The Senate Committee on Taxation was called to order by Chairman Mike McGinness, at 3:20 p.m., on Thursday, April 15, 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 Bob Coffin

COMMITTEE MEMBERS ABSENT:

Senator Michael Schneider (Excused)

GUEST LEGISLATORS PRESENT:

Senator Lawrence E. Jacobsen, Western Nevada Senatorial District

Assemblywoman Vivian L. Freeman, Washoe County Assembly District No. 24

STAFF MEMBERS PRESENT:

Alice Nevin, Committee Secretary

OTHERS PRESENT:

Gene Sullivan, Chairman of the Board, Nevada Land Conservancy, testified for A.B. 423, submitting his remarks for the record (Exhibit C).

Alicia Reban, Executive Director, Nevada Land Conservancy (NLC), testified for the bill. She said NLC is a volunteer-led, nonprofit, land trust organization with 501(c)(3) status (Internal Revenue Service designation for a charitable group). Ms. Reban submitted her testimony for the record (Exhibit D).

Bill Whitney, Open-Space Planner, Department of Public Works, Washoe County, spoke in support of the bill. He noted Washoe County and its citizens were committed to preserving and enhancing our region’s quality of life for present and future generations. He stated Washoe County saw the NLC as a very important element in helping implement the open-space plan. He concluded this bill would be very useful to NLC in these efforts.

Senator Rhoads requested additional information on NLC and the American Land Conservancy (ALC). Ms. Reban presented an A.B. 423 Overview  (Exhibit E), which listed the board of trustees, the background of NLC, NLC’s mission statement, and a bill summary.

Senator Rhoads pointed out there were many exemptions in place at this time. He stressed almost 90 percent of the land in this state was owned by a government entity. He said there were approximately 19 ranches that mining companies had purchased and there was a threat that at some point the land could be traded for land in Las Vegas or around Reno. He noted this legislation would put one more exemption in place at a time when several rural counties were experiencing severe financial difficulties.

Ms. Reban replied she understood the concern. She noted several members of the Assembly Committee on Taxation shared this concern. Ms. Reban called attention to an amendment to the bill, which required approval of the particular county involved.

Senator Neal asked for clarification of this bill. Ms. Reban said transferring critical pieces of land to a local or state government agency would protect the lands for future generations. She noted the mission of the NLC was to preserve and protect the special places and open spaces of Nevada.

Mr. Sullivan added the primary goal of NLC was to provide open space, beautification or preservation of agriculture land. He emphasized this was a tool especially for rapidly developing areas. Senator O’Connell asked if S.B. 523 dealt with the same issue.

Mr. Whitney said this bill provided tools to use in implementing the open-space plan. He noted a nonprofit organization could use S.B. 423 to acquire conservation properties, hold them for a period of time, then pass them on to a logical government agency. Mr. Whitney clarified S.B. 523 was a tool that local governments could use to acquire specific pieces of tax-delinquent properties that fit the open-space criteria.

Senator O’Connell questioned taking more land off the tax rolls. Mr. Whitney said Washoe County had an open-space plan supported by the Board of Commissioners, Washoe County. He noted it was important to implement the plan before open spaces in rapidly growing areas had disappeared.

Ms. Reban added Mr. Whitney’s ability to work with delinquent properties was one avenue that met the objectives of the commission; looking for creative ways to work with a nonprofit agency was another. She commented A.B. 423 was a separate issue that would help NLC do their job. Senator O’Connell said the addition of another tax exemption would not help taxes; taxes have to come from somewhere.

Mr. Sullivan stated land conservancy benefited urban areas primarily. He added rapidly developing areas, as in Washoe County, have very few open areas remaining. He said the goal was to try to preserve and protect the special places and open spaces of Nevada for future generations. He noted tax- delinquent land would not provide that kind of benefit.

Senator O’Connell asked if this could be done without a tax exemption. Mr. Sullivan replied yes, but a donor would not want to pay property tax on the land prior to donation of the land. He clarified this was an attempt to exempt a piece of land from taxes during the period of time that the land was in the land trust.

Senator Coffin said he would like to see a way to work out payment in lieu of taxes. Ms. Reban called attention to section 1, lines 8 through 13 of the bill, which gave local governments control in the use of the exemption. She noted this would work in the communities where it was in their best interest to protect the quality of life.

Senator Rhoads asked about the fiscal impact of this exemption. Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, was asked to research this issue.

Chairman McGinness inquired about the length of time the land could be held in trust. Ms. Reban answered a gift was made to NLC and at that point NLC was liable for the property taxes owed until the property was transferred to the appropriate government agency.

Ame V. Hellman, Vice President, American Land Conservancy (ALC), spoke in support of the bill. Ms. Hellman noted this bill supported land conservation through a nonprofit organization who worked to help local communities bolster their quality of life. She reiterated the bill said if the local government did not want to participate as a partner with the particular land conservancy agency, the bill would have no application.

Chairman McGinness closed the hearing on A.B. 423 and opened the hearing on A.B. 28.

ASSEMBLY BILL 28: Requires department of motor vehicles and public safety to report to legislature concerning tax on special fuel. (BDR 32-213)

Assemblyman P.M. (Roy) Neighbors, Esmeralda, Lincoln, Mineral and Nye counties, Assembly District No. 36, testified he was chairman of an interim committee named to study construction and maintenance of highways and roads. He said this bill required the Department of Motor Vehicles and Public Safety to report to the Legislature concerning the tax on special fuel. He explained state agencies were currently required to make many reports to the Legislature. He stated although this imposed another reporting requirement, he felt it would be very useful to the Legislature in fulfilling its responsibility of overseeing the activities of state agencies.

Mr. Neighbors stated the Legislature needed this particular report because the special fuel tax was a large source of revenue, bringing in over $64 million in Fiscal Year (FY) 98. He stressed the Legislature could not ignore a tax of this magnitude. He noted the Department of Motor Vehices and Public Safety would be required to report to the Legislature regarding taxes collected on special fuels sold or used to propel a motor vehicle on the highways of this state. Mr. Neighbors concluded few taxes offer such abundant temptations and opportunities for evasion and underpayment and it was important to pass this bill.

SENATOR TOWNSEND MOVED TO DO PASS A.B. 28.

SENATOR RHOADS SECONDED THE MOTION.

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

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Chairman McGinness opened the hearing on A.B. 504.

Assemblyman Lynn C. Hettrick, Douglas County, Carson City Assembly District No. 39, presented a letter regarding this bill (Exhibit F). He said the bill authorized additional counties to impose taxes for development of open-space land. He noted this was an important issue to Douglas County because the intent was to buy the development rights of ranches, but allow the ranchers to ranch the land and pay the taxes. He emphasized the land would not be out of circulation. He added this bill would remove the population cap, which was not the same issue as A.B. 423.

Senator Rhoads requested further clarification of the bill. Assemblyman Hettrick explained the county would buy a ranch and pay the owner for the development rights while allowing the rancher to continue to use the ranch. Senator Rhoads asked what would happen if 20 years from now, because of a need, the rancher sold the land. Assemblyman Hettrick answered if the rancher received and invested the money wisely this would not happen.

Assemblyman Hettrick noted Ms. Vilardo (Carol A. Vilardo, Lobbyist, Nevada Taxpayers Association) requested, during testimony in the Nevada Assembly, that a cap of 30 years be put on the bonds. He added Ms. Vilardo would address a number of questions which were brought forth during testimony. Assemblyman Hettrick suggested passing the bill, including Ms. Vilardo’s forthcoming amendment, if it could be prepared in time for inclusion in the bill.

Senator Neal clarified the rancher sold the land but continued to live on it. Assemblyman Hettrick said the land would not be sold; the rancher would agree for a fee to allow an easement to be placed on the land; the land would therefore be prohibited from being developed for housing or commercial development. He noted this issue was not about land that would be developed. He said if the land was agricultural now it would remain agricultural in the future.

Senator O’Connell asked why this procedure required a law to be put in place. Assemblyman Hettrick said the bill provided the funding mechanism. He explained the funding mechanism existed for Washoe County but Douglas County (under 100,000 population) could not use it because of the present population cap. Senator Coffin said as values progress around the properties, what would happen to the tax rates. Assemblyman Hettrick said it would be according to the agricultural assessment because this was agricultural land. He stressed this issue had no impact on the tax base.

James Settlemeyer, Carson Valley Conservation District, said he was a local area rancher and supported the bill. He testified it would be a useful tool as it was economically more beneficial to leave the land in agricultural use.

Dan Kaffer, Western Nevada Resource Conservation and Development, said he represented board members from six western Nevada counties, eight conservation districts, three water districts and two Native American tribes. He noted the board unanimously supported this effort.

Senator Lawrence E. Jacobsen, Western Nevada Senatorial District, testified in support of the bill. He said his main interest was to preserve agricultural land and agriculture.

Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, recommended inclusion in the bill of a 30-year provision for both the sales tax and the real property transfer tax issues. Ms. Vilardo said she would have the language drafted and provide it to the committee as soon as possible.

Chairman McGinness closed the hearing on A.B. 504 and reopened the hearing on A.B. 423.

Assemblywoman Vivian L. Freeman, Washoe County Assembly District No. 24, testified in support of A.B. 423.

Chairman McGinness was called out of the meeting and Vice Chairman Rhoads closed the hearing on A.B. 423 and adjourned the meeting at 4:18 p.m.

RESPECTFULLY SUBMITTED:

Alice Nevin,

Committee Secretary

APPROVED BY:

Senator Mike McGinness, Chairman

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