The Committee on Government Affairs was called to order at 8:27 a.m., on Wednesday, May 5, 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

GUEST LEGISLATORS PRESENT:

Senator Jon Porter, Representing Clark County Senatorial District 1

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Following roll call, Chairman Bache opened the hearing on S.B. 194.

Marvin Leavitt, representative, city of Las Vegas, testified in support of S.B. 194. He told the committee he had been asked to testify on behalf of Senator Rawson. S.B. 194 provided for an emergency fund to mitigate the effects of a natural disaster. It had been suggested that such a fund should be combined with the stabilization fund, which was designed for use in cases when revenues were not sufficient for a particular purpose. Such a merger would ensure natural disaster funds could be accessed much more easily.

Carole Vilardo, representative, Nevada Taxpayers Association spoke in support of S.B. 194. She said in 1995 the committee processed the first bill to set aside 10 percent of prior year expenditures from the general fund to be used for either the budget stabilization fund or the capital improvement fund. S.B. 194 would increase that total to 15 percent maximum. The program was voluntary on local government, but it was encouraged. She did not know of any situation where the full amount of the set-aside had ever been used.

Assemblywoman Freeman asked if many local governments had set up such a fund. Ms. Vilardo replied probably half of the 263 governmental units had done so. Assemblyman Neighbors wondered if there was a limit on the amount of money a fund could have. Mr. Leavitt replied the balance in the fund could not exceed 15 percent of the prior year’s expenditures.

Robert Hadfield, representative, Nevada Association of Counties, told the committee eight counties had set up funds so far.

Thomas Grady, representative, Nevada League of Cities and Municipalities, said he did not know how many cities had the fund in place.

Assemblywoman Berman asked if there was any consequence to having too much money in a fund, such as losing matching federal funds. Mr. Hadfield replied he did not think the provisions in S.B. 194 would have that effect, but rather might have helped the situation during the flood of several years ago. It had been necessary to come to the state for some of the matching funds.

Raymond McAllister, representative, Professional Firefighters of Nevada, expressed opposition to S.B. 194. While he was not against establishing funds to mitigate the effects of a natural disaster, he felt S.B. 194 might not be the best vehicle to accomplish that goal. Reports indicated smaller counties which were financially strapped might not need the fund, and it would cause a hardship to have it in statute that such a fund was mandatory.

Another objection, said Mr. McAllister, was that such a fund could be used to save money that otherwise would be made a part of collective bargaining for raises. The entity in question could assert the money needed to go into such a fund and claim it was not possible to give raises. A subsection of S.B. 194 also stated if any balance was left in the fund at the end of the fiscal year, that money was to be used to purchase equipment and supplies required for emergency management and to provide training to personnel related to emergency management. He felt there was too much room for creative uses for such funds, but he would support the bill if the cap was kept at the 10 percent currently allowed.

Andy Anderson, representative, Nevada Conference of Police and Sheriffs, testified in opposition to S.B. 194. Mr. Anderson believed increasing the funds to 15 percent would create a hardship on smaller entities to negotiate raises. While the groups in question sometimes sought only .25 to 1 percent raises or benefits, allowing a government to put an additional 5 percent into the fund could make it difficult to get those monies. He would support the bill with the original 10 percent cap in place.

Assemblywoman Segerblom pointed out it was not mandatory to put 15 percent into the fund. That was the maximum amount allowed, not the minimum. Most counties could not go up to 15 percent. Mr. McAllister agreed most counties would not put 15 percent into the fund, but for some, even if they only deposited 3 or 4 percent per year, they would eventually reach that 15 percent.

Ron Dreher, representative, Peace Officers Research Association of Nevada opposed S.B. 194 as written, but stated his organization would support the bill with the stipulation that the cap remain at 10 percent. From a negotiation standpoint, cities and counties could use the fund as an excuse not to grant pay raises and benefits.

Assemblywoman Tiffany wondered why the problem had not been discussed right after the floods and where the idea for S.B. 194 had arisen. Ms. Vilardo commented S.B. 194 did not come from an interim study, but from discussions with Senator Rawson where he indicated his concern there was not enough money set aside for disaster relief.

Mr. Hadfield interjected the initiative was being addressed at the present time because there had been heavy reliance on state funds to match federal monies. S.B. 194 was a tool to assist local governments to take care of themselves.

Chairman Bache closed the hearing on S.B. 194 and opened the hearing on S.B. 433.

George Stevens, director of finance, Clark County, testified in support of S.B. 433. He said S.B. 433 represented three distinct recommendations of the of the Southern Nevada Strategic Planning Authority for improving the manner in which local governments developed and reported on their annual capital improvement plans and financed the construction of infrastructure.

Mr. Stevens explained section 1 of S.B. 433 required the Department of Taxation to develop a standardized format for reporting. Section 4 of the bill was intended to clarify the authority of local governments to enter into contracts for capital projects to be funded by the proceeds of long-term debt prior to issuance of the debt. The proposed amendments to Nevada Revised Statute 354.626 would allow entities to better match the issuance of the debt to the actual cash flow requirements. To the extent that a local government could combine financing for several purposes, debt issuance costs could be reduced. Section 5 of S.B. 433 allowed a county under certain circumstances to issue debt on behalf of other governmental units so those units could take advantage of the county’s higher credit rating.

John Swenseid, representative, Clark County, provided an explanation (Exhibit C) of certain sections of S.B. 433. He wished to correct a mistake in the explanation. In three instances the reference to a population figure of 400,000 should be deleted. The Senate had amended the bill so it applied to all counties, regardless of population.

Mr. Swendseid explained section 6 of S.B. 433 defined what types of projects could be financed under the bill, such as fire and police protection and certain capital improvements. Section 8 defined what type of obligation could be acquired by a county from local government. A library or park project would have to be balloted by the political subdivision. Projects which could be financed under the bill were those which could not be financed through the state bond bank. A state bond bank could not finance libraries, public buildings, parks, or police protection projects. Certain exceptions which could go to the state bond bank and still be financed under the bill were water authority projects and projects for county-controlled entities.

Assemblywoman Freeman asked why organizations like the Regional Transportation Commission (RTC) would not be eligible under S.B. 433. Mr. Swendseid replied the RTC obligations were already issued through the county under existing provisions of the Nevada Revised Statute.

Assemblyman Mortenson wondered why the water district, for example, would run virtually all its bonds through the state instead of the county, when the credit rating and interest rates for both were double "A". Mr. Swendseid said the water district did not have the option of running bonds through the county. S.B. 433 would ensure that ability.

Assemblywoman Parnell asked why school districts were not in the original bill but were included in the amendment. Mr. Stevens responded the school districts were currently ineligible to use the state bond bank because it could only be used for projects associated with natural resources. The rating agencies had determined it would be in their best interest to go through a bond bank arrangement because the school districts carried only an "A" rating.

ASSEMBLYWOMAN SEGERBLOM MOVED TO DO PASS S.B. 433.

ASSEMBLYWOMAN VON TOBEL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Bache closed the hearing on S.B. 433 and opened the hearing on S.B. 418.

Note: Submitted but not testified to was (Exhibit D), written by Sharon Green, attorney, State Bar of Nevada. Originals are on file in the research library.

Jodi Curry, intern, Office of Senator Dina Titus, testified on behalf of S.B. 418. Ms. Curry explained false claims or key term provisions allowed private citizens the right and financial incentive to bring to light practices which attempted to defraud the government. Some of the common types of false claims included those made by contractors on public works projects, those made by health care providers who overbilled Medicaid or the state industrial insurance system, and people who claimed entitlement to benefits such as subsidized housing. A number of states had enacted false claims acts which had resulted in the recovery of tax dollars. Senator Titus had asked Ms. Curry to urge support of S.B. 418.

Tim Terry, senior deputy attorney general, Medicaid Fraud Control Unit, testified in support of S.B. 418. Mr. Terry explained the bill was modeled after the federal False Claims Act. Under that legislation, someone who had knowledge of fraudulent claims could file a complaint with the courts. The complaint was placed under seal and kept secret until the government decided whether they would intervene. If so, it became primary litigant. If not, the person who brought the action continued with the litigation and any recovery was shared between the reporting party and the government. That was the incentive for reporting such acts. S.B. 418 would prevent an employer from retaliating against anyone reporting false claims.

Assemblywoman Tiffany questioned the need for a statute to prosecute for false claims. Mr. Terry explained there were laws allowing prosecution of false claims, but nothing in statute provided an incentive for private individuals to report the act. The legislation actually allowed people to become private attorneys general.

Assemblywoman Tiffany asked which states had enacted the law, and what protection there was against false claims of false claims. Mr. Terry replied the states that had enacted such a statute were California, Florida, Tennessee, Illinois, and Texas. Others were attempting to pass such a law. He commented that in federal false claim acts, over the past decade recovery had gone from $300,000 in fiscal year 1988 to over $60 million in fiscal year 1997.

Those recoveries were due not to disgruntled employees, but people who had solid evidence of fraud in government programs.

Assemblywoman Tiffany then asked if there was a fiscal note attached to S.B. 418. Mr. Terry said the Attorney General’s Office, along with Senator Titus and various agencies, had decided not to attach a fiscal note for at least a 2-year trial basis. If it appeared to seriously impact the office’s resources, that would be brought up in the next legislative session. Assemblywoman Tiffany asked what criteria would be used to determine if a report of false claims was legitimate. Mr. Terry replied the reasonable doubt standard would apply. The amount of fraud would also be considered to determine if pursuit of a claim was financially feasible.

Assemblyman Humke asked for a timeline of a hypothetical case. Mr. Terry responded when a report of a false claim was filed the attorney general decided whether to intervene within 120 days. Some investigations could take as much as 1 or 2 years. If the case warranted it, the government could ask for and receive an extension of time to keep the investigation under seal of secrecy. Should the government finally decide to intervene, the case would be unsealed, the defendant would be served with a copy of the complaint, and litigation would ensue. The initial complainant had a right to be a part of the investigation and any subsequent decision to accept a settlement of recovery.

Mr. Humke wondered about a fiscal impact to the courts as a result of S.B. 418. Mr. Terry replied there had been only 417 cases nationwide in 1997 where the government had intervened. He did not see a significant fiscal impact to the court system.

Senator Dina Titus, Senate District 7, testified in support of S.B. 418. Senator Titus said the impetus for S.B. 418 was to save the taxpayers money. There had been a number of false claims against the government in public works and in health care, as well as entitlements.

Assemblywoman Freeman asked about whistleblower protection. Mr. Terry explained section 28 of S.B. 418, subsection 2, specifically prohibited employers from discharging, demoting, suspending, threatening, harassing, or denying promotion, or in any other way discriminating against employees who reported fraudulent activity. Assemblywoman Freeman asked if that section covered cases of unionizing activities. Mr. Terry did not feel the legislation was broad enough to cover that situation. In the case of fraudulent activity in a hospital or nursing facility, the relater would contact a private attorney and put together a complaint. They would alert the attorney general at that time. That would kick off the timeline as previously testified. The individual could also call the attorney general and make a criminal complaint, but there would then be no recovery. A private attorney would usually take such a case on a contingency basis.

ASSEMBLYWOMAN FREEMAN MOVED TO DO PASS S.B. 418.

ASSEMBLYWOMAN PARNELL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Bache closed the hearing on S.B. 418 and opened the work session on various bills.

Chairman Bache told the committee S.B. 68 was Senator Jacobsen’s bill changing Peace Officer Standards and Training to a commission instead of a committee. Assemblyman Arberry had informed Chairman Bache there was a fiscal impact and asked the committee for a motion to do pass and rerefer.

ASSEMBLYMAN NEIGHBORS MOVED TO DO PASS AND REREFER

S.B. 68 TO THE ASSEMBLY COMMITTEE ON WAYS AND MEANS.

ASSEMBLYMAN HUMKE SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Senate Bill 182: Revises method of calculating fee charged to user of water for beautification of city. (BDR S-117)

ASSEMBLYMAN LEE MOVED TO DO PASS S.B. 182.

ASSEMBLYWOMAN PARNELL SECONDED THE MOTION.

Due to technical difficulties with another bill which required attention, Chairman Bache asked the committee to withdraw the motions on S.B. 182.

MOTIONS WITHDRAWN.

ASSEMBLYMAN BERMAN MOVED TO AMEND AND DO PASS S.B. 366 WITH THE SUNSET EXTENSION OF 2 YEARS.

ASSEMBLYWOMAN GIBBONS SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Marta Brown, representative, North Las Vegas, in response to a question Assemblywoman Freeman had asked as to who the current city attorney was, said he was the city manager. He was an appointed employee as were most of the employees of the city of North Las Vegas.

Chairman Bache reminded the committee city attorneys, because they were responsible to the city manager, might not necessarily give legal advice to council members upon request when the city manager might issue conflicting orders.

Assemblyman Humke commented it was better in his opinion that a city attorney be elected rather than appointed. Assemblywoman Tiffany agreed with that position.

Assemblyman Mortenson stated he was concerned that a commissioner would have the power to terminate a city attorney if he or she did not like the position taken by that attorney. He would like to see more isolation from that possibility. Chairman Bache answered the issue under debate was different, since it dealt only with the city council, not a county commission.

ASSEMBLYMAN HUMKE MOVED TO DO PASS S.B. 454.

ASSEMBLYWOMAN VON TOBEL SECONDED THE MOTION.

THE MOTION CARRIED. ASSEMBLYMAN MORTENSON ABSTAINED.

Chairman Bache informed the committee the state controller had suggested certain amendments to S.B. 500 to the Senate, which had voted against them. Chairman Bache felt the bill was appropriate without those amendments.

Ms. Vilardo said she had testified in support of S.B. 500 during the Senate hearing, based on its original form.

Dave Ziegler, committee policy analyst, said the issue was centralized versus decentralized debt collection in agencies other than those with statutory authority to collect their own debt. The controller had recommended centralized collection.

ASSEMBLYMAN HUMKE MOVED TO AMEND AND DO PASS S.B. 500 WITH THE CONTROLLER’S AMENDMENT.

ASSEMBLYWOMAN PARNELL SECONDED THE MOTION.

THE MOTION FAILED.

ASSEMBLYMAN THOMAS MOVED TO DO PASS S.B. 500 AS WRITTEN.

ASSEMBLYWOMAN FREEMAN SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Bache explained S.B. 542 concerned the merging of parcels and resubdivision of parcels in Clark County.

Mr. Ziegler said Lesa Coder, representing Clark County, testified the bill would allow the county to eliminate certain revisionary maps and make other changes for expediency.

ASSEMBLYWOMAN FREEMAN MOVED TO DO PASS S.B. 542.

ASSEMBLYWOMAN SEGERBLOM SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Bache told the committee the bill was before them for discussion only. An amendment had been presented by Denice Miller from the Governor’s Office, as well as one from James Wadhams, representing the Nevada Association of Health Underwriters.

Assemblywoman Parnell was concerned if there was an amendment to ensure the groups of 300 did not drop out effective July 1, 1999.

Assemblyman Humke said he felt if an organization wanted to form their own health care organization they should be allowed to do so. S.B. 544 would assure proper administration of such health care.

Chairman Bache commented there was a 120-day provision in S.B. 544 which added another 4 months to the time limit for dropping out, and the committee on benefits would have to approve any application to do so.

Assemblywoman Tiffany told the committee she had been a health care and life insurance broker. She was in state self-insured and did not need all the benefits, but had to pay $300 a month to get any of them. She approved of S.B. 544 since it helped people who could not afford rich benefits, but needed lower premiums.

Assemblywoman Freeman agreed with the previous speakers, and was eager to review the program in 2 years to see how it was working.

Chairman Bache reviewed the amendment proposed by Denice Miller, contained in section 12.5 of S.B. 544. He felt the amendment was very important in that it reduced the amount of change from 10 percent to 5 percent to the bottom line before approval for leaving the system would be granted. In a group of 20,000 insured people that would be quite a significant change. As to appointments of members to serve, he felt the key factor was the control allowed by such a measure, not necessarily the length of time served. The legislators would have oversight through an interim legislative committee on health care. He suggested an amendment to remove a board member for just cause instead of being subject to removal by the governor.

Assemblywoman Von Tobel felt allowing groups of 300 or more to leave the system would be harmful since they took with them their state contribution. There were four state plans from which to choose, and such contributions helped those four plans. She felt the amendment would weaken the state system. If a group of 300 could find better insurance, why then could not all state employees be offered that same plan. Chairman Bache said the amount of money the state contributed to the health plan was in lieu of salary, so an employee who elected not to take state insurance would receive a salary reduction. Further, a private insurance plan might come about as a result of affiliation with certain organizations not all state employees would have.

Assemblywoman Tiffany said premiums were not set by the amount of money the state did or did not pay toward the premium, but rather through acturarials such as age, sex, health, and previous conditions. She felt the people who pulled out would not impact the body as a whole. Rather, it would actually work in reverse of the scenario just promulgated.

Assemblywoman Freeman suggested removal of sunset for the interim legislative committee on July 1, 2001. Chairman Bache said any specific amendments to S.B. 544 should be submitted as soon as possible .

There being no further business before the committee, Chairman Bache adjourned the meeting at 10:52 a.m.

RESPECTFULLY SUBMITTED:

Lois McDonald

Transcription Secretary

RESPECTFULLY SUBMITTED:

Virginia Letts

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

DATE: ________________________