Seventieth Session

May 4, 1999

The Assembly Committee on Ways and Means was called to order at 3:45 p.m. on Tuesday May 4, 1999, Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All Exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Mr. Morse Arberry Jr., Chairman

Ms. Jan Evans, Vice Chair

Mr. Bob Beers

Mrs. Marcia de Braga

Mrs. Barbara Cegavske

Mr. Joseph Dini, Jr.

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. John Marvel

Mr. David Parks

Mr. Richard Perkins

Mr. Bob Price

COMMITTEE MEMBERS ABSENT:

Mrs. Vonne Chowning

STAFF MEMBERS PRESENT:

Mark Stevens, Fiscal Analyst

Gary Ghiggeri, Deputy Fiscal Analyst

Cynthia M. Cendagorta, Committee Secretary

Don Hataway, Deputy Director of the Budget Division, said when his division prepared the budget the balance of the emergency fund was $302,000, so the $97,000 was needed to restore the fund to approximately $400,000. Since that time the division had paid out an additional $25,000. The division would not request any additional adjustment considering how tight the budget was. Mark Stevens, Legislative Counsel Bureau (LCB), said the bill would replenish the balance in the emergency account.

Mr. Hataway said the biggest payout from the fund over the biennium had been for National Guard-types of incidents where the Governor had called out the Guard.

The hearing on S.B. 159 was closed after there was no further testimony to come before the committee.

Mr. Hataway said the bill was requested by statute and allowed the executive branch to reimburse the Legal Division of the LCB for expenses in preparing legislation. The $150,000 in the bill was the amount given to the division by the LCB.

With no further testimony to come before the committee, the hearing on S.B. 250 was closed.

Assemblyman Dennis Nolan stated A.B. 170 had been heard before the Elections and Procedures Committee. There was a great deal of support for the bill by former and current legislators. The bill would provide a supplemental allowance for legislators who lived over 50 miles from the capital and therefore had to maintain a second household during the legislative session. The amount of the additional supplement was indexed by the Fair Housing Act and was commensurate with the cost for a one-bedroom dwelling in the Carson City area for the duration of the legislative session. At that time, the average was in the $550-600 per month range. The salary of the legislators was not adequate to maintain two households and dependents. There were people who were dissuaded from running for the state legislature because of the financial disincentive. The suggestion was made that the money could come out maximum amount allowed for travel expenses. Chairman Arberry asked if the federal government would allow the legislature to do that. Mr. Nolan said it was his understanding it would be allowed. Mr. Beers said it probably would be considered income as well. Mr. Dini said if the legislator did not go over what the IRS allowed in a particular community, he or she did not have to itemize the per diem pay they received.

Rick Bennett testifying as a former legislator, indicated he supported the bill in the Elections and Procedures Committee, and added the financial commitment related to serving in the legislature was becoming an increasing burden. He felt anything the committee could do to lessen that burden was good for the State of Nevada.

Carole Vilardo, Nevada Taxpayer’s Association, supported A.B. 170. The association urged favorable consideration of the bill.

With no further testimony to come before the committee, the hearing on A.B. 170 was closed.

Ms. Vilardo, representing the Nevada Taxpayers Association said the discussion among a number of trade associations had started in the 1997 legislative session about the concern for the amount of pay the legislators were receiving. Her association had consistently supported a raise for legislators. On October 25, 1998 Ms. Vilardo and Darryl Capurro sent out a letter asking the trade associations for support.

Ms. Vilardo said the bill mandated legislators’ salaries be raised to $250 per day, which would become effective after the legislators run for re-election. The Senators would have to run for re-election also, which meant no one who voted for the bill would benefit immediately. Also, the last pay increase approved by the legislature was in 1985. The present increase would not be available until 2001, which was a long time away. In addition, the candidate workshops the association ran had consistently dropping numbers. There was a strong financial disincentive to run for office.

Ms. Vilardo read a statement from the findings of the Commission to Study Legislative Pay Raises in 1989 that Governor Kenny Guinn formerly chaired.

Ms. Vilardo urged the committee’s support. Mr. Hettrick said he supported the issue last time and would again. He said what the state asked legislators to do was a joke, in particular those from southern Nevada. When people came to the legislature and asked how much money the legislators made they gasped when they heard how little it was. When they asked when the last raise was and heard it was 16 years ago they were amazed and asked why a legislator would do the job. Mr. Hettrick said it was time the state did something reasonable. He hated to see the raise characterized by percentages because it looked large, when it was really not. The state kidded itself on the legislators’ expenses as well. The $2,000 check they were handed and the postage amount that was fixed since 1864 were not realistic. If the state wanted to have meaningful government and to have people serve, this issue needed to be addressed. Mr. Arberry said he agreed, and hoped everyone would support the bill.

Ms. Vilardo said they had talked about the political difficulties of the association’s perception that they had not been able to move a pay bill out for three or four sessions. There was obviously a concern over the amount and if it would take another 18 or 20 years before the people who came later were able to convince the next group of legislators that they needed a pay raise. Looking at the political practicalities, she knew there had always been a concern from legislators who could not give other state workers salary increases for whatever reason. The association felt there should be a provision with an automatic escalator that would not kill the bill. Therefore, if public employees did not get a raise that year, the legislators would not receive a cost of living increase. Mrs. Evans said the idea of indexing was a good one, and that what made it palatable was that the legislators would not get a pay raise if the public employees did not.

Mrs. Cegavske said she opposed the bill last session and intended to do the same again. She felt there was a need for a pay raise, but she felt no one in office should be voting on the bill with the intent that they would be running again. She firmly believed no elected official should vote for something that benefited them salary-wise. If there was a commission or a vote of the people, that would be different. She added that the legislature had no money that session for anyone else so she could not even look at giving herself a raise, even if it was in 2001.

Ms. Vilardo said the bill could be amended, and she appreciated what Mrs. Cegavske was saying. She added that the only people who would be filing and running in the future would be the incumbents if the pay was not made more reasonable. From her perspective, she wanted to know that people had the ability to exercise the right to run for office. Someone had to start the ball rolling to attract future legislators.

Mr. Capurro, Nevada Motor Transport Association, said he did not know of any other profession where an employee would accept a pay raise every 15 years. The issues were more complicated, and the demands on the legislators time had increased. Mr. Capurro had been a member of the 1994 salary commission. He said there was a concern then the taxpayers would not understand exactly what the value was of having a decent living wage to serve in the capacity of representative. The recommendations that came out of the 1994 commission were for a $24,000 annual salary and for participation in the state health insurance program. That commission represented some broad interests in the state, including Common Cause. Mr. Capurro said his concern was that the number of people who were willing to devote time to public service was dwindling very rapidly. This was due to the fact that it was simply not worth it to serve in the legislature, considering all the legislators had to go through. He did not think the electorate intended that legislators work another 15 years without a pay raise. He thought the bill was inadequate in light of what previous commissions had found, but he thought it was a step forward and provided a helpful indexing system.

Mrs. Evans asked if there was anything in the bill that would preclude any legislator who felt the pay raise was inappropriate to refuse it. Mr. Capurro said he did not know the answer, but felt if that were the case the legislator should be able to do so if the bill was so amended. Mrs. Evans felt it was right that a person should be able to opt out of receiving the raise. Mr. Hettrick said he would amend the bill to specifically say that anyone who felt it was inappropriate could opt out. He added his net paycheck after taxes and retirement was $24.12 per day for the first 60 days. He did not see how people in the state could expect citizens to serve for that kind of paycheck. Someone had to step up to the plate and vote for the bill.

Ms. Giunchigliani said the whole issue was to be honest with constituents. The bill did not affect the present legislature, and for those who did run again, honesty was the best policy. If the person had voted for the raise, they would just have to say that outright when they ran. She added it was disingenuous to not let people know the legislators did not make an adequate salary to deal with their costs, and for other people down the road to maintain a citizen legislature. At some point, people would have to decide if they could afford to run again. Chairman Arberry commended the lobbyists for coming forward with the issue since he understood they took a lot of heat for the issue.

Peter Krueger, representing various trade associations like the Nevada Rental Association, said the citizens who elected the legislators were not paying them for what they were worth. He put the blame for the failure for those kinds of reasonable compensation packages to pass at the feet of many of the media people. This was because the issue generated sensational headlines. Mr. Krueger said he could not get the small business owners he worked with to take the time and the pay cut to come to the legislature and serve. If the citizens saw how hard the legislators worked and the time they spent, they would feel differently. He urged the committee to support the bill so the state could attract good legislators.

Mrs. Cegavske said she was not opposed to a pay raise, but felt strongly about how that came about. When she ran she knew full well how much money she would be paid. She felt there were a couple of options other than asking the legislators to approve their own pay raises, which she felt was wrong.

Cheryl Blomstom, Nevada Chapter of Associated General Contractors, said it was time for the legislature to raise the pay in order to keep it a citizen’s legislature.

Cami Dempsy, Las Vegas Chamber of Commerce, said the chamber supported the bill and felt the legislators should be more adequately compensated.

Ray Bacon, Nevada Manufacturer’s Association, stated if anything the bill probably did not do enough to address the ongoing and interim expenses of the legislators. He hoped though the first step would be taken by passing the bill.

Amy Hill, McMullen Strategic Group, said her clients supported the bill and were committed to defending it. The time had come for the bill and it was more than appropriate.

Jim Richardson, Nevada Faculty Alliance Chapters, stated he supported the bill, and that it was a long time coming and needed to be passed. He was astonished when he found out years earlier the legislators did not have health insurance, and felt that program should be available to legislators who desired it.

Mary Lau, Executive Director of the Retail Association of Nevada, supported the bill. The legislature was the people’s business, and part of the concern they should have was not only should legislators vote for a raise for themselves, but for the future and the quality of legislators the state could attract. The bill, if passed, probably would not make the job affordable, but would be more of an incentive. The job was one in the people’s legislature, but that did not mean the people serving could not be paid for what they did. The members of the Retail Association had instructed her to support the bill, and she urged the committee to do so also.

Maureen Brower, former legislator, said she supported the bill. She had seen people lose their jobs and have their businesses suffer due to the time they spent serving in the legislature. She understood Mrs. Cegavske’s point, and said if there was another option that was workable the committee should act on that. At that time though, she felt the best option was to vote for the bill as it was.

With no further testimony to come before the committee concerning A.B. 600, the hearing on the bill was closed.

Mr. Stevens said federal law allowed money to be contributed to a trust known as a Taft-Hartley Trust to be used to support apprenticeship programs. The trusts were non-profit entities, exempt from federal taxes, and proceeds of the trust were controlled by a group of trustees usually made up of an equal number of employee and employer representatives. The bill would exempt apprenticeship programs from sales tax. The fiscal note cited a revenue loss and indicated of the 13 applications for exemption that were processed, 8 were approved, 4 denied and 1 was pending. The Southern Nevada Operating Engineers program, for example, was exempt, while the Northern program was not. The Tax Commission was taking a look at the issue on a case-by-case basis, and was deeming some exempt and some not. The bill would clarify that all apprenticeship programs would be educational and exempt from sales tax.

MR. DINI MOTIONED DO PASS.

THE MOTION WAS SECONDED BY MS. GIUNCHIGLIANI.

THE MOTION PASSED WITH ELEVEN AYES AND TWO NAYS.

Mr. Stevens said the bill was the property tax exemption for apprenticeship programs. Prior to the 1990’s apprenticeship programs were routinely granted those exemptions. The Clark County District Attorney reviewed the statutes at some time and determined that property held in trust in those programs did not qualify. Union representatives approached the 1997 legislature and won approval of A.B. 476 which exempted real and personal property of apprenticeship programs owned by a state or local committee. However the property was owned by a trust and not an apprenticeship committee so they were not granted an exemption. Therefore A.B. 211 was an attempt to correct the language to grant the exemption that was intended by the 1997 legislature.

MRS. EVANS MOTIONED DO PASS.

THE MOTION WAS SECONDED BY MR. MARVEL.

THE BILL PASSED UNANIMOUSLY.

Mr. Stevens said the bill authorized up to $10 million in General Obligation bonds to support water conservation projects.

MR. MARVEL MOVED DO PASS.

MRS. DE BRAGA SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY.

Mr. Stevens said the bill was a one-shot appropriation that was included in The Executive Budget to purchase customer management systems at Department of Motor Vehicles & Public Safety management offices. Normally maintenance costs were not included in one-shot appropriations, but there was discussion of adding $25,180 to get the department through the biennium for maintenance costs of the systems.

Ms. Giunchigliani asked where that interfaced with the Genesis program. Mr. Stevens said there were two systems being used at that time at the Sahara office in Las Vegas and in Henderson, while the bill would add the offices located at West Flamingo and Kerry Avenue. The issue did not really have anything to do with Genesis.

MR. PERKINS MOTIONED DO PASS.

MR. HETTRICK SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY.

Mr. Stevens said there had been some additions and subtractions from the bill based on budget closings which required an additional $1,161 that needed to be added to the bill.

MR. DINI MOTIONED AMEND AND DO PASS.

THE MOTION WAS SECONDED BY MS. GIUNCHIGLIANI.

THE MOTION PASSED UNANIMOUSLY.

Mr. Stevens said the bill came over from the Judiciary Committee. Mrs. Giunchigliani said there was another bill that dealt with the person who came in contact with contaminated fluids. Mr. Stevens said the revision substantially reduced the fiscal note.

MRS. EVANS MOTIONED DO PASS.

THE MOTION WAS SECONDED BY MS. GIUNCHIGLIANI.

THE MOTION PASSED UNANIMOUSLY.

Mr. Stevens said the bill would be a longer range forecast than was currently done by the Economic Forum.

MR. MARVEL MOTIONED DO PASS.

THE MOTION WAS SECONDED BY MS. GIUNCHIGLIANI.

THE MOTION PASSED UNANIMOUSLY.

MR. MARVEL MOTIONED DO PASS.

THE MOTION WAS SECONDED BY MS. GIUNCHIGLIANI.

Chairman Arberry noted the biggest concern was that the legislature would be obligating a future legislature, which was not the intent, and needed to be clear.

THE MOTION PASSED UNANIMOUSLY.

Mr. Stevens said the bill was required since revenues from the parking violating program did not materialize in FY 1998 and the monies were needed n to make that shortfall.

MS. GIUNCHIGLIANI MOTIONED DO PASS.

THE MOTION WAS SECONDED BY MR. HETTRICK.

Mrs. Evans asked exactly what the bill was going to address. The concern was an unexplained sharp decrease in motor vehicle privilege tax revenues. She had recently received information from a reliable source that said there was a huge backlog of unprocessed mail-in registration, so the numbers were all skewed. She asked if there was a way to verify that large backlog. Mr. Stevens said that issue did not have anything to do with the parking violation.

THE MOTION PASSED UNANIMOUSLY.

MR. HETTRICK MOTIONED DO PASS.

MR. PERKINS SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY.

MR. PERKINS MOTIONED DO PASS.

MRS. DE BRAGA SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY.

The Ways and Means Committee hearing was closed at 5:30 p.m.

RESPECTFULLY SUBMITTED:

________________________________

Cynthia M. Cendagorta

Committee Secretary

APPROVED BY:

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Morse Arberry Jr., Chairman

DATE:_______________________