The Committee on Government Affairs was called to order at 8:00 a.m., on Monday, February 8, 1999. Chairman Douglas Bache presided in Room 3143 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Douglas Bache, Chairman

Mr. John Jay Lee, Vice Chairman

Ms. Merle Berman

Mrs. Vivian Freeman

Ms. Dawn Gibbons

Mr. David Humke

Mr. Harry Mortenson

Mr. Roy Neighbors

Ms. Bonnie Parnell

Ms. Gene Segerblom

Mr. Kelly Thomas

Ms. Sandra Tiffany

Ms. Kathy Von Tobel

Mr. Wendell Williams

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Robert S. Hadfield, Executive Director, Nevada Association of Counties

Larry Spitler, Legislative Representative, Clark County School District

Henry Etchemendy, Executive Director,

Carole Vilardo, President, Nevada Taxpayers Association

Mike L. Baughman, Ph.D., President, Intertech Services Corporation

Jeanine Coward, Assistant Controller, Controller’s Office, State of Nevada, testified. She submitted a two-page document (Exhibit C). She explained A.B. 101 eliminated the prohibition against certain employees of the Controller’s Office pursuing other businesses or occupations. The bill was submitted to clarify statutory language pertaining to the Controller’s Office and made that language consistent with statutory language pertaining to other offices of the executive branch of state government, thereby, eliminating confusion about restrictions on classified state employees’ ability to seek additional employment.

Ms. Coward orally reviewed differences in the language of Nevada Revised Statutes (NRS) which discussed employees of the offices of the governor, secretary of state, treasurer, and controller, respectively, as set forth on page 2 of Exhibit C. She pointed out NRS failed to address unclassified employees of the lieutenant governor’s office. She explained the words "other employees" in the language of the statute pertaining to the Controller’s Office encompassed both classified and unclassified employees and maintained it was clear, from the language of statutes pertaining to the other offices enumerated, that statute was intended to deal only with unclassified employees.

Ms. Coward said Assembly Bill 725 of the 68^th Session removed the prohibition against supplemental employment for certain unclassified employees of the executive branch of state government. She pointed out the reference to "NRS 184," on page 2 of Exhibit C, was in error and should read "NRS 284." NRS 284 was the chapter amended by Assembly Bill 725 of the 68th Session. As a result of the words "other employees," employed in the statutory language pertaining to the Controller’s Office, classified employees of the Controller’s Office were the only state employees prohibited from working outside state government. Therefore, it was requested those words be deleted. Deleting them would allow the Controller’s Office’s classified employees the same right enjoyed by other classified employees of the state to work outside state government. It was requested that statutory change become effective upon passage and approval of A.B. 101.

Chairman Bache closed the hearing on A.B. 101.

ASSEMBLYWOMAN TIFFANY MOVED DO PASS A.B. 101.

ASSEMBLYWOMAN VON TOBEL SECONDED THE MOTION

Brenda Laird, Chief Accountant, Controller’s Office, State of Nevada, testified, in part by reading from prepared text (Exhibit D). She explained the purpose of A.B. 124 was to change statutory language pertaining to certain funds and accounts to conform with generally accepted accounting principals.

Ms. Laird explained what the various sections of A.B. 124 accomplished.

• Section 1 changed "fund" to "account" and "account" to "subaccount" for reasons which would be discussed in connection with section 10.

• Section 2 created an "account" in the state’s general fund, rather than a "fund" in the state treasury, for the ombudsman for owners in common-interest communities. NRS did not specify what type fund must be created, and a refund was required to have a specified designation. An account in the general fund was the most appropriate way to account for that activity.

• Section 3 merely changed the word "fund" to "account."

• Section 4 changed the designation of the State of Nevada’s Department of Human Resources’ gift fund from a special revenue fund to a trust fund. Gift funds were normally trust funds. In the instant case, the gift fund was designated a special revenue fund because one source of its revenue was liquor taxes, and section 3 created an account in the state’s general fund to account for liquor taxes. The remaining revenues in the gift fund were truly gifts; therefore, it should be classified as a trust fund.

• Section 5 added a new section, which defined the word "account," to NRS 360.

• Section 6 included a reference to section 5 and, in essence, merely defined the word "account."

• Sections 7 through 9 changed "fund" to "account" for reasons to be covered in the discussion of section 10.

• Section 10 changed the designation of the local government tax distribution fund from that of a special revenue fund in the state treasury to that of an account in the intergovernmental fund. In accordance with accounting principals, that type activity belonged in an agency fund; it did not constitute a special revenue fund.

• Sections 11 through 18 changed "fund" to "account" and "account" to "subaccount" for the same reasons as those stated in the discussion of section 10.

• Section 19 changed the designation of the account to which certain proceeds from liquor tax were transferred for reasons to be discussed with respect to section 25 and previously touched upon with respect to section 4.

• Sections 20 through 23 changed "fund" to "account" and "account" to "subaccount" for the same reasons as those given in the discussion of section 10.

• Section 24 designated the fund in which accounts for the revolving fund and set-aside programs, which related to the Safe Drinking Water Act, were created.

• Section 25 added a section to NRS 458 to create an account in the general fund for liquor tax revenues. Revenue from liquor taxes was not a gift and did not belong in a gift fund; it was more appropriately accounted for through an account in the general fund.

• Section 26 deleted language pertaining to certain proceeds of liquor tax, now addressed through section 25.

• Section 27 replaced "under" with "pursuant to" and replaced "fund" with "account" for the same reasons as those discussed in connection with section 10 regarding the local government tax distribution fund.

• Section 28 repealed NRS 360.630, which defined the term "fund" as it pertained to the local government tax distribution fund.

• Section 29 established the provisions of A.B. 124 would become effective upon the bill’s passage and approval.

Assemblywoman Tiffany observed it appeared A.B. 124, primarily, accomplished housekeeping tasks and asked why the bill was brought before the legislature during the current legislative session, rather than the previous session, and what prompted it. Ms. Laird responded the bill came about because the Controller’s Office noted inconsistencies between legislation with which the office attempted to comply and accounting principles and, also, because statutes based on legislation passed during the last legislative session omitted fund designations.

Ms. Tiffany observed A.B. 124 cleaned up legislation passed in the last legislative session and asked whether that legislation was unique. Ms. Laird responded some legislation A.B. 124 addressed was passed during the last legislative session; however, she believed some was from prior sessions.

Ms. Tiffany asked what legislation passed during the previous legislative session A.B. 124 cleaned up. Ms. Laird replied she believed the funds and accounts discussed in sections 2, 10, and 24 of the bill resulted from legislation passed the previous session.

Assemblywoman Segerblom observed the fund for revenues from liquor tax was to be changed " . . . from a gift fund to the general fund." She asked to what purpose revenues from liquor tax were put. Ms. Laird said revenues from liquor tax would continue to be used for the purposes decreed by existing statutes; they would merely be recorded in a different fund.

Ms. Segerblom asked whether Ms. Laird knew the use made of revenues from liquor tax. Ms. Laird replied she did not have that information with her. Ms. Segerblom asked where she could obtain the information. Ms. Laird referred Ms. Segerblom to NRS 369 and NRS 458.097.

Chairman Bache asked Ms. Laird to explain the difference between a "fund" and an "account." Ms. Laird explained a fund was a self-balancing set of accounts, and an account was a means of keeping track of activity within a fund. She said according to accounting pronouncements and authoritative literature, it was best to keep the number of funds to a minimum. Tracking revenues and expenditures by means of accounts within funds promoted organization.

Chairman Bache closed the hearing on A.B. 124.

Assemblyman Roy Neighbors, District 36, testified. He submitted a booklet of information (Exhibit E). He explained A.B. 26 revised provisions governing distribution of revenue from lease of federal land and provided for other, related, matters.

Mr. Neighbors stated federal law required the Federal Government to pay a percentage of the monies it received from development of minerals on federal lands to the state in which those lands were located. He enumerated the specific sources of such monies. He pointed out pursuant to NRS 328.450, the first $7 million distributed to Nevada was to be deposited in the State Distributive School Account (SDSA). Sums in excess of $7 million were to be deposited into the account for revenue from lease of federal lands and distributed as follows: 25 percent to SDSA and 75 percent to the counties in which the revenues were generated. Mr. Neighbors pointed out 85 to 90 percent of money from lease of federal lands was generated in Nevada’s rural areas.

Mr. Neighbors recited a history of attempts made to have legislation passed which would cause monies returned to the state by the federal government to be distributed to the counties in which they were generated. He stated at one point, the legislature said, " . . . we will recognize you, but you have to have a threshold of $10 million." In 1995, he requested a legal opinion from the Legislative Counsel, who issued an opinion stating it did not appear the spirit of federal law had been carried out.

Mr. Neighbors said he had monitored revenues from lease of federal lands since approximately 1975 or 1976, and approximately $175 million had been generated to date.

Mr. Neighbors called the committee’s attention to page 2 of Exhibit E, which discussed a bill submitted to the legislature, during the 1995 legislative session, after Mr. Neighbor’s received the Legislative Counsel’s opinion. The bill decreased the threshold amount for revenues to be deposited in SDSA from $10 million to $7 million. Revenue in excess of $7 million was to be deposited in the account for the revenue from lease of federal lands, and the percentage of revenue to be distributed to counties from that account was increased from 50 percent to 75 percent.

Mr. Neighbors referred to a copy of the bill the legislature considered during the 1997 legislative session, set forth on the third page of Exhibit E. He pointed out the bill provided the state treasurer would deposit a sum not to exceed $7 million in SDSA. Any sums in excess of that amount were to be deposited in the account for revenue from the lease of federal lands and apportioned by the state controller. He explained 25 percent of any sums in excess of $7 million was distributed to SDSA. In addition, the counties were required to give 25 percent of the 75 percent of revenues distributed to them to SDSA.

Mr. Neighbors stated some federal "taxes" were not distributed to schools and cited two examples. He said no provision was made for distribution to schools of revenues generated by " . . . payment equal to taxes . . .," which pertained to Yucca Mountain and amounted to millions of dollars. However, on various occasions in the past, Nye County made school grants.

Mr. Neighbors referred to a yellow sheet of paper, in Exhibit E, and pointed out the left side of the page showed how revenues from lease of federal lands were distributed. He explained those revenues fluctuated. They had been as much as approximately $10 million to $11 million and as little as $5 million. He reviewed how the revenues were distributed and, with respect to monies distributed to SDSA, maintained, "When you give the county money, all that means is that that’s less money that the state has to send them." The right side of the page showed the distribution proposed through A.B. 26, which was 25 percent to SDSA and 75 percent to the county in which the revenues originated. Mr. Neighbors asserted, if a county wished to grant money to "the school," that was easy to accomplish.

Mr. Neighbors read aloud a portion of federal law, set forth on the ensuing page of Exhibit E and highlighted in yellow, pertaining to distribution of monies from lease of federal lands. He emphasized federal law specified the purposes for which monies distributed to a state’s subdivisions could be used.

Mr. Neighbors referred to a sheet of pink paper, contained in Exhibit E, and explained although the figures set forth pertained to the period 1994-95, the percentages shown remained the same. He pointed out Clark County received $185,353,218, or 53 percent, of the $347,22,282 allocated to SDSA for the year in question, while Nye County received $11,023,283, or 3 percent. Clark County generated 2 percent of the revenues from lease of federal lands during that year, while Nye County generated 46 percent.

Mr. Neighbors referred to the next page of Exhibit E and pointed out in 1989, 1990, and 1991, Nevada received 9.2 million dollars in revenues each year. Because the $10 million threshold was in effect during those years, Nevada’s counties received no portion of those revenues. In 1992, the state received revenues of $7,957,000. The $7 million dollar threshold became effective in July of 1992, and to date, because of the established threshold, Nevada’s counties had received no money.

Mr. Neighbors said the next page of Exhibit E showed the manner in which revenue from lease of federal lands was distributed to Nevada. He called attention to the fluctuation in oil prices and pointed out the thresholds of $10 million and $7 million, respectively, had never been reached.

The ensuing page of Exhibit E, Mr. Neighbors said, showed the major sources of revenue from lease of federal lands were oil royalties, geothermal royalties, and lease rental payments. Referring to a pie graph on the following page, Mr. Neighbors pointed out Nevada received revenues of $8.1 in FY1994-95, prior to establishment of the $7 million threshold. He said Churchill County generated 52 percent of those revenues, Nye County approximately 18 percent, Clark County 3 percent, and Washoe County less than 1 percent.

Mr. Neighbors called attention to the monetary distributions reflected on the next page of Exhibit E and asserted approximately 70 percent of all monies generated was generated in Nevada’s rural counties.

Mr. Neighbors referred to a spreadsheet, contained in Exhibit E, which provided a history of A.B. 26, commencing in FY1988-89, and showed how much money was allocated to SDSA.

Mr. Neighbors asked the committee to turn to a page of Exhibit E headed "Fiscal Impact" and pointed out the fiscal impact shown was $158,413,682. He contended the fiscal impact was on counties’ general funds, rather than the state’s general fund. He called attention to the next page of Exhibit E and indicated he tracked funds received as a result of the mineral leasing act since FY1975-76; in that fiscal year, they amounted to $757,000. For FY1997-98, those funds amounted to $5,128,000, and, for the first 6 months of FY1998-99, amounted to $1,800,000. Mr. Neighbors asserted it would be fortunate if they ever totaled $5 million again.

Mr. Neighbors said A.B. 26 would not reduce the amount of money Nevada received from the Federal Government, rather, it would direct that money to the counties in which it was generated and cause Nevada to be in compliance with federal law. He contended local governments in Nevada’s rural areas did not want to depend on subsidies, but they had difficulty financing hospitals, roads, landfills, and other unfunded mandates.

Mr. Neighbors referred to a page in Exhibit E which set forth information regarding oil production. He informed the committee there were fairly large oil fields in Nye County and parts of White Pine County, and one of those wells, 2 years previously, had the largest oil production in the United States.

Mr. Neighbors next referred to the first page of a letter from the United States Department of the Interior, contained in Exhibit E, and a report of federal mineral revenue disbursement for FY1993, attached thereto. He pointed out the report reflected $216,000 was paid to Clark County and $4,005,391 to Nye County. He suggested none of the counties reflected in the report received the money purportedly paid to them.

Mr. Neighbors read aloud the conclusion set forth on the last page of a Legislative Counsel Opinion, contained in Exhibit E, but utilized the term "the federal law" in place of the specific citations of federal law.

Ms. Von Tobel commented, although Clark County did not produce many minerals, it did produce gaming taxes. She wondered what percentage of gross gaming tax remained in Clark County versus the amount distributed to other parts of Nevada. She said, "Maybe this would be a great formula that we could use; such as 75 percent of the gross gaming tax staying in Clark County and 25 percent going out. We’ll probably want to jump on the bandwagon."

Mr. Neighbors stated, although Ms. Von Tobel had a good point, the instant discussion was about the law pertaining to revenues from lease of federal lands and not about gaming tax or other things.

Chairman Bache suggested Robert Erickson, the Legislative Counsel Bureau’s (LCB) Research Director, could answer Ms. Von Tobel’s question about distribution of gaming tax revenues throughout the state.

Ms. Gibbons complimented Mr. Neighbors on his presentation. She said she believed what was proposed was to take power from the state and return it to Nevada’s counties. She expressed approval of that proposition.

Ms. Segerblom asked whether, if the money under discussion was distributed to counties and placed in their general funds, some of the money would be used for schools. Mr. Neighbors replied affirmatively. He pointed out if money was provided in the form of a grant, the amount of money, per pupil, a school received from SDSA would not be affected.

Ms. Tiffany expressed concern Nevada’s counties had a tendency not to distinguish between one-time purposes and ongoing purposes in their use of funds. She observed federal law was fairly clear the monies being discussed were not to be used for things such as salaries and ongoing expenses but were to be used for things such as maintenance and planning. She asked whether, if those monies were distributed to counties, there was a method for determining the uses to which they were put. Mr. Neighbors responded "That’s a good question, and I’d say, again, my argument against putting the schools down there, and not taking them out, was just the fact that if you give them $5, it just means the state doesn’t have to send them $5."

Ms. Tiffany said the point of her question was whether, through counties’ accounting practices, it was possible to ensure the money would be set aside for planning, construction, and public services, as opposed to being used for salaries and ongoing expenses. She again expressed concern and suggested Nevada’s counties, sometimes, needed oversight because some had gotten into financial trouble in the past. Mr. Neighbors responded federal law dictated how the money being discussed was to be used. He pointed out one purpose for which it could be used was construction and maintenance of roads and other public facilities and said, " . . . I think the schools could probably go up there and make a point."

Robert S. Hadfield, Executive Director, Nevada Association of Counties (NACO), testified. Mr. Hadfield provided further response to Ms. Tiffany’s last question. He explained monies returned to a county would be placed in a special revenue fund. Counties were audited every year, and the independent auditor who conducted that audit would ascertain whether expenditures from a county’s special revenue fund conformed to the intent of federal law. Since federal law dictated how the monies were to be used, it would be easy to perform such audits and account for those monies.

Ms. Tiffany asked whether counties’ practices, particularly those of rural counties, provided them the ability to plan and prioritize the use of their funds. Mr. Hadfield replied practices varied among counties. He explained counties had various funds, such as capital project funds, and mechanisms through which to set aside money for specific purposes. One source of counties’ revenues was Federal Payments in Lieu of Taxes (PILT); occasionally, counties had to utilize those revenues to augment their budgets.

Mr. Hadfield pointed out the difficulty Nevada’s rural counties faced, currently, was different from the difficulty they faced in the past. Six of those counties were experiencing declining assessed valuations, not related exclusively to decreased mining activity but to a general, across-the-board, decline in the economy. He described a situation, in Mineral County, in which passage of a school bond issue forced the county to lay off workers and cut its general fund budget. He maintained the issue of facilities was critical. Counties were in as difficult a position as schools with respect to facilities and, he said, were " . . . competing for a tax base that isn’t there."

Responding to a previous question of Ms. Von Tobel, Mr. Hadfield said $134,000 of state gaming revenues was distributed to each county in Nevada. Other gaming revenues counties acquired were based on county-levied gaming fees and taxes.

Mr. Hadfield explained the Supplemental City-County Relief Tax (SCCRT) was the distributive fund for local governments. The difference between that fund and SDSA was that fund was not based on uniform and equal treatment in paying for needs throughout counties. It was based on both counties’ expenditures for FY1980-81 and their projected expenditures for FY 1981-82, regardless of whether they were spending as much or more than they needed to spend.

Mr. Hadfield contended Nevada’s revenue system was complicated and said counties occasionally had problems related to one-shot revenues. However, more and more frequently, restructuring was being effected and caveats imposed to ensure against such problems. Mr. Hadfield stated he could not say local, elected, officials would not utilize one-shot revenues, in an attempt to extricate their local governments, if confronted with situations like the one in Mineral County. However, things were so dire "out there" most local, elected, officials were not doing that but, instead, were cutting costs.

Ms. Tiffany asked whether, if the legislature changed distribution of revenues from lease of federal lands, it would be unreasonable to require a county which received a portion of those revenues to provide the legislature with information about how it intended to spend the money. She again expressed concern about how counties handled their money.

Mr. Hadfield replied he could not express an official opinion on behalf of NACO but would offer his personal observations. He was a local, elected, official and former county manager and felt strongly that local, elected, officials should have power to determine their communities needs and how resources should be allocated in those communities. He asserted continuing to create mechanisms to either deprive local, elected, officials of authority to determine allocation of revenues or require them to " . . . go through extra hoops . . . " would make it more complicated for the public to understand where responsibility lay and hold anyone politically accountable. He would like to see as much political accountability as possible at the level of local government.

Mr. Hadfield expressed the opinion, regardless of what resolution was reached with respect to A.B. 26, local governments had the ability to meet the intent of the law.

Larry Spitler, Legislative Representative, Clark County School District, testified by reading from prepared text (Exhibit F). He said it was possible counties’ needs had been shortchanged in distribution of revenues from lease of federal lands. Although federal law was silent about distribution of those revenues to schools, Nevada’s schools had in fact benefited from them. He maintained any negative impact on SDSA must somehow be addressed, and if A.B. 26 passed, SDSA must be made whole.

Ms. Segerblom asked whether Mr. Spitler believed A.B. 26 was not a good bill for schools. Mr. Spitler responded the revenue A.B. 26 would take from SDSA would have to be replaced from some other source, which created a policy issue. The purpose of the testimony offered on behalf of Clark County School District was to raise the issue of how, from a policy perspective, SDSA was to be made whole if the legislature passed A.B. 26.

Ms. Segerblom asked whether rural schools would still receive the amount of money to which they were entitled if A.B. 26 passed. Mr. Spitler replied, "The rural schools would get whatever entitlement they have coming based on whatever is put in and then massaged through The Nevada Plan." The equity issue would be resolved, but the money schools lost would have to be replaced.

Ms. Segerblom asked whether Mr. Spitler’s last comment pertained to all Nevada’s schools. Mr. Spitler replied affirmatively.

Mr. Spitler stated Mr. Neighbors’ had a good point, from a policy perspective, and, again from a policy perspective, it might be time to review the manner in which schools were funded in terms of operation costs. He said Clark County was very grateful when the legislature, in 1997, approved legislation to provide some remedies related to school construction. The commission established to study school construction, throughout Nevada, would submit legislation to address remaining issues.

Ms. Tiffany pointed out the state’s general fund, rather than schools, would be deprived of the revenues from lease of federal lands if A.B. 26 passed, and contended, by law, SDSA must be made whole. Mr. Spitler maintained those revenues were a component of SDSA, and no provision had been made to replace them.

Ms. Tiffany said she wanted to ensure people did not believe the legislature would be taking money away from SDSA if A.B. 26 passed. She reiterated the money would be taken away from the state’s general fund.

Ms. Freeman commented she had sat on the Assembly Committee on Government Affairs for 12 years and, during the legislative interim, on the Legislative Committee to Study the Distribution among Local Governments of Revenue from State and Local Taxes and, throughout the years, had listened to Nevada’s counties’ problems. She suggested to Mr. Hadfield, as NACO’s director, that Nevada’s rural counties should confer and develop a plan to present to the legislature. She proposed they might consider redefining county boundaries. In light of the current situation, with respect to taxes, services, and industry, existing boundaries were no longer appropriate, and some counties were unable to survive.

Henry Etchemendy, Executive Director, Nevada Association of School Boards, testified. He explained the Nevada Association of School Boards was comprised of Nevada’s 17 school boards and the State Board of Education. He maintained it would improper for someone in his position or for his association to allow A.B. 26 to be processed without expressing concern about protecting the funding mechanism for SDSA and The Nevada Plan. He pointed out legislation was passed which, initially, placed all revenue from lease of federal lands in SDSA and contended the legislature had reasons for passing that legislation. The legislature, he said, also had a reason for establishing, first, the $10 million threshold and, subsequently, the $7 million dollar threshold.

Mr. Etchemendy stated A.B. 26 would result in a "hole" in SDSA, during the next biennium, of at least $7 million. He based that statement on the state’s current financial condition. He pointed out many school programs had been cut and said, "A lot of one-shot programs that were given to the local school districts, such as technology, the funding for technology in the last session – not the equipment itself but the ongoing maintenance, training, rehabilitation and such as that –- all that is gone."

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Mr. Etchemendy said those who asserted school districts and SDSA would remain financially intact were correct if money could be found to keep them whole. However, he contended, that was a big "if." Therefore, The Nevada Association of School Boards believed A.B. 26 should not be passed, and the association opposed the bill.

Mr. Neighbors referred to Mr. Etchemendy’s testimony regarding the deficit passage of A.B. 26 would create in SDSA and asked Mr. Etchemendy how he felt about the deficit created in rural counties’ general funds because they did not receive mineral land lease revenues. Mr. Etchemendy responded if Nevada’s counties believed they were entitled to that money, then there was no question there was a deficit in their general funds. However, the Nevada Association of School Boards was speaking on behalf of schools to protect against the deficit A.B. 26 would create in SDSA if funding was not obtained from another source.

Mr. Etchemendy stated, if A.B. 26 passed, he urged county officials throughout Nevada, particularly those in rural areas, to pay close attention when representatives of their schools asked for assistance in funding school facilities.

Chairman Bache pointed out the 25 percent of revenues from the lease of federal lands to be distributed to SDSA applied from the first dollar of such revenue the state received, rather than after the $7 million threshold was reached. Therefore, the decrease in money distributed to SDSA, if A.B. 26 passed, would be $5.25 million rather than $7 million.

Ms. Tiffany contended the dire portrait Mr. Etchemendy painted was untrue. She asserted SDSA was funded, whether by means of revenue earmarked for that account or supplements from the state’s general fund, and declaimed, "You will get your money." She maintained expressions of fear, uncertainty, and doubt did not constitute a fair argument. If there was a shortage of money in both the general fund and SDSA, then Mr. Etchemendy had a basis for argument; however, in the past 15 years, there had been no such a dual shortage.

Ms. Tiffany said she held discussions with staff of the governor’s office about how to fund staffing, software upgrades, and maintenance for school technology programs, and the governor was working to establish a policy to provide such funding. She maintained it was unfair for Mr. Etchemendy to include a discussion about lack of funding for school technology programs in his argument because that was a separate issue and had nothing to do with discussion of A.B. 26.

Ms. Tiffany stated she believed all the committee needed to do was make a policy decision about whether revenue generated in a county, through lease of federal lands, should be given to that county.

Chairman Bache said he heard counties had considered suing for the monies being discussed on the basis federal law would support their claim. He asked whether Mr. Etchemendy would look forward to being tied up in court if the issue was litigated. Mr. Etchemendy replied the Nevada Association of School Boards would not look forward to being involved in such litigation.

Carole Vilardo, President, Nevada Taxpayers Association, testified. She informed the committee she was testifying neither in favor of nor in opposition to A.B. 26 but because, at some point, something should be done. She referred to testimony of previous witnesses about the amount of money schools would lose if the legislature passed A.B. 26. She maintained the schools would, in fact, be kept whole; however, there was a larger policy issue, as well as an equity issue, which must be addressed.

Ms. Vilardo pointed out a committee was created to study distribution among local governments of revenues from state and local taxes because some of Nevada’s revenue distribution systems were archaic. She urged A.B. 26 be referred to that committee rather than killed.

Mike L. Baughman, Ph.D., President, Intertech Services Corporation, testified. He explained he represented several of Nevada’s rural counties, including Lander County, Eureka County, and Lincoln County. He submitted a one-page document displaying public land ownership in Lincoln County (Exhibit G).

Dr. Baughman said he supported A.B. 26 and informed the committee rural counties were very dependent upon public lands and the revenues derived from them. He stated the economic base in Lincoln County was extremely narrow, and the county had few options for generating revenue with which to fund the general functions of government. The revenue stream addressed by A.B. 26, under federal law, should be distributed to Lincoln County; however, Lincoln County had not received it. That revenue stream would provide relief to Lincoln County, with respect to its ability to perform the general functions of government.

Dr. Baughman urged the committee to pass A.B. 26 without delay. He maintained the bill had previously been before the legislature and discussed and should not be studied further. He asserted there was a need to move on and, again, urged the committee to pass the bill.

Ms. Freeman said she appreciated Dr. Baughman’s concerns but believed Ms. Vilardo’s idea to submit A.B. 26 to the committee studying distribution of revenues to local governments was excellent. She suggested the bill might be used as a vehicle for long-range planning regarding the manner in which the state managed and funded its counties. She declared she could not express strongly enough that state government and the legislature needed to ask local governments to " . . . consider something so that we don’t have this thing coming back to us every 2 years – problems with the schools, problems with the delivery of health care. It just goes on and on."

Mr. Neighbors stated Lincoln County contained more public lands under government control than any other county in the United States. He said in excess of $200 million, including interest, which should have been distributed to counties, pursuant to federal law, had been distributed to other entities. He concurred with Dr. Baughman there should be no delay in processing A.B. 26.

Chairman Bache closed the hearing on A.B. 26.

There being no further business to come before the committee, Chairman Bache adjourned the meeting at 9:40 a.m.

RESPECTFULLY SUBMITTED:

Sara J. Kaufman,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

DATE: