt they may need money for is item 4 in Exhibit E, but she stated the state librarian has come through on this.
Ms. Kerschner stated her department already has the responsibility, by statute, to establish the schedules and she added if they did it in the manner suggested in number 3 of Exhibit E it would streamline the process for them. She pointed out it may not mean they can manage to keep up with all of the schedules, but she feels this suggestion will help streamline the process.
Chairman O'Connell asked if they all agree on these procedures, why do they need the bill. Ms. Kavenau stated they need the bill to convince everybody else about the changes, particularly maintaining an inventory.
Chairman O'Connell closed the hearing on A.C.R. 28 and opened the hearing on Bill Draft Request (BDR) 30-856.
BILL DRAFT REQUEST 30-856: Provides detachable call feature for bonds.
Marvin Leavitt, Lobbyist, City of Las Vegas, spoke to the committee on BDR 30-856. He stated when bonds are issued on a normal basis there are normally provisions for calling them. He added after a certain length of time the bonds are subject to call so if a situation arises that the market interest rate has gone down below the rate of interest on the face of the bonds, then the bonds may be called. He explained in calling the bonds at that time they may adopt the lower interest rate. He told the committee it is a fairly expensive procedure because they must get an underwriter and go through a normal sale process of bonds, which includes bond counsel, financial adviser and the underwriter which all make it expensive. Mr. Leavitt told the committee approximately a year ago one of the large investment houses came up with the idea to work a new arrangement so the call feature on bonds would sell separately from the bond itself. He explained this would accomplish the same thing as going through a refunding of the bond so the calls could trade on the market, so-to-speak.
SENATOR NEVIN MOVED TO INTRODUCE BDR 30-856.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RAGGIO WAS ABSENT FOR THE VOTE.)
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There being no further business Chairman O'Connell adjourned the meeting at 3:15 p.m.
RESPECTFULLY SUBMITTED:
Tanya Morrison,
Committee Secretary
APPROVED BY:
Senator Ann O'Connell, Chairman
DATE:
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Senate Committee on Government Affairs
May 10, 1993
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