The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 11:00 a.m., on Friday, February 26, 1999, in Room 2149 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 Ann O'Connell, Chairman

Senator William J. Raggio, Vice Chairman

Senator William R. O’Donnell

Senator Jon C. Porter

Senator Joseph M. Neal, Jr.

Senator Dina Titus

Senator Terry Care

GUEST LEGISLATORS PRESENT:

Senator Dean A. Rhoads, Northern Nevada Senatorial District

STAFF MEMBERS PRESENT:

Julie Burdette, Committee Secretary

OTHERS PRESENT:

Robert L. Seale, CPA, Managing Director, Gabelli Fixed Income LLC

Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association

Kathy Augustine, State Controller

Warren B. Hardy II, Lobbyist, City of North Las Vegas

Chairman O’Connell opened the hearing and requested testimony on Senate Bill (S.B.) 194.

There was no testimony on S.B. 194 and Senator O’Connell requested testimony on Senate Joint Resolution (S.J.R.) 9.

Senator Dean A. Rhoads, Northern Nevada Senatorial District, explained that this resolution would remove the State Controller as an elected official and would allow the Governor to make that appointment. He indicated that in the past the State Treasurer was allowed to make the appointment. This resolution would also allow the Legislature to prescribe, by law, the qualifications and duties of the State Controller appointed by the Governor. The Senator noted the resolution must pass the Legislature twice and then is voted on by the general public to amend the constitution.

Senator Rhoads specified that the intent was not to eliminate the office but to merge the two offices of treasurer and controller. The purpose of this resolution is to reduce the size of government and provide better service to the public. He named several states that have merged or combined the two offices.

Senator Porter asked if the language was the same as presented 4 years ago.

Senator Rhoads indicated that one part of the bill passed both houses 6 years ago, but the bill came back 4 years ago. The language then stated the treasurer would appoint the controller with qualifications prescribed by the Senate. This legislative session, the revision states the Governor shall appoint and the Legislature will draft the qualifications.

Robert (Bob) L. Seale, CPA, Managing Director, Gabelli Fixed Income LLC, and ex-treasurer of the State of Nevada explained that he was speaking in favor of S.J.R 9 as a citizen of the State of Nevada. He remarked that he had supported language of this sort for a number of years. However, he recognized there was some concern regarding internal controls. He emphasized the independence to the appointed controller and that by combining the office of the treasurer and controller an economy of skills would be created.

Mr. Seale submitted for review, a consolidation list of positions (Exhibit C). Ten positions and costs associated with those positions would be eliminated. He pointed out that six of the positions are in the controller’s office and four in the treasurer’s office. The controller, of course, would be appointed and have qualifications as prescribed by the Legislature. The annual savings would be almost a half million dollars, or a million dollars each biennium. He emphasized this figure did not include overhead, duplicative equipment costs, travel, etc.

Mr. Seale supported Senator Rhoads’ statement that there is a definite trend to either consolidating the two offices or eliminating them. He summarized by stating that most recently Minnesota eliminated its treasurer; prior to that Texas rolled the treasurer’s office into the controller’s office. Alaska, Georgia, Hawaii, Michigan, Montana, New Jersey and Virginia have an individual appointed by the governor that covers both of those functions. He summarized there are currently only 12 states that have both an elected treasurer and controller. They are California, Connecticut, Florida, Illinois, Maryland, Nevada, South Carolina, South Dakota, Tennessee, Texas, West Virginia and Wisconsin. Maryland and Tennessee have a comptroller elected by the legislature and not by the general public.

Mr. Seale stated there is one item in this bill that I think could be changed and that is shortening the length of time in which this is effective. He said he did not believe there was a need to take this length of time in order to accomplish this merger. Mr. Seale suggested that the committee look favorably upon this bill and that he would be happy to answer any questions.

Senator O’Donnell asked Mr. Seale to explain the duplicative nature of the offices listed on Exhibit C, and why not appoint a comptroller instead of controller and eliminate the office of treasurer. Mr. Seale suggested that it might make more sense to ensure the controller has qualifications that are prescribed by the Legislature, for example, a designation of Certified Public Accountant (CPA).

Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, speaking in support of S.J.R. 9, stated we have consistently supported the consolidation of these two offices. She pointed out that she knew from previous meetings and testimony there has been concern expressed in regard to the system of checks and balances. The taxpayers’ association believes the system is built-in if the people appointed are qualified. She stressed the association would like to see the Legislature set the qualifications for the office of treasurer, even though it is an elected office. These officers, whether elected or not, should be qualified; they are in charge of taxpayers’ dollars.

Ms. Vilardo stated Nevadans have eliminated offices by constitutional amendment in response to the times and how we do business. With the advent of electronics, she declared, including accounting systems that can be integrated and systems of checks and balances that can be created, there is no reason for this duplication. The Nevada Taxpayers Association believes it would be much more cost-effective to consolidate these offices.

Ms. Vilardo further addressed Mr. Seale’s comments on shortening the time frame involved by giving anecdotal testimony citing constitutional amendments passed in the 1987 and 1989 Legislative Sessions. She noted that the time issue and expense would be of significant importance to anyone running for this office.

Ms. Vilardo remarked the Nevada Taxpayers Association would definitely urge committee consideration for passage of the bill. In repolling the board, they feel very strongly that the offices should be combined, and again, not only at the state level but local level.

Senator O’Connell asked if there were questions for Ms. Vilardo from the committee.

Senator O’Donnell inquired why there was duplication in the first place. Mr. Seale answered that when the Nevada Constitution was written, the requirement for two separate offices made sense. Those two offices did all of the functions that were performed in a financial sense. The Legislature did not have the Legislative Counsel Bureau. He also noted that with electronics and the kinds of accounting systems available the appropriate checks and balances exist.

Senator Neal questioned how this office would be enhanced by having the Governor appoint this individual. Mr. Seale replied that by having an independent entity, the Governor in this case, appoint someone who serves at the Governor’s pleasure would ensure adequate internal control.

Senator Raggio remarked that the Legislature could debate whether both offices should be appointed. He also thought that an argument could be made for at least one of the fiscal officers to have the independence of being elected and answering to the general public. He voiced his concerns regarding the qualifications of individuals who fill either the office of controller or treasurer. He stated as long as it is a generic constitutional office, there is no insurance that people will have the kind of qualifications that are essential today for these positions.

Mr. Seale replied that was correct; our constitution is written so that anyone over 25 years of age can run for and serve as treasurer.

Senator Raggio asserted that the other side of the issue, valid or not, would be criticism that voters had been denied the opportunity to elect their officers. People are concerned about qualifications and this is a constitutional question.

Mr. Seale replied that defining the qualifications of both offices would be important and that the controller’s office is better understood and can be defined by the accounting environment; i.e., certified public accountant, etc.

Senator Raggio stated he did not think a constitutional amendment could effectively define the qualifications that ought to be in place for either treasurer or controller today. Finally, the appointment process would be preferable in ensuring properly qualified individuals for the two offices.

Senator O’Connell asked if anyone else wished to speak in favor of S.J.R. 9. Kathy Augustine, State Controller, stated the controller’s office does not necessarily want to oppose the Governor’s appointment of this office, which would not affect her term or herself personally. Ms. Augustine remarked that the controller’s office wanted to provide the committee with a packet of information (Exhibit D. Original is on file in the Research Library.).

Ms. Augustine continued to say that what she had heard in testimony and comments was different than what she believed the bill to say. In the resolution that was heard in the last legislative session the two offices would actually be merged and the controller would serve at the pleasure of the treasurer. The language in this bill states that the Governor shall appoint a State Controller. There is nothing in this bill regarding the merger of the two offices.

Senator O’Connell explained that this was why the bill had not passed the second time and had been withdrawn to change the language.

Ms. Augustine reiterated that her presence here today was for the purpose of providing specific information regarding the office of controller. She stated her opposition to the merger of the two offices.

Ms. Augustine continued by citing that the controller is the final approving authority for the treasurer’s approximate $20 billion-per-annum investments and should not serve at the pleasure of any one except the public. As an elected official, the controller is accountable to no one except the citizens of the State of Nevada and this would ensure the integrity of the system. She also stated her belief that an appointment to this office would be in direct violation of the intent of the people of Nevada when they voted for term limits.

Ms. Augustine referred to her prepared testimony (Exhibit D.), specifically noting that salaries for appointed positions are traditionally higher than those of elected officers. Ms. Augustine remarked that she exceeds the minimum qualifications. She also referenced a letter from former controller Darrel Daines to Senator Raggio discussing qualifications for the office and the question of appointment versus election of the controller.

Ms. Augustine emphasized that Nevada is the only state where the Legislature establishes the state’s accounting principles. She called attention to the fact that there are no defined qualifications for the legislators who not only establish the qualifications of a controller but who also set down the state accounting principles. She stated it would seem if you were to prescribe the qualifications for the controller you would have to prescribe similar qualifications for the legislators since the accounting policy that the controller carries out is actually set by the Legislature. Ms. Augustine declared that her prepared testimony refuted each point brought up by the proponents of the resolution.

Chairman O’Connell commented that she understood Ms. Augustine was not initially opposed but queried if she would have an objection if the two offices were merged.

Ms. Ausustine said that was correct. The bill actually states that the Governor shall appoint the State Controller, but there was nothing in the bill that prescribed that the two offices would be merged. She pointed out that the original bill draft request and the former resolution that came before this body in 1995 and 1997 specifically stated that the two would be merged.

Senator O’Connell wondered if the controller would have any comments on the information that was given (Exhibit C) regarding the million dollar savings on the duplication of efforts. Ms. Augustine called attention to the fact that the office had only one management assistant/secretary to serve 35 people. Further, as far as cost savings, she stated she had mentioned the costs of an appointed official, that are all over $90,000 in the state for department heads, etc.; she also referred the committee to a list of those states that require qualifications, education and experience for the controllers. The low end is Montana at $52,000; however, the high end is Wisconsin at a $102,000. She expressed the opinion that the cost of appointing the State Controller would set it above the current cost.

Chairman O’Connell asked for further questions or comments.

Senator Neal remarked that a number of elected positions had been eliminated, so there was precedent for amending this section of the Nevada Constitution.

Ms. Augustine urged the members to review the prepared testimony, pointing specifically to the organizational chart of the office and its functions, duties, and responsibilities.

Senator O’Connell inquired if anyone else wished to testify either for or against S.J.R. 9.

Chairman O’Connell closed the hearing on S.B. 194 and S.J.R. 9.

Chairman O’Connell opened the work session and asked for discussion on

Senate Bill (S.B.) 182.

Warren B. Hardy II, Lobbyist, City of North Las Vegas, stated there was a discussion with the committee members regarding concerns expressed about the inclusion of hotel/motel in the definition of housing unit, and it has been decided to remove that language. In addition, he pointed out, there were questions from the Nevada Taxpayers Association in reference to the notification of citizens in the community.

The city’s intent is to notify the customers 3 months prior to this fee appearing on the water bill. As this will require an ordinance change, the public-hearing process will inform the public in this manner.

Chairman O’Connell inquired that with the language removed, the only additional language would be apartment complexes. Mr. Hardy agreed, further stating the definition of a housing unit would include single family dwellings, townhouses, condominiums, apartments or multiple family dwellings, and mobile homes.

Senator Care asked for an explanation of why apartments would be included in the definition but not hotels or motels, which also charge by the unit or room. Mr. Hardy replied that hotels and motels are not residences. The charge would be passed on to people who are really residents of North Las Vegas. The beautification of the city should be the responsibility of the city and its residents.

SENATOR PORTER SECONDED THE MOTION.

*****

Chairman O’Connell asked the committee to consider Assembly Bill (A.B.) 99.

ASSEMBLY BILL 99: Increases maximum allowable age for commissioned officers of Nevada National Guard. (BDR 36-745)

Senator Neal remarked that he had not been present when A.B. 99 was discussed, and asked for clarification.

Senator O’Donnell responded that the change allowed Nevada law to reflect the federal law.

Senator Titus interjected that the language for noncommissioned officers already existed.

SENATOR TITUS MOVED TO DO PASS A.B. 99.

SENATOR PORTER SECONDED THE MOTION.

THE MOTION CARRIED. (SENATOR RAGGIO WAS ABSENT FOR THE VOTE.)

*****

Senator O’Connell noted that the controller’s office was the only office that did not allow their people to work outside of the office (Exhibit E).

SENATOR NEAL MOVED TO DO PASS A.B.101.

SENATOR TITUS SECONDED THE MOTION.

Chairman O’Connell referred the committee to Assembly Bill (A.B.) 124, adding that the question regarding the language of section 19 had been answered and clarified; she then invited discussion.

ASSEMBLY BILL124: Makes various changes regarding certain funds and accounts. (BDR 31-666)

SENATOR NEAL MOVED TO DO PASS A.B.124.

SENATOR O’DONNELL SECONDED THE MOTION.

*****

Chairman O’Connell opened discussion on Assembly Joint Resolution (A.J.R.) 5, declaring, for the record again, that that her husband is a "Notch Baby."

SENATOR NEAL MOVED TO DO PASS A.J.R. 5.

SENATOR O’DONNELL SECONDED THE MOTION.

*****

The Senate Committee on Government Affairs was adjourned at 12:45 PM.

RESPECTFULLY SUBMITTED:

Julie Burdette,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

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