The Committee on Taxation was called to order at 1:30 p.m., on Tuesday, April 6, 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. Bob Price

Ms. Sandra Tiffany

Mr. Morse Arberry, Jr.

Mr. Harry Mortenson

Mr. Kelly Thomas, Assembly District 16

STAFF MEMBERS PRESENT:

OTHERS PRESENT:

Chairman Goldwater apologized for the lateness in beginning the meeting explaining the floor session had delayed the committee hearings.

Moving to the agenda, Chairman Goldwater indicated the primary sponsor of the bill scheduled first on the agenda, A.B. 571, was not available, therefore, the bill was moved to the bottom of the agenda. The Chairman requested Mr. Zuend, fiscal analyst, Legislative Counsel Bureau (LCB) to present the bill which could then be included in the work session document.

Chairman Goldwater reminded those present the committee previously heard testimony on A.B. 669 concerning casino-entertainment tax, therefore, the bill would now be included in the committee's work session document. The bill as well as other issues would be heard during the hearing on April 8, 1999.

The Chair opened the hearing on A.B. 506 and asked the primary sponsor, John Marvel to present his testimony. A bill explanation, prepared by Ted Zuend, had been included in an effort to clarify dates established by the bill (Exhibit C).

Mr. Marvel explained the purpose of A.B. 506 which was to correct the inequity due to the estimated payments of net proceeds of mines. He pointed out what happened, notably in Humboldt County, was the net proceeds had been paid by the mines on an estimated basis and when the net proceeds did not materialize as estimated a shortfall had resulted. In the meantime, the school districts and counties had been paid in advance so the mining companies had to apply for a refund. Mr. Marvel distributed two financial documents prepared by Dino DiCianno, Deputy Executive Director of the Department of Taxation, included herein as Exhibit D identified as Breakdown of Credits Plus Interest/ Operators Only and a fiscal note from the Department of Taxation Exhibit E.

Mr. Marvel continued, with the price of gold down and the economy in northern Nevada suffering, requesting a refund really stretched the budgets of the schools and counties. A.B. 506 was an attempt to have the net proceeds paid on actual profit rather than estimates. During the interim, Mr. Marvel had asked Mr. Zuend to work closely with the bill drafters in an attempt to rectify the situation. He assured the committee he was open to any amendments that came from the Nevada Mining Association, Nevada Association of Counties (NACO), school districts, Nevada Taxpayers Association (NTA) and anyone who could provide a solution. The smaller governmental agencies needed to get out of the situation of the estimated tax being paid so they did not have to come up with those refunds when they really did not have the money. Mr. Marvel pointed out there were several people present from the Nevada Mining Association as well as Carole Vilardo, who had brought in some amendments. He pointed out there was a companion bill coming over from the Senate which addressed the same issue. He strongly urged favorable consideration of the bill.

Chairman Goldwater next called on Carole Vilardo, President of the Nevada Taxpayers Association who indicated she supported A.B. 506. She advised the committee, however, she was recommending some amendments, one of which was due to the way the bill was crafted, which in effect still made an estimation of what the net proceeds would be. That procedure was what had gotten the small rural communities into trouble. The bill was an attempt to get the tax paid on "actual" revenues. In order to do that, the language would need to be deleted on page 3, lines 21 to 23, of the bill. She explained her proposed amendment would require the committee to delete the language replacing it with "on or before August 1 for one-half of the net proceeds extracted from January 1 through June 30 of that year." That was the language needed to get the mines to payments based on "actual" revenue rather than "estimated" and would allow the state to look at what was actually coming in on the net proceeds. Also needed was a corresponding change on page 3 between lines 30 and 33. That language should be deleted and replaced with "February 16 for the remaining one-half of the net proceeds extracted from January 1 through June 30 and for the net proceeds extracted from July 1 through December 31." In effect, that would make the second-half payment plus the reconciliation for the first year and would require it be done on February 16. That would get the schedule back prior to 1989 or 1987, where the payments were paid on "actual" proceeds and at that time payments would only be made once a year.

Continuing on, Ms. Vilardo pointed out the mines knew exactly what their net proceeds were; they did the calculations for the state requirements and they made one payment based on actual proceeds. The ideal solution would be to go to one annual payment, but unfortunately that would leave the counties with no money coming in for a year. A.B. 506 was considered to be the best way to make the needed change and the language was adopted by the S.B. 253 Committee as Assemblyman Marvel had indicated. The concern of the local governments in wanting to change that was the fact they were put in an untenable situation due to estimating the proceeds. For example if the price of gold was $290 an ounce when they were doing the estimates, then it went down to $270 an ounce, when they did the reconciliation for the year the county ended up owing the mines money because they had paid too much. They were trying to create budgets on credit which had created major problems inasmuch as there had been interest as well that had to be paid. The feeling of the local governments was if they could get to the actual basis again, a lot of problems could be solved. The bill was the first step in doing that.

Continuing with the proposed amendment, Ms. Vilardo pointed out an additional change was needed on page 3, lines 26 to 29. On page 4, line 5, change the February 1 date to February 16. On page 4, line 33, change the date from February 20 to March 5. Those changes should have been made because changing the date to February 16 made those other two dates impossible. There had been another adjustment, which Ms. Vilardo turned over to Mr. DiCianno, deputy executive director, Department of Taxation as he needed to suggest two date changes.

Chairman Goldwater asked if there were any questions or comments for Ms. Vilardo. There being none, he turned the floor over to Mr. DiCianno.

Mr. DiCianno spoke next indicating he had discussed the issue with Tim Crowley, issue manager, Nevada Mining Association and Sharon Byram, manager, Ad Valorem Tax Committee for Newmont Gold Mining Company, and had worked out some suggestions for the committee's review. They suggested an amendment to page 1, line 10, which would change the 45-day period for filing amended returns making it 30 days and on page 4, line 14, change the March 15 date to April 15. Their reasoning being, those changes would allow staff sufficient time to do desk audits on amended returns, make the certification date for April 20, and send out billings which the companies would be required to pay by March 10. The bill, with changes, would also remove the necessity for additional staff time to prepare the desk audits. He volunteered to answer any questions concerning the amendments.

In response to Chairman Goldwater's request for questions, Mr. Marvel asked if Mr. DiCianno had any estimate of how much the changes would save as far as staff time and was advised his department had calculated approximately a $10,000 savings in additional overtime.

Ms. Tiffany, addressing her question to either Carole Vilardo or Dino DiCianno asked, hypothetically, if the proposal was in effect in October, or whatever the date was, what would the steps be through the first year or year and one-half during that transition.

Responding was Carole Vilardo explaining Linda Ritter, city manager from the city of Elko was scheduled to present the bill, but due to the weather she could not attend. Ms. Ritter was chairman of the subcommittee that worked on the concept and language in the bill. Ms. Vilardo stated what would happen was the mining companies would make a payment according to the schedule, they would do reconciliation and could then estimate the payments that were to be made.

Ms. Tiffany indicated she was interested in receiving more specific information on actual time for payments such as from the end of December or January, and so on.

Carole Vilardo, prior to going through the bill, suggested if Mr. DiCianno would detail the current procedures, she would go through the proposed changes. Mr. DiCianno proceeded through the current provisions stating on February 1 a company or royalty recipient would submit a financial report to the department of taxation based upon their prior year's actual net proceeds. The reports were desk audited up until the time of April 20 , when the certification went out to the companies and royalty recipients. The billing was due on May 10. Between March 15 and April 20, the tax department determined which companies would be paying on their current production under the current period. The department sent out notification to those companies saying they would have to pay for the first 6 months of the current period by August 1. Additionally on November 1, they would pay the next three months, then again the following February they would pay for the remainder of the year up through December for the final 3 month period and pay on that. Within the industry, due to the status of the price of gold and certain ancillary expenses, a situation had been created where credits were accruing.

Ms. Tiffany asked to be shown what the steps would be for the transition from February and would the transition be a problem.

Responding, Mr. DiCianno pointed out if the effective date was October that would not be a problem. Allowing the companies to provide the department of taxation with amended returns would, hopefully, correct some of the problems creating those credits to begin with. The mining companies would still be reporting in February, based on their prior year’s production, and make the payment on May 10. What the bill, which came out of the S.B. 253 Committee would do, was diminish the occurrence of those credits coming forward. In other words, the companies would be able to report better upon what had actually happened at their operations.

Ms. Vilardo explained when the bill became effective for the next year, rather than taking what the companies paid for the prior year, adjusting it, and making the payment, they would now be making two payments. The companies would make the August 1 payment which would be calculated based on a timetable of January 1 to June 30. The payment would be half of the net proceeds and, at that time, they would be in the year for which the net proceeds were being collected. Where there would normally be a November payment, the next payment would then be scheduled for the following year. In effect, the companies would be clearing up the actual calendar year. The plan was to have totally minimized the problems created by the estimates being so far wrong due to the dramatic decrease in the price of gold or having a mine shut down and having a local government operate on a credit. Ms. Tiffany expressed her thanks for their enlightenment.

Mr. Neighbors posed the question, when the roll was closed and the budget was certified, what number would be used by the county for assessed valuation. He was advised by Mr. DiCianno the number used would be the certified number the taxation department provided to them on April 20, for the prior fiscal year and based on actual net proceeds. Mr. Neighbors continued by asking if that was what the Department of Taxation was going to set the tax break on. Mr. DiCianno pointed out the net proceeds were outside the calculation of the tax rate.

Chairman Goldwater asked Mrs. Vilardo if she could help the committee with clarification of Mr. Neighbors' question and learned from her that Mr. DiCianno was correct. The net proceeds were outside the calculation, but the number still had to be given to the local governmental agencies for budgetary purposes. One problem that had been occurring was the numbers had been given near May 15 and now the numbers would be given April 20 . The tentative budget had to be filed April 1 with final budgets filed June 1. When the counties received their numbers May 15, and if that number was dramatically different than what they anticipated, they literally did not have adequate time to prepare all the calculations and adjust their expenditures to get the budgets filed by the deadline date. By moving the filing date to April 20, the hope was that the change would give the local governments additional time to adjust their budgets and give them a much more accurate number.

Mr. DiCianno interjected at that time, pointing out the date to which Mrs. Vilardo was referring was on page 2, line 16, in the bill and would be changed from April 30 to April 1.

In response to a request from Chairman Goldwater for further questions, Mr. Price stated he had a technical question and called the attention of the committee to page 5, line 13. He had just checked the statute and it said the taxation department shall report to the state controller on May 25. If the committee members noticed all through the Nevada Revised Statutes (NRS) the language always specified "on or before". Inasmuch as May 25 could be a Saturday or a Sunday, he suggested, the committee add just a very technical change to add "on or before" in that area. Mr. DiCianno confirmed he had no problem with that change.

Chairman Goldwater noted there were no further questions from the committee and therefore called on Mr. Crowley.

Mr. Crowley introduced himself as the issues manager of the Mining Association and wanted to indicate his support of A.B. 506 with the amendments that were outlined previously and including the amendment by Mr. Price. The issues under consideration were brought to the attention of the mining association during the interim when the local communities were working with the S.B. 253 Committee to find a way to improve their budgeting process. They were having difficulties in overestimating revenues from net proceeds and then being in the predicament they would have to refund the overpayments. That was problematic to both the communities the mining employees lived in and to the mines themselves. So, the association provided technical assistance to the local governments through the association’s taxation committee. There were three main things the bill achieved. It called for an earlier calculation of full-year proceeds from the industry allowing local governments to receive more accurate budgetary information, it modified the reporting of payments schedule in a way that drastically reduced the occurrence of overpayments and resulting refunds. And it provided a mechanism for refunds consistent with the recent tax commission ruling on overpayments. Mr. Crowley concluded by once again offering his appreciation to the committee for their consideration of Assemblyman Marvel’s bill, and to reassure those present of their unqualified support of the bill and the amendments as well.

In response to a question from Ms. Gibbons as to what grounds the mining companies were requesting a ruling on an overpayment, Mr. Crowley suggested Mr. DiCianno could probably answer that more thoroughly. He did state the tax commission had addressed the problem of overpayments to the schools and counties, but that had been going on since the net proceeds changed in the early nineties. On the technical aspects Mr. Crowley deferred to Mr. DiCianno.

Replying to the question by Ms. Gibbons, Mr. DiCianno stated it was his understanding it was an issue in 1998 and was presented before of the Nevada Tax Commission. A request for refund was submitted by Newmont Gold Mining Corporation, which was granted by the tax commission. He called the committee's attention to the language contained on page 3 of the bill, between lines 10 and 16, which resolved the issue. Once the net proceeds were certified and the billing was established on April 20, if there was a net credit, that would be subject to a 30-day refund provision. He had prepared and distributed a current breakdown of the outstanding credits included herein as Exhibit C.

Chairman Goldwater asked if there were any further questions. Seeing none he requested Mr. DiCianno and Ms. Vilardo to prepare a copy of their proposed amendment for the committee member's consideration. If the amendment could be available prior to the end of the hearing perhaps the committee could take some action, unless there was opposition to the bill.

Mr. Etchemendy, representing the Nevada Association of School Boards, indicated he did not wish to testify but wanted to be on record as supporting the bill.

Chairman Goldwater asked if there was anyone wishing to testify in support or opposition to A.B. 506, there being none he closed the hearing and would await copies of the proposed amendment from Ms. Vilardo in anticipation of correcting the problem.

Prior to beginning testimony on the next bill, Chairman Goldwater brought the attention of the committee to the revised work session document prepared by Ted Zuend which was dated April 4 (Exhibit F). Listed were issues still pending for the member's information so they could be aware of them. He announced he had planned on putting the casino entertainment tax (A.B. 669) for hearing on April 8.

The Chair opened the hearing on A.B. 562 and welcomed Assemblyman Kelly Thomas as primary sponsor of the bill.

The bill provided that an employer would be entitled to a credit against the taxes on personal property equal to one-half of the amount expended on childcare for the children of his employees. The credit may not exceed the amount of taxes due. The credit for the fiscal year must be computed based on the amount of childcare expenditures during the preceding calendar year. Provided that the claim for the credit must be made to the assessor by June 15 immediately preceding the fiscal year. Required the Department of Taxation to provide by regulation the form to be used for the claim and the evidence necessary to support the claim.

Kelly Thomas began his testimony by explaining what the committee had before them was a bill that would allow employers to receive a tax benefit for the provision of on-site childcare. The purpose of the bill was really twofold. Initially, it removed a vehicle trip from the daily lives of families that would have a very positive effect on air quality. In southern Nevada there had been a state of non-attainment and the state was at a high risk of losing over $170 million in federal funding due to that non-attainment status.

Mr. Thomas pointed out, most importantly, the bill would not only have a positive effect on air quality it was also a pro-families bill. By reducing the number of vehicle trips and having the children at a childcare site located at the parent's place of employment, they would be able to spend more time with their children thereby fostering that essential child-parent bond. He added the bill would provide more productivity due to less time from work. It was common knowledge if the parents were comfortable with the care of their children while they were at work they would be less likely to lose time from work themselves. The bill, in his opinion, not only provided environmental benefits from the reduction of trips to and from childcare facilities but also promoted social benefits from creating strong family ties. He also felt it had economic benefits if parents were to be more productive in their work place.

Mr. Thomas had distributed copies of a news clipping (Exhibit G) from one of the local journals in which it was mentioned that childcare bills could run between $100 and $180 per week. That being the case, there would be no incentive for anyone to work at an $8 an hour job if they had to spend a large percent of their salaries on childcare they may as well stay home. What the sponsors of the bill were attempting to do was help families. If there was childcare at work and if the employer provided that incentive, the legislature was going to be helping out families with less than median income as well as helping state-funded programs on welfare. He touched briefly on the quality of care some child providers offered; however, acknowledging that was an issue in other bills, he did not pursue that subject further.

In closing Mr. Thomas pointed out, hypothetically, if he was a business person whose business establishment provided childcare facilities for his employees he would add up all of his operating costs for the entire year, and be able to write off one-half the cost of providing that childcare. He called the committee's attention to the news article he had distributed in which they would see Citibank had been running such a facility at a cost of $350,000 a year, expending a million dollars for start-up costs, for which they received a tax benefit from their personal property tax of $175,000. There had been a fiscal note indicating the bill would affect local governments as it would be coming off the personal property tax and would be a hit of $487,000. He pointed out he had two conflicting numbers in his fiscal note on the Citibank account saying they spent $350,000 a year, and another one saying they were spending $471,000. Obviously the fiscal note had not been cut in half. He concluded that ended his testimony but offered to answer any questions from the committee.

Chairman Goldwater called upon Mrs. Freeman who asked Mr. Thomas if there was not already a bill asking for a tax break for providing childcare and was advised by Mr. Thomas he was not aware of any other bills but felt any tax breaks would be in the Committee on Taxation.

Mr. Anderson provided information that another legislator had legislation in the Committee on Judiciary which had come by way of the Committee on Ways & Means affecting gaming revenues and offering gaming establishments an incentive for childcare in the form of a deduction from their gaming revenue. He reminded the members the subject was in a bill requested by Assemblywoman Buckley in 1997 and was Assemblywoman Leslie's bill in 1999. Mr. Anderson continued the bill to which Ms. Freeman was referring was on housing, giving the provisions for housing not childcare. Mr. Anderson indicated he felt the bill as submitted was a very meritorious piece of legislation.

Chairman Goldwater asked Mr. Thomas if that benefit would be taxed as ordinary income when they received the benefit of childcare provided by their employer. Mr. Thomas responded in the negative stating that would be considered a tax-free fringe benefit.

Pursuing his line of questioning, Chairman Goldwater asked Mr. Thomas if he thought personal property was the last barrier to entry for a corporation getting into the business of childcare or were there other issues surrounding on-site childcare. In reply, Mr. Thomas stated he did not think taxes would be a barrier to entry, adding he felt it was the start-up cost and the ongoing operational costs. In his opinion the bill was an incentive for businesses to establish and operate those facilities.

In conclusion, Mr. Thomas stated the concept was following a paradigm of thinking that was on going at the federal level whereby they were offering a 25 percent reduction off the operating costs. He did not know which tax was involved, but he felt it was similar to what he had proposed.

Chairman Goldwater thanked Mr. Thomas for his work on the bill and asked any proponents of the bill to come forward and recognized Jan Gilbert.

Jan Gilbert, Director of Progressive Leadership Alliance of NV (PLAN), acknowledged, as an advocate for single mothers, she saw the bill as an addition to the childcare dollars that were in the budget to assist low-income families. The state budget had money for childcare, but it had never been enough. There was a list of over 4,000 individuals waiting for that type of assistance which was based on a sliding scale and was directed toward working families. The high cost of childcare was a real issue for low-income single parents, therefore, she saw the bill as a wonderful addition to helping working families. If the legislature could encourage businesses to have on-site childcare, she thought the bill could make a real impact. Historically, the concept had been shown to be good for employers and good for employees; she supported the bill and urged the committee to send it out of committee with a "do pass" recommendation.

Chairman Goldwater verified there were no questions for Ms. Gilbert and called upon Carole Vilardo.

Ms. Vilardo, President of the Nevada Taxpayers Association (NTA), reminded those present her association had not taken a position on the policy issue of childcare or low-income housing; however, if a public purpose was to be served and the tax could be used to help foster the public purpose, she and her association would be supportive of it.

Chairman Goldwater complemented Ms. Vilardo on her stand, adding her support indicated very good logic, and he appreciated that. The Chairman next recognized Mr. Schofield and asked if he had any comments.

Mark Schofield introduced himself as the Clark County Assessor and representing the Assessor’s Association of Nevada as president. He made it known the assessor’s association had not discussed the issue as a whole, but if the committee wanted the support and administration of Clark County for an exemption such as the current issue, the assessors pledged their support for anything providing help for working families in the state. He concluded the proposed legislation appeared to be a very tangible benefit for them.

Chairman Goldwater thanked Mr. Schofield for his remarks and then recognized Ms. Tiffany.

Ms. Tiffany asked if Mr. Schofield had discussed that or a similar idea with a large or small business that could relate to something similar where they would get a tax exemption. She would like to determine if anyone had ever been motivated by that, emphasizing she meant specifically large versus small businesses.

Replying in the negative Mr. Schofield explained he had no dialogue with any business in Clark County relating to the childcare issue or whether an exemption such as that would motivate them to create such a facility. He added it would be virtually impossible to tell the committee what type of fiscal impact that might bring or to determine how many businesses in Clark County did provide childcare on the premises.

Ms. Tiffany agreed with Mr. Schofield's analysis and pointed out any time she had discussed the issue with large casinos or hospitals, childcare facilities had not particularly been a big motivator. Generally, if the business was going to provide those facilities they would do it anyway. She speculated the businesses might want to offer the program as an incentive to keep employees, but she had serious doubts the smaller businesses would be doing it at all. She questioned whether the proposal was "feel-good" legislation or if it really did mean something.

Mr. Schofield at that time suggested he had an amendment he would like to propose which was that an even higher level of motivation would be created if the legislation allowed the businesses to be exempted from the total cost of providing childcare.

Ms. Tiffany asked if he meant exempting the total cost of the childcare against the business's personal property tax, dollar-for-dollar value and was advised by Mr. Schofield in the affirmative. He added that would simply be a wash; whatever the business invested into the day-care for the children of their associates or employees, they would be compensated for by not having to pay the personal property tax. Ms. Tiffany thanked Mr. Schofield for his comments adding it would take a lot to motivate big corporations to actually do something.

Chairman Goldwater acknowledged since there had been very little, if any, audit penetration on the personal property tax, if the assessors would be able to do a dollar-for-dollar credit and since it was an honor system tax, would they be able to audit them. Responding in the affirmative Mr. Schofield explained the assessors would essentially have to discern business-by-business how much of an investment the business had made, going in and looking at their accounting procedures, their books, and the type of equipment they put in. He asked the chairman if his question had been relative to the personal or real property tax. Chairman Goldwater indicated he meant personal property and was advised by Mr. Schofield that would be very easy to audit.

Chairman Goldwater recognized Mr. Thomas who stated he wanted to clarify Ms. Tiffany’s previous question. There had been a study done in southern Nevada, which indicated for the concept in the bill to be economically feasible for a company to establish, they should have in the area of 300 employees. That reasoning would actually simplify the process and bring it down to the smaller employers inasmuch as the more money they saved from operational costs, then someone who had 200 employees could begin taking advantage of it. Mr. Thomas specifically wanted to clarify the provisions were for "free care." Businesses could not charge for the childcare and receive the tax exemption.

Chairman Goldwater called upon Mrs. Freeman who asked if a business contracted with a childcare provider to provide the day-care in their facility but had someone else provide the equipment, would that still apply to the property tax exemption. She was advised by Chairman Goldwater it would not; the exemptions were for on-site childcare only.

Mrs. Freeman, pursuing her question, added she understood that was for childcare on-site, but would it apply if the business contracted with an outside agency to provide it.

Replying to Mrs. Freeman, Mr. Schofield explained that would be an ownership issue as the assessors tried to tax the legal owner of the property. The bill did not provide for exempting the property or characterizing the owner of the business as the owner of the property. He suggested some language could be crafted to facilitate that but the bill, as it was structured, did not make that provision.

Mrs. Freeman commented to Mr. Thomas she had been fighting for 10 years for money for childcare so if he was successful in his efforts, she offered her congratulations.

Chairman Goldwater next acknowledged Mr. Skancke for his questions or comments on the bill.

Tom Skancke, spokesman for the Station Casinos in Las Vegas pointed out their three properties all contained Kids Quest day-care centers, which were available to their employees, so they were in complete support of the bill. He pointed out, however, Mr. Schofield, Mrs. Freeman, and Ms. Tiffany had brought up a good question. Elaborating on his statement, Mr. Skancke stated his corporation had a lease agreement with the facilities whereby they provided day care for their employees as well as the casino and hotel customers and he believed the childcare was available 24 hours a day. Additionally, he was aware Citibank had a day-care facility, which was a 24-hour facility and understood it to be on-site; Citibank hired their own people, all of whom had been bonded and insured. The Station Casinos leased their facilities in a partnership agreement with Kids Quest so were partners in that venture. He added the Casinos did not own their sites but leased the land, which he believed was a financial benefit to both parties. For clarification purposes, he concurred and supported the bill but felt after hearing some of the points brought forward by the committee he needed some clarification regarding the legal and joint-venture agreements that would be brought up.

Ms. Gibbons pointed out Citibank and McCarran Airport both contracted their childcare service with the same firm. She cautioned Mr. Thomas that most business people wanting to offer child-care through their business did not want to participate in the operation of the childcare facility inasmuch as they were business people with no expertise in the field of childcare.

Chairman Goldwater asked Mr. Skancke if his corporation, Station Casinos, reported the facilities on a personal property tax return and was advised by Mr. Skancke he was not certain how that was reported but volunteered to get the information if needed.

Ms. Gibbons asked if the corporation Mr. Skancke represented charged their employees for childcare and learned Mr. Skancke believed it was provided as a free service to the employees; however, they did charge a fee to their customers.

Chairman Goldwater recognized Mr. Manendo who asked if the day-care center was operated by Station Casinos or was it contracted out and was advised they contracted that service out with the Kids Quest Corporation. The purpose was for reasons previously stated by Ms. Gibbons, which was they were not in the day-care business and therefore hired people to do that for them. Chairman Goldwater pointed out that policy removed some liability on the company's part as well.

Ms. Tiffany pointed out if the casinos offered childcare facilities for their employees plus commingled the service with the children of their customers that would be an interesting nuance that should be examined. She assumed from Mr. Skancke's testimony his corporation did not distinguish in day-care between employees' children and children of their hotel guests. She asked if they all used the same facilities for day-care and was advised in the affirmative. The casino stations did not have separate facilities.

Ms. Tiffany admitted she did not know what the definition of day-care was and felt that might be located somewhere in statutes. She knew when someone went to a health club, various facilities offered childcare for the members children and maybe they were only there for 2 or 3 hours. Did that qualify as day-care also where, if it was an employer it would be an 8-hour day.

Mr. Schofield explained one way to take care of the issue of contracted services and equipment being owned by a second party on the business site was to provide a credit which would be applied to the value of the business with a cap. For example, a business could start with $50,000. That would be one way they could avoid the ownership issue. He felt the committee would have a difficult time crafting language that would address the issue of the childcare services being contracted out and who would get the exemption. He could foresee a problem there with Kids Quest saying, "why would the casino get an exemption for providing day-care and we would not." That might be a legal issue the committee might need to resolve if the bill was processed.

The Chair recognized Mr. Price who stated he was thinking about where the bill addressed providing childcare on the premises, Nevada had many situations such as malls, hotels, and casinos where they had separate stores, but there may be one location where they provided day-care. Would they be able to use that facility which would be under the same roof but wouldn’t necessarily be "his premises." Did Mr. Skancke think that would work or would the committee need to make some changes in the wording.

Mr. Skancke inquired if Mr. Price meant as it related to the facility for day-care being off-site. Mr. Price explained his question addressed the issue of a business owner not technically inside the four walls of a store which was right next door, but in the same mall and under the same roof. Technically it would not be "on his site."

Mr. Goldwater agreed Mr. Price had brought up an excellent point adding there were several issues needing clarification in the bill. He volunteered to attempt to separate the "policy from the technical" issues. The question was, "were we going to chip away at the personal property tax for the purposes of eliminating what was generally agreed upon to be a useless and unfair levy." If the answer to that question was "yes we are going to start chipping away at that, and we will start chipping away at it for childcare and for all the issues that come before this committee concerning taxation." If the committee was going to say "yes" to the question and start providing the exemption, then Mr. Price made an excellent point. There had been other points made on how to best do that. He suggested it would behoove Mr. Thomas to work with the assessors, the taxation department, and the Nevada Taxpayers Association to logistically craft the particular exemption in such a way where it could almost serve as a model for future exemptions. Mr. Goldwater stated he could see the trend starting and could feel the will of the committee beginning to lean that way. If the members wanted to start putting a $50,000 cap on the exemptions, it might be a nice way to get rolling to see how it works.

Mr. Schofield asked if there was some urgency to pass that particular legislation and was advised by Chairman Goldwater all bills, under the 120 day limited session had to be out of committee by April 9.

Mr. Schofield pointed out the committee was well aware of an idea the assessors had brought before the committee as a provision in their omnibus bill to essentially exempt the first $50,000 of the business personal property tax. The committee had asked the assessors to revisit that issue with the concerned parties; they had and reached what was a viable compromise which was to include the issue of an exemption, if not the total repeal of the business personal property tax, to the S.B. 253 committee. He questioned whether Assemblyman Thomas would be interested or willing to "dovetail" the legislation, as he felt it was a marvelous idea if businesses could get some benefit such as free day-care in return for some exemption. The concept benefited everyone.

Responding to a question from Chairman Goldwater, Mr. Anderson commented he was a little concerned the committee would use Mr. Thomas’ important piece of legislation to add fuel to another bill that may be coming along. He added he felt Mr. Thomas’ legislation could stand by itself.

Chairman Goldwater concurred emphatically adding his plan was to remove the broad repeal of the personal property tax from the omnibus assessor’s bill, which had generally been agreed upon. The question was, "are we going to start chipping away at broad exemptions with socially important incentives, i.e., child care, art, museums." He added he could continue with that list as those issues came before the committee all the time. If that was the intent of the committee, as Chair, he felt it was incumbent upon the members to come up with a model that worked. If it was to be a cap, a dollar-for-dollar credit, or was a half-credit for what the businesses received, they would have to deal with the ownership leasing issues, not only in that, but in many situations to come.

The Chair felt the committee wanted to help with the personal property tax, as everyone agreed it was unfair and difficult for the assessors to administer but tough to make the broad based changes. The committee had indicated they were willing to start chipping away at it but not in a haphazard manner. He asked Mr. Schofield if he could help Mr. Thomas with some proper wording to accomplish the intent of the bill, he was advised by Mr. Schofield in the affirmative adding he as well as the rest of the assessors would be happy to lend whatever support they could.

Mr. Schofield asked for the opportunity to run whatever proposal the assessors determined would rectify the situation through Mr. Zuend before bringing it back to the committee. Chairman Goldwater acknowledged his suggestion would be very helpful and expressed appreciation to Mr. Schofield for his cooperation and assistance. He then asked if Mr. Thomas had any further questions.

Mr. Thomas explained he would be more than willing to work with the staff in an effort to bring something acceptable back to the committee.

There being no response to the Chair's inquiry as to further testimony either in support or opposition to A.B. 562 the hearing was closed and the committee's attention was directed to the next bill which was A. B. 567, also sponsored by Mr. Thomas.

Provided that an employer may deduct the total hours worked during the quarter of an employee for whom the employer paid and provided a pass for public transit. Additionally, defined "pass for public transit" as any object that allowed the employee to use any method of conveyance of a public transit system without additional charge.

Chairman Goldwater invited Mr. Thomas, as primary sponsor of the bill, to the witness table where he was joined by Ingrid Yocum, representing the Regional Transportation Commission of Clark County (RTC). Mr. Thomas explained the bill was basically an excellent tool to promote alternative modes of transportation throughout the State of Nevada and the Las Vegas valley. It was a "win-win" bill for the citizens inasmuch as employees would receive free transit, employers would get a tax break, and citizens would enjoy increased mobility, decreased traffic congestion, and improved air quality. More importantly, the State of Nevada would maintain control over its Federal Highway and Transit funding now and well into the future. He distributed copies of a policy statement entitled, "Improving Mobility, Reducing Traffic Congestion, and Improving Air Quality" (Exhibit H).

Mr. Thomas introduced Ingrid Yocum from the Regional Transportation Commission (RTC) in Clark County and invited her to address the committee on the bill in regard to what the Citizens Area Transportation System (CAT) in southern Nevada was doing. Ms. Yocum read her testimony into the record, identified herein as Exhibit I.

Ms. Yocum advised the committee her group had not yet taken a position on the bill as they had not had a chance to present it to the full board. On April 8, however, it would be formally discussed at a board meeting and the members would be taking their first in-depth look at the bill. The introduction of the bill coincided with their efforts to promote transit and other commuting alternatives in southern Nevada. The effort, being orchestrated by the RTC of Clark County, was called "Cat Match Commuter Services." Cat Match was designed to improve regional mobility, reduce traffic congestion, and improve air quality by working with employers and their employees to reduce the number of vehicles traveling to and arriving at work sites. It was an incentive-based program which would be easy for employers to implement and employees to utilize. Complimenting the effort was a federal tax benefit entitled "Qualified Transportation Fringe Benefits Program" and was approved in June 1998 under section 132 of the federal tax law. Because many employers were aware of it, they would be promoting it to businesses and employees throughout southern Nevada. RTC’s policy was to promote alternative commuting methods in southern Nevada, and although she could not endorse the bill on behalf of the RTC at that time, the intent of the legislation was consistent with RTC goals, which were to increase and improve transportation demand management. A.B. 567 was recognized as a tool to promote public and private partnerships and alternative commute modes throughout Nevada and Clark County and would be a benefit to both the employer and the employee. The effort complimented both federal and local efforts, including RTC’s Cat Match, which would improve air quality, reduce traffic congestion, and improve mobility in the Las Vegas valley.

Chairman Goldwater asked if there were any questions for the sponsor of the bill and recognized Ms. Tiffany. Ms. Tiffany explained she had not had a chance to read all the information, therefore, she did have some questions. She called attention to the federal tax exemption Ms. Yocum had just mentioned and asked if she could explain how that would work for the employer and what it was.

Ms. Yocum admitted she did not have all of the information on the exemption but offered to give the committee a broad overview. She explained the federal tax incentive under section 12 was federal tax law. It allowed an employer to provide up to $65 tax free to each employee, per month or $195 a quarter for the use of qualified transportation such as transit passes, car pools, van pools and so forth.

Ms. Tiffany questioned who would receive the tax advantage; the employer or the employee and was advised by Ms. Yocum it was a tax advantage to both. It was tax free money that could be given to the employee, but at the same time it was a pre-tax salary deduction for the employee, and the employer would save on payroll taxes as it would be tax free.

Chairman Goldwater interjected at that time stating that was not the way the legislation was written, adding Ms. Yocum was correct as far as being pre-tax money going to the employee, but the way he read the bill it was also a deduction against the business tax.

Mr. Thomas wished to provide some examples which might help. The bill was similar to the bill just heard as it too would be a tax-free fringe benefit. If a business chose to offer the benefit, the contribution was 100 percent deductible and exempt from payroll taxes. In addition, there would be a quarterly tax saving to the employer who received those passes of $25 per employee. When you combined that with the fact the contribution was a 100 percent deduction and exempt from federal payroll taxes, A.B. 567 provided a substantial saving to the business. For example, a monthly Cat pass presently cost $20 per month, which for a quarter would be $60 but would save the employer $25 on Nevada state taxes and an additional $28 on federal tax savings, because of the $60 investment. They basically would be saving $53 in tax savings.

Mr. Thomas pointed out he would like to offer a few other benefits. The legislation was offering a better benefit package, had reduced the need for expanded employee parking, offered improved efficiency of travel and productivity for employees, and good corporate citizenship for improving the air quality. He discussed some of the poor air quality and some of its impact. For example, motor vehicle miles traveled contributed 90 percent of the carbon monoxide emissions and one third of the haze and the smog-related problems in our urban areas. In Las Vegas there were 22 million motor vehicle miles traveled per day. By the year 2020 when the population was doubled, that would be 57 million miles per day. He cautioned it was easy to see the problems Las Vegas area residents were currently having with non-attainment status. It was not difficult to imagine what would happen if the amount of vehicle trips were doubled. It was clear something was needed to help improve the air quality to make certain there was access to those federal funds. Those were really the negative sides of poor air quality; communities under the classification of non-attainment increased the respiratory-related diseases.

Mr. Thomas added Nevada received $170 million in transportation funding from the Federal government which could be taken away, or they could tell the state exactly how to use the funds. It was imperative to make certain Nevada had air quality mitigation policies and procedures in place so state officials could not only maintain the monies, but they could control those monies and how they were spent. Calling the committee's attention to page 3 of the handout (Exhibit H), Mr. Thomas pointed out they would be able to see the transportation control measures or the travel demand management strategies located in the handout. He suggested ideas that could be put into motion were "congestion pricing," employer-based trip reduction, and ride sharing, all of which was what A.B. 567 directly addressed. There were alternative incentives such as bicycle incentives, alternative work scheduling and so forth.

Directing the committee's attention to page 4, Mr. Thomas indicated the cost of an avoided trip per vehicle, per trip with the most effective measure being ride sharing and alternative work scheduling. A.B. 567 went right to the heart of the matter by addressing the ride-sharing issue. There were three strategies that had been proven effective in encouraging employers to promote ride sharing for their employees. Calling attention to the bottom of page 5 there was an area-wide commute management organization, a transportation management association, and state and local tax incentives in southern Nevada. The Regional Transportation Commission was taking care of the first two. A.B. 567 was the third piece to the puzzle. In closing he asked the committee members to look favorably upon the concept. He acknowledged there would be a fiscal impact; however, he felt the impact was more of an investment in maintaining the federal tax dollars the state was receiving, reducing the road congestion, thereby improving the quality of life for all residents of Nevada.

Chairman Goldwater recognized Ms. Tiffany who asked to return to the discussion on the bus pass in Clark County and asked how much the pass per month was or how did they charge for those. Mr. Thomas replied the cost was $20 per month or $60 a quarter. Continuing with her line of questioning, Ms. Tiffany pointed out that was a reduction of $25 off per head, leaving $45 that the employers need to pick up; she was corrected by Mr. Thomas who indicated it was $35.00. Ms. Tiffany acknowledged it would be $35 out of the employers’ pocket, and, hypothetically speaking, she figured there were 100 employees. She questioned the advisability of using that to offset a business activity tax, adding she did not understand why there would be an incentive other than protecting the air quality.

Mr. Thomas affirmed there were incentives for all businesses today to be more environmentally and socially responsible, adding the members would see in the handouts where the figures indicated there would be $28 in federal tax savings. Businesses would be spending $60, but they would be receiving a savings of $53, so they would really only be spending $7. Ms. Tiffany questioned the success ratio of trying to give incentives to a business to use bus passes with $7 adding that was quite a stretch.

Chairman Goldwater advised Mr. Neighbors had brought out an excellent point that not every county had a public transit system so only the larger counties would be able to take advantage of that. A statement with which Mr. Thomas concurred.

Chairman Goldwater, after ascertaining there were no further questions for Mr. Thomas, stated Ted Zuend had brought to his attention on page 3, section 8, of the bill. The business may exclude the total number of hours which the employee worked during the calendar quarter in calculating the total number of hours worked by employees of the business during the quarter. There were only a number of those hours that were actually taxable. That section would need to be clarified because there were only a number of taxable hours that could actually be counted. There were no further questions, therefore, the Chair called for any further witnesses in support or opposition.

Michelle Gordon, administrative services director for the Regional Transportation Commission of Washoe County, proceeded to the witness table indicating she had distributed a Statement of Support for A.B. 567 (Exhibit J). She thanked the committee for reviewing the bill, adding she felt it would go a long way toward putting more people on the public transit system. She called attention to the handout where it showed the cost for an employer to provide passes to their employees once they considered the federal tax break, the subsidy the RTC provided, and the tax credit from A.B. 567. Washoe County had established their Smart Commute Options Program which set up ride sharing, alternative work schedules, promoted telecommuting, and also tried to promote transit use.

One of the things they did, according to Ms. Gordon, was provide a match subsidy to employers up to 20 percent for those employers who were subsidizing transit passes for their employees. The Washoe County passes were $40 per month, which equated to an $8 subsidy per month. Under that program, the initial up-front cost to the employer would be $32; the federal tax break, shown in the exhibit was for a company in a 40 percent tax bracket. The tax break the employer received would vary depending on what tax bracket they were in. The actual cost after the tax break to them would be $19.20 per month, for a total of the quarter would be $57.60, and then when a deduction was taken of the $25 for the back tax it would be a total of $32.60 per quarter, or less than $11 per month for a $40 per month transit pass.

Ms. Gordon reiterated the advantages of the bill including the fact it did cut down on the need for additional parking spaces for employees, it provided a tax-free benefit to the employees, it promoted less traffic congestion in the area, and maintained better air quality. Information in the report indicated that on any given day in Washoe County, vehicles emitted 130 tons of pollution into the air. The county had 8.8 million vehicle miles of travel occurring on any given day with the typical household generating 8 trips per day. The county was interested in trying to do what they could to cut down on the miles of travel on the roads with related congestion and air quality problems that occurred and felt the bill in question would help. She urged the committee to support the bill.

Chairman Goldwater indicated Mr. Neighbors had a question he wished to pose. He stated the public heard so much about the proposals and what they would do about air quality, but based on the purchase of a pass in the amount of $40 per month, they would only be talking about 250 adults statewide, based on the fiscal note he had received.

Ms. Gordon admitted she had not seen the fiscal note and could not respond.

Chairman Goldwater interjected there were some questions on the math, but those questions could be discussed in private. He asked if there was anyone else present wishing to testify for or against the bill. He recognized Carole Vilardo in the audience.

Speaking in behalf of the Nevada Taxpayer's Association, Carole Vilardo indicated her group was opposed to the bill. In their opinion, that was a business tax. It was a state-revenue source and the committee would be eroding the base for what was a local issue. A local issue could probably be utilized in two, three or four counties, not much more than that. She suggested an amendment on this adding the committee could substitute the business tax for the personal property tax. Chairman Goldwater concurred, adding that was exactly what he was going to suggest.

Ms. Vilardo pointed out the bill included using a state revenue source for what was obviously an important policy issue, but again, it was not something that was a state responsibility. That onus had been put on the local governments and as such if it was solved locally, it benefited the locals; it did not cost them additional money.

Chairman Goldwater agreed wholeheartedly with Ms. Vilardo's statements adding if the legislature was going to be allowing any exemptions, the personal property taxes would be where it would be. In response to the Chair's call for further question or comments, Amy Hill provided the following testimony.

Amy Hill, representing the Las Vegas Chamber of Commerce and the Retail Association of Nevada, indicated the groups she represented were opposed to the legislation. Not on the specifics or the philosophy but due to their policy of opposing anything that eroded the business tax. She volunteered to answer any questions.

Chairman Goldwater indicated he saw no indication of questions for Ms. Hill nor further testimony or comments from the audience.

The Chair requested that Mr. Thomas work with Mr. Schofield on the model he had set up on his previous bill, perhaps considering the exemption from the personal property tax to achieve his desires and goals in that bill as well. Mr. Thomas agreed to comply with the Chairman's suggestion and thanked the committee members for their attention and consideration.

Chairman Goldwater moved to the work session document, dated April 4, prepared by Ted Zuend prior to hearing the remaining bills on the agenda. He brought up A.B. 668, which was the assessor’s omnibus bill and invited Mr. Schofield to the witness table. He reminded those present the committee had indicated during previous testimony that the committee was going to rid A.B. 668 of the exemption of personal property tax, additionally the committee was going to rid the bill of the exemption on intangible personal property as well.

Concurring, Mr. Schofield added they had indicated just the portion contained in section 3 of the bill. He pointed out there were also a few minor clerical amendments as well as technical amendments that must be adopted. Mr. Schofield acknowledged Mr. Zuend had accurately outlined the requirements necessary to process the bill in the work session document.

Chairman Goldwater called attention to the work session document cautioning A.B. 668 contained the most controversial provisions. The greatest concern was that such an exemption may jeopardize Nevada’s ability to tax federal government contractors. Proponents of section 2 argued that the taxation for beneficial use was when a public golf course was operated by a private contractor and created an unfair situation among publicly-owned golf courses. One private contractor pointed out the taxes did not directly affect his revenue inasmuch as he received a credit from the municipality for any obligation. He asked if the committee was clear on what they were doing to the assessors’ bill. The proposed, amended compromise was to remove personal property entirely from the bill, not exempt it, but remove the proposed exemption. Additionally it had been proposed to remove the intangibles, except for section 12 with the remainder of the bill being acceptable to all parties. He requested Mr. Zuend to explain the verbiage in the bill.

Mr. Zuend pointed out Mr. Schofield had covered the heart of the amendments to which the assessors had agreed at that point. There were also some technical amendments that would be needed in sections 7, 8, & 9, and issues dealing with matters involving exemptions currently in the statutes. There were some clarifications needed, for example there was the spousal exemption rather than just the widow’s exemption. Those exemptions were paralleled in the motor vehicle privilege tax statutes but were not in the bill, and they should be. There should be comparable treatment in either one as a person had a choice to take the exemption against either a property tax or a motor vehicle privilege tax. Mr. Zuend proceeded through the remainder of his proposed amendments, all of which were included in the work session document. At the conclusion of the presentation by Mr. Zuend, Mr. Schofield affirmed the assessor's association was in agreement with the recommended amendments.

Chairman Goldwater next recognized Ms. Tiffany who had a comment. Ms. Tiffany apologized as she had not heard the bill during testimony, but it appeared to her there was some housekeeping being done. She asked if there was a policy change in the bill.

Mr. Schofield indicated they had added the "widows" to the slate of exemptions that were already available which, virtually mirrored the requested legislation coming from the S.B. 253 study committee. The other issue was the municipally-owned golf courses that were leased out to private contractors which at one time were exempt. It was later deemed the golf courses should not be exempt and the legislative committees had gone back and forth on that issue for the last few sessions. Everyone was now in agreement that if the municipally-owned golf courses met certain criteria they would be able to enjoy an exemption. Those were the only two things that really had, at this juncture, an impact. Prior to those amendments and the repealing of certain sections of the bill, the assessors provided for the exemption of the first $50,000 of business personal property tax in the year 2000 and again in the year 2001. The exemptions would run up to $100,000. Mr. Schofield added it was the intent to put the issue on the table, making people aware of the unfair nature of the particular tax because of what Ms. Vilardo articulated earlier about it being based on the honor system. There had been one statement made during original testimony on the bill that a particular individual did not report and was not going to report the business personal property. In addition, they had several businesses in homes of which the assessors were not aware.

Chairman Goldwater reiterated that portion had been taken out, but the one major piece of policy left in was the spousal exemption. The amendment went from a "widow’s" exemption to a "spousal" exemption, which was not a large change in public policy. He then asked if the committee understood the proposed amended bill and asked Mr. Schofield if the bill as amended, had the consensus of agreement of the assessors, including the smaller counties such as Nye and Eureka.

Replying to the Chairman's question, Mr. Schofield admitted when he began his testimony he was unaware there was one county opposed to it. Had he been aware of the opposition from other assessors to that particular legislation he would have advised the committee. He requested the Chairman to re-refer the legislation to the S.B. 253 Committee for a thorough evaluation. It may be at the next session of the legislature if deemed appropriate by the S.B. 253 committee or the members, that the issue be revisited in 2001.

Chairman Goldwater asked Mr. Schofield if he was talking about the personal property tax exemption and in learning he had been, the Chairman indicated he would refer that directly to the S.B. 253 Committee.

Mr. Schofield stated he had not polled the individual assessors, but to his knowledge there would be no opposition to the currently proposed amendments.

The Chair attempted to learn if there were any other assessors present, and if so, whether they had any opposition to the bill. There were no other assessors present so he then called upon Ms. Gibbons for comment. Ms. Gibbons commented for the record, the county assessor from Washoe County, had indicated to her he had no problem with the bill.

In order to eliminate any problems with understanding the amendments to the bill, Chairman Goldwater once again requested Ted Zuend to go through the proposed amendments. The proposed amendments had been outlined in the work session document as stated previously.

Chairman Goldwater affirmed he would accept a motion to amend and do pass with the motion to include the amendments as outlined by Mr. Zuend. He concluded the personal property tax exemption was something the S.B. 253 Committee needed to consider, but that did not necessarily need to be in the bill. He advised the committee he would send a directive to the proper authorities.

Mr. Schofield interjected It was his understanding the protocol currently being used was a letter from the committee chairman to the chairman of the S.B. 253 Committee requesting the issue be studied.

Chairman Goldwater assured the members he would draft a letter and have it delivered to the members of the committee for approval.

Chairman Goldwater opened the hearing on A.B. 571 and asked Mr. Zuend, in the absence of Mr. Mortenson who was the primary sponsor, to present the bill.

Mr. Zuend, in preparation for the bill had prepared a bill explanation, which was included herein and indicated as Exhibit K. He pointed out, as drafted the bill raised the room tax in Clark County and the city of Las Vegas by 2 percent. Sections 1 and 4 of the bill provided for the distribution of the additional 2 percent revenue and sections 3 and 6 reallocated it so the allocation conformed to the additional tax. Mr. Mortenson had provided a letter (Exhibit L) from which Mr. Zuend read some excerpts.

Mr. Zuend pointed out A.B. 571 did not emerge from bill drafting as Mr. Mortenson expected. His intent was to raise the room tax by 2 percent statewide, not 2 percent solely in Clark County. According to Mr. Mortenson room tax in Nevada varied regionally. For example, in Clark County the room tax was generally 9 percent and under the bill it would raise the room tax to 11 percent. In those regions where the resulting increase would exceed 11 percent, such regions may limit the total tax to 11 percent. With an increase to 11 percent the room tax in most Nevada counties would still be less than Los Angeles, Denver, Hartford, Washington, D.C., Miami, Atlanta, Chicago, Baltimore, Detroit, Minneapolis, St. Lewis, and so on. It would be equal to New Orleans. An amended A.B. 571 would require that revenue received from the tax be placed in a separate budget to be used exclusively for capital construction, capital improvements, and/or bonding for matching grants for capital construction or capital improvements. In counties with a population of 400,000 for example, 1 percent of the revenue, which would be for Clark County, would be used for parks, senior centers, community centers, cultural facilities, museums, open spaces, hiking trails, biking passes, or other recreational facilities. It would not be used for facilities related to tourism or gaming, nor should it be used for the acquisition of land.

Mr. Zuend cautioned the committee, that apparently, the bill was not what Mr. Mortenson had in mind in that regard either, because he said the second percent may be used for any purpose the county commission desired relating to capital construction or capital improvements. He would, in essence, want to bifurcate the 2 percent; 1 percent for specific needs and 1 percent for other capital needs. That was only within Clark County yet Mr. Mortenson alluded to making it statewide and perhaps limiting it to 11 percent in any jurisdiction. In counties with less than 400,000 population, the revenue may be used for any purpose the county commission desired relative to capital construction or capital improvements. Additionally he had written, "This bill is intended to compensate for the county fair and recreation legislation of the early 1960’s." The wording which authorized the construction of recreation center, zoos, museums, public parks, play grounds, swimming pools, and so forth which never materialized, except for the public park called the "Fremont Experience" owned by the casinos in downtown Las Vegas. In Clark County the County Fair and Recreation Board was renamed the Las Vegas Convention and Visitors Authority. Mr. Mortenson concluded by seeking support for this pass-through tax that would help many cities and counties and still not harm gamers or taxpayers.

Mr. Zuend provided a memo from Paul Mouritsen, principal research analyst, Research Division to Mr. Mortenson, included herein as Exhibit M, that would be difficult as it indicated the estimated revenue raise from 1 percent tax, so if he had been talking about a 2 percent tax, those numbers would be doubled.

Chairman Goldwater expressed the committee's appreciation to Mr. Zuend, pointing out he felt he had captured both Mr. Mortenson’s intent as well as his passion. The Chair then asked if there was anyone present to testify in favor of the bill. There being none, he then asked for anyone in opposition and recognized Mr. Tom Skancke.

Mr. Skancke introduced himself indicating he was representing the Las Vegas Convention and Visitor's Authority (LVCVA) and was strongly opposed to A.B. 571 for several reasons. For the record, Las Vegas had over 130,000 rooms and nearly 20,000 new rooms coming on board within the next 2 years. Those rooms needed to be filled as they were the lifeblood of the State of Nevada and the life blood of southern Nevada. The current occupancy rate was around 86 percent, which was down significantly over the same time a year ago. Most people believed that the LVCVA had all the money in the world to spend on certain projects. That simply was not true. Forty-seven percent of the room tax, nearly $76 million went for the items Mr. Mortenson mentioned in his bills; roads, schools, park construction, and other infrastructure needs in the counties. Each incorporated entity within Clark County kept a portion of the room tax money it collected. Those monies went directly to the general fund and were used at the general fund discretion of those entities. Of the 52 percent or so that was kept by the LVCVA, the primary use was for the sales and marketing of Las Vegas including the Fremont Street Experience, Laughlin, and Mesquite as resort destinations. The remaining portion of the room taxes collected by the LVCVA went to debt retirement for bonds. They were currently in the process of adding an additional 1 million square feet to make the LVCVA the largest convention facility in the world. The authority would be going out for bonds in the next 3 weeks to a month to construct the million square foot facility, so those funds were needed directly for the payment of the bonds.

Continuing with his testimony, Mr. Skancke explained the LVCVA had to compete with several other destinations not only in the United States but in the world. It was the county officials' job to make certain the 130,000 rooms on line and the 20,000 rooms that were coming on line in the next 2 years were filled. That was their main job. They also had to make certain the convention center was scheduled for events on an on-going basis. The LVCVA officials had made a tremendous investment in Clark County over the years making certain hotel rooms were full and the convention facility was used in the off-times of the year. When it was not tourism time, that was the rodeo during the Christmas holiday, COMDEX before Thanksgiving, and in the spring they had several other conventions and shows that filled those rooms during the down- time in tourism. Mr. Skancke concluded, while the intent and the spirit of the bill were probably good, it would not work for southern Nevada. Anytime room taxes were used for things other than those for which they were designed it had a direct impact on the marketing and sales budgets of those facilities. As an example, several years ago Reno appropriated 2 or 3 percent of the room tax, which was a significant amount, for infrastructure for schools, parks, fire department, police department, street repair, and the list went on. For those on the committee who were familiar with the LVCVA they had financial problems over the years as they had started taking money away from the convention authority. For those reasons, they strongly opposed the bill. They would not like to see an additional increase in the room tax. The sponsor of the bill pointed out Nevada would still be one of the lowest in the country, which was currently 9 percent in Clark County. There was also another bill being proposed by the city of Mesquite to raise the room tax in Mesquite by 1 percent to pay for an airport. The convention authority would be opposed to that as well. People in the convention business did not believe in increases in room taxes; higher room taxes did have an effect on tourist trade and an effect on people and their ability to spend money while they were in Las Vegas. He concluded by expressing strong opposition to the bill.

Chairman Goldwater recognized Mr. Price for comment. Mr. Price stated it seemed to him if the committee was going to process the bill, it should be exempted from December 27, 1999 to about January 3, 2000, as he had learned some of the rooms for the millenium holiday were going to run as high as $7,000 per night in Las Vegas. He pointed out if the counties began adding a 1-cent tax onto $7,000 it might keep a few people away.

Chairman Goldwater recognized Mrs. Vilardo who wished to speak on the bill.

Carole Vilardo, president, Nevada Taxpayer's Association, spoke in opposition to the bill but added she wished to make a suggestion for the committee to consider. She had an appointment to discuss some ideas with Mr. Mortenson relative to the bill but not been able to connect. There had been a number of bills since 1997 when the 1-cent tax was added for the room tax, which was adding to the problems the legislature was running into right now. She suggested the committee write a letter to the S.B. 253 Committee asking if they would look at the entire issue of room tax. She informed the committee her association had done a matrix on the subject and they found something very curious which was the Committee on Taxation was beginning to do a lot of those increments. She added, even worse the committees had those bills and the authority for them in Nevada Revised Statutes 244 (NRS), which was county law; NRS 268 which was city law, and then she believed four or five special acts. Through research, they found when they got to the special acts that the administrative procedures between the cities and counties were different, interest in penalties were different, The legislature was not only taking the potential for having a very high rate with all of those different increments earmarked, but also had the problem of administrative provisions which made it difficult for a Holiday Inn chain to operate in multiple counties. That was because in some counties they would be exempt after 28 days; other counties the exemption after 28 days for the 1 percent room tax, 30 days for their local split. Half of the local penalties were different; interest was different. If there was a will to use an increment for operation or life-style issues, then they should characterize what they were, put in the increment and eliminate all the individual bills with different pieces that would put us at 15 or 16 percent.

Chairman Goldwater expressed his appreciation for Ms. Vilardo's input, adding that was an excellent idea. Plus, there had been a question with the wholesale and retail letting of rooms, here the taxes were collected, and who would be paying them. He then asked if there was any further testimony in opposition to the bill. There being none, he announced he was going to hold the bill and check with the sponsor (Mr. Mortenson) to find out what he wanted to do. He volunteered to draft a couple of letters to the S.B. 253 Standing Committee and copy them to the committee members for approval before the next meeting. There was no action on the bill and the Chair closed the hearing at that time.

The Chair announced the work session document had been pretty well pared down and asked the members to review it in conjunction with the issues discussed. He asked if there was any other business to come before the committee and recognized Mr. Neighbors for comment.

Mr. Neighbors brought up a point he had been concerned about which was the committee had talked so much about eliminating personal property. He wanted to point out that, especially in the rural counties, most all of the modulars or trailers, if not on a concrete foundation, were considered personal property. The valuation received from the test site, $150 million, depreciated came in at about $50 million in personal property tax. For the rural counties, if the committee said they were going to eliminate personal property tax without coming up with an alternate tax, it would put them in a real bind.

Mr. Marvel concurred stating Mr. Neighbors made a good point and, along those lines, thought the committee was maybe looking for a definition of personal property. There was some personal property that was quite substantial that had a taxable value.

Chairman Goldwater thanked both Mr. Neighbors and Mr. Marvel for their comments.

Upon finding there was no further business to come before the committee the meeting was adjourned at 5:30 p.m.

RESPECTFULLY SUBMITTED,

Nykki Kinsley,

Committee Secretary

APPROVED BY:

Assemblyman David Goldwater, Chairman

DATE: