The Senate Committee on Taxation was called to order by Chairman Mike McGinness, at 2:00 p.m., on Tuesday, February 23, 1999, in Room 2135 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 Mike McGinness, Chairman

Senator Dean A. Rhoads, Vice Chairman

Senator Randolph J. Townsend

Senator Ann O’Connell

Senator Joseph M. Neal, Jr.

Senator Michael Schneider

COMMITTEE MEMBERS ABSENT:

Senator Bob Coffin (Excused)

GUEST LEGISLATORS PRESENT:

Senator Bill R. O’Donnell, Clark County Senatorial District No. 5

STAFF MEMBERS PRESENT:

Alice Nevin, Committee Secretary

OTHERS PRESENT:

Mary E. Henderson, Lobbyist, Regional Transportation Commission of Washoe County (RTC), discussed an article from the February 16, 1999 issue of the Reno Gazette-Journal and commented although it does not pertain to today’s testimony, it describes some of the work RTC is doing for local governments in northern Nevada. Ms. Henderson said RTC is comprised of members from Reno, Sparks, and Washoe County. She noted members are elected officials who represent RTC.

Michelle Gordon, Administrative Services Manager, Regional Transportation Commission of Washoe County (RTC), said the City of Sparks sponsored  S.B. 129. Ms. Gordon presented her prepared testimony (Exhibit C) stating the purpose of S.B. 129 is to establish staggered terms of office for the commissioners serving on RTC. The bill was written to impact RTC in counties whose population is 100,000 or more, but less than 400,000. Currently the terms of office for all five board members expire on December 31 of even numbered years. She explained this creates a situation where all terms could expire at the same time, meaning all members would need to be replaced at the same time. She concluded this proposal suggests a solution to this problem.

Senator Townsend asked who would decide the terms. Ms. Gordon replied the City of Reno and the Washoe County Board of Commissioners would establish terms for each member. Senator Townsend asked if current members were in agreement with the change in terms. Ms. Henderson said four current members of RTC signed Ms. Gordon’s prepared testimony and support the change. She explained the fifth commissioner, John Mayer, was unable to sign the letter but is supportive of the bill as well. Ms. Henderson said RTC was created in 1979 and there have not been any problems to date but this would prevent any problems in the future.

Barbara A. McKenzie, Lobbyist, City of Reno, testified the city approves the bill. K. Neena Laxalt, Lobbyist, City of Sparks, said the City of Sparks supports this bill.

SENATOR O’CONNELL MOVED TO DO PASS S.B. 129.

SENATOR TOWNSEND SECONDED THE MOTION.

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Chairman McGinness opened the hearing on Senate Joint Resolution (S.J.R.) 11.

Senator O’Connell said this bill was first introduced in 1991 as S.J.R. 13 of the Sixty-sixth Session.

Senator O’Connell said Frank Daykin, former Legislative Counsel, Legislative Counsel Bureau, wrote the original bill to provide an abatement to property tax for single-family owners with severe economic hardship. She continued the main premise was to provide the greatest benefit to the most deserving taxpayer. She explained the bill would amend the Constitution of the State of Nevada, Article 10, section 1. She said section 1 requires that there be an equal assessment of taxation on property and subsection 8 of section 1 has been broadly construed by the Nevada Supreme Court to allow the Legislature to define charitable purposes in order to give an exemption on property taxes. She explained if the bill passes the Legislature twice and is approved by a vote of the people, the Legislature could tailor the exemption by spelling out the specific criteria for an economic hardship in the law.

Senator Rhoads asked about the fiscal impact of this bill. Senator O’Connell said it would not be known until the criteria are set into the law two sessions from now.

Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, spoke on behalf of the association in support of S.J.R. 11. She said there has been a lot of discussion about the revenue structure of this state and one of the elements is property tax. She noted the degree to which property tax is used would depend on the degree to which it can be used without a taxpayer revolt. If the property tax were raised greater than what the cap is right now, a number of people could be severely impacted. Ms. Vilardo continued what this bill does is set in place a policy that allows the Legislature to determine if, in the future, assessments could be reduced in hardship cases.

Senator O’Connell gave an example of a severe economic hardship. She said an improvement district was requested on Eastern Avenue, between Tropicana Avenue and Russell Road, in an older neighborhood in Las Vegas. She continued a woman, who had owned a home in that neighborhood for 30 years, could not afford the assessment. She was dying of cancer and the doctor said if she were moved she would die more rapidly than if she were allowed to live out the rest of her life in her home. Ms. O’Connell said that would be a severe hardship type of a case and the bill would provide help for cases such as this example.

Kit Carson Weaver, Assessor’s Office, Carson City, testified the Assessor’s Office has dealt with hardship cases quite often. He said the only program available at this time is limited to senior citizens and is administered through the state General Fund. Mr. Weaver commented he was interested in seeing whether the enabling legislation could be linked with the senior citizens registration. He believed this bill would have a fiscal impact on the state and if there were a charitable exemption it would impact the counties, cities and school districts. He stated the Assessor’s Office supports any legislation that would assist those people who have trouble paying their taxes.

Senator O’Connell said she did not want to confine this to senior citizens. It should also be available to anyone who really needed the exemption. Ms. Vilardo said approximately 42 states have mechanisms such as circuit breakers and homestead exemptions to assist people. The State of Nevada is considered to have a mechanism because of the senior citizen exemption and the renter’s rebate.

Chairman McGinness clarified that if S.J.R. 11 were passed in 1999, it would be introduced again in 2001, go to the voters in 2002 and in 2003 be put into place.

SENATOR O’CONNELL MOVED TO DO PASS ON S.J.R. 11.

SENATOR RHOADS SECONDED THE MOTION.

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Chairman McGinness opened the hearing on S.B. 156.

Senator O’Donnell testified a constituent brought this issue to his attention. He said when a car is purchased, document fees are taxed but when purchasing property, escrow fees and processing fees are not taxed. He stated he introduced S.B. 156 to make the document fees a nontaxable item. He noted this would require a change in the Nevada Constitution.

Chairman McGinness called attention to the fiscal note for this bill, which is $3,268,369 for 6 months. Senator Neal said according to the fiscal note, these funds are used to support local schools.

Senator Rhoads asked why this bill was a Senate Bill instead of a Senate Joint Resolution. Kevin Welsh replied if it is a constitutional amendment there are provisions in the statutes that automatically provide for the question to go before the voters. This is not a constitutional amendment but it is amending something the people passed through referendum, therefore it had to be written as a bill.

John P. Sande III, Lobbyist, Nevada Franchised Auto Dealers Association, testified the association supported the concept of the bill but they would need at least 6 months to implement it because it required major computer software changes and revising/reprinting forms. Mr. Sande said the intent of the bill is to exclude from calculation certain fees charged by the dealer for documents that are required to complete the sale of the vehicle. Currently, documents prepared for the transfer of title and to finance the vehicle are taxed. Mr. Sande said the amount charged to prepare the documents varied from $30 - $500 throughout Nevada. He noted the customer would save $7 to $30 in taxes.

Senator Townsend said the fiscal note reflects $6.4 million of tax from document fees. He remarked the automobile industry originally thought document fees were nontaxable but the State of Nevada considered it to be part of the transaction of the sale of the vehicle and determined tax would be charged. Senator O’Connell questioned why escrow papers for purchase of a home are not taxed and document charges for the sale of an automobile are taxed.

Chairman McGinness asked Mr. DiCianno if he could clarify this matter.
Dino DiCianno, Deputy Executive Director, Department of Taxation, said the department works to administer and enforce specific statutes. He stated this bill, if approved by a vote of the people, would exclude or exempt document fees from sales tax charged for the car. He clarified the consumer would have to pay document fees but it would not be part of the sale price that is taxable. To answer the question about escrow fees, Mr. DiCianno said the difference has to do with how property is valued versus how sales tax is calculated for sales of tangible personal property. Mr. DiCianno said for the record, the department is neutral on this bill. He said there is an explanation in the Fiscal Note about how the fiscal impact was determined for this bill.

Senator O’Connell asked how this was done in other states. Senator Townsend said document fees are traditional in the industry throughout the country but he did not know if this was a taxable item in other states. Senator O’Connell asked Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, to find out how this is done in other states and when the State of Nevada began taxing document fees.

Senator McGinness closed the hearing on S.B.156 and adjourned the meeting at 2:55 p.m.

RESPECTFULLY SUBMITTED:

Alice Nevin,

Committee Secretary

APPROVED BY:

Senator Mike McGinness, Chairman

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