The Committee on Taxation was called to order at 1:45 p.m., on Thursday, March 4, 1999. Chairman David Goldwater presided in Room 3142 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. David Goldwater, Chairman

Mr. Roy Neighbors, Vice Chairman

Mr. Bernie Anderson

Mr. Morse Arberry, Jr.

Mr. Greg Brower

Mrs. Vivian Freeman

Ms. Dawn Gibbons

Mr. John Jay Lee

Mr. Mark Manendo

Mr. Harry Mortenson

Mr. Bob Price

Ms. Sandra Tiffany

COMMITTEE MEMBERS EXCUSED:

Mr. John Marvel

GUEST LEGISLATORS PRESENT:

Mr. Lynn Hettrick, Assembly District 39

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

The bill provided the new sales tax would replace funds to finance airport, recreational, and combined facilities that had previously been provided by room tax revenues generated at Lake Tahoe. Douglas County voters had approved the increase in the sales tax in the 1998 primary election. For a more explicit summary of provisions within A.B. 174, review enclosed Exhibit C.

Chairman Goldwater advised the bill being considered was sponsored by Assemblyman Lynn Hettrick and turned the floor over to Mr. Hettrick for testimony.

Assemblyman Hettrick explained the bill was the result of a tax shift on which the legislature worked last session which would shift room tax from sponsoring activities in Douglas County and put more of the room tax dollars into tourism. After the bill passed in 1997 county officials held numerous meetings and set up a panel to explore options to fund those services. Ultimately the panel recommended a one quarter cent sales tax which was subsequently placed on the ballot and passed by a vote of 2 to 1. Revenue generated from the one quarter cent sales tax was restricted in the bill to be used solely for parks, airports, libraries, and senior facilities. Changes could be made exclusively by the vote of the people and could not be used for any other purpose. Those funds would be replacement of revenue to keep funding the services the county already had.

The only provision Douglas officials wished to change in the proposal would be the effective date in the bill from July 1, 1999. That date was when the county wanted to have the tax become effective inasmuch as that would be the date for commencement of the tax shift. The county needed to start replacing revenue. The Department of Taxation had informed Douglas County in order to be able to make the shift work, they needed a 90 day lead-time to send out the appropriate forms and billings so everyone knew how to report correctly. Changing the effective date on the bill would not change the effective date of the tax which would still be July 1, 1999.

Mr. Hettrick volunteered to answer any questions and stated there would be several people wishing to testify as well. Mr. Lee asked if he could give him some information on the size and status of the Douglas County airport in the way of proposed expansions and so on. Mr. Hettrick admitted he did not deal directly with the airport but assured him there were people present who would respond to his question. He stated the airport could become a major economic factor in Douglas County in time. The issue at that time was funding for the airport which had been funded from room tax. The commissioners needed to be in a position to replace that revenue when the money was shifted to tourism.

Mr. Anderson disclosed a possible conflict at that time explaining his niece was a member of the Douglas County Parks and Recreation Committee; a fact he would disclose again during the vote on the bill. He had heard discussions about the loss, in terms of the operation of the Tahoe Douglas Visitors Authority (TDVA) as a result of a bill the legislature passed in 1997. He asked if there was anyone that could answer how effective that legislation was in meeting their requirements. Mr. Hettrick replied one of the members of the TDVA was also a county commissioner and would be able to succinctly address any concerns of the committee.

Chairman Goldwater asked everyone to please sign the guest list, and there being no further questions for Mr. Hettrick, the Chair called on Mr. Clarence Burr.

Clarence Burr, as the first witness, stated his family had been in Douglas County for four generations and he had been on the original study group when the room tax at Tahoe had been initiated. He summarized the problems they had encountered in seeking land and developing a revenue stream for their community’s recreational and senior citizens’ needs.

The committee began looking for revenue sources, one of which involved the room tax. They contacted Harvey Gross and William Harrah with the suggestion which did not meet with a great deal of favor. Through negotiations, however, it was agreed one-third of the room tax would go for park and recreational facilities, one-third to the airport at Tahoe and Minden and the last one-third would be for the senior center. They were able to get the bill through the legislature. As gambling grew, more money came in but rather than putting the money into a trust fund and using the interest to maintain or develop new parks Douglas County officials kept spending and it was eventually determined there had been a great deal of larceny and corruption involved. He added he was still concerned about the expenditure of some county monies, for example he was aware the county librarian had been doing some traveling and assumed it was at the county’s expense. A practice with which he did not agree.

Mr. Burr suggested the committee create a check and balance system if they processed the bill. He wanted to see a legislative audit on the money coming in on the sales tax for the first 6 years and every other year and let Douglas County pay for it. He encouraged that in order to see where the money was being spent. He was fully aware the tax increase would hurt his business, but he understood the necessity of having one.

Ms. Tiffany complemented Mr. Burr on his idea for an audit and asked if he would suggest a fiscal audit or having one performed by an outside accounting firm with the report being brought back to the Legislative Counsel Bureau (LCB). Mr. Burr had no suggestions but strongly urged requiring an audit with a report to the LCB.

At that time Ms. Gibbons explained it was her understanding the population in Douglas County was largely made up of senior citizens which was confirmed by Mr. Burr. Mr. Burr noted with the new growth of businesses coming into the community, the population would shift due to younger families coming into the work force. He pointed out the county had several parks and recreation areas with very nice living areas for families. Ms. Gibbons pointed out if the legislature did not pass the bill, the senior citizens center would have to be closed and that bothered her as she did not want to hurt them. Mr. Burr emphasized he was more concerned about getting the needed revenue in the appropriate category.

Joining the testimony was Jacques Etchegoyhen, Chairman Douglas County Board of County Commissioners and Dan Holler, Douglas County Manager. Speaking first was Mr. Holler who submitted correspondence from the commissioners’ office, included herein as Exhibit D. He pointed out the commissioners were on record as supporting the legislation before the committee but wanted to reinforce several items previously mentioned by Mr. Hettrick.

He stressed timing of the passage of the bill was important to Douglas County inasmuch as they were in the process of putting their fiscal year budget together. Mr. Hettrick’s proposed amendment making the bill effective upon passage would be helpful as they wanted to begin collection of the sales tax in July and if it caused the county to miss a quarter of tax revenue the cost would be approximately a $300,000 hit to the county’s finances which would be very detrimental to them. Additionally as was noted in the report, the replacement revenue coming into the county for the services were enumerated between parks and recreation, and seniors. He felt Mr. Burr was correct in terms of the county’s growth regarding the senior population and the demand for senior services. They also had the same issue in terms of library demand, parks and recreation, and the activities going on in those areas. That item was placed before the voters as an advisory question and passed with a 62 percent approval margin and went from there to the legislature for approval.

Mr. Holler wanted to address a couple of questions that came up on the airport. Those funds were primarily utilized for the grant match for the Airport Improvement Program (AIP), funds from the Federal Government which were primarily for runway reconstruction, overlays and so on. It was not for expanding the work of the airport, but it would maintain the facility. Most of the expansion was coming through leases and other business activity in the airport itself.

In terms of some auditing issues that had been addressed, the commissioners did conduct internal audits as well as having an outside audit done every year as required. He volunteered to forward any of the information to the legislative counsel or they would provide the information to the committee. In terms of the impact of taxing their residents the measure was voter-approved and would still allow the county to retain one of the lowest sales taxes in the region. He pointed out Carson City’s tax rate was at 7 percent, Reno was at 7 percent and soon going to 7 1/4 percent, Lyon county was still at 6 1/2. South Lake Tahoe and California were at 7 1/4 percent. The imposition of the sales tax in Douglas County would take them to 6 3/4 so they would still be competitive in terms of taxes. If the bill were imposed, the tax rate in Douglas County would go from 6 1/2 to 6 3/4.

Mr. Holler explained Douglas County also enjoyed one of the lowest property tax rates and he believed they were second or third lowest in the state on average. The tax burden under consideration would still be relatively low. He volunteered to answer any questions.

Chairman Goldwater called upon Ms. Gibbons who asked if the Douglas county airport received any federal funding and was advised in the affirmative by Mr. Holler who added they applied on a regular basis for the AIP. Those grants required over a 6 percent match. Ms. Gibbons asked if the legislation was not passed would Douglas County lose the federal funding.

Coming to the witness table at that time was Bernie Curtis, Commissioner from Douglas County who stated he had heard testimony given earlier in regard to Douglas County and wanted to make some clarifications. In particular, he wanted to address the statements from Mr. Burr having to do with the corruption and larceny experienced during earlier years. He pointed out the people involved with that dark spot in the county’s past had indeed been guilty of misconduct and had been convicted and sentenced for their wrongdoing. However, that was many years ago and since that time everything had been very carefully monitored. He supported the bill wholeheartedly and concurred it was the right thing to do. He thanked the committee for their time.

There were no questions for Mr. Curtis however, Chairman Goldwater wanted to make the Douglas county commissioners aware of one item, of which Mr. Hettrick was aware as well. That being the Department of Taxation had suggested an amendment to the measure included herein as Exhibit E. They anticipated being available to testify at the hearing but indicated by memo they could not and submitted their written testimony; copies of which were distributed to all members.

Chairman Goldwater asked for further testimony prior to taking up the proposed amendment.

Mr. Price interjected referencing the prior statement from Mr. Burr in regard to the librarian doing some traveling. He wanted to go on record as being in total support of employees and representatives going to conferences and meetings where they were able to meet with staff of like positions. The staff could bring back information to their community with new ideas and innovations that would enhance the performance of their division or department. Mr. Curtis assured those present their librarian did not do an excessive amount of travel nor was she flamboyant in the way she budgeted and spent money from her department. He added the librarian was in the audience and would probably like to address those statements herself.

Concurring with the testimony thus far from the Douglas County Commissioners, Commissioner Steve Weissinger stated in regard to the parks department they were not looking to build new parks with the replacement revenue. They simply wanted to maintain the quality of their existing parks. With respect to the airport, they were in the process of replacing the room tax revenue used to operate the airport through numerous leases secured recently along with a hanger project recently completed to generate revenue for the airport. They would not have to rely on room tax, so the money used from the quarter cent tax increase would be used for the grants.

Commissioner Weissinger pointed out the population of the senior center in Douglas County was growing so they would need to look at an expansion of the senior center in the near future. They were in the process of expanding the library in the valley and maintaining what they had at Lake Tahoe. That was simply "replacement revenue" and would not be used to build additional parks or other facilities.

Chairman Goldwater pointed out he felt the Douglas County officers had made their case for the bill and then asked Ted Zuend, LCB Fiscal Analyst, to go over what had been submitted by the Department of Taxation (Exhibit E). Additionally he explained there had been some concerns regarding citations in the bill and asked Mr. Zuend to address those as well.

Mr. Zuend pointed out he had reviewed the statute passed in 1997 for the Carson City one quarter percent tax increase which contained the same verbiage as in the exhibit. The language followed the verbiage from last session up to the point of ". . pursuant to this act only. . " The proposed amendment did not include the remainder of the sentence that being: ". .and the percentage must not exceed 1 percent." The state’s commission would be at one half of 1 percent unless the legislature changed that percentage and it would be three quarters of 1 percent which was the figure recommended by the governor. He explained that was the concern of the Department of Taxation.

Continuing Mr. Zuend explained he had one additional concern, which he had not picked up on in 1997 when the Carson City bill was passed. Looking at definitions on page 2, section 3, line 31 there was a reference to the Nevada Revised Statutes NRS Chapter 372 which had also been mentioned in the Carson City legislation. He explained local taxes had always been mirrored after Chapter 374 rather than Chapter 372 and noted there were slight differences in definitions between the two chapters, but there was a large difference concerning "occasional sales." He assumed in Carson City the Department of Taxation was collecting taxes under Chapter 374. Under that chapter if anyone had purchased a car from a private party, when they registered it they would pay only a portion of the tax because "occasional sales" were taxed under the 5 percent of the local tax but not lower than the 2 percent tax. If the bill was passed in its present form there would be a difference in the amount of taxes an individual would pay and he suggested the committee may want to amend the Carson City statute as well. Prior to taking any action he would need to check with the bill drafters on why they used Chapter 372 rather than 374 on the bill as well as the Carson City act. Every other local tax was mirrored against Chapter 374 which was the Local School Support Tax (LSST).

Chairman Goldwater asked Messrs. Hettrick and Etchegoyhen if they had any idea why different chapter numbers had been used and was advised they had no idea; however, they agreed the committee needed some type of clarification prior to taking action. They had no problem with the use of Chapter 372 or 374 whichever the Department of Taxation suggested to modify the language was acceptable to Douglas County. Mr. Hettrick pointed out section 3 appeared to be using Chapter 372 to ascribe definitions not to determine under what law taxes were collected. He read several sections from the bill but deferred to Mr. Zuend’s knowledge to determine the best language to accomplish their goals.

Mr. Zuend admitted he was concerned because it was an important issue with the taxation of automobiles. He believed if you went down to register a casual sale in Carson City you would pay the full 5 percent tax or all the local taxes assessed in Carson City. The definition of an occasion sale in Chapter 372 was different than it was in Chapter 374. Chapter 374 made an exception for the occasion sale of an automobile so it could be taxed at the local level on the local taxes. In his opinion Chapter 374 was the proper definition.

Chairman Goldwater assured the sponsors of the bill the committee would make every effort to move the legislation, but he wanted to check with the bill drafters and Department of Taxation first. If answers were expeditiously available it would be his intent to call a floor meeting and move the bill as quickly as possible.

Speaking next was Don Miner, Douglas County Commissioner, who also served as the commission’s representative on the Tahoe Douglas Visitors Authority (TDVA) and wanted to lend his support for the bill. Prior to hearing any further testimony, Mr. Anderson pointed out he had received the answer to his concerns but wanted to be certain the committee had the information on the record. His questions were relative to the accounting process that may have taken place within the operation of the TDVA and having been in existence for a while he assumed the authority would be performing an audit soon. Mr. Miner responded there had been an audit performed which had been made part of the public record. Pursuing his line of questioning, Mr. Anderson then verified for the record whether the meetings of the board were part of the public record under the open meeting law and were they properly noticed so the public could attend. Mr. Miner replied in the affirmative.

Elaborating on his reasons for wanting that information Mr. Anderson explained it was due to concerns he heard from individuals on occasion. He inquired if there had ever been a time when the meetings were not open to the public and was advised in the negative. Mr. Anderson thanked Mr. Miner for his frank and honest responses.

Chairman Goldwater next recognized several individuals from the audience who had signed in as being in support of the bill including Al Walker, Claudette Springmeyer, Geoff Morgan, Kelly Gardner, and Brian Fitzgerald. All of whom indicated they were in support of the proposed legislation but did not feel it necessary to testify.

Coming to the witness table at that time was Linda Deacy, Director of the library district. She indicated she had not expected to speak but felt she should address some of the concerns expressed earlier in the meeting. In response to statements made by Mr. Burr, she acknowledged she belonged to several library associations and did on occasion travel to conferences. She denied ever abusing the privilege and briefly summarized the associations and conferences in which she participated.

Ms. Deacy assured the committee members one of the biggest concerns for the past year had not been for expansion but trying to keep the doors open. The library district received 97 percent of their funding from the room tax money so without a supplemental source of income they did not have any way to maintain adequate operational abilities. It was her understanding once those issues were resolved the commissioners had made a commitment to expand the main library in Minden. As part of their consortium agreement the county commissioners would be bringing a new library system online which would be available the first part of April. It would be entirely graphical throughout the State of Nevada and users would be able to access the program from their homes.

In response to those comments, Mr. Anderson pointed out he represented the city of Sparks and in 1998 they had been able to get their second library. Since the opening of the city of Sparks in 1905 until 1993 Washoe County only allowed one additional public library branch in Sparks while Reno managed to have several. He applauded the very professional conduct of Douglas County and the fact that the school librarian had a library degree. He acknowledged Douglas County had always been a leader in developing library science throughout the state. In referring to the previous comments that had been made, Mr. Anderson urged that Ms. Deacy not take umbrage as the comments were not directed towards her ability to participate in public groups. His concern was in making certain the meetings and hearings of all public boards and commissions were open and available to the public at all times.

Dave Bolick, Carson Valley Chamber of Commerce and Visitor’s Authority, spoke next indicating the members of the chamber and visitor’s authority had worked closely with the Douglas county officials and urged support of the bill.

Speaking in opposition to the bill was Nate Leising, a member of the Carson Valley Agricultural Association. Mr. Leising explained he had the honor of serving with most of the commissioners and most of the people in attendance from Douglas County on numerous boards. Although he had always enjoyed working with them, on this item they were in disagreement. He thanked the committee for giving him the opportunity to comment on the important issue.

Mr. Leising was present representing the Carson Valley Agricultural Association and as president of the association he represented the first agricultural district of the state of Nevada which included Douglas County, Storey County, and Carson City. The association wanted to go on record as being opposed to higher taxes. The legislation would provide a permanent raise in the structural cost of doing business in the private sector. His association had one question "what was the priority in Douglas County?" They hoped it would be preserving the rural characteristics of Carson valley including the voluntary donations of time, money, private fund raising, and generally living within their means. All were characteristics that built rural Nevada. Or was it imposing higher taxes to provide urban city services at the expense of rural residents and the general economy and rejecting the user fees as a method of funding. There was nothing wrong with the northern portion of Douglas County having all the urban services at once. But rural Nevada could not support the taxes necessary for those services. Agriculture today was a very capital intensive business and almost every purchase made by agri-businesses was taxable.

Mr. Leising wanted to clarify some of the comments made in the Record Courier newspaper about the vote on the tax from the September primary. It had been said that 62 percent of the voters voted for the measure and for clarification the voter turnout was 35.7 percent of registered voters in the county. So figuring 35 percent of the voters went the polls and of that amount 62 percent voted for the bill, when one did the math 21.8 percent of all registered voters did vote for it; 68 percent did not vote for it. He concluded by cautioning that careful consideration be given prior to voting for the measure.

Responding to the statement, Mr. Anderson asked Mr. Leising what percentage of people voted at the general election held a few months later and was advised it was approximately 54 percent. Pursuing his line of questioning Mr. Anderson asked Mr. Leising if he would have presumed that everyone who did not vote in either the primary or general election would have voted against the tax. Mr. Leising stated he did not mean to indicate that. Mr. Anderson queried him then as to how he had come up with the 68 percent figure and added he did not believe anyone could make the argument that merely because people did not show up to vote they would have voted against the tax. It had been his experience that people who were against taxes and against a project had a tendency to show up in greater numbers than those who were in support. That was one of the more difficult problems of selling either public bonds for schools or any other project. He asked Mr. Leising if his organization got out in opposition to the proposal when it was first made or was his appearance here only after the fact.

Mr. Leising confirmed his group had opposed the issue prior to the vote; however, they had just been organized, therefore, they had not had time to come out publicly in opposition. He pointed out he had an opportunity of being a member of the committee appointed by the board of commissioners to study different alternatives. Of all the options put forth, the sales tax option by a majority of the committee was the option of choice. He volunteered he was in the minority on that and was the reason he was appearing today.

Mr. Leising explained ranchers in Douglas County were going through a transition where agriculture was really being pressured. The higher the taxes and the more pressure put on agriculture the more they chanced losing that most valuable resource. That was why his group was interested in coming before the legislative committee to let agriculture have a say.

Chairman Goldwater explained for the benefit of those in the audience, the legislature had previously made some exemptions for agricultural issues in tax law, and, hopefully those would alleviate some of the concerns. He then asked if there were further witnesses for or against the bill and called upon Dino DiCianno from the Department of Taxation.

Mr. DiCianno, Deputy Director, Nevada Department of Taxation, spoke next calling attention to written testimony he had submitted (Exhibit E). The Department of Taxation elected to take no position on the measure, their only concern was in regard to the state’s compensation percentage for administering the local portion of the sales and use tax. The department had suggested an amendment to the bill contained in their memorandum of March 2, 1999. Attached as part of the exhibit was a spreadsheet illustrating the estimated revenue that may be generated by the one-quarter percent sales tax increase. The exhibit detailed, based upon what his department knew about taxable sales if a one-quarter percent rate was applied and approved in each county, what it would generate. The spreadsheet would give members a feel as to the revenue associated with it. He went through various sections of the bill and indicated he had held conversations with Mr. Zuend and Mary Walker, representing Carson City and Douglas County relative to the amendment they suggested to the committee. He wanted at that time to further amend the amendment and suggested for the approval of the committee the changes they had outlined in the memorandum. Their concern was due to a bill that had been presented to the Assembly Committee on Ways and Means (A.B. 288) which was looking at changing the level of compensation from one half percent to three quarters percent. They felt that would be sending a conflicting message if something were to happen to A.B. 288 versus the measure under consideration at that time. He wanted to stress in no way would their proposed amendment materially affect the imposition of the one-quarter percent sales tax for Douglas County.

There were no questions for Mr. DiCianno therefore Chairman Goldwater asked Mary Walker to be seated at the witness table. Ms. Walker, representing Carson City and Douglas County stated when Mr. Zuend pointed out that perhaps rather than using Chapter 372 to utilize Chapter 374, a matter she would like to see made to the charter of Carson City section as well since that mirrored the Carson City one-quarter cent sales tax. At that time Chairman Goldwater informed Ms. Walker that change would be cleared up with Mr. Zuend, Ms. Walker, and the staff in legal drafting. If they could work something out as soon as possible due to time issues involved, they would be amenable to moving the bill. There were no questions for Ms. Walker.

Returning to testify at that time was Mr. Hettrick who wanted to explained the county commissioners had a study done through the LCB in regard to the cost of the sales tax and in Douglas County they found the county, out of 3,054 counties in the United States was the 67^th wealthiest county. The county also had one of the lowest tax rates in the state of Nevada at $2.53, and they were very aware of agricultural concerns. He added he had another bill in drafting that would allow Douglas County to participate in the open space ordinances already passed which applied to larger counties. The commissioners wanted Douglas County to participate in the open space projects and be able to maintain open space by allowing ranchers and farmers to keep their property and keep it in open space.

Continuing with his testimony, Mr. Hettrick added the bill as requested would take the tax cap off as soon as it came out of the bill drafters so they were very aware of the concerns of agriculture in Douglas County. He concluded by telling the committee Mr. Leising was very modest inasmuch as he had previously chaired the committee that heard the proposal under consideration and ultimately voted as part of the a majority to support the room tax. He was very fair and open with his concerns at the time with his support for other sources, but unfortunately, what it came down to was they were a very small county relative to other counties. When it was decided to go with the user fees it would have eliminated some of the people who needed to use those facilities as they could not have participated. That was the ultimate end of the proposed tax increase for community development. Eventually Mr. Leising supported some mix of the two but by that time the committee had voted for a request for a one-quarter percent tax increase. Douglas County had several thousand voters on the issue and the result was 62 percent to 38 percent so they clearly supported it. The commissioners felt an almost 2 to 1 vote in Douglas County was clear support from their residents. It would be a revenue stream that needed to be there to support parks, airports, and senior citizens within the county and he would appreciate the committee’s support on the measure.

Chairman Goldwater reminded those present of the concern the legislature has had for agriculture and always would have as shown by some abatements of the sales and use tax in law concerning agricultural equipment. The legislature was very sensitive to their problems. The Chair closed the hearing on A.B. 174 assuring those present the amendments would be taken up with the LCB and perhaps he would be able to call a meeting on the floor for the next legislative day.

The Chair announced the committee would dissolve into a work session and called attention to the list of bills having been heard previously in the committee (Exhibit F). In particular A. B. 32, A.B. 207, and A.B. 211.

First item on the work session was A.B. 32. Chairman Goldwater indicated the bill had been a concern of Mr. Neighbors and had a significant budgetary impact and although it was a policy committee, the committee could still consider the policy and worry about the budget in another committee. He added there had been amendments that would delay the reallocation until the year 2001; and other suggested amendments including limiting the reallocation to a fixed amount or fixed percentage of the total revenue collected from the sales of new and used motor vehicles. He recognized Mr. Neighbors.

Mr. Neighbors reminded those present he had been the chairman of the highway committee to study the highway roads and the message he brought to the committee on the bill was from the committee members who proposed that language. They were aware that over the next 10 years there could be a shortage of as much as $1.5 and $2 billion dollars in needed funding for roads. He felt safe in speaking for the study committee that delaying the effective date to 2001 would be acceptable to all those members. Chairman Goldwater asked for a motion:

ASSEMBLYMAN NEIGHBORS MOVED TO AMEND THE

EFFECTIVE DATE OF A.B. 32 TO 2001 AND RE-REFER

THE BILL TO THE COMMITTEE ON WAYS AND MEANS.

ASSEMBLYMAN ARBERRY SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

It was the consensus of the committee to amend corresponding dates on any additional bills relating to the same subject matter, as necessary, and Mr. Neighbors suggested he would work with Mr. Zuend on those.

Chairman Goldwater introduced the next bill and reminded the members they had heard the measure wherein sponsors indicated it would do very little to advance apprenticeship programs because the committees were not ones that bought machinery and equipment. The intent of the prime sponsor of the bill was to limit the exemptions to programs operated through the Taft-Hartley Trust which had joint union sponsorship. The exemptions would have to be carefully crafted because some programs were sponsored by employers only and there was not a separate accounting for purchases to support the programs. In that case some guidelines would have to be enacted.

Mr. Zuend explained prior to amendments to the sales tax exemptions, approved by the voters in 1996, it appeared that purchases for apprenticeship programs initiated through a Taft-Hartley Trust were exempted from taxation. The 1996 amendments which better defined the types of organizations that may qualify for an exemption had left the tax status of the apprenticeship programs in doubt. At the previous meeting on the bill, the Chairman had directed the fiscal staff to work on the problem and asked Mr. Zuend for their suggestions.

Mr. Zuend explained the attorney for the apprenticeship training programs, Kevin Christensen was going to send him the proposed amendments but he had spoken with Assemblyman Claborn who was the sponsor of the bill in some detail. He learned Mr. Claborn’s intent was on the Taft-Hartley Trust and were defined in U. S. Code; therefore, he felt it would be easy to slip an amendment in the new editions referring to those sections of the U.S. Code that provided for a Taft-Hartley Trust. The Taft-Hartley Trust was actually an exception to certain transactions between employers and their bargaining units that allowed, for one example, that employees were paid. There were a lot of prohibitions in federal law to prevent anything questionable going on between the business and the union. The Taft-Hartley Trust was one of those exceptions and there were actually three or four types of Taft-Hartley Trusts; one was for legal services, one for benefits and one was to provide money for apprenticeship programs. It was one of the subsections of the bill which Mr. Zuend volunteered to point out to the bill drafter Brenda Erdoes, if it was the intent of the committee to move forward with the bill.

Chairman Goldwater indicated, as he understood the position, there was a possible amendment to reference specifically Taft-Hartley Trusts to indicate what the legislators would be discussing. Additionally there had been the mention of adding, "and training" after "state apprenticeship program". Mr. Zuend interjected that had been Mr. Christensen’s suggestion but after he had an opportunity to examine the statute governing Mr. Christensen’s office, all the statute mentioned was "apprenticeship programs" and "apprenticeship committees." It did not mention "apprenticeship and training committees" or "apprenticeship and training programs" so he felt bill drafting would consider that redundant if it were added. The Chair reiterated what he understood had been agreed upon was, it was amenable to the prime sponsor of the bill we simply amend it to include "Taft-Hartley Trust" and amend the bill to cite the U.S. Code.

Ms. Tiffany informed the committee she would be voting against the bill for the reason she felt it was a "carve out" exemption and was something she had been trying to eliminate. That was a policy of hers not to "earmark nor carve out" exemptions and for that reason she would be voting against the bill.

Mr. Anderson stated his question would be relative to the Taft-Hartley Trust and asked if it would affect only subsection 5 of the language of the bill or would it affect other types of institutions which might not be under the Taft-Hartley Rule. Was the committee simply trying to raise the Taft-Hartley groups to the same level of exemption that currently existed for educational institutions which provided similar types of training. He asked if that was, in simplified language, what was being proposed with the legislation.

Mr. Zuend replied in the affirmative. He felt the intent was to insure the exemption that existed prior to the 1996 law. Those changes attempted to better define charitable, educational, and religious organizations because it was wide open. When the legislature approved it, and the voters subsequently approved the ballot question it was to tighten those regulations. He was not certain when the legislature considered those changes, if they were looking at each item individually. He felt the legislature had tried to craft language containing specific guidelines, but apparently that was written in terms, as Mr. DiCianno had said, that were somewhat in doubt with the Tax Commission who ended up ruling on whether someone qualified or not for an exemption.

Pursuing his line of questioning, Mr. Anderson asked if once we select the code would the state find ourselves subject to the whims of the Federal Government rather than the legislators’ vote. In response, Mr. Zuend admitted he had not spent much time studying the history of the trust but he understood the Taft- Hartley Trust came about in a bill in 1947. He believed it was considered an anti-labor bill at that time, but it did carve out those exemptions so there would be transactions between management and labor for specific purposes. Reading the statute it did not appear as if it had been amended substantially in the last 50 years.

Chairman Goldwater announced he would accept a motion to specifically reference the U.S. Code and pass it as such.

MR. NEIGHBORS MOVED TO AMEND A.B. 207 TO INCLUDE

REFERENCE TO THE U.S. CODE AND DO PASS AS AMENDED.

MR. PRICE SECONDED THE MOTION.

THE MOTION PASSED BY A MAJORITY VOTE WITH ASSEMBLY- WOMAN TIFFANY AND ASSEMBLYMAN BROWER VOTING "NAY"

AND ASSEMBLYMAN MARVEL ABSENT/EXCUSED

Chairman Goldwater reminded the committee the bill encompassed the same subject and same issues but spoke to property taxes rather than the sales and use tax. He asked Mr. Zuend to provide input on any information the committee might want to consider prior to taking action.

Mr. Zuend explained the only difference was the legislature took action back in 1997 in an attempt to grant the exemption, but the language came out in such a way that the assessors’ had difficulty granting the exemptions the way it was written. He felt if the committee went with the Taft-Hartley reference again it would be appropriate. He explained Mr. Jeffrey, Executive Director of the Southern Nevada Building and Construction Trades Council, had appeared in the 1997 session proposing the change to get the property tax exemption. He stated the proposed legislation would be in keeping with the intent in 1997 of what had been explained during the prior hearing. Mr. Zuend pointed out there had been one additional issue included in section 1 where it mentioned the federal government, pursuant to 29 U.S. Code 50, and the sponsor felt it was unnecessary because under labor law the programs were either run through the state or the federal government. One did not do both. So every apprenticeship program in Nevada had to go through the council and the apprenticeship committees, they did not go to the secretary of labor for approval.

Chairman Goldwater stated his understanding was the amendment would include the deletion at the end of line 8 and 9 on page 1 and clarify the Taft- Hartley issue. He indicated he would accept a motion to include the intent of the committee.

ASSEMBLYMAN NEIGHBORS MOVED TO AMEND AND

DO PASS A.B. 211 AS AMENDED.

ASSEMBLYMAN PRICE SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY BY THOSE PRESENT.

Assemblyman Neighbors thanked the committee for the expeditious action taken on his bill having to do with the Nye County Regional Hospital (A.B. 275) it had passed out of the Assembly. He had received word that, subject to the governor signing the bill, the county commissioners in an open meeting indicated they would come up with $1.3 million additional dollars to keep that very important facility open.

There being no further business to come before the committee, the meeting was adjourned at 3:00 p.m.

RESPECTFULLY SUBMITTED:

Nykki Kinsley,

Committee Secretary

APPROVED BY:

Assemblyman David Goldwater, Chairman

DATE: