The Assembly Committee on Ways and Means and Senate Finance Joint Subcommittee on Capital Improvements was called to order at 8:18 a.m., on Tuesday, April 27, 1999. Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada.

ASSEMBLY SUBCOMMITTEE MEMBERS PRESENT:

Mr. Morse Arberry Jr., Chairman

Mr. Joseph E. Dini, Jr.

Ms. Jan Evans

Mr. John Marvel

Mr. Richard Perkins

SENATE SUBCOMMITTEE MEMBERS PRESENT:

Senator Raggio

Senator Coffin

Senator Rawson

SUBCOMMITTEE MEMBERS ABSENT:

Senator Mathews

STAFF MEMBERS PRESENT:

The Chair recognized Brian Burke, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau. Mr. Burke explained there were several technical adjustments to this budget as follows:

• Amendment # 40 that had been proposed by the budget office recommended increasing the transfer from the Division of Buildings & Grounds (B&G) to DMV by $2,514 in each year of the biennium. The adjustment would correct motor pool costs for two Jeeps in Carson City that had been estimated using the wrong rates and mileage.

• The second adjustment would make technical adjustments necessary to close the B&G budget consistent with the Capitol Police budget closings that had been made in the Joint Subcommittee on Public Safety, Natural Resources and Transportation. The net reductions totaled $1,491 in the first year of the biennium, and $1,223 in the second year of the biennium.

• The third adjustment modified Decision Unit E-175 to remove duplicate base funding of $390 in the first year of the biennium for FASER training and $2,647 in the second year of the biennium for heating, ventilating, and air-conditioning (HVAC) training.

• The fourth adjustment reduced Decision Unit E-176, hardware and software costs, by $3,625 in the first year of the biennium pursuant to revised Purchasing Division price estimates.

Mr. Burke told committee members there were also several decision items for their consideration as follows:

• Decision Unit M-200 requested two new Administrative Aid positions; one for Las Vegas and one for Carson City. The Carson City office needed the support position to provide existing staff with more time to monitor and assess division internal controls, procedure manuals, and Americans with Disabilities Act (ADA) compliance. The position would also free-up staff time to process leases and contracts in a more timely fashion. The Carson City office currently had 3 clerical staff to support 38 positions. The Las Vegas office currently had 1 clerical staff supporting 15 positions.

• Decision Unit M-300 reflected the results of an occupational study completed by the State Department of Personnel that recommended a one-grade classification increase for custodial workers.

• Regarding Decision Unit M-825, The Executive Budget had recommended funding of $22,609 in the first year of the biennium to upgrade the security system at the Sawyer Building and to ensure Year 2000 compliance. On March 16, 1999, the agency administrator had testified to committee members there was sufficient funding in the Governor’s recommended budget to ensure Year 2000 compliance of state facilities.

• Decision Unit E-125 recommended funding for overtime equivalent to
  FY 1998 actual expenditures. The 1997 Legislature had budgeted $2,109 for overtime and $3,521 for standby pay in each year of the 1999 biennium. The actual amount of overtime pay during the biennium was $37,383. Committee members had been told the overtime was needed for facility-related emergencies that included snow removal, heating and air conditioning problems, and frozen pipes. The agency administrator had also mentioned to committee members the overtime pay was needed to avoid excess accumulation of compensatory time. FY 1998 had also seen the payment of $23,000 in comp time.

• As mentioned in earlier testimony, Decision Unit E-175 removed costs that duplicated the adjusted base.

• Decision Unit E-850 in The Executive Budget recommended $675,000 in each year of the biennium to address two maintenance issues. The first was to balance the HVAC and upgrade the sensors and controls at the Sawyer Building at an estimated cost of $281,425. The Budget Division, B&G administrator, and SPWB administrator had all testified regarding the need for the project.

The Chair recognized Mr. Marvel who requested Mr. Raecke respond to the air quality issue at the Sawyer Building. The Chair then recognized
Eric Raecke, Manager, State Public Works Board (SPWB) who told committee members there had been no less than three renowned experts in the field of indoor air quality who had evaluated the Sawyer Building. In every case, the experts had not been able to address any issues with the air quality. In fact, he said, the first expert had measured the air in the building for pollutants and the air inside the building was seven times cleaner than the outside air. He told committee members over 500 people worked in the building and the individuals who had constant complaints numbered approximately 15, most of whom worked for the Gaming Control Board (GCB). Those individuals had been moved to other locations in the building and SPWB was in the process of performing destructive testing in search of a cause.

The Chair asked if the experts could not find a problem with the building, was the $281,000 for the HVAC project still necessary. While he was not completely familiar with B&G’s budget, Mr. Raecke was aware B&G was requesting the addition of air sensors to track airflow in the Sawyer Building. He agreed an HVAC system should be re-balanced every
5 years to 7 years because of changes that occurred in building use and thought approximately $50,000 of the total requested would pay for
re-balancing of the airflow.

The Chair asked Mike Meizel, Administrator, Buildings & Grounds, to approach the witness table and asked him if B&G still needed the $281,000 for the HVAC project at the Sawyer Building in view of the results of the experts’ building evaluations. Mr. Meizel agreed with Mr. Raecke and told committee members $50,000 of the $281,000 represented the re-balance of the air. He said the American Society of Heating, Refrigeration, and Air Conditioning Engineers (ASHRAE) standards stated HVAC systems should be re-balanced every five years, irregardless of the building. The remaining $170,000 of the total provided for additional air sensors which he felt were necessary in view of the change in building use. He told committee members like projects had been performed in the Supreme Court building, the State Library building, and the State Capitol. The size of the Sawyer Building (250,000 sq. ft.) made the project very expensive. Mr. Meizel told committee members the additional sensors would provide a higher comfort level in the building.

The Chair said another concern committee members had was whether or not the original engineers and/or contractors of the building were responsible to make adjustments to the HVAC system after its initial installation.
Mr. Raecke told committee members the building had been constructed to all ASHRAE standards and Uniform Building Codes (UBC) in effect at that time. The building was constructed according to design and it was his opinion SPWB could not go back on an architect, engineer, or contractor as the result of a very selective problem. He pointed out SPWB had corrected the following reported problems:

• Humidity adjustment;

• Elimination of sewer smells;

• Elimination of mildew smells;

• Repair of ceiling leaks which the contractor participated in; and

• Elimination of cooking smells.

Mr. Raecke said smells from hairspray or plant spray were now being attributed to what was being called a "sick building" syndrome. He told committee members the Sawyer Building exceeded OSHA requirements and any other air pollutant measure. SPWB could not find anything wrong with the building that could be attributed to the complaints of 25 people.

The Chair said his point was perhaps subsequent checks of HVAC systems could be built-in to a building’s specification costs and eliminate the need for SPWB to seek additional funding for such modifications at a later date.
Mr. Raecke said he would work on that possibility.

The Chair recognized Senator Raggio who asked for an explanation of what re-balancing would entail in the Sawyer Building. Mr. Meizel responded the re-balancing would basically entail airflow. The dampers and air discharge levels would be checked. Senator Raggio stated the re-balancing of the Sawyer Building would cost approximately $50,000 and Mr. Meizel said that was correct. Mr. Meizel said those costs were often not seen in other budgets because they were included in the maintenance and operation category.

Senator Raggio said it was his understanding there had been complaints from approximately 15 individuals in the building and that SPWB had done everything it could to correct those issues and Mr. Raecke said that was correct. Senator Raggio stated it was employees of the Gaming Control Board who seemed to have the most problems and Mr. Raecke replied in the affirmative. Senator Raggio asked on which floor Gaming Control Board offices were located and Mr. Raecke said the second floor. Senator Raggio asked the cost to install sensors in the area occupied by the Gaming Control Board. Mr. Raecke explained the Sawyer Building consisted of six major sections. SPWB had discussed changing the filtration in that section up to about 85 percent, as opposed to the current 65 percent. Senator Raggio asked if the filtration system could be changed without additional cost. Mr. Raecke said there would be some additional cost for the filters and thought B&G could pick-up that cost through its maintenance category. He did, feel, however, once the filtration setting specification was changed, the air handlers would have to be re-balanced. Senator Raggio felt it was not productive and a waste of money to install additional sensors in the Sawyer Building in view of the objective tests that had already been performed and the fact there would always be complaints about one thing or another. Senator Raggio felt that while the re-balancing was appropriate, the legislature would be fiscally irresponsible to spend $250,000 to fix a problem which the experts said did not exist. Mr. Meizel agreed with the Senator and felt it was inappropriate to continue to spend money to fix a problem that had not been identified. He also agreed with the Senator that re-balancing was appropriate.

The Chair recognized Senator Coffin who asked if the Gaming Control Board was originally designed to be at its current location in the Sawyer Building and Mr. Meizel said that it was. Senator Coffin stated some agencies in the building generated more fumes from the chemicals they used and commented one room to stay out of was the room where the large copy machines were located. He pointed out GCB was a tree-killing agency that did a tremendous amount of copying and asked if there was a correlation between the amount of copying an agency did and the number of complaints coming from its employees. The Senator asked if consideration had been given to the installation of an air-expulsion system near the copy rooms. Mr. Meizel said the GCB copy room had been one of the first issues B&G dealt with and the exhausting system had been rerouted to the outside rather than being re-circulated back into the building. Senator Coffin wanted to know if the legislative building had a separate air-expulsion system and, if so, it was not performing very well. Mr. Meizel told the Senator B&G did not service the legislative building but would find out.

The Chair recognized Mr. Marvel who asked if the requested amount could be reduced to $50,000 and Mr. Meizel said that it could. The Chair asked if the $50,000 would include necessary permits and Mr. Meizel said that it would.

Addressing Mr. Raecke, the Chair asked if the legislature had appropriated funds in the 1997 session to address re-balancing issues and asked what amount of those funds had been expended toward that effort. Mr. Raecke said he did not have the exact dollar amount with him but that at least one SPWB employee had been in the Sawyer Building on a weekly basis for the last two years. The Chair requested the dollar figure be provided to the committee and Mr. Raecke said that it would.

The Chair recognized Mr. Burke who told committee members the final comment regarding this budget was the $176,000 proposed in FY 2001 for re-carpeting in the Sawyer Building. The subcommittee had questioned the need for re-carpeting full floors in the building. SPWB had modified its proposal to re-carpet only the high-traffic areas and reduce the cost of the project by $81,752.

The Chair turned committee members’ attention back to the overtime issue at B&G and recognized Mr. Marvel who questioned the payment of overtime and standby pay. Mr. Meizel felt one issue that was misleading the committee members was that while they were aware $37,383 had been expended on overtime, holiday pay, standby pay, and callback pay in
FY 1998, an additional amount of $23,725 had also been expended on the payment of comp time. The actual total expenditure for overtime in
FY 1998 was $61,108. Mr. Meizel agreed that 1997 and 1998 reflected high overtime amounts. He pointed out there was additional overtime during the winter months. If committee members were to look at B&G budgets historically, overtime had always been paid, even if it had not appeared in its own line item.

The Chair recognized Mr. Burke who told committee members there was one technical adjustment to bring the revenues up to the projected levels. There were two nominal decision items regarding replacement equipment to include 50 twin-sized mattresses in each year of the biennium and an increase in funding for seasonal help.

Mr. Burke said the item of special note that had been discussed in subcommittee on March 16, 1999, was regarding the negotiations for day-to-day operation and maintenance of the camp. He recalled the Girl Scouts had presented a proposal to operate the camp. Also discussed during that meeting was the possibility of transferring the center over to the State Parks Division. Discussion had been held that determined a transfer would not be appropriate unless the maintenance at the facility was current. In response to that determination, B&G had developed a list of maintenance needs totaling $319,092.

Mr. Burke told committee members there were three options they may wish to consider in regard to the Clear Creek property as follows:

• Maintain the status quo of continued management and operation of the site by B&G;

• Direct B&G to continue negotiations with all interested parties during the interim and bring a selection of alternatives to the Interim Finance Committee for final approval; or

• Transfer the site to the State Parks Division at a renovation cost of $319,092.

The Chair recognized Senator Raggio who recalled the site was operable and Mr. Meizel said that was correct. The Senator then asked how many groups used the facility during any year and Mr. Meizel said approximately 20. Senator Raggio asked if the proposal by the Girl Scouts would accommodate the groups using the facility. Mr. Meizel responded the Girl Scouts proposal was to include all groups using the facility because they needed the revenue. He said Rite of Passage would possibly be phased-out over the course of several years. Senator Raggio felt it was important to maintain the facility’s current usage and did not feel it was appropriate for it to be transferred to the State Parks Division at this time in view of the state’s fiscal status. He suggested B&G continue negotiations during the interim and keep in mind it was possible the site would be converted to a park at some time in the future. Mr. Meizel said B&G’s goals were to maintain the current usage of the facility and maximize revenue. He told committee members B&G had also discussed the facility’s use with a boarding school group. The boarding school would use the facility during approximately one-third of the winter when it was not used by any other groups.

The Chair recognized Senator Rawson who felt it was not the legislature’s job to provide a facility like Clear Creek to non-profit groups. He felt strongly the legislature’s direction should be to transfer the site to State Parks. He suggested any negotiations include discussion that indicated the agreement was temporary and the facility would ultimately become a state park.

The Chair recognized Ms. Evans who said she agreed with Senator Raggio’s and Senator Rawson’s testimony and asked if a time could be set for an Interim Finance Committee (IFC) report sometime after the first of the year 2000. In other words, she did not want to be faced with the same discussion in two years. She felt that time frame would allow for adequate discussions and recommendations. Mr. Meizel said he would report back to IFC at its first meeting after the first of the year 2000.

The Chair recognized Mr. Burke who told committee members there was one small technical adjustment in this budget to bring base raw water sales up by $2,879 in each year of the biennium to match FY 1998 actual amounts.

Decision Unit E-125 recommended $2,387 in FY 2000 to contract for a diver to inspect the dam outlets at Marlette Lake and Hobart reservoir.

Mr. Burke said there were two items of special note as follows:

• A question had been raised during the March 16, 1999 subcommittee meeting regarding historical water rates. B&G had indicated the rate was $0.16 per thousand gallons of raw water from the early 1970’s to 1992. At that time, the rate increased to its current level of $0.25 per thousand gallons.

• Regarding the subcommittee’s questions about the reserve, B&G ended FY 1998 with a cash balance forward of $60,883 and the reserve at the end of FY 2001, with adjustments, would be $20,448. The subcommittee had been concerned that the expenditure and usage patterns would not sustain the system during the 2001-2003 biennium. Mr. Burke said the agency administrator had testified the ending reserve balance would likely double and that led to discussions of the Carson water treatment plant possibly being turned over to the City of Carson. As subcommittee members were aware, the agency was in negotiations with Carson City for continuation of water rates to the state agencies at $0.85 per thousand gallons if the water treatment plant was dismantled. The rate charged to Carson City for raw water would be reduced to $0.20.

The Chair recognized Mr. Dini who commented on the meters used to meter the water to Storey County. It was his understanding a disparity had recently occurred involving 4 million gallons of water that never reached Storey County but for which the county was billed. He asked if discussions had not be held to place a meter at the Lakeview site and one at the top to determine the loss and Mr. Meizel said those disparities occurred during the summertime. He advised Storey County had installed a meter right above Lakeview two summers past and the results had been inconclusive. Mr. Meizel said B&G had left the installation of additional meters up to Storey County and had offered agency assistance. Mr. Dini felt it was important to find out where the loss was occurring and stop it. Mr. Meizel felt strongly the loss did not occur on the state side, but rather somewhere between five-mile reservoir and its destination. He added the loss was an ongoing study.

The Chair recognized Rick Combs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau. Mr. Combs told committee members staff had made the following technical adjustments to this budget account:

• To remove conference travel from the base budget because the manager had indicated those conferences were one-time expenditures and would not be attended by SPWB staff in the future.

• The costs for a fax machine and server recommended in Decision
  Unit E-710 had been adjusted based on the new positions being added in SPWB Inspection Budget Account 1562.

• The costs for computer hardware and software recommended in Decision Unit E-710 had been adjusted based upon the Purchasing Division’s new pricing information.

Mr. Combs identified the following budget closing issue for committee members’ consideration:

• Decision Unit E-125 recommended funding to conduct hearings of appeals that resulted from the qualification of bidders on public works projects, a requirement put into law in A.B. 547 (1997).
  The Executive Budget was built on the idea that a member of the board would conduct the hearings with the assistance of SPWB staff. At the subcommittee hearing conducted February 23, 1999, the manager indicated he would prefer to have the hearings officer from the Hearings Division of the Department of Administration conduct those hearings. Estimated prices had been received from the Hearings Division and placed in a special category for expenses related to the qualification of bidders.

The Chair recognized Mr. Combs who told committee members the following technical adjustments had been made to this budget:

• The elimination of additional expenditures for personal vehicle use recommended in Decision Unit E-125 in view of recommended funding for two additional motor pool vehicles for the agency.

• Expenditures for the use of state-owned aircraft had been removed from Decision Unit E-125 based on discussions with the manager that indicated there were no plans to use state-owned aircraft during the biennium

• Expenditures for equipment repair recommended in Decision Unit E-125 were eliminated based on the fact that the current amount in the base exceeded the agency’s 3-year average of expenditures on those items.

• The costs for computer hardware and software recommended in Decision Units E-127 and E-710 were reduced based on updated pricing information provided by the Purchasing Division.

Mr. Combs identified the following issues regarding Decision Unit E-125:

• Whether or not the subcommittee wished to:

Mr. Combs explained The Executive Budget recommended funding for six additional positions in Decision Unit E-127. Based on the manager’s testimony at the subcommittee hearing, and subsequent discussions, four of those positions were being eliminated. Those positions had been requested to deal with a backlog of school plans that had not been checked for fire safety code requirements. He advised committee members the SPWB and the Fire Marshal had developed a better working relationship and there was no longer a backlog of school plans. The two positions that had not been eliminated were a Program Assistant and an Accountant Technician. The Program Assistant position would assist with the new program for the qualification of bidders and the Accountant Technician position would assist with preparing and reviewing documents necessary to perform construction management services. SPWB had indicated the Accountant Technician position was necessary to implement a cost allocation plan for charging inspection fees to its capital improvement projects to support the costs of the account. Staff recommended approval of the Accountant Technician position contingent on a commitment to develop a cost allocation plan by the next biennium.

Mr. Combs told committee members Decision Unit E-710 represented the funding for replacement equipment as well as computer software and hardware. He said there were originally five replacement CAD workstations in The Executive Budget. Discussions with the agency had determined two of those stations were less than 1-year old and the agency agreed those stations could be regular PC’s rather than the more expensive CAD workstations.

There being no further business, the meeting was adjourned at 9:15 a.m.

RESPECTFULLY SUBMITTED:

Debbie Zuspan,

Committee Secretary

APPROVED BY:

Assemblyman Morse Arberry Jr., Chairman

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APPROVED BY:

Senator William J. Raggio, Chairman

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