MINUTES OF THE

      SENATE COMMITTEE ON TAXATION

 

      Sixty-seventh Session

      May 25, 1993

 

 

 

The Senate Committee on Taxation was called to order by Chairman Dean A. Rhoads, at 2:06 p.m., on Tuesday, May 25, 1993, in Room 224 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

Senator Dean A. Rhoads, Chairman

Senator Ann O'Connell, Vice Chairman

Senator Randolph J. Townsend

Senator Sue Lowden

Senator Bob Coffin

Senator Raymond C. Shaffer

Senator Ernest E. Adler

 

 

GUEST LEGISLATORS PRESENT:

 

Senator Raymond D. Rawson, Senate District No. 6

 

STAFF MEMBERS PRESENT:

 

Kevin Welsh, Deputy Fiscal Analyst

Billie Brinkman, Committee Secretary

 

OTHERS PRESENT:

 

Janice A. Wright, Deputy Executive Director, Department of Taxation

Vincent G. Swinney, Sheriff, Washoe County

John Sherman, Management Analyst, Washoe County

Mary Santina, Executive Director, Retail Association of Nevada

 

Chairman Rhoads opened the hearing on Senate Bill (S.B.) 465.

 

SENATE BILL 465:  Revises definition of "liquor" for purposes of taxation.

 

Senator Raymond D. Rawson, Senate District No. 6, came forward to explain the measure which was a constituent's request.  He said it treats "near beer" as a food item rather than a "liquor."  He said he had no research as far as revenue cost to the state, nor did he have a knowledge of the alcohol content of "near beer." 

 

Janice A. Wright, Deputy Executive Director, Department of Taxation, testified the Department of Taxation was not requested to do a fiscal note, but realized after studying the measure, that there would be a fiscal impact.  She said the Department of Taxation is presently in the process of preparing a fiscal note.  She indicated it is the understanding of the Department of Taxation that "near beer" does not fall within the definition of 1/2 of 1 percent alcohol by volume, therefore, it is sold as a food item.  She pointed out that a certain category of wine coolers fall within that definition.  Ms. Wright said any wine cooler which contains 1/2 of 1 percent alcohol by volume or less would not be taxed, but any wine cooler over that percent alcohol by volume would be subject to the excise tax on liquor.

 

Ms. Wright said the information being prepared by the Department of Taxation will be imparted to the committee upon its completion.

 

Chairman Rhoads closed the hearing on S.B. 465 and opened the hearing on Assembly Bill (A.B.) 395.

 

ASSEMBLY BILL 395:      Establishes maximum rate of ad valorem tax levied for support of jail for Washoe County and cities of Reno and Sparks.

 

John Sherman, Management Analyst, Washoe County, and Vincent G. Swinney, Sheriff, Washoe County, came forward to remark on A.B. 395.

 

Mr. Sherman introduced Sheriff Swinney who read a prepared statement (Exhibit C).  He then elaborated verbally on the points of his statement.

 

Senator O'Connell asked if this tax levy would go to a vote of the people.  Mr. Sherman replied that situation is provided for in A.B. 395.  He stressed the issue surrounding the management of a jail and the requirements are exceedingly complex.  He said that in the representative form of democracy, the Board of County Commissioners at the local level, is a body that has been elected to make very difficult decisions. In this instance, he said, the Board of County Commissioners is requesting the legislators to give them the authority which would allow them to make the decision as to whether or not to levy this tax.

 

Mr. Sherman explained A.B. 395 would fix the current tax rate  of 7.74 cents as opposed to fixing the tax revenue.

 

Discussion ensued.

 

Senator Townsend inquired what additional dollars would be generated over the next 2 years through the rate of 7.74 cents.  Mr. Sherman said in the 1993-1994 Fiscal Year, an additional $200,000+ in revenue would be generated,  which would equate to about $1.40 on a house valued at $100,000.

 

Ms. Wright came forward to provide the committee with some clarification on the information previously discussed before the committee.  She distributed a chart (Exhibit D) for the information of the committee.

 

Ms. Wright related a bit of history leading to the issue of A.B. 395.  She said a ballot question which was presented to the voters of Washoe County, November 6, 1984, asked the voters to approve $30 million in bonds for construction of a consolidated jail facility for Washoe County, Reno and Sparks.  She said through discussions of the issues, this was stated to be a more cost-effective measure.  She continued, saying the language in the bond issue did not address operating costs for the jail facility.  Washoe County then came to the legislature after the facility was built and requested additional money  for operating the jail facility.  The reason the measure was passed in 1987 was to provide additional funding, not through going back to the vote of the people, but by going directly to the legislature.  Initially, the legislature, in fiscal 1988, approved $2.9 million.  Then in subsequent years that figure increased to $3.8 million.  Ms. Wright then referred to the figures included in Exhibit D with further explanations.

 

Ms. Wright said her understanding was that Washoe County's final budget for Fiscal Year 1994, which has recently been approved at public hearing, shows that $3.8 million (a tax rate of .0734) has an impact on a $100,000 house of $25.69.  The impact, therefor, has dropped from $32.41 to $25.69 on a house valued at $100,000.  Ms. Wright said the purpose of A.B. 395 would be to stop the reduction of the property tax rate and stabilize it at a flat 7.74 cents for Fiscal Year 1994 which is the upcoming budget year, and it would generate a little over $4 million.  That amount then would continue to increase as the assessed valuation increases in Washoe County.  The Washoe County voters have demonstrated in the past that they are willing to provide money for the bond issue, but they have not had an opportunity to address the operating costs of the jail facility.  Ms. Wright said the Department of Taxation does not certify tax rates until June 25.  She said if A.B.  395 is passed out of the legislature prior to June 25, it can be implemented.

 

Mr. Sherman came forward again to reply to questions presented by Senator Townsend.

 

Senator Townsend inquired if A.B. 395 is not passed by the Legislature and more general fund money is necessary for the Sheriff's Office to meet required federal standards for the jail facility, will that money be provided.  Mr. Sherman said the budget has been set for this year for the jail facility and the proposed revenue to be generated with the passage of A.B. 395, was not included in that budget.  He said the mechanics of processing A.B. 395 out of the Legislature, then holding public meetings, duly noticed, the "window of opportunity is rapidly shrinking."  He said it is the opinion of Washoe County officials that the tax of 7.74 cents would not be levied this year.

 

Mr. Sherman said the Washoe Board of County Commissioners understands the implications of having the Federal Courts manage the jail facility.  He said the old jail in downtown Reno lived under the "consent degree" for a number of years.  He said the public safety issue involved is fully understood by the officials and that is the reason the Washoe County Sheriff's Office now has a plan to work at selling it to the taxpayers of the community.

 

Mr. Sherman stated there is a significant difference between a $30 million bond and the tax override necessary to pay for it, and an incremental layer of taxation based on assessed valuation growth and a flat tax rate.

 

In reply to a question by Senator O'Connell, Ms. Wright said the tax rate of 7.74 cents outlined in A.B. 395 cannot be changed.  But as assessed valuations increase, then the revenue from that tax levy will increase.

 

Mr. Sherman said he would like to comment on two different issues previously discussed.  He explained 1) a $30 million bond is being paid back over a 25 year term; and 2) the tax levy in A.B. 395 is an operating tax for the jail facility.  Senator O'Connell inquired if the operating costs were consciously omitted from the bond issue, to which Senator Adler replied he remembered the debates at that time, and that it was not a conscious decision to omit the operating costs.  Senator Adler said it was believed the new modern jail facility would not require great operating costs, however, due to the escalation of the inmate population, operating costs are higher than expected.

 

Mr. Sherman added as a side note, that a portion of the bonds had been refinanced this year at a lower interest rate causing a savings of $125,000 on repaying the bonds.

 

Chairman Rhoads closed the hearing on A.B. 395.

 

Chairman Rhoads guided the committee into the work session and opened the discussion on Senate Bill (S.B.) 365.

 

SENATE BILL 365:  Authorizes operation of brew pubs in permanent theme parks.

 

Senator Lowden, chairman of the subcommittee appointed to hold hearings on S.B. 365, distributed a copy of Senate Amendment No. 506 to S.B. 365 (Exhibit  E) to committee members.  She pointed out that total agreement did not occur within the subcommittee, however, the majority did vote to accept the amendment.  She stated two exceptions in S.B. 365 were basically eliminated, the theme park exception and the exception which allowed for the redevelopment and historic districts.  Senator Lowden said Amendment No. 506 provides that any brew pub which is opened would have to follow local ordinances and zoning guidelines required by any other business which applied for licensing.

 

Senator Lowden then went through  S.B. 365 line by line including the language in Exhibit E.

 

Senator Adler, a member of the subcommittee, remarked he agreed with much that had been put in Amendment No. 506 to S.B. 365.  However, he said he thought the preference for brew pubs to be placed in historic and redevelopment areas should have been continued.  And then, he added, give the county governments the ability to designate any other areas in which brew pubs could be located locally.

 

Chairman Rhoads called for a motion on S.B. 365.

 

      SENATOR O'CONNELL MOVED TO AMEND AND DO PASS S.B. 365 WITH            AMENDMENT NO. 506.

 

      SENATOR COFFIN SECONDED THE MOTION.

 

      THE MOTION PASSED.  (SENATOR ADLER VOTED NO.)

 

      *****

 

Chairman Rhoads requested a committee introduction request for Bill Draft Request (BDR) S-2036.

 

BDR S-2036:Directs state board of examiners to establish maximum tax rate for certain counties.

 

      SENATOR O'CONNELL MOVED FOR COMMITTEE INTRODUCTION OF

      BDR S-2036.

 

      SENATOR TOWNSEND SECONDED THE MOTION.

 

      THE MOTION PASSED UNANIMOUSLY.

 

      *****

 

Chairman Rhoads opened the work session on Senate Bill (S.B.) 454.

 

SENATE BILL 454:  Makes various changes related to motor carriers.

 

Chairman Rhoads asked Kevin Welsh, Deputy Fiscal Analyst, to explain S.B. 454.  He said it was a cleanup bill requested by the Department of Motor Vehicles and Public Safety and went through the measure section by section.

 

      SENATOR ADLER MOVED TO DO PASS S.B. 454.

 

      SENATOR TOWNSEND SECONDED THE MOTION.

 

      THE MOTION PASSED UNANIMOUSLY.

 

      *****

 

Chairman Rhoads requested committee introduction on Bill Draft Request (BDR) 32-137.

 

BDR 32-137:Requires department of taxation, under specified circumstances, to provide credit or refund to retailer who has paid taxes on property sold by him but who has been unable to collect sales price.

 

Senator O'Connell explained this measure was a request from the Retail Association of Nevada.

 

Mary Santina, Executive Director, Retail Association of Nevada, came forward to explain the issue included in BDR 32-137 had been addressed in previous legislative sessions.

 

      SENATOR TOWNSEND MOVED FOR COMMITTEE INTRODUCTION OF

        BDR 32-137.

 

      SENATOR ADLER SECONDED THE MOTION.

 

      THE MOTION PASSED UNANIMOUSLY.

 

      *****

 

Senator O'Connell brought to the committee's attention a remark made by Senator Adler concerning an amendment to S.B. 365.  She said he pointed out that any county could create an ordinance to stop a brew pub from being in any area.  She asked if the committee had an appetite to address such a situation in an amendment which would preclude a county from taking action to prohibit, by ordinance, a brew pub being in a certain location.

 

Senator Lowden stated she did not have a problem with such an ordinance within a county; and Chairman Rhoads added he felt that local control was what S.B. 365 was all about.

 

There being no further business to come before the committee, Chairman Rhoads adjourned the meeting at 3:06 p.m.

 

 

 

 

 

 

                  RESPECTFULLY SUBMITTED:

 

 

 

                                          

                  Billie Brinkman,

                  Committee Secretary

 

 

 

APPROVED BY:

 

 

 

 

                                

Senator Dean A. Rhoads, Chairman

 

 

DATE:                           

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Senate Committee on Taxation

May 25, 1993

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