The Senate Committee on Government Affairs was called to order by Chairman Ann O'Connell, at 11:00 a.m., on Tuesday, May 25, 1999, in Room 2144 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 Lawrence E. Jacobsen, Western Nevada Senatorial District

STAFF MEMBERS PRESENT:

Angela Culbert, Committee Secretary

OTHERS PRESENT:

Chairman O’Connell requested testimony on Senate Joint Resolution (S.J.R.) 22.

Alice A. Molasky-Arman, Commissioner, Division of Insurance, Department of Business and Industry, provided the committee with an informational packet from the National Association of Insurance Commissioners (Exhibit C). She explained S.J.R. 22 has been sought as a mechanism for voicing the concerns of Nevada to the United States Congress regarding the financial modernization bills, House Resolution (H.R.) 10 and Senate (S.) 900, currently under consideration. She indicated the measures before Congress are necessary to modernize banking regulations in financial institutions; however, she noted, they go "too far." She pointed out almost every commissioner in the country is currently in Washington, D.C., visiting their delegations. She said time has been purchased on commuter radios along with two full-page advertisements have been purchased to protest provisions in the measures that will preempt insurance divisions’ regulation of state laws.

Ms. Molasky stated H.R. 10 and S. 900 are clones of the Employment Retirement Income Security Act (ERISA) and would leave consumers without an agency to address their problems. Citing figures regarding the necessity for a state regulatory agency, she explained 4 million people nationwide seek the assistance of insurance commissioners, noting in Nevada, the insurance commissioner’s office receives 4,000 telephone calls per month for inquiry purposes. Ms. Molasky pointed out in 1998, Nevada’s insurance division had 2,371 formal complaints, of which, 1,255 were resolved in favor of Nevada consumers. She stated $3,126,000 in benefits and services were recovered for consumers in 1 year. With the current provisions in H.R. 10 and S. 900, she stressed, the ability to obtain these results would be taken away.

Ms. Molasky explained H.R. 10 and S. 900 would prohibit the states from regulating insurance activities of banks except in certain sales practices. Banks and bank-affiliated insurers would, therefore, be exempt from the laws that are applicable to all other insurers. She opined this would set a separate standard, noting without the state’s ability to hear the plight of consumers, litigation will be the result. The same cases that state commissioners have been able to resolve favorably, she pointed out, would not be provided with a federal agency resolution process. She stated there is no replacement for the state insurance commissioners.

Ms. Molasky drew the committee’s attention to Exhibit C, indicating it outlines the various consumer protection laws that would be preempted by the proposed measures such as the Unfair Trade Practices Law, the Unfair Claims Practices Law, licensing of agents, licensing of third-party administrators, and the ability to determine whether the parties are financially solvent when there is a merger or an acquisition of insurers. She urged the committee to adopt S.J.R. 22 to send Congress a message that Nevada wishes to preserve their authority to represent the consumers of the state in insurance matters.

Senator Care questioned whether the Governor or any members of Nevada’s Congressional Delegation have made a public statement regarding the legislation pending in Washington, D.C.

Ms. Molasky indicated guidance had been sought from the Governor’s Office prior to requesting S.J.R. 22. She stated no comment had been given on the matter, noting it was explained that there were only concerns regarding the regulation of insurance. Recognizing that financial modernization is necessary so the banking and financial institutions can compete on an international level, she contended the intent of the measure was to preserve the state’s rights.

Senator Raggio stated these issues have arisen in the past. He expressed appreciation for the information provided in Exhibit C, noting it outlines the laws being preempted and the state’s inability to deal with certain issues.

SENATOR RAGGIO MOVED TO DO PASS S.J.R. 22.

Chairman O’Connell directed the committee’s attention to Senate Bill (S.B.) 31.

The chairman drew attention to the unfinished business document (Exhibit D), which details amendments offered by the Assembly. She stated the sponsor of S.B. 31 has agreed to the amendment.

Senator Raggio abstained from voting on the amendment as it had been proposed by a member of his law firm.

Next, the committee reviewed S.B. 68.

Senator Lawrence E. Jacobsen, Western Nevada Senatorial District, indicated the amendment proposed was intended to resolve a conflict with S.B. 183.

The committee reviewed S.B. 191.

Senator Titus indicated she agreed with the amended definition of "project of significant impact" from 300 planned-unit developments to 500. She pointed out the change attempted to bring the school district into the planning process as well.

Chairman O’Connell requested the committee address S.B. 312.

The chairman questioned whether the sponsor of the bill objected to the amendment.

Ann Cathcart, Special Assistant Attorney General, Office of the Attorney General, expressed neither support nor opposition to Amendment No. 839, stating the office is prepared to follow the direction of the Legislature.

Senator Raggio pointed out the changes made the bill more substantive. He read from section 1, subsection 3, paragraph (b) of the amendment and questioned which corporations or limited-liability companies were being referenced.

Tom R. Skancke, Lobbyist, Las Vegas Convention and Visitors Authority, explained the convention authority makes grants and contributions to organizations in Clark County. He pointed out questions had been asked about whether the organizations, to which elected officials are appointed, operate under the open-meeting law. The attorney general’s office, he noted, has issued an opinion which would exclude organizations, such as the chamber of commerce, from complying with the open-meeting law if ex officio members, dues, and subscriptions were involved. Specifically, he stated, the question has arisen as to whether the grants and contributions the visitors authority makes to organizations to which elected officials are appointed would necessitate operation under Nevada’s open-meeting law. He explained the proposed amendment would require organizations receiving money from the government to operate under the open-meeting law. In the Assembly, he pointed out, a provision was added to provide organizations, receiving 10 percent or more of their operating budget from a body of government, be subject to the open-meeting law. Prompted by Senator Raggio, he indicated provisions would not include organizations which require dues and subscriptions.

Senator Care pointed out the decision to make a grant or a contribution would come under public scrutiny as it must be discussed at an open meeting. Mr. Skancke concurred.

Senator Neal clarified the definition of a public body would be expanded, by the amendment, to include corporations and limited-liability companies that receive more than 10 percent of their funding from a public agency. Mr. Skancke concurred. Senator Neal questioned if R and R Advertising, who receives a large contract from the convention and visitors authority, would become a public body.

Mr. Skancke explained the amendment would provide that if an organization has appointed/elected officials on the board, and receives contributions, grants, or direct budget support comprised of more than 10 percent of the total budget from any government entity, then they must operate under the open-meeting law. He stated the bill does not concern vendors. For example, he noted, if the city council appoints one of their members to sit on a board, and then the board receives a grant or a contribution from tax dollars in excess of 10 percent of the total operating budget, then the board must operate under the open-meeting law.

Senator Porter stated that there are many special events held with a number of groups receiving funding. He questioned whether the golf tournament in southern Nevada, which receives a couple of million dollars from the convention authority, would be subject to the open-meeting law. Mr. Skancke responded they would be subject to the law if their board has elected officials appointed by the city council or the county commission.

Senator Porter questioned if the chamber of commerce would have to operate under the open-meeting standards if they received a grant from the City of Las Vegas. Mr. Skancke recognized the chamber would be subject to the open-meeting law if the organization has officials appointed as members of the organization and if 10 percent of their total operating budget comes from the city. He called attention to the attorney general’s opinion that would exempt these requirements for ex officio members, and organizations with dues.

Senator Porter clarified that smaller local governments providing grants to organizations such as a chamber of commerce, a cultural center, or a hospital, would be subject to open and public meetings if an elected official is on the board, and the money received makes up more than 10 percent of their total funding. Mr. Skancke pointed out the official must be appointed to the board by an elected body.

Senator Porter expressed concern about approving the amendment with little time remaining in the session to allow the affected agencies and groups to testify on the issue.

Senator O’Donnell stated he was uncomfortable with the amendment, noting some agencies could be placed in a precarious position in which their operating procedures must change to accommodate the provision.

Senator Neal clarified the amendment would provide that if a public body appoints a member to a board, and the affiliated organization receives more than 10 percent of its funding from public money, then the organization would be subject to the open-meeting law. He stated the amendment would protect the expenditure of public funds.

Senator Raggio said if a corporation or limited-liability company received more than 10 percent of the total operating budget from a public entity, the entity would have the right to appoint an elected official to the board. He explained if a public entity contributed more than 10 percent of the operating expenses, but did not have the right to appoint someone to the board, then the corporation or company would not have to follow the open-meeting law. He said an elected official could become a board member, but unless he or she was appointed to that position, the open-meeting law would not apply. He stated there would have to be an agreement whereby the corporation or company received the money and, in turn, gave the right of appointment. Mr. Skancke concurred.

Senator Raggio agreed with Senator Neal stating if an organization desires to receive public funds in the amount of 10 percent of their total operating budget, and the entity appoints an member to the board, they should be subject to open-meeting laws.

Chairman O’Connell stated the proposal would provide accountability for taxpayers dollars.

Senator Porter pointed out he did not have a conceptual problem with the amendment, but expressed his concern regarding the number of organizations which would be affected by the proposal. He questioned the reason the proposal has been made to the committee in the last days of the session without the proper debate and discussion.

Chairman O’Connell indicated the matter had been discussed in the Assembly, and it was the Senate’s obligation to concur or not concur with the amendment.

Senator Porter indicated, as a former member of the city council in Boulder City, he was assigned to many boards. He stated his dissatisfaction for the measure without the proper discussion as it would impact many people in a short period of time.

SENATOR RAGGIO SECONDED THE MOTION.

THE MOTION CARRIED. (SENATORS PORTER AND CARE VOTED NO.)

*****

Chairman O’Connell called attention to S.B. 323.

The chairman indicated the sponsor of the bill did not oppose the amendment.

Michael J. Griffin, Lobbyist, Nevada Manufactured Housing Association, concurred with the chairman’s explanation that the amendment narrows the scope of the provision and contains more restrictions.

Senator Raggio asked for an explanation of the additional restrictions and questioned whether any of the provisions, previously approved by the Senate committee, had been removed. Mr. Griffin explained the amendment exempts the provisions of the bill in regards to the boundaries of a historic district. He drew attention to the additional requirement that a home had to be constructed within the 5 years immediately proceeding the date upon which it is to be affixed to the residential lot; thereby, making the provision more restrictive than had previously been determined by the Senate. Mr. Griffin pointed out the amendment would require the size of the home to be at least 1,200 square feet unless the local governing body approves a lesser amount due to the size of the lot or the size of the single-family residential dwellings within the immediate vicinity. Originally, he noted, the bill had a minimum of 960 square feet.

Senator Raggio questioned whether the provision concerning the slope of the roof had been removed. Mr. Griffin concurred with the senator’s interpretation that it had been replaced by the language in section 3, subsection 2, paragraph (a), subparagraph (3) of the amendment; however, he noted, the provision was subject to be "established by the governing body."

Mr. Griffin restated the amendment would exclude manufactured homes from historic districts.

SENATOR O’DONNELL SECONDED THE MOTION.

*****

Next, the committee reviewed S.B. 391.

Senator Porter expressed concern that, as the sponsor of the proposed legislation, he had not been advised in advance about certain items before the committee, and, therefore, had not been able to discuss the matter prior to the meeting.

SENATOR O’DONNELL SECONDED THE MOTION.

*****

Chairman O’Connell called attention to S.B. 436.

Senator Porter expressed his concurrence with the amendments, noting the changes made would clarify the role of the debt-management commission. He pointed out the members of the debt-management commission would be made parallel to and serve on the Southern Nevada Regional Planning Coalition. Chairman O’Connell noted the measure refers only to Clark County.

SENATOR NEAL SECONDED THE MOTION.

The committee addressed S.B. 470.

*****

Chairman O’Connell called attention to S.B. 473.

The chairman pointed out the committee was reviewing a conflict amendment.

*****

Chairman O’Connell drew attention to S.B. 475.

Gary E. Milliken, Lobbyist, Associated General Contractors, Las Vegas Chapter, expressed no opposition to Amendment Nos. 992 and 1098. He said the amendments would add the appointment of a member of the Nevada Contractors Association to the interim advisory committee to study design-build contracting.

Senator Raggio indicated he would like the opportunity to have further discussions on the measure as the amendments affect Reno, Sparks, and Washoe County.

SENATOR O’DONNELL SECONDED THE MOTION.

Next, the committee reviewed S.B. 478.

Senator Raggio indicated extensive amendments had been made including requiring a full-time commission counsel would be provided by the attorney general’s office.

SENATOR NEAL SECONDED THE MOTION.

*****

Chairman O’Connell requested the committee address S.B. 500.

The chairman noted the proposed amendments had previously been rejected by the Senate Committee on Government Affairs. She explained the measure had been presented by the attorney general to address problems concerning various state agencies not collecting money on debts owed to the state.

Wm. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau, concurred there had been problems in collecting significant amounts of money owed to the state. He noted the committee had previously rejected an amendment requiring agencies to utilize the state controller’s office as a collection agent. Prompted by the chairman, Mr. Crews stated the initial fiscal note had been resolved as the additional positions were added by the budget committees.

Senator Raggio pointed out the Senate Committee on Finance and the Assembly Committee on Ways and Means have agreed to add two positions for the dual purpose of implementing the integrated financial system as well as the additional duties and responsibilities under S.B. 500 to affect the collections.

Mr. Crews explained the amendment was a little different than the one submitted to the committee earlier in the session. He noted Amendment No. 918 would make it permissive for state agencies to utilize the state controller, as set forth in section 10.5 of the amendment. Conceptually, he pointed out, the Audit Division does not have a problem with the intent, though noted, further regulations need to be added as to when the agencies should utilize the state controller. He stressed the importance of not eliminating the director of the Department of Administration from the process as set forth in the amendment. The director, he contended, is integral to the process as the position has the oversight responsibility for the Executive Branch agencies to ensure all necessary collection efforts are made prior to utilizing the state controller. He suggested the director be added back into sections 12 and 13 of the bill as well. The amendment, he pointed out, removes the director of the Department of Administration from the adoption of regulation process while leaving it solely to the controller and the attorney general.

Senator Raggio indicated the amendment does nothing as the state agencies are not required to utilize the controller’s office. He pointed out the state agencies will continue to collect the debts unless they request the state controller to collect the debts on their behalf. He stated the problem is the agencies currently have not been collecting the debts, noting the bill does not require them to do so.

Ms. Cathcart expressed support for the proposed language regarding exchanging write-offs for cancellation, noting it to be an appropriate change. Senator Raggio questioned the reason both the state controller and the attorney general are required to designate a "bad debt." Ms. Cathcart explained the intent of the provision is to ensure the decision is legally correct. Senator Neal pointed out action would be prevented in the instances in which no agreement is reached. Ms. Cathcart concurred. Senator Neal questioned if it was appropriate to operate the law by stalemate. Ms. Cathcart stated the attorney general’s office has remained neutral on the provisions which reference the concurrence or inclusion of particular departments or agencies. She stated this is a policy issue, and recognized the attorney general’s office will abide by the decision of the legislature.

SENATOR NEAL SECONDED THE MOTION.

*****

Chairman O’Connell drew the committee’s attention to S.B. 530.

The chairman explained another amendment is forthcoming on the measure.

SENATOR PORTER SECONDED THE MOTION.

*****

Finally, the committee discussed Assembly Bill (A.B.) 615.

Chairman O’Connell indicated the Assembly did not concur with the Senate amendment. She stressed the committee had felt strongly about not allowing any election be held by mail. She questioned the reason the Assembly objected to the amendment.

Pamela Crowell, Deputy Secretary of State for Elections, Elections Division, Office of the Secretary of State, said the committee did not concur with the amendment on the direction of the Legislative Counsel Bureau staff. She pointed out a conflict resolution must be worked out in A.B. 520, specifically with regards to changing the dates on a minor party filing for candidacy.

With no further matters before the committee, Chairman O’Connell adjourned the meeting at 11:47 a.m.

RESPECTFULLY SUBMITTED:

Angela Culbert,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

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