The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 1:45 p.m., on Friday, April 9, 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

STAFF MEMBERS PRESENT:

Angela Culbert, Committee Secretary

OTHERS PRESENT:

Chairman O’Connell gave a brief explanation of the previous day’s committee actions. She called attention to Senate Bill (S.B.) 541.

The chairman indicated the bill required information must be provided to candidates regarding ethics requirements and included provisions on training and actual cost.

Senator Neal pointed out S.B. 478 was utilized for provisions concerning ethics. He indicated if S.B. 541 was necessary it should have been included within the scope of S.B. 478.

Chairman O’Connell indicated the committee had discussed the importance of a candidate’s knowledge concerning ethics provisions.

Senator Neal questioned the two-thirds majority vote requirement. Chairman O’Connell indicated the majority vote was necessary because the candidates would be charged for the pamphlet to cover printing costs. She pointed out research has shown it is imperative to have a training process for people who hold office so they know the rules of ethics.

SENATOR O’DONNELL MOVED TO INDEFINITELY POSTPONE S.B. 541.

SENATOR CARE SECONDED THE MOTION.

Chairman O’Connell called attention to S.B. 309. A work session document (Exhibit C) had been provided to the committee for further information.

Chairman O’Connell gave a brief summary of the bill. She requested Kim Marsh Guinasso, Committee Counsel, Legal Division, Legislative Counsel Bureau, reminded the committee of the constitutionality issues involved in S.B. 309.

Ms. Guinasso indicated the Legal Division had been requested to review whether the proposed amendment (Exhibit C) would have any further effect on the bill’s constitutionality. While there is some language in the amendment that would be helpful, she noted, it does not change their ultimate opinion of the bill’s unconstitutionality as a whole.

SENATOR RAGGIO MOVED TO INDEFINITELY POSTPONE S.B. 309.

Chairman O’Connell indicated the measure was a part of the plan for the industrial state health insurance. She pointed out the bill would allow contracting with another organization in order to obtain insurance coverage. She recognized the request to amend the bill into the S.B. 544.

Senator Neal questioned whether an amendment had been proposed. Senator Raggio indicated there had been a request to remove the effective date. Chairman O’Connell indicated the committee had been requested to consider language in S.B. 316 that would say the provision is not contingent upon union membership.

Senator Neal suggested the committee wait for further indication of the Governor’s plan on the issue, as set forth in S.B. 544. He expressed concern with placing restrictions on the health insurance prior to the full discovery of the Governor’s plan, stating, "We do not want to tie his hand on things that he plans to do if he plans on trying to make the plan sovereign." He suggested the committee not take action on S.B. 316.

Senator Raggio stated S.B. 316 and S.B. 544 should be reviewed together. Chairman O’Connell drew the committee’s attention to S.B. 544 and the description listed in the work session document (Exhibit C).

Kathy Naumann, Lobbyist, Nevada Conference of Police and Sheriffs, supplied the committee with recommendations provided by the Audit Division of the Legislative Counsel Bureau (Exhibit D). She contended the recommendations give a good indication of what the "Fix the Plan Coalition" wished to have happen with the health care plan as well as providing a way to facilitate conversation.

Andy Anderson, Lobbyist, Nevada Conference of Police and Sheriffs, explained S.B. 316 offers state employees a choice, though, he noted any choice must be approved by the Committee on Benefits. The bill, he pointed out, would provide the Committee on Benefits alternative plans to address different needs. He recognized the 300-person limitation set forth in the bill, and explained the proposal does not refer to individuals, but to groups. Every plan, he stressed, must be approved by the Committee on Benefits to ensure reliability.

Chairman O’Connell said this issue has been brought to the Governor’s attention who has expressed no opposition to the measure. Mr. Anderson agreed the Governor’s approval was based upon the provision of final approval by the Committee on Benefits.

Senator Care questioned the reasoning behind the 300-person limitation. Mr. Anderson indicated the intent was to make the number large enough to exclude small groups for cost consideration. He explained large numbers provide better negotiation powers. He noted the target groups fall within the limitation provision.

Senator O’Donnell questioned whether allowing a large group out of the state plan would have any negative effect on the personal insurance fund. Mr. Anderson conceded to the negative impact on the personal fund, though noted it would create a competitive atmosphere in which the plan chosen must be comparable to the one currently in place. Mr. Anderson stated:

Chairman O’Connell responded to Senator O’Donnell’s inquiry by stating:

Senator O’Donnell questioned, "But they will handle the tail?" Chairman O’Connell stated, "Oh well, it has to be, it has to be handled first." Senator Neal suggested this to be clearly stated in the bill. Chairman O’Connell responded:

Ms. Naumann indicated she was speaking on behalf of Gary H. Wolff, Lobbyist, Nevada Highway Patrol Association, who, she noted, is the spokesperson for the "Fix the Plan Coalition." She indicated S.B. 316 does not have additional language to ensure the debt is reconciled before this provision goes into effect because it, in conjunction with S.B. 544, allows the new Committee on Benefits the ability and authority to reject requests for self-insuring if they believe the plan will be threatened. Consequently, she explained, the bill would only offer a free-enterprise alternative for the sake of competition and better coverage for state employees.

Senator Neal expressed concern the circumstances may be similar to those in the State Industrial Insurance Program in which groups were allowed to "pull out" of the plan and leave all of their liabilities behind, thereby creating a $2 billion deficit in the fund. The groups left behind, he noted, pay more as a result. He stated he supported the groups’ ability to leave the state health plan, but he stressed, the liabilities cannot be left behind, as well.

Ms. Naumann responded:

Senator Neal stated, "My understanding is that the money escaped under a privatized situation." Ms. Naumann indicated state employees are looking to the Governor’s committee for a solution. She stressed the necessity of caution.

Wm. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau, indicated the Audit Division did not have a position on S.B. 316, but wished to address S.B. 544. He expressed overall satisfaction with the bill. Drawing attention to section 20, subsection 2, paragraph (f), he noted this provision required an annual audit. Mr. Crews then expressed concern regarding a requirement in section 20, subsection 2, paragraph (g) to contract with an attorney to conduct an audit. He stated uncertainty as to the appropriateness of this provision, suggesting the annual audit contained a provision in which an independent public accountant should make a determination whether the program is in compliance with federal and state tax laws relating to employee benefits. He recommended the deletion of the first 2 1/2 lines of section 20, subsection 2, paragraph (g) and the inclusion of the remainder of paragraph (g) into paragraph (f). He stated the annual audit conducted by a public accounting firm should have the expertise and knowledge to take care of those concerns.

Robert J. Gagnier, Lobbyist, State of Nevada Employee’s Association, expressed concern regarding language in S.B. 316, and contended the bill was mandatory and not permissive. He drew attention to section 1, subsection 2 which reads, "The Committee on Benefits shall approve the contract unless the departure of the group from the state’s program would cause an increase of more than 10 percent." He pointed out the committee has no option but to approve the plan if they cannot prove that it has a 10 percent or more impact. He stressed if the provision in S.B. 316 is allowed, the state plan will, as a result, be left primarily with retirees as the groups are not required to take their retirees with them. He stated:

Chairman O’Connell called attention to section 1, subsection 1 of S.B. 316 which states, "If approved by the Committee on Benefits pursuant to this section …." She continued reading from section 1, subsection 1, paragraph (b), stating, "Employee benefit plan, as defined … that has been approved by the committee on benefits." She stressed a plan has to be approved first by the Committee on Benefits.

Mr. Gagnier contended the committee must first approve the plan, but they "shall" approve the plan if it meets the requirements. Chairman O’Connell pointed out this is stated after all of the other conditions have been met. Mr. Gagnier requested legal counsel would have to make this decision, though noted the State of Nevada Employee’s Association’s lawyer interprets the bill as mandatory upon the committee unless they could prove a group’s departure would impact the plan more than 10 percent.

Senator Raggio expressed agreement with Mr. Gagnier’s interpretation of the bill. He stated if the group leaving the state’s plan would not cause an increase of more than 10 percent for the remaining participants, then the committee has an obligation to approve the change in plans. He pointed out legislative legal counsel agrees with this interpretation, emphasizing the bill is not permissive if the percentage requirement is met. He stated, "In other words, if they make their group come in and they present their group and show that … the result would not be more than 10 percent of the cost of premiums from those remaining, then I don’t [do not] think there is any discretion. I think the Committee on Benefits, the way it is worded now, would have to approve it."

Chairman O’Connell questioned whether the proponents of S.B. 316 would have a problem with making the language permissive. Mr. Anderson stated they would not object to the change suggested, noting the Committee on Benefits should be the ultimate responsible party, therefore they should be concerned about those leaving the system. He suggested the committee could come up with rules to address the issue of retirees. He recognized Mr. Gagnier’s concerns, noting each group has a responsibility to their own retirees.

Prompted by Chairman O’Connell, Martin Bibb, Lobbyist, Retired Public Employees of Nevada, suggested the committee obtain exact figures regarding retiree impact on the state fund from risk management. He noted there are fewer retirees in the groups than there are active members. He pointed out that once a retiree becomes 65 years of age, that person’s primary health care insurance becomes Medicare and the state group insurance plans becomes secondary. Therefore, he explained, the premium amounts collected from the state group insurance plan drop once that person becomes 65 years old.

Senator Porter drew attention to section 1, subsection 1, paragraph (b) of S.B. 316 which states, "The Committee on Benefits shall improve an employee benefit plan unless the committee finds that the plan is not operated pursuant to such sound accounting and financial management …." He pointed out this language adds protection. The senator expressed agreement this provision would be permissive and could be included in S.B. 544. Chairman O’Connell concurred, noting if there was any question about the permissive nature of the language, it could be easily clarified.

Randy Waterman, Acting Chief, Risk Management Division, Department of Administration, indicated he shared Senator Neal’s concerns regarding the solvency of the plan should groups be allowed to leave. He expressed support of adding a provision clarifying the permissiveness of S.B. 316, stating it would give the Committee on Benefits the opportunity to exercise their judgement. He recognized the lack of definition of the term "groups," noting the most healthy people could be chosen, leaving behind the high-risk employees. He restated Mr. Gagnier’s concerns regarding groups being held responsible for taking their retirees when leaving the state plan. He contended a high percentage of retirees could adversely affect the plan. The loss ratios of the retiree population is higher than active employees, he pointed out, and, as a result, the rates would have to be raised to maintain solvency of the state’s plan.

Jon Hansen, Tort Claims Administrator, Litigation Division, Office of the Attorney General, expressed disagreement with the Legislative Counsel Bureau’s Audit Division, stating compliance with Employment Retirement Income Security Act (ERISA) is a legal question and would be beyond the scope of an auditing firm. He requested the retention of the language set forth in section 20, subsection 2, paragraph (g) of S.B. 544 which would recognize the legal concern in the measure. He expressed agreement with Mr. Waterman’s concern regarding the lack of definition of "groups," noting there are no requirements that a group cannot be made up of all low-risk people, thereby leaving behind the higher-risk employees.

Chairman O’Connell stressed the Committee on Benefits would not allow groups with an unfair composition to leave the plan. Mr. Hansen pointed out if the language is permissive, the committee can stop this from happening. If the language remains mandatory, he noted, groups consisting of white collar and young employees will attempt to leave the program.

Senator Raggio requested the committee review the composition of the board as set forth in section 18 of S.B. 544. He questioned whether there would be anyone on the board who is not a participant. He outlined the membership of the board and questioned whether the person provided for in section 18, subsection 1, paragraph (f) of the bill would be considered a nonparticipant of the state plan. He stressed there should be 2 members on the board who meet the nonparticipatory qualification.

Senator Porter questioned whether there was another bill that established the composition of the board. Chairman O’Connell recognized this to be true, noting the bill did not pass.

Senator Raggio restated his support for adding members to the board who are not participants of the plan and subsequently not affected by decisions made. He indicated these people would be objective to benefits and premiums levels. The senator suggested 2 members be added to section 18, subsection 1, paragraph (f) of S.B. 544 who are not participants in the plan and who have substantial, demonstrated experience. He noted this would require there be 8 members on the committee. Senator Neal concurred with Senator Raggio’s suggestion.

Kim Marsh Guinasso, Committee Counsel, Legal Division, Legislative Counsel Bureau, pointed out section 18, subsection 1, paragraph (f), says "The governor may appoint the executive officer of the public employees’ retirement system." She explained this position would be considered a state employee, and questioned whether this provision should be eliminated.

Senator Raggio indicated the membership of the board as set forth in the current bill does not provide for a nonparticipant’s inclusion. Ms. Guinasso pointed out the Governor could appoint someone to that position who is not an employee, but would be permitted to appoint the executive officer of Public Employees’ Retirement System (PERS).

Senator Raggio questioned whether the executive officer of PERS would be a participant in the plan. He suggested adding another subsection which designates 2 members, with experience, who are not participants in the plan. He recognized the board would have to consist of 9 people.

Chairman O’Connell drew attention to the work session document (Exhibit C) which contains a chart delineating the membership of the Committee on Benefits. She requested the committee address the issue of incorporating S.B. 316 into S.B. 544.

Senator Raggio suggested language be amended in S.B. 316 to make the measure permissive rather than mandatory. He recommended retaining the limitation that the committee cannot approve a group’s "bail out" if it would result in more than a 10 percent impact on the remaining participants. Senator Neal indicated this would create a question of equality. Senator Raggio agreed, though noted without this change, the committee would have to allow groups to leave if they met the 10 percent impact requirement. He said by making the bill permissive, it would disallow groups to be "cherry picked."

Senator Titus stated:

Senator Raggio indicated the provision would not let groups "bail out." Senator Titus questioned the reason S.B. 316 was being considered as an amendment to S.B. 544. Senator Raggio recognized the concerns of employee groups who want the opportunity to petition the Committee on Benefits to allow them to leave the state health plan. He stressed the importance of accommodating these concerns while allowing the board the discretion to make this decision.

Senator Neal questioned the current amount of the collected premiums. Mr. Waterman indicated the gross total of premiums is over $70 million a year. Senator Neal noted 10 percent of this figure would be $7 million.

The senator stated the proposed motion would include the amendments to add 2 members to the board who are not participants in the plan but who have substantial, demonstrated experience in risk management. He indicated the motion would also include the addition of S.B. 316 with the provision to allow a group with the same limitations to opt-out of the plan only upon the approval of the Committee on Benefits and not in any case if the group’s departure would cause an increase of more than 10 percent of the cost of premiums. Finally, the senator mentioned the proposed motion would include the suggestion given in testimony by Mr. Crews.

Senator Neal said:

Senator Raggio concurred stating his interpretation of the current measure was that the groups would have to be allowed to leave. He maintained the 10 percent applied for each group and was not on a cumulative basis.

Ms. Guinasso expressed agreement with Senator Raggio’s summation of the measure. She pointed out the 10 percent increase is on the remaining participants.

Senator Neal stated, "The 10 percent is on the remaining participants? So if you get one 10 percent, you can come in and get another 10 percent; is that what you are saying?" Chairman O’Connell agreed though pointed out it was up to 10 percent.

Senator Neal restated, "… You have got group A who gets 10 percent. They leave. So you have got group B. They can take out 10 percent on the remainder?" Senator Raggio said, "It would have to cause an increase … of 10 percent or more in the contributions as I understand it."

Senator Titus clarified, "… What we are saying is that we are going to let this happen if a group pulls out and by having them no longer part of the pool, the cost of all of us who are left in the pool, have our rates go up by 10 percent." This situation was confirmed by the Chairman. Senator Neal pointed out, "And then the next group will have our rates go up again by whatever percent."

Senator O’Donnell stated, "If you look at it differently, the people that are in the group now are actually subsidizing the state employees and they actually could get a better rate by 10 percent if you use the same logic …. If they are a better, healthier group, and they can get a better deal somewhere else … but they cannot get out of the system, that means that their group is basically subsidizing the other group to bring theirs down the 10 percent …."

Senator Porter stated S.B. 544, with the proposed amendments, is not the "omnibus fix bill." He recognized many other issues still need to be addressed, such as the premium and benefit structure.

Chairman O’Connell drew the committee’s attention to S.B. 28.

Senator Titus expressed appreciation to the committee for hearing this measure. She requested the Legislature pursue the issue at such a time when the Committee on Benefits is in a secure position to review the benefits. She withdrew the bill from consideration.

Senator Raggio indicated he would abstain on the vote as he was a director of a company regarding health insurance.

Senator Neal indicated there would no longer be a need for S.B. 316 as it had been amended into S.B. 544.

SENATOR NEAL MOVED TO INDEFINITELY POSTPONE S.B. 316.

SENATOR PORTER SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Next, the committee addressed S.B. 391.

Senator Porter indicated S.B. 391 had substantial changes which are reflected in the amendment draft of the bill as set forth in the work session document (Exhibit C). He requested local government supporters explain the amendments.

Lesa M. Coder, Lobbyist, Clark County, called attention to section 3, subsection 1 of the proposal (Exhibit C). She indicated the language, "If the governing body of a city annexes territory pursuant to the provisions of NRS 268.579 to 268.608, inclusive, that part of the territory at the time of annexation that consists of," would be deleted and replaced with, "In a county with a population of 400,000 or more." She drew attention to section 3, subsection 1, paragraph (a) of the proposed changes (Exhibit C). She explained the words, "of the" would be deleted along with the language, "or planned for." The addition in this section, she noted would be the words "as a" as set forth in Exhibit C. She explained in the next paragraph (b) the words, "after the annexation" would be deleted.

Ms. Coder called attention to section 3, subsection 2, paragraph (c), subparagraph (3) of the proposed S.B. 391 (Exhibit C). The language reading, "a range of density from 1 dwelling unit per 5 acres to/through 2 dwelling units per acre," would be deleted while the language, "range of 1 residential unit per 5 acres to 2 residential units per acre," would be added. At the end of section 3, she noted, language would read, "This act applies to areas of development pursuant to the provisions of 3.2(c) as of the effective date of this act."

Ms. Coder pointed out section 6 had been deleted as set forth in Exhibit C. She indicated while section 7 would apply to chapter 278B of NRS, the addition of "B" would once again be deleted as a result of discussion with bill drafters. She referred the committee to section 9 of the bill, noting the language change in which "equally" would be deleted and "on a fair share basis" would be added in its place. Also in section 9, she noted, the words, "by assessing any necessary fees," would be deleted. The word "Regional" would be added in section 9, subsection 1, paragraph (c) of the proposal to read, "Southern Nevada Regional Planning Coalition."

Ms. Coder pointed out the deletion of the word "development" in section 10 of the proposal (Exhibit C) with the addition of the word "negotiation." Section 11, she explained would substitute the word "may" for "shall." She indicated section 14 would include the language, "The provisions of sections 3,4, and 5 of this act expire June 1, 2004."

Chairman O’Connell requested the overall effect of the amendment be explained. Ms. Coder stated the first part of the provision concerns rural neighborhood preservations by allowing for a 330-foot buffer area. In the buffer area, she noted, the bill would provide a range of densities so that if there was a single-family home on 5 acres or less, "still within the 1 unit per 5 acres and up to 2 units per acre," the range of densities would be allowed within the buffer. She pointed out the range of densities would also be allowed as part of "the developed rural area." Ms. Coder drew attention to the sunset clause attached to this portion of the proposal which would allow the measure to be active for 5 years so as to evaluate its performance. If it should be necessary to modify this provision, she explained, it could be done within the next legislative session.

Ms. Coder explained the second portion of the proposed legislation begins with section 7, and provides a mechanism whereby local governments may establish an infrastructure plan. This plan, she noted, would allow for an economic contribution on a fair share basis, including any fees, for the placement of the infrastructure. She pointed out Clark County has major development projects in the less densely developed areas. She indicated the projects are several square miles in area and the county spends much money to extend the infrastructure necessary to support those developments. She noted smaller developers often wish to be included in the extension of the infrastructure, though there is currently no mechanism which would allow the county or the master developer to receive "fair share" participation in the cost of that infrastructure. She explained the second portion of the bill attempts to set up this mechanism.

Senator Care proposed a situation in which a city were to annex 100 acres with 200 homes; an average of 2 units per acre. He pointed out the figure could go to 2 1/2, noting 50 more houses could be built within this 100 acres. He proposed:

Ms. Coder stated:

Ms. Coder stated, "… I do not believe that to be the case. RE allows for 2 units to the acre, that would allow for the subdivision of all the property, all of it, including the 5-acre parcel within the RNP [rural neighborhood preservation]."

Senator Neal questioned where in the amendment (Exhibit C) the definition for rural neighborhood preservation could be found. Ms. Coder drew the senator’s attention to section 3, subsection 2, paragraph (c) of the amendment.

Senator Neal acknowledged section 10 of the amendment (Exhibit C) regarding the implementation of the infrastructure master plan which, he noted, may be accomplished through negotiation of master development agreements. He inquired into the reason the language has to be permissive in section 11 if the agreement exists Ms. Coder explained the county prefers the language be permissive as it would allow each jurisdiction flexibility in terms of the funding sources. She pointed out section 11 references provisions for funding mechanisms.

Senator Neal made the assumption the intent of the bill would be to create an ordered community. He questioned the ability to control requirements such as the 330-foot buffer zone if a master development agreement allows the governmental entities such flexibility. Ms. Coder indicated the two provisions were "separate and distinct" parts of the proposal. She stated there would be no objection to maintaining the word "shall" in section 11, though by substituting the word "may" would allow the local governments more flexibility.

Elizabeth N. Fretwell, Lobbyist, City of Henderson, pointed out a specific section reference in the proposal to the language "assess any fees as necessary." The enabling provision, she noted, would provide options which could be used in the process. She pointed out if the language were to read, "shall," then all of the options would have to be used, though they may not all be needed. Conversely, she recognized, more options may be needed.

Senator Neal questioned whether a master development agreement involves a buffer zone of 330 feet. Ms. Coder stated it does not.

Senator Titus recognized the City of Henderson and the City of North Las Vegas were considering annexing a lot of land. She questioned how S.B. 391 would limit these proceedings in terms of zoning and planning.

Ms. Fretwell stated:

Senator Titus questioned, "So out there in that annexed territory, or even if it is not newly annexed, then you create a buffer zone around an RE area. That would be a 330-foot buffer zone. But there is nothing in here that would keep you from changing zoning or master plan for anything beyond 330 feet out there."

Senator O’Donnell explained a situation in which a developer wanted to create a higher density than the existing half-acre homes. He pointed out the developer was required to put half-acre homes on the exterior, facing out towards the other homes in the neighborhood, though on the interior, there was a higher density on a smaller lot. He pointed out the county commission is allowing this though they do not have the codification in the law requiring this be done. He expressed concern at the diminished acreage from 1 per 2 parcels. He questioned the reason for needing the 330-feet buffer zone in light of the newly diminished acreage. He said, "You would have half-acre lots on the front side, and then half-acre lots on the backside and the people on the backside would be facing a smaller density unit home on the interior." He suggested the buffer zone would be of better service at 150 feet.

Ms. Coder indicated Senator O’Donnell’s observation to be accurate in terms of Clark County’s decision-making process regarding buffering and stepping down densities. She pointed out every jurisdiction has not acted similarly. She suggested S.B. 391 would set a standard for buffers and density procedures. Typically, she explained, there would be one- or two-lot depths of buffering occurring. She stated it was thought that 330 feet was a good number because properties are subdivided by 330 and 660 parts. She contended the lots are not always back to back, but they are often side to side.

Senator O’Donnell drew attention to a problem existing in the Lake Tahoe Basin in which lot sizes and shapes have different topographies. He suggested some flexibility should be allowed to the county commission based on differences in land layout. Ms. Coder questioned whether Senator O’Donnell was suggesting a range for the width of the buffer. Senator O’Donnell recommended a rule of presumption be added to allow deviation from the provision by proof of topographical necessity. He indicated the county commission should not be tied to requirements that do not suit the layout of the land.

Ms. Fretwell explained in discussion on an Assembly bill, there had been concern regarding a similar provision. She indicated the attempt was made to build in a 25 percent range so as to, without compromising the integrity of the project, allow flexibility. She suggested this may work to address Senator O’Donnell’s concerns as well.

Prompted by Chairman O’Connell, Senator Porter indicated he would not have a problem using a similar provision to address this concern.

SENATOR PORTER MOVED TO AMEND AND DO PASS S.B. 391.

Ms. Fretwell stated for the record:

Chairman O’Connell indicated the bill needed to receive a final committee action by the end of the meeting, noting further amendments could be reviewed later in the process. Senator Porter indicated he would go forward with the motion with the knowledge further amendments may be proposed.

Ms. Coder suggested possible language to address Senator O’Donnell’s aforementioned concerns. She stated the bill in section 5, subsection 1, paragraph (b), could read, "The 330-foot minimum buffer width may be lessened by no more than 25 percent for topographic conditions and or geographic boundaries may warrant a lesser depth." Senator Porter agreed to include this language in his motion.

SENATOR CARE SECONDED THE MOTION.

Senator Porter reminded the committee the bill was intended to provide protection for families living in rural areas that are rapidly becoming urban.

THE MOTION CARRIED UNANIMOUSLY.

*****

The committee reviewed S.B. 418.

Senator Titus explained this provision referenced the false-claim act based on federal statutes. She recognized many other states either have such a statute or are in the process of drafting a similar measure. She reminded the committee S.B. 418 would give the fraud units another tool for penalizing those attempting to defraud government and steal taxpayers dollars. The senator said it had originally been drafted to affect the local level, noting this was too much of a burden on the local prosecutors. She explained the amendment would narrow the provision to affect only the attorney general at the state level.

Chairman O’Connell requested the committee address S.B. 475. She called attention to a section-by-section analysis of the bill as well as a formal amendment included in the work session document (Exhibit C).

Steve G. Holloway, Lobbyist, Associated General Contractors, Las Vegas Chapter, indicated he was representing both the northern and southern chapters of the Associated General Contractors (AGC). He read from the section-by-section analysis (Exhibit C), noting the bill would allow both the design build and the traditional method of contracting. He recognized the bill was a compromise measure and supported by the interested parties, as well as the public works agencies throughout Nevada. He pointed out three areas need to be further addressed. He called attention to section 2, subsection 2 of the proposal (Exhibit C) which provides there would be no more than one public works projects in a fiscal year for each of the public agencies in Clark County, between $5 million and $30 million.

Chairman O’Connell questioned whether there was a provision that required review of the process after a trial period. Mr. Holloway recognized this to be correct and drew attention to section 37 which establishes an interim advisory committee. He pointed out an interlocal committee had been reviewed as an option, but, he noted, the structure requirements were such that they did not allow for the desired composition. He indicated the committee will be reviewing the use of design build and will make recommended changes in the next legislative session. If recommendations are not made, he pointed out, the legislation will sunset in the year 2003.

Mr. Holloway drew attention to a change proposed to section 2, subsection 4, paragraph (b), subparagraph (5) of the proposal (Exhibit C) to allow design build to be used for the "restoration, enhancement or development of wetlands," as recommended by Ducks Unlimited. He noted this same group is requesting further amendment, stating although the AGC does not believe it is necessarily appropriate, they do not object to adding a new subsection 5 to section 2 of the proposal which would state, "A public body may enter into an agreement with a nonprofit organization to design build wetland restoration, enhancement, or development projects."

William A. Molini, Lobbyist, Ducks Unlimited Incorporated, Western Region, stressed the proposed amendment would add a substantial public benefit, explaining Ducks Unlimited is a nonprofit organization whose purpose is for the enhancement of wetlands and the associated wildlife resources. He remarked since the organization’s inception in 1937, they have raised more than $1.3 billion for wetland enhancement. He explained the amendment would allow Ducks Unlimited to become involved in the restoration of the Las Vegas Wash wetlands by permitting a public body to enter into an agreement with their core of professional registered engineers who conduct wetland design work all over the west coast. Ducks Unlimited, he noted, could provide this service to public bodies at a substantial savings.

Mr. Holloway drew attention to section 13 of the proposal (Exhibit C), noting this language duplicates the approved language in S.B. 437.

Mr. Holloway suggested the language in section 13 be deleted in its entirety. The committee indicated it would be better to retain section 13 to ensure its position in statute. He indicated the aforementioned provisions are the only amendments not previously discussed before the committee. He restated that all of the concerned parties are in accord with the proposed language.

James J. Spinello, Lobbyist, Clark County, expressed agreement with the amendments presented by Mr. Holloway, as well as the language proposed by Mr. Molini.

THE MOTION CARRIED UNANIMOUSLY.

*****

Next, the committee discussed S.B. 530.

Marvin A. Leavitt, Lobbyist, City of Las Vegas, provided the committee with a list of proposed revisions to S.B. 530 (Exhibit E). He reminded the committee of concerns expressed in the previous hearing regarding internal problems with the bill. He pointed out while the bill was originally drafted in chapter 268 of NRS, the general law relating to cities, it is not the proper place to address assessment districts. He recommended chapter 271 of NRS, relating to improvement districts, would be a better place for the provision to reside. He drew attention to proposed revisions (Exhibit E), and maintained the attempt has been made to incorporate the suggestions made at the hearing. He noted many sections in the bill can be deleted as they are currently referenced in similar form in chapter 271 of NRS. He justified the advantages to chapter 271, explaining many assessment districts have used this chapter, and, as a result of changes made, it is well defined.

Senator Raggio questioned which parties have agreed to the proposed revisions (Exhibit E). The senator noted the bill came from the Downtown Improvement Association, of Reno. Mr. Leavitt stated the association has seen the proposal, noting they have further suggestions to make. He indicated Ms. Vilardo has also had the opportunity to review the suggestions and is in agreement.

Senator Raggio questioned whether the proposal would authorize the inclusion of other cities and counties. Mr. Leavitt concurred the recommendation to make the provision general law has been added.

William H. Osgood, Lobbyist, Downtown Improvement Association, confirmed he had reviewed the changes and he commended Mr. Leavitt’s work. He indicated he had minor revisions to request as set forth in the written proposal (Exhibit F). He stressed by deleting section 10, subsection 2 of the original bill, the essence of a business improvement district is changed. He suggested a revision (Exhibit F) to put in a process to initiate the creation of business improvement districts with a governing body by a signed petition. He expressed willingness to give up the ability to use assessment as assessed value, recognizing this would have constituted a tax. He expressed agreement to implement the assessment valuation used in determining chapter 271 of NRS. He explained the revision (Exhibit F) proposes that no single property owner may represent more than 10 percent of the ownership within the business improvement district. He pointed out this would allow the plan to be formulated by a nonprofit organization while allowing the petitioning process. He explained the nonprofit can go to the property owners with a petition and a specific plan delineating the activities that will be part of the business improvement district.

Through the deletion of section 9 of the bill as proposed in Exhibit E, Mr. Osgood recognized, the governing board would be the authorized entity to prepare the plan thereby disallowing this option to the property owners or their association. He expressed the importance of expanding the language as it would provide necessary representation of the needs of the ratepayers. He drew attention to section 16 of the his revision (Exhibit F) which allows a municipality to contract with a nonprofit in creating a business improvement district. If the petition is initiated based on a plan involving nonprofit management of the district, Mr. Leavitt’s proposal (Exhibit E) would provide the governing body the option to initiate the district though a process other than that of the plan and the petition. This would, Mr. Osgood noted, allow the governing body to change the plan in midstream. The language in Exhibit F, he explained, would address this problem.

Chairman O’Connell expressed disagreement with the proposed revision (Exhibit F) to section 10, subsection 2 of the bill which would require the initiation and the petition be supported by half of the people with one property owner representing 10 percent of the ownership. She stressed there should be more participants in agreement with the plan, and indicated 10 percent is too high a percentage for representation by a single property owner.

Senator O’Donnell suggested the 10 percent provision is too low. He proposed a situation in which one casino owned an entire block on one side of the street and on the opposite side there were 6 businesses. He indicated the casino owner would only have a 10 percent vote regardless of larger property ownership.

Chairman O’Connell concurred with Senator O’Donnell’s summation and restated her opposition to the 10 percent provision. She voiced it would give too much power to one person.

Mr. Leavitt pointed out the revisions submitted by Mr. Osgood (Exhibit F) and compared it to the amendments he, himself, had proposed (Exhibit E). He drew attention to section 13 which provides that one-third of the people can stop the creation of the business improvement district.

Chairman O’Connell pointed out many people lease business space. She asked whether the proposal contained a provision in which the person who is paying the tax will not have a vote to protest the district. Mr. Leavitt indicated the amendment provides for special notice to the tenant, although the property owner is the person upon whom the lien is going to be filed and the assessments made available. He said he could not think of an easy way to bring the vote directly to the tenant when someone else owns the property.

Chairman O’Connell expressed concern for a situation in which a person with a long-term lease would be responsible for the assessment in the case the property owner is considered absentee. She indicated most of the downtown property is leased.

Senator O’Donnell stated a person owning one acre should have one acre’s worth of vote. He said the proportion of the concerned acreage to the amount of property owned should determine the percentage of vote. He voiced:

Mr. Osgood stated, "The language that exists in [chapter] 279 [of NRS] regarding petition and not provisional basically is 66 2/3 percent of at least 90 percent of the property there, which works out to 59.4. And that is the threshold that exists in [NRS chapter] 271 for the petition process."

Senator O’Donnell clarified it would be 59 percent. Mr. Osgood concurred stating:

Senator O’Donnell recognized, "… So what you really want to do is you want to identify the area that the business owns that wants to be in the SID." Mr. Osgood indicated this was correct, noting, "In other words you would define that and since property assessment is not going to be used as a criteria, it would be square footage or in the case of a business improvement district that is dealing with cleaning sidewalks and providing security probably linear frontage could be the best delineator."

Senator O’Donnell stated, "That makes sense as long as you did a 100 percent of the ownership. So if he had 660 feet of lineal feet, then he would have 660 feet of vote, if you will, compared to the other votes. I would go for that, but I am having a hard time with the 10 percent thing."

Senator Raggio commented:

Senator O’Donnell stated, "I could live with that knowing this is going to be limited to the list of things on the front side of this page [Exhibit E]."

Senator Raggio questioned, "I wanted to know why you have taken out some of these items in the list in section 7 [Exhibit E]."

Mr. Leavitt explained:

Senator Raggio recognized, "And then you put in a provision for dissolution if it is not working that well, or there are some problems." Mr. Leavitt stated, "That is correct."

Senator Titus expressed agreement with Senator Raggio. She indicated the language meets her concerns and maintained it is a good example of a public-private partnership. She stated the provision is needed in Downtown Las Vegas, as well.

Chairman O’Connell stated for the record:

Chairman O’Connell stated, "Well, I think they are going to answer the telephone and be delighted that somebody else is going to pay for this …."

Senator O’Donnell indicated he would like Mr. Leavitt to state for the record his position on the proposed revisions set forth in Exhibit F.

Mr. Leavitt stated:

Finally, the chairman called the committee’s attention to S.B. 342. The committee was provided a copy of the addendum to the work session document (Exhibit G).

Warren B. Hardy II, Lobbyist, Associated Builders and Contractors of Southern Nevada, stated, during the original hearing, questions arose regarding certain language to which amendments had been drafted to address (Exhibit G). He indicated some concern had been expressed with regards to the provision of benefits as the wording of the proposal might violate the ERISA federal law requiring all employees receive the same benefits. He stated the amendment was a result of an agreement between management and labor. He stated the proposed change (Exhibit G) will allow the worker who is being employed as part of the project labor agreement (PLA) to have the ability to choose between the benefits package currently provided by the nonunion employer and the benefit package the labor organization offers.

Mr. Hardy explained the second amendment (Exhibit G) concerned hiring through union hiring halls. He noted testimony had reflected it is a standard practice that if a nonunion contractor runs their employees through the hall, they can then be hired back onto the public works project. He indicated amended language would propose all of the employees would be run through the union hiring hall based on the agreement to use the employees on the job.

SENATOR NEAL MOVED TO AMEND AND DO PASS S.B. 342.

SENATOR RAGGIO SECONDED THE MOTION.

Senator Neal withdrew his motion, stating he thought testimony had reflected the amendment had been agreed upon .

Richard C. Daly, Lobbyist, Laborers International Union of North America 169, expressed concern with the proposed changes. He stated the proposed provisions (Exhibit G) would interfere with, and be preempted by, the National Labor Relations Act (NLRA). He told the committee of the Boston Harbor Decision and cited section 7 of the National Labor Relations Act which, he explained, guarantees employees the right to choose to bargain collectively. He stated mandatory subjects of bargaining are benefits, wages, and working conditions. Mr. Daly maintained if S.B. 342 is passed it will impose upon the federal law, noting any state law that infringes upon the negotiation portions of the National Labor Relations Act, will be ripe for litigation. He stressed the proposed provision will be easily challenged.

Mr. Daly explained the Boston Harbor Decision (Building and Construction Trades Council v. Associated Builders) allows that a PLA is a legal section agreement in the NLRA and authorizes construction unions and employers to negotiate a prehiring agreement. He stated this decision was an amendment given to construction unions in 1959 by Congress due to the difficulties specific to the construction industry. He pointed out if a state law is passed which diminishes a mandatory matter of bargaining, the statute will be subject to challenge. He requested the committee not pass the legislation, noting it will result in litigation.

Mr. Hardy contended the amendment would not interfere with the ability to negotiate issues of bargaining, but would set forth guidelines. He stated there should not be an agreement permitted by law that would force an employer to choose between providing benefits to their employee or being double charged for the benefits. He maintained there is sufficient national case law to indicate guidelines can be set forth concerning the PLAs. He stressed they have consulted with 4 labor attorneys who agree to the firm legal standing of the issue.

Mr. Daly stated:

Senator Porter stated his preference would be to take action on individual amendments, noting he could philosophically agree with the first amendment regarding health insurance, but could not support the second proposal.

Senator Raggio stated there are PLAs currently in Nevada authorized on public works by executive order of the Governor. He pointed out this was not objected to as interfering with the process, and he questioned whether the Legislature could modify an executive order. He explained the executive order mandates there must be PLAs on public works projects.

Mr. Daly clarified the executive order indicated a public works project must show cause not to have a PLA. He pointed out it gives them the ability to review PLAs as an option.

Senator Raggio requested legal counsel comment on the issue, stating Mr. Daly’s summation of the executive order does not meet its intent. He questioned the reason the Legislature could not modify the executive order.

Ms. Guinasso questioned Mr. Daly’s argument regarding the preemption by NLRA. Mr. Daly explained:

Ms. Guinasso interjected, "This bill relates to public works only, and thus the state is only dictating what project labor agreements can include pursuant to its own public works. So the state would be acting as proprietor in this case versus regulator. They are just saying what their own project labor agreements can say."

Senator Neal pointed out the PLA limits the NLRA. He commented a state statute cannot supercede a federal law.

Ms. Guinasso explained project labor agreements are not required and the state has the ability, but is not mandated to enter into one. Senator Neal contended the NLRA sets out a list of bargaining tools, and Mr. Daly’s testimony reflected the proposal would limit bargaining in these areas.

Mr. Daly stated:

Ms. Guinasso questioned if this applies to both employees who are not union members as well as union members. Mr. Daly responded:

Ms. Guinasso clarified, "This is not regulation. This is the state as proprietor so the state is essentially negotiating pursuant to direction from the Legislature by this act."

Prompted by Senator Titus, Ms. Guinasso explained the process applies to the state and its political subdivisions, therefore it is still the state negotiating the agreement.

Senator Raggio stated:

Ms. Guinasso indicated she was unsure of the correct answer. Senator Raggio requested an answer to the question regarding the efficacy of an executive order in a state.

SENATOR RAGGIO SECONDED THE MOTION.

Senator Care indicated he has been advised by the Legislative Counsel Bureau to abstain on all votes pertaining to S.B. 342.

Senator Neal requested an explanation of the amendment. Mr. Hardy said the bill currently states that if the benefit package provided by the union is greater in cost than the benefit package provided by the private, nonunion contractor, then the nonunion contractor receives a credit. He explained if the union benefit package is $6 an hour and the nonunion package is $4 an hour, the $2 an hour difference between the union package and the nonunion package would be paid directly to the employee. The amendment (Exhibit G), he noted, would allow an employee who works for a nonunion contractor and who is now being employed on a PLA job the choice between the benefit package provided by the labor organization and the benefit package received with the current nonunion employer with the additional $2 per hour. If there is no benefit package provided, he noted, the employee either accepts the union benefits or is paid the full $6 per hour for those benefits.

Senator Porter indicated his main concern was the employees were covered by health insurance. He inquired as to whether the provision allowed the employees an "out" regarding health care.

Mr. Hardy stated:

Senator Titus proposed a situation in which a nonunion employer was not providing a benefit package, and the employee wanted the extra $6 per hour rather than accepting union benefits. Mr. Hardy stated the employee has the ability to request union benefit coverage, noting nonunion employers are not required to provide benefits.

Senator Porter explained his understanding of the amendment is that if the employee has health care benefits, the nonunion employer should not have to double pay. Mr. Hardy concurred. Senator Porter noted the bill does not provide a reason not to purchase health care. Mr. Hardy agreed, and explained if an employee currently has a benefit package paid by the nonunion employer, and the company works on a project labor agreement, the employee would be able to choose between the union benefit package and his current benefit package. If the choice is to keep the current benefits, the employee would be paid the dollar amount difference between the two packages. He explained if the current employer does not provide benefits, then the choice is to receive either the full dollar amount of the union benefit package established by the project labor agreement or the union benefit package.

Prompted by Chairman O’Connell, Mr. Hardy stated if the PLA requires benefits, then the employee does not have any choice but to accept the union benefit package. Chairman O’Connell questioned if there was a PLA that did not require a benefit package.

Danny L. Thompson, Lobbyist, Nevada State American Federation of Labor-Congress of Industrial Organizations, stated:

Chairman O’Connell questioned whether a project labor agreement is always a union agreement. Mr. Thompson said a project labor agreement is an agreement that would allow a nonunion contractor to utilize union hiring halls and their trained people without having to sign a master agreement.

Chairman O’Connell recognized, "I know that is the way that we do it here, but a project labor agreement is always a union agreement, isn’t [is not] it?" Mr. Thompson contended, "I don’t [do not] think you can really say that because … on the water authority job right now, 50 percent of the contractors are nonunion and they are currently doing the work." Chairman O’Connell pointed out, "But they are still under the project labor agreement." Mr. Thompson responded

Chairman O’Connell stated, "I understand that, but you still are under the benefits…." Mr. Hardy continued, "You are still obligated to the terms of that project labor agreement. And if that project labor agreement requires benefits, which they do to my knowledge, then you are required to provide benefits. So if the private individual, private company does not offer a benefit package, then the individual has to choose the union benefits." Mr. Thompson stated, "Except that, if I understand this amendment … then the person would have the option to choose whether or not they took the benefits or not." Chairman O’Connell noted, "But the employee would have to be paid the difference, whatever the difference was." Mr. Hardy stated, "That is correct, and if the project labor agreements requires benefits, then he would be required to choose … that would be the choice."

Senator Raggio recognized:

Mr. Hardy stated, "That is correct."

Senator Raggio continued:

Mr. Daly stated:

Senator Porter stated:

With no further business before the committee, Chairman O’Connell adjourned the meeting at 4:15 p.m.

RESPECTFULLY SUBMITTED:

Angela Culbert,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

DATE: