MINUTES OF THE meeting

of the

ASSEMBLY Committee on Constitutional Amendments

 

Seventy-First Session

February 23, 2001

 

 

The Committee on Constitutional Amendments was called to order at 11:09 a.m., on Friday, February 23, 2001.  Chairman Bob Price presided in Room 3161 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mr.                     Bob Price, Chairman

Mr.                     Harry Mortenson, Vice Chairman

Mr.                     Greg Brower

Ms.                     Merle Berman

Mr.                     Don Gustavson

Ms.                     Kathy McClain

Mr.                     John Oceguera

Mr.                     David Parks

 

COMMITTEE MEMBERS ABSENT:

 

None

 

GUEST LEGISLATORS PRESENT:

 

Assemblyman David Goldwater, Assembly District 10

Assemblywoman Chris Giunchigliani, Assembly District 9

 

STAFF MEMBERS PRESENT:

 

Robert Erickson, Committee Policy Analyst

Linda Lee Nary, Committee Secretary

 

 

 

 

OTHERS PRESENT:

 

Ms. Mary Garcia, Assembly Intern

Ms. Carole Vilardo, Nevada Taxpayers Association

Ms. Janine Hansen, Nevada Families Eagle Forum

 

 

Assembly Joint Resolution 4 of the 70th Session:  Proposes to amend Nevada Constitution to repeal constitutional rule against perpetuities.  (BDR C-914)

 

Assemblyman David Goldwater, representing Assembly District 10, opened his testimony stating that the rule of perpetuities existed in the constitution and he wished to remove one section from it.  Mr. Goldwater presented three exhibits:  a Power Point presentation (Exhibit C); a memorandum from Mark Solomon, Probate and Trust Committee, State Bar of Nevada (Exhibit D); and a memo that outlined changes to the statutory rules against perpetuities (Exhibit E).

 

Mr. Goldwater wished to repeal the constitutional prohibition while increasing the protections in statute thus providing more creativity in estate planning.  Though estate taxes were paid to the federal government, the monies were recaptured for education expenditure by the state where the trust resided.  This was true even if the deceased had lived in another state. 

 

The PowerPoint presentation (Exhibit C) explained the original purpose of perpetuities, their effect on trusts, and how perpetuities would prevent the state from achieving a competitive advantage in attracting trust assets to Nevada.  Dynastic trusts, which allowed a degree of tax planning and credit when established to protect assets, were needed in Nevada, Goldwater stated.  Perpetuities limited the time period for trusts. 

 

Mr. Goldwater further testified that extended trust laws attracted trust assets to the states, which meant increased estate revenues.  Many states had repealed their perpetuities laws to obtain these revenues. 

 

A desire to establish statutory proposals contingent upon the repeal of the constitutional restriction by the people of Nevada was expressed by Mr. Goldwater (Exhibit E). The Legislative Counsel Bureau legal department would draft a bill to “strengthen and enhance” Nevada’s statutory protections.

 

Some of the advantages of repealing the perpetuities restriction were:  Nevada would become a financial mecca with more trust companies and bank trust departments, the estate tax revenue would increase, and citizens could create irrevocable trusts for indefinite periods of time.

 

In summary, Mr. Goldwater stated the rule against perpetuities was “antiquated.”  Citizens needed flexibility to do estate planning as they wished.  Nevada required the economic diversification this would provide. 

 

Mr. Gustavson asked what the original intent was when this was put into the constitution.  In response, Mr. Price asked his intern, Mary Garcia, to read into the record her research on the history of perpetuities rules (Exhibit F).

 

Mr. Goldwater then emphasized that Exhibit D supported the proposed bill and he believed passage of the bill was necessary in order for Nevada to compete with other states.

 

Mr. Mortenson asked where perpetuities was in the Nevada Constitution, to which Mr. Erickson replied that it was in Article 15, Section 4.

 

 

Assembly Joint Resolution 26 of the 70th Session:  Proposes to amend Nevada Constitution to exempt state contracts for improvement, acquisition and construction of facilities for schools from state debt limit. (BDR C-1753)

 

Assemblywoman Chris Giunchigliani, Assembly District 9, spoke in favor of A.J.R. 26 of the Seventieth Session, which, she stated, was to assist school construction at the local level.  This bill pertained only to the improvement, acquisition and construction of facilities.

 

Ms. Carole Vilardo, Nevada Taxpayers Association, testified there had been a concern in the rural counties where interest rates often reached seven percent, so this bill allowed the school districts to apply to have the bonds issued under the state. The constitutional issue was that if a school did this, it would apply against the state’s two percent debt limit.  This bill intended to amend the existing constitutional exemption exactly as was done for Natural Resources, which was exempted from the state debt limit; consequently, school bonds issued on behalf of a local school district would be exempt from the state debt limit.   Enabling language would identify on the ballot what the intention was.

 

Ms. Janine Hansen, Nevada Families Eagle Forum, testified against the bill.  She stated there were serious national economic problems.  She stated that 50 to 60 percent of an individual’s income goes to federal, state or local taxes (Exhibit G); alternatives to increased government spending existed (Exhibit H); and that the bureaucracy had not changed and was trapped in an old system.  She declared there were systems that could educate children for less money.  The system needed reform and options (Exhibit I).  Nevada had lost too much money due to mismanagement of federal lands (Exhibit J).  She concluded by affirming the need to look at alternatives.

 

Assemblywoman Giunchigliani clarified that this bill did not raise the cap but rather recognized that Nevada’s school district required assistance with facilities, nothing else.  The desire was to have roofs that did not leak, lights that worked, and accessible bathrooms.  She concluded by stating that Nevada did a better job for its prisoners than for its students. 

 

Ms. Hansen stated that she understood that and testified to that.

 

Chairman Price stated that the committee would take no action that day.

 

The meeting adjourned at 11:42 a.m.

 

RESPECTFULLY SUBMITTED:

 

 

 

Linda Lee Nary

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Assemblyman Bob Price, Chairman

 

 

DATE: