Seventieth Session

January 26, 1999

The Legislative Commission’s Budget Subcommittee was called to order by Vice Chair Jan Evans at 8:45 a.m., on Tuesday, January 26, 1999, in Room 1214 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster.

Mrs. Jan Evans, Vice Chair

Mr. Bob Beers

Mrs. Barbara Cegavske

Mrs. Vonne Chowning

Mrs. Marcia de Braga

Mr. Joe Dini

Mrs. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. John Marvel

Mr. David Parks

Mr. Richard Perkins

Mr. Bob Price

Senator William Raggio, Chairman

Senator Joe Neal

Senator Lawrence E. Jacobsen

Senator Ann O’Connell

Senator Bob Coffin

Senator William O’Donnell

Senator Bernice Mathews (Excused)

Mr. Morse Arberry Jr., Chairman (Excused)

Mark W. Stevens, Fiscal Analyst

Gary Ghiggeri, Principal Deputy Fiscal Analyst

Daniel G. Miles, Fiscal Analyst

Robert A. Guernsey, Principal Deputy Fiscal Analyst

Debbra J. King, Program Analyst

Christina Alfonso, Secretary

Cynthia Cendagorta, Secretary

Vice Chair Evans asked Bob Bayer, Director of Department of Prisons, to present the budget for Department of Prisons (DOP). She emphasized this was just an overview of DOP budgets for the 1999-2001 biennium, and only major issues would be presented. She stated specific details and individual concerns about the DOP budget would be addressed in future subcommittee meetings. Limited time would be available for public testimony after all DOP budgets were presented.

Mr. Bayer said he would present an overview of the DOP budget and address the key items while Glen Whorton, Chief of Classification and Planning, and Dr. Rex Reed, Research Analyst, would be presenting information on DOP population projections, inmate admissions and releases, average lengths of stay, the DOP master plan, and other key issues. Mr. Bayer stated John Slansky, Assistant Director of Operations, would give an overview of selected DOP capital improvement programs. He said a presentation of the DOP medical budget would be given, followed by Howard Skolnik, Assistant Director of Prison Industries, who would present an overview of prison industries and, if time permitted, Janet Johnson would conclude with major issues in each DOP budget account. Mr. Bayer noted each year as the budgets increased, he had to take a lessor role in presenting budgets, as each area required specific expertise.

Mr. Bayer stated there had been major accomplishments since the 1997 Legislative Session. For the first time he could recall, Department of Prisons did not have the highest expenditure of all state departments for industrial accidents. In 1994, DOP had accident claims totaling $2.4 million, and every year thereafter saw a steady decline; in 1997 claims totaled $1,082,000. He did not have the 1998 total accident claims, but there were fewer accidents than in 1997, which showed DOP made a safer workplace even though DOP continued to grow larger. In addition, for the first time since the law was enacted, DOP met 100 percent compliance with peace officer standards and training for 1997. For 1998, only 29 staff members were not in compliance, which Mr. Bayer assured was being addressed. He said many of those 29 not in compliance were on leave as the result of injury or needed additional time to take the test, due to injury. He reiterated that was encouraging because in 1995, DOP was only in 16 percent compliance with the standards.

Mr. Bayer addressed the closure of Southern Nevada Correctional Center (SNCC), which he said was sometimes misunderstood. He said the new prison was tentatively called Cold Creek State Prison. The name was being reviewed due to an unincorporated town called Cold Creek, of which DOP was unaware, and DOP wanted to be sensitive to the issue. Mr. Bayer explained the core of a prison (laundry, kitchen, maintenance, and warehouse) was the most expensive part of a prison, and was built first. Every time a prison was built, the cost per bed decreased as the other phases of housing were built. Generally, Nevada prisons were built in that manner, first the core, then the first few housing units, and more housing units were added until the efficiency of the core was maximized, which would bring back a portion of the cost per inmate and the operating cost for the facility.

Mr. Bayer said he didn’t need to dwell on the tight budget and that all agencies were trying to come up with ways to make budgets more efficient, and to make sure what money was available went to the highest priorities. He said DOP was asked by the Budget Office to look at the possibility of not opening one or two of the housing units of the new prison. That was not the most efficient way to run a prison because of the expensive core, the cost of the warden and associate wardens, and all expenses necessary to operate a prison. With only a few housing units in the prison, the local cost per inmate would be driven up. Mr. Bayer added due to recruitment problems it made sense to defer many of those problems and save money. For the first time in history DOP would be able to open a new prison with experienced employees as the bulk of the staff because they would be transferred from SNCC. He said that was why he recommended shutting down SNCC and transferring all SNCC staff, except for a few maintenance positions, over to staff Cold Creek. That would mean, for example, there would be no need for two wardens operating 80 miles apart. The wardens from SNCC would be transferred to Cold Creek. He said the SNCC warden had experience closing down prisons because he was involved in closing down Nevada Women’s Correctional Center.

Mr. Bayer went on to say it would save a lot of money to concentrate all the staff in one location until such time as DOP may need SNCC. He said there had been some talk of, and he was in support of, "mothballing" the facility. He had thought that was a great idea for Lovelock State Prison. If he could find a vendor who would be willing to lease SNCC property from DOP with a population conducive to Nevada, over which DOP would have control, it might generate an income. In addition, the state could have the lessor spend money to improve the property. In effect, DOP would become a landlord while SNCC was "mothballed." Mr. Bayer said it was better for the facility to be used in some way than to be vacant. He reiterated the DOP plan would consolidate staff while avoiding the anticipated difficult time of recruiting in the Las Vegas area. Because there were so many other projects and correctional positions opening in Clark County that were attractive to DOP staff, the other projects were taking staff away from DOP.

Mr. Bayer drew attention to Department of Prisons (DOP) personnel recruitment, for which there were 40 positions vacant at Lovelock State Prison and approximately 40-50 open positions at Ely State Prison. One of the incentives DOP built into the budget to remedy the situation was a remote area differential in the Lovelock State Prison for all staff. Also included was a 5 percent bonus pay at Ely State Prison above and beyond what the staff were currently receiving, but this incentive would be available for custodial staff only.

Mr. Bayer directed those who were interested in reviewing the requests for proposals for privatizing the medical budget to the state listing on the internet and to the purchasing division, where it was listed as Bid 1050. In addition, he said there would be a bill draft request coming in through the budget office that would treat psychologists working for the vendor in the same fashion in which they were currently being treated. Under statute, a DOP psychologist was exempt from having to be a licensed psychologist. He said DOP psychologists were called psychologists; many of them had masters’ degrees and some of them had doctorates. Mr. Bayer said the investigation he had done demonstrated if DOP medical care was privatized, the psychologists would fall under the board of psychological examiners and would be required to have a Ph.D., which would drive up costs. If the bill draft was not approved, the psychologists should be withdrawn from the medical bid and retained under DOP.

Mr. Bayer stressed when looking at Cold Creek State Prison time frames, it would be constructed in three phases. Originally, Cold Creek was planned to be built in two phases: 1,500 beds in phase one and 1,500 beds in phase two. He said it became most cost-efficient to build the prison in three phases, with 1,000 beds in each phase, giving DOP 500 beds sooner than originally thought, which allowed for the cost savings regarding Southern Nevada Correctional Center (SNCC). Mr. Bayer stressed it was imperative to open the phases as they were scheduled. Otherwise, given the DOP population projections, it would cost the state a lot of money.

Mr. Bayer concluded, in the 1999 Legislative Session, when looking at bills coming before the legislative committees the stance of DOP was to get tough on crime literally meant to get tough on the wallet—there was no way to avoid it. For every bill passed, such as increased enhanced penalties for existing crimes, or any law that would have a decided affect on prison population, there would be a cost. With a tight budget, bills must be carefully considered, which was the legislators’ job. The job of DOP, Mr. Bayer noted, was to try to give legislators the best cost information and analysis possible. He then introduced Exhibit C, which included Cold Creek State Prison site plans, plans for phases one, two, and three, and a typical day-shift housing unit, as well as staff plans for the housing unit. He added he would have available plans for each housing unit in subcommittee meetings, which would show the density of staff to inmates.

Senator Coffin thanked Mr. Bayer for his presentation and commended the prison system, but said unfortunately he needed to focus on some controversial items. Senator Coffin expressed concern with the DOP budget proposals, because legislators must either "take them or leave them," and the budget would become unbalanced, which took the issue out of the hands of legislators. Senator Coffin noted that Governor Guinn was inexperienced but would be getting experienced very quickly. He said when Governor Guinn made the decision, he had only been governor for about a week and may not have had the benefit of the give and take which occurred with that type of controversial issue. Senator Coffin said he was not upset, but noted caution must be taken and legislators had to take a role in the decisions. Senator Coffin doubted there was consultation and if there was, the legislators were not aware of it. He would be greatly aided if Mr. Bayer could inform the members of the budget subcommittee that there had been consultation with the legislature on the subject of DOP budgets.

Senator Coffin went on to say there were problems with enlarging the prison suddenly, because Nevada was used to incremental growth of institutions, where problems could be solved as they arose. When accommodating the unexpected projected doubling of prison population, Las Vegas Valley residents must be assured DOP could handle anticipated inmate population increases. Senator Coffin asked Mr. Bayer if the inmate who had recently escaped from Indian Springs Conservation Camp had been caught. Mr. Bayer replied the inmate was still at large, but there were several very good leads on the investigation. Senator Coffin expressed concern regarding DOP capability to keep up with rapid population acceleration problems, including inmate escape prevention.

Vice Chair Evans noted with the addition of Mr. Perkins and Mr. Goldwater, the full committee was present.

Mr. Bayer addressed Senator Coffin’s concerns and stated, regarding expected prison population growth, there would be no excess capacity. He also stressed Cold Creek was designed differently from any other Nevada prison and there would be a lethal fence around 50 percent of the prison. That would save staffing and operational costs and be a strong deterrent to inmates. He emphasized Cold Creek was designed to handle the high-level medium classification inmates that could be found at some of the other medium-security prisons which weren’t designed to handle those types of prisoners.

Mr. Bayer went on to say DOP had done an outstanding job, but design would play a big part in the future. In Ely State Prison and Lovelock State Prison there was a decided difference in the operation due to the design and enhanced security that had developed with time. He again acknowledged Senator Coffin’s concerns and reminded the committee DOP was there to give the best information to allow legislators to make a good decision. He encouraged committee members to look at DOP flaws and note where improvements could be made. In addition, Mr. Bayer stressed the importance of developing a sense of pride among DOP employees because they were running one of the best, most cost-effective, safest prisons in the country, which the rest of the country acknowledged.

Mr. Bayer concluded his presentation by emphasizing the difference between operating a jail and operating a prison. He explained there were two different bodies of law which govern prisons and jails, and people inside jails were very different from people inside prisons. Misdemeanors and pre-trial retainees were housed in jail and once they were determined to be guilty of felonies, they were sent to be housed by DOP. Mr. Bayer said most Nevada sheriffs would agree that when they had a person they couldn’t handle, they would send them to DOP.

Vice Chair Evans asked committee members to be mindful of the time, and reminded Mr. Bayer he needed to finish his presentation by 10:15 a.m. to allow time for public testimony.

Mrs. de Braga asked Mr. Bayer if the one or two Cold Creek State Prison housing units that would not be filled if Jean State Prison remained in operation would be in phase one or phase two. Mr. Bayer replied it would be in phase one. DOP looked at ways to save additional money, but decided not opening one or two housing units would have created a very crowded situation. He opted to close down six housing units at SNCC and put the inmates in a more efficiently designed prison at Cold Creek and transfer the core staff to Cold Creek.

Mrs. de Braga asked Mr. Bayer if the 5-percent pay increase would be sufficient to entice anyone to go to work at the Ely State Prison, and would a flat dollar amount be a better incentive. Mr. Bayer answered for every dollar the salary was increased, the chance of attracting staff also increased. He said DOP was lucky to get even the 5-percent increase recommended, especially given the budget situation.

Ms. Giunchigliani told Mr. Bayer she thought they had spoken in 1995 about updating DOP regulations, and asked him when was the last time he had done so. Mr. Bayer said the local regulations in place at each institution were updated each year. He put out informational bulletins and administrative directives each year, copies of which he could provide to the committee. But an overhaul of all administrative regulations had not been done, because in some cases it did not need to be done. He said as soon as the prison board met, he expected to see a steady stream of updated regulations and there were already about 50 updated regulations ready to go to the prison board.

Ms. Giunchigliani asked Mr. Bayer if there was employee input into regulation changes because she wanted to make sure outdated regulations were not driving up the cost of programs. Mr. Bayer replied the procedure was to first have the proposed regulation approved by the Attorney General’s office to make sure it was not in conflict with any other laws. Then the proposed regulation was circulated to a variety of staff, including all wardens and business managers. He said DOP kept a file of each regulation and what changes had been made to it. Ms. Giunchigliani said she did not want to take up any more time and would take up the matter in subcommittee. Mr. Bayer concluded, in terms of updating regulations he had not done a very good job. Ms. Giunchigliani appreciated his forthcoming and said she wondered if employee input would make valuable contributions on the front end instead of waiting until numerous steps had already been taken. She said there might have been safety or treatment issues that had not been dealt with but would take up the issue in subcommittee.

Ms. Giunchigliani asked if Jean State Prison was not closed, what would be inmate capacity to meet the projected prison population. Mr. Whorton, Chief of Classification and Planning, responded most of those figures would be given in his presentation. Mr. Whorton introduced Exhibit D, "Nevada Department of Prisons Budget Presentation, January 26, 1999." He referred to section seven of Exhibit D and said to look at the male master plan for June 2000. If 613 beds were added to the capacity (9,661), the total capacity would be 10,274.

Ms. Giunchigliani asked Mr. Bayer if his role was to work with The Parole Board or was it independent of them. She also asked if he worked with sentencing guidelines or did she need to deal directly with the parole and sentencing commission. Mr. Bayer said the sentencing commission’s role was to demonstrate what changes had occurred in sentencing. He did other studies however, such as the effects of Senate Bill (S.B.) 416. He found the length of stay of a inmate in prison was currently three months longer than before the bill was passed. DOP was now doing a very complicated study, exactly as they did in 1995. They would take each sentence and calculate by sentence the length of stay. Ms. Giunchigliani asked if he would be comparing male to female population; Mr. Bayer said he would. Ms. Giunchigliani requested he also provide figures on mentally ill inmates and Mr. Bayer said he would do so.

Vice Chair Evans asked Mr. Whorton to begin his presentation due to lack of time.

Mr. Whorton, DOP Chief of Classification and Planning, explained he would be going through and explaining Exhibit D, and would answer any questions from the committee. On January 25, 1999, DOP inmate population was 9,215, of which 92.7 percent were male and 7.3 percent were female. He said the male population grew 7.4 percent in FY 1997-1998 based on the average population for that year. The female population grew a very significant 19.22 percent. In Exhibit D, under tab one, some general statistics were provided including ethnicity, age, offense, and custody distribution.

Mr. Whorton said the 1997-1999 biennial DOP budget was based on population projections performed by The National Council on Crime and Delinquency (NCCD) in November 1996. He referred to an overhead projection that was not provided to committee members. He said the male population projection was extremely accurate to projection. He had been working with NCCD since they began making projections in Nevada and this was the most accurate projection NCCD had ever produced. Mr. Whorton stated there was currently only a difference of 21 inmates between the projection for December 1998 and the actual number of inmates in December 1998. He noted that was a difference of only 0.26 percent, which was astounding for a population projection. He said actual intake was virtually identical to projected intake, which showed the importance of making a good intake estimate for to establish a good population projection. The cumulative difference in inmate intake was only 34 inmates over the 26 months of the population projection.

Mr. Whorton continued with the parole violation trace vector for the population projection. He said there were 296 more parole violators than projected, which was a 25 percent difference. That was a significant difference but the number of parolees offset the parole violator increase. DOP paroled 672 more inmates than anticipated, which was a 21 percent difference.

Mr. Whorton moved on to inmate discharges, for which he stated a good estimate was also made. DOP discharged 301 less inmates at expiration of sentence than anticipated, which compensated for the increased number of paroles. For the male population projection DOP was currently working on, intake was exact, parole violations were higher, but discharges were less. This made them basically cancel each other out, which gave DOP a good number with which to work.

Mr. Whorton noted DOP did not have the same level of accuracy concerning female inmate projections as compared to actual. The actual growth reflected the 19 percent increase in female population, which was significantly above what was projected. The projection indicated in December 1998 DOP would house 607 female inmates, but actually housed 687. The difference of 80 was small, but considering DOP only housed 687 female inmates, it was a significant difference in terms of housing resources. DOP received, via intake, 197 more female inmates than projected. In terms of female parole violators, DOP had a good projection until the middle of 1998 when the number of parole violators increased significantly over what was projected. There were more female parolees than anticipated, but discharges at expiration of sentence were less than projected. Between the parole violators and intake, female population was driven up, which had a significant effect on how female inmates were housed. The use of Silver Springs Conservation Camp (SSCC) was increased from 112 emergency capacity threshold to 150. For several months unit six at Northern Nevada Correctional Center (NNCC), which was a male institution, housed female prisoners. The female inmates were returned to Southern Nevada Women’s Correctional Facility on January 13, 1999. DOP housed them at NNCC because even though there was a tremendous rise in population in 1997, the female population currently appeared to be declining. Since September 1998, DOP had seen a significant drop in female population. The female inmate population reached a high of 710 in September 1998 and as of January 25, 1999, was 675. This was a major drop over a very short period of time, which showed the volatility of trying to project female populations.

For new DOP inmate projections, on which the budget was based, the male projection was made in April 1998 and the female projection was made in July 1998. DOP made some basic assumptions about the NCCD projections. First, the parole grant rate for S.B. 416 inmates sentenced under the new law was presumed to be 47.8 percent. Second, with the discretionary the regular parole-grant rate was assumed to be 46.1 percent, and third, mandatory parole grant rate was assumed to be 51.8 percent. Those inmates sentenced under the old law would be continued at their 1996 parole decision levels, assuming the board would carry forward with its former pattern as it related to those kinds of offenders.

In terms of admissions, parole revocation rates would reflect the actual practice for 1997 and 1998. NCCD assumed the male intake would increase an average of 5.2 percent per year. To understand the scale of that, in 1998 DOP had an intake of 3,515 male inmates, so obviously turnover of inmates was relatively high—about a third of the population. Female admissions were expected to increase at a rate of 6.8 percent through 2001 and were projected to level out thereafter. NCCD’s assumption was that the extreme growth experienced in the last year or two would flatten out over time. DOP received 446 female inmates as intake in 1998, which did not include parole violators. A total of almost 4,000 new inmates came into DOP in 1998.

Mr. Whorton explained the compound growth rate, meaning the average for each year, was 5.83 percent for men and 6.12 for women. The higher female growth rate represented the trend in female populations. Nevada was not the only state experiencing this problem with the female population, as it seemed to be a nationwide trend. The new population projection for males, which went back to April 1998, was relatively close. The actual population was a little under what was projected. In December 1998 DOP was 105 male inmates under what was projected, but intake was only 33 under projection, and this seemed to be a relatively good trace vector. There were 41 parole violators less than projected, so essentially intake was the reason DOP was a little low on projected parole violators. However, the projection was defensible and could be workable. Mr. Whorton said he understood there were concerns regarding the 7 percent growth rate for FY 2000 over the 1997-1998 biennium, and about a 5.2 percent increase in FY 2000, which was about 500 inmates. DOP would be watching that and discussing it with NCCD.

Mr. Whorton went on to say male paroles were a little higher and DOP had 159 more inmates paroled than projected. The male discharge rate was a little less, but they had a tendency to cancel each other out somewhat. Essentially, the parole violators and the intake were what was driving that as well. The female performance was not as good; it was doing well until September 1998 when the female population decreased suddenly, which seemed to be driven by the intake. Since September 1998 DOP had been getting fewer female inmates than projected. Intake was starting to drop a little under the projection. The actual difference was 32 inmates, which seemed like a small number, but when dealing with a small population it would have a significant effect. Again referring to his chart, Mr. Whorton said parole violators may look significant, but this was a small trace vector and the actual difference was only 13 inmates. The female parole violator projection was the worst performance DOP had in their population projection—a difference of 15 percent. Paroles had been high, with 14 more than anticipated, which was a difference of only 5 percent. There were 29 discharges less than projected, which was 14 percent less. That could not balance out the intake vector so DOP ended up somewhat low.

Mr. Whorton moved on to the male plan for housing inmates and construction initiatives. In April 1999 DOP anticipated the opening of phase one of Jean Conservation Camp (JCC) remodel/reconstruction. That would add 32 beds, but in reality the construction of phase one would provide 144 beds, because when phase one was completed, the 112 existing beds in the trailers would be torn down to provide a space in which to construct the second phase. The second phase would be completed in August 1999. He anticipated an increase of 96 beds in phase two, bringing the total to 240 beds. JCC would look like Stewart Conservation Camp.

Mr. Whorton stated Cold Creek State Prison would open in June 2000, adding 1,008 beds. At that point the 600 or so beds would be closed at SNCC and DOP would also close some "Stickney" beds at Northern Nevada Correctional Center (NNCC). Mr. Whorton said those were beds in excess of capacity, which was essentially planned crowding within institutions. Mr. Whorton said to keep in mind when looking at charts with overages and shortages of beds, DOP had up to 701 beds they were planning on crowding into other institutions, so the numbers could be a little deceiving. In June 2000, DOP would have a surplus of 308 beds in excess of the population at the emergency capacity threshold. DOP always budgeted to the emergency capacity threshold, not to design threshold or operating threshold.

Phase two of Cold Creek would be completed in August 1999, adding 882 beds. Only three of the four units would be opened and unit eight would not be staffed or used. All beds in excess of emergency capacity would then be closed and DOP would begin a remodel of the Sagebrush area, which was essentially the old cellhouse at Nevada State Prison (NSP). DOP would move out 224 inmates while the utilities were worked on and at that point there would be a surplus of 399 beds. Mr. Whorton cautioned that could be a little deceptive because 224 beds were transitory and would come back into use in October 2000. In May 2002, DOP would open the fourth unit in phase two of Cold Creek, adding 126 beds, which would be used on an incremental basis, as they were needed. Mr. Whorton said a summary of this information could be found in Exhibit D, section 7, page 2. In July 2002 the third 1,000-bed phase for Cold Creek State Prison would be complete, which would result in the facility having 3,000+ beds.

Mr. Bayer interjected considering how long it took to construct a housing unit, and keeping in mind there was a net intake of 50 to 70 inmates per month, it was apparent why it was necessary to be ahead of the game. Mr. Bayer also pointed out he believed three-and-a-half units were to be opened in phase two of Cold Creek, leaving a half-unit vacant.

Mr. Whorton stated for July 2004, DOP proposed the construction of a 500-bed minimum-custody facility in southern Nevada. At that point there would be over 600 inmates living in medium-custody who could go to minimum-custody, but not necessarily a conservation camp. There would be a lot of inmates who could be transferred to a minimum-custody facility who were not qualified to work on a conservation camp crew. Mr. Whorton explained that an inmate population was a very needy population in terms of their physical status. There were a lot of motorcycle injuries, bad knees, bad backs, asthma, and epilepsy. A lot of medical issues affected an inmate population to a greater degree than what would be found in the general population. DOP found some inmates were occupying medium-custody beds, when they could be housed more economically in a minimum-custody facility, relatively close to a treatment facility, and with a program component so they had something productive to do. DOP also anticipated the opening in February 2005 of a 1,500-bed, "medium-close" custody facility in southern Nevada. At that point DOP would be closing a lot of beds in excess of capacity. Referring to Exhibit D, section 7, page 2, Mr. Whorton explained DOP was trying to find a simpler way to present bed resource statistics so the actual impact could be seen more clearly.

Mr. Whorton moved on to the female plan, which could be seen in Exhibit D, section 8, page 4. DOP would be sending 100 female inmates to be housed out of Nevada in July 1999. DOP planned on sending women out of state to appropriate places, hopefully relatively close. The decision to do that, even though it might tie up funds that could be used for other things, would be based upon the actual population at any given point in time. Inmates would not be sent out of state before DOP had to. In June 1999, DOP projected there would be a deficit of 15 beds, even after DOP increased the capacity of the women’s prison from 500 to 550. DOP had already increased the capacity of Silver Springs Conservation Camp (SSCC) from 112 to 150, and had already converted 22 male beds at the restitution center to women’s beds. Mr. Whorton reiterated sending women out of state would only be used as a last resort.

Mr. Whorton told the committee in March 2000, DOP anticipated sending another 20 inmates out of state again because the population was anticipated to grow and they would be 21 beds short in February 2000. DOP was hoping for the expansion (250 beds) in July 2000 of the existing women’s prison so all out-of-state female inmates could then be returned to the expanded prison. At the end of July 2000 there would be a total surplus of 175 beds. In December 2000, the completion of a third wing at SSCC was planned. Presently there were two wings, with the third planned and ready to be built, which was a very easy project. Throughout the entire process, DOP expanded the population at SSCC, so they needed to cut down on wear and tear and make SSCC a reasonable facility in which to house women. He also indicated SSCC was the only facility in northern Nevada to house women, so 156 inmates did not seem to be an unreasonable resource.

Mr. Whorton explained DOP was proposing in the completion of a 250-bed minimum-custody facility for females in July 2003. It was anticipated DOP would take the minimum-custody and community trustee inmates from the women’s prison. Mr. Bayer had also investigated the possibility of developing a return-to-incarceration program for those people who were violating their paroles and did not represent a physical risk. That would give them an opportunity to get an intermediary adjustment before sending them to expensive hard-prison beds.

Mr. Whorton said he understood there was interest in basic information on
S.B. 416. He explained in 1995, the legislature developed a new sentencing protocol for all felony criminal inmates in Nevada. Previously, inmates received a determinate sentence, described as a number of years, and served a percentage of that sentence less good-time credits in order to get paroled. This was a very complex and confusing process and neither the community nor the legislators were happy with the system. In many cases, the inmates were also unhappy with the system because they could not understand it. The change in S.B. 416 provided the inmates with a minimum and maximum sentence. The inmates now served the statutory minimum, unreduced by good-time credits. Thus, if the inmate had a one- to five-year sentence, he had to serve one full year before he was eligible for consideration by The Parole Board. The maximum term was still affected by good-time credits because a legal provision stated the minimum term could be no greater than 40 percent of the maximum term in order for parole to remain a viable component of the sentencing process. That indicated the intake grew much slower than anticipated. DOP thought it would be about 2 years before they would have a "full load" of S.B. 416 inmates. Mr. Whorton pointed out DOP was just now getting up to 75 to 80 percent and he believed that was because there were still people sentenced under the old law who were serving a 5-year probation, which was the maximum probation in Nevada. He presumed probation violators coming into DOP under the old law could explain the population projection difference. This was much slower than anticipated, but interesting because it gave DOP an idea of how long it took to change things in the state.

Directing attention to the total population, Mr. Whorton explained the change in the composition of the total population. He again referred to his overhead projection and said the bottom highlighted line represented S.B. 416 inmates as a percentage of the population in July 1995. The top highlighted line represented the old law inmates. So over time, it took quite a while before S.B. 416 inmates became a greater component of the population than the inmates sentenced under the old law. Once S.B. 416 inmates reached 50 percent of the population, the percentage seemed to flatten out, probably because of the effect of "lifers" sentenced under the old law who were backing up inside the institutions. Mr. Bayer then asked committee members for questions or comments.

Vice Chair Evans thanked Mr. Whorton for his presentation and asked Mr. Bayer how he would like to proceed. Mr. Bayer said DOP would be introducing capital improvement projects, then the medical budget, prison industries, and finally Janet Johnson would finish presenting the budget. Vice Chair Evans said Mr. Skolnik would present prison industries last if it turned out they were running out of time, because prison industries could be handled in subcommittee.

Mr. Goldwater commended Mr. Bayer for doing a great job as Director of Prisons. He asked why if Nevada had the safest, most efficient prisons in the country, was DOP moving toward the privatization of services. Mr. Bayer said in some areas DOP was doing very well, but that did not mean they should not keep getting better. He said DOP would know when the bids came back from the requests for proposals whether or not it would make sense to privatize all medical services. He said if it made sense to privatize those services, there would have to be some burden of proof to show the committee where there were savings and delivery of services.

Mr. Slansky, Assistant Director of Operations, said DOP had eight capital improvement requests for the 1999 Legislative Session, two of which were construction requests. The first one was Cold Creek State Prison (CCSP), which had already been addressed extensively. Phase two of CCSP was estimated to cost $50,711,900, which would add 236,244 additional square feet and 1,008 beds to CCSP, which was currently under construction by Sletten Construction Company. The second construction project was adding the additional wing at SSCC. The new wing consisted of seven bays, which would house eight bunks in each bay for a total of 56 inmates. The other public works projects DOP requested were maintenance projects to repair existing facilities. DOP planned an extensive sewage plant renovation project at four facilities: Southern Nevada Correctional Center, Pioche Conservation Camp, Ely Conservation Camp, and Lovelock Correctional Center. Mr. Slansky said, in summary, those facilities became overloaded very quickly and may have been a bit underdesigned. To make a long story short, DOP had to reevaluate and make them function as they need to function.

The next maintenance project was a repair of the fire hydrants at SNCC. The existing fire hydrants were over 20 years old and had been there since the institution was built. The lateral piping from the water mains had corroded and needed to be replaced for fire safety. The hydrants would remain, but what was below ground needed to be reconstructed.

Mr. Slansky said maintenance project number 29 would replace the wing gates at Southern Desert Correctional Center (SDCC) at Indian Springs. They were essentially pocket doors: the metal gate rolled in and out of a wall on the housing facility. The gates were chain-driven mechanisms that were worn out and very slow. Inmates could literally grab a gate and stop it in mid-travel without significant effort. Mr. Slansky thought the original pressure settings for the gate was 40 pounds, but the gates were no longer even close to that. The gates could be stopped with bare hands, which compromised officer safety.

Project 30 concerned showers at Nevada State Prison. The existing showers were unsanitary and simply could not be made and kept sanitary without an extraordinary effort. There was mildew and bacteria and the showers required continual maintenance. This project would install a stainless steel shower, improving the sanitation in the housing units.

Project 31 would replace the vehicle sallyport gate at SDCC. An inmate who stole a garbage truck and attempted to ram through the sallyport caused the major portion of the damage to the gate and the gate had not ran properly since. This was currently the main operational sallyport for SDCC, and had to be replaced.

The last project was also at SDCC. Mr. Slansky explained this was a project to begin a sequenced replacement of emergency generators. The existing generators were used when they were installed, but they had never operated effectively or efficiently. DOP planned on replacing them over a series of years. Project 99 M-32 was the first replacement of one of the generators with a new 1000-kilowatt generator. DOP hoped to eventually replace all three generators at SDCC. Mr. Slansky then asked for questions or comments from the committee, and Vice Chair Evans requested questions be held until the entire DOP presentation was finished.

Mr. Bayer said DOP would next be presenting medical budgets. He introduced Phil Nowak, Medical Administrator, and said Dr. Theodore D’Amico, Medical Director, and Dr. Donald Molde, Mental Health Director, would also be available to answer questions.

Mr. Nowak said his general comments regarding the medical portion of the DOP budget reflected a normal process preparation from the standpoint of medical attention, to present to the committee for base budget review. That occurred in 1998 and was particularly significant in that it occurred in conjunction with the conclusion of a legislative audit. Taken together, the two processes were very helpful to DOP medical division, which identified a number of areas that required fiscal and operational attention.

Mr. Nowak said DOP built their base budget with as many of the specific foreseeable benefits as they could as an outgrowth of those two events. The base budget incorporated in the 04 operating category approximately $1.2 million. He said members of the committee might recall in earlier testimony some specific areas noted, including increased and better controls of outside medical expense, attention to prescription drug management, and contract management. In effect, DOP endeavored to build a base budget that was responsive to the observations that had been made. The only enhancements to the base budget reflected far later impacts of the projected closure of SNCC and some staff-sharing that resulted potentially from the transfer of medical staff to support Cold Creek State Prison medical operations.

Mr. Nowak said the net product the committee had as part of the budget review reflected the beginning of the incorporation of the budget DOP had prepared, with the alternative of privatization of medical services. The budget DOP would have normally submitted was the base for submitting a projected impact of privatization. Mr. Nowak said the inclusion of privatization reflected an alternative that had been recommended and discussed for some time. From the standpoint that privatized operations at Ely State Prison could be used as something of an indicator, DOP based the structure of the request for proposal on incorporating that experience to make it as meaningful a response as possible when DOP received the bids.

In light of the significant change privatization would represent, Mr. Nowak thought if committee members had questions, it would be appropriate to pose them in conjunction since the major element of the medical budget was privatization. The other components represented the retention of a core staff to provide contract oversight and continuation of legislative requirements, which were distant from privatization specifically, but not limited to, continuation of
Assembly Bill (A.B.) 389 and A.B. 533, from the standpoint of medical co-payments, restitution, and any related administrative duties. The sum of the budget represented that component plus privatization, and the continuation of the residential treatment substance abuse program at Warm Springs.

Vice Chair Evans asked Mr. Bayer who, in addition to Mr. Nowak, would be presenting. Mr. Bayer responded Mr. Skolnik would be presenting briefly and if the committee would like one, Janet Johnson, Chief of Fiscal Services, would present a budget by budget overview. Vice Chair Evans stated the budget by budget overview would take an extended amount of time and would be more appropriate for the subcommittee. Due to time constraints, she added Mr. Skolnik’s presentation would also be left to subcommittee, however, questions would be allowed from committee members if they wanted specific information on any previously covered DOP budget issues.

Mr. Bayer said Mr. Nowak had a summary of recommendations on the base budget review and the audits and said he would provide the committee with copies of the summary. Mr. Price asked Mr. Nowak if he had responded to any of the committee’s audit recommendations that needed attention. Mr. Nowak said the summary responded to what was included in the base budget review, and included four categories. The first was to develop additional and more meaningful performance indicators. In response to that recommendation DOP included in its budget an expanded selection of indicators and those would commence in January. The indicators provided more specific and relevant indicators of fiscal control with the medical division. The second was to be timelier in collection of co-payments. DOP had been providing a summary recap of collections, co-payments, and restitution to the Interim Finance Committee (IFC), and those summaries would continue. Third, and perhaps most fiscally significant, was the recommendation to determine costs incurred in fiscal 1998 as a result of past practices which may not have been efficient. The cost must be deducted from the base budget for 1999-2001 biennium, which was the $1.2 million adjustment he alluded to previously. Fourth, he said the summary provided particular details to the primary concerns the committee raised, which were prior approval for outside medical treatment, use of preferred providers and specialty sources, use of gatekeeper institutions, control of outside dental treatment, and adherence to the prescription drug formulary, which Dr. D’Amico alluded to in IFC. Mr. Nowak said those were the four summary recommendations that were in fundamental review of base budget, and he would be happy to provide more detail. He then stated the short answer to Mr. Price’s question of whether he had begun responding to any of the committee’s audit recommendations, was yes.

Mr. Price asked if DOP had developed written guidelines for employees so they could determine what was adequate payment, reasonable and appropriate treatment, for approving outside payments. Mr. Bayer and Mr. Price agreed to take up the matter further in audit hearings.

Senator Neal drew attention to the portion of the budget concerning medical privatization for 1999-2001. For 1999, it showed $26 million for privatization, and $27.3 million for 2001. He said the overall budget for those years was $30.5 million for 1999-2000, and $31.6 million for 2001. He asked what services DOP did not propose to privatize that allowed for the $4.5 million differential in the costs for 1999-2000, and another $3 or $4 million for 2001. Vice Chair Evans asked for Dr. D’Amico to come forward to help Mr. Nowak answer Senator Neal’s question.

Mr. Bayer said Senator Neal’s question was basically what was the difference between the medical division’s current operating level and why it appeared there was a reduction in the request. The first reason was because they planned on retaining a small staff of nine or ten people, which included, for example, the residential substance abuse program staff. DOP did not want to put that program out for privatization because they wanted to maintain control. The second reason for the difference was an approximate 8-percent reduction in operating costs. Private industry contended in almost every case, when they privatized they could save over 10 percent. Mr. Bayer admitted it was a bit subjective on his part, but if there was no saving to the state it did not make sense to privatize. DOP built in a saving to the state and once the bidding began, they would find out which companies had the stamina, ability, and fiscal resources to deliver the services DOP expected, at a saving to the state.

Senator Neal asked if the bidding would be on $26 or $30 million, and Mr. Bayer replied it would be on $26 million. Senator Neal said he noticed the TB grant, which DOP had for the last few years, would be eliminated. Mr. Bayer said the grant was a limited duration grant and had ended. Senator Neal asked what the specific purpose of the grant was. Mr. Bayer said the grant was for testing and training and Dr. D’Amico could better respond to the question. Dr. D’Amico said the TB grant was currently running out and the grant was provided to upgrade the way DOP operated regarding TB, which was a very serious infectious disease. The TB grant had been used for training and equipment and was a very valuable tool in reestablishing what he considered a fine program.

Senator Neal asked if the $2 million for the Correctional Medical Services (CMS) contract at Ely State Prison was part of the $26 million, and Mr. Bayer answered it was. Senator Neal then asked why it was shown as a separate category in the budget. Mr. Bayer said the CMS privatization was currently in place, and because it worked out so well, DOP anticipated they would continue Ely medical privatization whether or not the whole DOP medical system was privatized. He directed attention to the request for bids and said the Ely medical contract could be bid two different ways. The Ely contract had to be renewed anyway, and that was why they were "ahead of the game" with their fee. Senator Neal asked if Mr. Bayer anticipated CMS bidding on the entire medical privatization contract. Mr. Bayer replied there was no way to be sure, but he expected they would. He thought CMS had responded and there were tours scheduled, but Mr. Nowak could answer more specifically. Senator Neal said instead of $26 million, the entire contract would be $29 million. He questioned why they were listed separately, leaving it to him to do the math. Mr. Bayer apologized and said it was not meant to be deceptive and Janet Johnson could better explain why the two contracts were listed separately.

Ms. Johnson explained the reason the two items were listed separately was because DOP built the budget as if privatization were not going to occur. The CMS contract already in existence was in a separate category and it was in addition to the privatization of the entire medical program. The retained positions DOP would have to keep to monitor the CMS contract were also listed separately, so the total cost was $30 million. Senator Neal asked if CMS were to get the bid for the entire privatization, would they get about $29 million, while any other new contractor would get only $26 million. Ms. Johnson replied there was an option for CMS to get a separate contract from the rest of the privatization. Mr. Nowak noted in structuring the request for proposal, DOP was mindful of the existing contract for Ely medical services, which, independent of how the review and process of additional privatization occurred, must continue because it was a separate contract. Senator Neal asked if this separation of contracts was identified in DOP’s bid specification. Mr. Nowak replied in the request for proposal, there were two parts: the Ely contract and the entire privatization contract including Ely. It was understood, depending on legislative review, privatization may or may not occur. Ms. Johnson added CMS may or may not get either contract, as all contractors would be bidding on the contracts.

Senator Neal asked what the termination date was for the existing CMS contract and Mr. Nowak replied it was a 2-year contract with a provision for a 2-year renewal. Senator Neal questioned whether it would be appropriate for DOP to bid the entire privatization contract until the Ely contract was decided because the state would end up losing money. Vice Chair Evans said Senator Neal was asking excellent questions that needed to be answered, but there were other committee members who had questions and unfortunately time did not permit all questions to be asked.

Ms. Giunchigliani asked, regarding both Preferred Provider Organization (PPO) and the drug provider rates, what was the expected Consumer Price Index (CPI) increase for FY 2000 and FY 2001. Mr. Nowak responded the preferred provider had a two-part manner in which they responded to CPI. With respect to the major medical facilities, which would include Washoe Medical and University Medical Center, those provisions had a floor and a ceiling CPI built into the per diem basic room-and-board rate only. He thought the floor was 3 percent with a cap of 6 percent. Ms. Giunchigliani asked Mr. Nowak which figure the budget was based on, for the 2000-2001 CPI index. Mr. Nowak replied DOP, other than within the context of outside medical as a whole category, did not distinguish, in as much as the other half of it for the PPO and non-PPO. The individual providers did not have a specific CPI component to their agreements in the case of the PPO. Mr. Nowak said DOP used, as he thought was typically the case, an overall medical inflation factor. Ms. Giunchigliani asked for the specific percentage used in the calculation and said she was looking for the point where there would be potential savings. Vice Chair Evans asked Mr. Nowak to give a short answer in response to the question. Mr. Nowak said he would like to confirm the figure with the Department of Administration because they selected the CPI, but he believed it was typically 8.4 percent.

Ms. Giunchigliani said as she understood in the request for proposal, it would be required to use the state PPO, and wanted to know if this was the case, where the savings were. Mr. Nowak said he believed the language of the request for proposal stated they may elect to use the state PPO, but if they did not, DOP reserved the right to be satisfied they would use a mechanism that derived appropriate savings. Ms. Giunchigliani expressed she was not getting the exact answer she was looking for, and Vice Chair Evans asked Ms. Giunchigliani to reserve her questions for subcommittee.

Mrs. Cegavske asked Mr. Bayer if he had statistics showing how many DUI’s a prisoner had before he was incarcerated. She also requested statistics showing the programs at each prison that helped drug- or alcohol-related inmates. Mrs. Cegavske said she had been inundated with emails and letters from DOP employees and asked if the employees had been talked to about the possibility of medical privatization before it was announced. Mr. Bayer responded privatization was no secret and he had discussed the matter numerous times in front of IFC. He said in 1995, he started a criminal investigation in the medical division and an audit was conducted at the same time. He said he made it very clear when he addressed DOP staff in 1995 there was no reason why privatization should do the job better than DOP. He said he put medical employees on notice that if they did not do their jobs, due to the scrutiny they were falling under, DOP would be in jeopardy. He said he did not think it was any secret to staff that he had been looking very carefully at privatization. Vice Chair Evans told Mr. Bayer that Mrs. Cegavske’s question was whether he had specifically addressed his employees directly regarding medical privatization. She said employees do not regularly attend IFC meetings. Mr. Bayer said yes, he had addressed medical employees, but on a limited basis. He addressed them in large staff meetings and had to rely on other people to get out his message.

Mr. Goldwater said the committee had had varied experiences with outside vendors and most of that experience had been negative. He said a bulk of the committee’s time had been spent dealing with vendors who promised the world and left the committee hanging. Then it was the committee’s responsibility to clean up after them, as was the case with Nevada Operations Multi Automated Data Systems (NOMADS), the state health insurance program. He said there were some consistencies with the way the committee dealt with outside vendors, in a positive way, starting with the Request for Proposal (RFP). A well-written RFP worked very well. Second was a detailed contract. He asked who on DOP staff, or who from the state, had the experience to write the RFP. Mr. Goldwater requested Mr. Bayer give the committee an idea of what the medical privatization contract would look like and who would be able to draw up a $26-30 million contract, including whether or not there would be negative aspects. He also asked if it would it be typical of other privatization contracts, and were there special things the state would have to look at. Vice Chair Evans requested Mr. Goldwater and Mr. Bayer get together individually to work out those important issues. Mr. Bayer asked to make a very brief response and said he understood how difficult the privatization contract would be. He added DOP, with no experience, drew up the privatization contract with Correctional Corporation of America, which was a $45-50 million contract. He said, working with Randy Munn from the Attorney General’s office, the purchasing division, and risk management, DOP probably had the tightest and one of the best contracts in the country. He said this was not to say that would be the case with the medical privatization contract, and the information Mr. Goldwater requested would be presented in subcommittee.

Senator Coffin said the medical privatization was a subject he had been interested in since the first big fight over the issue in 1985. The plan fell apart in 1985 because the vendors who were asked to bid at that time could not or would not provide information on whether or not they could reinsure excess coverage. Ultimately the "provider of last resort" was the state because no one demonstrated the state could save any money. Senator Coffin asked Mr. Bayer if anywhere in the RFP was there a request that the vendor provide reinsurance over and above what their contracted cost would be, in order to keep the state from being the "provider of last resort." He said that was left out in 1985, but now that there was a serious discussion about privatization of the whole medical system, he needed to know if there was backup coverage that could be purchased in the private sector, with a high deductible, to eliminate the possibility of catastrophic claims coming in to the state. That was a defining issue on whether or not medical privatization could work. Vice Chair Evans asked Mr. Bayer to speak directly with Senator Coffin on the issue. Mr. Bayer asked to respond briefly and said there was no cap on costs and the vendor had to meet the same conditions the state would meet and the vendor would pay for any extraordinary costs.

Vice Chair Evans told Mr. Bayer the committee needed written information regarding money from vending machines going into the employee fund. The committee also needed more information on the plan to use regional wardens. Finally, she wanted to know if all the information the committee was supposed to have had been sent over. She added DOP had been less than timely providing information just on the base budget review. Some of the information was just coming in and it should have been in 2 months ago. The committee’s staff would be in touch with Mr. Bayer on those issues so they could move on to the work of the subcommittees. Vice Chair Evans said there was limited time available for DOP medical employees to speak and asked the two designated spokespeople to come forward.

Diane Mathis introduced herself as Director of Nursing at Regional Medical Facility (RMF) located at Northern Nevada Correctional Center. She then read a prepared statement:

Sharon Wilson introduced herself as a Senior Psychologist with the Mental Health Unit at the RMF in Northern Nevada Correctional Center, where she had been employed for nine years. She then read a prepared statement:

Vice Chair Evans thanked Ms. Mathis and Ms. Wilson for their testimony and called forward Bob Gagnier, Executive Director of State of Nevada Employees Association. Mr. Gagnier said he would be very brief and that he had given all committee members a letter outlining his three major concerns within the DOP budget. The first was the compensation package within the prison system, which was not a new issue. He said he sat in the same seat two years ago and told the committee the same problem, and now it had gotten worse. On January 25, 1999 there was discussion of excessive overtime and until DOP was adequately staffed there would be excessive overtime. He asked the committee to please address the overtime situation.

Mr. Gagnier said the second concern was the proposal to close SNCC for two years. He said he thought he had offered an alternative in his letter. He also pointed out in other states where there were prisons for profit and inmates were brought in from other states, there was a sorry history of maximum-security inmates who were housed in minimum-security facilities and the community had paid the price.

He said his final concern was that people do not always compare apples with apples. He said Nevada had the lowest per-inmate cost in the western United States for operation of their prison system. The prison medical costs were the eighth highest in The United States, but medical costs in Nevada were high. He said an American Chamber of Commerce Research Association study showed Nevada’s health care was 118 percent of the national average. The state to Nevada’s east, Utah, was at 101 percent, so there were reasons for some of the high costs. He acknowledged the time constraint and said he would get into the issues in depth in subcommittee hearings.

Vice Chair Evans thanked Mr. Gagnier for his comments and reminded everyone this was just the beginning of the medical privatization discussion. She said the subcommittees chaired by Ms. Giunchigliani and Senator Jacobsen would be hearing the prison budgets in depth and urged people with concerns to be in touch with them. Vice Chair Evans asked Dr. D’Amico to distribute copies of the previously mentioned 5-year health services plan to committee members. Dr. D’Amico informed the committee the 5-year plan had not yet been submitted to Mr. Bayer. The 5-year operational matrix he put in place in 1999 contained that plan, but had not yet been submitted through appropriate channels. As soon as the plan was submitted through channels, and if it was released for the committee, that was how it would be presented to the committee.

Vice Chair Evans said she would like the 5-year plan available at the first subcommittee meetings, and requested it be expedited. Dr. D’Amico added he had not been instructed to develop a 5-year plan for the medical division, but he had extensive experience in administration and operating. Further, some of his matrixes and plans were constructed on his own, even though he had not been instructed to do so. He said he did not want to be out of order by circumventing the proper chain of command, but he would submit his plan to Mr. Bayer and then it could get to the committee.

Mr. Price noted someone in the audience had placed questions regarding medical privatization on committee members’ desks. He submitted them (Exhibit E, "Proposed Questions for Medical Privatization") to Mr. Bayer and requested answers to those questions be submitted to the committee. Vice Chair Evans said whenever written statements or questions were provided to the committee, the author needed to be identified. Mr. Price said he would submit them as his own questions.

Vice Chair Evans asked Division of Parole and Probation (P&P) to present their budget overview. John Drew introduced himself as Acting Director of Department of Motor Vehicles and Public Safety. He addressed the supplemental request that would be presented in Parole and Probation’s budget. The supplemental request was a result of supervision fees that were not collected at a high enough rate to prevent a revenue shortfall. Due to the revenue shortfall, P&P was required to make budget adjustments and cuts. Also because of the revenue shortfall, P&P inadvertently spent money earmarked for replacements of the radio system for the conversion from low-band to high-band. The supplemental request was necessary for P&P to participate in the radio conversion, and it had been well testified to that the radios were very important to P&P officer safety. Mr. Drew assured the committee none of the budget adjustments were done in such a fashion as to create problems with public safety, but the cuts were necessary.

Carlos Concha introduced himself as Chief of Division of Parole and Probation. He said his presentation would address P&P’s purpose, goals, major issues, and specifics of The Executive Budget. He asked Vice Chair Evans if he had time for a 20-minute presentation. Vice Chair Evans said that would be fine, but to please be mindful of the time. Mr. Concha said the purpose of P&P was to protect public safety through effective supervision of offenders, registration and tracking of sex offenders, and providing sentencing recommendations to the district courts of Nevada. He directed attention to the map on page 1 of his handout (Exhibit F, "Nevada Division of Parole and Probation"), which showed all P&P offices throughout Nevada. The division had 15 offices located throughout the state, with the majority of those offices and staff located in Las Vegas and Washoe County, which handled 81 percent of P&P’s workload. He said the state had grown over the past 2 years to the point where the majority of the offenders P&P supervised, about 60 percent, were in Las Vegas. The prison system was currently building in Las Vegas, and many of those inmates were being released into the community.

Mr. Concha identified several goals important to P&P. The first was to improve the effectiveness of supervision by maintaining a vacancy rate in order to maintain manageable caseloads. That included increasing the use of electronic monitoring and maximizing accountability and efficiency through improved sworn training programs. The second goal was to administer the program of registration, community notification, and tracking of sex offenders by identifying, assessing, and registering all sex offenders in the state. The third goal was to maintain the quality of information and sentencing recommendations to the court through cross training.

Mr. Concha addressed five issues of informational items. First, during the 1995 Legislative Session, S.B. 325 mandated sex-offender registration and community notification. As of January 1, 1999 a total of 1,304 sex offenders had been registered with P&P district offices statewide and necessary information had been forwarded to the P&P central office for record of registration. A total of 628 record registrations had been completed and forwarded to the Criminal History Repository (CHR). He said there was a balance of approximately 600 offenders whose record of registration P&P had failed to complete, due to staff constraints. In addition to the registration and tier-level assessments for community notification, which was completed by the P&P sex-offender registration in the central office, the division tracked and attempted to locate sex offenders who failed to register with P&P or failed to update their initial record of registration sent over from CHR. That process occurred every 90 days for sex offender predators and yearly for regular sex offenders.

In order to accomplish the tracking and follow-up on sex offenders, P&P was required to have district staff look for them, locate them, and convince them to register with P&P. Because there was no process in S.B. 325 that mandated sex offenders register with P&P, they requested a Bill Draft Request that mandated they register and created a Category D felony if an offender did not register with P&P. Currently, statute stated that sex offenders must register with local law enforcement, which then referred offenders to P&P. He said there needed to be something to enforce that sex offenders register directly with P&P.

Explaining the second issue, Mr. Concha said P&P received a letter of intent in 1997 directing P&P to report on recruitment activity every quarter so the vacancy rate could be monitored. He directed attention to page 2 of Exhibit F, which showed a graph identifying the vacancy rate for sworn staff and support staff. In July 1997 there was a sworn staff vacancy rate of 53 officers statewide. The majority of those vacancies, approximately 14, were in the Las Vegas office. Out of 143 line staff positions, 40 were vacant. As the chart showed, P&P had aggressively recruited and tried to reduce the number of vacancies. As of December 1998 there were only 23 or 24 vacant positions. In January 1999 P&P hired a number of employees. On February 1, 1999, seven officers would be attending the academy in southern Nevada, and seven officers would be attending the academy at Truckee Meadows Community College. Currently there were three vacancy positions for which applicants had not been offered employment.

Mr. Concha explained his third issue was caseloads. P&P had experienced high caseloads since 1996. It had been very difficult for P&P staff and the time it had taken to recruit and hire had been a long process. He said P&P intended to regularly monitor vacant positions very closely. What the division had gone through, especially officers of the field, should never happen again.

Mr. Concha’s fourth issue of concern was supervision fee collection. In 1998 P&P overspent and used funding from the radio allotment. There were high caseloads and there was not sufficient staff to supervise those caseloads, therefore special conditions and the restrictions and requirements necessary to supervise offenders were not met. That created a problem with collection of supervision fees. In order to improve the situation, P&P was closely monitoring collections and aggressively pursuing delinquent fees to align officers and the divisions with revenue officers. To date the revenue officers had generated more than 5,000 collection letters advising offenders of various levels of admonishments, designed to compel offender compliance.

Regarding the effect of S.B. 416, which was approved in the 1995 Legislative Session, Mr. Concha said P&P had not realized any measurable effect that impacts P&P operations or budget. In P&P’s budget, the Governor recommended an increase in staff from 439 to 480—an increase of 41 positions. Those positions were a result of M200 (caseload growth) and enhancements, which he would address as he moved through the budget.

Mr. Concha explained in the 1997 Legislative Session, S.B. 99, his fifth area of concern, was passed, which mandated psychosexual evaluations of offenders convicted of gross misdemeanor or felony sexual offences. The resources for funding the program were through grant monies with the expectation that offenders would pay a fee. Many of the offenders were sentenced to prison and never came under P&P supervision. As a result, collection of the fee was difficult. Therefore, General Fund money was now recommended to fund the program.

Regarding M200 caseload projections, Mr. Concha said since 1995 P&P had provided NCCD with statistical data in order to forecast statewide caseload growth. NCCD was asked to revise projections for specific programs by district offices following the 1997 Legislative Session. NCCD continued to revise as late as December 1998, and he believed NCCD was scheduled to review and update projections again in March 1999. Mr. Concha referred to Exhibit F, pages 4-6, which showed statewide breakdown of district caseloads for FY 1999. The chart identified specific types of cases: intensive paroles, house arrest parole, regular parole, compact in parole, total parole, and Intensive Supervision Unit (ISU). He noted the chart broke down every type of category from Carson City, Reno, Elko and Las Vegas Districts so NCCD could better project what future growth would be.

Mr. Concha said he would briefly explain the staffing formula for budget needs, without getting into detail. He said he would just speak regarding regular supervision, ISU, and pre-sentencing investigations. The regular supervision ratio was 75 offenders to 1 officer. ISU included house arrests, mandatory parole release of inmates, and inmates under residence confinement, such as the 305 DUI program and the 317 expanded house arrest program. The ISU ratio was 30 offenders to 1 officer. Under pre-sentencing investigation reports done monthly by officer staff, the ratio was 16 pre-sentencing investigations to 1 officer. Mr. Concha referred to NCCD’s projections in workload statistics for 1998-2002, Exhibit F, pages 7-9. By district, NCCD projected workload statistics for fiscal years 1998-1999. For Carson City, NCCD’s work unit projection for fiscal year 1998 was 1,238, and the actual was 1,119. Obviously the projection was rather high and as a result it was revised. The current 1999 projection compared to the 1999 projection made in 1997 had been adjusted to meet those increases or decreases. With the revision by NCCD and with the assistance of Budget and Legislative Counsel Bureau staff, P&P was better able to project for P&P’s future.

Mr. Concha referred to Enhancement 376, which the committee should have received in an amendment to The Executive Budget. The SCR-52 subcommittee recommended funding to conduct a workload study in the 1997 Legislative Session. The study was funded and completed by NCCD in June 1998, and he believed many committee members received a copy of the report. The study recommended basing officer staffing on the number of available hours necessary to perform the duties each month. However, funding was unavailable to support an increase to staffing levels as recommended in the study by NCCD. In order to move toward a more manageable caseload ratio, the Governor recommended reducing the current ratio of 75 to 1 down to 70 to 1. He thought the ratio reduction would help staff and reduce caseload in order to better monitor the activity of offenders. By reducing the ratio for regular supervision, P&P would receive an additional seven sworn staff positions and one support staff position, bringing the total to 480 positions.

Senator Raggio said the committee’s summary of adjustments showed the 2001 reduction in staff to 70 to 1 was projected to add a cost of $473,000 and asked Mr. Concha if the figure was correct. Mr. Concha said it was correct. Senator Raggio asked why it was only $106,000 in the first year. Mr. Concha believed in the first year there were only two line staff positions in Las Vegas. In the second year there were three positions in Las Vegas, one position in the Carson City office, and one supervisor.

Mr. Concha directed attention to The Executive Budget page DMV-183 and pointed out Enhancement 377, which provided staffing necessary to establish specialized caseloads to supervise sex offenders. Those caseloads had been historically staffed at a 75 to 1 ratio. E-377 would allow the caseloads to be supervised at a ratio of 45 offenders to 1 officer. That would allow more time to aggressively monitor sex offender activities and involvement in counseling. Additionally, these officers would locate sex offenders who failed to register or update their record of registration.

Mr. Concha called attention to page DMV-185, which listed the Major Reclassification of staff in the pre-release unit. Currently there were five Operations Supervisors assigned to the pre-release unit for the processing, monitoring, and facilitating of paperwork on inmates who had been granted parole, and inmates being considered and released for supervision under the 305 DUI and 317 Expanded House Arrest programs. Each Operations Supervisor was a sworn peace officer and was required to participate in ongoing training. Additionally, officers were assigned other duties such as armorers, range masters, and providing instruction at various training classes. As a result of many other responsibilities and training requirements that came with being a sworn peace officer, the release of inmates in a timely manner had been adversely affected. Module 807/806 Major Reclassification downgraded the existing Operations Supervisor positions to non-sworn Program Officer positions, which were almost all intensively paperwork. Mr. Concha anticipated the consolidation of pre-release activities into one centralized unit, along with the staffing change to Program Officers, would expedite the release of inmates from prison in a more timely fashion.

Turning attention to automation, Mr. Concha recalled the 1995 Legislative Session appropriated funding for a 5-year plan to complete automation of P&P. During the first biennium the division hired a program analyst and a network specialist. The analyst initially conducted numerous meeting and planning sessions in order to complete a business process review, which was produced in February 1997. During the 1997 Legislative Session both positions were transferred to DMV/PS’s Information Systems Unit. The final appropriation to complete the automation project would be requested in the 1999 Legislative Session, through a one-shot. The cost included computer hardware and software for personal computer workstations. The automation project also provided hardware installation and training. Mr. Concha said all equipment relative to networking was scheduled to be completely replaced and reinstalled. Currently all division locations were supposed to have been wired and connected to the Public Safety Network System. Actual completion was somewhat behind, largely due to circumstances beyond the control of the Public Safety Network System. In northern Nevada, all locations were online except the Minden Office, which recently moved. In southern Nevada there had been longer delays due to manpower issues and department priorities, such as a civil name check installation.

Mr. Concha explained there were currently 24 personal computers waiting to be installed or awaiting completion of user training prior to switching over from the old equipment. There had been a problem with the software in the six scanners P&P received, but the issue was being addressed with the vendor. The Dangerous Offender Notification System had been online since June 1996 and many modifications had been made to the application, enabling it to perform a wider variety of services than was initially requested. The modification had an impact on the deployment of the Usoft application. The Usoft system, which would replace the existing stand-alone systems as well as do its applications, was approaching phase two of a five-phase schedule. According to the initial schedule, P&P was about 1 year behind, but the content of deployment was reportedly more complete than originally projected. Because of popularity within P&P, deployment had been interrupted in order to expand the scope. Regarding the time delay between initially planned deployment and actual deployment, there had been considerable parent delay, which had been frustrating to P&P. However, the application to be deployed reportedly contained more than previously expected at its current stage. Following the deployment of certain modules in April 1999 the phase-three requirement should be a relatively simple task involving mostly user training. Although delays had occurred in terms of accomplishments, P&P was on track.

Explaining user training, Mr. Concha said P&P had used many of its employees to provide training in both Networking Technology (NT) and personal computer systems. P&P would train employees in the use of the new Usoft application following the deployment of the application in April 1999. In summary, P&P’s application deployment was continuing essentially on track with the original schedule, but had not been able to meet some interim installation expectation.

Mr. Concha said he had completed his presentation and would gladly answer questions from the committee. Senator Raggio referred to DMV-187, the summary of expenditures, said he was not sure Mr. Concha had covered the level of appropriations for training of existing officers and new staff. He said it had apparently been scaled down to practically nothing and asked Mr. Concha to comment. Mr. Concha believed John Drew, Acting Director of Department of Motor Vehicles and Public Safety, addressed the Peace Officer Standards and Training (POST) academy training issue on the morning of Friday, January 22, 1999. Mr. Drew said he addressed the issue in the presentation he made on trying to create a training division based on the recommendations of the SCR-21 interim study. The training division budget was based strictly through transfers from those public safety divisions and their personnel was involved in training 85 percent of the time, or more. Senator Raggio said he was not sure he understood what happened to the training for existing officers in the budget. Mr. Drew said with the creation of a training division, the department would become responsible for the POST category-one personnel and basic training of all public safety personnel, which would be the patrol, parole and probation and investigations, utilizing in-house staff. Senator Raggio asked Mr. Drew if he could assure the quality of training would be equivalent to what had been provided in the past. Mr. Drew said yes, the personnel conducting the training were the same personnel, excluding parole and probation, who were assigned to the POST academy, who were on loan from the department.

Senator O’Connell asked Mr. Concha regarding S.B. 99, if he was giving up on trying to collect any money for the psychological examination of sex offenders. She understood the offenders were in jail, but did Parole and Probation (P&P) try any follow-up after they were released. Mr. Concha said P&P was not giving up on having the offender reimburse the state for psychosexual evaluations. The problem was P&P could not collect enough revenue to support the program. P&P planned on actively collecting revenue from offenders as well as restitution for victims and supervision fees for services for all offenders. Unfortunately P&P had not successfully collected very much for psychosexual evaluations, due to the fact that most offenders were being sent to prison. The offenders under P&P supervision paid a fee of $30 per month for services; collection for Fiscal Year 1998 was $2.1 million. Mr. Concha admitted P&P was not the best bill collector, but was trying to improve.

Ms. Giunchigliani asked what exactly the impact was on the budget because many committee members were concerned collection fees would not fund the program. Mr. Concha said the impact was initially P&P had to fund $69,000 out of P&P salary savings.

Don Hataway identified himself as Deputy Director of the Budget Division and said several adjustments to the budget had been submitted for committee consideration during the closing of the P&P budget account. The first adjustment was a $180,186 reduction in the General Fund, which was for phase five of the automation project. The funding was duplicated in a one-shot. He informed the committee they had flexibility on the issue. Budget Division felt there was a need for more revenue in the new biennium than in Fiscal Year 1999. Consequently P&P intended to submit the one-shot to the committee for consideration. If the committee chose to approve the one-shot the committee could reduce the budget in FY 2000 or, depending on revenue needed, could "go the other way."

Mr. Hataway confirmed it was Budget Division’s intent to put the caseload reduction for the general officer to offender ratio as well as the officer to sexual offender ratio in the budget. The sexual offender ratio got into the budget, but the reduction from 75 to 1 to 70 to 1 did not get into the budget. The Budget Division definitely wanted the committee to consider adding it to the budget. The biggest part of the cost was the sexual offender reduction. There were four other minor motor pool cost adjustments when Budget Division projected those costs. They projected them on a 12-month basis for new employees, and obviously new employees were hired on a 9-month basis, so there was roughly a $9,000 net savings to the General Fund.

Ray Sparks, Public Safety Deputy Director, said in the interest of time he would forgo any comments since Mr. Concha gave a good overview of the budget.

Don Denison, Chair of the Parole Board, noted the Parole Board’s budget started on DMV-244. He thanked the Senate Finance Committee and the Assembly Ways and Means Committee for the budget provided in the 1997-1999 biennium. He said they gave the Parole Board everything they asked for and the staff asked him to thank them for the computers and the Management Analyst.

Mr. Denison explained the current budget reflected that the Parole Board was conservative. For example, in the contract services category, the Parole Board returned 60 percent of the money it was allocated. For training, the Parole Board returned 53 percent of the money it was allocated, and in travel it returned approximately 38 percent. With the exception of the salary increases that occurred in the 1997-1999 biennium, the Parole Board’s current budget was lower in every category than was funded in 1997-1999 biennium. The Parole Board was conservative; it strove to spend only what was absolutely necessary. Mr. Denison said if the subcommittees wanted details on how the savings occurred, he was ready and willing to provide them.

Mr. Denison noted each of the seven commissioners on The Parole Board was acutely aware of their responsibilities, both social and financial. They realized every inmate they released saved the state money and every inmate they kept cost the state money. However, if they released just one wrong inmate, the state and the Parole Board were in trouble and the costs, financially and socially, could not be calculated.

Mr. Denison said the legislative body, when he appeared before them previously, paid considerable attention to the parole approval rate. He suggested that instead of looking at the parole approval rate, the legislative body consider the parole release rate from prison. He said he discussed extensively the parole release rate staying above 35 percent. Currently the Parole Board was paroling inmates at a rate of about 50 percent. However, the inmates were serving much more time and there were reasonable explanations for this. The approval rate to look at was the release from prison rate of parolees, which was currently approximately 1.9 to 2 percent per month of the total inmate population. In 1998 it was closer to 23 percent.

Ms. Giunchigliani asked Mr. Denison if he had been using videoconferencing. He said he had tested videoconferencing, but the first few tests were less than satisfactory. In December 1998, there were commissioners at ESP and NSP who videoconferenced. It seemed to work if there were "warm-body" commissioners on site. In February 1999, instead of sending three commissioners to the three-panel hearings in Ely, the Parole Board intended to schedule hearings at ESP and NSP at the same time. The first few hearing in the morning would be three-panel hearings, which required three commissioners to be present. Those would be videoconferenced; once the videoconference was over, the commissioners in Ely would continue their hearings and the commissioners in NSP would continue their hearings.

Ms. Giunchigliani asked if in the beginning the equipment was just faulty. Mr. Denison replied the problem was beyond equipment. As long as at least one knowledgeable commissioner with interview skills was present, videoconferencing worked. But in video, body language, eye contact, and winces were missed. There were potential horrific stories he could tell about the results of missing body language during a hearing. Ms. Giunchigliani asked if he would later have a better idea of how well the videoconferencing would work. Mr. Denison said yes, and the Parole Board was trying other things besides videoconferencing. For example in the travel category, if at a rural camp there were only eight or nine people eligible, they would delay the hearings and double up the next month.

Ms. Giunchigliani said the parole rate was up but there were more parole revocations and wanted to know what that was being attributed to. Mr. Denison replied there was a discrepancy about the revocations in northern Nevada, as opposed to the revocations in southern Nevada. Apparently there was miscommunication and in southern Nevada many parolees were brought to the Parole Board for failing to pay their fees for 1 to 3 months. The Parole Board took the position that rather than put the person in prison for 6 months or a year, costing $8,000-$16,000, it would be better to warn them how important it was to pay their fees, then let them go out and work so they could pay the fees. Ms. Giunchigliani said she assumed the parolees were all employed in some way. Mr. Denison said they were hopefully employed, but this was part of Mr. Concha’s collection problem as well—trying to "get blood out of a turnip." He said the parolees were working minimum-wage jobs and had to pay for housing and food, and sadly "if too much pressure was put on a turnip it would break." For the collection, the source of the revenue might be the wrong place.

Ms. Giunchigliani said she would like to discuss the various fees the parolees pay in subcommittee. She said it was similar to the situation of a private businessperson: they often forgot how many assessments were put on. Mr. Denison said some of the fees were quite reasonable, but others, depending on the individual, were not. For example house arrest with Visatel, normally used for DUI offenders, was an excellent tool. Hopefully the offender was at least upper-middle-class, because the fee was about $300 per month. He said a person working a minimum-wage job could probably not afford $300 per month, after taxes.

Mr. Goldwater said it had been brought to the committee’s attention that P&P had projected the parolee rate to be about 7 percent, yet Mr. Denison’s projection, even with the caseload increase, appeared to be 3 to 4 percent. He asked Mr. Denison to explain the discrepancy. Mr. Denison asked if Mr. Goldwater was referring to the projection for the 1999-2001 biennium and Mr. Goldwater indicated he was. Mr. Denison said, looking at the Parole Board’s documents, there was an overestimation of about 80 hearings per month in the first year of the biennium. At the budget hearings in the 1997-1999 biennium he made the mistake of testifying the Parole Board’s numbers were their "best guesstimate" and that the Parole Board did not have the tools to project accurate numbers. He said that was one of the reasons he gave when he asked for a Management Analyst. The budget process was delayed while the Parole Board went to NCCD, and those were NCCD’s projections, not the Parole Board’s. Mr. Goldwater said he was not necessarily concerned with the methodology, he just wanted the reason for the discrepancy between Mr. Denison’s projections and P&P’s projections. Mr. Denison asked if he meant the number of people to be paroled and Mr. Goldwater replied yes. Mr. Denison said if the figures were within 2 to 3 percent of each other, they were pretty close since the discrepancy was between approximately 2,500 people and 2,350 people. Mr. Goldwater asked if a margin of error of 3 to 4 percent was acceptable and Mr. Denison said most polls had a 4 to 6 percent margin of error.

Vice Chair Evans said in December 1998, at some national legislative meetings, Jim Austin, who was with NCCD for many years and presented before the Nevada Legislature many times, spoke on the problem of crowded prisons. She said Mr. Austin suggested since so many parolees get sent to prison for technical violations, one of them in the realm of drug abuse, states could save themselves a lot of money and prison beds if they would put drug programs in place. Vice Chair Evans asked Mr. Denison if that sounded like a good idea. Mr. Denison said it had its good sides as well as its bad sides. He thought if they took a close look at
S.B. 416, "truth in sentencing," they would find the state made an attempt to do that with the E Category of crime, which mandated probation for drug possession. The Parole Board saw an unbelievable number of Category E probation violators. Another problem the Parole Board saw with Category E crimes was that often a many-time convicted felon would pick up a new felony that mandated probation. Then they would violate that probation 3 or 4 weeks later and get sent back to prison, then come before the Parole Board 12 months later. An example of the difference between parole rates under truth-in-sentencing and the old system was DUI offenses. There were many people in prison serving time for DUI offense. Prior to truth-in-sentencing, the normal sentence for a DUI offense was one year, and the person was eligible for parole in three months. They served their sentence, depending on where they were serving their time, in 7 to 8 months. They received almost a 100-percent denial of parole. Now, the same offender who previously completed a 1-year sentence in 6 to 8 months served a flat 12 months, with the good time coming off the end of the sentence instead of the beginning. The rate of parole for those people was extremely high, and it tilted the parole rate, which was one of the reasons the parole rate had gone up to about 50 percent. He cautioned the rate of people leaving prison under parole was really a better indicator than parole rate, because in the parole rate people were going to CS sentences and other places. People were serving more time now, even with the higher parole rates, due to truth in sentencing.

Vice Chair Evans asked Mr. Denison if he knew of jurisdictions where parole violators, if they violated parole because of a drug offense, were redirected in to a to learn that information. The Parole Board had their mandatory training scheduled for February 1999. Four hours of that training would be the Parole Board touring places they were sending people and talking to those people to find out what was being done with the inmates and what the people running the programs thought about the programs. The Parole Board had been sending people to various programs for years and to the best of his knowledge, this was the first time they were actually going to look at the programs and talk to the program administrators and the professional working in the programs.

Ms. Giunchigliani asked Mr. Denison to break down the numbers of how many people he was talking about when he referred to the parole-leaving rate. Mr. Denison said it was 23 percent; 1 percent of 10,000 represented 100 people, so it was around 2,200.

There being no further business to come before the committee, Vice Chair Evans recessed the hearing until 1:30 p.m.

CONSERVATION AND NATURAL RESOURCES - BUDGET PAGES CNR – 1-147

Vice Chair Evans stated a number of committee members would be absent due to new member orientation which was taking place during the week and they would be coming in and out of the committee meeting. Since the committee was not taking action on any items it was acceptable to continue with less than a full complement. Vice Chair Evans announced the committee would address Department of Conservation and Natural Resources budgets and asked Mr. Pete Morros, Director, to begin testimony.

Mr. Morros introduced himself as the Director of the Department of Conservation and Natural Resources and introduced some new division heads of the department. He remarked that Lewis Dodgion and William Molini had both retired and their successors were present. The Division of Environmental Protection would be run by former Deputy Administrator Allen Biaggi, and Terry Crawforth, former Deputy Administrator, Division of Wildlife, would administer the division. Mr. Morros then introduced Freeman Johnson, who had worked in the Department of Personnel, where he was formerly Chief of Technical Services since 1987. Mr. Morros noted his department was able to hire Mr. Johnson as Assistant Director due to the funding made available by the 1997 legislature. Mr. Johnson would be primarily responsible for personnel management within the department and, along with other duties, had administrative oversight of the combined air operations of Wildlife and Forestry Divisions. Mr. Johnson had also worked with the Wild Horse Commission and assisted them with the development of the Wild Horse Plan.

Vice Chair Evans thanked Mr. Morros for the introductions, welcomed the new department staff and asked the Director to proceed.

Mr. Morros identified three handouts (Exhibits G, H and I), to which he would refer, and noted Exhibit G dealt with new positions in the entire department, which he

would address. He told the committee the individual administrators of the different divisions would be willing to respond to specific questions about the responsibilities of each position.

Mr. Morros indicated the department had a legislative mandate in two areas, one of which was the state water plan, which would be completed and submitted to the legislature by the required date, April 1, 1999. There was also a statewide wild horse management plan that would be sent to the printing office Wednesday, January 27, 1999 or the following day. The due date on the plan was March 1, 1999, but the plan would probably be given to the committee during the first 2 weeks of February. The third item to be addressed was the Tahoe Improvement Program (Exhibit I). Pam Wilcox and representatives from Tahoe Regional Planning Association would go into more detail on that particular program. Mr. Morros noted that the three items he discussed were addressed in more detail on the handout "Legislative and Administrative Priorities" (Exhibit H). Mr. Biaggi said he would not review the other legislative priorities designated in the handout unless there were questions.

Mr. Morros said the Department of Conservation and Natural Resources was engaged in some activities which could create rumors he would like to dispel. The possibility of creating an administrative services division within the department was being discussed, which would bring all financial and accounting matters together within one division. That matter would not be brought before the legislature during the 70^th session since it was going to be worked on during the next 2 years, but could possibly be considered at the 71^st session. In addition, the location of department offices would not be brought before the 70th session. Mr. Morros remarked that all divisions within Carson City were in leased space, and as the department expanded, he had to relocate divisions out of the previous situation

where all of his staff was under one roof. The divisions and staff were spread all over town. Continuing, Mr. Morros said he was in the process of talking with a developer who was planning on building an office building and parking garage across the street from the Legislative Building on the block where Jack’s Bar was located. Mr. Morros would continue to discuss the possibility of locating the entire department in that office building. Included in that discussion would be an evaluation of whether to move the Division of Wildlife main offices from Reno to Carson City. Additionally there was a possibility of moving the Region One offices of Wildlife from Fallon to Reno into the facilities the main office of Wildlife presently occupied. Mr. Morros reiterated these issues would not be brought up during the 70^th session, but would possibly show up during the following session.

Mr. Morros directed attention to the handout titled "Summary of New Positions and Other Changes to the Salary Category." The Director’s Office was asking for two new General Fund positions; an Account Tech II and an Account Clerk I for the Division of Forestry primarily associated with the workload in the Elko area. Mr. Morros said both of the positions were workload driven. There was a General Fund position, a Fire Control Dispatcher for the northern region, which would be located in Elko. In addition, a new dispatch center was being built there as a result of the funding approved during the 1997 Legislature. Mr. Morros said there was an aircraft mechanic position, one-half of which would be General Fund and one-half of which would be supported by the Division of Wildlife. Mr. Morros indicated the department did not anticipate any impact on the General Fund from adding the mechanic position. He clarified even though the position was a General Fund position, the department would not be expending funds it had expended in the past for outside contractual maintenance services. He explained it would be a wash as far as the General Fund went. Forestry was also requesting three new crew supervisor positions from the General Fund for the expansion of the Silver Springs

Camp. Mr. Morros indicated Roy Trenoweth from the State Forestry Division would address specific questions about the Silver Springs Camp.

Mr. Morros moved on to page 2 of the handout Exhibit G because there were some funding changes to existing positions that would affect the General Fund. There was a water planning position, Program Assistant III, for which the department wanted to convert 50 percent to the General Fund. The A.B. 198 grant program had funded that position in the past, and Naomi Duerr, the State Water Planner, would take questions concerning that position. There was also a .6 FTE Land Agent II position in the Division of State Lands, which was currently funded from the non-General, .4 FTE making the position full time. This full-time position would add 40 percent to the General Fund. Mr. Morros said that was pretty much the thrust of the new General Fund positions recommended in The Executive Budget. In addition to those positions there were some seasonal positions which were also General Fund. A little over three-and-a-half seasonal position in total were recommended. Three of those would be crew supervisors for the Honor Camp Helicopter Crews and six-tenths of a position would be a seasonal forester mainly for work in the Tahoe Basin.

Mr. Morros said the non-General Fund positions were pretty well described. The Environmental Impact Program in the Lake Tahoe Basin would be the subject of four positions, one position each for the Forestry, Lands, Parks, and Wildlife departments. Two of the positions would be funded by the DMV Pollution Control funds, which Mr. Morros understood had already been touched upon by the legislature. He indicated there would be some companion legislation proposed to accomplish that. The Environmental Scientist III position for the Division of State Lands would be 100 percent funded out of the interest earned on the Tahoe Bond’s interest. The Wildlife Biologist III position would be funded 25 percent Tahoe

Bond’s interest and 25 percent federal funds. Forestry was requesting two fire captains and two fire fighters that would be funded out of county budgets. In addition there was the one-half aircraft mechanic position that Nevada Division of Wildlife (NDOW) would be responsible for. Also there were approximately seven Division of Wildlife positions which would be funded through federal aid and boating and/or license fees from the division. Mr. Morros indicated Terry Crawforth would be happy to take questions on those positions. The only other seasonal position was the Washoe Nursery position in Washoe Valley, which would be funded out of proceeds from the nursery.

Mr. Morros observed he had covered the funding changes for the director’s office and indicated the only other expense the director’s office would incur was related to computer equipment and data processing requests. The office needed to address the Integrated Financial System (IFS) Hardware compliant issues, replace a telephone system which was not year 2000 compliant, and replace a broken fax machine.

Vice Chair Evans noted there were some capital improvement projects (CIPs) in the department which needed to be discussed and asked whether Mr. Morros wanted to talk about the CIPs at that point or have the various chiefs talk about them later. Mr. Morros answered although he did not have the information in front of him, he could talk about them. The department had a proposal for a new building in Elko for the Division of Wildlife headquarters and shop complex. There would also be limited State Park staff located there. Mr. Morros was not sure, but believed three employees would be located in the new building. The rest of the employees would be strictly NDOW employees. Mr. Morros went on to explain employees in Elko were not housed in one location. Half of the employees were downtown in a building Mr. Morros felt was a firetrap. The existing building belonging to NDOW was located on the Mountain City Highway. The department proposal was to sell that property and use the money to offset the costs of the new building which would be located at the eastern end of town close to the forestry complex. There would be no land cost involved since the department already had the land. There were also other sources of additional funds; the wildlife boat account, hunter education and some other sources which Terry Crawforth could better address.

Mr. Morros declared the bottom line was the proposed building cost of a little over $2 million. The department was prepared to raise approximately $1 million through non-General Fund sources and the sale of the existing property where the Wildlife Headquarters was currently located. In Minden, there was an expansion of the dispatch center, around $150,000 for some additional work at the center to handle the additional workload which had developed. The workload was related to fire suppression activities. There were three projects associated with the conservation camps involving warehouse and shop expansions. The proposal was for approximately $536,000 to cover all three of those projects. That cost would be for materials only, since the department would use Honor Camp labor to construct those projects. The department estimated it had the potential to save at least $500,000 on labor.

Vice Chair Evans asked to which three camps was Mr. Morros referring. Mr. Morros responded they were looking at Tonopah, Ely and Indian Springs. Mrs. Cegavske then asked if the fees for boating would be raised, referring to the federal assistance license fees mentioned in Exhibit G. Mr. Morros replied he was not aware of the license fees being raised and asked Terry Crawforth to confirm that, which he did. Mr. Morros reiterated the department did not anticipate any increase in fees, and the necessary funding would come from existing monies which were available in those accounts.

Senator Neal asked Mr. Morros to indicate what part of the budget involved water permits. Mr. Morros replied it was in the State Engineer’s budget. Senator Neal asked if that did not come under the Department of Natural Resources and Conservation. Mr. Morros answered the money collected as a result of fees charged were deposited to the General Fund. Senator Neal then if the department collected those fees. Mr. Morros responded the Division of Water Resources did collect the money but it was all deposited to the General Fund. Senator Neal asked if Mr. Morros was saying that the money would not be a part of the department budget. Mr. Morros clarified the department did collect the fees and deposited them to the General Fund as required by law. The department then submitted the budget, and those monies offset the costs of the operations of the agency. Senator Neal asked if the budget showed the number of permits that were issued or were in existence. Mr. Morros responded Mike Turnipseed, State Engineer, would be in a better position to answer that question.

Mr. Morros addressed the jet mechanic position, saying the department felt it could save money by having its own in-house mechanic since it was necessary to ferry aircraft into California to have maintenance work done. The cost, downtime, and travel cost, was such the department could save money by having most of the repairs done in-house.

Vice Chair Evans called Allan Biaggi, Administrator of the Nevada Division of Environmental Protection, to testify.

Mr. Biaggi stated the mission of the Nevada Division of Environmental Protection was to protect and enhance the environment of the state consistent with the public

health and enjoyment, the protection and propagation of terrestrial and aquatic life, the operation of existing industries, and the pursuit of agriculture and economic development of the State of Nevada. To do this, Mr. Biaggi explained, the division consisted of 177 full-time positions located in two offices, one in Carson City and one in Las Vegas. The budget consisted of five accounts: 3173 administrative services; 3185 air pollution control; 3186 water pollution control; 3187 waste management, corrective actions, and federal facilities; and, 3188 which was a new budget account for the division funding the Bureau of Mining Regulation and Reclamation.

Mr. Biaggi also discussed the State Environmental Commission which was included in Budget Account 4149. He said the total budget for the division totaled $21.1, in each year of the 1999-2001 biennium, which did not include other assistance programs such as the petroleum fund or the state revolving loan fund. The revolving loan fund would include another $18 to $24 million. Mr. Biaggi stated federal funds and fees almost exclusively supported the division’s programs and for the biennium no positions would be requested. One small new air quality program was included which would be discussed in short order.

Mr. Biaggi said the division was asking only for modest increases in the budget in certain categories such as equipment and travel. This was due in part to three major issues which Mr. Biaggi identified. The first was the uncertainties present in the fiscal stability of the hazardous waste fund in light of the continued long-term operation of the Beatty hazardous waste landfill. This landfill provided the majority of fees into the fund. Second, there were either stabilized or shrinking federal grants in certain programs such as the division’s air and water programs and underground storage tanks. Lastly, Mr. Biaggi identified the need to revise and revisit the fee structures in some of the division’s programs. Mr. Biaggi indicated in fiscal years 2000 and 2001 there would be a focus on having a greater field presence in more of their programs. The division proposed a computer replacement schedule of 25 percent and, to the best of their knowledge they were year 2000 compliant.

Mr. Biaggi went on to discuss Budget Account 3173, the administrative unit of the Division of Environmental Protection. This budget supported the Office of the Administrator, fiscal operation, and personnel services. The budget also supported the regulatory assistance program which included the ombudsman, and the small business assistance program. The Administration Budget was not associated with any single program, but instead supported the services and activities of the entire agency. The agency had a very complicated mix of federal and state funding so it was critical the agency had a strong administrative unit. The budget supported 21 employees, 3 of which were computer specialists who were being transferred in from the Waste Management Budget. Mr. Biaggi explained the Administration Budget was funded through an indirect cost rate of a 25 percent assessment of salary and fringe of all of the division’s other budget accounts. This account also included the support for two deputy attorneys general who provided legal assistance to the agency. There was also a significant challenge over the next 2 years, which was to continue to maintain the fiscal accountability of the state and federal revenue sources and associated expenditures.

Budget Account 3185 was the Air Quality Budget, and was responsible for maintaining levels of air quality within the state to protect human health, prevent injury to plant and animal life, prevent damage to property, and preserve scenic, aesthetic, and historical values of the state. To accomplish that, the program would conduct permitting, enforcement, monitoring, encourage the use of alternative fuels, and conduct planning activities. The air program had a staff of 30, and would not regulate air quality in Clark or Washoe Counties. By statute these counties operated their own programs through the health districts. Mr. Biaggi noted the division did regulate fossil-fuel fired, steam-powered generation units in the two counties.

Mr. Biaggi explained currently the division had 461 facilities which were permitted, and operated 21 air quality monitors throughout the state. Funding was from fees, federal grants, and a revenue transfer from the Department of Motor Vehicles Pollution Control Account Fund. One of the major issues the division would face in the next 2 years, which they had dealt with in the previous year, was prescribed fires from federal land management agencies. The division wanted to insure a coordinated system of fire management to make sure those activities would not impact Nevada’s communities, in particular those along the eastern front of the Sierras. Decision unit M590 recommended funding to implement the new regional haze program which was federally mandated and would be supported by federal funds. That program dealt with visible air quality impacts to Class One Areas which include national parks, wilderness, and other designated areas.

Mr. Biaggi introduced Budget Account 3186, which encompassed the Water Pollution Control and Water Quality Planning Bureaus whose mission was protection of the surface and ground waters of the state. Activities in those programs included permitting of discharges to surface and ground waters, subdivision reviews, training and outreach of rural and treatment plant operators, a laboratory certification program, enforcement, inspections, the state revolving loan fund, sampling, planning well-head protection, and the control of non-point source pollution. The division permitted 650 facilities with facility-specific permits and had three general permits in place, which covered another 1,062 facilities. Staff saw a focus in upcoming years on ongoing review of water quality standards in the state’s surface waters. The bureau finished the Lake Mead and the Colorado River reviews and would proceed to work on the Walker River in the following year. The division would also continue to provide funds to local, urban, and rural governments, conservation districts, and cooperative extensions for control of non-point source water pollution. The state revolving loan fund provided below-market loans to municipalities for wastewater treatment facility construction. In 1999 approximately $16 million would be available for those activities. This budget included 38 positions and a major change to the account. The Bureau of Mining Regulation and Reclamation was transferred to Budget Account 3188 through a transfer decision unit E900. The purpose of the change was to simplify the budget account in terms of budget preparation and tracking. Mining was a stand-alone program consisting solely of mining fees and this was a good opportunity to move the program to its own budget account. Mr. Biaggi reiterated no new programs or positions for this budget account were anticipated.

Mr. Biaggi stated budget account 3187 was the largest account in the division, encompassing three bureaus; waste management, federal facilities and corrective actions. Tasks within the budget were wide ranging and included oversight of Department of Energy and Department of Defense operations, the development of innovative cleanup technologies, reutilization of the Nevada Test Site, hazardous and solid waste management and encouragement of recycling activities in Nevada. Also included were permitting, enforcement, the oversight of environmental cleanups, the operation of the State Petroleum Fund, consultant certification, underground storage tanks and the operation of the chemical accident prevention program. This program was the focus of 10 bill draft requests (BDRs), which would be the focus of the 70^th Legislature, as a result of the findings of the Clark Commission and the explosion of the Sierra Chemical Facility in Northern Nevada. Staff within this budget account totaled 67 full-time employees. Mr. Biaggi pointed out the division was regulating 2,400 generators of hazardous waste, 50 transporters of hazardous waste, 17 treatment storage and disposal facilities, 22 municipal landfills, 35 facilities subject to the chemical accident prevention program, 3800 underground storage tanks and 130 ongoing environmental cleanups. Mr. Biaggi reiterated no new programs or positions were being proposed and noted this budget account was fully fee and grant supported.

Senator Raggio brought attention to the underground storage tank issue and the fact a number of service stations had closed since they had not been able to comply with the federal requirements by December. He asked Mr. Biaggi to enlighten the committee on what the situation was, how it was created, what problems existed and what caused this to happen to these service stations. He added he had received calls from people inquiring about this issue and would like to be able to better respond to them. Mr. Biaggi replied the federal government, specifically the Environmental Protection Agency, approximately ten years prior, created the underground storage tank program. The Environmental Protection Agency put into motion the regulation, requiring the upgrading of underground storage tanks over a ten-year period to comply with some new technical requirements concerning tank construction and operation. December 22, 1998 was the deadline of that ten year period, in which there was seen a gradual decline in facilities, consolidation in some cases, as well as some facilities going out of businesses or putting in above ground storage tanks in order to comply with these requirements. Mr. Biaggi said the big push really came in 1998 when the deadline approached and a number of facilities conducted those upgrade activities. Mr. Biaggi said he was happy to report Nevada had one of the highest compliance rates in the in terms of compliance, with a 10 percent non-compliance rate at that point. Mr. Biaggi attributed this achievement to the efforts made by the division to work with the underground storage tank owners and operate their outreach efforts over the previous ten years, and the responsiveness of business and industry to those requirements and mandates.

Senator Raggio asked if Mr. Biaggi had any idea how many service station ceased operations due to the requirements.

Mr. Biaggi recalled when the program was first up and running the number of underground storage tanks in the state was between 5000 and 6000. Mr. Biaggi indicated the present number was around 3800. The difference represented the number of underground service tanks taken out of service. This number did not represent the number of facilities that went out of operation since some of them probably consolidated underground storage tanks, or put in above ground storage tanks, and some obviously went out of business. One of the issues the division was very concerned about in the program was what they called the "last lonely gas station." This term applied to underground storage tank facilities in very small communities such as Rachel, where that tank was the only gasoline available for many miles. The Division wanted to continue to have these facilities in place in these communities, and would work with the communities and industry to insure these facilities remained in business and stayed compliant.

Senator Raggio knew the facility in Denio was closed as a result of this program and asked if financial aid was available for people to draw from. Mr. Biaggi replied the Senator could have been talking about the State Petroleum Fund, which was in place with the intent to provide reimbursement for cleanup activities, which were very expensive. There was not a financial grant or loan program in the State of Nevada for upgrades though. People had to go out into the private sector to seek funds to upgrade storage tanks. Senator Raggio noted some years ago there was a backlog dealing with those water applications. He added the legislature authorized additional personnel and inquired as to the current level of backlog on those kinds of applications. Mr. Biaggi said he did not believe there was a backlog for those applications or for getting the permits out. The legislature did grant some new positions to catch up on that backlog, which was done. Senator Raggio asked what the lag time was between when an application was turned in to when the division was able to act on it. Mr. Mr. Biaggi responded it depended on the complexity and type of permit. The division issued two types of water and discharge permits, one a National Pollutant Discharge Elimination System permit which was a federal permit to surface waters, the other a state discharge permit to groundwaters. There were also requirements for public notice and meeting for the federal permits, and EPA review. Mr. Biaggi thought the lag time was approximately four to six months total to issue a permit, assuming no information or technical details were missing from the application.

Mr. Goldwater followed up by asking if there was a dispute over who was supposed to be paying for the cleanup, the franchisee or the franchiser. He asked if this was currently or had been an issue. Mr. Biaggi responded the issue did come up but was specific to each individual case and was not a global issue associated with environmental cleanups. He noted often times with major oil companies, for example, the companies were a franchise operation. Sometimes disputes would occur between the owner of the property, the operator and the franchisee.

Mr. Biaggi returned to discussing the Waste Management Budget, and stated there was a transfer of solid waste fees previously funded by the hazardous waste management fund. Additionally three staff from this budget account from the Office of Information Services were being transferred to the Administrative Budget. The major focus of this budget for the next couple of years would be the continued evaluation and cleanup of groundwater underlying the Las Vegas Valley. The division was also proposing the continuation of $500,000 for the Environmental Mitigation and Restoration Fund. These funds were used only in emergencies and allowed the division to go out and address an emergency environmental situation as it existed. The division used these funds in 1997 during the flood in Northern Nevada when they captured drums of chemicals out of the Carson and Truckee Rivers. Ultimately those funds were reimbursed back to the agency.

Mr. Biaggi noted Budget Account 3188, was the new Mining Regulation and Reclamation account. This program regulated the mining industry for the protection of groundwater, terrestrial and avian life, and restored mines to a post-mining productive land use after the mining ceased. Funds from this program were transferred from the Water and Mining Budget via an E900 decision unit. The mining program regulated 185 facilities in the water pollution program and 200 in the reclamation program. There was over $500 million dollars jointly held in financial instruments with federal land management agencies to insure that reclamation at these facilities was accomplished after mining was terminated. Mr. Biaggi reiterated the program was 100 percent fee funded by the mining industry, and supported 18 positions. Mr. Biaggi observed the low precious metals prices in existence created a major issue for this program. He noted a number of facilities had either declared bankruptcy or potentially walked away from the sites. Also, it took a lot of agency and legal resources to address these issues. To date there had not been any major catastrophes and the agency made it a priority to stay on top of the issue for the next couple of years. Mr. Biaggi anticipated this would continue as long as precious metal prices remained in a depressed state. The division was also proposing a contractual fund of $300,000 much like the environmental litigation program to address mines under bankruptcy or where the owner and operator had walked away from the site. The fund was designed primarily for the division to take over the site and conduct fluids management to make sure there were no spills or releases from the site. Once the site was stabilized, the division would look for other avenues for operation of the facility. Mr. Biaggi emphasized those funds would not be expended unless they were absolutely needed. This funding also had the support of the mining community.

Mr. Biaggi addressed Budget Account 4149, which supported the State Environmental Commission. The commission was an 11-member body tasked by the legislature to ensure there were acceptable air, water, and waste programs in Nevada. This body heard contested cases through appeals through the division’s enforcement actions and was the regulation-setting body for environmental issues for the division. The budget account also included the Air Quality Compliance Advisory Panel, which was required under the Air Amendments of 1990. The major expenses in this budget account were per diem and travel for commission members. The commission met as a full body about four times a year in panels that consisted of three members who heard appeals and hearings. Funding was a mix of air quality funds, Department of Motors Vehicles (DMV) funds, hazardous waste, and petroleum funds. Mr. Biaggi said he would be happy to answer any questions the committee might have.

Mr. Price said he remembered there being controversy over the monitor located at the Five-Points Down, where the Charleston and Eastern Rivers came together. He asked if that controversy had ever been resolved. Mr. Biaggi answered it had been resolved and the concern had been the monitor was improperly sighted, and was recording unusually high CO2 levels in the Las Vegas Valley. The Clark County Health District, which was responsible for monitoring air quality in Las Vegas, along with federal EPA, revisited the location of that monitor and moved it to another location which, was acceptable to everyone involved. Mr. Price asked about the Beatty dumpsite and inquired if the original dumpsite had been closed. Mr. Biaggi responded the radiation site of the facility was closed but the hazardous waste site was still open. Mr. Price said he and Jack Regan were in a meeting with the United States Ecology people, where a man stated they were putting some of the same materials that had, at one time, been officially hazardous materials, in Beatty, but were now building a new site with a changed legal description. Mr. Price asked Mr. Biaggi if any of this rang a bell with him. Mr. Biaggi replied no. He went on to say the Beatty landfill was a fully permitted hazardous waste facility that could take care of hazardous waste. Mr. Price asked if this included radiation. Mr. Biaggi said no. Previously there was a radiological site to that facility that accepted radiological waste. That site was closed and the only still operating was for hazardous waste. Mr. Price said his impression was that somewhere along the line they had redefined what level of radiation would meet the standards, and they were putting matter into the new dumpsite that previously would not have been allowed.

Ms. Giunchigliani brought up the issue of the recommendation that would be coming from the Southern Nevada Planning Authority regarding diesel fuel. She asked what impact if any this would have on the budget and the regional haze. She asked if diesel fuel was a contributor to the haze and what other factors contributed to it. Mr. Biaggi said he thought Ms. Giunchigliani was referring to sulfur diesel fuel, which was something the division was continuing to work on with the Clark County Health District. Mr. Biaggi did not know what impact if any this would have on the division’s budget. He thought there would be more of an impact on the industry by the cost of diesel fuel in order to have the sulfur removed from the fuel supply. Some of the other contributors to regional haze included dust and particulate matter, which probably had the biggest impact in Las Vegas. This came largely from unpaved roads, and areas where the vegetation and soils had been destroyed and denuded, which led to a lot of dust being kicked up by wind.

Ms. Giunchigliani noted there was a budget category that dealt with a mobile unit for fires and construction sites. She asked if that was in rural or urban areas, or both. Mr. Biaggi was unclear as to what she meant by mobile units. Ms. Giunchigliani clarified, a new utility van to facilitate the utilization of mobile air pollutants. Mr. Biaggi said it was a sampling van, which the division could put monitors in and took to locations where they wished to monitor air quality. Ms. Giunchigliani asked if the division had directives they could issue to local jurisdictions if they were in a non-containment area, or if this was up to the federal government to do. Also, were there any incentives at the State that they could give to local governments to keep the particulates down. Mr. Biaggi replied, by statute the two large counties, Clark and Washoe, operated their own air quality programs largely independent of the State of Nevada. They received their delegation directly from federal EPA, as did the division from the state. There were activities that were coordinated between the two counties, particularly dealing with mobile source and vehicle emissions. For the most part though, those jurisdictions operated their own programs independent of the state.

Senator Neal asked Mr. Biaggi if his team was doing any work at the Nevada test site. Mr. Biaggi replied they were doing extensive work at the site. Also, the majority of the Las Vegas staff was charged with overseeing environmental activities, both chemical and radiological, at the test site.

Senator Neal asked if Mr. Loux was working under Mr. Morros. Mr. Morros said no and Senator Neal remarked there seemed to be a high degree of compatibility between the two jobs. Mr. Biaggi said the division’s activities were on the Nevada test site proper with regard to the disposal activities and the nuclear testing that occurred. Mr. Loux dealt exclusively with Yucca Mountain and the nuclear repository, which were very different issues. Mr. Morros reiterated there was a distinct line of separation between the two jobs.

Senator O’Connell asked if Mr. Biaggi could tell the committee a little about the appeals and hearings process. Mr. Biaggi said actions by the Division of Environmental Protection could be appealed to the State Environmental Commission, which would usually hear the appeal as a three-member panel. Any decisions made by the State Environmental Commission could then be further appealed to District Court. The commission had the authority to uphold an action, deny an action, or modify it. Senator O’Connell asked how informal, if at all, the hearing process was. Mr. Biaggi said the process was relatively formal, with a transcription made. There was a process and procedure of witness testimony and questioning the witness for both sides, so that the appeals hearing was run much like a court proceeding. Attorneys for the division as well as those for the Environmental Commission and defendant were present. Senator O’Connell asked who paid for the hearings. Mr. Biaggi stated the cost for operating the hearing was paid for by the State Environmental Commission. Senator O’Donnell asked Mr. Biaggi if the division had any reserve accounts. Mr. Biaggi responded they had a number of special funds, such as the hazardous waste, solid waste and air quality funds. These funds all had varying funds in them at one time. Senator O’Donnell asked if Mr. Biaggi could tell him the balances in those accounts and Mr. Biaggi told him he could get him that information. Mr. Morros added the Division of Environmental Protection was almost wholly non-General Fund supported. A very small percentage of their operation, approximately one percent or less, was General Fund supported. Senator O’ Donnell said the committee liked to track those numbers to make sure the fees were not exorbitant or even less than they should be. Mr. Biaggi said he appreciated that. He went on to say in the Mining Regulation and Reclamation Program they had a scaled fee structure where the fees would go up over time. In 1998 the division recognized their fees were more than adequate to cover their costs. Realizing this the department went to the Environmental Commission and asked that those fees not be increased that year in order to draw down the accounts and make sure they were not impacting the regulated community to a significant degree.

Ms. Giunchigliani asked what impact the situation in the southern part of the state with Lake Mead water had on the water quality budget. She thought the State came down and did the testing and reviews on that. She asked if this was reflected anyplace or if this was anything the state needed to plan for. She thought there was some cleanup of amoebas that would have to occur, but could not remember specifically. Mr. Biaggi replied the budget took into account sampling efforts and ongoing monitoring for Lake Mead and for the other surface waters throughout the state so it was accounted for in the budgets.

Vice Chair Evans excused Mr. Biaggi after no more questions were asked.

Mr. Morros introduced Mike Turnipseed and told the committee Mr. Turnipseed was the person who could answer the previous question about water permits.

Mr. Turnipseed, Nevada State Engineer introduced himself and said he was responsible for the state’s water resources and enforcement of the Nevada Water Law, with the exception of the Colorado River. That included adjudication of
pre-statutory water rights, appropriation and changes of existing water rights, licensing of well drillers and water right surveyors. It also included the Dam Safety Program in the State, both on repairs and construction of new dams, as well as inspection programs for existing dams. Mr. Turnipseed added there were no new programs in the budget, and no new personnel requested. He went on to say he caused a lot of litigation in the state, although he did not initiate it. Mr. Turnipseed stated he had anywhere from 40 to 60 lawsuits against him at any time during the year. In the last two years the department had published the final order of determination of all of the water rights in the Monitor Valley. He added there were many contentious issues in that adjudication, including reserve rights for the Forest Service for stock water, reserve rights for the Bureau of Land Management (BLM) for public reserves, and reserve rights for the Forest Service for administrative sites. Those would all be appealed to the district court and, Mr. Turnipseed thought, to the Nevada Supreme Court. There were major federal interests involved. The department had just completed the adjudication of the Las Vegas Basin, including all of the underground and surface rights in the basin. Mr. Turnipseed said that one adjudication had been concluded and the final order filed with the court. Objections were filed, hearings held, and all of the issues had been resolved. That one would be taken to the Nevada Supreme Court. Mr. Turnipseed stated recently he had issued rulings on the unappropriated water on the Truckee River, which generated about 8 appeals, 4 in each case. The department was arguing all of those belong in state district court to preserve state sovereignty and primacy in administering its own waters.

Mr. Turnipseed said on the other hand, they had many appeals on change applications within the Truckee/ Carson irrigation district, where Mrs. de Braga was from, as well as change applications within the Truckee Meadows for Sierra Pacific Power Company. Those had been appealed to the state district court and were removed to the federal district court. Those cases were headed for the 9^th Circuit Court of Appeals. Mr. Turnipseed added the stock water bill which was passed by the legislature in 1995, and then clarified by an attorney general’s opinion, received in 1997. Mr. Turnipseed issued a ruling on 9 applications in Douglas County, which denied stock watering rights to the Bureau of Land Management. This went on appeal to the state district court, where the department prevailed, and then to the Nevada Supreme Court. The department would have a conference with the settlement judge under the new rules, which stated all appeals to the Nevada Supreme Court must first be heard by a settlement judge. There would be no opportunity to settle in that case as all of the issues were purely constitutional and legal in nature. Mr. Turnipseed offered no bills for the 70^th session, but he said there were somewhere between 24 and 26 that would be on the Bill Draft Request (BDR) list, which he would be tracking. Mr. Turnipseed said he believed Senator Raggio’s earlier question to Mr. Biaggi might have been directed toward him. Mr. Turnipseed then said several sessions ago the legislature gave the department additional people to address the backlog in water applications. At that time Mr. Turnipseed was required to report to the legislature or Interim Finance Committee (IFC) quarterly as to how he was doing on the backlog. Mr. Turnipseed said he was happy to say they were taking action on between 200 and 300 more applications than were being reviewed. They still had a significant backlog, but one which had been reduced from in excess of 4000 applications to slightly over 3000 applications. Mr. Turnipseed concluded by saying he would take questions.

Senator Neal asked if Mr. Turnipseed could tell him how many water permits the Southern Nevada Water Authority had filed outside its own county. Mr. Turnipseed replied in 1989 the then Las Vegas Water District filed 146 applications to appropriate groundwater. About three of them were in Clark County but not in the Las Vegas Basin. The balance of them were in Nye, Lincoln and White Pine Counties. Mr. Turnipseed said they withdrew 20 or 21 of those applications in environmentally sensitive areas. These applications were in Pahranagat Valley, about half of the applications in Lake Valley and Jakes Valley, west of Ely. One of the applications was for service water out of the Virgin River, which Mr. Turnipseed held hearings on and issued a ruling on in 1995. There were no appeals taken at that time. Mr. Turnipseed said the applicants had the right to take an average of 190,000-acre feet out of the Virgin River and a maximum of 300,000-acre feet in any given year. The Virgin River, Mr. Turnipseed said, went through wide swings in supply, even as high as tenfold its lowest levels. The remaining applications, numbering around 120, were still sitting in the department files waiting to go to hearing. The applicants had to prove there was unappropriated water in the source, that it would not interfere with existing rights, or prove to be a detriment to the public interest. Senator Neal asked if Mr. Turnipseed had approved around 23 applications. Mr. Turnipseed replied they had approved one for the surface water, and that the applicants had withdrawn about 20 or 21. Mr. Morros added these applications were being held in advance, at the request of the applicant who asked that no action be taken. He said he thought this was because the applicant wanted to fully evaluate the possibility of additional water supplies out of the Colorado River before they tried to take on the importation project. Mr. Neal asked what happened when an application was held in advance and if anyone could come in and file another permit. Mr. Turnipseed said the 1991 legislature allowed him to jump over their permits and issue a permit in the basin if it was not
over-appropriated and over-pumped. In other words, if there was unappropriated water there, but they had yet to exercise those applications, Mr. Turnipseed could then approve a permit in the basin for a temporary specified period.

Mr. Turnipseed took a closer look at the backlog, saying there were many applications in the 3000 that were currently filed which the division could not act on. For instance, the stock water ruling addressed nine applications, but there were 90 others waiting for a ruling in the Supreme Court. There were also 200 or 300 applications for desert land entries and Kerry Act applications that were either waiting for the Bureau of Land Management or some other agency to make a determination on whether the land was eligible for entry. The division also had several other groups of applications, which were awaiting some kind of ruling out of the district court or the Supreme Court.

Mrs. de Braga asked if water rights on the Virgin River were being exercised at that point. Mr. Turnipseed replied no, and said the application had been permitted. The testimony the division heard when they held a hearing included a diversion, pump to storage offstream, and a pipeline to Las Vegas. Obviously it was much cheaper to let that water flow into Lake Mead and pick it up at the Saddle Island pumping station. Under the secretary of interior’s rules, once that water hit the mainstream, it was considered Colorado River water to be divided up among all of the states. Before the water could be run through Lake Mead, there would have to be a change of rules by the Secretary of Interior. Mrs. de Braga said her understanding was there was a certain time of year, possibly in the spring, where there was a huge flush of water that actually was not used. She asked if this new plan would be specific to a time or place where it was diverted. Mr. Turnipseed replied the permit would be approved for an eight or nine month period. The summer flows were very salty, and were the lowest flows. These waters could not be put into the drinking water system. Also, a certain amount of water had to be left in the Virgin River for environmental and wetland uses of that water as it entered Lake Mead. The secretary of interior chose only to appropriate that water on a seasonal basis.

Senator Neal inquired how Lake Bellagio would get approved. Mr. Turnipseed responded prior to the Bellagio being built, the Dunes casino and golf course were there. There were groundwater rights issued to the Dunes many years back, perhaps as long ago as the 1950’s or 1960’s. When the property was purchased, the groundwater rights for the Bellagio came from the rights that were there for the Dunes. As to the lakes, Mr. Turnipseed said he knew there were ordinances and legislation passed by the legislature dealing with artificial lakes. Mr. Turnipseed observed there was actually less water being used in the lake and in the Bellagio hotel than was consumed by the Dunes casino and golf course. These were water rights for the Dunes to sell and they sold them.

Senator Coffin said the water rights situation was a little more complicated than that. He said the Dunes was pumping potable water way down into the water table, so the Bellagio could use these rights. He thought the Bellagio was using water just below the surface in the non-potable category. Mr. Turnipseed replied he knew this to be true of the Mirage and Treasure Island, which pumped shallow ground water that was very high in salt. They then treated this water so they could use it in the volcano and the lake where the battleship was located. Mr. Turnipseed did not know if the Bellagio was using this kind of water for its lake but said it was possible. Mr. Turnipseed said for example, drinking water quality was 500 parts per million, primary standard and 100 parts per million secondary standard. The shallow groundwater in that area was around 6,000 parts per million salt.

Senator O’Donnell asked if Mr. Turnipseed was issuing any permits out in Jean yet. Mr. Turnipseed responded the division had been very careful in Jean. There was not much recharge in Jean; he thought about 600-acre feet. Some of this was used in Good Springs and some by the Las Vegas Valley Water District to serve the Jean area. The division had an agreement at State Line where an owner had some water coming from out of state, which he treated and then reinjected his effluent water. The division gave him partial credit for that and had rearranged the credit formula a while back. It was proven a greater amount of that returned to the groundwater to be used. The division had assessed around a 20 percent seepage and evaporation loss to his injection ponds, and the owner showed them it was less than that.

Mr. Morros introduced the Water Planning budget (Exhibit J) and Naomi Duerr, the administrator for the Nevada Division of Water Planning, introduced herself. She stated the division’s mission was to provide technical, financial, and education assistance, and information to decision-makers, agencies and the public about the state, regional, and local water supplies. There were ten staff, budget accounts 4161 and 4155, and eight programs within the division. The largest and most well known program was the State Water Plan. The division was assisted in developing the plan by a 15-member water planning advisory board. Through this program Ms. Duerr had met with every county commission to discuss development of the water plan and held more than fifty workshops and presentations in the last couple of years. The division would be submitting the plan to the legislature by April 1, 1999. Ms. Duerr said the division also had a program on data management, which had been identified as one of the largest issues facing Nevada dealing with water resources. The division also provided assistance developing local water plans to local governments, for example White Pine, Elko, and Washoe Counties. The division started a new program after the 1997 Session where a three-person flood management program was added. Ms. Duerr referred to Exhibit K, a fact sheet on the flood management program. Ms. Duerr said the division was also responsible for doing natural resource planning for the whole department. The position was funded in the director’s office, and was assigned to Ms. Duerr’s division to head up natural resource planning for the entire state, including all areas such as water, land, forest and parks. The division had a technical committee at the division and department levels, which worked on that plan. A report would be submitted to the legislature at a later date. The division also did water shed planning, which included the Walker River Management program. During the 1997 Session the legislature added $20,000 to the Water Education Program with which the division was able to hire several contractors to provide additional Water Education Training (Project WET) for teachers. They were also able to obtain a number of new grants. Finally there were the A.B. 198 grants to small water systems program. A five-member board for financing water projects managed this program. Under this program there was $40 million to allocate to small water systems, such as Mina, Luning, Jarbidge and other small places. The division had allocated about $20 million through this program to approximately 20 applicants. In the 1997 Session the legislature increased that funding from $25 million to $40 million, which was good since the division had already reached the $25 million mark and without that funding the program would not have been able to continue. Some of the significant accomplishments the division had in the last few years included completion of the Nevada state water plans, which entailed 6 volumes and over 1,000 pages. There was a much smaller summary for the legislators to digest.

The division produced a socio-economic overview for every county in Nevada, a part of this water planning effort, which was very well received. The division also implemented the new State Floodplain Management, the Walker River Planning, and Natural Resource Planning Programs. Ms. Duerr said she knew the legislature was always concerned with performance standards, which the division was able to meet or exceed, with the exception of the natural resource plan which was behind schedule. The plan was behind schedule due to some difficulties encountered in recruiting that position, but the division was back on schedule with the program. Ms. Duerr closed by saying there were no new bills, programs or positions to propose. She added the division would be submitting a report on the natural resource plan and the state flood program in response to letters of intent the division received from the 1997 Session. Ms. Duerr reiterated the budget was basically status quo, with the division generally revenue funded, with 20 percent of the funding coming from grants. The Grants to Small Water Systems Program was 100 percent funded off bond funds. The division asked for small increases in maintenance and enhancement in order to keep up with workload.

Senator Neal said he understood there to be 243 actual requests for information and only 30 projected for 1999 and 175 for 2000. He asked what happened in 1998 to create these numbers. Ms. Duerr responded the projections for fiscal year 1999 where carried forward, and were not updated like the sheet was, so the division projected 30 for both 1998 and 1999. However, based on what the division received in 1998, Ms. Duerr expected to receive around 200 or so requests for information. Ms. Duerr said the division documented all of the requests, which varied, depending on what information people needed. Separate from those requests the division had 200 requests for information in the flood program in a six-month period. Ms. Duerr observed the committee would probably see a large fluctuation in that number.

Mr. Morros introduced the Nevada Natural Heritage program. Glen Clemmer, Program Manager of the Nevada Natural Heritage program, budget number 4101, introduced himself and testified. Mr. Clemmer said the program was responsible for maintaining a comprehensive database on the location, population status, habitats and biology of all sensitive species throughout Nevada. Nevada had one of the greatest levels of biological diversity in the United States, ranking in the top ten, with some of the highest numbers of imperiled species as well. Therefore, the division tried to maintain as much information about these species as possible, to use for various planning purposes. The division tracked 649 species in the state with over 5,500 occurrences. Mr. Clemmer referred to a summary map,
(Exhibit L), of a publication put out in June on the scorecard which summarized attempts to prioritize areas of concern. Those areas were designated based on vulnerable species, how imperiled they were, and management needs. This was done with the hope that proper conservation and more research in these areas would avoid listings in the state in the future. The division had no new programs in the budget and Mr. Clemmer was not aware of any new legislation pertaining to sensitive species. The division office in Carson was staffed with three permanent and two temporary positions. The division was requesting support for one of these temporary positions, upgrades for reclassification, computer, printing, and travel costs. Mr. Clemmer said as Mr. Morros had pointed out earlier, a transfer of funds from the Nevada Department of Transportation (NDOT) funded the one position the division was requesting be moved to permanent status. The budget office was coordinated with NDOT so there was a transfer of funds which would replace a significant portion of the general funding support for the program in that year. The department staff believed good data were essential for good planning and conflict avoidance, and in that regard believed the heritage program was an integral portion of the planning efforts of Conservation. There were no questions from the committee so Mr. Clemmer was excused.

Mr. Morros introduced Budget Account 4156, the Heal Wild Horse Bequest. Cathy Barcomb, the administrator of the State of Nevada Wild Horse Commission, began her testimony. Ms. Barcomb observed the Commission for the Preservation of Wild Horses consisted of five commissioners appointed by the governor, and consisted of one staff person, whose duties were to operate the daily function of the commission office, engaging in programs designed to promote the preservation and protection of horses in Nevada, as well as their habitat. The role of the commission was to serve as an advocate for wild horses through funding of educational, promotional and habitat programs and projects. The commission participated with federal agencies in the land use planning process to ensure sufficient habitat and viable populations. The commission also served as a clearinghouse for information to the general public and the news media on all aspects of the Wild Horse Program. The commission also coordinated with other various state and government enforcement agencies with information regarding illegal activities against wild horses. The commission operated under budget program 4156, which included various mandated programs. One such program was to write a Nevada Wild Horse plan and would be due to the legislature by March 1, 1999. The commission did land use planning on a daily basis, with approximately 500 documents a year coming through the office. The commission also published a quarterly magazine (Exhibit M), which was intended to inform the public of programs the commission was involved in, as well as the wild horse programs in Nevada to promote tourism and education for the adoption program. The commission also worked with groups nationwide to promote tourism in Nevada. Also, the commission conducted a wild horse and burro show every year, with 1999 being the 8^th year, at the Livestock Events Center to promote tourism and the adoption program. The commission was funded entirely out of interest earned from the Kyle Bequest, and received no General Fund dollars. There were no questions asked of Ms. Barcomb so she was excused.

Mr. Morros introduced Pam Wilcox and Budget Account 4151, the budget for Conservation Districts in the Division of State Lands. Ms. Wilcox described the Division of Conservation Districts as a small agency whose mission was to encourage the conservation of renewable natural resources, working through 27 locally elected conservation districts around the state. The division worked with the state conservation commission which was both a policy-making and a regulatory board, which had a staff of two professional and one clerical positions. The division was almost entirely a General Fund agency, however, and had ½ of one full-time position paid for by, and dedicated to, the Tahoe Bond Act Question 12, which was assistance for erosion control and stream restoration projects in the Tahoe Basin. This budget account had no new programs, was a status quo budget request. The only thing Ms. Wilcox wanted to add dealt with a request made during the previous two sessions, which was for a program of grants to conservation districts funded by the legislature in a one-shot bill. That program was in The Executive Budget with a grant of $5,000 for each district or a total of $135,000 in that grants-to-district program. Vice Chair Evans noted that this program was one in which the legislature got a lot of bang for the buck.

Mr. Marvel asked how the division was coming with the S.B. 40 inventory studies. Ms. Wilcox replied that program was in the Division of State Lands, and was going very well. The division did have one position working on that program full time, working with counties around the state while trying to encourage innovative approaches to working with federal land management agencies. Ms. Wilcox added they seemed to be in a period where the climate in the federal agencies was one of receptiveness to that type of approach. The program was going very well, according to Ms. Wilcox. Mr. Marvel inquired when Ms. Wilcox thought she would be ready to have something to take back to the Congress. Ms. Wilcox responded the division asked all of the counties to get back to them with their wish lists in time to present them to the 1999 legislature.

Senator Neal said he was curious as to how the division determined how soil was prevented from eroding at Lake Tahoe. He noted the division indicated a million to three million pounds figure in the division’s documents. Ms. Wilcox replied those estimates were based on soil loss equations developed by the United States Division of Agriculture Natural Resources Conservation Service. These estimates were one of the ways the division decided which of the projects to fund in the Tahoe Basin. They attempt to determine how much soil would be saved once the project was put on the ground. An estimate was done in advance when the division prioritized projects for funding, and after the project was completed the division attempted to determine if the project delivered the "bang for the buck".

Ms. Wilcox introduced Budget Account 4166 for the Nevada Tahoe Regional Planning Agency. Ms. Wilcox said the agency was the board which oversaw the provisions of the Tahoe Regional Planning Compact regarding structures, housing and gaming in the Tahoe Basin. There was a governing board which consisted of the seven Nevada members of the Tahoe Regional Planning Agency. Staff services for the program had been provided by the Division of State Lands since 1993. The budget was a status quo budget with two maintenance units. The first would allow the board to meet four times, which was its normal schedule, as opposed to the two times it met in the base year. The second maintenance unit would allow for some meetings independently of Truckee Meadows Regional Planning which normally picked up most of the board’s travel expenses, so they needed a little extra in case they had to meet independently. Ms. Wilcox added this was the first budget presented of the day that was affected by the funding shift from the General Fund to the Department of Motor Vehicles Air Pollution Control Fund. Ms. Wilcox added she would like to make a brief presentation about that fact, which would cover this budget as well as some of the other budget items which would be affected by this change.

Ms. Wilcox stated the proposal to shift the cost of almost $1.2 million in Tahoe programs to the air pollution control fund, controlled by DMV, actually came out of the Budget Office during the budget preparation process. As the legislature was aware, during the budget preparation process the division was under severe constraints not to add new General Fund programs or items. The Tahoe programs had, however, been a very high priority so there was a lot of brainstorming to allow these programs to go forward. When the suggestion was made by the Budget Office the division took it back and studied it, and found it was a fortunate combination of an underutilized fund which was set up to provide environmental protection, and an acute need at Lake Tahoe to provide environmental protection for the lake. The division looked at the proposal from every angle, obviously looking at the fact that this was a statewide fund, for which funds were generated primarily out of Clark and Washoe counties. Ms. Wilcox said it seemed to division staff there had been a very strong showing of statewide support, particularly from the voters in those counties, for two Tahoe Bond Acts passed by the voters, in 1986 and 1996. The division also noted the fund had been used in the past to support TRPA’s air quality programs for some years. Ms. Wilcox observed in order to make the shift work, the legislature would have to amend the current statute, Nevada Revised Statute 445B 830, which set up that fund. The division did draft such an amendment, and was working with the Attorney General’s office.

Mrs. Wilcox said the decision was made in the beginning to protect the existing users of the fund, so the draft the division requested allocated funds first to programs of the DMV, second to those of the Division of Environmental Protection, and third to programs of the Division of Agriculture. The division then took the draft program which was authorized by statute and reserved the fees which funded that grant program so that 1/5 of the fees generated within the county would be actually reserved for grants to that county of origin of the funds. The Tahoe programs would then be at the bottom of that list and would be eligible for available funds after the primary needs of the funds were met. At the same time, the statutory authorizing language would be modified so those funds could be spent to achieve the purposes of the Tahoe compact. Ms. Wilcox said the division was satisfied they had done the best they could to make this a good fit, and it was certainly appropriate for the committee to look at it all carefully and to ask questions. She said she and her division would work with the legislature to make it work and she would be happy to answer any questions.

Ms. Giunchigliani said she understood Ms. Wilcox to say the pollution control fund they went to had been underutilized by local governments, and she appreciated knowing that. She thought Ms. Wilcox summed it up very clearly that the people in the state had continually voted to preserve one of its most precious resources, regardless of where those monies came from. Ms. Giunchigliani added she appreciated the division looking for appropriate ways to make everyone partners in the preservation by holding other groups harmless, and especially when they hadn’t been utilizing their funds, she had a comfort level it was probably the right direction to move in. She hoped at least through the budget hearings there would be some more dialogue about that, and she thought the issue should not be how, or whether they preserved Lake Tahoe, but where the funding came from.

Vice Chair Evans stated one of the concerns was how or whether that fund over time would be able to sustain all of the different services Ms. Wilcox outlined. Ms. Wilcox answered there would still be a substantial reserve at the end of two years, which was as far as the division had gone, since they were taking it biennium by biennium. Ms. Wilcox did not have a very good feel for whether revenues would be going up in the future or how long the fund could be maintained, since she had never worked with the fund before. That was why, when they drafted the legislation, the division felt it was important to make sure the primary purposes of the fund were met first. Vice Chair Evans said that was appreciated and reiterated the concern was not for the present biennium but for the fund’s ability in the future to sustain all of the programs.

Ms. Wilcox stated she would next discuss the Division of State Lands, Budget Account 4173. Ms. Wilcox said this account had a staff of 15.6 positions, 14 of which were General Fund. The 6/10 of a position was by interest on the Tahoe Bond Act, coordinated the state’s Tahoe programs. The division would be continuing the Tahoe Bond Act interest funding for that position as long as it was feasible, certainly for the next biennium. The mission of the State Land Office was to serve the state by serving as its general land agent, acquiring, holding and disposing of lands and interests in lands. The land office also managed some state land, including some submerged lands, in order to protect the land, the environment, and the public interest. The land office maintained and protected public land records also. The other agency falling under the Division of State Lands was the State Land Use Planning Agency. The mission of this agency was to serve the state by promoting sound land use planning, particularly by providing technical planning assistance to local units of government around the state. The agency also promoted the appropriate use and management of the states public lands, and worked on federal land issues on a continuing basis. The agency, during the last biennium, added a Tahoe unit, whose mission was to serve the state by protecting the environmental quality of the Lake Tahoe basin. Ms. Wilcox added there were no new programs in the budget, but there was a substantial expansion of programs related to Lake Tahoe. Ms. Wilcox reiterated Mr. Morros’s requests for one part-time land agent position and one seasonal forester, both to take care of the 500 parcels they had acquired in the Tahoe Basin from funds from the Tahoe Bond Act of 1986. Ms. Wilcox said she would take any questions the committee had on the general state land budget.

Ms. Giunchigliani asked about the feasibility of a deed check being done on the Jean property, and if it could be provided to the committee. Mrs. Wilcox said she believed it had already been provided to staff, but she would be happy to provide a copy to Ms. Giunchigliani also.

Mrs. Wilcox said she would like to go into the Lake Tahoe issues and asked Jim Baetge and Jerry Wells from the Tahoe Regional Planning Agency (TRPA), to testify. The division wanted to make it clear since the Presidential Summit of 1997, the division had a very closely coordinated program. Mrs. Wilcox said she saw people from TRPA almost every day. The programs the state had in the Tahoe basin were coordinated very closely with the programs of the TRPA. Mrs. Wilcox referred to Exhibit I, and said the committee would recall during the events of the Presidential Forum of 1997 the federal government, California, and Nevada made massive commitments to assist TRPA in implementing the Environmental Improvement Program (EIP). The EIP was a compendium of the projects that had to be put on the ground in the Tahoe basin in order to protect the quality of the lake. Those on the Nevada side included erosion control projects, stream restoration projects, street and highway retrofits, and a massive list of other things to be done in order to protect the lake.

In Exhibit I, there was an estimate of the EIP implementation costs for ten years, which Mrs. Wilcox assumed most of the committee members had seen many times. The total estimate to protect the basin during that ten-year period was $906.8 million, of which Nevada had been asked to contribute $82 million. Nevada began to work on coming up with that amount of money and implementing its commitment immediately after the summit. Mrs. Wilcox noted the voters had already approved, in the election before the Summit, a $20 million bond act for the lake, so Nevada had its first down payment already in hand at that time. In addition to the $20 million of the Tahoe Bond Act, about $5.5 million had been committed out of prior appropriations and State Highway Funds. Mrs. Wilcox observed there was a need to come up with the remaining $56.4 million in order to protect the lake between 1999 and 2007. Today, Mrs. Wilcox said, they were on target and doing well. She told the committee when they looked at the E4 component of the biennium budget, the Department of Transportation was committing $4, 476, 500 worth of EIP projects in the next biennium. In addition, $3.2 million were being requested for projects of the Division of State Parks in the Tahoe Basin.

Mrs. Wilcox said State Parks managed about 5,000 acres of heavily forested land in the Tahoe basin, and had never had funds to do resource conservation work on their lands. She added if someone drove up and looked at the lands managed by the Division of State Parks, they would see acres of dying trees, indicating the tremendous amount of forest health work needed. Therefore, around half of the $3.2 million appropriated to State Parks in the next biennium would go to starting the forest health work. The rest of the funding would go to a variety of State Parks projects that would protect the environment. Mrs. Wilcox said the Division of State Lands would continue to issue grants under the $20 million bond act they already had in hand. With the $3.2 million in bonding authority, the division would be on track for the next biennium, implementing the division’s commitment to Tahoe. Mrs. Wilcox pointed out when the Summit ended and the agencies stood back to take a look at what protections were needed for Tahoe, Nevada decided to craft a "Nevada solution" which Mrs. Wilcox thought was unprecedented. That solution was to have an interagency team composed of staff persons from ten agencies, most contributing only a few hours, working together to develop projects that would protect the lake. The last page of Exhibit I showed what the team looked like and where those people where located. Mrs. Wilcox noted there were asterisks next to some of the positions, which corresponded to requests for new positions. NDOT requested two new positions, which would be funded with State Highway funds, and would work on Lake Tahoe projects. The Division of Forestry was requesting one position, funded by DMV funds, which would be dedicated to working in the Tahoe Basin. The Division of State Lands was adding a stream restoration specialist, which was important since at that time there was no one with the State who had this expertise. Streams that had been damaged by development needed to be reconstructed. That position would be funded by interest on the Tahoe Bond Act. The Division of State Parks was asking for a person who would help coordinate all of the Park’s projects in the Basin, and the position would be funded 25 percent with interest on the Bond Act and 75 percent with federal funds. Therefore, with no impact on the General Fund and some creative work, the division had put together what Mrs. Wilcox believed would be a very effective team to oversee the expenditure of the State’s Tahoe commitment and to make sure the money was spent in the most efficient and effective way possible.

Mrs. Wilcox, referring to Exhibit I, noted their partners were also working on delivering their commitments. The federal government had expenditures once again proposed for that year, in excess of $20 million, which was close to what they had the previous two years. There were strong consensus groups that went back to Washington, D.C. regularly and lobbied for those funds. Mrs. Wilcox reiterated the amount of effort that went into the Tahoe programs was very impressive, ranging from efforts by interest groups, local government, state and federal agencies. Mrs. Wilcox said California had doubled its appropriations for the Tahoe Basin that year, which amounted to more than $20 million for 1999. Altogether it was a fascinating effort, and Mrs. Wilcox added if the committee ever wanted a detailed presentation on the projects completed, proposed, and waiting, the division would be happy to provide one. She also offered tours of the Tahoe basin to the committee members if they were interested.

Senator Coffin inquired if there were any other lakes in Nevada which State Lands should be interested in besides Tahoe. Mrs. Wilcox said the only lakes of any size in the State were Washoe Lake, Walker Lake, and Lake Tahoe. Senator Coffin asked if Lake Mead would fall into that category. Mrs. Wilcox responded Lake Mead was entirely held by the federal government, so she was not very familiar with what the needs of Lake Mead were, but could look into it. Senator Coffin said the reason he brought it up was he noticed over the years a substantial state contribution had been made toward saving Tahoe, but he was not sure what the state had done for Walker and Pyramid, which he felt were probably of equal historical significance. Also, Clark County taxed itself very heavily to do what it could to keep Lake Mead clean. Senator Coffin said he was simply curious as to what initiatives there were for the residents who enjoyed the ownership of property and the immediate aspect of Lake Tahoe. He asked if they paid fees to live there, and if these fees were comparable to other areas. Senator Coffin said he did want to save Lake Tahoe, but was just curious if the residents were paying their fair share. Mrs. Wilcox referred the question to Jim Baetge, since the TRPA had an ongoing effort to work with local governments to identify additional sources of funds that could be used to raise revenue for the Tahoe basin. Senator Coffin said in Clark County the voters voted for, and passed, the Tahoe Bond Act, as well as did other things to help, but were getting close to the bottom of their well in terms of money. He inquired what proposals there could be for those people who lived around the lake to tax themselves to help solve the problem they created by living there.

Jim Baetge, Executive Director of TRPA, said there was an ongoing effort to generate roughly $200 million over ten years, locally generated, to match the federal and state funds coming into Lake Tahoe. The good news was it was not only TRPA attempting to do this, but also the chambers of commerce along with the visitor’s bureaus which were starting public hearings that month to get public input. TRPA was looking at 21 potential revenue sources, which the local groups wanted to narrow to 5 or 6. Then the groups would go forward and do an economic analysis of what it all meant to the community, both tourism-related and revenue-related. Mr. Baetge said he fully expected to have some good answers out of that process by the end of March. The local community was stepping up to that challenge, and it was not that they had not given in the past, but an additional need had developed for the federal/state cooperative effort.

Vice Chair Evans asked what the expectation, in terms of outcome, was from that very large federal grant. She asked how progress would be measured. Was progress defined in terms of water quality. Also, for that amount of money what would the state get out of its investment.

Mrs. Wilcox said determining progress was done in part by measuring water quality, and once a year Professor Goldman dropped his dish into the lake and saw how far it went, which was a continuing measure. Also, it was important to bear in mind the results from the protection put on the ground today would most likely not show up right away, and there would be some lag time. In order to ensure the approaches used were the most appropriate approaches, it was important to use the best science available. Then everyone would have to wait to see the actual results in the lake. Mrs. Wilcox remarked the evidence presented during the forum was overwhelming that the state was at a crisis point, since Tahoe had become what was known as a "phosphorous-dependent" lake. This meant the lake had become especially sensitive, in particular to soil erosion into the lake, and if something wasn’t done immediately it could be impossible for the lake to recover.

Vice Chair Evans asked what kind of federal oversight was in place, or what kind of strings were attached to that grant. Mrs. Wilcox said federal grants were specific and varied from grant to grant. The grants that came to the State Highway Department had standard highway conditions attached, for example. The federal presence in the basin was much larger than these grants, and had a federal partnership team which met regularly, and an advisory committee on which the state had a seat. This committee was to meet later in the week. The coordination between the federal and state agencies as well as other players in the basin was outstanding.

Mrs. Wilcox pointed out she provided the committee two pages of numbers
(Exhibit I) which pulled out the different Tahoe items from the budget and presented them in one place. Mrs. Wilcox then turned the meeting over to Jim Baetge who would present a slide show designed to bring Tahoe into better perspective.

Mr. Baetge introduced Budget Account 4204, saying when they talked about this plan, there was agreement on what had to happen at Tahoe, which came out of the forum. He said that agreement resulted in the plan with $900 million over ten years being considered to reach their goals. That was basically what these groups were talking about. Mr. Baetge thought the good news was when people asked what they were paying for, they could be told TRPA knew what the projects were and how much they cost. He thought it would be valuable to look at a few slides so the committee could have a better idea of what the projects in the EIP were. Mr. Baetge said when they looked at Tahoe, they could see the lake was losing clarity at a rate of 1 to 1 ½ feet a year. If they were to look ahead 30 years, or sooner, the lake could look like any other lake in the county. All of the scientists agreed on this fact. Looking at a slide, Mr. Baetge said the good news about the forum was it brought the states of California and Nevada, the two governors, the federal government and all the federal agencies together to focus on one solution, which was the EIP, and made commitments to the treasure of the lake which could not be lost. Most people at the time were focusing on clarity loss, but there were other issues, in fact nine thresholds, although the clarity loss caught most of the attention.

Mr. Baetge said an example of what they were trying to do, was the area along Highway 28, where there was quite a bit of runoff from the slopes which eroded into the lake. The nutrient load and the salts all ran into the lake. It was treatments like this that could be used to end up with a better looking facility as well as controlling the water running off it. Mr. Baetge thought it would be interesting to look at what happened when the runoff was collected. In one of the facilities they collected the grease and oil and separated it from the water before it got to the lake. He felt it would startle people to see this grease and oil, knowing it used to go into the lake. There was also further treatment done to this runoff to pull the nutrients out before it got to the lake. On Spooner Summit, Nevada Department of Transportation was working on a project and figuring out how to proceed with it. The result of having exposed slopes could be seen on Spooner, where runoff came down every year, and created maintenance costs and costs to the lake. These types of things had to be corrected. What could happen was the runoff could go, for example, into Glenbrook Creek. TRPA was also trying to restore the fisheries, as was the case at Glenbrook Creek. There was also a need to remove the dead and dying timber out and get the area restored to "pre-Comstock" condition as much as possible. Not only was there a threat of fire, but it would damage not only the urban areas but also the lake itself. The good news was these efforts were making progress. Also, interesting things were getting better in that area in terms of wildlife, such as an increased number of eagle and the osprey. TRPA also protected those areas, so any projects did not disturb any nesting sites. In terms of talking about the air quality funding source, there was the issue of people getting around the lake without the use of automobiles.

Mr. Baetge added in the 1970’s, the lake was nitrate deficient, and if the level of nitrogen going into the lake could be stopped, the clarity loss could be stopped. In fifteen years, the lake became phosphorus-limiting. Most of this was airborne, much of it coming externally from the basin into the lake. The big hope was to control this through phosphorus. TRPA was finding people would ride public transportation to get around the lake if necessary. Mr. Baetge noted some time ago the legislature supported TRPA in getting a bike trail around the lake, which they were still working on for the Nevada side, and which was in use on the California side. Mr. Baetge said looking at the California side of Crystal Bay, with thanks to the help Senator O’Donnell had given TRPA, there were public, private, state and local funds creating a project to control the runoff. This would change the whole character of the neighborhood, treat the water, improve the scenery, pull the ugly signs down and basically become a much better interest to the State of Nevada. Mr. Baetge showed a portion of the California Budget Governor Davis put forward. The last paragraph was very supportive of Lake Tahoe, with Governor Davis proceeding with the $274 million commitment from California. In the budget, California went forward with funding TRPA’s request, as did Nevada. If you looked at the budget, California was totally supportive of working on the Lake Tahoe issue from that end, but they wanted all of the players at the table, which hopefully they would have. Mr. Baetge turned the meeting over to Jerry Wells, Deputy Director TRPA, to review TRPA’s program.

Mr. Wells said he would give an overview of the agency, their mission, and then go into the specific budget enhancements which were requested. Mr. Wells said the first slide (Exhibit N) gave the four basic concepts the bi-state compact envisioned what purpose TRPA should serve. The first purpose was to enhance governmental efficiency and effectiveness. The second was to establish environmental threshold standards, used in measuring success. The third purpose was to adopt and enforce a regional plan to attain the threshold standards. The final purpose was to provide for orderly growth and development consistent with the standards they adopted. Mr. Wells said the mission statement for the agency was still a valid one, even though it was created a number of years ago. The mission statement
(Exhibit N) read "the Tahoe Regional Planning Agency led the cooperative effort to preserve, restore, and enhance the unique natural and human environment of the Lake Tahoe Region." Mr. Wells stressed the word "cooperative" and said TRPA was working as partners with federal, local and private sector groups. Mr. Wells continued, saying the agency operated three primary programs. Referring to Exhibit N he identified TRPA’s regulatory programs, the EIP, and finally their monitoring programs. The first program, the regulatory program (Exhibit N) was aimed at controlling the environmental impacts of new development. Those regulatory programs established design and construction standards, established development limitation, overall development caps and the pace and location of development. The EIP, on the other hand, was aimed at repairing the damage of the past. It was a coordinated effort to identify, fund and implement all necessary environmental improvement to attain thresholds. The price tag on this was approximately $900 million over the next 10 years, which was developed through a joint partnership. Lastly, the monitoring program was designed to provide feedback on threshold attainment progress and provide direction for necessary regulatory or EIP adjustments. Mr. Wells said in the past, every five years, TRPA would take a snapshot look at their progress, but were moving toward what they called a "real time" monitoring program which would be more accurate and frequent. This would allow TRPA to get feedback in a more timely fashion. Mr. Wells stated the Nevada Governor’s Budget authorized $1.3 million in each of the 2 years of the biennium for TRPA. The compact set out a formula that 1/3 of the funding for the agency came from Nevada, with the other 2/3 from California. Therefore TRPA’s requests to the two states were made on that basis. Mr. Wells reiterated the California Governor’s Budget did include California’s full share.

In terms of funding, in the past, TRPA was funded about 96 percent out of the General Fund and about 4 percent out of the DMV Air Pollution Fund. The Governor’s proposal was to shift that to 100 percent financing from the DMV fund. Mr. Wells reiterated that would require a bill draft request (BDR), which would be moving forward with their budget.

Mr. Wells outlined the five enhancement requirements associated with TRPA’s budget. The first enhancement was to the EIP, where it was critical to make on-the-ground improvements, and was the highest priority for the agency and the region. If the EIP was not implemented within the next ten years, it was estimated the opportunity to reverse the lake’s loss in clarity would be gone. Therefore, that issue really needed to be moved forward. The two states funded this program initially as a pilot program in the previous biennium. Given the program’s success and support, it had evolved into a major part of the agency’s operations. This particular budget request was for continued funding for the EIP program as a part of the agency’s baseline operation, as well as including a variety of program support and implementation activities. Those activities included such things as the regulatory conformity program, the permit streaming program, public outreach and project facilitation for EIP projects, real-time monitoring and further development of their geographical information systems. The second bullet dealt with the motorized watercraft enforcement and public education program. Mr. Wells said during the last year TRPA had been working on ordinances regulating motorized watercraft on Lake Tahoe. Those ordinances were adopted primarily to protect water and air quality as well as abating noise. Educating the public and enforcing those new regulations were critical to the agency’s ability to prevent those environmental effects from occurring. This particular budget request would provide what TRPA felt was the minimum level of funding necessary to initiate the first two years of their public education enforcement process for those regulations. Their long-term strategy was not to completely do this themselves, but to engage with local and state government which already had jurisdiction at the lake. TRPA wanted to work with them to enforce the regulations, which could possibly take legislation or additional agreements with those agencies. This would take time, therefore TRPA put together the interim program to get the program started for the next two years.

The next enhancement dealt with threshold studies, which was also a program in the last biennium. The last evaluation of thresholds indicated a need for further study of the thresholds themselves, to make sure they were what TRPA should be using to measure their success. The EIP had identified approximately 79 of those types of studies which needed to be studied over the next 10 years. State, federal, and local governments, and the private sector shared funding of those studies as well. This particular item was funded in the last two years, and TRPA was asking for that to be continued. The last two issues dealt with cost increases in legal and employee costs the agency was experiencing, which the agency was asking the committee to support. In conclusion, Mr. Wells said TRPA supported the Governor’s recommendation and asked if the BDR the legislature was considering related to their budget should not meet with their approval, would the committee please look at alternative funding sources so TRPA could continue these important programs. After no questions were asked, Mr. Wells and Mr. Baetge were excused.

Mr. Morros introduced Budget Account 4195. Roy Trenoweth said the mission of the Division of Forestry was the protection of life and property on public and private lands, and the coordination and management of the natural resources of the state of Nevada. This mission was accomplished using five budget accounts. Budget Account 4195, Forestry Administration and Operation, was authorized 38 employees was introduced. In that account, the division was still attempting to acquire helicopters, and hadn’t acquired any since one went down in Watson Lake. Acquiring more helicopters was a big priority for the division. Budget Account 4196 was the Forest Fire Suppression Account, which paid the overtime, equipment costs, and other costs related to wild land fires and other emergencies. Budget Account 4198, Forestry and Honor Camps, had 104 employees spread out over 10 camps. In this account, there was a letter of intent from the 1997 legislature which asked the state forester to take a good look at operations, and perhaps do them differently. With that letter in mind, the division looked at the monthly reports at the end of fiscal year 1998, and saw a camp which did not have the required 12 inmates per crew, so Mr. Trenoweth moved some crew supervisors around. They let the program analyst know they moved a crew from Pioche to Jean and moved a couple of crews out of Indian Springs up to Silver Springs to better balance the ratio. Mr. Trenoweth said in November, he saw Indian Springs’ numbers were growing, so he moved a crew from Tonopah to balance the numbers. Mr. Trenoweth said he had been working diligently with the prison to try to square away the camp reports. There was a meeting with prison administrators last fall in which some conclusions were drawn. The division made some adjustments on their multi-camp reports reflecting recommendations made by the Department of Prisons, and went with that. Budget Account 4227, was the Inter-governmental Agreement Account. This account had six fire protection districts, wild land fire protection districts, and contracts with the forest service for the Humboldt and the Toiyabe. These forests used to be two different forests and were now one. Within this budget, there were six fire protection districts statewide, formed under Chapter 473 with the state forester administering the districts. One of the counties, during the summer of 1998, opted to dissolve the 473 district and form their own 474 district, which would be county-formed and county-run. The state forester had never dissolved a district, so the attorney general’ s office was consulted to be certain of the legality of this action. The district sent a petition of 25 percent of the landowners in the district. Mr. Trenoweth had notified them two weeks prior they did have more than 25 percent of the landowners, so they could proceed with dissolving the district. The division still had the feasibility study of dissolving the district and the providence of the equipment and supplies, which they were diligently working on. Mr. Trenoweth hoped to have this resolved by mid-February.

Mr. Marvel asked if the Division of Forestry would still respond to fires in Storey County. Mr. Trenoweth said yes and Mr. Marvel asked what this would do to the division’s overall funding. Mr. Trenoweth replied they would continue to respond to emergencies, however Storey County would be billed for the Division’s costs. It was that simple, and had been impressed upon Storey County, and the county did not seem too concerned. Mr. Trenoweth said a $1/2 million fire would have a big impact on a small county budget. Mr. Trenoweth said Mr. Joe Dini had been kept apprised on this matter, Mr. Trenoweth said he had some strong feelings Storey County was going the wrong way on this matter, but the county had their minds made up. Storey County wanted to handle their own fire suppression activities, and the property owners had signed the petition to dissolve the district, which would relieve the division of that responsibility. The division would continue to respond to emergencies, and would never refuse to do that, but they would send a bill to the county to cover the Division’s costs. Mr. Marvel asked Mr. Morros how much public land there was in Storey County. Mike Bilgrosso answered from the audience about 10 to 20 percent. Mr. Marvel said the county would have some major fire bills in that case, with which Mr. Trenoweth agreed. Mr. Morros reiterated the county had been warned about the cost.

Mr. Marvel asked if Mr. Trenoweth could address the conservation camps again, and asked if the division was cooperating with the Department of Prisons and getting good, workable crews. Mr. Trenoweth said they were getting better cooperation from the Prison. Mr. Trenoweth saw the camp reports every morning from the northern and southern regions, with four camps operating from each area. He also read the Silver Springs and Stewart reports, and was happy when the crew supervisor took twelve crews out, like they had that day. Mr. Trenoweth noted they seemed to be getting a better class of inmate than they used to. At the women’s camp at Silver Springs they had no problems, so Mr. Trenoweth moved two crew supervisors to that camp.

Mr. Marvel asked how many supervisors the division had all together, and Mr. Trenoweth replied there were 86. Mr. Marvel asked if the supervisors all had 12-man crews, and Mr. Trenoweth replied they did.

Ms. Giunchigliani recalled hearing in the morning testimony that CCA was not properly screening some of the women going to the Silver Springs Camp. She asked what the division did with the inmate that was six months pregnant. The committee needed to know the division was getting the individuals they needed to work on the crews. Ms. Giunchigliani asked if they could check to see if there were difficulties in the process, to ensure the right classification of inmate was participating and that they were able-bodied. Mr. Trenoweth said there were around 158 women currently in the 112-person camp. Ms. Giunchigliani asked how many crews were working. Mr. Trenoweth said that day all of the crews went out, and there were eight crew supervisors in the camp, although two were new. This equaled around 72 people out that day on crews. Mr. Trenoweth said he reviewed the report that morning and all of the crews had gone out, and he was sure they went out with the right classification. There were more women there than they could use at the present time.

Ms. Giunchigliani referred to the M625 decision unit in the Administrative budget, the additional revenue for the volunteers at Mt. Charleston, and asked about the self-contained breathing apparatus. She then asked if the division had resolved the issue of the back-up water tank and fires into the canyon. Mr. Trenoweth said they did not look at in the budget, so it must have been resolved, but he would check and find out.

Mrs. Evans asked if the Storey County issue would be resolved sometime in the next few months. She asked if all of the paperwork and the money had been taken out of the budget. Mr. Trenoweth replied yes. Mrs. Evans then said if this were the case, on a case by case basis, the division would simply bill back to the county for the services provided. Mr. Trenoweth said they had mutual aid agreements with outside agencies, such as this, where the first 12 hours, body for body, person for person, truck for truck, were free. Beyond that, the division would bill. This was the type of agreement the division would most likely make with Storey County. The county could not swap the division an inmate crew, and could not provide the division with air tankers, since they did not have tankers or helicopters, which would be paid for from the first minute the equipment was utilized. The other items would probably be paid for on a twelve-hour basis.

Mr. Trenoweth said within the Administration and Honor Camp accounts, replacement vehicles were requested, and only one was recommended in the Administration account. The division negotiated with the budget office and received some funds, as they did a few years ago, to repair the vehicles. He noted all the vehicles were in either poor or fair condition, with one in the Honor Camp account already taken out of service. Three of the other crew vehicles had gasoline engines, and didn’t warrant many repairs. The division was still in the process of replacing their vehicles from funds authorized last session, and had managed to get 17 replaced. The division would hold those vehicles in the East Lake Yard, which was half way between Carson and Reno, in case a replacement vehicle was needed, and they also could take parts off one and put them on another.

Budget Account 257-4235, the Forest Nursery and Seed Bank Account, was an enterprise account. There was one BDR which dealt with the police and fire law and the lung and hearing physical examinations. Mr. Trenoweth said he would be happy to answer any questions. There were no questions so Mr. Trenoweth was excused.

Mr. Terry Crawforth introduced Budget Account 4452, Division of Wildlife, and said the division was asking for new positions. The mission of the division was the preservation, protection and enhancement of Nevada’s wildlife resources, and the promotion of safe boating on Nevada’s waters. The division did this with six administrative bureaus, which largely provided program leadership to the agency, and had three operational regions. In addition, the division worked closely with the nine Nevada Wildlife Commissioners who were appointed by the Governor, and had policy and regulatory power to set hunting seasons and make boating and wildlife activity regulations. The division was primarily a user-funded agency, funded through either hunting or fishing license fees, or federal aid, which came from an excise tax on hunting and fishing supplies. The Division also received money from the United States Coast Guard and numerous other small grant sources. The division had been very involved in an extensive planning effort over the previous two years, and had budget requests based on that strategic plan. The primary emphasis in the plan, based on input received from the public, was for improved customer service, providing better science, and taking better care of employees and facilities.

The division had six budget accounts, with the primary operating fund being the Wildlife Account, 4452. The sources of funds were primarily license fees and federal aid. There were also a number of transfers from other accounts; for example, all 205 employees in the agency were paid from Wildlife. The obligated reserve account was also operated by Wildlife, which was made up from obligated funds such as duck stamps, elk damage funds, gifts, etc. For a number of years the division was in somewhat of a confusing situation over the obligated and unobligated reserve in the Wildlife account. Substantial progress had been made on this issue over the last couple budget cycles, and had a E900 decision unit proposed to the legislature to work with both staffs to clarify and move some funds to the Wildlife Obligated Reserve, Budget Account 4458, so the reserves could be separately identified.

Vice Chair Evans stated this issue was one of the key concerns in the budget, and noted the unobligated reserve really plummeted, and would get through that biennium, but she was concerned with longer-term implications and how that would affect the division’s work. Mr. Crawforth referred to the figure in the un-obligated reserve at the end of that biennium, and said all of their federal aid was on a reimbursable basis, so their final vouchering was not done until well after the end of the fiscal year. The division had been working with committee staff as well as staff from the Budget Office to revise the revenue figures. The end-of-the-biennium balance in the unobligated reserve would be in excess of $1.7 million. Mr. Crawforth said he looked forward to addressing that issue in subcommittee.

Vice Chair Evans agreed that point was one which would need to be discussed at length. The next major account discussed was the Boating Account, 4556. The revenue sources were federal aid through the Coast Guard, boating registration and title fees, and the state gasoline fuel tax. With those funds, the division operated the boating registration program, the enforcement program on the water, educational and navigational aids, and contributed significantly to the construction and maintenance of boating access facilities. Mr. Crawforth said the division’s education program was growing substantially and there was a request to add to that, which was a voluntary program. The division planned to increase their efforts also.

Mr. Crawforth then introduced the Trout Account, 4454. The trout stamp account was fairly simple, with everyone who fished for trout in Nevada being required to purchase a trout stamp. The funds were placed in the Trout account and were matched with some federal aid and used to pay off the bonds for the Mason Valley Fish Hatchery. The hatchery facility would be paid off in 2001. The division did put a small amount of money into the operation and maintenance of the existing facilities from this budget. The division would also address this at the 2001 session of the legislature.

Mr. Crawforth introduced Budget Account 4451, Habitat and Mitigation, which dealt with private funds donated principally from mining companies to assist the division in matching federal aid to improve lands. The principal projects included that on Deer Winter Range in northeastern Nevada, where there had been substantial fire damage. The division was reseeding certain portions of that area between Elko and Battle Mountain.

The last account Mr. Crawforth addressed was the Wildlife Heritage Account, 4457, which entailed the receipts from auction tags for big game, and the second chance big game drawing. The funds were put into that account by statute, and the wildlife commissioner had some management authority over them. The public could also come forward with project proposals, which were either approved or denied by the commission in a grant-type program. Some successful projects dealt with wild sheep in southern Nevada, where the Foundation for Wild Sheep built water developments for bighorn sheep using these funds. The division did have eight new positions, none of which were General Fund, but federal aid, license- or boating-fee related. The division opened a satellite office for improved boater registration and titling in Henderson in 1998, which was staffed by 2 people and was already very busy. In order to not get overrun at that office, the division wanted to add one additional person. The division also requested a new warden in Boulder City to firm up the boating education program in Southern Nevada. The division was asking for a Management Analyst IV to lead them through the continuation of the planning office, and also to manage the substantial federal aid coordination which occurred in the agency. One of the top items the public said they wanted to see from the division was more education and information about wildlife. The division was requesting two Conservation Educators I at the Region Two office, and one in Reno to bolster that program in the western part of the State. The division was also asking for a biologist in Las Vegas, where there was a fair amount of interface between the public and Wildlife. Sometimes the division got involved with nuisance problems, and the division would make an effort with the new position to teach and encourage people to live with wildlife in an urban setting, as well as address the nuisances. The division would be acquiring Carson Lake in Lahontan Valley, hopefully in year 2000, and had been purchasing that valuable wetland for a number of years. The division would need a person to help maintain the water flows, structures, grazing management and public use in that area.

Also, the division was requesting a new Fisheries Biologist II to participate in the Lake Tahoe EIP. The division had been very involved in performance indicators, over the last couple of sessions, and was excited about the new plan. The division’s performance indicators had been largely output measures, and they were working on developing new outcome measures, working with committee staff and Budget Office staff. There was a list of draft performance indicators the division was working on, and hoped to complete the process in conjunction with the legislative session.

Senator O’Donnell asked if Mr. Crawforth was involved in the licensure of fishing licenses. Mr. Crawforth said the division had 160 license agents scattered throughout all kinds of businesses in Nevada, where the bulk of the licenses were sold. There were some licenses sold out of division offices, but the majority of the almost 200,000 licenses sold were sold by agents who received a one dollar commission on most of the licenses they sold. Senator O’Donnell asked if the licenses lasted from February to February. This was confirmed. Senator O’Donnell asked if a person bought a license in January if that license would be good for only one month. Mr. Crawforth said yes. Senator O’Donnell asked if this was dissuading people from buying licenses. Mr. Crawforth said it probably had some impact on the number of licenses bought and that two years ago the division overhauled its licensing system and created some short-term licenses where people could buy lower fee licenses and then add days for a few dollars a day fee depending on where they were fishing. He added a lot of the other extra stamps were not required for short-term licenses. Mr. Crawforth said he imagined there was some resistance to buying a license, but the Division had a substantial increase in the number of short-term licenses purchased. Senator O’Donnell thought if the division ran the fishing license division like a business, with the licenses running from purchase year date to the corresponding date the following year, the division would make more money. The purchase dates could be input into the computer and individuals with expiring licenses could be sent a notice telling them it was time to renew. This would do the state a far better service than just picking a date and having the license expire on that day. Mr. Crawforth said he agreed, and that the division had practiced the same licensing procedures for the last ten years. Senator O’Donnell asked if the division issued the licenses by hand, and Mr. Crawforth said yes, and added the same hand batch system was used as was used many years ago. The division, as part of this budget, and a desire to improve customer service, was going to look at going to a point of sales system. Up until this point, the division was busy improving the big game application process and selling that program to other states. In the meantime, other states were working on new licensing systems, which Nevada might have to buy from them. Mr. Crawforth reiterated the division did in fact need a new system along the lines of the one Senator O’Donnell suggested. Vice Chair Evans thanked and excused Mr. Crawforth. She added she was pleased to hear the division was working on performance measures, and asked if a draft would be ready by the time subcommittee convened. Mr. Crawforth said a draft had been provided to staff, and the division was working with staff and the Budget Office to finalize the information before the beginning of the subcommittee hearings.

The last budget to be discussed was 4162, State Parks, which was addressed by Wayne Perock, Administrator of the Division of State Parks. The division planned, developed and maintained a system of 24 park and recreation areas for the use and enjoyment of residents and visitors. The division also preserved areas for scenic, historic, and scientific significance in Nevada. The division’s goals were to continue to manage, protect, operate and maintain existing and future units of the state park system. The goals were to acquire, plan and develop a well-built, balanced system of areas of outstanding scenic, recreational, scientific and historic importance. In addition, the division strove to continue to manage and interpret the natural, cultural, and recreation resources of the Nevada park system. The major issues facing the division were to provide adequate facilities and services to a growing state population. As mentioned earlier, a major issue was to protect Nevada’s park resources at Lake Tahoe. The division revised its performance indicators to be more outcome-oriented. Mr. Perock referred to a statistic addressing the number of visitors who rated their park experiences as good or bad. He said the division started doing such surveys at the beginning of that fiscal year, and were beating their projected approval rating of 80 percent by achieving 90 percent approval ratings. Mr. Perock stated he was proud of these numbers and of the park system. He went on to say Chapter 407 of the Nevada Revised Statutes really stated the legislative intent, and said the committee would notice the division’s mission and goals supported that. Chapter 407 indicated the division should acquire, protect, develop and interpret a well-balanced system of areas of outstanding scenic, recreation, scientific, and historic importance for the inspiration, use and enjoyment of visitors to, and citizens of the state of Nevada. Such areas would be held in trust as irreplaceable portions of Nevada’s natural and historic heritage. In addition to managing the state park areas, the division was also charged with the administration of two federal park and recreation grant programs on behalf of the State of Nevada. The first was the land and water conservation fund, which was authorized by the Land and Water Conservation Act of 1964, as public law 88-578. There was a package sent in the mail in regard to the land and water conservation fund, due to a national effort to revitalize the state side of the Land and Water Conservation Program. For years, in particular during the 1970’s, many of Nevada’s parks were acquired and built by this fund. In the previous 4 or 5 years there were not federal programs like this, which Mr. Perock encouraged the committee to support.

Mr. Marvel asked if there was any money left in that fund. Mr. Perock replied no. Mr. Perock said they would discuss later how this program could be revitalized. The division had some ideas as to how they could leverage some of that money. Mr. Perock said the other federal program the division administered was the National Recreation Trails Program, which was authorized under the National Recreation Trails Act of 1991, public law 102-240. The State Parks Budget was the primary operation and maintenance budget account for the division, and included all the functions specified in NRS 407. The division also traditionally had a separate account set up for park improvements, which included development of new facilities as well as maintenance, renovation, and replacement projects within the state parks.

Budget Account 4165 was established as the Park Improvement Budget Account. As a majority of the division’s budget was spent to run the 24 state park units, Mr. Perock wanted to present a short slide show at the end of his presentation. Also, he had provided a state parks brochure, and invited the committee to tour some of the local parks and meet some of the people who worked there. A tour was done in April of 1998 that gave some of the legislators a chance to see the park facilities and meet some of the personnel. Mr. Perock discussed one-shot appropriations, which were limited to the replacement of approximately $325,000 worth of equipment, including nine new vehicles, a snow removal loader, eight computer printers, office and safety equipment. The next request was for more new equipment, for $121,000, to meet expanding responsibilities and workload. This would allow the division to keep pace with technological advances, vehicle maintenance, radio communications, and special equipment requests. Park maintenance totaled over $346,000, which would provide field staff with the materials and labor needed to complete the highest priority items identified for buildings and grounds maintenance throughout the state. Mr. Perock added although the division usually received General Fund appropriations for park improvements, due to the projected revenue shortfall there was no funding in the recommended budget. However, the division did anticipate a need to carry over some General Fund dollars into the next biennium for the existing park improvements. This would have to happen in order to complete several ongoing projects that had been delayed for several reasons. The savings incurred, resulting in leftover funds, could be utilized toward required matches for various federal grant programs, resulting in several new, viable park improvement projects during the upcoming biennium despite the lack of General Fund dollars. In that manner, the division expected to be able to recover as much as $983,000 over the $2.4 million potentially available federal funds the division would otherwise forego without the General Fund dollars.

Vice Chair Evans asked if the division’s user charges were scheduled for an increase. Mr. Perock said the division, whose fees were in Nevada Administrative Codes, revised them every year, and would begin having workshops in the summer for implementation in January of 2000. Mr. Perock did not anticipate any increases, and in fact had received feedback from the surveys indicating high fees was one of the most common complaints. He added the division might make some adjustments to the fees, and did survey neighboring states to see what the marketplace looked like for the same types of facilities and services so Nevada stayed viable. Mr. Perock reported with satisfaction as a result of some of the fiscal audits, the division had brought some of the revenues on the fee side from around $3/4 of a million to around $1.5 million. This took a lot of work and was an ongoing process. The NACs limited this process somewhat, and if the committee could suggest ways the division could respond to the marketplace better, it would be helpful. Some of Mr. Perock’s colleagues in other state parks did have that authority, which was something the committee could consider.

Vice Chair Evans said the reason she raised the issue was because there were user charges listed as well as user charges for the next fiscal year listed. Mr. Perock explained the division collected on a calendar year which better coincided with how people recreated, since this was not necessarily from July to June, for example. The division therefore collected every six months and then carried over six months into the next fiscal year. Vice Chair Evans noted the very substantial increase the division was projecting; for example the work program numbers for 1998-99 and then for the upcoming biennium. Vice Chair Evans clarified she was looking at the summary for the State Parks Budget. She said she knew the subcommittee would deal with that further but she just wanted to bring it to his attention. Mr. Perock said what was apparently happening was there were some additional revenues suggested the division could collect. The division was also taking some extra measures to ensure compliance by visitors. Mrs. Evans said the figures sounded ambitious, and the committee was hopeful the division could realize those figures or they would have a shortfall in their budget. Mrs. Evans said Mr. Perock was welcome to start the slide presentation.

Mr. Perock introduced Steve Weaver, Chief of Planning Development, who put together the slide show. Mr. Weaver said the Nevada Division of State Parks was comprised of 24 sites, ranging from 1.6 to 34,000 acres. The system’s total acreage was over 132,000 and included some 447 structures, many of which were historical. The slide tour began with the newest park, the 2,300-acre Big Bend of the Colorado River state recreation area, located 4 miles downstream from Laughlin. The park included two and a half miles of river frontage and included some prime riparian habitat. Big Bend was becoming increasingly popular with jet skiers in particular, with visitation nearly tripling in the previous two years. With the help of the Fish and Wildlife Service, and the Nevada Division of Wildlife Boating Access Grant, the division was able to more than double the popular waterfront picnic sites. They were also in the process of completing a new maintenance facility for the park with funds appropriated from the 1997 legislature. Spring Mountain Ranch State Park was located just 15 miles west of Las Vegas and was in the heart of Red Rock Canyon National Conservation Area. The park was visited by nearly a quarter of a million people per year. Summer theater productions were particularly popular there.

Mr. Weaver said the old Las Vegas Mormon Fort State Historic Park was located in downtown Las Vegas adjacent to the Cashman Field Complex and the city’s Heritage Museum and park. The summer vegetable gardens grown by staff, and pioneer seeds are popular with increasing numbers of visitors. Just last year the Sesquicentennial of the arrival of Mormon pioneers in the Las Vegas valley was celebrated at the fort. In November, the first phase of the park’s development was completed to include parking, a perimeter security wall and fence, and underground utilities. Utilizing a 1997 one-shot General Fund appropriation and the remaining Question Five park and wildlife bond monies, the division would soon be putting out the bid the next phase of development, which included the recreation of the original creek, a portion of the original fort wall and bastion, corral, public restrooms and landscaping. Also, 2000-acre Floyd Lamb State Park was located in the northwest quadrant of Las Vegas valley.

Mr. Weaver said the Floyd Lamb State Park included the historic Tule Springs Ranch, which, using Question Five bond money completed restoration work on a number of structures. Most recently, the division completed a new interpretive gazebo, which would soon have graphic displays which depicted the history of the ranch. With over 34,000 acres, Valley of Fire State Park was the largest, and just recently became 420 acres larger with a generous donation of the White Grill Mine by Mr. Bob Mendenhall. Famous for its unusual rock formations, the park was becoming increasingly popular as a tourist destination. Visitation was approaching one half million people a year. As a result of another 1997 one-shot appropriation, a new fee booth was installed at the park’s west entrance.

Beaver Dam State Park, the state’s most remotely located, was found 30 miles southeast of Panaca on the Utah border. The park featured a
14-acre reservoir with a variety of typical park camping, hiking and fishing in a rustic setting. Mr. Weaver noted Cathedral Gorge State Park was located along
US 93, a designated scenic state highway, just outside of Panaca in Lincoln County. This park was one of the earliest state parks which featured a number of unusual geologic formations as well as a number of now historic facilities, constructed by the Civilian Conservation Corps. The park also featured a new regional park information center located on Highway 93, built with Question Five bond monies, and a federal scenic byways grant. The center included an attractive interpretive garden with permanent displays that provided natural history interpretation and information about recreation opportunities in a two-county region.

Mr. Weaver introduced Echo Canyon State Park, and said it was also located in Lincoln County near Pioche. The primary focus of the park was its 35-acre reservoir and its fishing, boating, picnicking and camping opportunities. Kershaw-Ryan State Park was located just three miles from Caliente. After being closed some 13 years due to severe flood damage, the division was finally able to reopen the compact scenic canyon park in July of 1997, after investing over $1 million in infrastructure, financed by the Question Five bond issue. Part of that investment included replacement restrooms and two new picnic shelters. Eventually the division hoped to construct a new campground. Spring Valley State Park was just down the road from Echo Canyon. Spring Valley Reservoir saw thousands of shore fisherman and small fishing boats every year. As an overflow camp area photo indicated, the two campgrounds were frequently overwhelmed. Consequent to a 1997 General Fund appropriation the park was in the process of getting a new water system, RV dump station, campground, restroom and shower, and other campground renovations which should be completed the following fall. In addition, a number of improvements to accommodate persons with disabilities had been completed throughout the state park system with the cooperation of the public works board. One such example was the handicap accessible campsite at Spring Valley.

Mr. Weaver observed Cave Lake State Park was located in White Pine County near Ely and was becoming increasingly popular as a winter sports area. At 7,300 feet elevation, the 32-acre reservoir had twice produced state record German brown trout. With two small campgrounds, the park often served tourists as an overflow area for nearby Great Basin National Park. Ward Charcoal Ovens State Historic Park was located just a few miles from Cave Lake. The park featured six relatively pristine 1870’s charcoal kilns and a scenic mountain setting with flowing streams. The park’s water system was undergoing significant renovation and expansion, which the division hoped to finish eventually, and then open the partially completed campground. South Fork State Recreation Area was situated around 15 miles south of Elko and had a three-mile long reservoir, which had become a favorite with boaters and fisherman, overwhelming the original boat parking area. With funding assistance from the Fish and Wildlife Service and NDOW that past spring, the division was able to double the number of boat parking spaces and add a
badly-needed restroom at the boat launch area.

Mr. Weaver said the Wildhorse State Recreation Area was located 65 miles north of Elko, and was also popular with boaters and fishermen. With two campground loops, it had ample scenic camping opportunities. Although NDOW had agreed to fund a badly needed replacement boat ramp several years ago, mother nature had not cooperated, hindering the project with above average precipitation four years running. Belmont Courthouse State Historic Site, in the town of Belmont was the smallest state park, with just 1.6 acres and was dominated by the historic 1870’s courthouse. Unfortunately, the state was gradually losing the courthouse due to a crumbling foundation. Berlin-Icthyosaur State Park was located in northern Nye County about 23 miles east of Gabbs. The past biennium, with the help of volunteers, the division was able to open Berlin’s historic mine to public tours. The hard rock mine still had its original support timbers and was full of mining artifacts, most in relatively pristine condition. The division was also able to install several new replacement restrooms at the campground and the fossil house. Not quite a year previous, the same 100-mile an hour winds that destroyed several houses in Gabbs, heavily damaged the historic Berlin mill, and ripped off much of the roof and did considerable structural damage. With the help of the state public works board, a thorough assessment of the damage was accomplished, and detailed plans to repair the estimated $283,000 in damage was completed. Depending on how much of that total damage assessment was covered by insurance, the division hoped to make some progress toward restoring the mill later that year.

Fort Churchill State Historic Park was situated near the Carson River in Lyon County. Four years ago, with Question Five bond monies, the division was able to acquire public ownership of three contiguous ranches, including the historic 1870’s Buckland Station. With the help of appropriations made by the past two legislatures, the division was making great progress in restoring Buckland Station. Using those funds as a match, the division was successful in obtaining a $432,000 federal Intermobile Surface Transportation Efficiency Act and enhancement program allocation through Nevada Department of Transportation (NDOT) and the Federal Highway Administration for replacement of the foundation and exterior renovations. Provided the division was authorized to carry over remaining monies from previous state appropriations into the next biennium, the division was fairly confident it could obtain a second federal allocation which would allow them to restore the main floor interior, install interpretive exhibits, provide public restrooms and open the facility to the public.

Mr. Weaver said with the Federal Recreation Trails Program Grant, the division was able to complete several trailheads with parking and public restrooms on the newly acquired Carson Ranch properties. The focus of Lahontan state recreation area in Lyon and Churchill Counties was its 12,000-acre reservoir. With over 400,000 visitors per year, Lahontan catered to throngs of summer-beach goers and was the third most visited facility. With legislative support, the division was able to match a Federal Bureau of Reclamation grant the division was able to replace five more wooden outhouses with new fabricated SST bolt toilets. Rye Patch state recreation area was located on the Humboldt River off Interstate 80, between Lovelock and Winnemucca. With another reclamation grant and General Fund match, the division was able to complete a major overhaul to the area’s water system and provide adequate water storage capacity for the first time in the park’s history. That summer, with a 75 percent Fish and Wildlife grant through NDOW, the division expected to be able to replace the nasty existing bolt toilets at the boat launch area with new flush toilets, showers, and a fish cleaning station. The division also completed installation of a new modular ranger residence with funding from the 1997 legislature’s appropriation.

Mr. Walker observed Walker Lake State Recreation Area was located along US 95 near Hawthorne. With a proposed Fish and Wildlife and NDOW grant, the division hoped to replace the existing high and dry boat ramp in a new location as well as provide more modern and sanitary picnic facilities. Dayton state park was located immediately adjacent to its namesake town. The compact, 152-acre park featured historic Comstock-era mining remnants, as well as camping, family and group picnicking and hiking along the Carson River. Mormon Station state historic park was situated in Genoa. It featured a reconstructed log waste station along the California Immigrant and Pony Express Trails. Washoe Lake state park was located in Washoe Valley, between Carson City and Reno. The park provided access to the 5,000-acre Washoe Lake. In the spring the division would be installing a floating breakwater for the main boat launch facility with financial assistance through NDOW and the Fish and Wildlife Service.

Finally Lake Tahoe Nevada State Park had a 14,242-foot stretch along ten miles of the Carson Range of Tahoe’s east shore. With nearly 900,000 visitors per year, it was the busiest state park and was very much in need of forest restoration work, habitat improvements and facility construction. These were provided for in the EIP endorsed by Governor Miller and included in Governor Guinn’s 1999-2001 budget. In the meantime, the entire Sandpoint Loop Trail was completed, along with major trail work completed throughout Sand Harbor, which was funded in the previous session. The new Memorial Point overlook facility, funded through the federal ISTEA program, administered by NDOT with a match provided by the 1997 legislature for TRPA mitigation, was nearly completed. The new facility included year-round flush toilets and would serve the nearly quarter of a million tourists who stopped annually at the scenic overlook on Tahoe’s east shore. The division expected to open that facility to the public in the spring of 2000.

Mr. Price asked if there was anything on the books that would help restore or preserve the Belmont Courthouse. Mr. Weaver said there was $400,000 allocated expressly for restoration of the foundation on the first go around of the public works budget. That did not make the final cut though, to the best of Mr. Weaver’s knowledge. Also, he knew of nothing on the present budget for the Belmont Courthouse.

Mr. Beers asked how the pamphlets on state park information (Exhibit O) were distributed, to which Mr. Weaver said they were distributed in the parks. Also, if people called or wrote for information, the division sent the pamphlets out. In addition, those pamphlets were funded cooperatively with the division of tourism. Mr. Beers asked how many pamphlets the division had and if they were available to give to school kids to get to their families. Mr. Weaver said the Commission on Tourism did have a supply, and that the division had enough to meet its own needs directly. Mr. Weaver added Nevada was the 49^th state to come on-line to experiment with information on the web, and got 4,000 hits the first month. Mr. Weaver said to look on the state home page and look for "p" for parks.

Vice Chair Evans thanked everyone for his or her presentation and said the committee would meet the next day at nine a.m.

There being no further business to come before the committee, the meeting was adjourned at 4:40 p.m.

RESPECTFULLY SUBMITTED:

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Christina Alfonso,

Committee Secretary

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Cynthia M. Cendagorta,

Committee Secretary

APPROVED BY:

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Assemblyman Morse Arberry Jr., Chairman

DATE: _________________________________

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Senator William J. Raggio, Chairman

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