The Senate Committee on Taxation was called to order by Chairman Mike McGinness, at 2:15 p.m., on Thursday, April 22, 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

GUEST LEGISLATORS PRESENT:

Assemblyman Kelly Thomas, Clark County Assembly District No. 16

STAFF MEMBERS PRESENT:

Alice Nevin, Committee Secretary

OTHERS PRESENT:

Chairman McGinness opened the meeting with two letters (Exhibit C) in support of Assembly Bill (A.B.) 423, provided as additional information to committee members.

Chairman McGinness opened the hearing on Assembly Bill 567.

Assemblyman Kelly Thomas, Clark County Assembly District No. 16, testified in support of the bill. He presented his written remarks for the record (Exhibit D).

Senator O’Connell asked how the bill would affect the personal property tax. Assemblyman Thomas said this bill would provide a partial exemption of the personal property tax for an employer who provided a free pass to an employee. Senator O’Connell asked what would happen if there were more employees than tax exemptions. Assemblyman Thomas said the total could not exceed $3,500 of assessed valuation. Senator O’Connell questioned the impact this bill might have in the Las Vegas area. Assemblyman Thomas said he did not have fiscal information but he thought it would have a minimal fiscal impact.

Dino DiCianno, Deputy Executive Director, Department of Taxation, said the fiscal note for the bill had to be changed because the language was amended in the first reprint of the bill.

Assemblyman Thomas said this idea came from his experience in education and urban planning. He noted this type of tax incentive encouraged mass-transit use and several other western states had similar programs.

Senator O’Connell requested information on the number of casino workers riding the bus to work. Justin B. Shore, Transportation Demand Manager, Regional Transportation Commission (RTC), Clark County, said ridership statistics were available for the entire Las Vegas Valley. He noted no employer-specific information was available, but as part of a trip-reduction, ride-sharing program that was being developed, additional information would be available by next year.

Chairman McGinness asked if a new fiscal note was forthcoming and Assemblyman Thomas said he had not requested a revised fiscal note. Chairman McGinness asked him to follow up on that matter and provide any new information to the committee.

Mr. Shore testified in support of the bill. He said, for the record, the RTC had not formally endorsed A.B. 567, but many of the concepts contained in the bill were consistent with RTC-adopted plans, programs and policies. He noted the introduction of the bill coincided with a concerted effort to promote transit and commuter alternatives in southern Nevada. He said this effort was called "Cat Match Commuter Services." He added it was designed to improve regional mobility, reduce traffic congestion and improve air quality by working with employers and their employees to reduce the number of vehicles at work sites.

Mr. Shore stated complementing this effort was a federal tax benefit called Qualified Transportation Fringe Benefits. He commented many employers were not aware of this benefit and RTC planned to promote it to businesses throughout southern Nevada as part of the Cat Match Program (Cat Match Commuter Services program). He said current estimates in Clark County showed vehicle miles traveled contributed 90 percent of the carbon monoxide emissions and at least one-third of the haze- and smog-related emissions. He added this was expected to grow from 22 million miles per day in 1998 to over 57 million miles per day by the year 2020.

Mr. Shore said air-quality problems could become significantly worse in the coming years, impacting Nevadans greatly. He stressed measures had been developed to improve air quality and they were designed to reduce mobile carbon monoxide and other pollutants by improving efficiency or reducing single-occupant vehicles. He said measures discussed were shifting people from single-occupancy vehicles to transit and high-occupancy vehicles; employer-based trip reduction; congestion pricing; ride sharing (including transit and car pool); bicycle incentives; alternative work schedules; telecommuting; no-drive days. He noted studies had found that ride sharing, including van pools, car pools and transit, were cost-effective transportation control measures. He presented Improving Mobility, Reducing Traffic Congestion, and Improving Air Quality (Exhibit E).

Mr. Shore concluded A.B. 567 represented an incentive for an effective strategy to encourage ride sharing as a means of improving air quality. He noted a state tax incentive, offered to employers and commuters, would complete a strategy for increasing mobility, reducing congestion and improving air quality for Nevada.

Senator O’Connell asked if the board (RTC) had taken a position on the bill. Mr. Shore answered no, but many of the aspects of the bill had been acted upon and were being implemented.

Senator Neal clarified the employee received an exemption. Mr. Shore answered the employer received an exemption and the employee received a free pass for public transit. Senator Neal asked about "personal property" as mentioned in section 1, line 3 of the bill. Mr. Shore said personal property was unsecured property that was not considered real property, such as unregistered vehicles, computers, desks, or items used by the business in its daily operations.

Joseph L. Johnson, Lobbyist, Sierra Club (Toiyabe Chapter), said the Sierra Club was actively working on air-quality issues in southern Nevada and supported this bill.

Mary Henderson, Lobbyist, Regional Transportation Commission (RTC) of Washoe County, said RTC took a formal position on the bill, as originally written. She noted since the shift to personal property tax (first reprint of the bill, with amendments) RTC had not met to discuss the issue, but supported the concept. She said there was a program currently in force where RTC matched, with the federal government, the 20-percent cost on a monthly bus pass. She commented the Reno area was many times in non-attainment for air quality and it was felt that this could improve ridership on the bus line, which was critical for the community as a whole. Ms. Henderson said the bill could help decrease traffic congestion which, as a tourist destination, was very important for Washoe County. She noted a recent study by the Washoe County Health Department, Air Quality Management Division, indicated 55 percent of the Washoe County residents surveyed said they would participate in improving air quality, if their employer offered incentives.

Senator O’Connell asked Ms. Henderson about the fiscal impact of the bill. She replied she had not seen an updated fiscal note. She noted the RTC board would be interested in reviewing it because RTC membership was comprised of two commissioners from Washoe County, two city council members from the City of Reno, and a council member from the City of Sparks. She continued the board would want to make sure it was not unfair or that a benefit existed, as well.

Senator Neal asked for further clarification of the $3,500 amount of assessed valuation in the bill. Mr. Thomas said there was $2.83 of assessed valuation for every $100, which equated to approximately a $99 benefit to the employer (per pass).

David Pursell, Executive Director, Department of Taxation, said the department would be responsible for devising the form used by employers and prescribing the regulation. Senator Neal asked the amount of money which would return to the state. Mr. Pursell said it would be the 15-cent portion of the tax rate that goes to the bond debt retirement fund. He noted the remainder would be a local exemption.

Barbara Byington, Assessor, Douglas County, representing the Nevada Assessors’ Association, said the fiscal impact would depend on the county tax rate. She said it would be hard to predict how many businesses would take advantage of this process and therefore difficult to estimate the financial impact.

Chairman McGinness closed the hearing on A.B. 567 and opened the hearing on A.B. 506.

Assemblyman John W. Marvel, Humboldt, Pershing, Elko, Eureka and Lander counties, Assembly District No. 34, testified in favor of the bill. He said the concern was to remedy a situation with the estimated net-proceeds tax on minerals. He noted some counties and school districts had been required to refund the net-proceeds tax paid to them. He stated this bill attempted to address the problem of estimations. He noted S.B. 502 was a similar bill, with the exception of section 6. He commented he would have no problem with an amendment to make these companion bills. He noted the idea was to remedy a situation and begin actual reporting of the net-proceeds tax of minerals.

Senator O’Connell said she had no objection to "killing" S.B. 502 and amending section 6 into A.B. 506.

Assemblyman Marvel asked Mr. Pursell to explain the reporting dates in the bill. Mr. Pursell said the change in the reporting requirement dates had been a problem in the past. He stated through the efforts of the 253 committee, (Senate Bill (S.B.) 253 of the Sixty-ninth Session committee) the dates were changed to ensure actual reporting of the net proceeds.

Mr. Pursell explained if a credit were created, it would automatically apply to any tax owing by a particular mining company. Mr. Pursell noted the mining companies had overpaid the tax and that prompted this legislation.

Mr. Pursell stated he was prepared to indicate to the committee how to amend A.B. 506 to mirror  S.B. 502. Mr. Pursell said the changes were: delete page 2, line 19, of A.B. 506; add lines 23 through 28 of S.B. 502 to A.B. 506; change page 4, line 24 of A.B. 506 from February 15 to February 28; add sections 6 and 7 of S.B. 502 to A.B. 506.

Russ Fields, Lobbyist, Nevada Mining Association, testified in support of the bill.

Sharon R. Byram, Manager, Ad Valorem Taxes, Newmont Gold Company; Chairman, Nevada Mining Association Taxation Committee, testified for the bill. She said counties had difficulty with the way the net-proceeds tax was structured, particularly the timing of the filing requirements, estimating requirements, and payment. She stated this legislation would not change the amount of tax paid, but local governments had requested these changes and the association supported the language in the bill, as amended.

Senator Neal asked for information on the previous use of the estimated tax system. Ms. Byram said there was a budget problem in 1989 and the mining industry was requested to make payments in advance, instead of in arrears. She noted that system worked for several years but when there were declines, overpayment occurred. Chairman McGinness clarified the smaller counties were spending the payment and when the mining companies were due a refund, the counties did not have the funds.

Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association, said the association supported the bill. She said this was a first step and adjustments could be made at the next legislative session, if needed. Senator Neal asked if this meant the old problems would be eliminated. Ms. Vilardo said the previous circumstances were different, and with some other changes, the old problems would be eliminated.

SENATOR NEAL MOVED TO DO PASS A.B. 506.

SENATOR TOWNSEND 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. 601.

Stephen R. Johnson, Real Estate Appraiser, Johnson-Perkins and Associates, said he had served 8 years on the Nevada State Board of Equalization, and while serving in that capacity, he had gained experience by participating in hearings of tax-appeal cases. Mr. Johnson stated Tim Morse, Chairman of the Las Vegas County Board of Equalization, had asked him to talk in support of the bill. He presented his remarks for the record (Exhibit F) and remarks by Timothy R. Morse (Exhibit G).

In response to a question, Mr. Johnson commented it was his understanding that the assessors were neutral on the bill at this time; the bill simply codified a cloudy area of the law.

Senator Neal questioned if this applied to property situated in one location with similar characteristics. Mr. Johnson clarified it was contiguous parcels or adjacent parcels that were unified in some manner. He added this legislation should result in more accurate value estimates both for the taxpayers and taxing authorities.

Senator Coffin asked if this applied only to residential areas. Mr. Johnson said it would apply across the board. He said this bill would eliminate the minor instances where the issue of the appraisal unit had been a problem. Senator Coffin said he believed it allowed a potential of mixing of values in a series of contiguous properties which were owned by the same person. Mr. Johnson said he thought this bill would allow the taxpayer to be taxed realistically on the value of his assets.

Ms. Byington said this process was presently done in the larger counties, where the property was looked at, as a whole. She said the law stated it must not be over market value and this process was a way to lower those values. She stressed it could be done presently through the boards of equalization.

Terry Lamuraglia, Lobbyist, Clark County, said he spoke with Mark Schofield, Assessor, Clark County, and he supported this bill for clarification purposes.

Chairman McGinness closed the hearing on A.B. 601 and adjourned the meeting at 3:25 p.m.

RESPECTFULLY SUBMITTED:

Alice Nevin,

Committee Secretary

APPROVED BY:

Senator Mike McGinness, Chairman

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