MINUTES OF THE meeting
of the
ASSEMBLY Committee on Government Affairs
Seventy-First Session
April 18, 2001
The Committee on Government Affairswas called to order at 8:17 a.m., on Wednesday, April 18, 2001. Chairman Douglas Bache presided in Room 3143 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. John J. Lee, Vice Chairman
Ms. Merle Berman
Mr. David Brown
Mrs. Vivian Freeman
Mrs. Dawn Gibbons
Mr. David Humke
Mr. Harry Mortenson
Mr. Roy Neighbors
Ms. Bonnie Parnell
Mr. Bob Price
Mrs. Debbie Smith
Ms. Kathy Von Tobel
Mr. Wendell Williams
COMMITTEE MEMBERS EXCUSED:
Mr. Douglas Bache, Chairman
GUEST LEGISLATORS PRESENT:
Senator Mark Amodei, Capital Senatorial District
STAFF MEMBERS PRESENT:
Eileen O’Grady, Committee Counsel
Dave Ziegler, Committee Policy Analyst
Virginia Letts, Committee Secretary
OTHERS PRESENT:
Janelle Kraft, City of Las Vegas
Danny Thompson, Nevada AFL/CIO
Carole Vilardo, President, Nevada Taxpayers Association
Tom Grady, Nevada League of Cities
Mary Henderson, Community Relations Director, City of Reno
Andrew Green, Director of Finance, City of Reno
Senate Bill 75: Clarifies provisions relating to classification of employees of state printing division of department of administration. (BDR 29-751)
Senator Mark Amodei, Capital Senate District, testified S.B. 75 was a result of constituents’ concerns in dealing with the state printing office. Although the positions fell under Nevada Revised Statutes (NRS) 344, two positions clearly fit a stereotypical description of classified service duties. The Legislative Counsel Bureau (LCB) coordinated with the printing office and Ms. Greene of state personnel who advised the only way to rectify the situation would be changing statutes to make those positions classified, in order to avoid a situation where those positions would have to go through the competitive process. Another thing that prohibited administrative action was privatization of State Industrial Insurance System (SIIS), where the employees had “bumping rights” when they were terminated. The two positions would in effect be subservient to those on the SIIS list. The word “assistant” was deleted when specifying job descriptions for the two printing office positions, and housekeeping language was needed to implement the process to decide the grade and step for those positions.
Mr. Lee asked if the two positions were included in the unique group of employees who had their own union affiliation. Senator Amodei replied the state printing office was kind of a hybrid in terms of not fitting into any stereotypical notions in other departments. There was a union representing the majority of those employees and they were a blend of unclassified positions as specified in statute.
Danny Thompson, representing the Nevada AFL/CIO, said the problem had been worked on for about three years, and as Senator Amodei had mentioned, one of the biggest problems was privatization of SIIS, because it gave displaced SIIS employees two-year “bumping rights.” One of the printing office employees had been on the job for 19 years and the other about 10. Without the proposed legislation, they could be “bumped” by people who had worked for the state for no more than two years. The affected positions had a lengthy history with the printing office going back to 1869, and without the state printer the Legislature would have been in trouble with the 120-day deadline. He supported the bill and did not know of anyone opposing it, as it only affected two positions in the state printing office.
Vice Chairman Lee closed the hearing on S.B. 75 and opened the hearing on S.B. 125.
Senate Bill 125: Makes various changes to provisions relating to financial reporting of local governments. (BDR 31-898)
Janelle Kraft, representing the City of Las Vegas, stated S.B. 125 resulted from an Interim Study Committee, which addressed the distribution of local government revenues. It came to the attention of the committee that an employee of the Legislative Counsel Bureau (LCB) had been compiling information for many years from local governments, without the information being fully utilized. The person was getting ready to retire and the committee saw it as a perfect opportunity to shift responsibility for the data to the Department of Taxation so that information could be utilized in a variety of ways. There were a few local governments that were in severe financial straits and the bill would allow monitoring of their fiscal health. The bill would require local governments to file information electronically rather than manually for more efficient reporting. Included in the new language was the deletion of assistance to local governments that did not have the capability of filing those reports electronically.
Mr. Lee asked Ms. Kraft if she was on the interim study. She responded, “not officially.” She added Mr. Leavitt represented the city of Las Vegas along with other local government and legislative representatives on the interim study committee.
Mr. Lee questioned if the committee was ongoing. Ms. Kraft indicated the committee was established by the 1995 Legislature and was supposed to sunset in July of 2001. With the proposed bill, that period would be extended for another two years.
Mrs. Gibbons wondered about new language in subsection 2 regarding filing of fiscal reports. Ms. Kraft said that section referred to procedures that would be implemented by the Committee on Local Government Finance for local governments to follow when submitting their reports to the Department of Taxation. Administrative code regulations for governments would be developed following LCB recommendations.
Mrs. Gibbons thought the Attorney General developed guidelines for regulations and questioned the drafting of the bill. Ms. Kraft indicated the Committee on Local Government Finance was the technical advisory board to the Tax Commission, and they adopted administrative codes regarding those sections. Once it was in code the information would alert LCB to financial emergencies.
Ms. O’Grady interjected because the Committee on Local Government Finance was a local governmental body they would not be incorporated into the Nevada Administrative Code (NAC).
Carole Vilardo, President, Nevada Taxpayers Association, testified one of the issues was to streamline and clean up a number of procedures, and fiscal reports that were usable. Quarterly reports did not help identify when problems were going to surface. The impetus of the bill was to make reports more meaningful, as current quarterly reports contained too much information that was not available in a timely manner. Many entities were only able to report through hard copy transmission and they would like to be able to implement electronic reporting. Under the bill, reporting would be in a format that made financial reporting clearer and more useable for everyone.
Mr. Neighbors thought problems in White Pine and Mineral Counties would have been caught sooner if the bill had been in place at that time. Tom Grady, Nevada League of Cities, testified 50 percent of league members had responded and they were in full support of the S.B. 125.
Senate Bill 200: Expands authority of certain local governments with respect to administration of municipal finances. (BDR 21-631)
Mary Henderson, Community Relations Director with the city of Reno introduced Andrew Green with the city of Reno Finance Department who was appearing for the first time before the Legislature. She indicated the bill came about when the finance department was working with her department on BDR packets. The city of Reno had citizen focus groups and the language in S.B. 200 was approved as it was felt it was prudent financial management. The Reno City Council endorsed the proposed language as part of their legislative packet and received no opposition in the Senate. Also the counsel for the city endorsed it as part of their bill draft packet and the bill passed the Senate with no opposition.
Andrew Green, Director of Finance, City of Reno, testified the purpose of S.B. 200 was to correct inconsistencies in the law and the city charter specifically. It expanded the ability of the city to pledge revenues for room tax to special obligation, revenue bonds in addition to the general obligation bonds. That would allow reduction of the cost of financing city-needed projects. There was an inconsistency with state law and the city charter, which basically restricted the use of interest earned from investments and could only be used for debt service repayment. With proposed language it would allow interest to be used for construction costs on a specific project.
Mr. Lee requested an expansion of the meaning of special obligations. Mr. Green replied special obligations were types of bonding or financing similar to revenue financing on a project that issued bonds secured specifically by revenues generated by that project. Presently only general obligation bonds were available which were secured by property taxes.
Mr. Lee wondered what projects were planned and if those would be covered by special obligation bonds. Ms. Henderson interjected one project they were working on was with a Baltimore developer called the Cordish Project, which was about a $100 million redevelopment project in downtown Reno. Some of the room tax money might be used to pledge against projects under development. There was also Reno’s Trench Project and if it went forward would actually reduce the ultimate cost of that project.
Mrs. Gibbons asked if the room tax could be used for the Cordish or Trench Projects. Ms. Henderson stated there was a room tax component for the Trench Project and if the city went forward with that project, it would be a better use of those dollars. Mrs. Gibbons wondered if the Reno-Sparks Convention and Visitors Authority (RSCVA) had approved the use of room tax. She did not want any RSCVA funds taken from them for current projects. Ms. Henderson responded the room tax was already in place. It was not a new tax, just a better use of those funds. The current room tax was the result of legislation passed either last session or the one before.
Mrs. Gibbons queried if the bill passed, would citizens of Reno still be protected. She understood general obligation bonds were the ultimate responsibility of the state, but revenue bonds were different. Ms. Henderson knew bonding had been a major concern of Mrs. Gibbons but if the city council imposed a room tax, those dollars would be pledged against special obligations with use of the revenue source as a basis for funding. Property tax fell back upon the citizens of Reno. It was an anomaly in Reno’s charter as general obligation financing could already be used the bill only allowed expansion so special obligations could be pledged against room tax fees.
Mr. Lee questioned removal of the city bond law and wondered if it was being removed from statute altogether. Ms. Henderson indicated that was actually done by the bill drafters and that same question came up on the Senate side. It was being removed and did not have any effect on current statutes.
Ms. Parnell questioned why “issued by United States of America” was deleted on page 3. Mr. Green understood it allowed the city of Reno the same flexibility currently allowed by state law. Basically it was restrictive on the part of the city of Reno more so than state law, so S.B. 200 would again make the two legal documents consistent.
Ms. Parnell asked for an example of what outside or foreign securities referred to and how that language broadened the city’s capabilities. Mr. Green replied there was the potential of issuing what was called “Guaranteed Invested Contracts (GIC) which was an investment tool for bond reserves a city was required to maintain throughout the life of the bond. In some instances in order to get a better interest rate international investments could be included through the federal government but based on international arenas.
Mr. Lee stated as there were no more questions he would open the hearing on S.B. 201.
Senate Bill 201: Makes various changes relating to certain loans made by local governments. (BDR 31-367)
Tom Grady, representing the Nevada League of Cities, stated the bill was requested through the Committee on Local Government Finance in order to clean up some language in statute and would be addressed by Ms. Kraft.
Janelle Kraft, representing the city of Las Vegas, testified SB 201 pertained to inter-fund and inter-governmental loans. The intent was to clean up those statutes and provide structure for loans between local government funds. A local government recently used all of their monies within their funds for a development project loan, without any interest or any stated terms for the loan. The issue was brought to the attention of the Committee on Local Government Finance, indicating there needed to be some guidelines in the future. Local governments would be prohibited from using restricted monies, unless the project was one qualifying for a specific purpose. They would also have to declare money could be loaned without impairing their financial condition, indicating the terms and conditions of the loan and if there was interest charged, how many years the money could be loaned without impairing their financial condition. There would also have to be an indication of how many years the money could be used without being repaid.
Carole Vilardo, representing the Nevada Taxpayers Association, spoke in support of S.B. 201. She had brought that particular situation, referenced in the bill, to the attention of the Committee on Local Government Finance, when documents were received about a loan from a government to one of their sub-functions. In the documentation on that loan there had been pledged revenues, the majority of which were restricted. There were also problems in trying to find accurate uses for those funds. Those documents stated funds had been used from the 911 emergency, indigent, and animal control funds, which had been voter-approved and therefore restricted as to usage. There would be problems when trying to find accurate ending fund balances. If for any reason a government needed to access money there was no way to guarantee a pay back at the time it was needed, because it was not specified. The bill set up a procedure so that future occurrences would not take place and she felt it was an important taxpayer protection.
Mr. Neighbors recalled that a few years back any inter-fund loan transferred between funds had to be approved by the Department of Taxation. Ms. Vilardo responded that was no longer the case. The difference was short-term loans would be paid back within a year’s length of time, but long-term bonds would have a lengthy repayment schedule, thus the term “long-term.” It turned out a secondary set of documents she received on that particular instance allowed a loan to be paid off over 24 years with an initial interest rate of 3 percent. She pointed out a better rate of interest could be earned by putting the money into a Certificate of Deposit at the bank.
Ms. Smith felt there was no real due process in place even though a public hearing was held. Ms. Vilardo said there was a public hearing held regarding the loan, but the backup documents were not discussed. It was only after they were delivered to the office she became aware of problems. At that time she asked the Committee on Local Government Finance to place the issue on an agenda, because usage went beyond the one-year interdepartmental, interfund, inter-governmental loan, which was going to be paid back. The bill set proper procedures and certain determinations must be made to not only approve a transfer of funds from the government to the sub-government function, but have public hearings as well.
Mr. Mortenson queried if it was made clear where the money was coming from at the hearing. Ms. Vilardo indicated there was documentation but it was not readily available so there had been no discussion.
Mr. Mortenson wondered how Ms. Vilardo personally felt taxpayer money that was voted specifically for one item was being loaned to some other agency or entity. Ms. Vilardo stated, technically that was not supposed to be done, particularly for that length of time. The argument at the time was those funds were ending fund balance and would not be needed for other obligations. If the voters approved something, unless there was a valid reason to expand that purpose, it should not be changed. There should be a procedure in place for expanding any usage of restricted funds. The debt-management commission could place the issue on the ballot for an expansion of purpose, so there would be mechanisms in place. She did not fault what local governments were trying to do when lending money, it was a question of how those funds were being used.
Mr. Lee stated as there were no further question, he closed the hearing on S.B. 125.
The meeting was adjourned at 9:00 a.m.
RESPECTFULLY SUBMITTED:
Virginia Letts
Committee Secretary
APPROVED BY:
Assemblyman Douglas Bache, Chairman
DATE: