The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:00 a.m., on Saturday, May 22, 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:

Patricia Hampton, Committee Secretary

OTHERS PRESENT:

Senator Raggio stated the budget for the Taxicab Authority was closed based on the proposed amendment to Senate Bill (S.B.) 491.

Senator Raggio stated that when the proposal was outlined for the Taxicab Authority one of the new "considerations" was a Taxicab Authority for Washoe County. He asked who requested this and why, when there has not been one in the past. Senator O’Donnell replied the reason was that there are rules and regulations that are promulgated by the Transportation Services Authority (TSA). He said the TSA is an umbrella organization over the entire state. He stated the TSA can only promulgate rules for the entire state; however, there are differences in the way taxicabs are regulated in Las Vegas versus in Reno. He pointed out that if the two were combined, which is what S.B. 491 does, it would be necessary to have the same regulations for Las Vegas as for Reno, which would not work.

Senator Raggio asked who has been regulating the taxicabs in Reno. Senator O’Donnell answered the TSA has been. He stated the Reno cab companies were not interested in having the TSA as their regulatory body because the companies have the limousines as well. He pointed out that if the limousines and taxicabs were combined Reno companies could be placed under the Taxicab Authority.

Senator Raggio asked what would change in the regulation of taxicabs in Reno. Senator O’Donnell stated it is his understanding the county commissioners in Washoe County do not want to have the responsibility of regulating taxicabs. He explained the Governor would appoint three part-time commissioners to the Taxicab Authority and the authority would then draft regulations to conform to the needs of the industry.

Senator Raggio asked whether the Taxicab Authority would license the taxicabs by this proposal. Senator O’Donnell answered that would be up to the regulations, which have not as yet been drafted. Senator Raggio asked whether they are currently licensed by the TSA. Senator O‘Donnell replied yes. Senator Raggio asked whether the taxicab operators in Reno have agreed to this proposal. Senator O’Donnell answered there has not been too much opposition from taxicab drivers. He said there was a big concern, early on, from Washoe County and Reno about TSA regulating the entire state. He pointed out that one of the compromises was to have the TA regulate taxicabs in both Reno and Las Vegas.

Senator Raggio asked what the proposed amendment would do. Senator O’Donnell responded one of the major things is that it deletes section 15.5 of the bill, which removes the 19-passenger buses, because the federal regulations deal with 19-passenger buses. He stated the household goods movers would be under the TSA, the bill moves the limousines from the TSA to the respective TAs of both Clark and Washoe Counties and allows other counties to opt-into the northern Nevada regional TA or the Las Vegas TA. He explained that only happens if the county commissions in other counties do not want to regulate taxicabs themselves.

Senator O’Donnell stated this proposal would take the money normally allocated for the TSA and allocate it to an escrow account. It would allow the TSA and the TA to draft regulations and develop budgets using staff of the Legislative Counsel Bureau and then make a request to the Interim Finance Committee (IFC) by October  1, 1999. He explained this would allow the TSA and TA to transfer not only the money but also the personnel into the different TAs along with the respective responsibilities. Senator O’Donnell said this was discussed and suggested by Ginny Wiswell, Program Analyst.

Senator Raggio stated he does not see that language in the amendment. Senator O’Donnell explained that Dan Miles, Senate Fiscal Analyst, had stated it would be possible to put the language into the General Appropriations Act because the dealings with the TA and the TSA, in this particular bill, were separate from the financial decisions to be made.

Dan Miles, Senate Fiscal Analyst, Legislative Counsel Bureau, stated that putting language into the appropriations bill and the Authorization and Expenditures Act was discussed when the budget was closed. He said that would require the agencies to return to the IFC before October 1, 1999, and would give the IFC the authority to move "the money and positions "among the budgets as the final plan is established. He explained it is the same thing that the Legislature did with the reorganization of the Public Utilities Commission of Nevada.

Senator Raggio stated the bill needs to be amended consistent with the budget closing action, with the language to return to the IFC with a reorganizational budget plan. He asked what the effective date of the bill would be. Senator O’Donnell answered it would be October 1, 1999, but the provisionary sections of the bill start July 1, 1999, so the agencies can begin preparing the regulations and the budget to be ready by October 1, 1999.

Senator Raggio opened the hearing on S.B. 399.

Senator Jacobsen testified the proposed amendments to the bill would change the proposed Legislative Committee on Correctional Institutions committee membership to an even number, 6 (three members of the Assembly Committee on Ways and Means and three members of the Senate Committee on Finance), and would provide for five ex-officio members. He stated this is a realistic bill. He pointed out there are 25 correctional agencies within the state and said this would be a committee that would visit the various institutions and aid in solving any immediate problems. He noted the ex-officio members would be the director of the Department of Prisons, the medical director, the director of the Department of Administration, the Division of Forestry fire warden, and the director of Prison Industries.

Senator Jacobsen pointed out that any of those individuals could designate a representative. He stated the fiscal note shows an impact of approximately $15,000. He said that using a state or National Guard airplane could reduce that figure by half. He anticipated the new committee would have eight meetings "between now and the next legislative session." He stressed it is not the purpose of the committee to change the policies or direction of the prison administration.

Senator Raggio asked about the possibility of having the correctional institutions committee be for state facilities rather than limited to correctional facilities. Senator Jacobsen replied that is his intent. He explained if the committee is meeting in an area where there are other state facilities, the committee members could visit the site. He estimated four to six institutions could be visited in one day.

Senator Raggio said one of the problems with a short legislative session is that there is not an opportunity to make facility visits, as has been done in past sessions. He said the proposed Legislative Committee on Correctional Institutions might be a good way to begin, and perhaps it could be broadened into an overview committee for all state facilities.

Senator Raggio pointed out that the amendment also removes sections 5 through 8 and is replaced with a more limited charge to the committee, which he said seems to be appropriate.

Senator Jacobsen stated that another area needing attention is the prison industries. He said more work needs to be done in-house to produce money for the prison system. He pointed out the reason the honor camps are so valuable today is that they are almost guaranteeing coverage of the cost of keeping the inmates.

Senator Raggio pointed out the fiscal note contemplated seven committee members rather than six and the committee would meet eight times during the biennium. Senator Jacobsen reiterated he believed the fiscal note could be reduced by using state airplanes.

Senator Raggio requested fiscal staff to adjust the fiscal note.

Senator Raggio asked for a list of bills that are still before the Senate Committee on Finance and asked committee members to review the bills and contact him on bills having a priority. He stated he expects a report by May 24 showing the financial status with reference to available funding, either one-shot or continuing, so other requests can be considered. He pointed out it will be necessary to confer with the Assembly Committee on Ways and Means on what bills they have.

Senator Raggio stated the Governor had requested an internal audit function within the Department of Administration or the Governor’s Office which would be funded from the new funds. He said that Perry Comeaux, Director, Department of Administration, had indicated he would present a revision of the proposal. Mr. Miles said there is a bill draft request (BDR), but the figures are the same. Senator Raggio said the bill draft can be requested and the budget can be reviewed.

Senator O’Donnell asked whether the VIPER (Vehicle Investigations Project for Enforcement and Recovery) program was eliminated. Senator Raggio stated no and explained the funds were placed in reserve until requested from the IFC.

Senator Coffin stated it seems the Governor could use someone permanently who would be responsible for making sure policies are being followed and things are being done properly. He said he feels supportive but would like to know what the cost would be in the next biennium.

Senator Raggio pointed out an office would be established. Don Hataway, Deputy Director, Budget Division, Department of Administration, explained this office would mirror the activities of the Legislative Counsel Bureau (LCB) audit staff; however, there is language that the office would confer with LCB staff so there would not be two audit staffs working in the same agency at the same time. He stated it is the desire of the Governor to have the flexibility to perform his own investigations of how agencies are operating and whether they are following proper procedures, and how the agencies relate to customer service, and so forth.

Senator Raggio noted the Governor would only have authority within the Executive Branch. Senator Coffin asked whether there is anything in the bill that would prevent the sharing of information between LCB auditors and the Governor’s auditors. Mr. Hataway answered no, that is in the bill. He pointed out there is a certain degree of confidentiality, but there has to be the ability to exchange information and coordinate activities.

Senator O’Donnell stated the allocation is rather substantial and perhaps there needs to be a better idea of what the funding will be used for. Senator Raggio stated the Governor’s request is $2.5 million to set up the audit office, which would be a continuing office with a number of positions.

Mr. Hataway pointed out the fiscal note mirrors what was thought to be similar to the LCB audit staff; however, other things have been pointed out by Mr. Miles and Gary Crews, Legislative Auditor, on costs that were in the fiscal note which would not be required in the new office. He pointed out that in terms of initial impact, the fiscal note has staff starting July 1, 1999, and that could be changed to October 1, 1999, to reduce the costs.

Senator Raggio stated the same size staff might not be required. Mr. Hataway said the Governor’s desire was to have the same size staff, but that is subject to discussion. Senator Raggio suggested requesting a bill draft and setting a hearing on the bill.

Senator Jacobsen asked if this office is approved, could the department auditors and LCB auditors work in conjunction with one another? He stated he has served as chairman of the Audit Subcommittee, and one of the complaints that is always received is that when the auditors are in an agency or a department everything is in an upheaval. Mr. Hataway assured him that provision is included in the bill draft.

Senator Raggio pointed out the new office would in no way interfere with the LCB audit function. He stated the Legislature would authorize audits that are felt to be necessary and the Governor’s Office would not preempt the Legislature from continuing its audit process. He said it was his understanding the Governor did not have the facilities or anyone with the capability of going into agencies and performing audits, and he asserted the Governor should not have to wait for the LCB staff to complete audits. He stated he is surprised that past Nevada governors had not asked for an audit office during their tenures.

Mr. Hataway noted the bill draft requires the auditor to perform an annual plan of what is intended to be done and said there is no reason why, at that point, the two audit staffs could not exchange information, to prevent their being in an agency at the same time.

Senator Rawson said S.B. 520 is a bill that would allow Clark County to explore the creation of a health system in the county.

Charlotte Crawford, Director, Department of Human Resources, said the department has not requested this bill, it is Senator Rawson’s or Clark County’s bill. She said she could speak to the general concepts in the bill and the Governor’s position on the bill. She explained S.B. 520 would provide for a medically needy program and for moving that program, as well as the Nevada Check-Up Program, through Medicaid to Clark County. She said, "The essentials are to provide a county-based health organization delivery system."

Ms. Crawford said the fiscal note reflects a projected fiscal impact for the "medically needy" program of approximately $180 million over the biennium because it would entail a substantial modification and change in the Medicaid program. She stated it is her understanding the wish is to change the language to "medically indigent" rather than "medically needy." She pointed out there is also a substantial amount of language in the bill regarding creating a board to oversee and make decisions concerning the program and to develop a waiver to allow such a program to occur.

Ms. Crawford stated a waiver would be very substantial in terms of the type of actuarial analysis which would have to be done to demonstrate that this would be a cost-effective proposal from the perspective of the federal Health Care Financing Administration (HCFA) as well as the state. She pointed out the fiscal note to complete the study and waiver would be approximately $400,000 for the biennium.

Ms. Crawford stressed that the Governor is extremely interested in working with Clark County to look at alternative ways of delivering what is currently a state-operated system. She said the Governor does not believe he needs legislation to mandate that this be done.

Senator Raggio asked whether this would be a sub-state agency that would have its own capability to apply for waivers. Ms. Crawford answered she believes the concept is that the system would be county-operated. Senator Raggio asked whether the county health system could implement this change without taking the new form. Ms. Crawford replied that currently Clark County does not have the authority to be a risk-bearing entity "in terms of a health maintenance organization" (HMO); the county would have to be given the authority to do that. She explained that in terms of waivers, the HCFA holds the state responsible for the Medicaid program, but county-based arrangements can be made. Ms. Crawford said that as she reads the bill, this would change the oversight and decision-making without changing the liability.

Senator Raggio asked what the cost would be to the state General Fund if this were approved. Ms. Crawford answered that if the language for "medically needy" were removed there would be a fiscal note of approximately $400,000, "if this type of waivering were done." She maintained such a waiver is premature at this point, and the exact model the county would like needs to be explored to see where it is being used and what would be entailed.

Senator Raggio stated he would like to set a hearing on this bill. Senator Rawson said there are many kinds of arrangements that could be developed. He agreed with Ms. Crawford that it is premature to be applying for waivers and said more study needs to be done.

Senator Raggio called attention to Assembly Bill 321 and the budgets for the LCB and the interim Nevada Legislature.

Lorne J. Malkiewich, Director, Legislative Counsel Bureau, stated that A.B. 321 provides the appropriation for the Information Systems unit of the LCB. He said that at the hearing on the bill there was speculation on whether the phone system could be deferred. He pointed out that savings of approximately $60,000 to $70,000 a year in operating costs have been built into the budget, based on the phone system being installed. He said the savings would be minimal. The payment would need to be made in the future and then it would be 25 percent higher because there would not be the capability of "piggybacking" with the other installations being done in the state system.

Senator Raggio asked for a review of the adjustments to the LCB budget. Mr. Malkiewich said the only adjustment proposed to Nevada Legislature Interim budget is to increase the adjusted base to reflect the increased amount necessary for group insurance, for a total increase of $11,940 as shown in Exhibit C.

Mr. Malkiewich reviewed the adjustments to the LCB budget shown on pages 1 through 3 of Exhibit D. He explained that the initial budget proposed approximately a 7.9 percent increase in appropriation. He said a reduction of more than $475,000 is proposed, reducing the increase to 6.5 percent in appropriation. He pointed out that approximately $450,000 would have to be added for group insurance because of rate increases, and this almost offsets the reduction. Mr. Malkiewich pointed out the other increase is in E-845, Other Enhancements. He called attention to A.B. 525, which would create an Office of Financial Analysis and Planning and a task force.

Mr. Malkiewich explained that LCB would like to budget the money and if the bill were not approved the money would not be spent; if it were, the money would be built into the Fiscal Analysis Division budget for that purpose.

Mr. Malkiewich called attention to page 1 of Exhibit D, which summarizes all of the adjustments to the LCB budget, and pages 2-3, which show the adjustments by division.

Senator Raggio recalled that the last time the budget was discussed there were questions about new positions and asked how many new positions are requested and where they would be located. Mr. Malkiewich answered that the initial budget proposed including 14 new positions. Two of those positions are being cut, and the proposal is to add back one of the positions without funding. Senator Raggio asked how that could be done. Mr. Malkiewich replied the positions would be paid for from savings within the Administrative Division. Senator Raggio asked whether that position is with the security office. Mr. Malkiewich explained this is a receptionist position in the security office that was hired for the legislative session and would be continued and paid for out of savings.

Senator Raggio asked whether security staff is reduced when the legislative session is over. Mr. Malkiewich answered that security goes from approximately 24 employees to 6 to 8. He explained the receptionist position is an 8 to 5 o’clock position answering phones and performing clerical tasks for the Legislative Police office. He stated the person who was in that position has become a full-time safety officer.

Mr. Malkiewich stated there is currently a staff of 200 and with the proposed budget the number would increase to 214.

Senator Coffin stated that a considerable amount of money is spent on having security pick up the southern Nevada legislators from the airport in Reno. He suggested there might be a less expensive alternative to having security officers make the pickups. Mr. Malkiewich stated it might be possible to save a small amount of money; however, the issue of whether that would be wise would be up to the Legislature. He pointed out there are three benefits to having the legislative police make the pickups: (1) in case there is a security problem there is a licensed officer present; (2) many of the officers are trained in first aid and provide a safety component; and (3) the workload of the officers is filled out, which is a budget matter. He stated, "You can keep a staff large enough to provide 24-hour coverage of the building if there is enough work in some other areas."

Mr. Malkiewich pointed out the airport pickups do not amount to very much when the Legislature is not in session. He said if there is a problem, some of the individuals hired during session are brought in on an intermittent basis, which is provided for in the budget.

Senator Raggio asked whether any salary adjustments are in the budget. Mr. Malkiewich answered, "Only the upgrades that have been proposed." Senator Raggio said he was under the impression the upgrades would be dealt with when the unclassified pay bill was reviewed. Mr. Malkiewich said the upgrades can be dealt with later, "it would just be reducing money from the budget creating savings." He stated the upgrades are detailed in a memorandum sent to the committee.

Senator Raggio stated the committee could act on A.B. 525.

RESPECTFULLY SUBMITTED:

Patricia Hampton,

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: