The Joint Subcommittee on General Government of the Senate Committee on Finance and the Assembly Committee on Ways and Means was called to order by Chairman Vonne S. Chowning, at 8:30 a.m., on Friday, April 23, 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.

SENATE COMMITTEE MEMBERS PRESENT:

Senator William R. O’Donnell, Chairman

Senator Lawrence E. Jacobsen

Senator Joseph M. Neal, Jr.

ASSEMBLY COMMITTEE MEMBERS PRESENT:

Mrs. Vonne Chowning, Chairman

Mr. Bob Beers

Mrs. Marcia de Braga

Ms. Christina R. Giunchigliani

Mr. David E. Goldwater

STAFF MEMBERS PRESENT:

Mark Stevens, Assembly Fiscal Analyst

Bob Guernsey, Principal Deputy Fiscal Analyst

Rick Combs, Program Analyst

Birgit Baker, Program Analyst

Debbra King, Program Analyst

Jim Rodriguez, Program Analyst

Johnnie L. Willis, Committee Secretary

OTHERS PRESENT:

Mrs. Chowning called the meeting to order and said the subcommittee would close budgets.

DEPARTMENT OF BUSINESS AND INDUSTRY

Business and Industry Administration – Budget Page B&I-1 (Volume 2)

Budget Account 101-4681

Rick Combs, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, said the base in this budget was adjusted by staff for each year of the biennium to increase the amount transferred to this account from the Industrial Development Revenue Bond Program. He reported the adjustments to the budget as documented in "Subcommittee on General Government Closings for Friday, April 23, 1999" (Exhibit C.)

Mr. Combs said the budget has also been adjusted throughout the base and in every decision unit for "adjustments in the cost allocation." He noted that based on the subcommittees direction the agency "reworked" its cost allocation plan to use less General Fund money and to access more funds from the agencies to which the costs are allocated.

Mr. Combs discussed with the subcommittee the budget closing issues documented on page 3 of Exhibit C. He said the issues include the half-time student assistant for the Las Vegas office as recommended in decision unit M-200, and based on the information provided by the director’s office the recommendation appears reasonable.

Mr. Combs said another issue is the Department of Information Technology (DoIT) Computer Network Specialist position to provide full-time information technology support to the agencies within the Department of Business and Industry as recommended in decision unit M-201. He said the recommendation appears reasonable, based on the information provided by the director’s office.

Mr. Combs indicated there is also an issue in regard to the rent increase for the director’s Carson City office as recommended in decision unit M-203. He said that recommendation also appears reasonable.

Mr. Combs said other issues are the costs of entering into a service and maintenance contract for a computer system designed for the visually impaired receptionist in the Las Vegas office, the elimination of the Center for Business Advocacy and Services and the three positions that administer the program, the funding for a new laptop computer, and the funding for two conference telephones and various computer equipment and software. He said that based on the information provided by the director’s office the recommendations appear reasonable.

Mrs. Chowning asked whether the marketing of the Made in Nevada program will continue to be funded through the Commission on Economic Development and, if not, how that program will be funded. She said the Legislature needs some assurances the Made in Nevada program will continue. She also asked how people who are starting a new business in Nevada would have their needs met if those services are being eliminated. Don Hataway, Deputy Director, Budget Division, Department of Administration, replied the Commission on Economic Development will continue to handle the Made in Nevada program. He said there was a savings in the restructuring of the funding allocation of the Washington Office and the recommendation was to redirect that savings to additional marketing for the Commission on Economic Development. He noted that operating the Made in Nevada program is one of the commission’s primary functions.

Dan Tom, Director, Department of Business and Industry, said most businesses seeking assistance are using the Small Business Development Centers located in the University of Nevada system’s facilities. He said it was difficult to measure the effectiveness of the Center for Business Advocacy and Services office.

Mrs. Chowning inquired whether Mr. Tom felt the small business services being provided by the university will be sufficient to help people needing business advice. Mr. Tom replied yes. He said he was impressed with the work performed by the staff at the university centers. He said it is a mature and enthusiastic organization.

Mrs. Chowning asked whether there would be someone serving in the Department of Business and Industry that would give referrals. Mr. Tom replied all the personnel in the administrative functions of the department should be giving referrals to inquiries for aid. He said the program officer in Las Vegas would assume some of the duties of the Center for Business Advocacy and Services office.

Senator Jacobsen asked, in regard to decision unit M-203, the square footage of the director’s rented office. Mr. Combs replied it is about 1,460 square feet in the Carson City office.

Mr. Combs said the subcommittee may wish to note Assembly Bill (A.B.) 103 would remove the Division of Agriculture, the Division of Minerals, and the Predatory Animal and Rodent Committee from the Department of Business and Industry. He said the enactment of the bill would have an impact on the director’s office and would result in the need to make adjustments to the department’s allocation plan.

Mrs. Chowning, moving to another issue, asked whether the user agencies had been contacted regarding the costs allocated to them. Mr. Hataway replied those agencies have been informed there are potential changes to the cost allocations. He said the revenues and expenditures of the director’s office will have to be reviewed first to ascertain whether there are any adjustments that need to be made in the budget for that office. He said Mr. Combs will need to work with the Budget Division’s staff and the Department of Business and Industry director’s office if A.B. 103, passes to make adjustments to all the budgets involved.

Mr. Tom said his office has a contingency plan to implement if A.B. 103 passes. He said his agency does not expect to cause the cost allocations to the other agencies involved to increase. He said if the amount of work the director’s office has to do is less, then the office will have to find efficiencies in that office.

Mr. Combs said that based on the testimony, if the department is not planning to raise the assessment on the user agencies, the only other option is to reduce expenditures.

Mr. Hataway said the Legislature may want to handle the situation with a Letter of Intent that recognizes the change in potential status of the overall organization of the Department of Business and Industry and requests the department and the budget office to work with the legislative staff to construct a revised expenditure plan.

Industrial Development Bonds – Budget Page B&I-10 (Volume 2)

Budget Account 210-4683

Mr. Combs said the technical adjustments here are corresponding adjustments that were made in the Business and Industry Administration budget.

Housing Division – Budget Page B&I-69 (Volume 2)

Budget Account 503-3841

Mrs. Chowning directed the subcommittee’s attention to the next budget in the closing list (Exhibit C).

Mr. Combs said that in the base an adjustment needs to be made to transfer the amount budgeted for state-owned building rent to the non-stated-owned building rent for the Las Vegas office relocation. He noted another adjustment is for the telephone system equipment costs, which must be moved from decision unit E-710 to decision units M-200 and M-597 because those cost relate to the relocation of the Las Vegas office.

Mrs. Chowning asked Charles L. Horsey III, Administrator, Housing Division, Department of Business and Industry, whether he endeavored to get the best rental price possible and where the division would be housed. Mr. Horsey replied his deputy administrator researched a number of sites to accommodate the needs of the division and when Mr. Horsey was in Las Vegas he selected the site at 1771 East Flamingo, directly across from the TGI Friday’s restaurant.

Mrs. Chowning commented one of the best things the state could do for its citizens was to help them move out of rental situations and to become home owners. She said the long-term impact of this program is very positive and people in the program feel they truly are a part of the community.

Mr. Combs, further reporting needed adjustments, remarked that the Fiscal Year (FY) 2000 costs for in-state travel and operating cost were adjusted for the new positions recommended in decision unit M-597, and the FY 2000 dues and registration cost were reduced because one of the field auditor positions will not start until FY 2001. He said decision unit M-597 recommends the hiring of two new field auditors, one in each year of the biennium, to handle the increased number of multifamily housing projects. He said the auditors must ensure that after those projects are completed the developers have people with the correct income levels living in the units, and that they are charging the correct amount of rent the bond was based on.

Mrs. Chowning commented the legislators had received the requested information regarding the costs of the multifamily units, the rent levels, and the current vacancy factor and said the information would be made available to all the members of the subcommittee.

Mr. Combs said decision unit E-125 recommends a group of publications and educational exhibits which will promote the creation of affordable housing.

Mrs. Chowning asked whether the agency would be working with the State Printing Division to keep the cost of the publications down. Mr. Horsey replied yes. He noted the art program in Clark County has been a huge success. He said the agency has two options to help keep the printing costs down. He stated the first option is to use the State Printing Division for the needed printing services. If the division documents that its prices are not the lowest, then the agency will receive the authority to use a contracted printer which will be lower than the State Printing Division’s prices. He said the second option reflects the interest of home builders, realtors, and other entities in funding the production of the publication of the calendar of children’s artwork.

Mr. Combs reported the items of recommended adjustments are documented on pages 9 and 10 in Exhibit C.

Mrs. Chowning asked whether the agency could still function if half the funds in items 5 and 6 on page 9 (Exhibit C) were cut. Mr. Horsey replied that out-of-state travel is necessary since a majority of the agency’s funding comes from the federal government. He said that to lobby for these funds the agency must travel to and from Washington, D.C. and attend numerous programs. He said to maintain the state’s ratings the agency must gain the latest information regarding tax credit accounting, program underwriting, and other changing and varied information. Mr. Horsey noted the Housing Division does not use General Fund dollars. He indicated the agency’s number one priority is to maintain financial integrity. He stated, "I don’t know if there is any more room to cut out-of-state travel."

Mrs. Chowning informed Mr. Horsey the subcommittee would close the budget with the understanding he would work with Mr. Combs to ascertain whether there are possible decreases in the out-of-state travel and training categories of the budget and would give staff the authority to adjust the budget downward if possible. Mr. Horsey replied the division has attempted to keep the costs as low as possible but would work with Mr. Combs to establish whether the costs could be further decreased.

Ms. Giunchigliani said this is the time to cut the budget. She said either the subcommittee cuts it now or it does not cut it.

Mrs. Chowning replied Mr. Horsey and the fiscal staff need to review the possibility of decreasing the costs.

Ms. Giunchigliani said, "With no disrespect, I don’t think they have the authority to do that. I think we either have to make the changes now or not."

Mrs. Chowning disclosed the fact that as a real estate agent she had clients who have benefited from a housing authority program, although there was no direct benefit to herself, and said she would be voting.

Senator O'Donnell said he wanted to make the same disclosure as Mrs. Chowning, and he also would be voting.

Mrs. Chowning called on Birgit Baker, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, to explain the recommended adjustments to this budget as displayed on page 11 of Exhibit C.

Industrial Relations – Budget Page B&I-109 (Volume 2)

Budget Account 210-4680

Ms. Baker said this is the Division of Industrial Relations administrative budget and includes an industrial insurance regulation section which will be responsible for regulation of 3-Way Worker’s Compensation Insurance (3-way) that becomes effective July 1, 1999. She noted the Interim Finance Committee approved 17 new positions. She stated the plan constructed for the implementation of 3-Way indicated that two of those positions could be eliminated. Ms. Baker explained pages 11 through 13 of the closing sheets reflect the adjustments to eliminate those two positions.

Ms. Baker noted the other adjustment has to do with WAN (Wide Area Network) charges included in the budget but no longer necessary. She said there is also some reduction for the revised prices of computers and software.

Ms. Baker explained the outstanding issue regarding the Workers’ Compensation and Safety Fund Assessments are on pages 12 and 13 (Exhibit C). She said those issues do not affect the closing of the Industrial Relations budget.

Mrs. Chowning directed the subcommittee to the next budget on the closing list (Exhibit C).

Occupational Safety and Health Enforcement – Budget Page B&I-116 (Volume 2) Budget Account 210-4682

Ms. Baker noted the Occupational Safety and Health Enforcement (OSHE) budget also administers the Occupational Safety and Health Administration (OSHA) program in the state. She said one of the issues for OSHE is the outcome-based performance indicators proposed by the agency. She explained the performance indicator data is documented on page 16 of Exhibit C. She said the targeted industries used in the report are for both public and private industries and include manufacturing, construction, and hotel/casino industries.

Ms. Baker said the OSHE budget includes recommendations for 10 new positions for safety and health in the M-200 module.

Ms. Baker further explained staff’s recommendations for adjustments in this budget as documented in Exhibit C. She said the adjustments include, in addition to the M–200 module, an adjustment to M-201 module which recommends eight new positions, and the other adjustment documented in Exhibit C. She said the only technical adjustment to this budget is a recommendation in this account to reflect the current computer hardware and software prices provided by the Purchasing Division.

Safety Consultation and Training – Budget Page B&I-122 (Volume 2)

Budget Account 210-4685

Ms. Baker noted this budget is for the program that provides assistance to employers and employees to assist in developing and maintaining their workplace safety programs. She said this budget also includes the multimedia campaign which the Governor recommends funding at $425,000 a year.

Ms. Baker mentioned the agency provided the performance indicators requested by the subcommittee. She said those indicators are detailed in item 2 on page 17 of the closing list (Exhibit C).

Ms. Baker said the technical adjustments in this budget relate to computer hardware and software prices.

Mine Safety and Training – Budget Page B&I-128 (Volume 2)

Budget Account 210-4686

Ms. Baker said the Mine Safety and Training budget includes the Governor’s recommendation for 1 new Industrial Hygienist position to address the growth in underground mine operation in the state. She said there is also 1 Program Assistant position recommended to develop and maintain a database to track the statistical information about Nevada’s 479 active mines. She noted the performance indicators this agency provided are on page 21 of the budget closing list (Exhibit C).

Ms. Baker said the technical adjustments are to remove the $35,789 from the base budget, which was not justified; to adjust the grant in the base budget to the actual expenditures; and to utilize those funds to fund the enhancements requested by the agency. She said staff is requesting that once the budget is closed the grant category be eliminated from this budget and in the future those expenses be allocated to all the appropriate categories within the budget. One other technical adjustment is to reflect current computer hardware and software prices provided by the Purchasing Division.

Mrs. Chowning asked Roger Bremner, Administrator, Secretary, Advisory Council to the Division of Industrial Relations, Department of Business and Industry, whether he agreed with the budget closing recommendation. Mr. Bremner replied yes. He stated he agreed with the Safety Consultation and Training budget closing recommendation and with the staff recommendations for the Mine Safety and Training budget.

Nevada Attorney for Injured Workers – Budget Page B&I-133 (Volume 2)

Budget Account 101-1013

Ms. Baker said this budget has only several small enhancements which were recommended in the Governor’s budget. She said one of the issues that arose in the review of this budget was concern about system failures in the computer system. The agency purchased new computers. She noted, however, there were still some items that appear to be needed. Ms. Baker explained those items are listed at the bottom of page 23 in Exhibit C. She said the list is the result of a preliminary needs assessment performed by DoIT.

Ms. Baker said the technical adjustments in this budget are those items for which justification was provided such as hourly rate increases for technical support, advertising costs, and telephone equipment repair costs.

Ms. Giunchigliani said she believed the subcommittee should approve the $14,732 for maintaining the computer system for this agency. She declared that over the years the Legislature has not dealt properly with the funding part of this budget. She stated that with all the changes in the agency there is a need to track the client database. She said it was a reasonable request and she felt more comfortable with it since DoIT has performed an assessment.

Mr. Beers said he thought it was surprising that it would take DoIT 2 years to perform a formal needs assessment for the Nevada Attorney for Injured Workers agency and inquired whether this issue could be presented to the interim committee to review. Ms. Baker replied the only vehicle that this agency has to obtain additional funding during the interim is through the hearings reserve account. She said the hearings reserve account has traditionally been used to deal with staff issues and not computer issues. Ms. Baker pointed out there was a Letter of Intent last session that limited the use of that account to staff issues only. She said the only other option would be to add funds to the hearing reserve account designated to deal with additional computer enhancements; however, there was not a proposal to document what that amount would be.

SPECIAL PURPOSE AGENCIES

Public Employees Health Program – Budget Page SPECPURPOSE-11 (Volume 3) Budget Account 625-1338

Mrs. Chowning said the memorandum to Ms. King (Exhibit D) is a response to the subcommittee’s request for information and was finally received at 5:48 a.m. this morning.

Debbra King, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, said there have been numerous problems with this business. She said staff is recommending closing this account according to the Governor’s recommended budget as modified through budget amendments No. 46 and 100. She said those changes adjust The Executive Budget as printed to match the medical trend rates, premium rates, and reserve level testified to by the actuary in the Department of Administration.

Ms. King said the budget as amended will provide premium rate increases of 23.7 percent in FY 2000 and 12.7 percent in FY 2001 for both the state contribution and the dependent-premium contribution. She said approval of this budget assumes approval of two bills that would appropriate a total of $26 million to restore the reserve and the cash balance in this account.

Ms. King stated that if "everything acts as projected by the actuary" the ending reserve for the account would be established at $11.6 million in FY 2000 and $16 million in FY 2001.

Ms. King said this budget also includes additional positions for an Executive Director, a Chief Accounting Officer, an Operations Officer, a Quality Control Officer, and an Internal Auditor. She said these positions are consistent with the recommendations of Senate Bill (S.B.) 544, which revises the provisions governing the state’s program of group insurance.

Ms. King commented the subcommittee may need input regarding the issues documented on page 24 of the closing sheets (Exhibit C).

Mrs. Chowning said there has not been a meeting on this subject for over a month and the subcommittee has not had an update as to the status of the project to correct the problems the Public Employees Health Program has been having. She inquired how the interim oversight committee will be designated and when that may happen. Ms. King replied that S.B. 544 recommends a legislative subcommittee to review the new Public Employees Health Program. She said that subcommittee will have six legislative members. Mrs. Chowning inquired whether S.B. 544 has been heard by the Senate. Ms. King said it has been heard and passed out of the Senate and at present is residing in the Assembly. Mr. Hataway responding to Mrs. Chowning’s question regarding the status of the project, said this problem is one of the Governor’s top priorities, and there was not a final "setup" recommendation nor has an "insurance czar or czarina" been appointed. He said there will hopefully be a recommendation coming to the Legislature in the near future.

Mrs. Chowning inquired whether future recommendations would have to be considered in closing the budget as the Governor recommends. Mr. Hataway replied, "No, the budget you have before you is based upon the structure as proposed in S.B. 544."

Mrs. Chowning asked whether the program would continue with the self-insured and the HMO (health maintenance organization) options. Mr. Hataway replied the bill allows the options but a decision has not been made.

Mrs. Chowning pointed out to the subcommittee that this budget was very large, $100 million. She said line item changes total $11.2 million and $19.9 million for the 2 years of the biennium.

Ms. King said she has been working with the actuary on ascertaining where the money went and the actuary has not have been able to resolve that question yet. She stated staff will not be able to provide the answers needed with the level of assurance it wishes to provide prior to the end of session.

Mrs. Chowning inquired whether staff would be able to provide those answers for the interim committees. Ms. King replied yes and said she would be able to develop a more comprehensive representation of the factors involved for the interim committee.

Retired Employee Group Insurance – Budget Page SPECURPOSE-18 (Volume 3) Budget Account 101-1368

Ms. King said this budget account has never had a hearing, but normally it is a routine budget. She said staff became aware of a shortfall in the account for about $1.2 million in FY 1999, although the memorandum from the agency (Exhibit D) says it is $1.3 million. She stated that based on further correspondence and discussion with the actuary it has been determined there is another shortfall in this budget. She noted the budget amount as presented in The Executive Budget included $8.8 million in FY 2000 for retirees’ subsidies when actually the need is $9.7 million, and in FY 2001 the revised figure is $10.5 million when $11.7 million is needed. Ms. King said the agency’s response provided (Exhibit D) the Department of Administration’s recommendation on one issue. She said the department is recommending the $1.2 million shortfall for FY 1999 be offset in budget account 625-1338 and the $26 million be considered an appropriation. Ms. King said that will reduce the projected reserves in FY 2000 from $11.6 million to $10.3 million and in FY 2001 from $16 million to $14.7 million, which still leaves a $1.3 million shortfall.

Mrs. Chowning explained there were no reserves, there was a huge deficit, and now this is being "infused." However, she said, although this prevents a decrease in retirees’ benefits it eliminates the reserve that has been built up. The assemblywoman said the only other option is to increase assessments to make up the shortfall.

Mr. Hataway said the Budget Division agreed with the motion. He noted the Assembly Committee on Ways and Means introduced a bill to set the assessment rates and the Budget Office stands by those rates. He said that for example, the $26 million was based upon an expenditure need for $15 million, but the latest information is $14.2 million. He stated yes and elaborated there may be a $1.2 million deficit, on the one side, but there is also a potential for savings in this budget and the budget office is recommending the use of the reserve.

Mr. Goldwater inquired whether the Executive Branch had the authority to increase contribution levels on behalf of beneficiaries. Mr. Hataway replied the benefits services committee establishes rates. Mr. Goldwater asked whether the Governor could increase the rates of contributions for beneficiaries after the legislative session is over. Mr. Hataway replied yes and said a Letter of Intent to keep the legislators informed would be acceptable to the budget office. Mr. Goldwater said that if the Legislature does not do something to reserve the state’s contribution, or increase the state’s contribution the Governor’s only option is to increase the rates for beneficiaries. He inquired whether the Legislature could do something to protect against that rate increase. Ms. Giunchigliani replied, "That is what should have been done when the bill was passed out of the Assembly Committee on Ways and Means." She wondered whether the Governor could decrease benefits rather than increase rates.

Ms. King said the impact of taking the $1.3 million out of the reserve in the Benefit Services fund will be "underactuarially reserved" and indicated the fund had previously been "underactuarially reserved." She explained that in FY 2001 it was determined the special appropriations are "appropriations" and not loans; then the fund will be "overactuarially reserved," and as a result the fund should balance out over the 2-year period. She stated the action taken in the motion should not require rate increases or benefit decreases.

Randy Waterman, Acting Chief, Risk Management Division, Department of Administration, said any change Risk Management has that would impact the budget would have to be presented to the Interim Finance Committee (IFC) to adjust the categories which would give the Legislature another chance to review the benefits budget. He said he did not expect that would happen for the same reasons Ms. King just stated and said that is because over the biennium the reserve account should be fine.

Mr. Goldwater said the IFC is not the Legislature. He said it is a "quasi" Legislature, and it is more difficult to get things accomplished through the IFC. The assemblyman emphatically stated he wanted it very clear that if something can be accomplished to prevent the increase of rates or the decrease of benefits, that is what the legislators should do now, not later. He said it is a very complicated subject and he would like the assurance these changes are not going to be made. Mr. Hataway replied the budget office believes the bill being processed through the Legislature to reorganize the benefits program will be sufficient to accommodate what needs to be accomplished.

JUDICIAL BRANCH

Supreme Court – Budget Page COURTS-1 (Volume 1)

Budget Account 101-1494

Ms. Chowning directed the subcommittee’s attention to the overview on page 1 of subcommittee on General Government Closings for Friday, April 23, 1999" (Exhibit E.)

Senator O'Donnell assumed chairmanship of the meeting.

Jim Rodriguez, Program Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, gave an overview of the judiciary’s previous presentation as documented in Exhibit E pages 1 and 2. He said in the previous presentation the Administrative Office of the Court (AOC) presented a budget that increased the court funding by approximately 25 percent. Mr. Rodriguez noted the subcommittee suggested that, given the economic situation the state is currently facing, the budget presented by the court appeared to be higher than the state could support. He said the subcommittee requested the court revise its request to reflect an 11 to 13 percent increase over the court’s adjusted base budget. Mr. Rodriguez stated there was confusion as to what the base for the court would be. He said since then staff and the court have worked out a consensus as to what the base would be. He indicated the spreadsheet handed out to the subcommittee (Exhibit F) shows what the 13 percent would fund from the court’s priority list for General Fund appropriation for each of the budgets that access those funds. He said those budgets are the Supreme Court, the Division of Planning and Analysis, and the Law Library budgets.

Mr. Rodriguez said the 13 percent includes seven of the priority positions that the court requested. He said in addition to those positions the court also requested a Senior Information Services Manager and an Information Services Specialist III.

Senator O'Donnell said the subcommittee agreed to seven positions. He said that when the subcommittee agreed to the seven positions it excised everything else including copiers, supplies, and other such items because there were no funds. He asked Karen Kavanau, Director, Administrative Office of the Courts, Nevada Supreme Court to justify the necessity of the items in the budget "that [go] beyond the 13 percent."

Mr. Rodriguez pointed out the 13 percent is not a recommended budget for the court, it is an estimate of what can be funded with the 13 percent limitation the subcommittee suggested. He said if the court is not set on the seven positions there could be a mix of other items for that 13 percent. Senator O'Donnell said the position count could be reduced but the court has made a good case for the seven positions and he would like to hear the justification for the extra amount. He said the subcommittee could fund the seven positions and then place the extra "$300,000 plus" in each year of the biennium into "an-add back or a priority list" so that those items over the 13 percent could be funded if funding becomes available.

Ms. Kavanau said the court had submitted to the subcommittee members a detailed explanation of the decision units. She said the court maintains these are minimal requests and are made in response to caseload and statistics. She reiterated the requested items are "absolutely basic minimums in terms of added new items."

Ms. Kavanau stated the requested items include "caseload," inflation, a broken copier, and other such items. She said there is a distinct need for each and every one of those items.

Ms. Kavanau said the training requests are minimal, but the court feels special training for the clerk’s office and the central legal staff is needed to respond effectively and quickly to the panel system so the cases can be processed as quickly as possible.

Ms. Kavanau said the court has reduced the original request for the Case Management System study from $150,000 down to $25,000 on the premise the application support person’s skill level will be able to supplement other systems support needs. She said the reason the $25,000 is still being requested is that there has been difficulty hiring technical people and the court may have to contract for the support it needs.

Ms. Kavanau said the photo room furniture equipment is to allow the clerk to handle the massive amounts of paperwork and is not associated with positions.

Ms. Kavanau stated the out-of-state travel is the amount that was used by five justices and now there are seven.

Ms. Kavanau remarked the increases in budget account 101-1484, Division of Planning and Analysis, are simply inflation. She said the increases in budget account 101-2889, Law Library, are also inflation and are to address caseload issues.

Ms. Kavanau stated the court did not know where else to decrease its request.

Mrs. Chowning asked on what number the court was basing its reference to caseload. She stated the subcommittee was told the accurate number for the caseload was around 8 percent. Mr. Rodriguez replied that was the contention in the previous subcommittee hearings. He said the court’s projection was 12.5 percent growth but staff pointed out that there had been a "spike" and the actual growth was lower. He said staff does not know what the actual growth is going to be; it could be 9, 10, 11, or 12 percent. The current trend is a decrease in the projected rate and the actual rate is between 8 percent and 12.5 percent. Ms. Kavanau stated the court downgraded the projection to 11.9 percent based on the information acquired since the budget proposal was submitted.

Mrs. Chowning said the highest projection was 12.5 percent, but the history shows the caseload growth is not 12.5 percent but more nearly 8 percent. Mr. Rodriguez said that for the last 2 years the caseload growth has been substantially lower than 12.5 percent. He said it was around 4 percent in 1998 and this year it appears to be in the 3, 4, or 5 percent range. He said there was a spike in the caseload growth in 1996 which contributes to the difference in the numbers.

Mrs. Chowning inquired why the budget should be on a possible high figure when the more accurate figure is 8 percent. She said the Legislature does not do that in other budgets.

Senator O'Donnell asked how many cases are still backlogged and how old they are. Ms. Kavanau replied she did not have that information with her. Senator O'Donnell said he had that information and it is 2,000 cases that are over 5 years old. Ms. Kavanau replied the court’s caseload increase in FY 1993 was over 15 percent. In FY 1994 it was 8 percent, in FY 1995 it was 11.5 percent, in FY 1996 it was 11.74 percent, in FY 1997 it was 19 percent, and in FY 1998 it was 4.9 percent. She said that if those years are averaged together the average is 12.5 percent. She stated the court has reevaluated the caseload growth based upon current information for FY 1999 and has lowered the projected increase rate to 11.9 percent.

Mr. Goldwater asked what inflation factor was used for the cost of books. He said he did not feel the court should be allowed a factor for inflation since K-12 (Kindergarten through Grade 12) education and the university system were not allowed to use an inflation factor for their budgets. Ms. Kavanau replied the court used the parameters set in the budget instructions from the Department of Administration.

Senator O'Donnell asked Ms. Kavanau whether the court would concur if the subcommittee agrees to the seven positions then to only fund the extra amounts if the Economic Forum projections allow the extra funding. He said that if the funds are not available the court will not receive the extra funding. Ms. Kavanau said "Yes, sir."

Mrs. Chowning, inquired how the subcommittee could implement the priority list system that Senator O'Donnell outlined. She asked whether the subcommittee would agree on the plan since it increases the court’s budget by about 35 percent. Senator O'Donnell replied the differential under discussion is $600,000 over the biennium. He said it would be $300,000 the first year of the biennium and "$300,000 and change" in the second year of the biennium.

Ms. Kavanau said that perhaps the members of the subcommittee are not aware of the contributions the administrative assessments are making to the Supreme Court and the AOC budgets. She said those administrative assessments are intended for court improvement and capital acquisitions in the trial courts, not the Supreme Court, yet 73.5 percent of the administrative assessments received by the courts go directly to the Supreme Court and AOC’s budgets. She stated that is close to $8 million over the biennium. Ms. Kavanau further stated the court has cut over 75 percent of its original request that is over the FY 1998 adjusted base. She said the court feels it has been reasonable in its request.

Senator O'Donnell inquired what the original request was. Ms. Kavanau replied that the General Fund increase was $14.6 million and the court has cut $3.1 million from that. She said it is now $11. 5 million. Ms. Kavanau said the 35 percent increase on Mr. Rodriguez’s worksheet includes the adjustment to the FY 1998 base. She agreed it is a huge number but noted it is what was approved by the 1997 Legislature and has nothing to do with the court’s current request.

Senator Neal stated the Supreme Court is a co-equal branch of Nevada’s state government. He said he did not believe the Legislature could micromanage that branch of the government. The senator said the Legislature can review the court’s budget and make inquiries about the request, but in the final analysis the court has to tell the Legislature what it wants and the Legislature has to give it the funds within the constraints the Legislature has. He said he was wondering why the subcommittee is probing the issue, declaring the court has cut back the budget to a great extent. Senator Neal said that now it is just a matter of giving the court the funds. He stated the subcommittee seems to be trying to micromanage the third branch of government and it may be headed for problems. The senator said it is "not like when the Executive Branch presents its agencies." He said the Judicial Branch of the government deals with the substantive rights of the citizens of the state of Nevada. Senator Neal said the Legislature needs to make sure the Supreme Court can function in that capacity. He said the court should be more "aware of" its needs than the Legislature is.

Mrs. Chowning stated the subcommittee had originally asked for the 13 percent, which was agreed upon, but because of a miscommunication the add-on budget is a 20 percent increase. Senator O'Donnell replied that is correct and "that is what the court says it needs, knowing full well the court has already cut $3 million from the original request because of the [ability of the Legislature’s staff’s] to scrutinize the budget."

Mrs. Chowning inquired whether the $772,000 is what is being requested on the "wish list," knowing that the court may not get any of it.

Ms. Giunchigliani said she did not feel that when the Legislature reviews a budget it is attempting to micromanage the agencies. She stated that is the Legislature’s job. She emphasized that every year she has been in the Legislature the agencies have overinflated their budgets continually and regularly and then it looks as if the agencies have "cut out all these dollar amounts to make a difference." Ms. Giunchigliani said she will not make a decision on a budget based on the fact she may have a case before the court. She stated that after several budget hearings the subcommittee made a decision to have the court’s budget funded at a 13.7 percent increase, which was still close to 10 percent higher than any other budget with which the Legislature is dealing. Ms. Giunchigliani said she will not support this additional increase, whether it goes up or down. She said it is irresponsible at this point, when there are budget cuts and there are other programs that are far more needy. Ms. Kavanau replied she understood the assemblywoman’s concern about the budgets in the past and she felt the Legislative Counsel Bureau’s staff would agree that the court has given more information than was asked for. She said even though it is 20 percent it is significantly lower that the original request. Ms. Kavanau stated that the court, when it realized there was a misunderstanding after the last hearing, cut an additional $1.5 million. She stated the court did not "stick" to its original request or increase that request but instead cut more funds from the request.

Senator O'Donnell inquired whether there was a second to the motion. None was forthcoming and he adjourned the meeting at 10:30 a.m.

RESPECTFULLY SUBMITTED:

Johnnie L. Willis,

Committee Secretary

APPROVED BY:

Senator William R. O’Donnell, Chairman

DATE:

Assemblywoman Vonne S. Chowning, Chairman

DATE: