The Committee on Taxation was called to order at 2:15 p.m., on Thursday, April 1, 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

Ms. Dawn Gibbons

Mr. John Jay Lee

Mr. Mark Manendo

Mr. John Marvel

Mr. Harry Mortenson

Mr. Bob Price

Ms. Sandra Tiffany

COMMITTEE MEMBERS EXCUSED:

Mr. Morse Arberry, Jr.

GUEST LEGISLATORS PRESENT:

Mr. Lynn Hettrick, Assembly District 39

Ms. Genie Ohrenschall, Assembly District 12

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Robert Faiss, Attorney at Law, Lionel, Sawyer and Collins

James Settelmeyer, Member, Carson Valley Conservation District

Arnold Settelmeyer, Rancher, Carson Valley

Jerry Whitmire, Rancher, Carson Valley

Dave Bolick, Carson Valley Chamber of Commerce

Ame Hellman, Member, American Land Conservancy

Carole Vilardo, President, Nevada Taxpayer's Association

Chairman Goldwater pointed out due to lack of a quorum the meeting would begin as a subcommittee with members being marked present as they arrived.

The hearing was opened at that time on A.B. 669 which would make a technical change relating to the imposition of the casino entertainment tax.

The Chair asked Robert Faiss, representing the Nevada Resort Association (NRA), if he would put a statement on the record on what he and his clients had in mind.

Mr. Faiss introduced himself indicating he was associated with the law firm of Lionel, Sawyer, and Collins, appearing as counsel for the Nevada Resort Association. He advised the committee they were asking that the hearing be postponed inasmuch as his firm was in discussions with the Gaming Control Board and they felt if things continued as they were there, may be a resolution to their problem without calling for legislative action.

Chairman Goldwater cautioned Mr. Faiss the legislature now had a deadline they must observe whereby the committees were required to get all bills out of committee by the April 9. He advised the witness if they determined legislation was necessary and had their request prepared to please bring it forth so it could be processed. He closed the hearing on A.B. 669.

The hearing on A.B. 504 was opened with the Chair welcoming Mr. Hettrick as primary sponsor.

The bill would allow all counties, other than Clark County, to impose several different taxes, with voter approval, to develop open-space land. The taxes made available for this purpose included an additional real estate transfer tax of one tenth of 1 percent, an additional sales tax of up to one-quarter of 1 percent and an additional property tax of 1 cent per $100 of assessed valuation.

Because voters in the county had to approve any tax increase, there was no opposition to the bill. The Nevada Taxpayers Association requested the bill be amended to limit any tax increase for a period not to exceed 30 years and to limit the term of any bonds issued to be supported by the taxes for a period not to exceed 20 years.

Mr. Hettrick pointed out the bill was the request of some of his constituents in his county, and he felt it made good sense for the rest of Nevada as well. The legislation simply amended a law put into place by Washoe County some years ago allowing the public to vote on establishing tax rates to fund the purchase of open space. At the time, for reasons of which he was unaware, the question was limited to counties of more than 100,000, less than 400,000. The legislation was asking the committee to strike the 100,000 bottom cap so the smaller counties could take advantage of that as well.

Pursuing his testimony, Mr. Hettrick suggested if the committee members had an interest in striking the top limitations as well, he would have no problem, but he was interested in helping the smaller counties who were requesting removal of the bottom cap. It was a simple bill which simply struck the figure of 100,000 in three or four places and a couple of semi-colons. It really was that simple. There was a great deal of interest in Douglas County to allow the voters the opportunity to purchase some open land.

Mr. Hettrick emphasized he was very proud of Douglas County as they had one of the most beautiful counties in the state, in his opinion, and they would like to maintain that by allowing the voters to tax themselves and keep that open land and the open space that made it beautiful.

Mr. Hettrick explained there were several people from his county present today who would want to address the committee as well.

Chairman Goldwater asked if there were any questions for Mr. Hettrick from the committee. Not seeing any, he indicated he had one which addressed the new policy regarding taxes and fees relative to the message from the governor's veto message. He asked Mr. Hettrick if he had shown the bill to the governor.

Responding, Mr. Hettrick stated he had spoken to the Governor's Office previous to the meeting about the bill. Because it would take a vote of the people and did not increase any fees or taxes of those already in statute, it would have no impact whatsoever on taxes or fees, it only changed the population cap. The taxes and fees were already in place and would take a vote of the people. It was a specific comment that would not apply to anything that went to a vote of the people.

Mrs. Freeman spoke next indicating when she introduced a similar bill, the people from the land conservancy showed up and testified. She believed the bill was passed at that time for the Rancho San Rafael Park which was a large county-owned park. She felt the bill was passed to allow the people of the area to vote to acquire that wonderful park. She supported Mr. Hettrick’s idea as being a very good one.

Mr. Hettrick pointed out he had not discussed the proposal with anyone from Clark County which, he believed, was currently the only county in Nevada with a population of over 400,000. If the committee chose to pass the bill, he would not have a problem with amending the bill to take out the caps altogether if that was the decision of the members of the committee. He indicated he had brought the bill forward specifically to respond to the issues for the smaller counties, in particular Douglas County.

The Chair explained there had been no problem with acquiring public property in Las Vegas and they were the largest municipal landholder in 50 states. He asked if there was anyone from Clark County in the audience. With no one responding, the Chair then called upon Mr. Hettrick.

Mr. Hettrick introduced Mr. Settelmeyer who had researched the issue and found Clark County currently had authority to do that for their area.

(The Chairman noted for the record a full complement of committee members were present)

Chairman Goldwater invited Carole Vilardo, representing the Nevada Taxpayer's Association to come forward.

Ms. Vilardo volunteered to respond to questions on the bill and comment on a possible amendment which she would consider a friendly amendment. She pointed out her association would like to see if the sales tax for any issue, including open spaces was approved, and if approved to purchase facilities, that it be bonded. They recommended the bonds be no longer than 20 years, and the sales tax or the portion needed for the facility would sunset, allowing it to be recycled for some other purpose. Additionally, they were proposing it would be in place no longer than 30 years which would be consistent with the state's "pay-as-you-go" policies and other operating provisions. Perpetuity was no longer allowed, therefore, the legislature had set those types of issues at a life span of 30 years. When the original open space bill was passed in 1991 was prior to legislation providing the end of perpetuity. Not knowing if that fell under the new provisions or because it was an extension of the old language, she was asking the committee to ensure that the state would have those timeframes.

Chairman Goldwater asked Ms. Vilardo if she would work with the sponsor of the bill and deliver their recommendations to the committee as soon as possible to which Ms. Vilardo responded in the affirmative. The Chair then asked if Terry Wright from Nevada Title was on the board of the Nevada Taxpayers Association and was advised by Ms. Vilardo he was not. He then asked if she was aware of the title industries’ concerns regarding the real estate transfer tax collection and was assured by Ms. Vilardo she was. She added she and members of her association had worked on that matter 10 days ago at the request of the Senate Committee on Taxation, and they had already met and were planning yet another meeting. Chairman Goldwater acknowledged for clarification the Senate Committee on Taxation would be taking care of the issue which was confirmed by Ms. Vilardo.

Chairman Goldwater recognized there were additional people signed in for the hearing on A.B. 504, and indicated if anyone was here in support of the bill and did not want to testify that would be noted for the record. He then called upon Dave Bolick who had appeared before the committee on a prior occasion.

Dave Bolick introduced himself as executive director of the Carson Valley Chamber of Commerce and Visitor’s Authority adding the chamber was in support of the bill. He had just spoken with Assemblyman Hettrick, and he assured him they would have no problem with the 20-year limit on the tax, and if people liked it, they could put it back in again.

The Chair thanked Mr. Bolick and asked if there were any questions from the committee. Seeing none Chairman Goldwater called on Ms. Hellman.

Speaking next was Ame Hellman who introduced herself as representing the American Land Conservancy and also as a member of the Douglas County Planning Commission. She wished to clarify the bill would potentially allow the conservancy the opportunity to purchase development rights, not fee acquisitions, which meant conservation easements. That would insure the land would remain on the tax rolls, which she thought was an important point to note for the State of Nevada. She added Douglas County had a groundswell of support from a very diverse community group, as Mr. Bolick had mentioned, ranchers being members of that group. Her group was optimistic they could continue to move forward. The bill would allow them to go to the community and say, "if you are interested in looking at a stable funding source, you have the opportunity to do it."

Chairman Goldwater thanked Ms. Hellman for her testimony while pointing out Nevada's real estate transfer tax was lower than almost any place in the country. He then recognized Mr. Settelmeyer for his comments.

James Settelmeyer, a member of the Carson Valley Conservation District and a local area agriculturist, explained he would be speaking in favor of A.B. 504. He pointed out everyone had seen a nationwide recognition of the urban sprawl, adding it was a local initiative that would help Carson Valley deal with it. The bill would also put them in a position to benefit from matching funds that supposedly were being discussed by the livability agenda by Al Gore.

The Chair, recognizing there were no questions for Mr. Settelmeyer thanked him for his testimony and then called upon Charlie Hone.

Mr. Hone explained he was a member of the Carson Valley Conservation District as well as being an area rancher and was in support of the bill.

Chairman Goldwater verified there were no questions then announced if anyone was in support of the bill and wanted to indicate to the committee they were in support and did not wish to speak that was fine. He noted he would call names from the guest list and anyone could indicate their support by a show of hands. He then called up Arnold Settelmeyer.

Mr. Settelmeyer stated he was a rancher and wanted to say the bill was a good tool for state planning, hopefully, to allow the next generation to carry on with what had happened in the last 100 years.

The Chair recognized Jeremy Whitmire who explained he was an area rancher in Douglas County and felt the open space initiative in Douglas County had the benefit of helping Douglas County implement its master plan and certainly preserve the heritage of the Carson Valley Agriculture Community. It could also help to contain infrastructure growth, contain and be able to provide more efficient emergency services, and certainly preserve the flood plains which Nevada officials knew were certainly important after the flood in 1997. The bill would allow the county officers to create a local, stable funding source and to make the agricultural community a viable entity in Douglas County.

Chairman Goldwater finding there no questions recognized several observers in the audience who wished to be on record as supporting the bill. They were Messrs. David Hussman, Al Walker, Scott Morgan, Dan Kaffer, and Doug Busselman all supporting A.B. 504. The Chair thanked those individuals and asked if there was anyone present who wished to speak in opposition to A.B. 504. There being none he closed the hearing and reminded the committee members there were amendments being discussed with Ms. Vilardo for potential sunset in 20 years among other things which would be brought to the committee as soon as possible.

The bill sought voter approval of a sales tax exemption for hearing aids and related accessories. If ultimately approved by the voters, the exemption was estimated to decrease revenues from a combined 7 percent tax rate by $285,000 in FY 2000-01 and $570,000 annually thereafter.

Included, as part of the minutes was Exhibit C, a fiscal note prepared by the Department of Taxation.

Chairman Goldwater introduced Assemblywoman Ohrenschall and opened the hearing on her bill, A.B. 514, explaining the committee was having a tough time with exemptions during the session but were appreciative of her being here.

Ms. Ohrenschall indicated she had been looking forward to the hearing with a certain amount of trepidation as she realized it was not the year to be proposing exemptions. She cautioned the committee they would need to look at a couple of considerations: (1) The bill would call for a vote of the people, so by making a decision at that time, the committee would allow the voters to express their position on the issue and (2) The exemptions for the medically necessary devices, she felt were essential to the quality of life. People did not choose to go deaf. When someone was blind they had a seeing eye dog or a white cane therefore somebody at a distance could take that disability into account. If someone was deaf and in the middle of the street without a hearing aid could not hear a car horn, and the driver of the car did not know the person standing there did not hear the horn, that could potentially be life threatening. The hearing aid devices were expensive for seniors, most of whom were on fixed incomes and for that reason she requested the committee take a favorable look at the bill. She admitted she was well aware of the economic squeeze and offered to answer any questions.

Chairman Goldwater asked Ms. Ohrenschall if she believed the addition of sales tax was a barrier to people purchasing hearing aids and was advised in the affirmative. Ms. Ohrenschall added when looking at the socioeconomic groups of the residents in her district, particularly the seniors who lived in mobile parks, they were most often caught between paying for over-the-counter medication they may need or buying groceries. She had one woman call who was unable to get on section A housing; her total income was $570 per month and her rent was $500. As everyone would agree, $70 did not leave much in the way of buying groceries, obtaining transportation, and trying to pay for something such as a hearing aid. She understood the need for a uniform state taxation policy but she doubted in the limited 120-day session it could be done. She pointed out all other devices such as orthopedic prosthetics, necessary for the quality of life were exempt. Not all people who purchased hearing aids were seniors, but generally seniors wanted to be independent but if they could not hear it was much more difficult.

Chairman Goldwater asked if hearing aids were covered by Medicaid and was advised by Ms. Ohrenschall she did not believe they were, adding they were not covered when she researched the question 2 years ago. She added she had not checked since to see if there had been a change.

Ms. Freeman asked Ms. Ohrenschall if she could support a means test and if so, how difficult would that be to administer. She was advised by Ms. Ohrenschall she would support a means test, however, Chairman Goldwater interjected a means test would be a tough provision to put in administratively but would be something to investigate with the Department of Taxation.

Mr. Neighbors told the committee of a personal experience in dealing with hearing aids that brought the focus of the members as to how expensive dealing with hearing aid distributors had become.

Mr. Manendo pointed out the Committee on Taxation passed a bill introduced by Assemblyman Sandoval in the 1997 Session on a similar matter which went before a vote of the people. Given those circumstances, Mr. Manendo stated he would support the measure under consideration. He felt the bill was important and not necessarily just for seniors. There were many young families having hearing problems struggling just as hard, therefore, he felt it was imperative the legislature took a stand by putting the question on the ballot letting the voters decide. If they chose not to, he would have no problem with it but felt the measure should be given the same action received by Mr. Sandoval’s bill.

Chairman Goldwater encouraged Ms. Ohrenschall to continue with her efforts as those who were adversely affected with hearing problems and disorders appreciated her efforts regardless of what happened to the bill.

He then asked if there was anyone present to testify in support of A.B. 514, there being no one, he called for anyone wishing to testify against A.B. 514. Seeing none, he closed the hearing on A.B. 514 announcing he would bring the bill back in the work session document.

The bill sought voter approval of a sales tax exemption for school supplies purchased by an eligible student during the last 7 days of August each year. Eligible students would include anyone enrolled in a public or private school, community college or university who could show acceptable proof of that enrollment. School supplies include items commonly used by students for schoolwork, except for clothing, computers and computer software and any single item sold at retail for more than $100.

The exemption, which would not take effect until August 2001, would result in an estimated revenue loss, based on an average 7.25 percent tax rate, of $3.82 million during FY 2001-2002. The fiscal note was estimated from information furnished by the Department of Education and the University System that estimated spending of $75 during that week for each elementary and secondary student and $250 during that week for each college and university student.

A fiscal note had been provided included as Exhibit D.

Chairman Goldwater welcomed Sandra Douglas, student intern for Assemblyman Wendell Williams and asked her to proceed. She stated she had outlined the bill as she was aware there was similar legislation in Texas, New York, and Florida that had been introduced and she felt it would be beneficial to Nevada residents as well. She pointed out the other states she mentioned included clothing and shoes as well as school supplies, but it was felt Nevada should focus on education, therefore the bill was limited to exempting sales tax from school supplies as defined in section 3. The exemption would be for 1 week in August therefore students from public, private, and elementary schools that were on "tracks" would be able to take advantage of it. In her opinion, the exemption would provide more benefit for the state, as it would circulate more dollars, and with more spending the student would be learning indirectly the value of school and education. If they got a tax exemption on school supplies, they would understand the exemption was made for a reason and that school and education were important. The concept would help students across Nevada, ranging from kindergarten to college students.

Ms. Douglas had drafted a rough estimate of expenses families would save in school supplies. In drafting the bill she included calculators and backpacks but she had not included anything to exceed the amount of $100. For example backpacks were around $40, lunch pails $5, scientific calculator which was necessary for pre-calculus, calculus, and trig classes could go as high as $100. School supplies such as paper, notebooks, pencils, pens, pads, had been estimated to run around $20. The total would be about $165 per student. In her opinion A.B. 581 was a positive bill benefiting students throughout Nevada. The bill would simply allow the public to have their say whether want the tax exemption or not.

Mr. Anderson pointed out on line 40 the bill drafters had excluded computer software; however, the trend in many of the textbooks and other school supplies was to move to areas on computer software packages that were often included as part of the items necessary for particular classes. He emphasized he did not want the committee to exclude computers and was surprised she was suggesting the exemptions be excluded for computer software. That field became such an integral part of the world, particularly in the case of higher level classes, and as students moved further away from the traditional textbooks, they became a bigger single source. He explained he was curious as to why she was advocating that change inasmuch as she had drafted the piece of legislation.

Ms. Douglas clarified the term "computer software" may have been excluded in the draft of the bill because a lot of CDs and programs might exceed $100; however, if anyone wanted an amendment to add software into the listing of school supplies, as long as it did not exceed $100, she would have no problem with it.

Mr. Anderson asked which was the most expensive textbook Ms. Douglas had purchased in her classes at the university and was advised she had a physics textbook priced at approximately $95. She added the bill would not include textbooks for college students inasmuch as the University of Nevada, Reno Bookstore currently exempted them. Mr. Anderson pointed out that was the point about which he may be concerned. If it was computer software that was specifically designed or augmented for a particular class, would the exemption end up being excluded even if the cost exceeded $100. Rather than buying a physics textbook if the student ended up having to buy software for their computer would it be exempt if the purchase was part of the offered course.

Mr. Zuend, responding to Mr. Anderson's question, explained if the purchase was made at a tax-exempt facility it would be tax exempt, and he did not think there were any conditions. Continuing his line of questioning, Mr. Anderson asked if the material was purchased off-site in the event the bookstore did not happen to carry the item was there anyway of carrying the exemption over to another place. Mr. Zuend responded affirmatively, adding the exemption was for the retailer, not the purchaser.

The Chair recognized Ms. Tiffany who asked Ms. Douglas if she had discussed the idea with the tax department or tax commission to determine how the tax officials would notify the retailers if the bill passed. Ms. Douglas responded she had discussed it with Ms. Vilardo who pointed out section 3 of the bill would be providing the eligibility standards for the students.

Ms. Tiffany stated her question was how the retailers would be notified on who and what was eligible, as the bill could create an interesting situation on the retail level.

Ms. Vilardo pointed out anytime the legislature passed a bill, such as an increase in the rate for sales tax, the Department of Taxation was required to provide notification to any affected business. She added one of the original premises of the bill was not to go to the ballot question, but to do the local portion. Ms. Douglas realized there would need to be time to coordinate between school districts, the Department of Taxation, and to notify retailers. At that point, the bill would have been effective a full year from now with the provisions in place.

Ms. Douglas interjected that was in her original bill. Her original intent was not to go to the voters and have the exempt 5 percent state sales tax. Those were all added in the bill which was why she had gotten confused. When it was put to the voters the section on notification of the Department of Taxation was deleted.

Ms. Tiffany directing her question to Ms. Vilardo asked when the Department Taxation notified the retailers could that become confusing or did she feel the definitions were clearly defined as to what articles were or were not tax exempt.

Ms. Vilardo replied it appeared from the descriptions it was relatively clear. She then asked the Chair if she could answer beyond the scope of the question and proceeded by explaining one of the things missing from the bill was something on which Ms. Douglas worked very hard, which was in the original language she submitted. It was the potential problem of retailers being able to identify who was a student and if they qualified. Ms. Douglas had been very specific in the language she presented as to an interface between the Department of Education who would arrange for the identification slips, the Department of Taxation, and proper notification to the retailers and how it would be worked out. Ms. Vilardo understood there was a 3-month timeframe required for notice to retailers. The bill also provided a 9 month window of time in which to work out the needed mechanics. She was speaking in support of the bill and wished to explain why inasmuch as it was not usual in most cases for her to support an exemption. She was suggesting in answer to questions by Mr. Anderson and Ms. Tiffany that Ms. Douglas be allowed to discuss what she proposed inasmuch as her suggestion should be included as an amendment to the bill.

Ms. Vilardo concurred the question on the exemption needed the voter’s approval but the committee had addressed some very serious issues, and to make certain there was no misunderstanding the amendments she originally had when she submitted the legislation should be incorporated into the bill. She suggested it might be helpful if the committee chose to have the question go to the voters to amend in language saying, "And future sessions or future legislators may redefine, add, or modify the definitions provided in subsection 2."

The reasons she was supporting the bill were, the bill had a very limited provision, because it allowed someone who was preparing a child for school to get supplies and also to get supplies once they had been given a list from school. New York State had run two amnesty periods: the first one they did, across the board, was written up in the Wall Street Journal last January, and they did a second one under $125. They found in both cases they had a huge stimulation of business by offering that. From her association’s perspective, they had always believed the state wanted tax rates at a moderate level. The fact the committee was thinking of providing the exemption allowed her group to look at how much business would be stimulated, even though it was in a limited context. She believed there might be additional items purchased which would be taxable such as clothing items and so forth necessary in getting children ready for school. She believed it was a win-win situation as it allowed the state to begin benchmarking things like the benefits of selected amnesty programs. It was unfortunate the idea had to placed on the ballot and put in statute without being able to study the issue first to see how successful it was and if it would be doing what the legislature wanted it to do. She concluded her association supported the bill with the inclusion of the two sets of amendments, if the committee wanted to process the bill.

Ms. Tiffany stated before she came to the meeting she had read the Nevada Taxpayer's Report and was happy to hear Ms. Vilardo mention the New York case. In her opinion putting the mechanism in the bill would be very helpful. Ms. Tiffany stated she liked and supported the bill but did have a question on policy or philosophy. She asked how did Ms. Douglass happen to come up with the bill; she had never heard of the idea before. Ms. Douglass replied she had read an article on the issue in the National Black Legislator Magazine. A retailer wrote a two-page article on similar legislation being heard or introduced in New York, Florida, Tennessee, and Texas. She proceeded to answer Ms. Tiffany's other question about notification. The first bill draft stated the Department of Education would notify all school districts and provide samples of the documentation, which would be school ID cards to be copied and distributed to students. The Department of Taxation would provide all retailers with at least a 3-month notice of the amnesty program dates. Documents to be presented to the retailers would be the school identification card and any regulations established by the tax commission necessary to carry out the program.

Mr. Anderson stated he was curious as to the way Ms. Douglass decided the $100 limit for a single item, particularly at the college level adding he had just had two daughters finish college and was very familiar with what seemed to be a never ending list of costly items. Responding Ms. Douglass explained the reason for the $100 limit was because the proponents of the bill did not want anyone to abuse it. They did not want kindergarten parents to buy stocks of paper and calculators, things their own students did not need and claim the exemption. The limit of $100 came to her in thinking back when she was in high school she knew the highest price she paid for supplies was for a calculator. She figured the $100 limit was reasonable and no one would abuse it.

Chairman Goldwater asked, in her discussions with retailers, did she find their mechanisms for inventory and charging at the rack and their software systems could accommodate a provision like that. In response, Ms. Douglass explained that was another reason they limited it to school supplies, because if they had opened it up to clothing and shoes there would be no way for auditing purposes to be accountable. That was another reason she felt it necessary to go to the voters because if the exemption was simply provided by a bill, it would be a 5 percent exemption which would be harder for the retailers to manage. That was one reason why the idea was going to the voters, to provide the 7 percent exemption.

The Chairman called for further questions. There being none he called upon Ms. Lau for her testimony.

Mary Lau, representing the Retail Association of Nevada as executive director, stated she was testifying in support of A.B. 581 explaining she had held several conversations about the bill with interested parties in Nevada and in other states on how amnesty provisions happened and how they were assisted. She understood the bill would create a policy decision for the committee to make; however, she wanted to comment on the questions raised on how retailers would be able to handle it. She acknowledged her group was not anticipating the changes would be through programming as that would create a great deal of difficulty. They anticipated they would be working with documents provided by the Department of Taxation in the regulatory format where they would have definition and clarity. They would then be able to handle all the bookkeeping through documentation with backups. She asked if the $100 limit was per family, per shopping trip, or per student. Her question was directed to the Chairman, as her association was willing to work with the committee, and the bill would assist the parents who had students attending school in the state and needed a break.

Chairman Goldwater asked Ms. Lau if she anticipated any problems in the sales tax audits if it was to become law and she responded in the negative. Her association anticipated the department would propagate regulations and have the necessary documentation, and the auditors and retailers would be knowledgeable of what those requirements were.

The Chairman next called upon Ms. Lancaster who had signed in as a witness and asked her to proceed.

Elaine Lancaster introduced herself as president of Nevada State Education Association and stated they were in support of the legislation. She believed it was a good way to encourage people to get supplies for their children to go to school in the fall pointing out it would affect the year round schools as well. She urged favorable consideration of the bill.

Chairman Goldwater determining there were no further witnesses in support or opposition to A. B. 581 closed the hearing and advised Ms. Douglass she had heard the concerns noted by some members of the committee and, in addition, some needed clarifying language from the retailers. He asked that she contact him with any proposed changes so it could be included in the next work document.

The Chair opened discussion on the work session document prepared by Ted Zuend.

Chairman Goldwater pointed out the bill was the construction equipment bill introduced by Ms. Cegasvke. The committee was having a difficult time with exemptions, because of the fiscal impact he did not know what the feeling of the committee was, but it would be tough to pass one exemption bill and not do them all. He asked for the feeling of the committee and called upon Mr. Neighbors.

Chairman Goldwater in response to a question from Mr. Manendo explained the measure would not go to a vote of the people and not to discourage the sponsor from bringing it up again explained it was the wrong session for exemptions. He then called for a vote on the motion.

THE MOTION PASSED BY A MAJORITY VOTE WITH MS.

GIBBONS, MS. TIFFANY, AND MR. LEE VOTING "NAY."

The Chairman explained the bill addressed two separate property tax issues. First, granting a property tax exemption for the Nevada Nature Conservancy when it temporarily acquired property to be held for later acquisition by state or local government. The exemption was currently provided to the Nature Conservancy, a national organization. Testimony revealed the organization seeking the exemption was the Nevada Land Conservancy. The bill, if approved, would need to be amended to reflect the correct name. The "American Land Conservancy," a national organization similar in purpose requested they also be granted the same exemptions. Concern was raised by committee members that the bill would increase the withdrawal of property from the tax rolls in the counties who did not want or need additional open space and Mrs. Freeman requested a proposed amendment from the Legislative Counsel Bureau to address those concerns. The proposed amendment was included herein as Exhibit E.

Continuing, Chairman Goldwater explained the second part of A.B. 423, enhanced benefits available to very low-income senior citizens, the Senior Citizens' Property Tax Assistance Act. The change provided in subsection 1 of section 3 would increase the benefit for seniors in the lowest income category from 90 percent to 95 percent of the accrued property taxes. The change in subsection 2 of section 3 of the bill would increase the maximum amount of relief from $500 to $1,100. The Department of Taxation estimated the changes in the bill would require an additional appropriation of $1.05 million in the year beginning in FY 2001-02. There had been few questions from the committee and little discussion about those proposed changes to the senior citizens' program.

Ms. Freeman pointed out the fiscal note did not address the issues separately in regard to the American Land Conservancy and asked Mr. Zuend for some assistance. Responding to her question, Mr. Zuend explained the Department of Taxation did not have a fiscal note on the changes to the American Land Conservancy provisions because there had been nothing going on, and there was no ownership of that property. The financial impact would depend on how much land was withdrawn in the future.

Ms. Freeman indicated she shared the feelings of the committee in regard to exemptions to the sales tax but felt the bill was very important for low-income seniors. She understood Mr. Zuend had drafted the bill purposely so it would address only that group. She was also aware Governor Guinn anticipated providing some assistance but would not because of the budgetary shortfall. She felt if there was any area really needing relief it would be the low-income senior population. It would be enormously helpful to those folks.

Mr. Zuend advised the committee, if passed, the bill would not take effect until the next biennium when the additional money required for the program was available.

The Chairman asked Mr. Zuend to explain the proposed amendment (Exhibit E).

Mr. Zuend explained the amendment went to the heart of the concerns raised by Mr. Neighbors over the possible withdrawal of land by one of those conservancies. The bill was requested by Washoe County with Mr. Neighbors suggesting the possibility of adding a population threshold. After reviewing the possibilities Mr. Zuend stated he found Mr. Neighbor's suggestion would not work because, for example, Carson City had added a one-quarter percent sales tax to purchase land, however, the legislature would be faced with coming back in 2 years to add Carson City to the bill. In speaking with legal counsel, they made it clear it would have to be the decision of local government involved in a land withdrawal with the amendment. In reading the new sections A and B of the amendment, which was drafted by Ms. Erdoes, it was a pretty complete amendment. The state or local government unit had agreed in writing that the acquisition of the property would be given serious consideration. In other words, the Nevada Land Conservancy, the American Land Conservancy, or even the Nature Conservancy, which was in the bill, would have to get the approval of the local government unit to take advantage of the bill. The second section somewhat limited the state’s flexibility for property. The state had given a statement, required by paragraph A, that the governing body of the county in which the property was located had approved the potential acquisition of the property. That way the county itself had some say in what the state planned to do with open space land before it acquired it. The other amendments just fixed the name of the Nevada Land Conservancy and added the American Land Conservancy, which was an analogous group to the Nature Conservancy. Mr. Zuend felt there was some discrimination between the two because of the way the exemption read.

Chairman Goldwater verified, prior to taking action, that everyone understood what was proposed in A.B. 423 as amended and restated the committee was having a tough time with exemptions, and some of the bills under consideration would have large budget impacts. He asked for the desire of the committee on action on the bill.

Chairman Goldwater asked for discussion on the motion and stated he would not be voting on the motion not because he did not like the bill, but because he wished to remain consistent in the policy the committee had been following.

Mr. Marvel pointed out the senior citizens' rebate had always bothered him because the state had to make it up out of the general fund, but the counties were the ones who collected the money. He felt it was a matter of fairness that the counties should pay it back rather than the state. Chairman Goldwater concurred with Mr. Marvel's statement.

Mr. Neighbors expressed his opinion stating he thought the bill had merit, but he wished to be consistent on the exemption.

Mr. Anderson felt it was important to discuss a couple of issues in the bill that needed to be addressed, one of them being a name change to be accomplished to be more reflective of who would be qualified for the exemption. The additional statements in there he did not see as an inconsistency in his general opposition to giving the seniors exemptions. He did feel the name change had some merit along with some of the other parts of the bill, and he felt it should move forward.

Chairman Goldwater agreed with statements made by Mr. Anderson adding he had no problem with the Land Conservancy section as he felt it worked very well. He then called for the question.

Ms. Freeman posed the question, if the opposition was primarily due to the property tax, she suggested passing the bill solely with changes for the land conservancy.

The Chair opened the hearing on A. B. 428.

The bill would apply the exclusion to all businesses reducing business tax revenues by approximately $11 million per year at current levels. There was both support and opposition to the bill. The prime sponsor of the bill noted the taxes as well as the compliance costs posed a particular hardship to small business. Another proponent noted the tax may discourage employers from hiring additional employees. Opponents of the exclusion noted the tax helped spread the burden of taxation across all sectors of the private economy and the exclusion would likely do nothing except shift the tax burden to others. Suggested amendments were provided as part of the work session document dated March 26, 1999, and included allowing the exclusion to be phased in at one additional employee per year, over a 5-year period, increase the tax rate on taxable employees to make the proposal revenue neutral, and the third suggestion was to alleviate compliance costs of small employers without providing an exclusion, allowing employers with five or fewer employees to pay the tax in advance on an annual basis.

Chairman Goldwater asked Mr. Lee if he had any comments or suggestions he wanted to bring out, to which Mr. Lee responded he was trying to tie the exemption into a benefit for low income senior employees. He didn't believe the bill had much of a chance even though he firmly believed in it and felt its day would come. Mr. Lee added he was a realist but wanted the Chair to know, if it was the will of the committee, he would move to indefinitely postpone the bill, to which Chairman Goldwater responded his advocacy on behalf of small businesses would be noted for the record.

Chairman Goldwater opened discussion on A.B. 455.

The Chair read excerpts from the work session document and indicated the bill had been a difficult one inasmuch as, according to a representative from the Department of Motor Vehicles, the loss of revenue from the bill was projected at $42 million per year. It provided an exemption from the vehicle privilege tax for certain vehicles registered by elderly persons. The bill was Assemblyman Perkins’ bill, and he had indicated his intent was to exempt only a single vehicle, which would avoid the possibility of multiple exemptions. Other suggestions included limiting the exemption only to senior citizens 62 years or older. The idea had been discussed of creating an entitlement program similar to the senior citizens property tax assistance program. Some technical amendments were also required, including a suggested amendment from the sponsor of the bill delaying the effective date of the act until July 1, 2000.

The Chairman opened the floor to discussion. Ms. Tiffany, addressing her question to Mr. Zuend, stated she had received more complaints about the vehicle privilege tax than any other issue. Since the vehicle privilege tax had been enacted, could he tell her if the issue had ever been considered with any other type of study, or had anyone done anything about the effect it had on people. On the reverse had anyone looked at the policy going to flat registration as opposed to the fee. What was the history on it. She asked if Mr. Zuend could respond to those questions.

In response to Ms. Tiffany's questions, Mr. Zuend explained in spite of the comments he had heard over the years, and a lot of discussions held about it, it had never been formally taken up to change it. Ms. Tiffany asked Mr. Zuend if he knew if there had ever been a ballot question to remove it. Mr. Zuend acknowledged the tax was originally imposed based on a constitutional amendment back in the 1960's, before vehicles were taxed as personal property. The assessors taxed the vehicles and, of course, the state did not have in place a particularly strenuous structure for the assessment of property back then which resulted in the taxation of vehicles varying considerably from county to county. As a way to fix that problem, a constitutional amendment was offered and passed by the voters saying vehicles would be taken out of the "uniform and equal requirements" under the general property tax and put the tax into its own special category where the legislature could enact the vehicle tax at a uniform and equal right of assessment and taxation separate from that. The tax in place was the tax that had been in place for 35 years. That was the recollection of the research he had done on it. Ms. Tiffany asked if that was done in the 1970's and was advised by Mr. Zuend he believed it was in the 1960's.

Ms. Tiffany asked Mr. Zuend if he could estimate how much the tax would generate each year. He believed it was around $140 million to $150 million mostly for local governments.

Entering into the discussion at that time was Mr. Neighbors who concurred with Mr. Zuend, stating that was correct. In the 1960's the registration showed the value of the vehicle depending on what county the person happened to be in and whatever the tax rate was. When they went with the $4 rate on the veteran’s exemption, the attorney general ruled personal property taxes and privilege taxes were one and the same. It could be said it was an extension of personal property tax. He asked if Mr. Zuend concurred with that.

Mr. Zuend stated he was not certain; however, there were a few exemptions such as the widow’s exemption, veteran’s exemption, and an exemption for the blind which he believed carried over to the motor vehicle privilege tax. The taxpayer currently could choose to which one they wished to apply the exemption, but he did not know if was the result of a carry-over from when the tax was first started.

At that point, Mr. Neighbors added anywhere a person went they would get a $40 exemption on their vehicle in those days, depending on the tax rate. He recalled he was selling plates at the test site many years ago and the issue came up whereby the attorney general gave her opinion saying privilege tax and personal property tax were one and the same in that regard.

Ms. Gibbons felt it important the legislature pass legislation similar to that as the question was going to come up every year. She wished to see how much it would cost in Nevada if the system was put in at the age of 65 and over. She felt $42 million seemed high for a $5,000 exemption.

Chairman Goldwater framing the question stated the discussion involved changing the age of the eligible person to 65 or over, limiting the exemption to one vehicle per eligible person or one eligible household, changing the effective date to July 1, 2000, and fixing technical problems to make proof only upon initial application, and an affidavit for annual renewal. He also clarified that the assessor had only a limited role in small counties and in other counties, nothing precluded the assessor from having the applications in their office, so that the elderly could to return them to DMV. Also there was suggestion the amount of exemption could be lowered to $2000 or $3,000 if it was not means tested. That would decrease the fiscal note. He asked Ms. Gibbons if that was what she had been addressing. Ms. Gibbons replied in the affirmative.

MRS. GIBBONS MOVED TO AMEND AND DO PASS A.B. 455

WITH AMENDMENTS AS STATED ABOVE.

MOTION SECONDED BY MR. MANENDO.

Prior to taking the vote, Chairman Goldwater reiterated the motion as follows, taking the spirit of the bill and change the age of the eligible person to 65 or older, to limit the exemption to one vehicle per eligible person, or one vehicle per household, changing the effective date to the July 1, 2000, and fixing the technical problems to make the proof only upon initial application and an affidavit for annual renewal. Also, clarifying the assessor has only a limited role in small counties, and in other counties, nothing shall preclude the assessors from having applications in their office, so the elderly could return them to DMV. Also, there was a suggestion, the committee could potentially lower the amount of the exemption to $2000 or $3000, especially if it was not means tested. That would decrease the fiscal note. Chairman Goldwater questioned Ms. Gibbons whether her motion was for the exemption at $2000 to which she replied in the affirmative.

THE VOTE ON THE MOTION PASSED UNANIMOUSLY.

Chairman Goldwater explained Mr. Marvel had indicated he was going to withdraw the bill as it was being handled in the Senate. The Chair indicated he would accept a motion if that was the pleasure of the committee.

MR. ANDERSON MOVED TO INDEFINITELY POSTPONE

ACTION ON A.B. 463.

MOTION SECONDED BY MR. NEIGHBORS.

THE MOTION CARRIED UNANIMOUSLY.

Chairman Goldwater pointed out to Mr. Anderson on A.B. 471, a bill he had requested to be heard, he did not want to kill the bill and had therefore requested the representatives of the counties and the sponsors of the bill to come up with a way to replace the revenue, but they had not sent anything back.

The Chair asked Mr. Anderson if he had received anything back from them and was advised he had not. The Chair indicated he would inform Mr. Humke, as sponsor of the bill, of that fact in the event he could try to help move it along, but the bill would not be heard at that time.

Chairman Goldwater reminded the committee that was a very tough and confusing issue with no compromises to be made and indicated he would accept a motion.

MR. ANDERSON INTRODUCED A MOTION TO INDEFINITELY

POSTPONE A.B. 557.

SECONDED BY MR. NEIGHBORS.

MOTION PASSED BY A MAJORITY VOTE WITH TWO MEMBERS

VOTING "NAY". THEY WERE MS. TIFFANY AND MS. GIBBONS.

There being no further business the meeting was adjourned at 3:45 p.m.

RESPECTFULLY SUBMITTED:

Nykki Kinsley,

Committee Secretary

APPROVED BY:

Assemblyman David Goldwater, Chairman

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