The Assembly Committee on Ways and Means was called to order at 9:45 a.m., on Tuesday, May 11, 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

Mr. Bob Beers

Mrs. Barbara Cegavske

Mrs. Vonne Chowning

Mrs. Marcia de Braga

Mr. Joseph Dini, Jr.

Ms. Chris Giunchigliani

Mr. David Goldwater

Mr. Lynn Hettrick

Mr. John Marvel

Mr. David Parks

Mr. Richard Perkins

Mr. Robert Price

COMMITTEE MEMBERS ABSENT:

Mrs. Jan Evans, Vice Chair (Excused)

STAFF MEMBERS PRESENT:

Norman Robison, Senior District Judge provided background to the bill. The District Judges’ Association was trying to parallel the Judicial Retirement Plan to the Public Employees Retirement System (PERS) as much as possible. Those justices who were in or vested with PERS before coming to the bench were allowed to remain in that system.

In the Judicial Retirement System, credit was accrued at a different rate. A judge accrued at 4.16 percent per year beginning at year-5. Justices reached a 75 percent retirement at the end of 22 years. PERS candidates achieved
75 percent retirement at 30 years at a rate of 2.5 percent per year.

Judge Robison testified Assembly Bill (A.B.) 592 was an attempt to parallel both systems as much as possible. It would allow a judge in the Judicial Retirement System credit for all the years served on the bench with vesting in 5 years. Judges would accrue credit at 3.4 percent. The end result would still be a
75 percent retirement at the end of 22 years, but a judge who served only one term would have approximately 20 percent credit toward retirement instead of 8.3 percent under the current system. Under the current PERS system someone with the same tenure would accrue 15 percent for the same 6 years.

The only fiscal impact would occur if a judge retired with less than 22 years of service. Judge Robison noted he knew of no judge currently that had less than 22 years and who was contemplating retirement.

Judge Robison advised the committee that the District Judges’ Association had requested four separate bills concerning retirement statutes and the bills did not conflict with each other. All the bills were aimed at aligning the Judicial Retirement System and PERS.

Assemblywoman Chowning asked if any of the judges contributed any of their own salary to the retirement system. Judge Robison replied that back when he was in PERS the judge contributed half and the state contributed half. Currently the state contributed 100 percent for judicial retirement.

Assemblywoman Chowning asked why everyone else in the state retirement systems contributed part of their salary toward retirement and that was not done in the judicial system. Judge Robison stated he believed all state employees were paid for at 100 percent by the state and that was true of most counties. That was not the case with Legislative retirees. Judge Robinson stated he thought there were three retirement systems, judicial, state and legislative.

Mark Stevens clarified within the state employee system there were two plans, one where employees paid 10 percent and the state paid 10 percent or employer-paid retirement where the state paid 18.75 percent. State employees took a pay reduction of 9.2 percent before the state paid 100 percent of their contribution.

Assemblyman Marvel asked if "retirement" meant not being re-elected also. Judge Robison stated it could mean that if the person was vested in the system. The Judge stated the intent of the district judges was that the judges and judicial employees would vest in 5 years, the same as in PERS. He added if the person was vested, 60 years old, and was not re-elected they could enter retirement status.

Assemblyman Perkins asked why didn’t the judicial retirement exactly mirror PERS since A.B. 592 was trying to more closely align the two. Currently the Judicial Pension Fund was funded through the General Fund. Assemblyman Perkins suggested a judicial contribution and a state contribution be authorized, create an arm of PERS, do the investment portfolio, and save millions and millions of dollars in the long run. Mike Griffin, Judge in Carson City and Storey County responded an interim study was done by the legislature to determine if funding the judicial retirement could be done through funds from the General Fund. It had been decided not to do that because of the funding shortfalls.

Judge Griffin added the judicial retirement funding was always different in the past because they were not funded under the full faith and credit of the state. A number of judges took the bench at a much older age than those in typical career paths. More recently a number of younger judges started getting on the program and that was the reason for some of the changes.

Assemblyman Perkins asked if Judge Griffin agreed that the proper method of funding would be to create an arm of PERS because that at some point in time a budget deficit would result unless that was done. He asked if the judges were willing to contribute a portion of their salary with a match from the state to create a separate arm of PERS. Judge Griffin replied he did not know what amount would be sufficient to fund such a proposal. Currently most state employees had an option of contributing something but it was state-funded for most of them. The judges were willing to explore any option that made it possible for them to have the same type of treatment any other state employee had.

Judge Robison stated he understood there was another potential being explored, that the legislature could set a time certain where the new judicial electees and appointees went into PERS at the different rate and they started funding it as they went along. He explained several years ago when he was contributing, the judges were contributing half of the contribution and the judicial retirees were not. He recommended those in the judicial system who were in PERS could stay, and only new appointees or electees would be allowed to join in the future and that process would avoid a lump sum jump into PERS.

Brian Doran, Deputy State Court Administrator testified the Administrator of the Court and the Supreme Court were in sponsorship of A.B. 592. He noted the first reprint of the bill reflected the change to allow judges to vest in retirement at 5 years.

Chairman Arberry stated since both Judge Griffin and Judge Robison were at the table he would temporarily close the hearing on A.B. 592 and open the hearing on A.B. 622.

Judge Mike Griffin, representing the District Judges’ Association testified the association supported A.B. 622. He stated the current statutes regarding judge’s widows were archaic. The bill would increase widow benefits to $3,000 per month. He was not aware how many current surviving widows would meet the qualifications and create a fiscal impact on the bill.

Mr. Doran stated the bill was being supported by the Supreme Court and the District Judges’ Association because the current minimum was $2,000, which was set back in July 1991. Due to inflation the purchasing power of that minimum benefit had eroded to as little as $1,600. The current plan had no built in cost of living adjustments. Every surviving spouse began drawing the $2,000 at age 60. In the past a statutory change had been required to address the problem.

A.B. 622 sought to correct the inequity of the decreasing value of the benefit due to inflation based on cost of living increases obtained under the PERS system.

The request was consistent with what was being done in other states. At present 34 states used a percentage of the deceased judge’s salary as a base for the surviving spouse. Of those, 28 states used 50 percent or higher.

The bill mirrored benefit Option Four of the PERS retirement plans.

Assemblyman Marvel asked if a deceased judge’s surviving spouse was eligible for Social Security benefits, were those reduced when the spouse became eligible for the widow benefit. Mr. Doran replied Social Security benefits were not reduced.

Assemblywoman Giunchigliani asked if the bill would provide a built-in Cost of Living Allowance (COLA). Mr. Doran replied the bill would simply bring the minimum benefit up from $2,000 to $3,000 per month. The plan would function the same as PERS. He explained a member had to be in PERS system 5 years before COLA benefits were automatically provided. Assemblywoman Giunchigliani confirmed the spouse would have to be collecting benefits for
5 years before the COLA benefits would start. Mr. Doran replied the correct time frame would be that there would be no increase in the first three years. For years four, five, and six, there would be a COLA increase of 2 percent.

Assemblywoman Giunchigliani stated the bill read that even if the judge had not retired, but was deceased with sufficient years of service the widow would be eligible for benefits.

Assemblywoman Giunchigliani reiterated the bill would raise the minimum benefit by $1,000 per month and add in COLA benefits. She asked what the average spouses got currently from other retirement plans. Mr. Doran replied if they tried to use the PERS Option Four as a parallel, the difference would be approximately $300. A person under PERS benefits at the same point would be receiving $2,700 per month.

Assemblywoman Giunchigliani asked why the judges would choose Option Four when most retirees chose Options One or Two. Mr. Doran responded they had simply selected one of the seven options offered by PERS.

Assemblywoman Giunchigliani stated it might be interesting to see what the figures would work out to if another PERS option was mirrored. Mr. Doran advised the committee that another bill had been introduced that mirrored Option Two.

Judge Robison explained Senate Bill (S.B.) 514 contained Option Two. He added if a judge retired and passed away, the surviving spouse had to be
60 years old and not remarried to receive any benefits at all. One judge had a 46 year-old wife, was eligible to retire. If something happened to him, his wife would get nothing for 14 years. Assemblywoman Giunchigliani stated that was similar to what Option One under PERS provided. Judge Robison stated he understood Option One allowed a 25 percent benefit at the time of the death of the spouse.

Chairman Arberry asked if there was anyone else present to speak on behalf of either A.B. 592 or A.B. 622.

Michael Gibbons, District Judge in the Ninth Judicial District stated he was on the Legislative Committee of the District Judges’ Association and was present to represent the association. The association supported A.B.592. He explained the bill reduced the amount a judge received per year. Through the amendments, it allowed vesting in 5 years.

Judge Gibbons stated for each year of service a judge would earn a rate of
3.4 and would have 17 percent at 5 years and nothing prior to that time. Under the current law, the judges began earning in the first year at a rate of
4.1 percent.

The Judicial Retirement System was established for reasons that distinguished it from PERS. Most attorneys who became judges did so at an average age of 45. If public service was not started until that age, it took quite a while to get into the retirement system. Most people in the PERS system were much younger. At present there were 7 Supreme Court Justices and 55 District Court Judges. About half were already in PERS and half were in the Judicial Retirement System. Thus the bill could affect roughly 30 people. But some of those people had already reached 22 years of service so the final number affected would be even less.

The only time A.B. 592 had a fiscal effect was if a judge retired with less than 22 years of service and was in the Judicial Retirement System. The fiscal impact from the bill should be minimal. The bill was a fairness issue and made a lot of sense.

Judge Gibbons stated he was also present to support A.B. 622. The association was also trying to achieve some fairness for surviving spouses. The language in the statute was ancient and placed a penalty on a person because if they remarried they received no benefits, even though benefits were earned during the course of their marriage. He recommended if the bill were to be amended, the language concerning remarriage should be deleted, as it was not the original intent of the bill.

Seeing no further testimony either for or against A.B. 592 and A.B. 622 Chairman Arberry closed the hearing on those bills with no action taken.

Mark Stevens, Legislative Counsel Bureau staff reviewed the bill. He noted the bill was heard approximately one month previous. He supplied committee members with two proposed amendments to the bill for the members to review (Exhibit C).

Mr. Stevens explained the amendments would allow individuals who served in the legislature to elect to continue in PERS during the legislative session. It would allow the individual to make the PERS payment and use the that credit toward their service credit. The legislator could elect to use the payment for Legislative Retirement to be credited to PERS and no longer contribute to the Legislative Retirement System.

Mr. Stevens stated the issue was that the individual legislator was currently out of the PERS system while they were serving in the legislative session. The bill would allow those individuals to continue to receive service credit if the proper actuarial amount was paid into the PERS system during that period.

Assemblywoman Giunchigliani disclosed she was a public employee and when she was teaching she contributed to the PERS system. She asked if the bill would allow her to choose her legislative fund contribution be sent to PERS and then offset the additional cost personally to make the entire actuarial rate. She stated she would appreciate consideration of the bill. Mr. Stevens replied that was how he read the amendment. Assemblywoman Giunchigliani explained because of her legislative service she was approximately 4 years behind on retirement credits and the bill would be of assistance to her.

Assemblyman Goldwater stated the bill was a good concept but asked why all legislators could not be allowed to contribute into the PERS system. He asked why all legislators could not opt out of the legislative retirement plan and have the funds directed to their own contribution or benefit plan. He stated the bill gave public employees preferential treatment. The Chair explained some of the legislators might not be losing time in their other retirement systems while those who were regularly under the PERS system were losing time each day.

Assemblyman Goldwater stated everyone lost time and his point was that everyone should be allowed to opt out and contribute to their primary plan. Chairman Arberry stated he had brought the amendment not to isolate any particular group. Serving in the legislature had some drawbacks. The Chair added legislators were losing financially and then lost even more when they attempted to retire. He had no problem with opening it for everyone.

The work session on A.B. 189 was closed with no action on the bill.

Assembly Bill 220: Makes appropriation to University and Community College System of Nevada for needs assessment and implementation plan for 4- year state college in Henderson, Nevada. (BDR S-1231)

Chairman Arberry explained Assemblyman Perkins had given testimony the previous day on the bill. The bill proposed a feasibility study and implementation plan for a college in Henderson. The Chair stated he and the sponsor were in agreement to reduce the amount to $500,000 that would fund a study to determine if it was feasible to have a campus or new school in Henderson.

SPEAKER DINI MOVED TO AMEND AND DO PASS A.B. 220.

ASSEMBLYMAN GOLDWATER SECONDED THE MOTION.

Assemblywoman Giunchigliani asked what the $500,000 would buy. The Chair explained it would study the feasibility of placing a state college in Henderson. If the study was less than the $500,000, the remainder would revert.

Assemblyman Marvel asked if the study would be done purely under the discretion of the Board of Regents or was there another group that could actually ask for the study. Assemblyman Perkins replied according to the bill, the Board of Regents would administer the study.

Assemblyman Marvel asked if Assemblyman Perkins was comfortable with that plan. Assemblyman Perkins replied he was with the wording of the bill, which called for "completion of a needs assessment and an implementation plan."

Chairman Arberry opened the work session on A.B. 342.

Staff stated the next two bills were the last two Assembly one-shot appropriations included in The Executive Budget.

A.B. 342 was an appropriation to the Department of Motor Vehicles and Public Safety (DMV) for expenses related to production of license plates.

The issue addressed by the bill was redesigning the "goat" plate and provided for refurbishing of the older blue license plates.

The amounts in the bill had been reduced. Based on staff recommendation, the total on line 3 of the bill would be reduced from $4.9 million to $3,773,076. On line 4, refurbishing the blue license plates would be reduced to $148,867. At line 6 which provided for redesign of the existing standard license plates the amount would be reduced to $3,610,140 and on line 8 the amount for special license plates would be changed to $14,069.

Fiscal staff had worked with DMV and the department had agreed to the revised amounts.

Assemblyman Marvel asked if the provision was in The Executive Budget.
Mr. Stevens replied it was in the budget as a Highway Fund appropriation.

ASSEMBLYMAN MARVEL MOVED TO AMEND AND DO PASS A.B. 342.

ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.

Chairman Arberry asked Assemblywoman Chowning to make the floor statement. The Chair opened the work session on A.B. 343.

Staff stated A.B. 343 requested a General Fund appropriation to the Division of Parole and Probation for completion of their agency automation project. The bill recommended $188,493 appropriation and staff had worked with the agency to review the funding. Staff recommended the amount be amended to $161,478 for two reasons. In addition, the number of computers was expected to be reduced from 59 to 54. There was a decrease in the price of computers from what was in The Executive Budget based on revised prices from the Purchasing Division. The Division of Parole and Probation had agreed to the revised amount.

ASSEMBLYMAN MARVEL MOVED TO AMEND AND DO PASS A.B. 343.

ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY WITH ASSEMBLYMAN PRICE AND ASSEMBLYWOMAN EVANS ABSENT FOR THE VOTE.

Chairman Arberry asked Mr. Marvel to give the floor statement for the bill. The Chair opened the work session on A.B. 663.

Staff stated the bill was the Administration’s bill to revert the $5 million appropriation related to the Virginia and Truckee Railroad project. An amendment on the bill was proposed during the hearing on April 15, 1999. The committee might wish to consider the proposed amendment.

Speaker Dini stated the proposed amendment was to take the language in the existing law and add it into the bill. It would also authorize $5 million in bonds within 4 years. He added if proponents of rebuilding the railroad could raise the required $15 million, the bonds could be issued by year 2003. The state would be repaid by a percentage of every ticket sold on the rebuilt railroad. The state would also get a first security interest on the railroad track, right-of-way, and all assets of the Tri-County Railway Commission up to $5 million.

The Speaker explained a great deal of work had gone into the project since 1995 to rebuild the rail line. The project would be a regional tourist attraction that proponents had put a lot of work into.

Speaker Dini said the state needed the pledged $5 million back during the tight budgetary time, but with the amendment, the same law could be put in place. The difference would be that the Board of Finance could issue the bonds if sponsors of the project raised the $15 million in matching funds.

SPEAKER DINI MOVED TO AMEND AND DO PASS A.B. 663.

ASSEMBLYMAN MARVEL SECONDED THE MOTION.

Assemblywoman Chowning asked if the amendment included extension of the sunset date to June 30, 2003. Speaker Dini stated it did.

Assemblyman Beers asked if a written version of the amendment could be provided and the bill held for a day to digest the information.

Speaker Dini stated the language of the bill was in existing law that provided a direct appropriation of $5 million. The bill would take the current language and change it to a $5 million in bond authority and revert the $5 million cash back to the treasury.

Assemblyman Hettrick asked if the bonds would not be offered until the match money of $15 million was met. Speaker Dini agreed. Assemblyman Hettrick said the bill would have no current expense to the state and the bill would authorize a bond to fulfill the obligation already made by the legislature assuming the match was met.

Speaker Dini stated in the year 2003 the bond would have to be re-authorized or the Governor would have to find another means of funding the project. He noted the Governor fully supported the project.

Assemblyman Beers confirmed the original appropriation of $5 million was contingent on the Tri-County Railway Commission first raising $15 million. Speaker Dini agreed and added the funds had remained in the treasury and the state had received the interest.

Speaker Dini commented it took a lot of organization to raise $15 million. Storey County had authorized a quarter cent sales tax. Carson City lost the sales tax increase try by about 90 votes and Lyon County lost the increase in sales tax totally. Thus the only money really going into the fund was the Storey County sales tax but the group had been getting a lot of grants.

The commission had done much of the right-of-way work, acquired most of the right-of-way, got $2.3 million from the Intermodal Surface Transportation Efficiency Act (ISTEA) to fill in the Overman Pit, and some other grants for operating money.

Speaker Dini stated the Tri-County Railway Commission included Carson City, Storey County, and Lyon County. There was discussion that the next legislative session might expand the commission to include Douglas and Washoe Counties because the rebuilt railroad would be a regional attraction.

Assemblywoman Giunchigliani stated with no disrespect, she would not be able to support A.B. 663. One of her constituents had been quite verbal about the issue and she would be voting nay.

Assemblyman Marvel asked if there was a possibility that Carson City or Lyon County might pass a sales tax increase in the future. Speaker Dini replied he did not believe so. Carson City had added a quarter cent sales tax the previous year to support "open space" and had a really high overall sales tax. The right time was when it had been proposed in 1995. He stated Lyon County absolutely would not support an increase because it was a "no-tax" county.

Mr. Stevens briefed the committee on a few items. He provided committee members with copies of proposed State Parks maintenance projects (Exhibit D). The projects were recommended by the Division of State Parks to be funded by the additional room tax funds generated through the Assembly Ways and Means Committee budget closings.

Funding would provide $193,000 in the first year of the biennium and $197,000 in the second year. If the committee agreed, the list would be for projects completed through the funds generated from the closing of the Tourism budget.

The elimination of the Washington Office in budget closings would reverberate down to the budgets of the Commission on Economic Development and the Commission on Tourism as well as the Nevada Division of Transportation because they were the funding source for that office. The General Fund would also be affected.

The last item concerned the Transportation Services Authority budget and the Taxicab Authority budget. Those budgets were not closed. Mr. Stevens stated he was not sure of the direction in which the committee wished staff to proceed. He said the agencies could be invited to ask further questions or asked whether staff should bring the budgets up again for a closing vote. He noted the last time the committee had tried to close those budgets major issues had held them up.

Mr. Stevens remarked S.B. 491 would place only regulation of tow trucks under the Transportation Services Authority and established separate taxicab authorities in Washoe and Elko Counties. The bill was currently in the Senate Finance Committee.

Assemblywoman Giunchigliani asked if it was possible to create scenarios of what would happen if the two agencies were merged. Chairman Arberry commented the legislature was running out of time for major undertakings.

Staff commented the two agencies could be merged but there were other issues of what the two agencies regulated, and what was not regulated. If the agencies only regulated taxicabs and tow trucks the other transportation entities would no longer be regulated. That was one of the questions that needed to be answered.

Assemblywoman Giunchigliani stated maybe more would be known after the Senate hearing the following day, but if the Senate at least had a favorable reaction to the issues in the bill, she felt it was an absolute there was no need to justify the agency any longer to regulate only one area. If the two were merged, the Taxicab Authority could oversee both industries.

Chairman Arberry asked what happened to the employees if the two agencies were merged. Staff responded the issue would have to be reviewed. Staff was not sure how many additional positions the Taxicab Authority would need. Staff did not want to proceed with doing five different scenarios so late in the session if the committee had a particular plan in mind.

The Chair asked the committee to think about the issues.

With no further business before the committee the committee was adjourned at 10:30 a.m.

RESPECTFULLY SUBMITTED:

Cindy Clampitt,

Committee Secretary

APPROVED BY:

Assemblyman Morse Arberry Jr., Chairman

DATE: