The Committee on Government Affairs was called to order at 8:18 a.m., on Friday, April 16, 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

Mr. Kelly Thomas

Ms. Sandra Tiffany

Ms. Kathy Von Tobel

Mr. Wendell Williams

COMMITTEE MEMBERS EXCUSED:

Ms. Gene Segerblom

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Chairman Bache called the meeting to order at 8:18 a.m. and opened the hearing on Senate Bill 111.

James T. Spencer, Deputy Attorney General representing the Department of Administration, testified in support of S.B. 111 and gave a brief background of the bill. Prior to 1985, Nevada law allowed an agency head to purchase retirement credit for himself or for others out of the agency budget. There were no restrictions on the purchase. In 1985, legislation that put certain restrictions on those regulations was enacted, resulting in Nevada Revised Statute 286.3007. The restrictions would have required the agency to enter into a pre-employment agreement with the employee before he or she came to work, and the employee’s service credit could be purchased by the agency, then after only one year of service with the agency.

The language in S.B. 111 was drafted due to a recent problem when an agency head, represented by private counsel, sought to extend his employment for a period of years in order to effectuate a purchase of retirement credit. The Board of Examiners, who in effect was the "gatekeeper" of such events, was advised by Mr. Spencer that such an agreement was unlawful and contrary to statute. The request was denied. Nonetheless, private counsel went back to the state agency and advised the agency everything was fine. The agency entered into the agreement contrary to the denial. When the payment was not made, the state employee, who was the executive director of a commission, sued and eventually was successful because a jury rendered a verdict.

"I don’t think anyone can explain the mysteries of juries," Mr. Spencer remarked. The language in S.B. 111 was intended to tighten the statutes and clarify that the purchase of retirement credit could only be made pursuant to an agreement prior to the initial hiring of the employee.

Mr. Spencer indicated he had been authorized by the Public Employees Retirement System to tell the committee there was no fiscal impact on PERS, and that PERS maintained a neutral stance on the bill.

Robert J. Gagnier, Executive Director, State of Nevada Employees Association, agreed with Mr. Spencer’s statements. S.B. 111 was a clarification no one thought would ever become necessary, he said. He did not understand how the statutes could have been so misunderstood and the case cited by Mr. Spencer was an abuse of the law. The language in S.B. 111 would clear things up.

Chairman Bache noted that Dana Bilyeu of PERS was in the audience, and asked her to give PERS’ position statement on S.B. 111 for the record.

Dana Bilyeu, Operations Officer, Public Employees Retirement System, indicated Mr. Spencer’s statement of PERS’ position was correct. There was no fiscal impact, and no plan design impact with respect to the statute. PERS had no position with respect to the bill.

Chairman Bache closed the hearing on S.B. 111.

Before moving on, he distributed a draft amendment to Assembly Bill 566 (Exhibit C) and asked the committee to review it prior to a formal hearing. He wanted to be sure the committee felt the amendment language met the intent of the original motion. The amendment to the bill defined traditional neighborhood development, deleted "narrow streets", used slightly different language, but addressed the committee’s intent that a land use plan may include a provision that "allows for a mixture of at least residential and commercial land uses such as is characterized in a traditional neighborhood development." Later on, he continued, the language, "The zoning regulations must include a provision that allows for a mixture of at least residential and commercial land uses such as is characterized in a traditional neighborhood development," was inserted. Chairman Bache felt the amendment met the intent of the committee’s vote and, seeing no objections from the members, optioned to e-mail Eileen O’Grady so she could have the amendment printed in official form.

Mr. Bache opened the hearing on Senate Bill 125.

Brian Krolicki, State Treasurer, described S.B. 125 as the "long-anticipated, much-fun-poked-at Assembly Bill 82 [of the 69^th Legislative Session] morphed into its current form." He proceeded to explain the history of the bill to the new members of the committee.

S.B. 125 transferred the Division of Unclaimed Property into the State Treasurer’s Office, Mr. Krolicki said. Unclaimed property, in its simplest form, was repatriating property that rightfully belonged to people that had somehow been lost somewhere – such as in companies, bank vaults, or data banks – to the rightful owners. The first laws for unclaimed property in Nevada were written in 1979, and at that time the enforcement and locating responsibilities fell upon the Department of Commerce. In 1983 the Division of Unclaimed Property was created and placed within the Department of Commerce.

After a reorganization by former Governor Bob Miller in 1993, the Division of Unclaimed Property was transferred into the new Department of Business and Industry.

Since Business and Industry employed over 700 people and oversaw 27 divisions, transferring the Division of Unclaimed Property to the Treasurer’s Office simply made sense, Mr. Krolicki opined. Cash management was the chief function of the Treasurer’s Office. Last fiscal year over $27 billion passed through. "It’s our job to move things and make cash an interest-earning asset as quickly as possible," he said. The bill was heard twice before in previous legislative sessions, and he hoped the "third time would be the charm." S.B. 125 had the full support of Governor Guinn, and had passed the Senate 21 to 0.

Mr. Krolicki indicated there might be a technical amendment needed to resolve conflicts with other bills processed recently.

Chairman Bache indicated there was a conflict amendment notice on the bill because of the change from the Deputy Treasurer of Operations to the Deputy Treasurer of Debt Management.

Assemblyman Mortenson posed a hypothetical question. A safety deposit box key was found among the possessions of a deceased person, he said. No one came forward to claim the key. Banks all over Nevada were queried. It had a Mosler key serial number on it. He wondered if Unclaimed Property would be able to trace the legal owner.

John Adkins, Deputy State Treasurer, assured Mr. Mortenson the networking system in effect with other states would most probably be able to trace the owner of the key. If none was found, the safety deposit box would then be opened and its contents would then become Unclaimed Property and would be held by the Administrator of the Unclaimed Property Division.

Assemblywoman Parnell wondered why the legislation had failed in previous legislatures and whether the reasons for its failure were because the money always reverted to the General Fund.

Mr. Krolicki did not feel where the money went was the issue. It was an oversight issue. Unclaimed property belonged to someone or to someone’s estate, and that was the overriding priority, he said. However, if the money could not be repatriated, it eventually turned into monies that went into the General Fund. With the oversight transfer, no changes were made in the actual procedures of unclaimed property.

Assemblywoman Freeman asked if the Treasurer’s Office had the technology and expertise available to handle all the different duties that would be inherent with the transfer of Unclaimed Property to that office. Mr. Adkins reassured Mrs. Freeman the Treasurer’s Office was fully capable of handling the additional responsibilities without additional funding. Mr. Krolicki indicated the technology platform in his office was superior to that currently used by the Unclaimed Property Division.

Assemblyman Lee asked Dan Tom why he was allowing the Unclaimed Property Division to be "slid out from underneath" him, and if he was afraid he was unable to do the job properly.

Dan Tom, Director, Department of Business and Industry, disagreed. There were opportunities for efficiencies within the Treasurer’s Office that Business and Industry did not enjoy, especially in its networking capabilities with other states.

Assemblyman Neighbors asked for an average of the unclaimed monies that eventually went into the General Fund.

About $6.5 or $7 million was transferred into the general fund fiscal year 1998-99, Mr. Krolicki replied.

Mr. Neighbors inquired as to the association with counties having unclaimed property. Counties normally transferred such property to the state, Mr. Krolicki answered.

In response to a question by Mr. Neighbors regarding the time frame involved in those transfers, Mr. Adkins countered with a question of his own. Was it unclaimed property the county possessed, or collected? If counties themselves held unclaimed property, a report was to be made to the state and transferred. Property collected by a county was handled by the county assessor and then transferred. The two processes basically worked together, thereby relieving county treasurers or assessors of the responsibility.

Mr. Neighbors wondered how often an agency advertised unclaimed property lists. About twice a year, Mr. Adkins responded. He contended there were more efficient ways to contact unclaimed property owners, but the advertising was supposed to be in the county in which the property resided.

Assemblywoman Berman asked Mr. Krolicki if his budget would be increased if the Unclaimed Property Division were transferred to the Treasurer’s Office. No increase was anticipated, Mr. Krolicki replied. Mr. Adkins elaborated. The current budget as proposed by Business and Industry with respect to unclaimed property would transfer to the Treasurer’s Office with no increase than that already authorized. For 1999 the amount was $566,000. For 2000 it was $545,000.

Ms. Berman observed the Treasurer’s Office would get $1 million it would not have had otherwise. Mr. Adkins reminded Ms. Berman there was also an associated $1 million in expenses, so the net value was zero. Ms. Berman asked if the Treasurer’s Office would gain a monetary enhancement from handling the division aside from the General fund. Mr. Krolicki indicated an existing operation was simply being moved into the state treasury. There was no extra enhancement. There was no extra cash. All the Treasurer’s Office was attempting to do, he said, was absorb Unclaimed Property and blend it into the existing structure, budget, and personnel, and hopefully make it work better at less cost.

Ms. Berman asked about the web site. Mr. Krolicki explained the Treasurer’s Office operated a web site and was hoping to enhance the effectiveness of unclaimed property by linking to the database.

Assemblywoman Tiffany, observing the bill had been heard in two previous legislative sessions, felt it was a controversial and difficult issue. She thought the issue might be better handled through an interim study, or perhaps even moving Unclaimed Property to the Secretary of State. The Secretary of State had the ability and personnel to manage large organizations, plus an ongoing relationship with banks and financial institutions. She thought a hold should be placed on the bill and the committee consider placing it into an interim study.

Chairman Bache agreed Ms. Tiffany’s suggestions were possible. He heard there would be one Senate Joint Resolution coming to the Assembly side which contained amendments dealing with the treasurer and the Secretary of State’s Office.

Ms. Tiffany thought Mr. Krolicki’s suggestion was a good one, and did not think immediate action should be taken on the bill.

Assemblywoman Freeman had heard of other bills under consideration that dictated the use of unclaimed property funds, and asked Mr. Krolicki to explain.

There had been some thought about using the money, rather than putting it into the General Fund, for economic development, Mr. Krolicki replied. Mr. Tom elaborated. He was aware of two bills, one of which was a welfare measure to allocate a portion of dollars escheated by utility companies to a fund to help lower income people to pay their utility bills. The other was a measure that suggested some of the funds could be used for venture capital purposes.

Assemblyman Mortenson asked for a rough percentage of unclaimed property that was actually reclaimed and how much went to the state.

At the close of 1998, John Adkins answered, $1.93 million was returned to claimants. This came out of the total $6, the balance of which was returned to the General Fund.

Assemblyman Neighbors wondered what was the largest unclaimed property in dollar value with which Mr. Adkins had dealt. Mr. Adkins was not sure, because some of the transaction information was still not accessible. He recalled one of around $600,000. Mr. Neighbors had real concerns with the infrequency of advertising unclaimed property, especially since the monies eventually went into the General Fund. Mr. Adkins assured Mr. Neighbors the Treasurer’s Office would pursue other avenues for claimant location such as the internet and television.

"Mr. Krolicki, last session I quizzed you on what kind of unclaimed property they had, and you didn’t do too well," Chairman Bache remarked. "Now I want to hear from you this time. I assume I’ll get a better answer. I assume you figured out cars are not part of unclaimed property?"

There was an exception, Mr. Krolicki replied. If an automobile was found in a warehouse, the warehouse would be liquidated and the automobile would then become unclaimed property. The preponderance of unclaimed property consisted of cash, securities, [bank] deposits, or utility deposits.

Mr. Bache asked if Mr. Adkins would become Deputy Treasurer of Unclaimed Property. Mr. Adkins emphatically said he would not administer the division but presumed he would have some sort of oversight position.

Chairman Bache referred to the issue of the utility companies. He wondered if unclaimed property could be used to assist low-income consumers whom, " . . .as we are transferring to the deregulated environment, are unable to choose an alternative seller of electric service."

Chairman Bache closed the hearing on S.B. 125 and reiterated no action would be taken until all Assembly bills had been sent to the Senate. He opened the hearing on Senate Bill 367.

Madelyn Shipman, Assistant District Attorney, Washoe County, described the bill as one designed to bring the deferred compensation language already in the statutes into conformance with federal law.

Chairman Bache recognized the language as similar to other legislation, and indicated any action would be held on Senate bills until all Assembly bills moved to the floor.

After further discussion regarding the committee schedule, Chairman Bache adjourned the meeting at 9:05 a.m.

RESPECTFULLY SUBMITTED:

Charlotte Tucker,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

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