The Senate Committee on Finance was called to order by Chairman William J. Raggio, at 8:28 a.m., on Monday, May 24, 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

GUEST LEGISLATORS PRESENT:

Assemblyman Robert (Bob) E. Price, Clark County Assembly District No. 17

Assemblywoman Marcia de Braga, Assembly District No. 35

Senator Mike McGinness, Central Nevada Senatorial District

Assemblyman Joseph (Joe) E. Dini, Jr., Assembly District No. 38

Senator Mark E. Amodei, Capital Senatorial District

Assemblyman John W. Marvel, Assembly District No. 34

STAFF MEMBERS PRESENT:

Jean Laird, Committee Secretary

OTHERS PRESENT:

Senator Raggio opened the hearing on Assembly Concurrent Resolution (A.C.R.) 23.

Assemblyman Robert (Bob) E. Price, Clark County Assembly District No. 17, explained that granting administrative leave to legislative employees in recognition of their service is a "tradition" started many years earlier. He indicated he would appreciate the committee’s consideration of this measure. Mr. Price noted there was one change this session which clarifies the employee’s responsibility to complete work after the last day of the session. Senator Raggio stated he appreciated Mr. Price’s bringing this measure forth and commented that because of the 120-day session, employees have worked especially hard and have done a wonderful job getting things organized.

Senator Raggio closed the hearing on A.C.R. 23 and opened the hearing Assembly Bill (A.B.) 380.

Assemblywoman Marcia de Braga, Assembly District No. 35, said A.B. 380 accomplishes several things. She explained it establishes prospectively that nonuse of water will not result in forfeiture of water rights. She noted it is a statewide application that will benefit the entire state in the future. She said the bill also provides that municipalities can retain water rights from previously farmed areas and reserve those rights for future municipal and industrial development. Mrs. de Braga added there is a list of provisions under which abandonment will not apply for the loss of a water right.

Mrs. de Braga said there is a letter of agreement covering how the bill would be put into place. She testified all parties currently in litigation over water rights on the Truckee River have agreed to terms under which those lawsuits will be terminated or withdrawn if this bill passes. She pointed out one of the pending lawsuits is from the City of Fallon against the Truckee Meadows and that will "go away" upon signing of the bill by the Governor. She noted other suits are against downstream users for what were perceived to be forfeited water rights.

Senator Raggio inquired who has the right of dismissal on the litigation referred to by Mrs. de Braga. Mrs. de Braga responded it would be the U.S. Department of Interior or the Pyramid Lake Paiute Tribe of Indians. Senator Raggio asked whether it would not be the Truckee-Carson Irrigation District (TCID). Mrs. de Braga replied TCID filed most of the suits, would have to withdraw the suits, and have agreed to do that.

Senator Raggio inquired whether there was a written agreement. Mrs. de Braga responded there was and agreed to provide a copy for the committee. Senator Raggio asked whether there were assurances that all parties of interest will dismiss with prejudice all pending litigation if this bill is passed by the Legislature and signed by the Governor. Mrs. de Braga replied that was true, with one provision. She explained a fund had been established whereby water rights could be purchased and the fund would be used to acquire water rights currently under litigation. But, she added, if a party chooses to stay in litigation and loses, the same value of those water rights would be paid from the fund to the Pyramid Lake Tribe. Mrs. de Braga noted this would cost no more than if water rights were purchased from the original party. She stated this provision allows people with water rights currently under litigation to choose to continue litigation or sell the water rights. She noted water rights up to 6,500 acre-feet can be acquired through this fund and once that goal is reached, the rest of the suits will also be withdrawn.

Senator Raggio asked for discussion of the proposed amendments to A.B. 380. Mrs. de Braga stated she had the "old" proposed amendment, which concerns the state’s portion of the funding. She said the federal government has agreed to contribute $7 million. Sierra Pacific Power will, if it is approved by the Public Utilities Commission of Nevada (PUC), contribute $.5 million each of the 5 years for a total $2.5 million. The state, through whichever avenue it chooses, will contribute $4 million. Senator Raggio asked whether that is payable over a period of time. Mrs. de Braga replied it is payable over 5 years. She said the original bill sought to increase the conservation bonding ability from $8 million to $12 million, but the Governor indicated preference for a direct appropriation in the amount of $3.3 million assuming interest earned on the $3.3 million would accumulate to bring the total to $4 million over the 5-year period. She noted Senator McGinness would address that proposal.

Senator Raggio asked Senator McGinness whether there was an amendment proposing a General Fund appropriation of $3.3 million, with the expectation interest over that period would generate the amount required. Senator Mike McGinness, Central Nevada Senatorial District, responded that there is. He said the Governor’s Office determined bonding would cost the state several times more and $3.3 million invested over the 5-year period would generate the $4 million needed. Senator McGinness said this method would meet the state’s obligation to the Newlands Reclamation Project Water Rights Fund.

Senator Raggio pointed out the amendment would delete section 4 of the third reprint of A.B. 380, which authorized the bonding. Senator McGinness explained that when the bill was passed by the Senate Committee on Natural Resources, bonding was the agreed-upon funding method and that has since changed. He agreed that entire section would be deleted. Senator Raggio pointed out the proposed amendment does not delete section 5 of the bill, which contains language regarding the state’s $4 million obligation to this fund. Senator McGinness clarified that both sections 4 and 5 should be deleted. Senator Raggio reiterated that if the General Fund appropriation is approved in the bill, section 5 should be deleted. He added the committee needs clarification and a corrected amendment.

Mrs. de Braga confirmed both sections 4 and 5 should be deleted if the option for the $3.3 million direct appropriation is approved.

Senator McGinness indicated that, in addition to establishing dates and solving forfeiture and abandonment issues, there are about 2,500 administrative and legal cases in the office of the State Engineer, Division of Water Resources, State Department of Conservation and Natural Resources, that will "go away" under this agreement. Senator Raggio asked who guarantees those cases will "go away." Senator McGinness referenced the document "Joint Testimony of Truckee-Carson Irrigation District, Pyramid Lake Paiute Tribe of Indians, City of Fallon, Churchill County, and Sierra Pacific Power Company," which he said is essentially a letter of agreement that those things will happen. Senator Raggio requested Mrs. de Braga provide copies for the committee and for the record. (Mrs. de Braga later provided the document, which is included as Exhibit C.)

Mrs. de Braga explained the method for withdrawing these suits is outlined in the document and signed by all parties. Regarding the $3.3 million, she pointed out there remains a state obligation of $4 million and the assumption of earned interest is somewhat "blue sky." She indicated the Governor would review the earnings in 2 years when it would be clearer whether the interest would achieve the $4 million goal. She said the estimates have been calculated several different ways and, assuming the first payment is not made for approximately a year, estimates indicate the total could easily reach $4 million with the $3.3 million appropriation. Senator Raggio asked what amount is due to be paid to the fund each year. Mrs. de Braga replied it is not spelled out, but depending again on the interest rate it would be approximately $.8 million.

Michael F. Mackedon, City Attorney, City of Fallon, said he had not seen the proposed amendments before arriving at this hearing and indicated it appeared section 4 should be deleted from the bill. However, he said, section 5 should be changed, rather than deleted entirely, because it is the intent of the parties that a $12 million fund be produced from three sources. He noted this is evident in the joint testimony document. Senator Raggio suggested Mr. Mackedon work with legislative staff to rewrite the amendment. Senator McGinness indicated he would also work with staff on the amendment.

Senator Neal asked whether the amendment would contain an appropriation. Senator Raggio replied it would contain a $3.3 million appropriation.

Mr. Mackedon pointed out the agreement referred to in this testimony is actually contained in the joint testimony document (Exhibit C). Senator Raggio asked what was meant by "joint testimony" and declared if the committee passes this bill, it must have assurance the litigation will be dismissed without prejudice. Mr. Mackedon stated the City of Fallon and the County of Churchill commenced the litigation at the forefront to protest the transfer of water rights within the Truckee Meadows. He testified that when this bill is signed by the Governor, he, as city attorney, and the attorney representing Churchill County will dismiss the litigation regarding the protested water rights in Washoe County. He added that from that point forward the effect of the bill will foreclose future contests of the same kind. He emphasized that is part of the "bargain" and he makes that promise part of the record.

To make sure the committee understands this, Mr. Mackedon said, there is other outstanding litigation this bill would obviously affect, but the bill "could not legislate people’s rights away." He added the primary litigation is with the City of Fallon and Churchill County and they are only waiting for the Governor’s signature on this bill to dismiss their cases.

To clarify the amendment, Mrs. de Braga said sections 4 and 5 deal with Nevada Revised Statutes (NRS) Chapter 478 and that chapter should remain as it is. Section 4 of the bill should be deleted. In section 5 of the bill, lines 41 and 42 would revert back to $8 million and $4 million, so section 5 would also be eliminated. Therefore, she pointed out, both sections that would have amended NRS Chapter 478 would be eliminated and NRS Chapter 478 would remain as it is. Mrs. De Braga said the conservation bonds would be under the same regulations as always. Senator Raggio said that supports his earlier comment that both sections 4 and 5 of the bill should be deleted.

Senator Jacobsen said it is difficult to visualize all the effects of this kind of legislation and it would be helpful to see a chart indicating what the suit is about and what the ramifications are. He said that on the farm tour, legislators saw land south of the Dodge Ranch that had been retired because of lack of water. He said it would be nice to see an overall picture, for those who do not live in that area, which describes exactly what the problems are. Mrs. de Braga said she would provide the requested information.

Mrs. de Braga mentioned that if A.B. 380 passes, farmers would be able to use their allotments of water anywhere on land they own any way they wanted to, provided they did not use additional water. In good precipitation years, she explained, this would allow farmers to replant striplands and get agricultural use back by putting in low-water-intensive crops.

Senator Raggio requested a corrected amendment be prepared and provided to the committee as soon as possible.

Joseph E. Dini, Jr., Assembly District No. 38, said A.B. 380 is a far-reaching bill. He indicated legislators who represent people on the Walker, Carson and Truckee Rivers find benefits in the bill, especially the forfeiture/abandonment part. He stated there have been "water wars" in Nevada for over 100 years, and they will continue. However, he said, this measure will help on the Walker and Carson Rivers as well because "the action is just starting on those rivers." He said this measure will be advantageous for all water users in western Nevada in the agricultural section. Mr. Dini commended the people who worked diligently to achieve agreement on this complex and controversial issue. He noted he represents Fernley, which is involved in Truckee River issues, and said the bill is "certainly a great benefit" to the people in Fernley, as well as the people in Fallon.

Senator Raggio pointed out that funding from the state, whether it is in the bill or not, will need to be conditioned on the other committed funding also being received. He noted he did not see that in the bill. Senator McGinness said the joint testimony document (Exhibit C) covers that. Senator Raggio said it is not in the bill, however, and there must be some reference to clarify intent.

Senator Raggio closed the hearing on A.B. 380 and opened the hearing on A.B. 663.

Mr. Dini explained A.B. 663 is an administration bill which reverts the $5 million appropriated 4 years ago for the V&T Railroad restoration project from Virginia City to Carson City. He stated that because the Tricounty Railway Commission and other parties had done so much work to try to raise the remaining $15 million, the Assembly decided to provide the opportunity to continue to pursue the $15 million match. He indicated the bill would provide that $5 million in bonds would be issued during the next 4 years if the commission reaches the match. He described this as a better alternative than just cutting off the project. He said if the $5 million is reverted and this bill is not passed in this form, the project is lost. He explained the bill retains the language passed 4 years ago requiring $15 million in matching funds and repayment of the $5 million to the General Fund by transferring a portion of future ticket fees.

Mr. Dini said it is the intention of the Assembly to proceed. He noted there were representatives from the commission present to provide testimony on what has been done and the status of the project. He stated this is a worthwhile project for all of western Nevada to preserve the heritage of the western part of the state. He said it was a good project when the bill was first passed 4 years ago and it is still a good project, but there have been problems raising the $15 million.

Senator Mark E. Amodei, Capital Senatorial District, testified that effective marketing takes into consideration the entire region. He added the area needs to reestablish regional ties, rather than only being concerned with Reno and Lake Tahoe. He stated, "One of the things this area has to sell is its history." He opined this project dovetails perfectly with these concepts. He said the decision the committee made initially to provide this money in a loan context was the correct decision and the committee needs to reaffirm it by passing this bill.

Senator Raggio agreed and said one of the real historical tragedies in this state was the removal of the V&T railroad tracks from Reno to Carson City. He said the railway could have easily been extended to Virginia City and would have been the greatest tourist attraction in the western United States.

Senator Raggio asked for an update on the commitments toward the required $15 million match. Mr. Dini responded Storey County had passed the .25 cent sales tax and that money had been provided to the Tricounty Railway Commission for operating expenses.

Janice Ayres, Chairman, Tricounty Railway Commission and President, Northern Nevada Railway Foundation, stated her foundation is the nonprofit organization that has been attempting to raise the funds. She said she had been working with the Reynolds Foundation and other foundations to raise the $15 million. She testified spokespersons from those foundations are asking why, if the state truly views this as a viable project, the state does not put funding into it. She said she had explained the $5 million would be provided by the state contingent on raising the match. She indicated the Reynolds Foundation representatives stated their desire for the state to "put the money up first." She noted that has been the impasse. She related that with this amended bill she can point to the $5 million and will be able to raise the rest of the money.

Shelly Aldean, Secretary-Treasurer, Tricounty Railway Commission, said she has been involved with this project since 1995 and wanted to dispel the misconception that nothing has been accomplished. She explained her organization has been working diligently and quietly behind the scenes to overcome the obstacles, none of which are unsurpassable.

To begin with, Ms. Aldean said, there is a physical impediment called the Oberman Pit, which is an enormous hole in the ground outside Gold Hill. She explained the Nevada Department of Transportation (NDOT) has been working with members of the commission and the foundation to determine the most expedient and cost-effective way of bridging that mall. To assist in that effort NDOT obtained a $2.6 million grant from the ISTEA (Intermodal Surface Transportation Efficiency Act) Program to analyze and determine the best way to bridge or fill the Oberman Pit. She said NDOT is responsible for the first 1.3-mile section out of Gold Hill on the way to Carson City.

Ms. Aldean also said the Carson City Convention and Visitors’ Bureau has provided $50,000 annually since 1992 and the bureau’s total commitment to date is $450,000 derived from the Carson City room tax. She noted that is a significant investment. She informed the committee WNDD (Western Nevada Development District) obtained a technical grant to conduct a feasibility study and that feasibility study indicates the railroad would be economically viable once reconstructed. In addition, she said, WNDD has contributed $230,000 and she noted WNDD includes counties other than Storey County, Carson City and, Lyon County. She said there has been a considerable amount of money allocated to this project.

Ms. Aldean said the other major obstacle has been the acquisition of right of way. She opined the work of the attorneys to acquire the right of way is very promising. She indicated most of the owners have been cooperative and willing to provide easements or grants.

Ms. Aldean testified the commission has a preliminary operating agreement with Bob Gray, an experienced railroad operator, who operates the existing short rail line from Virginia City to Gold Hill. She stated one of the questions frequently asked by prospective contributors was, "Who has the local expertise to operate the reconstructed railroad?" Mr. Gray, under this 2-year agreement, would provide those services once the railroad is operating.

Ms. Aldean said the previous capital campaign raised approximately $200,000 in contributions. She admitted professional fund-raisers unfortunately consumed most of that money. She explained that is why the commission formed a new Internal Revenue Code (I.R.C.) 501(C)(3) entity called the Northern Nevada Railway Foundation, which is staffed almost entirely by volunteers. She said the foundation does receive technical assistance from WNDD but is determined to ensure every dollar received is banked specifically for the reconstruction of the railroad.

Ms. Aldean encouraged committee members to visit the foundation’s website, STEAMTRAIN.ORG. She said it is the commission’s intent to keep this project in full view of the general public and the commission hopes to also solicit significant donations over the Internet. She said railroads are extraordinarily popular nationally and internationally. She said the commission hopes to promote greater awareness of the project to generate significant donations.

Senator Raggio asked who estimated the total cost of this project. Ms. Aldean replied a feasibility study was conducted in 1994 by Northwest Engineering, which estimated cost and revenues. She said the total cost was projected at $20 million, but in reality such numbers fluctuate and as unanticipated impediments are encountered there may be need for adjustment. Senator Raggio asked whether there is an updated estimate. Ms. Aldean replied the updated estimate is $22 million. Senator Raggio asked whether that would cover the acquisition of right of way and completion of the tracks. Ms. Aldean replied that it would and it also includes the acquisition of some equipment. She noted it is an all-inclusive figure. Senator Raggio asked who would provide the rolling equipment. Ms. Aldean replied Bob Gray would initially provide the rolling equipment under the operating agreement, which has a duration of 2 years.

Michael Smiley Rowe, Attorney, Tricounty Railway Commission, testified the $22 million estimate included acquisition of some equipment, such as rail stations and other facilities. He said those numbers may also vary downward from the estimate. He explained the feasibility study took into account the possibility of purchasing new equipment built to appear as old equipment. He said the $22 million is the upper limit and there may be some cost savings. For example, he said, Lumos and Associates, the current engineering firm for the Tricounty Railway Commission, has already identified areas where savings might be made.

Regarding the right of way, Mr. Rowe said the 1.1-mile stretch is the first stretch from the end of the existing short railroad to across the Oberman Pit. He said that right of way has been acquired, for the most part. He explained there is a commitment on the remaining right of way once additional engineering information establishes exactly where the train will go. He said that is what NDOT is doing.

Mr. Rowe said the commission has been in negotiations for the next big area of right of way, which is BLM (Bureau of Land Management) land. He said BLM representatives propose BLM lease the right of way to the Tricounty Railway Commission. He explained one of the predicates to getting the lease is the environmental impact statement (EIS), which has been drafted by NDOT. He noted there were some comments regarding the environmental impact statement that necessitated a redraft. He said everyone involved anticipates a finding of "no significant impact" will be issued as a result of the redrafted the EIS. Once that is in hand, he said, the commission will be able to secure the BLM right of way, which is over half the needed right of way. He said the balance is across private properties and everyone he has discussed the train with has indicated willingness to donate the easement or the right of way. He said one of the large landowners enthusiastically supports the project. He informed the committee that, if the BLM lease is included, the commission has 65 to 70 percent of the necessary right of way in hand.

Ms. Ayres added there is very strong support from the Governor for this project. She said the Governor had contacted her personally and stated his desire to have the project for historical and tourist destination values. She said he had offered to accompany her to the Reynolds Foundation or any other large foundation to help make the presentation for support. Senator Raggio indicated he was also aware the Governor is in favor of the project.

Senator Raggio inquired about federal funds. Tom Stephens, Director, Nevada Department of Transportation, responded the ISTEA money committed several years ago is still in place and available and NDOT is still working on the project. Ms. Aldean added that the commission is working with the offices of U.S. Senators Reid and Bryan on that issue and have discovered there may be money available through the Heritage Corridor Program. She said the commission is diligently pursuing that in cooperation with the State Historic Preservation Officer.

Senator Raggio closed the hearing on A.B. 663.

Senator Raggio reminded committee members they had heard testimony on S.B. 306 on May 20, 1999. He explained it was a request for a $1 million appropriation to the Jarbidge Water System. Since that time, he said Stephanie D. Licht, Lobbyist, Elko County Commissioners, has appeared and suggested a letter from the committee that sets out certain representations to make this project recognizable for funding from the State Board for Financing Water Projects. He added if the Assembly Committee on Ways and Means agrees, it could be a jointly signed letter.

Ms. Licht said she recently became aware the Board for Financing Water Projects had nearly $4 million in grant funding. She said it occurred to her the board might provide a grant for the project discussed when S.B. 306 was presented to the committee.

Senator Raggio said there is some remaining authorization and the bill has been processed to increase that authorization. At the same time, he pointed out, it also increased the project. For example, he said, Mr. Dini proposed an amendment to provide for irrigation projects. Senator Raggio said that although there may be additional authority, the service of the bonds must be kept within the 15-cent rate allowed for general obligation bonds. He queried John P. Comeaux, Director, Department of Administration, whether additional authority would be available in the future. Mr. Comeaux replied "Maybe."

Senator Raggio reiterated the request for the committee to consider issuing a letter, possibly jointly with the Assembly Committee on Ways and Means, which sets out certain information. He asked whether Ms. Licht wished to address any corrections, verifications, or additions for the draft letter in her handout (Exhibit D).

Ms. Licht said her handout includes the original letter she had briefly discussed with Senator Raggio and a correction sheet. At Senator Raggio’s request, she had reviewed the letter and identified corrections to the letter. She explained the chart on the correction sheet sets out how much per person or per connection the improvements will cost to meet the federal regulations of the Surface Water Treatment Rule and the Safe Drinking Water Act. She noted there are approximately 25 persons or 103 connections annually. She said the handout is self-explanatory and indicated the correction sheet should be blended into the original draft. Senator Raggio requested Ms. Licht prepare a new draft with the corrections already incorporated into the draft letter. Ms. Licht said she would do that.

Senator Raggio opened the hearing on A.B. 320.

Assemblyman John W. Marvel, Assembly District No. 34, testified that the concept in A.B. 320 originated in the 1985 Legislative Session and has been very successful in the rural areas. He noted the appropriation requested is $150,000, which has not changed since 1985. He said the musicians’ union administers this program and tries to ensure all rural Nevada benefits from it. He said it has certainly been well received in his district. He pointed out it provides the opportunity to enjoy classical music in areas where it would not otherwise be available.

Senator Raggio inquired whether the musicians’ union contributes funding. Mr. Marvel replied the union contributes nearly all funds needed above the $150,000. Senator Raggio acknowledged this appropriation has been made for a number of sessions and inquired whether this project is tied to a national fund and a national endeavor for the musicians’ union. Mr. Marvel replied that it is.

Senator Raggio asked Mr. Comeaux whether this was funded in the current biennium. Mr. Comeaux replied he believed it was. Senator Raggio requested a report on the activities generated as a result of this appropriation. Mr. Marvel indicated he would request the Research Division of the Legislative Counsel Bureau to provide that information.

Regarding A.B. 285, Senator Raggio directed attention to the Memorandum of Agreement resulting from the Presidential Forum that took place regarding the Lake Tahoe Basin (Exhibit E).

Senator Raggio pointed out the Memorandum of Agreement is signed by the Federal Interagency Partnership on the Lake Tahoe Ecosystem, the State of California, the State of Nevada, the Washoe Tribe of Nevada and California, and the Tahoe Regional Planning Agency. He said that although there is not much detail in the agreement, it reaffirms commitment to the Tahoe Regional Planning Compact and to sound management and protection of the Tahoe basin.

Senator Raggio indicated the parties agree to cooperate with each other to pursue implementation, including funding of an appropriate environmental improvement program. He indicated he is very supportive of this measure, but still has a major question: If Nevada provides the bonding requested in A.B. 285, where is the commitment for all the other funding apparently agreed to? He said he is still searching for documentation of those commitments.

Senator Jacobsen indicated he was a member of the Legislative Commission’s Committee to Continue the Review of the Tahoe Regional Planning Agency (TRPA). He asserted this bill is one of the committee’s recommendations involving the partnership to ensure all parties are headed in the same direction and "nobody is pulling separately in some area." He stated the committee agreed to support the project. Additionally, Senator Jacobsen said, he was endeavoring to hold a summit with California because the two states have not gotten together since the Tahoe Regional Planning Agency was formed. He said it is time to meet to ensure "we are unanimous and uniform in what we do."

Senator Raggio voiced concern that according to A.B. 285, when the fund is established there will be no requirement for legislative involvement other than a report to the Interim Finance Committee (IFC). Senator Neal commented that is the nature of the compact. Senator Raggio replied this measure has nothing to do with the compact but is a partnership to develop an environmental improvement program. He said his concern is that it commits $82 million from the State of Nevada over a period of 10 years. He noted it has been explained to the committee that approximately $25.6 million of the commitment is to be raised by local governments and the private sector, although most of that consists of in-kind contributions. He emphasized Nevada would be required to issue bonds of $56.4 million for the remainder of the $82 million commitment.

Senator Raggio reiterated he has not seen the commitment for the federal government’s share or California’s share. Based on the bill, he noted, Nevada would establish a fund called the Fund to Protect the Lake Tahoe Basin. He said the administrator of the Division of State Lands, would administer the fund. He noted the bill states that all money collected must be deposited in the fund without limitation, including appropriations or interest earned. The bill states the Administrator of the Division of State Lands may use the proceeds from bonds issued pursuant to this act or may request an appropriation to defray the costs of administering the program if the money in the fund is not sufficient. He pointed out that, unlike California, Nevada has a Legislature that is not in session all the time. He said that although the bill calls for a report to IFC, there needs to be some kind of control in the bill that allows the matter to come before the IFC when the fund is utilized. He added the committee would need to know at that time the commitments from the other entities are in place. He suggested the bill be amended to require that kind of oversight and approval.

Senator Jacobsen suggested that before the committee takes action, Pam Wilcox, Administrator, Division of State Lands, State Department of Conservation and Natural Resources, be asked to appear again before the committee to address these concerns. Senator Raggio said he did not mind doing that but recalled that Ms. Wilcox had indicated she was not in favor of that approach when the committee previously heard the bill. He said he was troubled by this kind of authority without something more definitive than this Memorandum of Agreement.

Senator Rawson indicated the bill indicates $56.4 million in total bonding authority, but it also indicates $20 million. He was not sure which amount is supposed to come from the state. Senator Raggio clarified that $56.4 million would come from the state and $25.6 million would come from local government and the public sector. He said the commitment from Nevada is $82 million over 10 years. He explained that Nevada had previously issued $20 million in bonds which have been utilized.

Senator Rawson asked whether this was in The Executive Budget. Mr. Comeaux said the Governor’s budget includes the last $10 million of the voter-approved $20 million in Lake Tahoe bonds plus $3.2 million which would represent the first part of the $56.4 million that would be authorized in A.B. 285.

Senator Raggio asked whether there was anything available other than the Memorandum of Agreement. Mr. Comeaux said that as far as he knew that was all that was available, other than informational reports on the project. Senator Raggio asked whether there is any problem with IFC having approval authority over this program. Mr. Comeaux replied he did not think so, but he pointed out the 1999 Legislature would only take action on the authority to issue the bonds for the $3.2 million and additional authority will still need to be authorized by future Legislatures. Senator Raggio said that according to the bill once the $56.4 million bond is authorized it is solely in the hands of the administrator of the Division of State Lands, with only the requirement to report to IFC, and that, he said, is not satisfactory.

Senator Rawson noted the Legislature would have opportunity to approve or deny additional bonding above the $3.2 million every 2 years at each legislative session. Senator Raggio commented he did not read the bill that way. Mr. Comeaux indicated he did not think the state could issue any of that $56.4 million except for the $3.2 million that is included in the Governor’s budget. Senator Raggio stated this needs to be clarified because he is not prepared to "write a blank check." Mr. Comeaux said he did not see any problem with requiring periodic reports on commitments made by the other entities involved or money actually appropriated or otherwise provided for. Senator Raggio suggested Mr. Comeaux talk to Ms. Wilcox because the Legislature needs better understanding of where the money is going. Mr. Comeaux indicated he would.

Tom Stephens, Director, Nevada Department of Transportation, provided information requested by the committee related to S.B. 174.

Mr. Stephens indicated he would make three points on the bill. He said he continues to be opposed to NDOT’s funding something on a county road. Second, he said, if NDOT were funding this, it would be somewhat less than what was proposed and referenced his handout (Exhibit F). He said NDOT would install 3 signs in place of 3 existing signs that would say "DESERT INN RD WESTBOUND USE RANCHO DR" as indicated on the first page of the handout. He said the second page indicates where those signs would be installed. Third, he said, rather than 2 overhead signs as was previously proposed, NDOT would install 1 overhead sign with the language appearing on the third page of his handout.

Mr. Stephens indicated this new proposal would reduce the cost to about $100,000, saving $50,000. Senator Raggio asked whether this proposal would be consistent with signage usage otherwise. Mr. Stephens replied it would be. He cited as an example the South Virginia Street on-ramp at Mt. Rose to U.S. Highway 395 where there is only 1 overhead sign.

Senator Coffin mentioned some of the confusing signage that exists and used as an example the sign on U.S. Highway 395 in Reno that says "South Virginia Street North." Mr. Stephens indicated that sign is in the process of being changed, but the problem there is what the sign says, not the number of signs.

Mr. Stephens said NDOT’s share of the construction of the Desert Inn superarterial was about half the cost. He said if the nexus for NDOT’s doing this is that NDOT shared in the construction cost, NDOT’s share should only be about half the cost and the county should put up the other half. He explained the Legislature would then make $50,000 available contingent on Clark County providing the remaining $50,000 to do the work.

Senator O'Donnell said the county is not "excited about putting up signs at all" and if its responsibility is for half the cost, the county may not do it. Senator Raggio asked Senator O'Donnell to contact Clark County to determine the likelihood of their providing half the funding.

Senator Raggio asked Mr. Comeaux to come forward regarding S.B. 236.

Senator Raggio said S.B. 236 makes an appropriation to Lincoln County School District for completion of repairs for an electrical distribution system. He said that from conferences with the Governor’s Office, representatives of Lincoln County School District, and some of the legislators involved, his understanding is that this bill is the vehicle proposed to address the situation in the Lincoln County School District. Originally, he said, there was a proposal from the Governor’s Office that out of the new revenue available from the refunding of bonds, around $700,000 would be provided because modular units had been discussed. He said the superintendent from Lincoln County School District indicated if the school district could receive $1 million instead of $700,000 the district could build a school rather than use modular buildings and that would be more desirable.

Mr. Comeaux agreed with Senator Raggio’s summary of the events and added the Governor was able to recommend allocation of $700,000 from the savings of bond refundings, but the Governor did indicate if additional money could be found to increase that amount, he would certainly encourage doing that. He confirmed the $1 million would provide sufficient funding for a "stick-built" school.

Senator Raggio asked whether the committee wanted additional information before acting on S.B. 236. Senator Coffin said he would like further information on the total amount of money available. He said the committee heard last week there would be a figure in hand to show the committee how much money is available to consider for requests not in the Governor’s budget. Senator Raggio said the final numbers are not available, but the committee does know the $700,000 is included in the bond refunding. Senator Coffin asked how much of the $1 million is in the Governor’s budget. Senator Raggio replied none of it is in the budget now.

Mr. Comeaux explained the Governor and the State Treasurer worked together on bond refundings and "bond swaps" that produced approximately $9.5 million in eventual interest savings that could be used for other things. He said the plan was structured so the $9.5 million could be realized over the biennium and the Governor proposed how that funding should be used. Mr. Comeaux said $700,000 for the Lincoln County school was part of that proposal. Senator Raggio clarified the money from refunding of bonds would not specifically be earmarked for the school but would be deposited to the General Fund, and if the Legislature appropriates the $1 million requested, $700,000 would have come from that source.

Senator Raggio pointed out this is an issue that must be addressed, because otherwise Nevada is at risk for not replacing condemned schools. He acknowledged it does open up a bigger issue.

Senator Raggio indicated it was his understanding there was language proposed to make this kind of appropriation conditioned upon special circumstances in that county. He noted that is not in the amendment. Mr. Comeaux said A.B. 597 will include the language that will identify three criteria to be met for the state to provide funding.

Senator Raggio pointed out S.B. 236 does state the appropriation is for "construction of an elementary school to replace a school building that has been found unsafe, structurally unsound and unsuitable for continued use as a school." He said the committee had been concerned about the precedent it would be setting and indicated that is why he asked the question. Mr. Comeaux said the three criteria in A.B. 597 are that the affected district be at or near the maximum statutory property tax rate, the district has a declining assessed valuation, and there be a finding by an independent third party that the school in question represents a safety problem for children and others who use the building. Senator Raggio observed that in the situation in Lincoln County all three of those criteria have been met. Mr. Comeaux agreed. Senator Raggio indicated the amendment for S.B. 236 should specifically state the three criteria have been met.

Senator Jacobsen asked whether the committee should require Lincoln County to appear before the committee to make a presentation and added there are modular buildings available that are not being used. Senator Raggio said the bill would be held for one day and asked Mr. Comeaux to communicate that to Lincoln County officials. Mr. Comeaux agreed to do so.

Senator Coffin said it might be helpful to use the 24 hours to determine which counties meet those criteria. Senator Raggio said there is only one county that currently meets those criteria and that is Lincoln County. He added the only other county considered by the Governor in that proposal was to relieve the remainder of the debt for White Pine County.

Senator Raggio recessed the meeting at 9:50 a.m. until the call of the chair.

RESPECTFULLY SUBMITTED:

Jean Laird,

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: