The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 3:15 p.m., on Tuesday, April 20, 1999, in Room 2134 of the Legislative Building, Carson City, 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

Senator Bernice Mathews

STAFF MEMBERS PRESENT:

Brian Burke, Program Analyst

Debbra J. King, Program Analyst

Mary A. Matheus, Local Government Budget Analyst

Rick Combs, Program Analyst

Jim Rodriguez, Program Analyst

Barbara Moss, Committee Secretary

OTHERS PRESENT:

Senator Raggio opened the meeting on budget closings using the "Senate Committee on Finance Closing List No. 16" (Exhibit C.).

DEPARTMENT OF ADMINISTRATION

Motor Pool – Budget Page ADMIN-42 (Volume 1)

Budget Account 711-1354

Brian Burke, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (LCB), indicated the budget was closed by the Joint Subcommittee on General Government on April 13, 1999, and several technical adjustments were recommended. He read the technical adjustments on page 6 of Exhibit C.

Item 1. Mr. Burke indicated vehicle counts and average daily rent costs were corrected. He said that as a result, vehicle rental revenues are decreased by $91,228 in FY 2000 and $103,722 in FY 2001. Corresponding adjustments were made to the reserve category and balance forward revenues, Mr. Burke remarked.

Item 2. Mr. Burke indicated decision unit M-100, vehicle insurance deflation, is adjusted to reflect revised vehicle counts.

Item 3. Mr. Burke stated the base budget, M-800, and E-800 modules are adjusted to accurately reflect the Motor Pool account’s share of the Administrative Services Division costs. He said this is a cost allocation arrangement.

Continuing, Mr. Burke read the subcommittee recommendations on page 6 of Exhibit C.

Item 1: Mr. Burke said this item relates to the one-shot appropriation recommended in Assembly Bill (A.B.) 346.

Mr. Burke indicated that initially 33 vehicles were recommended. The Budget Division submitted several amendments, which brought the total to 49 vehicles. The subcommittee recommended necessary adjustments to change depreciation transfers and operating cost for the vehicles.

Referring to page 7 of Exhibit C, Mr. Burke indicated the subcommittee also recommended allowing the fiscal analysis staff to make any modifications to the Motor Pool account and the Motor Pool Vehicle Purchase account that may result from changes pursuant to A.B. 346.

Item 2: E-125. Mr. Burke noted this item requests two new positions. He said the subcommittee supports the Governor’s recommendation for two new positions, a Chauffeur in Las Vegas and a Garage Service Worker I in Carson City.

Item 3: E-126. Mr. Burke said this item addresses overtime. He indicated the subcommittee recommends reducing overtime funding from $10,109 a year to $5,000 a year. The subcommittee felt the need for overtime would be reduced with the addition of the two new positions, Mr. Burke added.

Item 4: E-710. Mr. Burke indicated this item addresses replacement equipment. The subcommittee recommended approval of depreciation transfers which amount to approximately $85,000 the first year of the biennium and $272,000 the second year of the biennium.

Senator Raggio asked for a definition of "depreciation transfers." Mr. Burke explained that depreciation accumulates on existing equipment in this account and is then transferred to the Motor Pool Vehicle Purchase account to replace existing wornout vehicles.

Item 5: E-720. Mr. Burke pointed out this item addressed new equipment. He said the recommended new equipment consists of a typewriter stand, a document shredder, and three lateral file cabinets.

In response to a comment from Senator Rawson, Mr. Burke clarified the function of the Chauffeur position is to shuttle state employees from the airport to the motor pool.

Senator Raggio indicated he observed no change in regard to overtime and asked John P. Comeaux, Director, Department of Administration whether he was comfortable with the situation. In response, Mr. Comeaux said he would not describe himself as being "comfortable" with the situation. Senator Raggio observed that overtime does not appear to be decreasing. Mr. Comeaux replied, "I agree with that." He voiced the opinion the overtime level is "probably" at, or close to, the level expected in routine operations. He said that occasionally something "bizarre" will happen which produces overtime, or an agency will be guilty of not adequately managing overtime. Senator Raggio recalled that overtime controls had been put in place. Mr. Comeaux agreed that overtime controls are in place but said there are occasional "slips." He pointed out that the budget analysts review overtime reports generated through the payroll system quarterly and require documentation from agencies. He said problems are investigated to ensure overtime is being managed. Senator Raggio reflected, "Other than staff, I am probably the only other person in the state of Nevada who reads the reports on overtime." He said it appears an inordinate amount of money is spent on overtime. Although he understood some overtime is necessary, Senator Raggio suggested an attempt should be made to "get a handle on it."

Senator Rawson speculated that overtime is sometimes used as a mechanism to raise salaries and observed it is particularly prevalent in agencies with lower pay. He suggested overtime would not be an issue if pay scales were adjusted. Mr. Comeaux said there are times when overtime is necessary for a valid reason. He declared that an agency may have the flexibility to adjust an employee’s work schedule in the same pay period to avoid paying overtime. He mentioned there are times when legal agreements are entered into with employees which set work schedules that are provided in the law. Mr. Comeaux agreed the amount of overtime could be reduced; however, he said overtime is managed and used "fairly wisely," generally speaking.

Senator Raggio indicated that when time permits there will be a reporting session on overtime in order to arrive at some understanding of the issue.

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Motor Pool Vehicle Purchase – Budget Page ADMIN-48 (Volume 1)

Budget Account 711-1356

Mr. Burke indicated the Joint Subcommittee on General Government closed the budget on April 13, 1999. He stated this account is a companion to the Motor Pool account. Referring to the subcommittee recommendations on page 8 of Exhibit C, Mr. Burke said the adjustments are consistent with those made in the Motor Pool account to bring in the additional depreciation associated with the previously discussed adjustments.

Further, Mr. Burke pointed out on page 9 of Exhibit C in decision module E-710, Replacement Equipment, that the subcommittee recommended approval of funding requested to replace 74 existing vehicles in FY 2000 and 85 vehicles in FY 2001. He indicated the total cost of the 159 recommended vehicles is approximately $3 million for the biennium. He called attention to the chart on page 9 of Exhibit C which showed the recommended replacement vehicles.

Senator Raggio queried whether the guideline was that the vehicles must be 8 years old or have 80,000 miles on them. Mr. Burke answered yes and said at least 159 vehicles met the guidelines.

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Purchasing – Budget Page ADMIN-51 (Volume 1)

Budget Account 718-1358

Mr. Burke indicated the Joint Subcommittee on General Government closed the budget on April 13, 1999. He addressed the technical adjustments on page 10 of Exhibit C that were recommended by the subcommittee.

Item 1. Mr. Burke indicated the base budget, M-800 and E-800 modules are adjusted to accurately reflect the Purchasing account’s share of Administrative Services Division costs.

Item 2. Mr. Burke said the modem costs in module E-128 are reduced by $1,118 in FY 2000 to reflect current Purchasing price estimates.

Item 3. Mr. Burke noted the software costs in module E-710 are reduced by $5,607 in FY 2000.

Calling attention to item 5, E-876, Purchasing Assessment, under subcommittee recommendations on page 11 of Exhibit C, Mr. Burke indicated the subcommittee had considerable discussion on this recommendation because of the proposed change in the assessment methodology. He said there were three subgroups within the purchasing assessment. He declared the two commodity subgroups were acceptable to the subcommittee; however, services and contracts assessments would be built on full-time equivalents (FTEs). Mr. Burke indicated the subcommittee determined, and the Budget Division concurred, that the FTE assessment would create imbalances in a number of agency accounts. Therefore, he said the subcommittee recommended eliminating the FTE assessment equation with the concurrence of the budget director.

Senator Mathews indicated FTE assessment was done in the past and inquired about the procedure for direct charges. Mr. Burke explained that at present charges are not done "according to FTEs," which was a proposed change with which the subcommittee disagreed. He said the subcommittee was determined to continue to direct charge in this biennium.

Continuing, Mr. Burke said the subcommittee also recommended reducing the reserve to a balance of approximately $500,000. He indicated the account previously carried higher balances, which caused the state problems with cash management improvement penalties.

Senator Raggio indicated he would accept a motion to close the budget.

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Surplus Property – Budget Page ADMIN-59 (Volume 1)

Budget Account 101-1367

Mr. Burke stated the Joint Subcommittee closed the budget account on April 13, 1999, and recommended only the technical adjustments shown on page 15 of Exhibit C.

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Administrative Services – Budget Page ADMIN-105 (Volume 1)

Budget Account 716-1371

Senator Raggio asked what Administrative Services entails. Mr. Comeaux responded the Administrative Services Division is the central accounting division of the Department of Administration.

Mr. Burke indicated the subcommittee closed the budget on April 13, 1999. He referred to the technical adjustments on page 16 of Exhibit C.

Item 1. Mr. Burke said funding for fringe benefits in M-300 is changed to administrative charges rather than reserve in order to match the Governor’s recommended budget.

Item 2. Mr. Burke indicated software costs in E-125 are reduced pursuant to Purchasing Division price estimates.

Item 3. Mr. Burke noted hardware costs in E-710 are reduced pursuant to revised Purchasing Division price estimates.

Item 4. Mr. Burke stated funding for transfer adjustments in M-900 is changed to administrative charges rather than reserve to match the remainder of the budgets in the account.

Mr. Burke said page 17 of Exhibit C shows several modules with which the subcommittee concurred:

Item 1. E-125, Internet Access and GroupWise Software.

Item 2. E-710, Replacement Equipment. This is funding for two personal computers, a network hub, a file server network card and adapters, and laser printers.

Item 3. E-900, Position Transfers. The subcommittee concurs with the Governor’s recommendation to transfer two personnel positions from Administrative Services to the Budget and Planning account. Mr. Burke noted the staff routinely requests permission to make any necessary cost allocation adjustments to other accounts resulting from changes in this account.

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Printing Office – Budget Page ADMIN-33 (Volume 1)

Budget Account 741-1330

Mr. Burke distributed the "Budget Closing Action Detail Report" (Exhibit D) and addressed the technical adjustments on page 1.

Item 1. Mr. Burke said that during testimony from division personnel it was indicated position number 0023, Offset Supervisor, would be paid a lower rate because the position was proposed for the satellite quick-print office. He stated the division would pay the Offset Supervisor the equivalent of a grade 27 instead of the equivalent of a grade 37 at present, which is commensurate with the change in duties for the position.

Senator Mathews reflected the change caused quite a drop in grade and wondered whether an employee would find it difficult to be "decreased" to that extent. She asked whether the employee had left the job. Mr. Burke answered the position was vacant at the time the budget was proposed for the satellite quick-print office. This led into item 2 of the technical adjustments on page 2 of Exhibit D.

Item 2. E-125. Las Vegas Quick Print. Mr. Burke explained the Las Vegas quick-print center will be a new office for the Printing Division in Las Vegas. He said the position was vacant when the budget was built and the plan was to hire a person with the intention of moving the position to Las Vegas. He declared a grade 37 was not needed to do quick printing, which is essentially a copy center operation. Mr.  Burke indicated the position cost has been adjusted. Senator Neal asked the present salary of the position. Mr. Burke replied the present salary of the position is $34,487.

Senator Raggio inquired whether the adjustment was mostly for rent. Mr. Burke explained there is a significant rent adjustment because rather than non-state-owned building space, 1,200 square feet of space was acquired in the Grant Sawyer State Office Building in Las Vegas. He said the position cost reduction would be reflected in the base budget because it is an existing position that will be rededicated to that office. Senator Raggio queried whether the rent is on a 2-year pilot basis. Mr. Burke indicated the committee had considerable discussion on this issue. He said that the agency presented some cost savings information to the subcommittee. He pointed out it is the desire of the subcommittee to verify that the cost savings materialize throughout the interim.

Item 3. Mr. Burke indicated software adjustments in module E-710 were made to reflect current price schedules provided by the Purchasing Division.

Item 4. Mr. Burke said the cost allocation adjustments were made throughout the Department of Administration budgets.

Further, Mr. Burke addressed item 2 of the Decision Items on page 2 of Exhibit D.

Item 2. Mr. Burke indicated this item was addressed previously. He said a satellite office would be established in Las Vegas. The agency presented documentation indicating the savings would be about $178,000 to state agencies over the biennium. He pointed out the subcommittee recommended approval of a quick-print center with the adjustments on a 2-year pilot basis. Mr. Burke said the 2-year time frame will allow the agency to return with actual savings reports.

Mr. Burke discussed item 4 on page 3 of Exhibit D.

Item 4. E-129. Overtime/General Fund Repayment. Mr. Burke indicated the subcommittee recommended eliminating the overtime amount $13,805 the first year of the biennium and $21,805 the second year of the biennium, "on top of" the base amount of $186,000. He said the budget would have allocated $200,000 of overtime the first year and $208,000 the second. He stated the subcommittee recommended denial of the overtime request in E-129 and reduction of the base overtime amount from $186,000 to $150,000. Mr. Burke declared the reduction was recommended because the subcommittee believed the addition of the satellite office and improved automation derived from the printing equipment budget would reduce the overtime burden. He stated the agency concurred with the reduction.

Senator Neal asked, "What is overtime based upon?" Mr. Comeaux answered overtime is based upon studying historic levels of overtime and the reasons for it. He indicated the Printing Division, for example, routinely works a lot of overtime during a legislative year. He said "in off years" they work less overtime; however, they still work overtime to accommodate rush jobs from agencies when necessary. Mr. Comeaux declared that overtime is generally not budgeted. He explained the Department of Administration proposed to recognize the inevitable and authorize overtime in some of its budgets, and some other areas as well. He declared the subcommittees have almost uniformly indicated they do not want to budget for overtime. In general, there are very few budget accounts where overtime is actually budgeted, Mr. Comeaux stated.

Senator Neal inquired whether compensatory time, rather than overtime, is used when overtime is not budgeted. Mr. Comeaux indicated compensatory time is used to the extent allowed by law, but for paid overtime vacancy savings are used.

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Senator Mathews inquired the percentage of printing that is sent out. Mr. Burke indicated he would provide the information to the committee.

State Employees Workers’ Compensation – Budget Page ADMIN-15 (Volume 1)

Budget Account 715-1329

Debbra J. King, Program Analyst, Fiscal Analysis Division, LCB, read the narrative on page 1 of Exhibit C. She indicated the budget account reflects the activities of the three FTE positions assigned to coordinate and administer the State Employees’ Workers’ Compensation account. She said the adjustment to the account reflects The Executive Budget modification No. 80 received by the Budget Division, and they both accomplish two things:

1. It presents the recommendation that the Public Employee Health Plan become a stand-alone entity. In prior years the account was supported by the administrative staff in the Public Employee Health Plan.
2. It delineates the rate adjustment that resulted when the staff was able to renegotiate the retrospective premium to the Employees’ Insurance Company of Nevada (EICON) from $10 million in FY 2000 and $11 million in FY 2001 to $9 million each year of the biennium. This will result in allowing the composite central payroll rate to be adjusted from $2.18, which was included in the original Executive Budget, to $2.01 in FY 2000 and $1.93 in FY 2001. This would generate approximately $427,000 in FY 2000 and $632,000 in FY 2001 in General Fund savings.

The Joint Subcommittee on General Government voted to approve the rate reduction described above.

Senator Rawson indicated there is a balance forward from previous years of approximately $2 million to $3 million and asked whether such a large balance is necessary. Referring to page 2 of Exhibit C, Ms. King answered Amendment  No. 80 reflects a reversion of $3 million to the various accounts that generated the reserve. She indicated $1.7 million would go to the General Fund and the Budget Division indicated the reversion would occur within a matter of weeks. She declared the subcommittee approved the recommendations of The Executive Budget insofar as Amendment No. 80, and the decision units in The Executive Budget to fund the Occupational Health Nurse position, additional training for staff, file cabinets, and cost allocations. Ms. King said there is also a recommendation to fund a reclassification of the staff in this account.

Senator Raggio inquired whether everyone in state service is covered under the Public Employee Health Plan. Ms. King indicated there are different rates for the Public Employees’ Retirement System (PERS), the Nevada Department of Transportation (NDOT), and central payroll, but everybody is covered under the Public Employee Health Plan.

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Insurance Loss and Prevention – Budget Page ADMIN-21 (Volume 1)

Budget Account 715-1352

Referring to pages 3 and 4 of Exhibit C, Ms. King said this budget account is responsible for providing agencies effective loss prevention information and tools, risk transfer, and loss funding mechanisms to protect the state’s assets from accidental losses. She indicated the budget account also received Executive Budget modification No. 81 to reflect the recommendation that the Public Employee Health Plan become a stand-alone entity. She stated the budget account was also receiving administrative and clerical support from that entity; therefore, a budget amendment was recommended to transfer the clerical support to the Department of Administration’s Administrative Services Division.

Ms. King noted there were technical adjustments to adjust the cost of travel and training and eliminate the cost included in the base budget and decision unit E-125. She said the amount recommended in decision unit E-175 in The Executive Budget was reduced to agree with the amount requested by the agency. She declared all the adjustments and costs were balanced to the reserve. Ms. King stated the Joint Subcommittee on General Government voted to approve the budget as amended by The Executive Budget modification No. 81 and staff technical adjustments.

Senator Coffin asked what percentage of the insurance cost is used to administer the program. Mr. Comeaux indicated the percentage proposed for FY 2000 for automobile compensation and collision claims is $377,806, and for property claims is $411,092. He noted the attorney general’s tort claims are handled out of a different fund.

Senator Raggio observed that there are insurance premiums of $1.4 million and $1.5 million each year, and asked to whom those premiums are paid. Mr. Comeaux said he did not know specifically to whom the premiums are paid, but it would be to the companies that handle the reinsurance or stop-loss insurance fund.

Requesting clarification, Senator Raggio asked whether the state pays out directly in claims the amounts referenced in testimony, and whether the state pays the insurance premiums, which is the portion not covered by the insurance. Mr. Comeaux said the answer is yes in both cases.

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DEPARTMENT OF MOTOR VEHICLES AND PUBLIC SAFETY

Public Safety Information Services – Budget Page DMV-92 (Volume 3)

Budget Account 201-4733

Ms. King referred to page 19 of Exhibit C and read the objective, budget modification, technical adjustments, and Executive Budget decision units of the budget account.

Ms. King indicated this budget account was created by the 1997 Legislature to correctly allocate the information services cost for the public safety branch of the Department of Motor Vehicles and Public Safety. She said the department would directly charge costs for programming and network support to the appropriate user agency. She noted that specific language was included in the General Appropriations Act which would allow the department to do this. Ms. King indicated that unfortunately the language was not followed and charges were made in accordance with the way the budget was built rather than who actually used the services.

Ms. King stated the Joint Subcommittee on Public Safety/Natural Resources/Transportation recommended a Letter of Intent be provided the department to allow them to charge resources as they are used. She declared the department would then report to the Interim Finance Committee (IFC) in May of each year, and, if necessary, transfer authority among Public Safety accounts. She said the subcommittee also recommended continuing the language in the General Appropriations Act to allow the director to transfer authority among budget accounts as needed to support payment to this account for services received. She stated budget authority transfers could only occur between like-funded accounts, the Highway Fund or the General Fund. She explained that should the Division of Parole and Probation require additional programming support, but the Nevada Division of Investigations (NDI) require less programming support, the agencies could approach the IFC and transfer the authority between the two accounts. Ms. King pointed out that should the Highway Fund or hazardous material accounts require more support, and the Highway Patrol regular account need less support, those accounts could be transferred as well. She said the director could, in that event, utilize the programming as he or she sees fit and the resources could still be paid for appropriately with either Highway Fund or General Fund dollars, or with fee funds.

Ms. King indicated budget modification No. 99 proposes significant changes to the account. She said the changes primarily relate to more accurately identifying the cost associated with the services provided by the Public Safety Information Services account. She stated the costs are separately identified for the law enforcement message switcher and programming and network support. Ms. King said that in addition, adjustments were made to the telephone circuit charges, vacancy savings, and rent categories. She noted all the changes to expenses required adjustment to the revenue charges.

Ms. King said maintenance costs for the Hot Site backup were adjusted to the amount provided when the Hot Site was approved by the 1997 Legislature. She indicated insurance on the Hot Site was adjusted to reflect current insurance costs. She said the telephone circuit costs were moved to a separate category and represent a significant portion of this account’s cost. Ms. King noted that due to the significant increase in this account the telephone circuit costs were moved to a separate category to more specifically identify them. She declared that furniture for the new positions was eliminated based on the department’s response, and a computer and the accompanying software was added for new positions.

Ms. King indicated the Joint Subcommittee recommended 3 Computer Network Specialists, 1 Computer Network Technician, and software that was recommended in The Executive Budget. She said decision unit E-197, adjusted to $226,651, represents the projected telephone circuit cost increases for the 1999-2001 biennium. She stated the increase represents a 148 percent increase over FY 1998 actual amounts, which is the reason it was placed in a separate category. Ms. King declared the subcommittee voted to include in the Letter of Intent language that specifies the category for telephone circuit costs is intended to be used only for telephone line/circuit charges. She said the subcommittee approved The Executive Budget recommendation as modified by budget modification No. 99 and the technical adjustments.

Senator Neal asked whether the telephone circuit charges that were moved to a separate category were given a new budget account number. Ms. King answered the telephone circuit charges are still within this budget, but each budget contains different categories and an agency cannot overspend a category total. Senator Neal queried why the telephone circuit charges do not have their own budget number if they are separated. Ms. King explained the charges are tracked separately within the category. Senator Neal inquired who assigns budget numbers. Mr. Comeaux replied, "I believe we do." He noted that placing the telephone circuit charges in a separate category within this budget account is adequate for tracking purposes. He indicated the only way authority can be moved from one category to another is formally, through a work program process. Mr. Comeaux said this process provides adequate safeguards that will assure the accounting for these charges is separate and a separate budget account is unnecessary.

Senator Neal further inquired, "What would I see if I pulled up the budget on a computer and looked at the charges by using the budget account?" Ms. King referred to page DMV-95 of The Executive Budget, pointed out the lines entitled "Operating Expenses," "Equipment," and "Switch Operation," and explained there would be another separate line for "telephone charges." Senator Neal sought to clarify that the information would "come up" should it be accessed by computer. Ms. King answered that was correct.

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DMV, Emergency Management – Budget Page DMV-112 (Volume 3)

Budget Account 101-3659

Referring to page 21 of Exhibit C, Ms. King indicated the budget account reflects the grant-funded activities of the state Emergency Management Division. She said The Executive Budget recommends adjusting the funding for the hazard mitigation program to go from 100 percent federal funding to 25 percent state funding, and 75 percent federal funding, effective July 1, 1999. She noted it is not required to be effective until October 1, 1999; therefore, the staff reduced the General Fund match required for that account. Ms. King said small adjustments were made for inflation costs. She stated The Executive Budget also recommends transferring this account and merging it with budget account 101-3601 to form one division of the Emergency Management account. She said separate accounts were initially established because this account required a federal match and the account with which it would have been merged required 100 percent federal funds. Ms. King noted the 100 percent federal-funding program has been eliminated and separate accounts are therefore no longer needed.

Ms. King indicated the Joint Subcommittee agreed with The Executive Budget’s recommendations for the enhanced state cash-match requirements and to merge this account with the other Emergency Management account.

Senator Rawson asked whether the accounts were merged as shown on page 21 of Exhibit C. Ms. King answered, "Yes, the end result of the three accounts is one big account." Senator Rawson pointed out that a number of items were not carried forward, namely project impact, justice assistance, state disaster identification (ID), and earthquake preparedness, and inquired whether the items ceased to exist. Ms. King responded the account had a variety of programs, some of which are no longer in existence. She added the Division of Emergency Management decided some programs would be more appropriately managed by the university, and gave as a specific example the earthquake grant.

Senator Rawson called attention to a bill that continues some funding for the state disaster identification (ID) team. Senator Raggio explained that after a budget is closed and is affected by a bill, the bill is addressed and an adjustment is made.

Senator Rawson pointed out that food reimbursement, hazardous cleanup, and so forth are important programs and asked whether those categories had been eliminated or appeared elsewhere in the budget. Ms. King indicated the categories were created pursuant to the flood of 1997. She said the costs were reimbursed to this budget account for the state’s costs to respond, clean up, and manage the flood activities. She stated that in the event of another natural disaster, the department would conduct a work program and the categories would be added.

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DMV, Emergency Management Division – Budget Page DMV-117 (Volume 3)

Budget Account 101-3673

Ms. King stated this is a new budget account resulting from the merging of budget accounts 101-3659 and 101-3601. She indicated the new account represents the combined activities.

Ms. King said decision unit E-800 reflects the allocation for the Public Safety Information Technology budget account, and E-805 represents a correction to a position that was transferred to this account from budget account 3601. She stated modules E-901 and E-905 reflect changes made to budget accounts 3601 and 3659 relating to federal grant match requirements and inflation/insurance calculations.

Item 1: Ms. King said a Radiological Hazard Mitigation Officer’s position that was filled when The Executive Budget was completed has since been vacated. She stated the department indicated the position could be reduced to funding for a step 1. It has been the practice of the Division of Emergency Management to underfill the position and train the incumbent, which saved $2,318 in FY 2000 and $2,564 in FY 2001 in General Fund appropriations, Ms. King reported.

Item 2: Ms. King stated the importance of the Ham Radio Operator during an emergency was discussed in the budget hearings. She said that due to an extended vacancy, the half-time Communication Systems Specialist position that was previously funded to coordinate the ham radio operators was eliminated during the base budget review. She said the department indicated the position had been held vacant due to an investigation. Ms. King noted the division indicated willingness to eliminate a clerical position to provide funding for the half-time Communication Systems Specialist position. She indicated the joint subcommittee agreed with the recommendation and eliminated the clerical position effective September 30, 1999, and added the half-time Communications Officer effective October 1, 1999. This action saved $4,637 in FY 2000 and $5,128 in FY 2001 in General Fund appropriations, Ms. King remarked.

Item 3: Ms. King indicated that during budget hearings discussions were held regarding the transfer of two accounting positions from the Division of Emergency Management to the Administrative Services Division to form a centralized Grant Accounting Unit. The Administrative Services Unit has since eliminated the Grant Accounting Unit but retained the accounting positions. She said the subcommittee transferred the Accounting Technician III position back to the Division of Emergency Management, which required an additional General Fund match of $12,978 in FY 2000 and $13,028 in FY 2001. The net General Fund impact of the subcommittee’s changes to this account will be a savings of $45,005 in FY 2000 and an increase of $2,598 in FY 2001, Ms. King reported.

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DMV, Emergency Management-Federal Grants – Budget Page DMV-121 (Volume 3)

Budget Account 101-3601

Ms. King indicated this budget account reflects the Division of Emergency’s management grants that were previously 100 percent federally funded. She said that due to changes in the grant requirements of the Federal Emergency Management Administration’s (FEMA), a 50 percent cash match is now required. She noted The Executive Budget recommended that the additional cash match become effective July 1, 1999, but it is not required until October 1, 1999. Anticipating that event, Ms. King said $4,639 was eliminated from General Fund cash match requirements. She said the joint subcommittee agreed with the recommendation of The Executive Budget to merge this account with the other Emergency Management account, as well as the technical changes to reduce longevity and increase funding for inflation, printing, postage, and insurance.

Senator Raggio inquired where the cash match is shown in the budget. Ms. King explained the cash match is shown in decision unit E-375 on page DMV-123 of The Executive Budget. Senator Raggio asked why it is not shown on the summary page. Ms. King answered the cash match was incorporated into the other account.

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DMV, Dignitary Protection – Budget Page DMV-137 (Volume 3)

Budget Account 101-4738

Mr. Comeaux requested this budget account be held pending a proposed adjustment. Senator Raggio agreed to hold the budget account until further notice.

DMV, Highway Safety Grants Account – Budget Page DMV-152 (Volume 3)

Budget Account 201-4721

Ms. King indicated this is a new budget account in The Executive Budget. She said that although the budget account has been in existence "for a while," it represents activities funded through the federal Motor Carriers Safety Assistance Program (MCSAP). She reported the Joint Subcommittee on Public Safety/Natural Resources/Transportation recommended the following changes:

1. Elimination of the Highway Fund start-up appropriation. The department can request that funds be deposited into the state account within a matter of days using the electronic funds transfer mechanism. There are many 100 percent federally funded accounts that do not have start-up cash from either the General Fund or the Highway Fund.
2. Elimination of the Federal Funds Cash Balance Forward. Pursuant to the Federal Cash Management Act, the department should not be carrying federal cash forward from year to year. Federal cash should only be drawn down to meet current projected expenditures.
3. Adjustment of the total grant award projected to this account to the Federal Fiscal Year (FFY) 1999 level. If the actual grant awards for FY 2000 and FY 2001 exceed the FY 1999 award, the department can amend the budget through the IFC.
4. Because the total grant award was adjusted to the 1999 level in the base decision unit, any additional expenditures must be offset against the existing grant budget.

Senator Raggio inquired whether this budget account is a separate account. Ms. King answered yes. Senator Raggio noted the grant requires a 20 percent state "soft match" comprising the time spent by troopers on program activities. He asked whether the budget showed a state match. Ms. King answered the "soft match" is met by the commercial enforcement troopers in the regular Highway Patrol budget account. Senator Raggio inquired whether that value is shown in the budget. Ms. King responded the value is shown in the federal reports but is not included in the budget.

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DMV, Forfeitures-Law Enforcement – Budget Page DMV-156 (Volume 3)

Budget Account 101-4703

Ms. King indicated this budget account represents the proceeds of assets forfeited by criminals who obtained them through illegal activities. She said the technical adjustments recommend correction of the general ledger to provide authorization to transfer funds through to locals and adjust the amount of cost to be passed through to the Investigation Division for its grant match. She indicated the Investigation Division of the DMV&PS approached the IFC with a spending plan when developing projects for utilizing the forfeiture funds in this account. Ms. King stated the Byrne Grant match is the only authorization in the budget account. She noted the Joint Subcommittee on Public Safety/Natural Resources/Transportation recommended computer funding purchases.

Senator Raggio asked the nature of the forfeitures. Ms. King answered the forfeitures include cash, cars, radios, and so forth. She said the anticipated revenues from forfeitures are $710,000. Senator Raggio noted the agencies suggested only $345,000 might be forfeited. He asked whether any positions were built into the budget. Ms. King indicated the revenues from forfeitures go into the reserve, with the exception of a small amount of funds authorized to pass cash through to local governments for their share of forfeitures, or to provide the Byrne Grant for the Investigation Division. Senator Raggio asked the amount of the Byrne Grant match. Ms. King said the match is approximately $351,000 each year. Senator Raggio inquired whether the reserve is "overly reserved." Ms. King indicated that plans on how to spend the reserve come forth every interim.

Senator Rawson noted the actual for FY 1997-98 was $1,257,789 in fines, forfeitures, and penalties, and asked what percentage goes to local law enforcement. Ms. King answered the amount that goes to local law enforcement is determined by the judge when he or she authorizes the release of forfeiture funds. Senator Rawson asked whether forfeitures consistently bring in more funds than what is budgeted. Ms. King said it depends upon "whether it is a good or a bad year." Senator Rawson inquired whether an actual-value determination would be conducted if an agency receives an airplane. Ms. King stated many things must be considered if an agency acquires an airplane. She noted a determination must be made as to whether or not the airplane was purchased for use by the agency’s task force, in which case the agency would have the option to retain the airplane. However, should the acquisition be the result of a joint task force purchase, the airplane would be sold in order for each agency to retain a share of the proceeds.

Senator Rawson inquired whether this procedure is compatible with the Nevada Constitution. Ms. King indicated there are strict limitations on how the funds may be used.

*****

DMV, Fire Marshal – Budget Page DMV-225 (Volume 3)

Budget Account 101-3816

Ms. King stated The Executive Budget recommends the Fire Marshal account become a self-funded account through licenses and fees charged to the fire protection industry and through plan review checks. She indicated the subcommittee voted to include language in the Authorizations and Expenditures Act to allow the State Fire Marshal Division to balance forward excess fees received in FY 1999. She noted the increases in projected revenue for the Fire Marshal account in The Executive Budget were generated by workload increases rather than fee increases.

Ms. King indicated that in addition to the change in fees, the Joint Subcommittee on Public Safety/Natural Resources/Transportation approved the budget with the following technical adjustments:

In this decision unit, funding for training was reduced to reflect the five plans examiner positions recommended in The Executive Budget.

This decision unit provides funding for travel previously funded by a grant and was reduced to the actual amount of travel paid by the grant. It also provided additional travel to allow the Fire Services Board to meet more frequently. The amount recommended in The Executive Budget was adjusted to eliminate amounts included in the base budget in accordance with the department’s letter dated February 23, 1999.

The additional inspector travel recommended in this decision unit was adjusted to reflect corrected per diem amounts for Mondays and Fridays, and vehicle travel expenses were adjusted to actual agency calculations.

This decision unit was adjusted to reflect the updated hardware and software prices received from the Purchasing Division on March 9, 1999.

Decision unit E-805 was added to reflect budget modification No. 99 to The Executive Budget which adjusts the costs allocated from the Public Safety Information Services budget account.

Ms. King noted that with the technical adjustment recommended by staff, this budget would not have balanced with the Public Safety Information Services cost allocation. Therefore, the joint subcommittee elected to direct the State Fire Marshal Division to increase fees across the board by 10 percent. She said this would include fees for plan reviews and the fire protection industry. The projected fees were calculated to be effective for 6 months in FY 2000 to allow a regulatory change through the executive regulatory process and the full year in 2001. Ms. King indicated it would reflect $59,000 in additional funding in FY 2000 and about $128,000 in FY 2001.

Ms. King called attention to a memorandum on page 30 of Exhibit C from John P. Comeaux, Director, Department of Administration, which indicated the Governor would not oppose a fee increase.

Senator Jacobsen pointed out the fire marshal is a "must" for the rural areas. He said there had been concern that should fees be raised the increase would be vetoed by the Governor. The senator indicated he conferred with Governor Guinn who said as long as the increase was justified "everything would be fine." Senator Raggio added the fire marshal has responsibility for commercial buildings, multiple family buildings, and so forth, throughout the state.

*****

DMV, Hazardous Materials Training Center – Budget Page DMV-232 (Volume 3)

Budget Account 101-3834

Ms. King indicated this budget account is the training component of the budget for the State Fire Marshal Division. She said the staff suggested combining the two reserves recommended in The Executive Budget because they originate from the same fee source. She declared Module E-805 was added to reflect the cost for the Public Safety Information Services.

Ms. King stated The Executive Budget recommends:

This decision unit recommends funding the federal Superfund Amendment and Reauthorization Act of 1986 (SARA) Title III grant activities, operating costs for vehicles, and board member travel that had been removed from the base budget.

This decision unit recommends office furniture, computer replacement, and replacement of two vehicles for the training officers.

These decision units recommend the transfer of the Fire Services Training Board travel costs to this account, 101-3834, and the Fire Services Standards Board to the Fire Marshal’s general account, 101-3816.

Ms. King indicated the Joint Subcommittee on Public Safety/Natural Resources/Transportation elected to authorize 2 additional Fire Marshal Inspector positions in response to the Clark Commission on Public Safety’s recommendations. She said the department indicated the positions will be self-funded through additional fees generated from on-site hazardous materials inspections of businesses, which require a $120 hazardous materials storage certificate. She stated the subcommittee recommended the additional positions and included a Letter of Intent specifying semiannual reports be submitted to the IFC. Ms. King said the Letter of Intent should also specify the subcommittee’s intent that the positions be self-supporting. She pointed out the positions will be eliminated should they fail to generate sufficient funds to pay their costs. She indicated the State Fire Marshal Division conducted a study in Winnemucca which found that 71 percent of the businesses did not have the required hazardous materials certificate. Ms. King declared the result of the study was used to support the addition of the inspector positions. She said additional positions may be requested of the IFC if the positions are successful.

*****

DMV, Emergency Response Commission – Budget Page DMV-238 (Volume 3)

Budget Account 101-4729

Ms. King indicated this budget account works with local emergency planning committees to assure that local agencies are available to respond to hazardous material spills and effectively plan, train, and equip public safety officials and responders to ensure public safety. She said The Executive Budget recommends additional travel to allow staff and commission members to work with newly activated local emergency planning commissions and allocation of the Public Safety Information Technology cost. Ms. King stated the Joint Subcommittee on Public Safety/Natural Resources/Transportation recommended this budget be closed in accordance with the Governor’s recommendations.

Senator Rawson asked the identity of the director of the Emergency Response Commission. Ms. King answered Mary Lynn Evans was recently named director of the Emergency Response Commission. Senator Rawson inquired about the interest

in the budget account. Ms. King responded that the interest in the budget account emanates from reserves received from permits issued by the Nevada Highway Patrol for hazardous material transporters. She said 20 percent of the fee goes into this budget account for a contingency fund and the account earns interest off the contingency account. She further explained the Emergency Assistance budget account is the account receiving interest income off the Disaster Relief Fund, which receives interest and income from budget stabilization. Senator Rawson asked the location of the Emergency Assistance budget. Ms. King said the Emergency Assistance budget is on page DMV-243 of The Executive Budget and was closed as recommended by the Governor. Senator Rawson asked where the interest from the Emergency Assistance budget account is allocated. Ms. King answered the Emergency Assistance account receives interest from the Disaster Relief Fund up to $500,000 a year. She said that in the event no emergencies occur and there are funds remaining, the State Emergency Response Commission may grant the funds to local governments for equipment or training.

Senator Jacobsen indicated he serves on both the state and Douglas County Emergency Response Commissions and noted they are good programs. He said some of the money could go toward training. The senator declared that every department in the state was allowed to determine its needs and the major need reported was communications. He stated an attempt had been made to bring areas together to produce hazardous materials teams, such as Carson, Douglas, and Lyons Counties, which share expenses. He pointed out that every county in the state is required by federal law to have a local emergency operation plan which catalogs the hazards within that county. The senator asserted that should there be a disaster, the location is noted and drills are put in place. He remarked that Elko was the only county which refused to comply. He said when an attempt was made to bring Elko County "into line," it was discovered the county has 39 fire departments, which he said makes unanimity difficult. Senator Jacobsen indicated that occasionally funds will go into training for volunteer fire departments. He pointed out volunteers are expressing reluctance because they are unsure of the legal ramifications to which they will be exposed.

Senator Rawson noted it was recommended in the Emergency Assistance budget that the administration of the account be moved from the State Emergency Response Commission to the Division of Emergency Management, and inquired whether this has been accomplished. Ms. King responded the Division of Emergency Management has a bill which will clean up "some" of the statutory language. The Budget Division requested the Division of Emergency Management to amend the bill to include movement of this budget account from the State Emergency Response Commission to the Budget Division.

*****

Senator Raggio relinquished the chair to Senator Rawson.

Mary A. Matheus, Local Government Budget Analyst, Fiscal Analysis Division, LCB, distributed the Senate Committee on Finance Closing List No.15 (Exhibit E.).

Department of Taxation – Budget Page TAX-1 (Volume 1)

Budget Account 101-2361

Ms. Matheus indicated this budget was closed April 6, 1999, in the Joint Subcommittee on General Government with several technical adjustments. She declared decision unit M-200 was adjusted to reflect the removal of three modular units at a cost of $17,524 the first year of the biennium. She noted the units were erroneously included in the budget and were for positions not recommended in the Governor’s recommended budget. Ms. Matheus indicated the staff received updated pricing from the State Purchasing Division on March 9, 1999, and some of the prices were adjusted in decision unit E-710. The unit price for laptop computers was reduced for a total reduction of $4,010 the first year and $310 the second. The Microsoft Office Professional Suite upgrades were reduced from a unit price of $302 to $205, a total reduction of $20,370 in the second year of the biennium for 210 software upgrades.

Ms. Matheus pointed out that during the Department of Taxation’s initial budget hearings it was determined funding for the second phase of the agency’s Information Services project was not included in the Governor’s recommended budget. She said the first phase, the business process reengineering (BPR), was funded in the current biennium at a cost of $595,852. She noted the Department of Taxation indicated the cost of phase 2, including but not limited to system requirements, data mapping, interface, and report identification, would cost approximately $860,000. Ms. Matheus said the Joint Subcommittee on General Government voted to approve funding of phase 2 of the Department of Taxation’s reengineering project using the recommendation of the Budget Division.

Referring to pages 3 and 4 of Exhibit E, Ms. Matheus stated the Department of Administration provided Budget Amendment No. 90 which reflects the Department of Information Technology’s new rate structure. She said the proposed structure reduces the total DoIT charges in the Governor’s recommended budget for the Department of Taxation by $51,347 in FY 2000 and $273,704 in FY 2001. She declared the recalculation of the new rate structure indicated the total reduction for the Department of Taxation would be higher at $511,347 the first year and $673,704 the second. Ms. Matheus said the Department of Administration proposes the Department of Taxation be authorized to retain $460,000 the first year of the biennium and $400,000 the second year in reallocated charges to fund the next phase of the Information Services project.

Senator Rawson asked whether the Information Services project is the Automated Collection Enforcement System (ACES) project. Senator O'Donnell reflected it was odd that the entire cost to produce ACES was approximately $949,000, but the study to produce the next generation of software costs almost $800,000. He commented, "I think it is just totally way out of line. I don’t know what we are doing here¾ but it seems to me like we could spend this money creating the software instead of trying to reengineer the reengineering."

Senator Rawson observed that the Department of Taxation "drives the state" and should therefore receive what is needed but said, "Let’s do it right." Senator O'Donnell stated, "I guarantee you, Mr. Chairman, that if $1 million was put in the budget for BPR, that is how it would come back. If you put it in at $300,000, a $300,000 BPR is what you would get."

Dave Pursell, Executive Director, Department of Taxation, explained the difference between what the department is doing presently and the ACES as it currently exists is due to an inadequate definition of the ACES. He explained that although he has only been working in the Department of Taxation for 2 months, he has worked with account clerks, tax examiners, and individuals responsible for inputting information into the system. He said inputting information into the system is labor-intensive and duplicate information must be entered because the ACES does not distinguish a debit from a credit in some instances. As the department went through the first phase in the process of studying the reengineering, the Department of Information Technology and the consultant retained by the state (TRW) determined that the ACES cannot offer a revenue management system that will move into the next century, Mr. Pursell remarked.

Mr. Pursell opined the scope is much broader for the reengineering system than it is for the ACES. He indicated the Department of Taxation received many fiscal notes related to tax issues during the session and each one must be programmed by a DoIT employee on site at the Department of Taxation. Mr. Pursell said there is no ad hoc reporting capability with the current ACES. He declared the other difference between the ACES and what is requested through phase 2, and ultimately phase 3, is an integrated revenue management system¾ not just sales and business tax but all excise taxes, the net proceeds of mines tax, and utility taxes¾ and the ability to interact with other agencies collecting statewide revenues. Mr. Pursell said, "Yes, it is a lot of money, but I have to rely on the experts who directed our need for a systems requirement to ensure what is developed in phase 3 is precisely what the taxpayers want and what the state needs in order to manage the collected revenues."

Senator Rawson commented the problem with the ACES is that an adequate definition of the system was never accomplished. Mr. Pursell agreed and stated the reason the task became so labor-intensive was that there was no plan. He declared that by the time the ACES began, parts had been added and efforts duplicated. Senator Rawson asked whether the ACES is planned around a central computer using "micros and/or minis." Mr. Pursell indicated the recommendation is to have a client server at the Department of Taxation with an information specialist as liaison between the Department of Taxation and the Department of Information Technology to handle database management and processing for the Department of Taxation. Senator Rawson asked whether there is a difference between what is presented today from what was recommended by the subcommittee. Mr. Pursell answered the recommendation today is the same as that recommended by the subcommittee.

Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association (NTA), said the Department of Taxation is responsible for the bulk of the revenues generated for the State of Nevada. She expressed concern, in connection with the fees collected, that the Department of Taxation has become a revenue-generating agency. She reflected that should the Department of Taxation receive and retain fees for collecting sales tax for the counties and so forth, the first phases of the computer system could be funded from those fees rather than "funds being requested from the budget." Ms. Vilardo indicated she was grateful to be part of the BPR steering committee because she represents people who must respond to the Department of Taxation. She noted those individuals are unable to conduct electronic filings with the ACES program because the system has no desk audits and nothing is integrated. Ms. Vilardo explained there are businesses that not only collect sales tax, but also cigarette, alcoholic beverage, and business license taxes¾ none of which are integrated. She declared the NTA would rather the state collect everything "out there" before taxes are required to be raised. She pointed out that consultants have indicated the ACES cannot be expanded as it is currently set up, and a new system is required although the NTA does not favor large bureaucracy.

Ms. Vilardo emphasized that this is one case in which the state must enter the 21^st  century and generate the required revenue. She stated the task must be accomplished efficiently to enable electronic funds transfer filing, as well as to provide one simplified report. Anything that can be done to fund the department to that end would be very much appreciated, Ms. Vilardo remarked.

Senator O'Donnell submitted a list of requirements to achieve the goals:

1. Situate the data center at the Department of Taxation in order to manage not only the CPU, the server, and other necessary equipment, but the programmers as well.
2. Discover what needs to be accomplished and pare down the BPR to about $200,000.
3. Begin programming the software utilizing the remainder of the money.

In so doing, Senator O'Donnell said the state will be on the way to having a great in-house product in which it will have pride and ownership. He indicated that currently the system is bifurcated with the computers in one location, the Department of Taxation in another, and a "data person" who is responsible to two department heads. The senator asserted, "Until the Department of Taxation breaks the apron strings and goes off on its own, it will never succeed." Senator O'Donnell conjectured he would return in 2 years to again deal with the problem.

Ms. Vilardo pointed out she is computer-illiterate and dysfunctional and only knows what she wants the computer to accomplish. From the perspective of sitting on the BPR steering committee and tracking taxes for many years, she suggested it would be efficient to eventually integrate the Employment Security Division (ESD) and the Office of the Secretary of State into the system. Relative to the cost of the BPR, Ms. Vilardo commented no bids were received when the original BPR was placed in the budget for $500,000. The amount was reduced to $250,000 and still no bids were received. She said the IFC was approached for another $250,000, which brought the amount to $500,000 for the first phase. Ms. Vilardo indicated $800,000 seems "high"; however, at one point the amount was $1.2 million because of a need for additional elements. She pointed out the decision must be left with the people who work with the consultants contracted by the Department of Taxation. She indicated she did not wish to see the amount decreased another $200,000 only to later have the department request more money, which would delay the process even more.

Senator O'Donnell declared:

Senator Rawson asked Mr. Comeaux to give his recommendations. John P. Comeaux, Director, Department of Administration referred to a letter on pages 3 and 4 of Exhibit E. He explained that when The Executive Budget was put together it was acknowledged the Department of Taxation had a "desperate" need to do something with the ACES. He said the department was still in the middle of its BPR and could not provide any information on the amount of money required to begin development of a new system, fix the ACES, or implement whatever other solution might emanate from the BPR. Further, Mr. Comeaux indicated, "We were absolutely broke and probably [the budget office] would not have been able to find the money even if the department had been able to furnish the information." He said that the department’s consultant estimated the cost of the BPR at $860,000. He pointed out the money in the budget was freed up through the information technology cost allocation. Under those conditions, Mr. Comeaux stated his recommendation was to proceed. He indicated the Department of Administration anticipated a revenue management system through the ACES, which did not occur. He predicted the ACES would pay for itself many times over.

Senator Rawson remarked that should the budget be closed as recommended by Mr. Comeaux, it would provide the resources to accomplish Senator O'Donnell’s recommendation. He asked whether Mr. Pursell would consider having an independent source study what had been presented by the consultant, taking Senator  O'Donnell’s suggestions into account as well. Although acknowledging it was one more step, Senator Rawson declared it would "provide comfort for the committee." He said Senator O'Donnell had predicted the problems that resulted after each step of the Nevada Operations Multi Automated Data Systems (NOMADS) and the ACES. The senator pointed out in each case Senator O'Donnell was correct and the state had gone down a nonproductive and expensive road.

Mr. Pursell voiced the opinion the request is reasonable and said he would be willing to work with Senator O'Donnell through the next phase of the process. Senator Rawson indicated he would accept a motion on this budget.

Senator Neal inquired what Senator O'Donnell would contribute to the process. Senator Rawson explained that Senator O'Donnell had laid out an abbreviated direction in order to reach the same point. Senator Neal pointed out the evaluator of the system must possess the correct knowledge and expertise to study it in terms of how it is set up and constructed in order to deliver the product to the state. Senator Rawson responded the budget would be closed according to the recommendations to allow the system to pursue the recommended course. The senator desired that there be a second review of the system before committing the state to the project.

Senator Neal asked whether funds for an evaluation had been provided in the budget. Mr. Pursell answered the budget did not provide for an independent review of the second phase of the project. Senator Neal asked whether an evaluation had been discussed in the subcommittee. Mr. Pursell said an evaluation was not brought up in the subcommittee. Senator Rawson clarified his suggestion was the budget be closed as recommended by the subcommittee, and the Executive Branch would be responsible for an independent evaluation of what had been accomplished thus far. Senator Neal noted the budget should not be closed contingent upon Senator O'Donnell working with the Executive Branch on the project. "The action is out of the ordinary," remarked Senator Neal.

Senator Rawson indicated a Letter of Intent would be provided Mr. Pursell authorizing him to study the issue once more and providing the resources to proceed.

Ms. Matheus said the Department of Taxation is requesting a $165,000 supplemental appropriation which is not in the Governor’s recommended budget. She pointed out the Joint Subcommittee on General Government discussed the need for a bill draft request from either the Senate Committee on Finance or the Assembly Committee on Ways and Means to obtain the supplemental funds.

Senator Rawson requested Senator O'Donnell to include the bill draft request in his motion. Senator O'Donnell agreed.

*****

Senior Citizens’ Property Tax Assistance – Budget Page TAX-7 (Volume 1)

Budget Account 101-2363

Ms. Matheus indicated the budget was closed in the Joint Subcommittee on General Government on April 6, 1999, in accordance with the Governor’s recommendations. She pointed out the budget includes refunds based upon a 1.7 percent Consumer Price Index (CPI) increase, and in the second year the refunds are based upon a 2 percent CPI increase applied to a 5.5 percent increase in the population of people over age 65. Ms. Matheus said The Executive Budget recommends elimination of a $250,000 reserve approved by the 1997 Legislative Session to ensure funds would be available to pay refunds at 100 percent of the eligible amount. She said that should the number of applicants significantly exceed the estimate, refunds are prorated and awarded at less than 100 percent of the full amount calculated.

*****

Personnel – Budget Page PERSONNEL-1 (Volume 1)

Budget Account 717-1363

Ms. Matheus indicated the Joint Subcommittee on General Government heard this budget on April 6, 1999.

B-000, M-200 and E-127B. These adjustments eliminate the calculation of personnel assessment and payroll assessment erroneously charged to this budget. They are not customarily charged against this budget.

M-300, M-825 and E-710. These adjustments reflect changes made to the Governor’s recommended budget to properly allocate revenues between the payroll assessment and the personnel assessment according to the functional breakdown of cost.

M-200. Following discussions with the agency, it was determined one printer recommended in this decision unit for $1,718 could be deleted. It was for a position that was not recommended.

E-710. The Fiscal Analysis Division staff and the Department of Personnel determined that several items in this decision unit¾ two multiplexers for $24,000 in the first year of the biennium, two replacement color printers for $1,332 in the first year of the biennium and $3,104 in the second year, and two 21-inch monitors for $3,154 in the first year¾ were not critical to continuing business functionality and have been eliminated in the closing sheets.

M-200. The Joint Subcommittee on General Government voted to replace the 1.20 full-time equivalent (FTE) contractual positions with two FTE positions, a Management Assistant I and an Account Clerk II position. The subcommittee approved both positions for the biennium with an agreement that the Account Clerk II position would sunset June 30, 1999, and the need for the full-time position would be reviewed during the next budget process.

E-127. The subcommittee voted to approve costs in this decision unit for additional contractual services to be provided by American Management Systems in the amount of $250,320 the first year and $29,120 the second. The costs are necessary for continued operation of the new payroll/personnel system.

Referring to the "IFS Project Budget Distribution" sheet on page 12 of Exhibit E, Ms. Matheus said the budget was $495,948 for the first year of the biennium and $502,649 the second year. She said these costs were not included in the Department of Personnel’s budget and are Integrated Financial System (IFS) recurring costs. She stated the subcommittee voted to allow the staff to include the costs after they had been validated and adjusted according to the closed IFS budgets. Ms. Matheus indicated the Department of Personnel’s budget is funded through a payroll and personnel assessment charged as a percent of gross payroll. She said the original Governor’s recommended budget included a personnel assessment of .94 percent of gross salaries and a payroll assessment of .22 percent of gross salaries.

Ms. Matheus pointed out Budget Amendment No. 36, as shown on pages 15, 16, and 17 of Exhibit E, indicated a calculation error and recommended the personnel assessment be reduced to .80 percent of gross salaries. She said that based on the estimated increases in the DoIT cost in Budget Amendment No. 90, the statewide cost allocation, and the recurring IFS costs, the personnel and payroll assessments must be recalculated. Ms. Matheus noted the Joint Subcommittee on General Government voted to authorize the staff to make the necessary technical adjustments to the Department of Personnel’s budget. The rates must be reported to the committee prior to implementing them into the affected budgets upon final calculation of the personnel and payroll assessment rates, Ms. Matheus stated.

Senator Rawson asked the net effect of the recommendations by the subcommittee. Ms. Matheus answered the IFS costs will be $495,938 the first year and $502,649 the second. She said the DoIT cost allocation is $353,000 the first year and $355,000 the second, which will be added back in. Ms. Matheus indicated she did not have the statewide cost allocation numbers presently.

*****

B&I, Unclaimed Property – Budget Page B&I-13 (Volume 2)

Budget Account 101-3815

Rick Combs, Program Analyst, Fiscal Analysis Division, LCB, explained the technical adjustments and budget closing issues in the budget on pages 18 and 19 of Exhibit E.

E-710. This decision unit for equipment replacement was eliminated. The subcommittee learned the division had already replaced the equipment that was included in the decision unit and eliminated it for this biennium.

E-720. The laptop costs for this decision unit were reduced based upon new purchasing price information.

In-state Travel. Based on the level of travel during the 1999 session, the in-state travel budget was reduced to nine trips for the 2001 Legislative Session.

E-125. The Joint Subcommittee on General Government voted to approve funding for the imaging of the division’s records by the micrographics division, the renewal of a notary public registration, and two legal-size filing cabinets in each year of the biennium.

E-275. The subcommittee voted to increase out-of-state travel, to provide pager service for three field auditors, and to increase expenditures for in-state travel for conducting additional audits of businesses to determine whether they possess unclaimed property. The out-of-state travel increase was to send two employees to the annual "holders’ seminar" and to send the administrator to the midyear meeting of the National Association of Unclaimed Property Administrators. The in-state travel increase for audits was based on the fact that the auditors spent 2 months of their time during FY 1998 auditing one business in the Las Vegas area where the office is located and therefore did not incur the normal amount of travel. The subcommittee voted to adjust the amount up to what was budgeted for FY 1998-99.

E-276. The subcommittee approved funding for increased travel to Carson City for the legislative session, but it was reduced to reflect the reduced number of trips conducted during the 1999 Legislative Session.

E-720. This decision unit was for a laptop computer for the use of the administrator.

*****

B&I, Manufactured Housing – Budget Page B&I-18 (Volume 2)

Budget Account 271-3814

Mr. Combs discussed the technical adjustments and budget closing issues on pages 20 and 21 of Exhibit E.

The training expenditures for the Compliance Investigator were eliminated because the costs of the training were included in the work program that included approval of the new Compliance Investigator in FY 1999.

E-250. Computer software and hardware costs were reduced based on updated price information received from the Purchasing Division.

M-200. The Joint Subcommittee on General Government voted to approve the new Compliance Investigator position on a permanent basis, a new Program Assistant I, and a Program Assistant II. The Compliance Investigator position, which was approved by IFC during FY 1999, is addressing complaints received from owners and prospective owners of manufactured homes. The complaints received by the division are related to the service received from dealers after the homes are installed, as well as complaints regarding the manner in which dealers do business. The division indicated that because of the increased level of consumer complaints received by the division, the employees responsible for performing field inspections were required to address consumer complaints.

The Program Assistant II would assist the Licensing and Codes Compliance Officers in the issuance of licenses. The Program Assistant I would assist in processing and issuing certificates of title for mobile homes.

E-250. The subcommittee voted to approve a new Auditor II position which will conduct audits of the trust accounts of the manufactured housing dealerships. The trust accounts are similar to an escrow account in a real property sales transaction. The money is held until the transaction is finalized and the audit will ensure the funds are handled properly. The division became aware of the need for the position when they were addressing various consumer complaints regarding those issues.

E-710. The subcommittee approved funding for the replacement of two typewriters, three chairs, six personal computers, a printer, and upgrades for software for the division’s computers.

E-720. The subcommittee approved funding for a new compact disk (CD) library system for the division’s computer system. Mr. Combs explained the title section often contains volumes of titling documents. He said that to access documents from a personal computer, a CD carousel system is required rather than replacing the CD each time a new bit of information is desired.

E-900. The subcommittee approved the transfer of a Program Assistant I from the Mobile Home Parks account (271-3843) to this account. The transfer is based upon the division’s indication that the workload had changed and the position was performing the work which currently belonged in this account rather than in the existing account. The primary responsibilities for this position are in the titling section.

*****

B&I, Mobile Home Lot Rent Subsidy – Budget Page B&I-24 (Volume 2)

Budget Page 630-3842

Mr. Combs discussed the budget closing issues on page 22 of Exhibit E.

E-710. The Joint Subcommittee on General Government voted to approve funding for the replacement of an office chair and two personal computers with network adapters.

*****

B&I, Mobile Home Parks – Budget Page B&I-27 (Volume 2)

Budget Account 271-3843

Mr. Combs discussed the budget closing issues on page 23 of Exhibit E.

E-720. The joint subcommittee approved funding for a new computer and printer for the landlord/tenant investigator in the Las Vegas office.

Senator Coffin asked whether an Assembly bill concerning the governing of mobile home parks was considered by the subcommittee when this budget account was approved. Mr. Combs said this budget account was closed April 9, 1999, and he was unsure about the progress of the bill at that point. Senator Rawson indicated the budgets could be adjusted should there be a policy change. Senator Coffin cautioned there could be fee increases contained in the bill. Senator Rawson indicated the issue will be addressed when the bill is heard.

*****

B&I, Consumer Affairs – Budget Page B&I-33 (Volume 2)

Budget Account 101-3811

Mr. Combs discussed the budget closing issues on page 24 of Exhibit E.

M-200. The Joint Subcommittee on General Government approved funding for retaining the services of a certified court reporting firm to provide certified transcripts of the hearings. The subcommittee also approved the increased use of the division’s toll-free telephone line, which was approved by the 1997 Legislature. The division reported that the toll-free telephone line had been successful. People who call with complaints are able to receive answers in a proactive fashion instead of waiting until a problem requires investigation or court action. The public service announcements approved by the 1997 Legislature increased the number of calls on the toll-free telephone line.

E-175. The Joint Subcommittee on General Government voted to approve funding for various software upgrades and the recommended computer instruction and training manuals.

Mr. Combs said that in addition to the decision units included in The Executive Budget, the subcommittee voted to approve $4,500 each year of the biennium for increased consumer education activities. The division was directed to use the funds in any manner related to consumer education, which included public service announcements.

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B&I, Governor’s Committee to Hire Handicapped – Budget Page B&I-38 (Volume 2)

Budget Account 101-3156

Referring to page 25 of Exhibit C, Mr. Combs addressed the technical adjustments and budget closing issues of this budget account.

The subcommittee approved reduced costs for computer software and hardware, and extended warranties were eliminated from the budget request because the computer that will be purchased includes a 3-year extended warranty.

M-200. This decision unit increased rental cost for the office. A new office was obtained because the previous office shared space with Truckee Meadows Community College and the college requested the space back.

M-525. This decision unit addresses a lease for payments on a copier at Truckee Meadows Community College used by the department before the office move.

E-710. This decision unit recommends funding to place a facsimile machine in the Las Vegas office.

E-720. This decision unit recommends funding for installation and line charges for a new telephone line and two new computers, printers, and modems.

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B&I, Dairy Commission ¾ Budget Page B&I-208 (Volume 2)

Budget Account 233-4470

Mr. Combs discussed the technical adjustments and budget closing issues on page 35 of Exhibit E.

Mr. Combs said that after The Executive Budget was submitted, the agency requested a decrease in revenue from the assessment on ice cream products by $107,776 each year of the biennium. He indicated the Dairy Commission voted to decrease the assessment based on the fact that the expenditures in the base budget were reduced by eliminating three positions: an Auditor, an Investigator, and an Accountant Technician.

E-250. There was funding in this decision unit for a third staff member to attend the annual conference of the Association of Milk Control Agencies. The funding was eliminated by the Joint Subcommittee on General Government based on the fact the expenditure was in the base budget.

E-250. This decision unit approved funding for the printing of 5,000 public information brochures in each year of the biennium. The brochures will be distributed to retailers to be displayed next to dairy products. The brochures explain the function of the Dairy Commission, as well as the dairy industry in Nevada.

Senator Coffin commented that some of the things regulated by the Dairy Commission have been deregulated. He asked the mission of the Dairy Commission and whether it matches the budget. Senator Neal voiced the understanding the mission of the Dairy Commission matches the budget. He explained that in the Joint Subcommittee on General Government meeting Senator Jacobsen made the case the Dairy Commission should remain and the technical adjustment made by the fiscal analysis staff was "right and proper," including continuing the reduced assessment on ice cream. Senator Neal stated there are still dairies in Nevada, but their numbers have been reduced.

Senator Coffin noted the state deregulated electricity and transportation but still charges too much for milk. In response, Mr. Combs indicated the assessment on fluid milk products has been eliminated.

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B&I, Energy Conservation ¾ Budget Page B&I-229 (Volume 2)

Budget Account 101-4868

Referring to page 36 in Exhibit E, Mr. Combs declared the only decision unit transferred $20,000 each year of the biennium from the Petroleum Overcharge Rebate account to this account, and then to the Aging Older Americans Act budget account 101-3151. He indicated the funds in the Aging Older Americans Act account would be used for a seniors transportation effort in the rural communities. Mr. Combs said it was his understanding some of the funds had been used for that purpose in the past and the Governor’s recommendation reinstated that practice.

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B&I, Petroleum Overcharge Rebate – Budget Page B&I-233 (Volume 2)

Budget Account 101-4539

Referring to page 37 of Exhibit E, Mr. Combs said this budget account provides the match for the federal funds in budget account 101-4868. He pointed out this is the account from which the original $20,000 for the energy conservation program is transferred. Mr. Combs stated the funds go through both accounts to show the energy conservation program is issuing a grant.

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HR, Public Defender – Budget Page PUB-DEF-1 (Volume 2)

Budget Account 101-1499

Mr. Combs discussed the technical adjustment and budget closing issues on page 38 of Exhibit E. He indicated this budget account closed in the Senate Committee on Human Resources/K-12 subcommittee.

E-710. Based on budget instructions, the costs for five reception chairs recommended in this decision unit were reduced from $230 each to $165 each.

M-200. This decision unit recommended funding for a new Deputy Public Defender position and support costs for Carson City and Storey County. The office supported the recommendation because of demographic growth as well as an increase in the prosecutorial staff.

E-125 and E-127. Referring to the memorandum on page 40 of Exhibit E, Mr. Combs said these two decision units are alternate proposals that will somewhat affect the recommendation of the Joint Subcommittee on Human Resources/K-12 in this area. He indicated the budget was submitted with alternate proposals for providing Deputy Public Defender services for Lander County. He noted that since the Joint Subcommittee on Human Resources/K-12 closed the budget based on what was anticipated to be done by Lander County, it was closed with the approval of decision unit E-127. Mr. Combs declared that since then a memorandum has been received from the Office of the State Public Defender indicating Lander County had decided not to use the services of the Office. Although the budget closed that way in the subcommittee, the two decision units can be eliminated. The services would have been funded through fees on Lander County, but the contract was awarded to someone else, Mr. Combs remarked.

E-375. This decision unit approves the installation of a half-door and a panic button to enhance the security of the secretary in the Winnemucca office when the attorneys are out of the office.

E-710, E-711, E-720, and E-721. These decision units all recommend replacement equipment and funding for subscriptions to Internet law services for the attorneys in the office. Mr. Combs said decision unit E-721 contains the Internet law service. He explained the subcommittee discovered the attorneys are using means other than the Internet to conduct legal research.

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B&I, Insurance Regulation – Budget Page B&I-82 (Volume 2)

Budget Account 101-3813

Referring to pages 26, 27, and 28 of Exhibit E, Jim Rodriguez, Program Analyst, Fiscal Analysis Division, LCB, indicated this budget account is the main operating administrative account for the Division of Insurance. He addressed the budget and technical adjustments of the budget account.

Mr. Rodriguez said the method of internal allocations within the division was of concern to the Joint Subcommittee on General Government; therefore, the division was directed to study its methods for allocating administrative costs to the other budgets. He stated the budget closing reflects the change, which has a net effect of increasing funding into this account by $3,242 in FY 2000 and $13,266 in FY 2001. He declared another adjustment to the base budget reflects additional revenue and a change in the way the division accounts for investigations conducted by compliance investigators. Mr. Rodriguez said that previously the costs for insurance investigations performed by the division’s compliance investigators were absorbed in this account, but now the costs will be accounted for in the Insurance Examiner’s Fund because that is where the authority for such investigations is obtained. He indicated the division was unable to recover the cost of salaries of the employees performing investigations because the salaries were in this budget account. The salaries are now charged to budget account 101-3817 and the division can be reimbursed for the salary costs. This will reduce the General Fund need by $8,106 each year, Mr. Rodriguez remarked.

M-203. This decision unit makes an adjustment to alter the office suite for a new legal supervising secretary which reflects an increase of $1,432 in FY 2000.

M-501. This decision unit technically adjusts the calculation of the tort insurance. The division has changed policy and will fund all training out of budget account 101-3824, Insurance Education and Research resulting in a General Fund saving of $500 per year. Funding authority for the division training expense will be expended from budget account 101-3824.

E-712. This decision unit is an adjustment for a reallocation and forward- accelerated purchase of computer hardware for the division’s network. Mr. Rodriguez explained that in late 1998 or early 1999, the division’s network "crashed." He said the "crash" brought about a request to the budget office from the division to accelerate planned computer hardware purchases that were accounted for in the division’s budget. The request accelerated purchases that were necessary to get the network operational immediately, and thereafter provide additional authority to finish upgrading the network and transferring the remainder of the computer hardware into budget account 101-3833, Cost Stabilization, which is the account from which the division’s computer hardware purchases are generally made. Mr. Rodriguez said that in addition there was an overall reduction of assessed need due to the repairs, which reduced the overall computer requirement by $11,908.

Senator Rawson clarified that the total fiscal impact is the savings. Mr. Rodriguez indicated the total impact on budget accounts 101-3813 and 101-3833 is a saving of $50,000 and $538, respectively.

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B&I, Insurance Examiners – Budget Page B&I-90 (Volume 2)

Budget Account 223-3817

Mr. Rodriguez referred to pages 29 and 30 of Exhibit E and addressed the budget and technical adjustments.

Base. The adjustment to the base budget is the effect of the reallocation methodology discussed in budget account 101-3813. The net effect of that reallocation is a reduction of a transfer into budget account 101-3813 of $61,223 in FY 2000 and $51,182 in FY 2001.

E-125. An adjustment is made to reflect the investigative exams referred to in budget account 101-3813. The division will now be able to charge those costs in this budget and be reimbursed for the "salary piece" of the exams which will now be transferred back into budget account 101-3813.

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B&I, Insurance Education and Research – Budget Page B&I-94 (Volume 2)

Budget Account 101-3824

Referring to pages 31 and 32 of Exhibit E, Mr. Rodriguez discussed the budget and technical adjustments.

Base. Mr. Rodriguez said the base adjustment addresses reallocation of administrative costs. He noted that the effect of the reallocation on this budget account is an increase transfer to budget account 101-3813, Insurance Regulation. He said the transfer from this budget account increases from $5,010 to $23,261 in FY 2000, and from $5,642 to $24,017 in FY 2001. The total net effect is an increase transfer to budget account 101-2813 of $36,626, Mr. Rodriguez stated.

E-126. Mr. Rodriguez indicated this decision unit deletes $25,000 in each year of the biennium. This funding was provided by the 1997 Legislature to offer an incentive to the division to more aggressively pursue insurance industry research and education activities. He declared the division was unable to come up with an adequate plan to spend the funding and it is perceived the opportunity will not be forthcoming this biennium. Mr. Rodriguez explained the division’s reluctance to create a plan is due to its having determined $25,000 is not adequate enough to accomplish a research project. He voiced the opinion that the division misunderstood the intention of the Joint Subcommittee on General Government, which was to begin pursuing research and education activities. He pointed out the division’s reserves are adequate enough to fund additional effort in that vein; however, an adequate plan never materialized. Therefore, the $25,000 is being deleted until the division can provide a viable plan for expending these funds, Mr. Rodriguez remarked.

E-127. Mr. Rodriguez said this decision unit makes an accounting adjustment. He indicated the division originally put "all this money" into printing and copying and it would have been more appropriate to separate the costs for this project. He pointed out that postage, telephone, printing, and copying are now separated and reported individually. Mr. Rodriguez said mailing and postage were decreased to reflect what the division would realistically be able to accomplish during this biennium.

Reserves. Mr. Rodriguez indicated the reserve level of this budget account is approaching $343,000 in FY 2000, and will reach $321,000 in FY 2001. He said that to date the Division of Insurance has not aggressively pursued expending these funds pursuant to legislative intent. He noted the subcommittee requested the division take another look at the program and return to the IFC with a plan that will more adequately fulfill the intent of the budget mission. Mr. Rodriguez indicated the division agreed to do so. He suggested this committee issue a Letter of Intent with this budget account and have the division follow up with the IFC.

Senator Rawson queried whether the subcommittee closed the budget with the idea of including a Letter of Intent. Mr. Rodriguez answered a Letter of Intent was intended by the subcommittee.

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B&I, Self Insured-Workers Compensation – Budget Page B&I-104 (Volume 2)

Budget Account 210-4684

Mr. Rodriguez addressed the budget and technical adjustments on pages 33 and 34 of Exhibit E. He indicated there are two adjustments in this budget account:

1. The reallocation of overhead costs, the net effect of which is a transfer increase in budget account 101-3813, Insurance Regulation, of $15,031 to $50,720 in FY 2000, and $16,927 to $52,368 in FY 2001.
2. The division is transferring all its training costs into budget account 101-3824 and the net effect is a General Fund saving of $2,700 in each year of the biennium.

Senator Neal clarified the net savings will be $5,400. Mr. Rodriguez indicated the funding transfer will be from the General Fund to the Insurance Education and Research budget account, a fee-based account.

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There being no further business, the meeting was adjourned at 6 p.m.

RESPECTFULLY SUBMITTED:

Barbara Moss,

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: