The Committee on Taxation was called to order at 1:30 p.m., on Thursday, March 18, 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. Greg Brower

Mrs. Vivian Freeman

Mr. John Jay Lee

Mr. Mark Manendo

Mr. John Marvel

Mr. Harry Mortenson

Mr. Bob Price

Ms. Sandra Tiffany

COMMITTEE MEMBERS ABSENT:

Mr. Morse Arberry

Ms. Dawn Gibbons

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Carole Vilardo, Representative, Nevada Taxpayer’s Association

Michelle Gamble, Representative, Nevada Association of Counties

Glenn Logan, Representative, Carson Valley Historical Society

Marlena Hellwinkel, President, Carson Valley Historical Society

Cecile Brown, Curator, Carson Valley Historical Society

Theresa Hickey, Trustee, Carson Valley Historical Society

Gene Sullivan, Chairman, Nevada Land Conservancy

Alicia Reban, Executive Director, Nevada Land Conservancy

Alvin Kramer, Treasurer, Carson City

Karen Mullin, Director, Washoe County Parks

Bill Whitney, Staff Member, Washoe County Open Space Program

Virginia Kersey, Vice Chairman, Nevada Land Conservancy

Ame Hillman, Vice President, American Land Conservancy

David Purcell, Executive Director, Department of Taxation,

Following roll call, Chairman Goldwater opened the hearing on A.B. 463.

Assemblyman John Marvel, Assembly District 34, introduced A.B. 463 to the committee, and said the bill was a result of a request from the Winnemucca Museum Society.

Jack Bullock, representative, Humboldt County Museum, testified in support of A.B. 463. Mr. Bullock explained for many years rural counties had been allowed to petition the boards of county commissioners for funds from tax roles up to a maximum of 5 cents per $100 of assessed valuation. Historically, the Humboldt County Board of County Commissioners had not opted to pass on that money to the North Central Historical Society for purposes of building and maintaining museums and so forth. While the board of county commissioners had been supportive, they had always just funded the day-to-day operation expenses. Mr. Bullock said additional reliable funding was necessary to continue into the next century. The history of the Humboldt County Museum began in 1974, and had since expanded to double the capacity of that building, and money was needed to complete the interior. A.B. 463 would change Nevada Revised Statute 244.377 to enable the various historical museums to plan for the future with a stability of funding which had not be available in the past.

Mr. Bullock said Humboldt County had three or four areas of heritage to preserve, including pioneer, farming, gaming, and mining histories. The 5 cents per $100 assessed valuation would give the museum approximately $260,000 annually for salaries, operating expenses, and growth.

Mr. Bullock continued the additional language in A.B. 463 would exclude the tax so levied from the tax cap the counties were allowed to receive. It would not be necessary to take the funds from one place just to put them elsewhere.

Assemblyman Marvel commented Mr. Bullock had been in communication with the legislative Legal Division and an amendment was being proposed to A.B. 463.

Mr. Bullock said Nevada Revised Statute 361.045 defined taxable property as all property of every kind except as otherwise provided by law, and he believed that would not include exempted property such as federal and state properties. He would like to be sure it was not the intention of the bill drafters to include as taxable property those exempt properties.

Assemblyman Anderson asked if A.B. 463 applied only to county museums. Mr. Bullock said the bill applied to museums which were funded and operated through a historical society. Assemblyman Anderson then asked how counties where there were multiple museums would benefit from A.B. 463. Mr. Bullock replied that would depend on whether the museum was a county museum which was fully funded exclusively by the county without a support base in a historical society, or whether they were an arm of a historical society. The Humboldt County Museum was funded through the North Central Nevada Historical Society, which was authorized by different portions of the Nevada Revised Statutes. If a private or municipal museum had no county affiliation it would not be eligible for funding under A.B. 463.

Assemblyman Anderson noticed purchasing would be limited to cabinets only and not to display items or conducting activities. He wondered if that was the only use to which funds would be put. Mr. Bullock replied all expenses of maintaining the county museum or historical society would be covered. The Legislative Counsel had deleted the reference to art centers as being redundant. Assemblyman Anderson wished the maintenance of county museums to include such things as activities. Mr. Bullock said it was the intention of the proponents to delete references to art centers only because there was not enough money to share between the two entities. Assemblyman Anderson asked if there was support for A.B. 463 from other counties. Mr. Bullock replied that was the case.

Brenda Erdoes, Legislative Counsel, stated the bill drafters had indeed removed a reference to art centers as being redundant.

Assemblyman Lee asked what designated a historical society. Mr. Bullock responded the Nevada Revised Statutes defined a historical society in order for it to become a nonprofit charitable corporation or association. Assemblyman Lee wondered if the county audited the books for a museum or historical society. Mr. Bullock replied money was given to Elko subject to approval by the county commission. On a quarterly basis, vouchers were submitted to the county for the purpose of paying salaries and other things. Historical societies were subject to the open meeting laws, public works laws, and contract bidding laws. While there was not an actual mechanism in place for auditing books, the voucher system would perform that function. Assemblyman Lee asked if there would be a problem if A.B. 463 excluded counties of over 100,000 population. Mr. Bullock said it would not, but someone from Elko needed to answer for themselves since their population would soon reach that figure. In such a case, their funding source would be affected.

Carole Vilardo, representative, Nevada Taxpayer’s Association, spoke in opposition to A.B. 463. She said the question was not that of opposing such things as art museums or cultural societies, but rather opposing the vehicle being used. The money put into statute had been placed there in 1969 as a way for a county which had a museum to fund the operation of the museum. At that time it was permissive. A.B. 463 made it mandatory on the counties. A.B. 463 was outside the $3.64 property tax cap. More importantly, said Ms. Vilardo, there was another bill in the works which provided some relief for the rural counties where it was necessary for operating funds to go outside the cap. There was a particular problem when specific increments of property taxes were to be used for specific purposes. Outside of financing of facilities approved by the voters, property tax was a general government revenue source. If, within the general government provisions of a particular entity, the people chose to fund museums or cultural centers, that would be part of the overall budget process. When a mandate was required which was not balloted, locally elected officials tended to be gun shy about raising property taxes for a need which was already a specific general government function. Operating funds needed to be made available. That was best done through generic language being put into Nevada Revised Statute 354, which would allow at least 5 cents to be used for a period of at least 10 years for operations of specific items for a county, or regional facilities where there were multiple government needs.

Ms. Vilardo said that would give discretion to a local governing board as to where the priorities were. Amendments were being made to a bill in the Senate at present which would give discretion to those local governments for specific operating expenses.

Chairman Goldwater asked the probability of success for such a bill. Ms. Vilardo replied there were enough people who wished to eliminate special interest bills to make success feasible. Assemblyman Marvel felt A.B. 463 should be held until the other bill was heard.

Michelle Gamble, representative, Nevada Association of Counties, said she was concerned A.B. 463 would dedicate property tax revenue for the maintenance of museums. There were currently six counties which had experienced a decline in assessed property value over the last fiscal year, and seven counties which were at or within a few cents of being at the cap. Anytime there was a mandatory tax rate for any county at or near the cap, there was a problem.

Assemblyman Neighbors said in Nye County the amount of money being discussed was $300,000. Esmeralda County would spend $21,000, which was a lot of money for that county. Mineral County would expend $51,000. Lincoln County would have to earmark $42,000. All those counties were experiencing financial difficulties.

Assemblywoman Freeman recalled a lot of work being done in the interim committee on S.B. 253, but not many bills were coming out. Ms. Vilardo said a number of bills were dropped. One of those bills had set up conditions for rural counties under which the cap could be exceeded.

Assemblyman Neighbors commented that Nye County’s tax base was in Pahrump. They had no museum, but would pay the major part of the money.

Glenn Logan, representative, Carson Valley Historical Society, testified in support of A.B. 463. Mr. Logan said he was very concerned about funds for two Douglas County museums. Nevada Revised Statute 361.045 was passed in 1969, and amended in 1975. No money had been given by the county commissioners under the bill because the language said "may" instead of "shall." County commissioners had helped over the years, mostly through capital improvements. Operating overhead had been met through donations and volunteers. Curators and directors worked part-time for minimum wage. In 1989, when the high school was changed into a museum, the county commission had agreed to assist with at least the utilities, but over a period of time the commissioners changed, and the new members did not wish to help.

Before he retired as president of the historical society, Mr. Logan had asked the county commission for $3,000 a month to aid in the operation of both museums. He was granted a total of $5,000. That did not solve the problem. A tourism bill was passed under which the historical society should qualify, but no money was forthcoming from that source.

Marlena Hellwinkel, president, Carson Valley Historical Society, testified in support of A.B. 463. Ms. Hellwinkel told the committee she supported the testimony given by Mr. Logan, and added that in a meeting the previous evening, a request had been made for $42,000 per year from the county commissioners to aid in the maintenance expenses for the buildings and salaries. If that money was received, volunteers could concentrate on fundraising events and preservation of historical exhibits. However, all that was granted from the county commission was $6,000. If volunteers from the historical society alone were paid only $5 per hour, that would cost $86,000 per year.

Cecile Brown, curator, Carson Valley Historical Society, testified next in support of A.B. 463. Ms. Brown said she was the only paid curator for the Carson Valley Historical Society. She approved of A.B. 463 but suggested it could be amended to not make the 5 cents a blanket amount. For Douglas County, that amount would bring $700,000 a year, which was more than the historical society needed. In Douglas County were some of the oldest artifacts in Nevada, which were well worth preserving. The museums in Douglas County were not county museums, and Ms. Brown expressed the hope that A.B. 463 would enable funding to help keep the historical society open.

Theresa Hickey, trustee, Carson Valley Historical Society, added her testimony in support of A.B. 463. Ms. Hickey reiterated the problems with funding for the museum.

Chairman Goldwater asked for further testimony in support of A.B. 463, or in opposition. There being none, Chairman Goldwater closed the hearing on A.B. 463, and opened the hearing on A.B. 423.

Assemblywoman Vivian Freeman, Assembly District 24, introduced A.B. 423 on behalf of the Nevada Land Conservancy. Assemblywoman Freeman told the committee there was a piece of property in Reno which was owned by Sierra Pacific Power Company that was adjacent to a big regional park. The Nevada Land Conservancy wished to effect a trade to make that property part of the park.

Assemblywoman Freeman said page 2 of A.B. 423 addressed property taxes of senior citizens, which was another issue from the park property and would be addressed further into the hearing.

Gene Sullivan, chairman, Nevada Land Conservancy, testified in support of A.B. 423. Mr. Sullivan introduced various individuals who would also testify in support of the bill.

Alicia Reban, executive director, Nevada Land Conservancy, testified next in support of A.B. 423. Ms. Reban said the mission of the Nevada Land Conservancy was to protect and preserve special places and open spaces in Nevada for future generations. The Nevada Land Conservancy was a grassroots volunteer-led nonprofit land trust. Land trusts existed as land saving organizations to benefit the community at large. The Nevada Land Conservancy had a legal and ethical obligation to ensure that each land transaction served a public benefit.

Ms. Reban said the Washoe County Commission was largely responsible for the genesis of the Nevada Land Conservancy, providing a grant for administrative funding. As part of an agreement with Washoe County, the Nevada Land Conservancy used the Regional Open Space Plan, adopted by the Washoe County Commission and the cities of Reno and Sparks in 1994, as a guide and pledged to help implement that plan.

Ms. Reban continued the Nevada Land Conservancy engaged in targeted land pre-acquisition and was not in the business of long-term land ownership. The Nevada Land Conservancy had to ensure they were working on county and city priorities in the communities they served. The focus was on areas experiencing high growth, to preserve the quality of life which attracted such growth.

A 1989 Regional Planning Commission survey, said Ms. Reban, ranked projected conditions of the area in the next 20 years. Ranked first was clean air and water with many open spaces and abundant wildlife. The survey suggested that 74.5 percent of the people were willing or somewhat willing to support tax increases to purchase environmentally sensitive lands and 78.6 percent would definitely accept or might accept bond issues to extend parks or purchase lands for green veldts. A 1994 tax override attitude survey had reported that 65 percent of the people were very much or somewhat for a quarter-cent sales tax for acquisition or maintenance of a regional open space system for wetlands protection, trails construction, wildlife habitat, and historic preservation. Further surveys indicated that over-development and growth was one of the most serious issues facing Washoe County.

Ms. Reban continued that more recently Truckee Meadows Tomorrow, a community based nonprofit organization, with membership representing businesses, education, health and human services, and environmental interests, underwent an extensive public participation process to identify what was important at a community level. The process revealed that open space was a high priority quality of life indicator. The Truckee Meadows Regional Planning Governing Board also named open space as one of the top 10 of 66 indicators for quality of life. The Forum for a Common Agenda, a consortium of business and community interests, had named the Nevada Land Conservancy as a group on which to focus support.

Ms. Reban presented a written copy of her testimony to the committee (Exhibit C) which outlined the above and further surveys and beliefs. Assemblywoman Tiffany asked if the Nevada Land Conservancy and Nature Conservancy were the same companies, and were they private companies. Ms. Reban explained the Nature Conservancy and the Nevada Land Conservancy were separate private companies. The Nature Conservancy had the tax exemption being sought, the Nevada Land Conservancy did not. Ms. Tiffany asked if the organization was new to Nevada. Ms. Reban responded the organization had been in Nevada only a few years. Ms. Tiffany asked how the organization stayed in business. Ms. Reban said an operating agreement with Washoe County assured a 5-year grant to help cover administrative costs. It was the responsibility of the Nevada Land Conservancy to generate additional funding for acquisition purposes. A lot of property was donated for a certain period of time. The Nevada Land Conservancy was able to offer certain tax benefits to landowners through an agreement with certain cities or counties.

Ms. Tiffany asked for an example of how revenue would be generated. Ms. Reban replied the Nevada Land Conservancy might be given a piece of property to hold for a specified period of time. The only costs associated with that would be stewardship, such as making sure title was clear, and that real estate transactions were handled properly. The county looked to the Nevada Land Conservancy to help implement the regional open space plan and so the Nevada Land Conservancy was concerned only with properties that were in that plan. The Nevada Land Conservancy did not look to acquire large areas of land.

Mr. Sullivan interjected the responsibility of the Nevada Land Conservancy was to generate funds through the typical annual dinner, selling memberships, and so forth. The Nevada Land Conservancy could dispose of land if it was given to them.

Ms. Tiffany asked if both the Nevada Land Conservancy and the Nature Conservancy had grants from Washoe County. Ms. Reban replied the Nevada Land Conservancy was the first local land trust in Nevada. The Nature Conservancy was a national land trust which already had the tax exemption which the Nevada Land Conservancy desired to obtain. Ms. Tiffany asked why the numbers in Exhibit C had been changed. Ms. Reban explained the numbers in the exhibit had to do with another portion of the bill with which she was not concerned.

Assemblyman Neighbors asked how often land was transferred into private ownership. Ms. Reban responded that had not happened.

Assemblyman Manendo wished to know who wrote grants. Ms. Reban replied she wrote the grants. The Nevada Land Conservancy had some private funding, and had applied for foundation grants and fundraising in the community.

Assemblyman Mortenson wondered what advantage an owner would derive from transfer of property to the Nevada Land Conservancy. Mr. Sullivan replied he had been the director of parks for Washoe County for 20 years, and on many occasions a developer might want to contribute land in lieu of taxes or for some other reason. There was quite a bureaucratic process involved in giving land to the county. If the Nevada Land Conservancy handled the transfer, it would be much easier. In many cases, the Nevada Land Conservancy was obligated to turn over such lands to the county, city, or forest service. Mr. Mortenson asked if a case could exist where a landowner who contributed land could continue using that land for a length of time. Ms. Reban replied such a case would be a life estate where a person might make a gift of land and live their lives out on the land. At the time of death the land would be transferred to the Nevada Land Conservancy. There were conservation of stewardship guidelines set up by the Nevada Land Conservancy board where property had to meet certain public benefit requirements.

Mr. Mortenson said he was concerned a situation could exist where the county was deprived of tax money. If the Nevada Land Conservancy owned the land and allowed a benefit of free use until death, that cost the county a number of years’ worth of taxes. Mr. Sullivan replied the benefits outweighed the tax benefits. Mr. Mortenson asked what the benefit was to the county if the Nevada Land Conservancy held land.

Assemblyman Neighbors asked what the annual budget entailed. Ms. Reban replied the current annual staffing budget was $75,000 for her salary.

Alvin Kramer, treasurer, Carson City, testified most of the land which came into the hands of such organizations as the Nevada Land Conservancy was open space land and was designated agriculture deferred. That land typically had such a low tax rate there was little loss. If the property was used in a commercial manner and was owned by a conservatory, there would still be a tax on the lessee or operator of the business.

Karen Mullin, director, Washoe County Parks, testified the majority of the parcels in Washoe County had been very large tracts of land. The land use designation had usually resulted in a very low valuation. The problem was the lifetime use program when it took the county a long time to actually acquire and process the transaction and accept the donation. What occurred was an accrual of taxes during that time period. In Washoe County the Parks Department picked up the tab and paid the Washoe County Treasurer taxes on that property. She felt that cost the taxpayer because it came out of the parks department operational budget. Most of the time the cost was minimal, but if there were a lot of transactions in 1 year, it could amount to a lot of money. The idea of the conservancy was a true partnership since it helped if the parks department did not have to use its staff to manage transactions, and a lot of the assessments, which was a benefit to the citizens.

Assemblywoman Tiffany asked if the nonprofit organization was created by the county for the express purpose of a blind holding company. Ms. Mullin replied the Nevada Land Conservancy was established by a group of business leaders in the community. Over a 5-year period of time the challenges were studied, and a grant was requested. The Nevada Land Conservancy asked for grants from other organizations as well to sustain them until they were well on their feet. Ms. Tiffany asked where the $75,000 came from for the salary.

Bill Whitney, staff member, Washoe County Open Space Program, replied the $75,000 salary came from the Open Space Program budget. It was a fairly unique cooperative effort nationwide for a local government body to work with a nonprofit organization to get it going. The Regional Open Space Plan was adopted in 1994, and an effort was being made to implement it in every way possible without raising sales or property taxes. The county commission had given its staff and the Nevada Land Conservancy the task of doing so.

Assemblywoman Tiffany asked where the savings were when a salary cost $75,000 and land might be worth $50 a year in taxes. She wondered how the situation developed. Mr. Whitney said Washoe County was the only county which implemented the program. Ms. Mullin said the Nevada Land Conservancy received grants throughout the year for other things than land, such as capital improvements in the county, which grants ranged from $150,000 to provide a trail system along the Truckee River to $16,000 for equipment.

Assemblywoman Tiffany said she understood it was good for the taxpayer because it gave them a break, but the taxpayers were paying for the grant to begin with. Ms. Mullin said the one grant from the county was matched by other grants, and while the county helped get the Nevada Land Conservancy running, it was only a singular grant.

Assemblywoman Freeman said she saw the project as an example of the people getting together for a good cause. It must be remembered the project was a joint effort and a good way to spend tax dollars. A bill was being considered that addressed regional planning and she felt the entire process would work together for the good of the people.

Assemblyman Neighbors asked if the land dedicated as open space belonged to the Nevada Land Conservancy and would be sold. Mr. Whitney replied that land would be kept as open space in perpetuity. Ms. Mullin said such land as was dedicated was deed restricted and would remain open space.

Virginia Kersey, vice chairman, Nevada Land Conservancy, spoke in support of A.B. 423. Ms. Kersey said she had been involved in park and open space issues for over 20 years, and had served on the Nevada Land Conservancy since its inception. She said the Nevada Land Conservancy hoped to grow into a statewide organization. A land conservancy could hold land until bond issues could save it. An example of that was the land on which the balloon races were held every year. If the county had not passed a bond issue, the land could have been sold.

Chairman Goldwater said government was not against open land but when exemptions were put into statute, it created a disincentive for the county to support a conservancy. When lands were taken off the tax roles, the county had less money to spend on other things. Ms. Kersey replied if the county accepted donated land, it went off the tax roles anyway. The Nevada Land Conservancy could receive the land as a donation and transfer it to the county, and while it still went off the roles, other things could be done with it. Mrs. Freeman suggested it should be possible to implement a population threshold for concerned counties.

Ame Hillman, vice president, American Land Conservancy, testified in support of A.B. 423. She asked for an amendment to add the American Land Conservancy to the bill. The American Land Conservancy was a national nonprofit agency similar to the Nature Conservancy, which was included in the Nevada Revised Statute 361.111. The American Land Conservancy had been in Nevada for 10 years, and had worked on acquisitions in northern Nevada such as the Galena acquisition which prevented a casino and ski resort development. The organization had recently acquired almost 9,000 acres on Peavine Mountain.

Ms. Hillman said land adjacent to protected open space typically increased in value by 30 to 40 percent, which calculated back into property tax roles in a significant way. When local land trusts like the Nevada Land Conservancy got involved in acquisitions, the land was not usually held for any length of time. There was always a plan for the land. The change sought in A.B. 423 would facilitate land conservancies to continue the good work.

David Purcell, executive director, Department of Taxation, presented a fiscal note (Exhibit D). He explained the department canvassed 17 county assessors and could not find any property held by the Nevada Land Conservancy, and therefore could see no fiscal impact. Since hearing testimony in the present meeting, he realized there could be an impact if the amendment to include the American Land Conservancy was included. If such became the case, the committee might wish to request a revised fiscal note.

Assemblywoman Freeman reiterated the desire to install a population threshold in A.B. 423 and also wished to discuss the second part of the bill which related to senior citizen tax thresholds. She explained the senior citizens in her district had a real problem just buying food. A.B. 423 would help the very low-income senior citizens to keep their property.

Ted Zuend, fiscal analyst, Legislative Counsel Bureau, explained section 2 of A.B. 423 was a technical change to the bill and had no fiscal impact. In the 1997 session, a bill was passed which put into place a Consumer Price Index adjustment to be effective from December to December. There was a problem because the Consumer Price Index adjustment for December would not be reported until late in January. The tax assessors did not have correct income thresholds for the information they needed to send out regarding taxes. A change of dates of July to July would solve that problem. The income levels in section 2 of A.B. 423 were changed because the dates were moved forward by 1 year, which reflected approximately in a 1.5 percent increase in inflation. The change would become effective July 1, 2000. Section 3 of A.B. 423 would raise the refund level to 95 percent from 90 percent, and subsection 2 of section 3 increased the maximum amount refunded from $500 to $1,100. The $500 figure had been in place since 1979. A fiscal note (see Exhibit D) was furnished by Mr. Purcell.

Chairman Goldwater asked for further testimony on A.B. 423. There being none, the meeting was adjourned at 3:20 p.m.

RESPECTFULLY SUBMITTED:

Lois McDonald,

Transcription Secretary

RESPECTFULLY SUBMITTED:

Nykki Kinsley,

Committee Secretary

APPROVED BY:

Assemblyman David Goldwater, Chairman

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