The Committee on Government Affairs was called to order at 8:30 a.m., on Tuesday, May 11, 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

COMMITTEE MEMBERS EXCUSED:

Mr. Wendell Williams

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Because some Nevada banks desired to remain open on December 31, 1999, in order to demonstrate confidence to the public in their computer systems entering the millenium, an amendment was provided that would amend subsection 1 of the Nevada Revised Statutes (NRS) chapter 662.255 (Exhibit C). That would allow a banking establishment to elect to close on Saturdays, Sundays, or legal holidays

Exhibit D, proposed by Chairman Bache, would provide for the following amendments:

• Amend section 1 of NRS 236.015 to allow for Nevada Day to be observed on the fourth Friday in October.

• Section 3 of NRS 388.110 would be amended by placing a period after NRS 236.015 and deleting the remainder of the line.

• Deleted lines 1, 2, and 3 on page 3 of S.B. 31.

Chairman Bache informed the committee there was a clarifying amendment to S.B. 291. The main change would be amending the term "draught" to "amount of water" (Exhibit E).

Chairman Bache informed the committee that since there were a large number of proposed amendments, it would be easier to vote on the various proposed amendments separately thereby simplifying the process.

Mrs. Freeman proposed an amendment to S.B. 544, which would eliminate the "sunset" date on the interim legislative committee created by section 12 of the bill. She felt because it was such an important issue, she was concerned if the date went into effect the state would not have continuing legislative oversight for the Committee on Benefits; therefore, she proposed deleting line 6 on page 29 (Exhibit F).

Mr. Humke asked if the Legislative Committee had intended that if the sunset date was to be removed, it would become a statutory standing committee. On a practical matter, a statutory standing committee was beyond the control of leadership thereby creating a policy issue with which to deal.

Mrs. Freeman commented in a prior session it had been disputed all the statutory committees should be eliminated. It had been argued on the floor of the Assembly that many of the committees were needed and funded with general fund monies. She reiterated S.B. 544 was important legislation and stressed the need for continuing legislative oversight.

Mr. Humke remarked given the fact it was a legislative committee, it would be advisory because of the possibility of a "separation of powers" problem. He believed the bill would give the authority to manage the benefits committee to the governor, and the legislative branch could only have advisory authority with minimal oversight. If the intent of the individual who proposed the amendment was to ensure the benefits committee did not get into trouble again, he was unsure an advisory legislative committee could prohibit that from occurring.

Directing his comment to Chairman Bache, Mr. Humke said he did not discover any wording implying the committee would be advisory; however, in his estimation it would inherently have to be advisory because it was an executive branch function in control of carrying out an insurance program.

Chairman Bache remarked he believed the interim benefits committee was structured parallel to the interim retirement committee. He suggested if Mrs. Freeman’s amendment was adopted, and the Senate did not concur, the Assembly could combine both interim committees.

Ms. Tiffany asked if the interim committees had the ability to return with suggestions for statute changes in Bill Draft Requests (BDRs), to which Chairman Bache responded affirmatively.

Ms. Tiffany asked if those committees would also have the ability to request legislative audits. Chairman Bache replied the committee could request an audit through the legislative commission; however, it was ultimately the commission’s responsibility to request such audits.

Ms. Tiffany remarked S.B. 544 was not a policy issue, so she was reluctant to create the new committee unless it was a policy to be examined as long-term; however, she was agreeable in combining the interim committees. She asked how often the interim retirement committee met, to which Chairman Bache replied the committee had conducted approximately five meetings between sessions.

Mrs. Freeman understood the reluctance to interfere in the administration of the executive branch, but she was concerned with the problems that had occurred with the state self-funded insurance plan because there was no legislative oversight. She expressed concern with regard to the ability of one of the branches of state government being able to "step in" when problems occurred with another branch in order to request necessary changes. If Chairman Bache felt the interim retirement committee would help to allay her concerns, she was agreeable to the bill.

Ms. Tiffany asked if the number of people on the interim benefits committee would be changed as a result of the combination. Chairman Bache replied it was assumed current language relating to the interim retirement committee would be used, which was a six-member committee and similar to the structure the interim benefits committee.

Ms. Parnell asked if those six people would handle the responsibilities of both committees, or would additional members be recommended. Chairman Bache replied the intent of the motion was to amend the name of the interim retirement committee to the interim retirement and benefits committee, and would be a six-member committee only.

Chairman Bache indicated he possessed an amendment that had been proposed by the Office of the Governor. He believed a slight conflict existed between that amendment and some of the others dealing with the same section. He would review all proposed amendments before addressing the amendment from the governor.

Chairman Bache called attention to the proposed amendment submitted by Jim Wadhams (Exhibit G) which did not conflict with any of the amendments he possessed. The amendment would amend section 15, lines 20 to 25 of S.B. 544, to allow companies to secure group health or worker’s compensation insurance for its officers and employees and their dependents.

Chairman Bache remarked the amendment proposed by Senator Raymond Rawson (Exhibit H) did not conflict with any other proposed amendment. The amendment would allow session employees of the Legislative Counsel Bureau (LCB) to maintain their insurance coverage through Consolidated Omnibus Budget Reconciliation Act (of 1984) (COBRA) without a lapse between sessions.

Responding to Ms. Von Tobel’s remarks regarding COBRA, Mr. Humke said Senator Rawson’s amendment would extend COBRA coverage for coverage for an additional 3 full calendar months.

Ms. Tiffany remarked she had been under COBRA policy and thought it was a very useful benefit to allow the session employees to advantage of the policy. Because there was no fiscal impact to the state, and because there would be no problem with the actuarial, she supported the amendment enthusiastically.

A proposed amendment received by the committee from Gary Crews, legislative auditor, suggested eliminating "…all applicable…" on line 9 of S.B. 544 (Exhibit I).

Chairman Bache informed the committee all the remaining amendments that had been submitted dealt with section 12.5 and section 18. The committee began by reviewing those amendments related to section 18.

Chairman Bache asked Martin Bibb, executive director, Retired Public Employees of Nevada (RPEN), if his proposed amendment (Exhibit J) was based on what had been proposed by the governor (Exhibit K), and if it was a clarifying amendment. Mr. Bibb replied affirmatively. He believed what had been proposed by the governor dealt with section 18, subsection 3, part (a), but not part (b).

Mr. Bibb summarized his previous testimony dealt with language with regard to the one retiree recommended to serve on the Committee on Benefits. As presently drafted, S.B. 544 (first reprint) indicated in section 18, subsection 1, part (b), there was to be one member who was retired from employment with the State of Nevada and appointed by the governor upon consideration of any recommendations of organizations that represented retired public employees. RPEN viewed the provision as exclusionary in that it prohibited any other retired public employee from even being nominated to serve on the Public Employees Benefits Board.

The amendment provided would amend section 18, subsection 1, part (b) to read, "one member who is retired from public employment, appointed by the governor upon consideration of any recommendations of organizations that represent retired public employees." By enacting the change, RPEN or any other group that represented retired public employees, could nominate a retired state or public employee. Another proposed amendment would change section 18, subsection 3, part (b) to read, "Except for a member appointed pursuant to paragraph (g) of subsection 2, be a current employee of the State of Nevada or another public employer that participates in the program or a retired public employee who is a participant in the program." Enacting the change would then permit those 1,150 participants in the state self-funded plan (not necessarily retired state employees) to at least be able to compete for the one retiree position on the board.

Upon review of the amendments proposed by both Mr. Bibb and the governor, Chairman Bache determined both said essentially the same thing although worded differently. Mr. Bibb said in essence they were the same.

Chairman Bache asked if, since they were essentially the same, the suggested change to section 18, subsection 1, part (b), proposed by Mr. Bibb could be overlooked the present time and the committee would address subsection 3, part (b). Mr. Bibb replied affirmatively and reiterated part (b) was simply the second half relating to the fact an individual that was selected for the retiree position must be in the group insurance plan. He felt the present language of the bill was exclusionary and would eliminate those 1,100 public employees and retirees from being considered.

Ms. Segerblom asked if the amendment would include retired schoolteachers, to which Mr. Bibb replied it would.

Chairman Bache remarked with the elimination of Mr. Bibb’s proposed amendment to section 18, subsection 1, part (b), the governor’s amendment would not conflict.

Further proposed amendments submitted by Chairman Bache (Exhibit L) dealt with parts (f) and (g), which slightly conflicted with the amendments offered by the Office of Governor. The governor’s amendments would combine the two parts into one, whereas Chairman Bache’s amendments would leave them separate. The amendment offered by Chairman Bache would clarify a member appointed by the governor could be an administrative employee of the State of Nevada, as well as the executive director of the Public Employee Retirement System (PERS). He wanted to provide for a management representative on the benefits board.

Chairman Bache commented the proposed change to section 18, subsection 1, part (g) would sunset those members to July 1, 2003. He expressed concern nonparticipants would make determinations relating to benefits for those participating in the plan.

Ms. Tiffany remarked she preferred keeping a representative who was not a participant in the self-funded insurance plan, but who did have experience in the private sector, on the board.

Referring to part (f), Mr. Humke remarked the person currently indicated in part (f) would not have to be a plan participant, but Chairman Bache’s amendment required the person to be either an administrative employee of the state or the PERS executive officer. If that was so, he agreed with Ms. Tiffany’s point about bringing in individuals from the private sector. As a modern trend, a member or members of the public were selected and included on boards and commissions considered by the legislature because they were not licensed or regulated under that board or commission.

Chairman Bache reiterated he was not agreeable to having nonparticipants on the board because the money that went into the insurance program was in lieu of salary, and those individuals made decisions on how to expend money contributed by those who were participants. He felt members of the insurance plan should be making those policy decisions.

Mr. Humke commented when the character of the benefits committee, as well as the portfolio of investments was examined, the purchase of the benefits was a complicated issue. There was a real question of whether the money transferred to an employee was really transferred or if it retained the character of taxpayer funds. Because plan contributions did retain some character of taxpayer funds, common ordinary citizens, not just public employees, with expertise could and should be appointed to the benefits committee.

Ms. Parnell asked what was the composition of the PERS board. Andy Anderson, representing Nevada Conference of Police and Sheriffs (NCOPS), replied he was on the PERS board, which was comprised of seven members. Those individuals represented state or school administrators, city administrators, county administrators, state employees, city and county employees, and there was one retiree and one schoolteacher.

After hearing the makeup of the board, Ms. Parnell commented the PERS board was not comprised of individuals necessarily with expert knowledge of investments; however, those members had a direct buy into the plan. Mr. Anderson said that was true and added, those members on the board did have knowledge of benefits to some degree.

Ms. Tiffany commented because she paid 100 percent into the plan, she wanted to have some expertise on the board. One of the concerns the state had with regard to the board was its composition. By adding the legislative committee, in addition to experts from the private sector, additional oversight on benefits would be achieved.

Mr. Humke remarked while there were obvious comparisons to the PERS board as to similarity of function, he felt it was a mistake to only look toward the PERS board. Other state governments maintained nonmember participants on their boards and had the ability to act as a fiduciary with other individual’s money.

Ms. Von Tobel remarked the entire history of the Committee on Benefits needed to be reviewed. Had the prior board on benefits possessed outside expertise, they would not have lost such a large amount of money. She stressed the economic forum was comprised of all outside experts and queried why the state would not want that for its insured members.

Chairman Bache stressed the issue was not the composition of the Committee on Benefits, but a lack of structure with no authoritative position on the board. There had been requests for audits of the benefits committee in 1993 and 1995 but those requests had been rejected by the legislature. The previous risk manager had the authority to perform certain tasks, but was prohibited from performing others by statute. The prime purpose of S.B. 544 was to restructure the committee so there was an executive director responsible for managing the benefits who would be accountable to the board. The board would be the policymaking body whereas the experts would be responsible for implementing that policy.

Mr. Humke asked if amending that section would leave the requirement for the expertise, risk management, portfolio investment strategies, and so on. Mr. Bache replied the amendment would not replace those qualification requirements.

Mrs. Freeman asked if one of the board members could be a nonparticipant. Chairman Bache replied that was addressed in part (g).

In reviewing page 3 of Exhibit K, Mr. Humke said the issue was treated by combining subsection 1, parts (f) and (g) thereby providing for three members to be appointed by the governor. If part (f) was approved, the proposed amendment from the Office of Governor would be altered.

Ms. Tiffany remarked the governor had intended the positions to be three private sector positions to which she did not agree; however, if the committee was to amend part (f) and leave part (g) alone, she would agree.

Chairman Bache informed the committee the only amendment in conflict was his proposed amendment that dealt with section 18, subsection 1, part (g). It had been suggested to sunset those members indicated in subsection 1, part (g) in 2003. Senator Raggio had desired the expertise of the members on the board; however, Chairman Bache desired to eliminate those members altogether. Exhibit L proposed a compromise between the two.

Mr. Thomas concurred with Chairman Bache’s concerns with regard to the representation on the board.

Chairman Bache called for a motion to accept the remaining amendments proposed by the Office of Governor.

Mr. Humke stressed the amendment proposed by the governor with regard to combination of subsection 1, parts (f) and (g) were now nullified.

Chairman Bache informed the committee there was one remaining amendment from RPEN, Exhibit J, that dealt with section 18, subsection 3, part (b)

Chairman Bache stated the committee would address those amendments that dealt with section 12.5 of the bill.

With regard to Exhibit L and section 12.5, Ms. Von Tobel remarked she desired to see the date those groups could leave the system as January 1, 2002, instead of 2001.

Referring to a proposed amendment from State of Nevada Employees Association (SNEA), submitted from Bob Gagnier (Exhibit M), Chairman Bache said Mr. Gagnier desired if the committee did not entirely eliminate section 12.5, that they delayed it. He suggested the committee deal with the proposed amendment relating to section 12.5 from the Office of the Governor prior to accepting motions on any of the other proposed amendments.

With regard to Exhibit K, Chairman Bache pointed out that amendment would reduce the impact those leaving the plan would have on the system from 10 percent to 5 percent, and would provide that approval was at the board’s discretion and subject to procedures established by the board. The approval to leave the program would not take effect until 120 days after approval.

Ms. Von Tobel commented the committee could combine both proposals (from Chairman Bache and the Office of the Governor) relating to section 12.5. She felt the two would work well together.

Mr. Humke remarked it was obvious the committee wished to reduce the impact percentage from 10 to 5 percent, and asked if the committee also desired to include consideration of the cumulative affect of the groups that had departed the plan. Chairman Bache replied that was part of the proposed amendment. The percentage of the impact on the plan dealt with a fiscal impact only, not the percentage of employees. He felt the date of January 1, 1999, would coincide with the renewal and change of benefits and would not complicate issues in the middle of a plan-year.

In order to vote on his amendments, Chairman Bache turned the meeting over to Vice Chairman Lee.

Chairman Bache explained the first proposed change indicated by Exhibit L would amend section 12.5 to become effective on July 1, 1999, for the purpose of enacting regulations. Groups that desired to leave the plan would be able to examine the possibility of leaving at that time. It had been his original intent to permit those groups to leave as soon as possible; however, because of concerns that had been expressed, the date of January 1, 2001, had been proposed in order for groups to leave the system.

Ms. Von Tobel was concerned with the date of January 1, 2001, because the change would come prior to the next legislative session. She felt more time was needed in order to allow the state self-funded plan to recover. If groups left before the next legislative session, she thought it would complicate the plan. She suggested delaying the timeframe until January 1, 2002, in order to determine if the plan was still financially stable and to determine how many individuals had already departed during open enrollment.

Mr. Humke clarified the motion on the floor included the regulation date of July 1, 1999, and January 1, 2001, for the purpose of groups leaving the system. He suggested a separate motion be made on each proposed amendment. The date of July 1, 1999, was an agreeable date; however, he did not agree with the date of January 1, 2001. He felt sufficient roadblocks were contained in the governor’s amendment. If the proposed board could not find adequate reasons to prohibit specific groups from pulling out of the system regardless of a set date, then that board was the appropriate decision-making board.

Mr. Neighbors concurred with the sentiments of Ms. Von Tobel regarding changing 2001 to 2002.

Ms. Parnell suggested a compromise date of July 1, 2001, which would follow the next legislative session and would allay Ms. Von Tobel’s concerns.

Ms. Tiffany supported not delaying the timeframe in which a group could pull out, and she desired two separate motions be made for those separate amendments.

Mrs. Tiffany said 300 people would not greatly impact the outcome of the successful recovery of a plan in which 17,000 individuals participated and stressed S.B. 544 would be a great test to examine the consequences of groups separating from the plan. She felt the governor’s intent was for groups to be able to eliminate themselves from an unsuccessful plan.

Ms. Von Tobel pointed out enacting legislation for only 300 people was a mistake. The state should not assume only those 300 individuals would take advantage of the act, but that numerous groups would take advantage of the act. She cited the reason self-insured groups formed was because a group could get better rates and develop a better plan as a group. Although she did not blame those groups for their desire to exit the self-funded insurance plan, she warned the plan was still in its recovery phase and cautioned allowing groups to leave.

Ms. Von Tobel stressed the Committee on Benefits could add additional insurance carriers to the employee selection. Individuals upon enrollment could choose from those additional carriers. She felt S.B. 544 was a large policy change and to suggest the date be pushed back to January 1, 2002, was not asking a lot.

Ms. Tiffany said the legislation was not about one group of 300 but about the opportunity for a group that could justify leaving, the chance to leave. To delay the timeframe 1 year did not give the board the chance to review justifications for exiting. Even though an individual could opt-out, they could not pick up health insurance on an individual basis. That was the reason a group of 300 or more was needed.

Ms. Parnell remarked she hoped the purpose of the new board was to review and mend the problem with the plan, not to begin the reviewing justifications for exit for those groups.

Chairman Bache commented the discussion ensuing among the committee was the reason the date of January 1, 2001, had been proposed. Although he agreed with Mr. Humke and Ms. Tiffany on their expressed concerns, he felt that proposed date of January 1, 2001, was a compromise. He did not object to separating the motions in order to consider the regulation date as separate from the January 1, 2001, date.

Chairman Bache reiterated the motion on the floor was to accept his two proposed amendments on section 12.5, which was seconded by Mrs. Freeman.

Vice Chairman Lee asked if there was any objection to separating the motions, to which there were none. He requested the committee vote on whether to amend section 12.5 to become effective on July 1, 1999, for purposes of enacting legislation (as indicated by Exhibit L). He reiterated it had been moved by Chairman Bache and seconded by Mrs. Freeman.

Vice Chairman Lee informed the committee he would accept a motion on the proposed amendment, which would amend section 12.5 to become effective on January 1, 2001, for the purpose of groups leaving the system.

Mr. Humke reiterated the point made earlier that the amendments proposed by the Office of the Governor were approved, and in doing so, sufficient safeguards were built in so the need for a delay was unjustified.

Chairman Bache pointed out in the discussions that had been undertaken advocating immediate dates and delayed dates, he requested as a compromise the proposed date would give the committee time, yet allow those groups that desired to leave the system the chance to do so before the next legislative session.

Ms. Von Tobel reminded the committee the next legislative session did not begin again until February 1, 2001, and the legislature would not be provided with a full report on the status of the state self-funded insurance plan until that date. She rhetorically asked what if the legislature was provided with a report that the plan was not yet fixed. She believed an extra year was needed in that case. To suggest the committee allow such a large policy change in the self-insured plan before receiving a report on the status of the plan, was not good policy; therefore, she stood by her suggested 2002 date.

When asked to restate the motion, Mr. Humke noted if the committee favored his motion then Chairman Bache’s motion would be voted down.

Chairman Bache called the committee’s attention to section 49, subsection 2, which stated sections 1 to 40, except for certain sections, became effective on July 1; therefore, section 12.5 would become effective on July 1, 1999. There was no need for a motion if the committee desired the group’s ability to leave the plan immediately. If Mr. Humke’s position was supported, then the date of January 1, 2001, would be negated.

Vice Chairman Lee informed the committee the second half of Chairman Bache’s motion would be balloted, which was to adopt Chairman Bache’s proposed amendment that would amend section 12.5 to become effective January 1, 2001, for the purpose of groups leaving the system. It had been previously moved by Chairman Bache and seconded by Mrs. Freeman.

In response to Vice Chairman Lee’s question, Chairman Bache said there was one last amendment that dealt with section 18.5 indicated by Exhibit L that had not yet been addressed. As currently written, section 18.5 indicated the appointed member of the board served at the pleasure of the appointed authority and could be removed for any reason. He expressed concern with the current language of the bill, and stated if a member of the board made a politically unpopular decision although financially prudent, that member could be removed. He proposed amending the section to read, "The appointed members of the board can only be removed by the appointing authority for just cause." He stressed Denice Miller, senior policy director, Office of the Governor, did not have a problem with the suggested change.

Ms. Tiffany asked when the word "pleasure" was removed and replaced with "just cause" would a member who was removed by the governor be put into a position whereby it would enable him to object to that removal. Eileen O’Grady replied the term "at the pleasure" would not give the individual being removed any right to object; however, if it was for just cause, a reason needed to be provided.

Ms. Tiffany asked if the person objected to removal, what would happen. Chairman Bache replied "just cause" was a legal term setting a higher standard than "at the pleasure of the governor." By amending the section with the term "just cause," he felt the appointing authority would have to state a reason for removal and if the person being removed did not think the reason was justifiable, they could take the case to court.

Directing her question to Ms. O’Grady, Ms. Tiffany asked what language was used in other governor-appointed boards as far as whether it was "at the pleasure" or "just cause." She did not want to distinguish the benefits committee from any other governor-appointed committee. Ms. O’Grady replied she would research the question and provide her with an answer.

Mr. Humke said most executive branch unclassified personnel served at the pleasure of the governor. Many of the members to be appointed to the new board were unclassified personnel and could be terminated by the governor without any reason. He expressed dismay a representative from the Office of the Governor would agree to the amendment since one of the purposes for the legislation was to redevelop a board that was hopelessly in trouble. He stressed the governor should clearly maintain the authority to enact changes to the board.

At that point, Vice Chairman Lee turned the meeting back over to Chairman Bache who called for a motion to amend and do pass S.B. 544 with the proposed amendments.

After recessing the meeting at 10:20 a.m., Chairman Bache reconvened and stated the next bill on the committee’s agenda for consideration was S.B. 131.

Chairman Bache stated the bill had been voted out of committee; however, due to a technical problem it had been rereferred back to committee.

Alfredo Alonso, representing the National Pager Coalition, stated the coalition had been working with Lieutenant Stan Olsen and The Las Vegas Metropolitan Police Department (Metro), and had finally developed a solution to the problem.

Referring to Exhibit N and in conjunction with Exhibit O, Mr. Alonso suggested a change be made to subsection 1, part (b) by deleting "…paging equipment and subleases or otherwise makes the equipment available for use…" He stated the phrase violated the Federal Communications Commission (FCC). The word "service" would be added to that section. Part (b) would then read "provides paging service to another person in that county, to maintain such records of the names and addresses of the person to whom the paging service is so provided as the board deems necessary."

Chairman Bache asked if that was the only change, and if Lt. Stan Olsen, representing Las Vegas Metropolitan Police Department (Metro), was satisfied with the change. Lt. Olsen replied affirmatively.

Chairman Bache stated he would accept a motion from the committee members.

Ms. Von Tobel asked for a short synopsis on the purpose of the legislation. Lt. Olsen replied there were a number of individuals engaged in criminal activity who utilized pager services on a cash-only basis in order to transact their criminal activities. When the pager companies accepted those individuals on a cash-only basis, some of those companies neglected to keep records on the names of those leasing the pagers. It made criminal investigations difficult to track.

Daniel Musgrove, representing the city of Las Vegas, said it had been testified there were problems with the language of park projects, as well as the imposition of an impact fee for a park project. In an effort to make the bill a little more palatable to those who had expressed concern, he proposed an amendment (Exhibit P). Exhibit P further defined a park project and indicated it would be limited to those projects which did not exceed 50 acres in size and did not include recreational trails or bike paths outside an improved park parcel. The amendment also proposed to amend section 4 of S.B. 457 to state a local government shall not impose an impact fee for a park project. The language would ensure against "double dipping." He urged the committee to adopt the proposed amendments into the bill.

Mr. Lee asked how did the city finance the construction of a fire station in a growth area of a city. Mr. Musgrove replied the funds would be expended from the general fund or requested by bond. It had been felt by those in the older, established neighborhoods that they were paying for the growth that was occurring, so traditional methods of bonds had not met with satisfaction.

Continuing, Mr. Musgrove said as had been discussed in a previous hearing, the fire station itself had a direct nexus to the growth better than the parks did. In terms of a nexus issue, homebuilders would side with recreation but not public safety. When examining the nexus issue, if a fire station was needed in order to counteract a specific response time, it resulted in an issue both residential and commercial should be involved in the funding. Impact fees came into play where other traditional methods of funding did not. Because individuals might have to pay for a fire station that might be erected outside their area, the city of Las Vegas desired to include fire suppression as it was narrowly defined in the statute.

In response to Mr. Lee’s questions and remarks, Mr. Musgrove replied the legislation was enabling language in order to place fire suppression projects into the existing bill. The process would be a lengthy capital improvement process in order to determine district boundaries. The impact fee would be assessed only for those areas impacted by the construction of the new station.

Mr. Musgrove pointed out if growth was currently halted, the city would be five stations behind and the limits of response time were already being pushed. By passing S.B. 457, the city would be provided with the opportunity to start examining those projects as another way of funding growth.

Mr. Lee asked if the bill did not pass and voters voted down a bond request, what would be the city’s next step. Mr. Musgrove replied the city would have to begin examining taking money from other issues. The budget and tax assessment were set so other internal ways of funding the projects would have to be examined, and if the bond issues did not pass, the city would not be able to build a fire station in that particular area for which the bond had been requested.

In response to Mr. Lee’s question, Irene Porter, representing Southern Nevada Home Builders Association (SNHBA), said there were several questions that needed to be answered with regard to park and fire suppression projects. SNHBA concurred with the city’s amendment, Exhibit P, relating to section 3 of the bill.

Ms. Porter stated residents in existing neighborhoods were already funding the construction of fire stations with their property tax bill. When existing bond issues had not yet been paid, property tax was applied to a new home. That resident paid for existing fire services and stations.

Continuing, Ms. Porter said S.B. 457 would apply to every city, county, and community in the state and would enable them to impose fire impact fees. With regard to fire suppression, if an impact fee was imposed for an entire city, the service level would need to be set and the entire city would then be brought up to that level. The city could not have increased fire service in newer areas than was maintained in existing areas. If certain areas were behind in service levels and fire suppression they would have to require bond issues be passed or utilize general fund monies in order to bring the fire services up at the same time.

Continuing, Ms. Porter said if 75 percent of an area was undeveloped and 25 percent was developed, the city had to have a way of providing finances for that developed percentage of area. The equivalent share of an impact fee had to be financed through a bond issue or other resources, whether they were residential or commercial. When newer developments came online, those residents paid an impact fee that was credited on their property tax for any existing fire station. She stressed it was a very complicated process and just financing those projects with bond issues would simplify the process because fire stations could not be constructed strictly with the use of impact fees.

Ms. Porter remarked most bond issues proposed before the voters in Clark County passed; therefore, she disagreed with Mr. Musgrove on the record of passing bond issues in southern Nevada. SNHBA felt the reference to fire suppression should be deleted from S.B. 457; however, would concur with Exhibit P. Because the history of park taxes had not been first-rate statewide, it was felt the city was on the right track with a wider variety of parks. SNHBA felt there was a better opportunity to provide more parks and recreation for the city with impact fees than with residential construction tax.

Mr. Neighbors commented he was opposed to impact fees being imposed for fire suppression and felt the issue should be addressed on a bond issue basis. He proposed to amend fire suppression out of S.B. 457.

Mrs. Freeman asked why fire suppression was included in the bill. Mr. Musgrove replied the city council desired the opportunity to start examining the issue as a vehicle for funding and was enabling legislation. The key to the legislation was in the fact that impact fees could be more broad-based and fairer than exactions to all those who would potentially use that facility. He agreed with Ms. Porter in terms of the bond issues for fire suppression, but that history was not the same for parks, and he held the position fire suppression was an issue that could easily be examined and might tend to provide the fairness exactions did not.

Mrs. Freeman remarked she was unsure fire suppression was an issue, but she did like the park provision. She was glad to see it was statewide, and supported the bill.

Ms. Tiffany remarked she concurred with the sentiments expressed by Mr. Neighbors on the fire suppression portion of the bill, and favored Ms. Porter’s suggestion the issue be dealt with strictly with bonds as opposed to imposing impact fees.

Directing her question to Ms. Porter, Ms. Tiffany asked what was involved in converting donated land into a park, was there a bond concerned or were funds available with the Parks and Recreation Department. Ms. Porter replied in Henderson there was an exaction process involved for converting land into parks. She provided an example to the committee relating to dedicated land. The city used a combination of Residential Construction Tax (RCT), bond money, and general fund money. She said most of the parks in older neighborhoods were not paid for by the residents of those neighborhoods but were built utilizing federal land and water conservation funds.

With regard to new developments, Ms. Tiffany said currently the developer had been donating the land for parks. Ms. Porter said that was correct; however, in some cases, as a result of the requests to donate land for parks, developers were crediting against the park tax due to them, and in other cases land was obtained from exactions.

Concerning Henderson, Ms. Tiffany asked if it was a mixture of funds utilized for converting land into parks. Ms. Porter replied affirmatively.

In response to Ms. Tiffany’s question, Ms. Porter said operations had to be funded with general fund money. It could not be funded with impact fees or residential construction tax.

With regard to the Southern Nevada Strategic Planning Authority (SNSPA), Ms. Tiffany said one of the issues they were addressing was the park issue to use as regional park policy question, and asked if she was aware of what those discussions entailed. Ms. Porter replied she was unsure what SNSPA used with regard to funding. The Southern Nevada Regional Planning Coalition (SNRPC) had adopted the service level of 2.5 acres per 1,000 people-population as the standard to be met for parks valleywide. Many entities currently maintained 1.75 to 2.25 acres per 1,000 people valleywide.

With regard to Henderson that was only 50 percent built-out, Ms. Tiffany expressed concern it was the second largest city in the state and the fastest growing and underdeveloped as far as remaining land space. She had never heard one person from the city of Henderson comment on the need for impact fees for parks. If the legislation was passed, she said it might be preemptive to what had happened in the south with regard to funding decisions. She remarked the legislation was a policy issue and she did not like the bill. Ms. Porter commented parks had been a major issue with SNRPC, and they were reviewing ways in which parks could be funded.

Mr. Thomas asked for a rationale on the park project being limited to 50 acres. Mr. Musgrove replied the rationale behind the decision was for the park acreage to remain less than regional. With regard to the nexus issue, the plan was to not go beyond what the impact of the area would fund. Ms. Porter said it had been originally proposed at 40 acres and the city had returned with a proposal of 50 acres to which had been concurred in order to fund more neighborhood and community parks.

Mr. Thomas asked if golf courses could be excluded from the newly amended definition of a park project. Mr. Musgrove said he had no problem with excluding golf courses.

Mr. Thomas stated he was in support of the bill as amended because impact fees were a way of helping growth to pay for growth, and the constituency was in favor of impact fees.

Ms. Parnell remarked residents of areas outside of Clark County had not been fortunate with regard to bond issues for funding school construction. She said S.B. 457 allowed bonding amounts to be lessened, and was a vehicle that could offset the amounts needed in what had been requested in floating bonds. Mr. Musgrove replied she was correct. In order to reach the city’s goal, different combinations of funding methods needed to be examined. Without that requirement in NRS 278B, the possibility could not even be examined.

Ms. Parnell asked if the impact fees could be utilized to build the fire stations, bonds could be used to pay for the operational costs, and the general funds could be used to pay for the staff. Mr. Musgrove replied affirmatively. The city government needed to examine those different methods in which goals could be achieved without having to eliminate certain services.

With regard to section 4, Ms. Von Tobel asked what took care of the "double-dipping" for fire suppression. Mr. Musgrove replied Residential Construction Tax (RCT) did not impact fire stations. The Residential Construction Tax was put in place strictly for park projects; therefore, it did not serve as a funding mechanism for fire stations.

Ms. Von Tobel commented bonding was referenced and queried how the state did not have "double-dipping." Ms. Porter replied when the impact fee law was reviewed it would be discovered the law would require the amount of property tax to be credited against the amount of impact fee a resident would be charged. She explained if the impact fee was $1,000 and the property tax offset was $500, it would result in a $500 impact fee to be paid. If, in fact, the development in which an individual purchased had required them to dedicate land for a fire station, the fair market value of the land would be credited against the impact fee. If the value of the land in the new neighborhood was more than the impact fee, the city would have to pay the difference between the impact fee and the land back to the builder. Those were mechanisms to stop the "double-dipping" in existing law.

Ms. Von Tobel asked who would be in charge of the accounting with regard to the aforementioned issue. Mr. Musgrove replied normally a consultant would be brought in to assist the city in determining the funding issues.

Ms. Von Tobel asked if cost benefits of bonding versus impact fees had ever been weighed, to which Mr. Musgrove replied no.

Ms. Von Tobel commented the cost benefits should be weighed before the committee passed the legislation, and if there were no cost benefits involved she queried why the legislation should be passed. Mr. Musgrove replied it was a fairness issue in terms of costs being spread to those areas using the growth; however, he agreed with her trepidation as to why the legislation should be passed because cost benefits could not be defined.

Chairman Bache remarked for exactly the reasons Ms. Porter had stated, he felt it did not matter if fire suppression was in the statute, and Mr. Musgrove had indicated only the city of Reno (in the case of road construction) utilized impact fees. If impact fees were used for park construction, the state would offset the Residential Construction Tax.

Raymond McAllister, representing Professional Firefighters of Nevada, pointed out currently the city of Las Vegas had a bond issue to be placed on the ballot; however, after review, an analyst had determined the bond issue should be removed because it would not pass. Individuals would not be inclined to vote on an issue that would increase their taxes.

Mr. McAllister reiterated if growth in Las Vegas stopped, it would be determined the city was at least five fire stations behind in need. He provided the committee with an example of distances between existing fire stations and travel times to those areas to which firefighters responded, and said those response timeframes were beyond what was accepted for an ISO Class 1 Fire Department. If the fire station in which he worked was to be re-rated presently, they would not pass that class rating again and consequently rates would increase.

Continuing, Mr. McAllister said from a firefighter’s standpoint, there were many times whereby they were by themselves with only one engine. Three fire engines and a ladder truck were involved in an initial response to a fire distress call. In many instances, there was only one engine because there were not enough stations in the city.

With regard to comments offered by Ms. Parnell, Mr. McAllister said the federal Occupational Safety and Health Administration (OSHA) standards had been changed in order to require two firefighters was on the scene in ready reserve before two firefighters could be sent into a building to fight a fire. Currently, Carson City Fire Department had three firefighters in an engine company so when responding to a house fire, those firefighters could not enter the house until the next engine arrived. A bond issue had been placed on the ballot in order to hire three firefighters to fulfill that requirement, and it did not pass. He stressed a house could burn down in some instances before extra firefighters could arrive on the scene. The committee should keep in mind those points while considering S.B. 457.

Mr. Mortenson commented the same bond issue, passed in Henderson for parks, failed in unincorporated Clark County.

With regard to Mr. McAllister’s testimony, Ms. Gibbons asked if a person was discovered to be inside a burning house, would the firefighters still not be able to enter. Mr. McAllister replied federal regulation did allow for entrance if a known life safety hazard was involved.

Ms. Porter reiterated it would not solve any problems placing fire suppression under impact fee law because those fees could not be used to hire fire suppression staff or construct fire stations.

Mr. Musgrove commented alternative funding methods needed to be researched. Impact fees would not allow the state to make up for those stations; however, the state needed to be, at some point, on the offensive.

Mr. Neighbors stated the city of Las Vegas was currently requesting funds from the legislature for an issue in which it was felt the voters would not approve.

Chairman Bache informed the committee S.B. 394 had been proposed by Senator Dina Titus, and there had been no opposition to the bill.

Senator Titus had agreed to an amendment proposed by Joan Lambert, representing Washoe County, deleting Washoe County from the bill. The amendment offered would eliminate section 4 in its entirety and amend section 5 to read "the county whose population is 400,000 or more…," and in paragraph 5 of section 6, amend the definitions of local air pollution control board and regional transportation commission in order to clarify those references to a county with a population of 400,000 or more. Section 13 would also be amended from 100,000 to 400,000 or more, thereby excluding Washoe County entirely from S.B. 394.

Chairman Bache asked if section 13 was current law, to which Ms. Lambert replied she believed section 13 was transitory statutory law, which was the reason it was not in italics. Section 13 dealt with a report required to be provided to the next legislative session.

Chairman Bache informed the committee he would accept a motion on S.B. 394.

Chairman Bache reviewed previous testimony related to S.B. 404, and informed the committee he would accept a motion.

In response to concerns expressed by Mr. Lee, Ron Dreher, representing Peace Officers Research Association of Nevada, stated as he had previously testified, the 60-day requirement in order to make notification to the system in the event of the death of a police officer or firefighter was similar to PERS requirements. The association did not object to 60-day requirement.

Chairman Bache commented time was needed in order to make decisions relating to benefits.

Ms. Parnell felt if the surviving spouse or child elected not to remain with the policy, they would need to provide notification.

Ms. Von Tobel queried on behalf of a constituent, why all state employees killed in the line of duty had not been included in the bill. She felt the committee should consider all state employees to be included.

With regard to the proposal from Ms. Von Tobel, Mr. Humke commented it would create a substantial fiscal note and would receive scrutiny from the Assembly Committee on Ways and Means. Because "in the line of duty" included traffic accidents (while still on the job) and so on, if every state employee was to be included in the bill, it would cause an increased fiscal impact which would be easily estimated but difficult to fund. He opposed the amendment offered by Ms. Von Tobel.

Ms. Von Tobel commented the life of a police officer or firefighter should not be weighted any heavier than another state employee. If it was felt too cost prohibitive by the money committees, then they could remove the amendment; however, the issue of other state employees killed in the line of duty, including teachers, was a serious issue to consider.

Ms. Segerblom stated the bill should be considered as currently written.

Ms. Parnell concurred with Ms. Segerblom.

There being no further business, Chairman Bache adjourned the meeting at 12:02 p.m.

RESPECTFULLY SUBMITTED:

Rachel Baker,

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

DATE: