The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Thursday, April 15, 1999, in Room 2134 of the Legislative Building, Carson City, Nevada. The meeting was videoconferenced to the Grant Sawyer State Office Building, Room 4401, Las Vegas, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator William J. Raggio, Chairman

Senator Raymond D. Rawson, Vice Chairman

Senator Lawrence E. Jacobsen

Senator William R. O’Donnell

Senator Joseph M. Neal, Jr.

Senator Bob Coffin

COMMITTEE MEMBERS ABSENT:

Senator Bernice Mathews

GUEST LEGISLATORS PRESENT:

Senator Dean A Rhoads, Northern Nevada Senatorial District

Senator Jon C. Porter, Sr., Clark County Senatorial District No. 1

STAFF MEMBERS PRESENT:

Judy Jacobs, Committee Secretary

OTHERS PRESENT:

Stephanie Wong, Student, Bonanza High School, Las Vegas

Zuri Langhorn, Student, Valley High School, Las Vegas

Jared Tatro, Student, Carson High School, Carson City

Jay Dalton, Nevada FFA, Clover Valley

Tom Axtell, General Manager, KLVX Channel 10, Las Vegas

Rick Schneider, President and Chief Executive Officer, KNPB Channel 5, Reno

Stephanie Hughes, Member, Juvenile Diabetes Foundation International

Senator Raggio announced that testimony would be heard from Las Vegas via videoconference. He said that because of the heavy schedule for the meeting, testimony on each bill would be limited to 20 minutes. He asked those testifying to be mindful of time constraints and to avoid being repetitive. Senator Raggio requested testimony be taken first on Senate Bill (S.B.) 251 to accommodate Senator Rhoads.

Senator Dean A. Rhoads, Northern Nevada Senatorial District, said he and Senator Jacobsen introduced the bill. He related $200,000 was given to vocational student organizations in 1997, and the funds were used to support and expand upon student activities that promote leadership and technical skill development. He declared the young people involved "are the cream of the crop of our Nevada students." He stated they will be the future leaders in communities and businesses and political leaders of the future.

Phyllis Rich, Team Leader, School Improvement and Work Force Education, State Department of Education, conveyed the support of Mary Peterson, Superintendent of Public Instruction, and Keith Rheault, Deputy Superintendent for Instructional, Research and Evaluative Services, for S.B. 215. Reading from prepared testimony (Exhibit C), Ms. Rich said the bill will provide funds for five student vocational organizations.

Donnell Barton, Education Consultant, School Improvement and Work Force Education, State Department of Education, said she acts as the consultant for Family and Consumer Science and as state director of the Future Homemakers of America (FHA). She listed the organizations funded by an appropriation from the last session of the Legislature (Exhibit D) and said the funds were used to rent facilities for conferences, bring motivational leaders to workshops, train state officers, allow members to attend conferences and meetings, and purchase instructional materials.

Ms. Barton noted state membership increased by 14 percent last year, 1,899 members participated in state conferences, 405 participated in national conferences, more than 1,000 attended state leadership workshops, and over 250 attended national leadership workshops. She asserted the vocational student organizations (VSOs) encourage students to stay in school, and she cited statistics in her prepared statement (Exhibit D). She provided several documents outlining the activities of VSOs in Nevada (Exhibit E.).

Ms. Barton stated federal mandates regarding federal funds have resulted in fewer funds being available for vocational and student organizations. She declared S.B. 215 will secure the base funding for VSOs.

Senator Raggio stated the effect on the dropout rate was very impressive.

Senator Neal asked how many students participated in the parliamentary procedures workshop. Ms. Barton replied there were approximately 50 at a workshop held in conjunction with the Nevada Vocational Association.

Stephanie Wong, Student, Bonanza High School, Las Vegas, spoke from written testimony (Exhibit F) in favor of S.B. 251. She said she is the new president of the former Nevada Distributive Education Clubs of America, which has evolved into a student marketing organization with over 2,000 members in Nevada and is now called simply the DECA Association.

Zuri Langhorn, Student, Valley High School, Las Vegas, voiced support for S.B. 251. She told the committee she is a junior in the International Baccalaureate Program and just completed a term as state president of the Nevada FHA. Her comments are included as Exhibit G. She attributed her ability to assume a leadership role to her experiences in FHA.

Davida R. Nash, Student, University of Nevada, Reno (UNR), said she is a past state president of the Nevada FFA Organization, the former Future Farmers of American (FFA). She explained the name was changed because the organization has grown so much since 1928 when it began.

Ms. Nash asserted S.B. 251 is very important to vocational student organizations. She said the members attend more than 16 annual state, regional and national conferences, and Nevada FFA holds 3 such conferences each year. She added FBLA (Future Business Leaders of America), DECA, FHA and VICA (Vocational Industrial Clubs of America) also engage students in training conferences.

According to Ms. Nash, the conferences provide direct services to students and send students to national conferences. She noted business and industry are actively involved in the organizations, and more than 100 local businesses contribute each year. She said those contributions include technical assistance for contests, event management, equipment, supplies, tours, visits to classrooms, and other services.

Ms. Nash said funds supplied by S.B. 251 will be used to support the organizations and the management of state conferences. The funds also will provide training for state officers and advisors. She urged support of the bill.

Jared Tatro, Student, Carson High School, Carson City, said he is the current student body president of his school and a former state officer of the Future Business Leaders of America. He declared, "FBLA . . . has been one of the most memorable experiences in my life." He reported it has taught him time management, people skills, and parliamentary procedure and has allowed him to travel. He said the funds provided by the Legislature last session allowed a Nevada student to hold national office and allowed state officers to travel.

Mr. Tatro credited the Legislature for providing the funds for conferences held in various areas of the state. He said participation in each has increased greatly. He urged passage of the bill.

Senator Raggio asked whether the organizations provide an accounting of how the funds are used. Ms. Barton said they provide a list of objectives and a proposed budget, the grants are reviewed, and the utilization is monitored. Senator Raggio noted the funding is not included in The Executive Budget, and though there is a budget shortfall and it will be impossible to fund all competing projects, there appears to be some merit in the programs presented. He said it is important for the committee to have a better idea of how the funds are being used.

Jay Dalton, Nevada FFA, Clover Valley, stressed the need for S.B. 251. As the past state secretary of the FFA he said he is aware of how important the appropriations have been to vocational student organizations. He pointed out the funding has allowed students to compete at the national level in various career events. He urged support.

Senator Raggio commended the students for all they have accomplished. Senator Jacobsen indicated the future lies with such students. He requested Michelle Lewis to say a few words, calling her "the sparkplug of this outfit."

Michelle Lewis, Nevada FFA Organization, expressed appreciation to Senator Rhoads and Senator Jacobsen for introducing the legislation. She said the funding enabled the organization to reinstate business and industry tours that had to be discontinued nearly 15 years ago. She said the FFA anticipates its leaders will not only become ambassadors for FFA, but also ambassadors for agriculture.

Senator Raggio opened the hearing on Senate Bill 248.

Senator Rawson distributed a 3-page document (Exhibit H) containing excerpts from a 200-page report on health care education in Nevada. He drew attention to a column on the second page showing projected annual job openings and the third column showing the degrees and certificates awarded by the University and Community College System of Nevada (UCCSN). He pointed out very few meet the needs of health technology in Nevada.

Senator Rawson explained the equipment for health technologists and technicians is very expensive so those items have not been purchased in the past. He said in the past the students have taken rotation at various hospitals where the equipment is available, which he asserted is not an ideal teaching situation. He said the bill makes an appropriation that will be spread around the system primarily for ultrasound machinery and the computer support.

Senator Raggio asked how much ultrasound imaging equipment costs. Senator Rawson responded the state really cannot afford to obtain high-end ultrasound equipment because it can cost as much as $1.5 million, but he said units that will be adequate for teaching are available in the $20,000 to $30,000 range. He said it should cost approximately $175,000 to equip the various nursing and health occupation programs in the system.

Senator Raggio indicated it would be helpful to have a breakdown of the anticipated usage of the funding and options available should the entire amount requested not be appropriated.

There being no further testimony on S.B. 248, Senator Raggio closed the hearing. He opened the hearing on Senate Bill 270.

Senator Jon C. Porter, Sr., Clark County Senatorial District No. 1, explained the measure will provide $2 million in state matching funds to stimulate a minimum of $6 million in private funds for construction of the federally mandated digital public television stations in Reno and Las Vegas. He reported all television stations in America must construct and begin operating entirely new digital television facilities by the year 2003. He said this is an unfunded federal capital mandate that falls heavily on educational and public stations which rely primarily on private donations.

According to Senator Porter, the cost to KLVX in Las Vegas and KNPB in Reno, the Public Broadcasting System (PBS) stations, for new towers, new digital transmitters, new digital switching controls and limited digital production equipment will exceed $12 million. He said both stations have made a commitment to raise a minimum of $3 in nonstate funds to match every dollar provided by the state, and S.B. 270 ensures the private funds will be raised before any state funds are appropriated.

Tom Axtell, General Manager, KLVX Channel 10, Las Vegas, said Channel 10 will be turned off the air in the year 2006 and never broadcast again. He explained in the year 2003 operation of an entirely new station will begin broadcasting on Channel 11 in Las Vegas using a completely different technology. He said the new technology will use the digital concepts of the computer world to transmit data that may be pictures, sound, or the equivalent of web pages on a system that will be able to generate the same amount of information as a compact disc, 1.9 million bits of data every second. He characterized the breadth and scope of the digital frequency as "astonishing."

Mr. Axtell drew attention to an outline he distributed along with other explanatory papers (Exhibit I) showing that all commercial stations in the top 10 markets in the United States must have a digital transmitter on the air by May 1999, and all other commercial television stations must convert by 2002. He pointed out there will be a period of time when stations will simulcast with digital broadcasting while continuing to broadcast on analog equipment, some with overlapping programming, some with different programming. By the year 2006 all analog signals will be turned off and the federal government will auction off the spectrum of signals to a variety of wireless communication services as a method of enhancing federal revenue.

Mr. Axtell called attention to an explanation of digital television on the second page of Exhibit I and noted that television and computer technologies are converging. He pointed to a digital television and an analog television on display for the committee to compare the detail available with the new technology. He explained high definition television is only one of several legal transmission modes available for the new digital spectrum. He stated it will be possible to multicast four to six pictures with the same clarity as found in homes today. The viewer will be able to select which picture he or she wishes to see when the television station elects to broadcast without the wide-screen high-definition picture.

Mr. Axtell said a third component of digital television is data casting, such as closed-captions, but with a much advanced technology. He explained that while a station is broadcasting a television signal it will also be able to broadcast an extraordinary amount of data, with no requirement for a wire to the computer. The computer will receive the data similarly to transmission received by a cellular telephone. He said many computer manufacturers are already building computers with a television card so that pictures or data can be received through an antenna. As an example, he said all the bills and information on the legislative website can be transmitted in one second.

Mr. Axtell noted President Clinton has proposed that $450 million be distributed among the 300 PBS stations for digital conversion. Mr. Axtell asserted it will require very large gifts from the private sector to fund the new technology and, in many cases, put additions on buildings, and to build a new transmission tower in northern Nevada. He voiced concern regarding the short period of time in which to raise the capital and make the conversion. He reiterated the major portion of the funding will be derived from the private sector.

Rick Schneider, President and Chief Executive Officer, KNPB Channel 5, Reno, spoke from prepared testimony (Exhibit J). He agreed the public is only beginning to understand the changes in the television industry, and that high-definition television is what has received the most publicity. He said the most exciting change is the educational and learning potential of the other digital services, multicasting and datacasting.

Mr. Schneider pointed out television is limited by time and the inability to review material such as can be done with a book that may be reread. He stated digital television will change those limitations by providing stored digital material that can be studied again and again, and by providing interactivity. He demonstrated an example of interactive music education in which the score was displayed while violinist Itzahk Perlman conducted students and in which the viewer has the ability to add annotations onto the score and stop or click on a particular section.

Mr. Schneider said digital television provides the ability to broadcast in one second the amount of data that would require 10 minutes to download with a 28.8 computer modem. He demonstrated how educational broadcasting supplemental information can be accessed for use by teachers or students. He asked for support of S.B. 270.

Senator Raggio asked what the status is of proposed federal funding. Mr. Axtell replied nothing has been appropriated as yet although it is included in the President’s proposed budget. He said a major capital campaign will be conducted in Las Vegas for the PBS station separate from the normal on-air pledging. He noted the Las Vegas plan utilizes four phases, with the first phase for $2 million providing a completely passive system to allow for receipt of the national signal. It will not include any local education origination, it will only pass through the PBS signal. He said the ability to produce and telecast local programming will cost another $7.5 million, exclusive of any additional building needs.

Mr. Axtell said distance education and similar components will bring costs to about $12 million. He said his board is investigating various options including the potential sale of the current building and a move to a location adjacent to a high school and community college campus where an integrated training program could be provided for vocational students through a sharing of facilities.

Senator Raggio asked what it will cost to meet the mandate. Mr. Axtell replied it will cost $7.5 million.

Mr. Schneider reported the Reno station is approaching foundations and corporations for funding, and he estimates it will cost $8 million to meet the mandate. Senator Raggio noted KNPB just completed a new building and asked whether it was constructed with the mandate in mind. Mr. Schneider said some digital elements went into the planning of the facility, but the building was constructed as a separate issue and the mandate will require new broadcast infrastructure within the building and a new transmission facility on Slide Mountain.

Senator Jacobsen asked whether the entire state will have access to the system. Mr. Schneider responded the current system utilizes translators in the rural areas, and there is still some question as to how the rural areas will be reached in the digital future. He explained there is potential for using the new system to reach all areas of the state through satellite transmission, although that is not included in the initial planning.

Senator Jacobsen asked what will become of the material in the archives of the PBS stations. Mr. Axtell said college interns are hired in the summer to convert material from film or videotape to digital storage to prevent deterioration.

Mr. Schneider interjected the federal government has not yet resolved the issue of what will be permitted regarding translators and whether the spectrum will be allocated to translators to duplicate the signal in rural areas. He said Channel 10 uses 29 translators at present, and it is not clear what the cost of building new translators will be, what technology will be available, or whether the translators will have to be abandoned and the PBS signal be provided only by satellite.

Senator Coffin asked why the nonprofit stations are being required to convert. Mr. Axtell responded it is not just nonprofit stations but all commercial stations. He pointed out the system is 50 years old, and under the proposal all channels from 54 to 69 will be permanently abandoned. He indicated the federal government will auction off that very wide spectrum to wireless operators, some for wireless Internet service, some for new technology as yet unknown. He explained it will reduce the allocation of the spectrum for television, make use of the spectrum more efficient, make it digital, and tie it into the computer world.

Senator Coffin suggested funds from the sale of the spectrum should be used to finance the unfunded mandate. Mr. Axtell responded a number of PBS stations have been making that suggestion to the federal government.

Senator Porter opined once the infrastructure of the new system is in place it will benefit the educational system throughout Nevada.

Senator Raggio closed the hearing on S.B. 270 and opened the hearing on Senate Bill 294.

Senator Rawson provided written remarks (Exhibit K) and added the Legislative Committee on Health Care heard many hours of testimony on juvenile diabetes. He asserted juveniles with diabetes and their parents must be taught to take care of themselves and monitor their diabetes or eventually they may experience kidney failure and require dialysis, kidney replacement, blindness, other major problems, or early death. He said improper treatment of diabetes can cut 30 years off the productivity of their lives.

Senator Rawson explained the onset of type 1 diabetes takes place in childhood and is life-threatening early on, and the onset of adult diabetes generally is found in people who are overweight or under stress. He noted the type 1 diabetes is the more serious and "is the killer."

Bernard Feldman, M.D., M.P.H., Acting Chair, Department of Pediatrics, University of Nevada School of Medicine; Chairman, State Board of Health; and Member, Advisory Board on Maternal and Child Health offered support for S.B. 294. He characterized juvenile diabetes as a devastating disease. He noted the annual report for 1998 of the Governor’s advisory board concluded that 1 in 7 health care dollars can be attributed to diabetes and related complications.

Dr. Feldman said there are approximately 30,000 births in the state each year, and the report indicates there is a need for a state disease-management model to emphasize diabetes prevention and comprehensive, coordinated care. He said the Nevada School of Medicine is willing to help meet that need. At present his department has two full-time endocrinologists in Las Vegas and a half-time endocrinologist in Reno. He said the provisions of S.B. 294 will allow him to organize a statewide disease-management program for pediatric diabetes.

Senator Raggio asked how the funds provided in the bill, $395,000 each year, will be used. Dr. Feldman replied the funds will help pay the salaries of physician extenders, such as nutritionists, nurse-educators, health analysts, data systems collection, and an exercise physiologist. He pointed out the funds will be used primarily for salaries. Presently, he said, the salaries for the endocrinologists are derived from the University Medical Center, Sunrise Hospital, the Nevada School of Medicine, and, primarily, from patient-care dollars. He said the center will also generate patient-care dollars, and the aim is to be able to extend the program after the sunset period.

Henry G. Artman, M.D., Pediatric Endocrinologist, University of Nevada School of Medicine, said he has practiced in both northern and southern Nevada for the past 17 years. He declared the patient load has been increasing greatly, and he knows of pediatric groups in both ends of the state whose goal is to see 50 to 60 children each day.

Dr. Artman pointed out there are at least 600 children in the state with diabetes. He explained the disease can develop from early infancy to late adolescence, and it is constantly presenting new challenges. He pointed out infants and toddlers must adapt to strict diet and sleep schedules, and diabetic youngsters cannot eat the same as their peers. Additionally, he said, adolescents must test their blood four or more times a day and eat accordingly. He noted there is never a vacation from diabetes, and there is an ever-present fear of a life-threatening episode of hypoglycemia.

Dr. Artman stated the goal of health care providers is to empower families to cope with the burden of raising a child with diabetes. He said the process is very time-consuming, and yet medicine as a whole generally operates under an emergency-room model. He asserted that although that works for acute, limited problems, it does not work well for complex, chronic diseases such as diabetes.

Dr. Artman noted the family is generally in charge of chronic diseases, but often the health-care giver is unable to provide the necessary help and support the family requires because of time constraints. He explained the issues involved in diabetes have more to do with nutrition and social and psychological predicaments. He stated diabetic children are admitted to the hospital for diabetes emergencies primarily because of psychosocial problems within the family, rather than because of purely medical problems. He said a team of medical professionals consisting of a nurse-practitioner, diabetes educator, nutritionist, social worker, and physician is necessary to empower families to control the diabetes. He said S.B. 294 will provide for the team.

David Donaldson, M.D., Pediatric Endocrinologist, University of Nevada School of Medicine, said that when he came to Las Vegas 4 years ago, Las Vegas was the largest metropolitan area in the country that did not have a resident pediatric endocrinologist. He said he became aware after 2 years in practice that the major difficulty was the lack of a multidisciplinary team. He said that when he arrived in Nevada he received commitments from the hospitals to provide an educator and a nutritionist to assist in the diabetes program, but because of the lack of behavioral resources he has been unable to satisfactorily affect the behavior of families and children while running the largest pediatric endocrinology practice in the country. He said the job is impossible without additional assistance.

Dr. Donaldson said there should be at least three pediatric endocrinologists in the state with strong pediatric diabetes endocrinology programs. He noted there is twice the likelihood of suffering complications from diabetes in the United States as in Great Britain or Germany because of the emphasis on sick care rather than prevention. He stated the major goal of disease management is to empower patients to prevent the disease, if possible, or empower and educate the families to care for themselves and avoid complications and costly hospitalization.

Dr. Donaldson reported that last year the direct cost to the state for diabetes-related problems was $300 million, with a similar amount in indirect costs. He said the requested funding will provide one-tenth of 1 percent of the amount expended last year. He noted not only do patients have a stake in the proposed program but also employers and the government, which pay 40 percent of direct costs and a much greater percentage of the indirect costs and disability.

Dr. Donaldson added the programs that will be implemented will include diabetes prevention through the screening of relatives of type 1 diabetes who may be at risk. He said there is an emerging epidemic of type 2 diabetes which is affecting adolescents and the bill will allow work with families at risk to prevent the condition. He said the third program will utilize the team to optimize both short- and long-term outcomes for patients with diabetes.

Dr. Donaldson gave the committee copies of a letter from Monica Meehan, R.N., (Exhibit L), the mother of a diabetic child who has been under his care. Another letter (Exhibit M) was introduced from the Executive Director of the Nevada Diabetes Association for Children and Adults, who was unable to attend the hearing. Both letters urged support of S.B. 294.

Carolyn Leontos, Nevada Diabetes Council, spoke in favor of S.B. 294. Her testimony is attached as Exhibit N. Ms. Leontos noted 92 percent of the funds expended on diabetes in Nevada covers the cost of complications and extra hospital days, lost time from work, and disability. Only 8 percent is spent on primary care and education. She asserted Nevada, like the entire United States, uses an approach of care for the sick rather than preventative medicine.

Skyler Blue Dillon, Fifth Grade Student, Reno, told the committee of the changes in her family’s life and her own from the time she was diagnosed with diabetes, and she urged support of S.B. 294. Senator Raggio commended Ms. Dillon on her presentation and asked that she provide her notes for the record. They are attached as Exhibit O.

Stephanie Hughes, Member, Juvenile Diabetes Foundation International, testified from Las Vegas in favor of S.B. 294. She reported she has had diabetes for 35 years, and for the past 15 years she has had kidney disease as a result of the diabetes. She stated it was necessary for her to go to California to find a comprehensive program in order to be put on an insulin pump and obtain the combined services of a nurse, a dietician, and an endocrinologist to teach her how to live with her disease successfully. She said her kidney disease is in remission and she is healthier than she has been for years.

Ms. Hughes stated her family continues to worry about her in spite of her improved health, and she stressed the importance of helping the entire family deal with diabetes.

There being no further testimony, Senator Raggio closed the hearing on S.B. 294 and opened the hearing on Senate Bill 333.

Senator Rawson reported the office was established during the last session of the Legislature, and though the office is included in the present budget, it has not been funded. He pointed out Nevada is the only state that does not have an officer of science, and he suggested it is impossible to treat economic development seriously without an adviser on technical issues.

Senator Rawson noted some changes should be made to the bill. He opined gifts, grants, and donations to the office should be permitted, and the reversion should be removed. He said there is a drive to develop private funding for the office, and he surmised it will be successful to a degree and will decrease the demand on the state budget.

Terry A. Simmons, Ph.D., Attorney at Law; Adjunct Associate Research Professor, Desert Research Institute; and President, Nevada World Trade Council, summarized his written testimony (Exhibit P) in favor of S.B. 333. He agreed the science adviser is important not only to the Governor and Lieutenant Governor, but also to the Legislature, many agencies, the university system, and private industry. He cited various examples wherein the services of the proposed office would be invaluable as set forth in his written statement.

Dr. Simmons relayed a message from Jane Nichols, Vice Chancellor of the University of Nevada, Reno, offering support for S.B. 333 on behalf of the chancellor’s office.

Before closing the hearing on S.B. 333, Senator Raggio suggested that Senator Rawson work with staff regarding proposed methods of funding the Office of Science, Engineering and Technology. The committee next took up consideration of the budgets for the Division of Economic Development and the Division of Tourism included in Closing List #10 (Exhibit Q. Original is on file in the Research Library.).

ECONOMIC DEVELOPMENT AND TOURISM

Commission on Economic Development – Budget Page TOUR/ECON-1 (Volume 2)

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Mary A. Matheus, Local Government Budget Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, stated the subcommittee recommended closing the budget as proposed by the Governor with one adjustment. She said budget amendment #91 is included on page 15 of the closing list, and it will change the economic development commission’s contribution to support the Washington, D.C. office. She explained it will reduce the contribution to $20,000 in each year of the biennium, and the amendment recommends that the $79,900 savings in each year be reallocated to supplement the advertising budget for the Commission on Economic Development.

Ms. Matheus reported the commission also requested that any unspent funds in the category 19 Train Employees Now (TEN) be exempted from reversion at the close of the first year of the biennium. She explained the funds are currently reverted at the end of the year, and the agency has indicated that a timing problem exists between the time a commitment is made to relocate and expand companies and the time the training is actually funded. She indicated the exemption will require some special language in the General Appropriations Act.

Ms. Matheus noted The Executive Budget also recommends continuation of $500,000 funding each year for the TEN budget. She said that during discussion of the TEN program the agency recommended companies applying for the incentive be required to pay wages equal to 80 to 125 percent of the average wage. She explained at present only 75 percent of the statewide or county average wage is required.

Senator Raggio inquired what the state average wage is at present. Robert E. Shriver, Executive Director, Division of Economic Development, answered it is $13.37 per hour.

Senator Raggio asked why this program requires 75 percent while other programs require more. Mr. Shriver responded the initial reason was that companies coming into the state desire trained workers and do not want to pay a high wage while workers are being trained. The motive was to create a mechanism to require 75 percent of the statewide average wage be paid to trainees upon completion of the training cycle. He stated the policy has worked very successfully, and earlier testimony showed that those companies being funded under the TEN program actually pay a higher wage, averaging over $15 an hour. He said that was the basis to move to 80 percent and to provide more consistency among the marketing of various incentives.

Senator Raggio asked why additional funding is being allocated to advertising. Mr. Shriver reiterated that as a result of a reduction from $99,000 to $20,000 to the Washington, D.C. office each year, the commission would like to reallocate the $79,000 saved.

John P. Comeaux, Director, Department of Administration, explained that when discussions took place regarding the Division of Economic Development, the Division on Tourism, and the Nevada Department of Transportation (NDOT), it was determined that the level of effort was being staffed by the Washington office for the other areas. As a result the funding for the office was reallocated.

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Ms. Matheus reported the budget is funded entirely through a transfer of room tax revenue from the Commission on Tourism’s budget. She pointed out the greatest increase in the budget is in enhancement unit E-125, which includes a $25,000 increase in each year of the biennium for advertising. She said the staff recommends closing the budget according to the Governor’s proposal.

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Ms. Matheus stated the budget is funded through a General Fund appropriation and a federal grant from the U.S. Department of Housing and Urban Development (HUD). She said the federal allowance for administrative costs is 2 percent of the total grant award plus $100,000, and the state is required to provide a match equal to 2 percent of the grant amount. She explained the federal grant has not increased over the past 4 years, yet the costs to administer the program have necessitated an increase in the General Fund contribution.

Ms. Matheus reported decision unit E-805 recommends aligning the budget with position upgrades that were approved in the unclassified pay bill in 1997, and the staff recommends closing the budget in accordance with the Governor’s proposal.

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Ms. Mathews indicated the budget is funded through a grant from the U.S. Department of Defense, registration fees for conferences, and a General Fund appropriation. She said the grant is similar to the former in that the grant amount is currently maximized at $300,000 each year, and new costs to the program in the past several years have been funded through the General Fund.

Ms. Mathews pointed out decision unit E-805 also recommends aligning salary increases for some positions that were authorized in the 1997 unclassified pay bill, and a request has been made to reclassify one position and upgrade. She said it would change a Small Business Associate position to an Associate Industrial Development position.

In response to a query by Senator Raggio, Ms. Matheus indicated this is the office that assists companies to qualify for and obtain federal contracts. Again she said the staff recommends closing the budget in accordance with the Governor’s recommendation.

Senator Raggio asked why salary increases are being recommended. Ms. Matheus replied a number of salary increases were approved in 1997, but the funding increase was not reflected in the budget. She said the budget is being aligned with the actual pay as reflected in decision unit E-805.

Commission on Tourism – Budget Page TOUR/ECON-19 (Volume 2)

Budget Account 225-1522

Ms. Matheus pointed out an adjustment to the base budget for administration of the Washington, D.C. office, and another to continue a $10,000 allocation each year to the Department of Museums, Library and Arts for inclusion in the Office of Historic Preservation budget for the Historic Marker Program. Also, she reminded the committee budget 101-2941 for museums included an additional $3,910 in the maintenance decision unit M-200 from the Commission on Tourism and the budget was closed including those funds.

Senator Jacobsen asked who handles the Historic Marker Program. Bob Guernsey, Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, replied the job falls to Ronald M. James, State Historic Preservation Officer, in cooperation with NDOT which provides approximately $20,000 each year for the markers. He indicated the funding in question will be used to renovate the markers, and Mr. James would be the person to contact regarding any markers in need of replacement. Senator Jacobsen commented care of the markers would be a good project for inmate crews since most damaged markers simply need to be straightened.

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Ms. Matheus pointed out the budget is an enterprise fund and operates with no allocation other than what is earned. She said the staff agrees the budget should be closed according to the Governor’s recommendation.

Senator Raggio asked the committee to review the Judicial Branch budgets on Closing List #11 (Exhibit R).

JUDICIAL BRANCH

Jim Rodriguez, Program Analyst, Fiscal Division, Legislative Counsel Bureau, noted the budgets were not reviewed by a joint subcommittee.

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Mr. Rodriguez said staff has no recommendations on this budget, but there are two bills under consideration that would increase the number of judges from 51 to 57. Senator Raggio asked how the funding for six new judges would be handled. Dan Miles, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, responded that last session the appropriations for new judges were included in the bill, and the bills under consideration have appropriations included.

District Judges’ and Widows’ Pension – Budget Page COURTS-34 (Volume 1)

Budget Account 101-1491

Mr. Rodriguez stated the court had included a maintenance decision unit M-200 to fund anticipated cost increases based upon historical analysis of a 5- or 6-year average. He explained typically pension accounts are not budgeted for that type of increase unless the court specifically identifies judges who will retire during the biennium. Because no retiring judges were identified, he eliminated unit M-200 funding. The courts still have the option to go before the Interim Finance Committee (IFC) should funds be required.

Mr. Miles pointed out the Appropriations Act allows for funding in the account to be moved between the fiscal years in the event there are several retirements during the first year of the biennium.

Budget Account 101-4192

Mr. Rodriguez said the same adjustment was made to the budget as in the previous budget to delete unit M-200 since no specific retirees were identified.

Budget Account 101-1493

Mr. Rodriguez reported the account was adjusted according to a proposal by the Administrative Office of the Court (AOC) that revised projected revenues into the account. He indicated the account also was adjusted to reflect that the AOC would no longer make transfers, as it has in the past, to budget account 101-1494 to fund the Settlement Conference and Fast Track programs or to budget account 101-1484 to fund local governments to contract for independent audits of municipal and justice courts. He explained the funding for budget 101-1494 was appropriated as a short-term remedy for the account, and funding for budget 101-1484 was appropriated for a start-up only.

Senator Raggio rephrased his understanding that budget account 101-1484 for the Division of Planning and Analysis will not provide funding to local governments to contract for independent audits of the municipal and justice courts that was based upon an audit performed by the Legislature. Mr. Rodriguez reiterated the audit was a onetime audit and the funding was allocated at that time but will no longer be provided. Local governments will be required to fund the audits hereafter.

Senator Raggio noted budget account 101-1493 is funded solely by the peremptory challenge fees. Mr. Rodriguez pointed out that although the AOC reduced estimated revenue for the account, by the end of the biennium the reserve should reach nearly $500,000 after the adjustments are made.

Retired Justice Duty Fund – Budget Page COURTS-40 (Volume 1)

Budget Account 101-1496

Mr. Rodriguez commented the staff made no recommendations to change the account. He noted the account is funded entirely by administrative assessments.

Judicial Discipline – Budget Page COURTS-48 (Volume 1)

Budget Account 101-1497

Mr. Rodriguez reported three changes have been recommended by staff. He said one is to respond to a request to upgrade word processing software to improve annual reports and to be Year 2000-compliant. He said the courts had included $500 in each year for the change but the upgrade will only require a onetime upgrade, and also the Fiscal Analysis Division received a revised estimate of costs. He said a small amount for Building and Grounds (B&G) services was included twice in the budget, so that was deleted. He noted an additional $15,000 was included for contractor services for investigator costs and legal counsel costs, but that was considerably above the average growth calculated for the other accounts so the figure was reduced accordingly.

Mr. Rodriguez reminded the committee they discussed merging Judicial Discipline and Judicial Ethics functions and the budget for this account will be merged into the account of the Commission on Judicial Discipline at the suggestion of the courts. He guessed the combined budget will be identified as Judicial Discipline and Ethics. He suggested a Letter of Intent be included to establish the accounting structure in order to keep track of the two activities separately once the budgets are merged.

In response to an earlier query, Mr. Miles interjected the pensions for the widows or widowers of both Supreme Court judges and District Court judges are the same, $2,000 a month. He said the pensions begin at age 60, although there is a provision in the law that if a judge is not eligible to receive benefits at the time of death, the spouse will receive benefits equal to those from the Public Employees Retirement System (PERS).

Having completed the Judicial Branch budgets included in Closing List #11, Senator  Raggio took up the Administration budgets also included.

ADMINISTRATION

Printing Office Equipment Purchase – Budget Page ADMIN-39 (Volume 1)

Budget Account 741-1331

Brian Burke, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, said the account is funded from the Printing Division’s main budget, account 731-1330, through depreciation on existing equipment. He noted enhancement module E-710 recommends the purchase of several large pieces of equipment as listed on page 8 of the closing list (Exhibit R). Other equipment is requested under decision unit E-720.

Mr. Burke stated staff has recommended adjustments to unit E-710 to reflect current vendor price estimates.

Purchasing – Equipment Purchase – Budget Page ADMIN-57 (Volume 1)

Budget Account 718-1364

Mr. Burke noted this account is also funded through depreciation on existing equipment, and the adjustments are primarily to reflect current computer prices. He pointed out the hardware expenditures in decision unit E-710 are decreased from $63,676 to $53,918 in the first year of the biennium, and from $19,920 to $14,833 in the second fiscal year. He indicated the Purchasing Division also suggested elimination of several pieces of equipment which is reflected in the staff proposal.

Commodity Food Program – Budget Page ADMIN-63 (Volume 1)

Budget Account 101-1362

Mr. Burke said the only adjustment recommended by staff for the account is to eliminate $8,761 in overtime funding in decision unit E-175. He explained that historically, overtime is not budgeted and is paid from existing resources. He said performance indicators numbers 2 and 6 will be modified to reflect the Governor’s recommended budget including the changes.

Mail Services – Budget Page ADMIN-78 (Volume1)

Budget Account 713-1346

Mr. Burke reported The Executive Budget recommends three part-time student positions in enhancement decision unit E-125. He described the duties of the students, as outlined on page 11 of the closing list. He said other adjustments to the base budget reflect payment schedule modifications to some existing equipment and decision unit E-128 is adjusted to reflect modified depreciation costs. He added staff also recommends eliminating overtime funding for the same reason as in the previously cited budget.

Mail Services – Equipment Purchase – Budget Page ADMIN-84 (Volume 1)

Budget Account 713-1347

Mr. Burke pointed out the account is new and was established to transfer depreciation for equipment purchases. He said no equipment purchases are recommended for the biennium in order to build up some reserves, and the only adjustment recommended by staff is to modify the depreciation transfers to reflect the adjustments made in the previous account.

Carson Water Treatment Plant – Budget Page ADMIN-92 (Volume 1)

Budget Account 712-1369

Mr. Burke explained the adjustment recommended by staff will increase the base treated water revenue to the actual levels in Fiscal Year (FY) 1998 and adjust the reserves accordingly. He stated the treatment plant was not discussed in the subcommittee, but during the Joint Subcommittee on Higher Education/Capital Improvements hearing on Marlette Lake the Building and Grounds (B&G) Division representatives reported the division is contemplating terminating operations at the treatment plant because it appears to no longer be cost-effective.

Mr. Burke said B&G is presently negotiating with Carson City to lease the state’s water storage tank and has indicated the plant equipment could be dismantled and sold. He reported B&G has indicated Carson City would hire the single operator employed by the state if the plan goes through. He added the B&G administrator indicates state agencies will continue to pay the current rate of $0.85 per 1,000 gallons of water.

Senator Raggio wondered whether it would be wise to keep the budget open until the matter is settled. He asked when the matter will be resolved. Mr. Comeaux responded the negotiations may take some time and it would be better to settle the budget matter. He surmised it will be necessary to obtain approval of the IFC if there is a disposition of state assets.

Senator Raggio adjourned the meeting at 10:40 a.m.

RESPECTFULLY SUBMITTED:

Judy Jacobs,

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: