MINUTES OF THE
SENATE COMMITTEE ON TAXATION
Sixty-seventh Session
June 26, 1993
The Senate Committee on Taxation was called to order by Chairman Dean A. Rhoads, at 3:15 p.m., on Saturday, June 26, 1993, in Room 119 of the Legislative Building, Carson City, Nevada. The meeting was teleconferenced to Las Vegas. 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
STAFF MEMBERS PRESENT:
Kevin Welsh, Deputy Fiscal Analyst
Billie Brinkman, Committee Secretary
OTHERS PRESENT:
Samuel P. McMullen, Lobbyist, Reno-Sparks Convention & Visitors
Authority
Perry Comeaux, Executive Director, Department of Taxation
Bonnie James, Lobbyist, Las Vegas Chamber of Commerce
Harvey Whittemore, Lobbyist, Nevada Resort Association
Chairman Rhoads explained Amendment No. 1165 to Senate Bill (S.B.) 501, having to do with the "White Pine County" problem.
SENATE BILL 501: Directs state board of examiners to establish maximum tax rate for certain counties.
He said the amendment makes it possible for interest on the school bond money through grants, to "buy down" on the debt. It phases itself out at the end of the biennium.
Chairman Rhoads called for a motion to amend S.B. 501 with Amendment No. 1165.
SENATOR TOWNSEND MOVED TO ADOPT AMENDMENT NO. 1165 TO S.B. 501.
THE MOTION WAS SECONDED BY SENATOR O'CONNELL.
THE MOTION CARRIED. (SENATORS ADLER AND COFFIN WERE ABSENT FOR THE VOTE.)
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Chairman Rhoads indicated he had requested an amendment to the Nevada Constitution which would prevent the legislature from including, as a source of income in a current biennium, revenue from a tax which is historically payable in the following biennium.
Chairman Rhoads said he realized it was late in the legislative session to be introducing this measure, however, he hoped it would
cause public awareness concerning use of revenue from the next 2
years to balance the present budget.
Chairman Rhoads asked for a committee introduction of Bill Draft Request (BDR) R-2166.
BDR R-2166:Proposes to amend Nevada Constitution to prohibit use in current biennium of money from tax which is historically payable in the following biennium to balance current budget.
SENATOR TOWNSEND MOVED FOR COMMITTEE INTRODUCTION OF BDR R-2166.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS ADLER AND COFFIN WERE ABSENT FOR THE VOTE.)
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Chairman Rhoads opened the hearing on Senate Bill (S.B.) 560.
SENATE BILL 560: Facilitates enforcement of taxes upon transient lodging.
Samuel P. McMullen, Lobbyist, Reno-Sparks Convention & Visitors Authority, explained this measure is intended to do three things with respect to the collection and enforcement of the laws relating to the payment of room tax: 1) Make the intentional failure to pay room tax a criminal offense; 2) Extend the period of time from 90 days to 6 months for the filing of a room tax lien; and 3) Insure that a room tax lien has the same dignity as a state tax lien for purposes of foreclosure, with equal priority with state tax liens.
Mr. McMullen walked the committee through a proposed amendment to S.B. 560 (Exhibit C).
Mr. McMullen, said for the record, he had tracked Nevada Revised Statutes (NRS) Sections 204.010 and 204.020, which are included in the chapter, Crimes Against State Revenue. The two sections relate to the unlawful use of public money, and basically the failure to pay provisions. He said he had utilized the penalties from the referred to sections in the proposed amendment to S.B. 560.
Senator O'Connell indicated she felt the penalty provision was too stiff in S.B. 560.
Mr. McMullen stressed S.B. 560 deals with specific intentional failure to pay room tax.
Discussion ensued.
Perry Comeaux, Executive Director, Department of Taxation, came forward to discuss the tax statutes which the Department of Taxation administers. He said basically it is the civil statutes that Mr. McMullen is referencing.
Mr. McMullen said the revocation of license and lock and seal provision in the NRS did not seem to be an adequate tool to prompt payment of intentional delinquent room tax. He indicated a criminal offense provision was what S.B. 560 requested.
Further discussion ensued.
Chairman Rhoads asked Mr. McMullen to return to the committee with an amendment containing different language.
Chairman Rhoads closed the hearing on S.B. 560.
Chairman Rhoads indicated he believed Assembly Bill (A.B.) 394 (included on Exhibit A) was the logical business tax measure which should be processed.
ASSEMBLY BILL 394: Makes changes in rate and manner of payment of business tax.
Chairman Rhoads asked Mr. Comeaux to address three other business tax measures outlined on the agenda Exhibit A.
Mr. Comeaux started with Senate Bill (S.B.) 27.
SENATE BILL 27: Makes various changes in provisions governing business tax.
Mr. Comeaux explained S.B. 27, saying basically it provides administrative detail needed by the Department of Taxation to administer the tax; changes the due date of the quarterly tax payment making it 30 days later than the present provision; and eliminates the existing rate schedule cap and substitutes a flat $23.75 per employee per quarter, adding this is about a 5 percent reduction over the rate included in A.B. 394. Mr. Comeaux indicated S.B. 27 is very close to being revenue neutral.
Chairman Rhoads guided Mr. Comeaux to Senate Bill (S.B.) 372.
SENATE BILL 372:Exempts child-care establishments from business tax.
Mr. Comeaux said S.B. 372 simply excludes from the provisions of tax and license requirements, child-care establishments. He said there would be a fiscal note of about $240,000 per year on this measure.
Mr. Comeaux next talked on Senate Bill (S.B.) 505.
SENATE BILL 505: Makes various changes relating to state finances.
Mr. Comeaux walked the committee through S.B. 505. He said administrative provisions are included and the tax due date is delayed, however the wording for that provision is not appropriate. He declared S.B. 505 eliminates the payment schedule and the cap and substitutes a flat fee of $27. per employee per quarter for each employee up to and including the 99th employee, then the tax becomes $32.50 per employee per quarter. The tax may, at the option of the business, be calculated on each employee separately for each geographically separate location where business is conducted. Mr. Comeaux briefly touched on various changes and appropriations which the bill is designed to provide.
Mr. Comeaux testified calculations of the Department of Taxation indicated that S.B. 505 would generate about $64.5 million in the first year, and the second year it would generate about $67.1 million. He said that is roughly about $13.7 million in the first year, and $14.3 million in the second year, over the amount anticipated in the executive budget.
Mr. Comeaux went to Assembly Bill (A.B.) 394.
ASSEMBLY BILL 394: Makes changes in rate and manner of payment of business tax.
Mr. Comeaux said A.B. 394 is a composite of many business tax bills which were introduced in the Assembly. He explained the measure includes the administrative provision for the Department of Taxation. It makes the tax payment due date the last day of the quarter, however, it adds the payment must be made on or before the last day of the following month.
Mr. Comeaux continued, saying this measure eliminates the rate schedule and cap and imposes a flat tax of $25 per employee per quarter. The measure provides for an additional extension for payment of taxes of up to 30 days which can be requested in writing from the Department of Taxation. It does not include a provision for the second 30-day extension, interest-free, which he believes is appropriate language.
Mr. Comeaux indicated A.B. 394 will produce about $54.4 million in the first year, and $56.6 million in the second year which, he said is about $3.6 million in the first year and $3.8 million in the second year over the proposed executive budget. He briefly mentioned another piece of legislation, Assembly Bill (A.B.) 456, referred to as "Assemblyman Scherer's bill," which he said would probably reach this committee in a day or two.
ASSEMBLY BILL 456: Makes various changes to provisions governing business tax.
Senator Coffin inquired if there was a fundamental difference between S.B. 27 and A.B. 394. Mr. Comeaux replied fundamentally, there was not a difference. That the difference was basically between the details of how the payment date is extended and in the amount of the proposed tax.
Chairman Rhoads inquired of Bob Arnold, the teleconference operator in Las Vegas, if there was anyone there who wished to speak on any of the measures previously discussed. Mr. Arnold replied there was no attendance at that center.
Bonnie James, Lobbyist, Las Vegas Chamber of Commerce, stated the business community in Las Vegas is interested in the business tax measures. She said she supports A.B. 394. She talked about A.B. 456 and a flat tax on specific people who attend trade shows and host conventions, and motion picture production companies which, she said would not necessarily generate a large amount of revenue.
Harvey Whittemore, Lobbyist, Nevada Resort Association, discussed basic points he felt should be made with respect to A.B. 394 and some other changes being proposed in A.B. 456. He said since the gaming industry pays more than 60 percent of the business tax, if S.B. 27 were processed then funding would have to be made up from another source, and he asked that gaming not be considered as the target. He said under S.B. 27 or A.B. 394, the gaming industry is paying the highest percentage of the new money. He continued with an explanation of his statement.
Mr. Whittemore pointed out A.B. 456 is a very important measure and talked at length on its contents. He indicated he thought there were several policy issues left to be decided by this committee with respect to the business tax issue. He expounded on a provision for full time equivalent employee hours which could range from 20 to 36 hours per week.
Senator Coffin pointed out he had compiled a list of at least 10 additions to the Nevada Administrative Code (Exhibit D) which he shared with the Committee. He said the handwritten inserts were by Brenda J. Erdoes, Chief Deputy Legislative Counsel.
Mr. Comeaux commented on Exhibit D. He said most of the provisions outlined in Exhibit D will be taken care of through the processing of A.B. 394 and A.B. 456.
Senator O'Connell declared that although she is in business, she will be voting on the business tax measures.
Senator Lowden said through her business, she is directly affected by the caps, however, she will also be voting on the business tax measures.
Chairman Rhoads called for action on A.B. 394.
SENATOR O'CONNELL MOVED TO DO PASS A.B. 394.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN ABSTAINED FROM THE VOTE.)
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Chairman Rhoads asked for a motion on S.B. 505.
SENATOR TOWNSEND MOVED TO INDEFINITELY POSTPONE S.B. 505.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Rhoads asked for a motion on S.B. 372.
SENATOR O'CONNELL MOVED TO INDEFINITELY POSTPONE S.B. 372.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR ADLER VOTED NO.)
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Chairman Rhoads called for a motion on S.B. 27.
SENATOR COFFIN MOVED TO INDEFINITELY POSTPONE S.B. 27.
SENATOR TOWNSEND SECONDED THE MOTION.
Senator Adler remarked that technically the Senate Rules indicate that when two measures deal basically with the same subject, the lower bill draft request number should be acted on first which was S.B. 27.
Chairman Rhoads emphasized there was a lot of work to be accomplished on S.B. 27 and there was not time to take care of the changes which would be necessary.
The vote was taken on S.B. 27.
THE MOTION CARRIED UNANIMOUSLY.
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Mr. McMullen returned with testimony on S.B. 560, informing the committee of a change in the language which deleted the criminal provision.
SENATOR ADLER MOVED TO AMEND AND DO PASS S.B. 560.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
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There being no further business to come before the committee, the meeting was adjourned at 4:13 p.m.
RESPECTFULLY SUBMITTED:
Billie Brinkman,
Committee Secretary
APPROVED BY:
Senator Dean A. Rhoads, Chairman
DATE:
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Senate Committee on Taxation
June 26, 1993
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