ASSEMBLY COMMITTEE ON GOVERNMENT AFFAIRS

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Government Affairs

Seventy-First Session

May 18, 2001

The Committee on Government Affairswas called to order at 8:25 a.m. on Friday, May 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. Douglas Bache, Chairman

Mr. John J. Lee, Vice Chairman

Ms. Merle Berman

Mr. David Brown

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:

Mrs. Vivian Freeman

STAFF MEMBERS PRESENT:

Eileen O’Grady, Committee Counsel

Dave Ziegler, Committee Policy Analyst

Glenda Jacques, Committee Secretary

OTHERS PRESENT:

Terry Johnson, Labor Commissioner, State of Nevada

Jack Jeffrey, Lobbyist, Southern Nevada Building and Construction Trade Council

Danny Thompson, Lobbyist, American Federated Labor and Congress of Industrial Organizations

Gary Milliken, Lobbyist, Las Vegas Chapter of General Contractors

Cheryl Blomstrom, Lobbyist, Nevada Contractors Association and the Southern Nevada Chapter of the National Electrical Contractors Association

John Madole, Lobbyist, Nevada Chapter of Associated General Contractors

Colleen Wilson-Pappa, Lobbyist, Clark County

Ted J. Olivas, Purchasing and Contracts Manager, Clark County

Lori Ashton, Lobbyist, Nevada Carpenters

Pat Zamora, Director, Accounting, Clark County School District

Madelyn Shipman, Assistant District Attorney, Washoe County

Jim Bell, Public Works Director, City of North Las Vegas

Kurt R. Segler, Lobbyist, City of Henderson

Warren Hardy, Lobbyist, Associated Builders and Contractors

Marty Bibb, Lobbyist, Retired Public Employees of Nevada

Senate Bill 560: Makes various changes to provisions relating to employment practices and prevailing wages for public works. (BDR 28-559)

Terry Johnson, Labor Commissioner, State of Nevada, explained his office regulated private employment agencies, apprenticeships, industrial relations law, child labor, and wage and hour provisions. S.B. 560 incorporated the 1994 Legislative Counsel Bureau audit findings of widespread inefficiencies in the Labor Commissioner’s office. A good faith effort had been made to address those concerns.

Page 2, line 39, dealt with contractors on public works projects who filed certified payroll reports. The contractor completed the report and submitted it to the proper agency. Inaccurate, late payroll reports indicated something was wrong on the project. Page 5, lines 26 through 33, clarified the maximum amount of monetary violations. All penalties for violations were increased and the Labor Commissioner had the authority to establish sliding scale penalties. Section 6 defined the expectation of workers employed on the site of a public work project. Section 8 increased monetary penalties for wage irregularities and eliminated certified payroll reports to the Labor Commissioner’s office. All certified payroll reports were to go to the public body that issued the contract.

Mr. Johnson explained the bill streamlined the Labor Commissioner’s office and incorporated the findings and recommendations of the auditors and Legal Division. Nevada spent $1.8 billion on public works projects last fiscal year and those state agencies needed to be more efficient. Each agency needed a regulated environment that was fair, legal, competitive, and successful. The system would consist of multi-level enforcement with the Labor Commissioner overseeing the public works operations. The system had proven successful in the federal government and 13 other states. Regulations had been proposed to outline how public bodies would exercise their duties. Citizens’ faith would be restored by regulating fair projects. Contractors who violated wage regulations were usually dishonest in other areas.

Mr. Humke asked how the contractor would prove a certified payroll report had been sent. Mr. Johnson replied they were looking at regulations to monitor that.

Mr. Humke asked how citizen complaints were addressed by the Labor Commissioner’s office. Mr. Johnson explained his office had been doing the duties of other agencies and had been negligent in answering citizen complaints. Legislation clarified that project monitoring should be done by the awarding body and unresolved conflicts be handled by the Labor Commissioner. Public works projects had increased 86 percent and the Labor Commissioner needed to redirect his staff to handle their core duties.

Mr. Humke asked how the agency’s budget and staff were holding up under the workload. Mr. Johnson said he had a full-time staff of 29 individuals and they could handle the load.

Mr. Humke stated the previous Attorney General representing labor was afraid of the court system and was ineffective. Mr. Johnson felt the current Attorney General was fine. The Labor Commission had the first responsibility to provide necessary regulation.

Mr. Humke commended him on the changes and work being done.

Mr. Mortenson asked where the fines and penalties went. Mr. Johnson said any fine or penalty assessed by the Labor Commissioner went to the General Fund. A fine or penalty assessed by the awarding body was forfeiture and was paid directly to them.

Mr. Mortensen asked if Nevada’s Constitution prohibited entities from collecting fines they imposed.

Ms. Berman said she received a letter from Fredrick Smith, construction manager of Clark County School District (CCSD), stating several local governments could simultaneously be investigating the same contractor for possible prevailing wage violations.

Mr. Johnson explained the office did very little investigating and any increase would be beneficial. The contractors should be investigated by the awarding public body. Any contractor who violated the contract was unjustly enriched by those violations.

Ms. Berman asked if there was a problem with the CCSD to come out so vehemently against the bill.

Mr. Johnson stated legislation was in the public works body regulations that defined what it meant to work on a public works project. NRS 341.153 states:

“The legislature hereby finds as fact: that the construction of public buildings is a specialized field requiring for its successful accomplishment a high degree of skill and experience not ordinarily acquired by public officers and employees whose primary duty lies in some other field [and] that this construction involves the expenditure of large amounts of public money which, whatever their particular constitutional, statutory or governmental source, involve a public trust.”

Public agencies have a fiduciary responsibility to monitor how the people’s money was spent. Honest contractors who abided by the system were being forced out of the system by unscrupulous wage hustlers. Workers had the right to receive what was rightfully owed them. The law had been in place since 1937 but “tradition” had changed the statute. All public bodies had the duty to ensure those laws were met. The CCSD awards more contracts than any other public body and would need to adjust their thinking on how to correct those problems.

Mr. Brown disclosed that he had represented a local contractor with general wage violations. He felt there was a benefit in placing the investigation as close to the violation as possible. “Home rule” should take precedence. He questioned the differences between local government forfeiture and fines from the state.

Mr. Johnson explained the forfeiture provisions were mandatory when contractors violated the contract. Fines came from the Labor Commissioner’s office.

Mr. Brown asked if the Attorney General endorsed the bill. Mr. Johnson replied the original bill had a fiscal note that had been removed and the Attorney General had worked closely with them on the bill.

Mr. Brown asked about the definition of employees on the projects that were defined as “other specific statutes.” Mr. Johnson stated they had left the definition a little flexible to allow for surveyors or other design professionals that might come onto the job.

Mr. Brown asked if the Labor Commissioner had worked on regulations to define workman circumstances. Mr. Johnson replied the federal government had adopted some regulations to clarify those statutes.

Mr. Brown felt the legislation would go a long way to avoid litigation. He asked what due process was in place for the public entities that were allowed to investigate and determine violations.

Mr. Johnson explained the language had been there since 1937 and no regulations had been developed. Section 9, subsection 2, outlined that no final payment would be received until a full investigation had been done by the awarding body or its agents. The Department of Transportation awarded about $400 million in contracts last fiscal year. Their new complaint procedures had collected penalties on several complaints.

Mr. Brown asked if Mr. Johnson was comfortable with approving public bodies to follow through with citing contractors. Mr. Johnson stated there would be a transition and training period with contractors and public bodies to define the requirements of working on public works projects. It could take the next six to nine months to accomplish that task. He was very confident the Labor Commissioner’s office would clarify the best procedures to use through regulations, information, and discussions with public agencies.

Mr. Brown asked if they had developed ordinances to govern investigations. Mr. Johnson stated proposed regulations outlined types of information to be reviewed, steps to take during the investigation, and how to forward the information for further review. As long as the “big picture” was there to insure the terms of the contract, local governments could be flexible.

Mr. Brown questioned where appeals would go. Mr. Johnson replied proposed regulations in NRS 233B determined the Labor Commissioner’s office would govern the process.

Mr. Brown asked if all investigations were reported to the Labor Commissioner’s office. Mr. Johnson replied only the violations.

Mr. Brown suggested a “Letter of Intent of Investigation” might be sent to the Labor Commissioner’s office to prevent the overlapping of investigations.

Vice Chairman Lee asked if there could be multiple violations on each job site. Mr. Johnson said sliding scale regulations determined the severity of violations. The egregiousness of the violation would determine the types of penalties.

Vice Chairman Lee questioned why “Attorney General” had replaced “District Attorney” in Section 3, subsection 3. Mr. Johnson stated it was a matter of efficiency to consolidate those services. Their legal counsel was familiar with the issues. A District Attorney representing a public body might have a conflict of interest if the public body violated the terms of the contract.

Vice Chairman Lee asked if any penalties imposed had deterred potential violations. Mr. Johnson stated some contractors had chosen to “take their chances” because the penalties were not stiff enough. They hoped lengthening the period of administrative penalties would deter violations.

Vice Chairman Lee inquired if daily penalties in Section 8, subsection 1, would be taken out of the retention deposit. Mr. Johnson replied the public body had the ability to invoke penalties off the top of the project if necessary.

Vice Chairman Lee questioned why the effective and expiration dates were different for different sections. Mr. Johnson clarified the Legislative Counsel Bureau had done that to avoid conflicts with other pending or proposed legislation.

Mr. Brown asked if the CCSD would perform investigations on their projects. Mr. Johnson explained any complaint filed would be the responsibility of the approving body.

Mr. Brown was concerned that approving public bodies might not have the resources to deal with those investigations. Mr. Johnson said there were no “economies of scale” to consolidate the investigations into the Labor Commissioner’s office. Each approving public body would need to “step up to the plate” and take care of their own projects.

Mrs. Smith commended Mr. Johnson for his work defining his agency. She asked if the Department of Transportation followed proposed regulations and received and processed certified payroll reports.

Mr. Johnson replied affirmatively. The Department of Transportation (DOT) had an employee who looked at certified payroll reports, walked the job and talked to workers about their duties. The state strategic plan said “Government functions best when it functions at the level closest to the people.” DOT was an example of a proactive agency.

Jack Jeffrey, Lobbyist, Southern Nevada Building and Construction Trade Council, commended Mr. Johnson for making his office more efficient and getting all entities involved. The biggest problem on the public works projects was contractors knew they were not watched. The awarding bodies appeared not be concerned about prevailing wage violations. Once violating contractors had been penalized violations would drop dramatically. The bill made the Labor Commissioner’s office more efficient and the bidding process fairer. They strongly supported the bill.

Danny Thompson, Lobbyist, American Federated Labor and Congress of Industrial Organizations, stated both labor and management supported the bill. He commended Mr. Johnson for cleaning up the backlog of complaints his office had. Prevailing wage violations cheated the worker and other contractors. Awarding bodies entrusted with public money should be held responsible for monitoring their projects. If everybody worked together there would be considerably less problems.

Gary Milliken, Lobbyist, Las Vegas Chapter of General Contractors, supported S.B. 560. They were glad to see legislation that enforced prevailing wage provisions and clarified fines.

Mr. Brown asked how contractors felt about extending periods of offense. Mr. Milliken stated they had no problems with it.

Cheryl Blomstrom, Lobbyist, Nevada Contractors Association and the Southern Nevada Chapter of the National Electrical Contractors Association, stated Nevada’s law-abiding contractors were at a competitive disadvantage when they competed against contractors who ignored prevailing wage laws. They commended Commissioner Johnson for his openness and willingness to work with all entities involved.

John Madole, Lobbyist, Nevada Chapter of Associated General Contractors, supported the bill and making contractors more accountable.

Vice Chairman Lee asked if “protected classes” of employees was a Nevada or federal statute. Mr. Johnson replied he did not know the specific statute and possibly it was addressed by the Nevada Equal Rights Commission to ensure equal employment opportunities across all classes.

Colleen Wilson-Pappa, Lobbyist, Clark County, stated they had clarified in the Senate Committee on Government Affairs they would work with the Labor Commissioner but the additional costs for the enhanced responsibilities needed to be addressed. Their proposed amendment would help mitigate the effects of the enhanced responsibilities and help them meet the intent of the bill.

Ted J. Olivas, Purchasing and Contracts Manager, Clark County, concurred with the Labor Commissioner that nonpayment of prevailing wage was cheating everyone and contractors needed to meet their contractual obligations. The proposed amendment (Exhibit C) clarified three changes: approved staff members designated “authorized representatives” to perform investigations, the ability to recoup necessary costs, and clarification of investigations conducted on “complaints” filed.

Vice Chairman Lee asked if public bodies had the ability to receive penalties and if contractors could ask for refunds of investigation costs.

Mr. Olivas said their agency investigated contractors and the lack of compensation did not change the process. The intent of the law was to notify contractors that infractions would result in penalties.

Lori Ashton, Lobbyist, Nevada Carpenters, stated they had battled wage and hour claims and explained to approving bodies what certified payroll reports were. She felt the clarification of “authorized representative” would streamline the investigative process.

Pat Zamora, Director Accounting, Clark County School District (CCSD), stated they had a vested interest in having prevailing wage properly followed. They supported S.B. 560 with the proposed amendment. They were concerned about unequal enforcement with different entities doing the investigations. They would like to see a regional economy of scale for penalties.

Ms. Von Tobel stated it was late in the session and adding amendments might cause the bill to go into conference committees and possibly not be passed. She asked if they could operate under the current language of the bill.

Mr. Zamora said they were concerned about spending too much time on the issue in school board meetings when education was their primary mission.

Ms. Von Tobel stated the board’s responsibility included the building of schools to educate those children. She did not feel the original language of the bill caused additional dialogue in school board meetings.

Mr. Zamora stated the board had heard hours of public testimony on the “jet stream” issue and felt S.B. 560 would do the same.

Ms. Von Tobel asked what language in the bill caused that. Mr. Zamora replied there was no specific language but the provision for representatives to make determinations might contribute to that.

Madelyn Shipman, Assistant District Attorney, Washoe County, was supportive of the proposed amendments. She felt counties would need to hire additional personnel to monitor the projects.

Vice Chairman Lee asked if smaller counties could add surcharges to their contracts to cover administrative costs of S.B. 560.

Ms. Shipman replied the counties could not withhold money to cover investigations costs without the state’s authority. Regulations needed to be drafted to address payment costs.

Jim Bell, Public Works Director, city of North Las Vegas, stated they supported the bill with proposed amendments.

Janelle Kraft, Lobbyist, city of Las Vegas, echoed the comments of other governments and supported the amendments. She felt there might be a duplication of services and appreciated an opportunity to recoup those costs.

Kurt R. Segler, Lobbyist, city of Henderson, supported the bill and Clark County’s proposed amendments.

Mr. Jeffrey supported the bill and felt it was inappropriate to bring an amendment forward this late. There had been ample opportunities for local governments to work with the Labor Commissioner to address problems. He felt the amendment was contentious and might cause the bill to die. A “witch-hunt” could develop when agencies imposed fines to fund investigations. Any collected funds should go to the General Fund. He felt it was too “late in the game” to entertain an amendment and strongly opposed it.

Mr. Johnson stated they opposed the amendment. They were not opposed to some of the issues, but felt local governments had over a year to discuss the issues. The Legislature gave the Labor Commission the authority to adopt regulations that had the force and effect of law. His office had been very open and accessible to labor, management and awarding bodies and they would continue to work with those entities. Everything addressed with regulations would be looked at. He did not feel the bill contained any major issues that needed to be addressed and possibly derail the process.

Mr. Johnson responded to the concerns of local government about the likelihood of unequal enforcement, being distracted from the main mission and disputes over amendment clarifications. The amended bill stated it “clarified” the duties of public bodies. Two Legislative Counsel Bureau opinions had outlined the duties of public bodies. One had to wonder who was watching the projects when excessive costs and workmanship issues arose. More pro-active involvement on taxpayer-funded projects would prevent investigations. The issue was accountability, responsibility and being pro-active on the projects. Nevada had about 80 to 85 percent of their public works projects awarded by five public bodies: CCSD, Clark County, city of Las Vegas, Washoe and Douglas County. The Labor Commissioner could better assist smaller counties if larger counties monitored their own projects. Public works needed to be fixed now and could not be delayed.

Mr. Thompson stated they opposed the amendment. The amendment had not been presented when the bill was originally heard in the Senate Committee on Government Affairs. Any amendment should have been presented months ago. The CCSD was currently doing the majority of public works projects. Many children spend their entire school years in portable classrooms because of the inability to build schools fast enough. Non-English speaking workers from a school district project testified before the School Board that they were told they would make $10 an hour when they were supposed to be making $18. They were told they would lose their jobs if they asked questions. They brought their check-stubs to the board meeting for verification. One worker testified he paid the contractor $150 a week to work there. That same contractor was currently working on a project for CCSD and had not been fined. The Labor Commissioner was not responsible to “clean-up” the school district’s house. Passing the bill would clean up most of the blatant problems.

Warren Hardy, Lobbyist, Associated Builders and Contractors, had met with Mr. Johnson and they fully supported the bill.

Vice Chairman Lee closed the hearing on S.B. 560 and turned the meeting over to Chairman Bache.

ASSEMBLYMAN HUMKE MADE A MOTION TO DO PASS S.B. 560.

ASSEMBLYWOMAN SMITH SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY BY THOSE PRESENT.

Senate Bill 298: Revises provisions relating to public employees’ benefits program. (BDR 23-542)

Chairman Bache advised Ms. Parnell he had informed Assemblywoman Chris Giunchigliani the committee was requesting a bill draft for an interim study on the Public Employees’ Benefit Program (PEBP). He asked Mr. Zeigler to review the bill for the committee.

Dave Ziegler, Committee Policy Analyst, explained that Lori England, interim executive officer of PEBP, testified the bill was submitted on behalf of the board and consisted of clean-up language. The plan’s actuary had recommended the change of “shall” to “may” in Section 2. An independent certified public accountant would be hired annually to audit programs for rule compliance. The bill changed “30-days” to “60-days” for the convenience of participants.

ASSEMBLYMAN LEE MADE A MOTION TO DO PASS S.B. 298.

ASSEMBLYMAN BROWN SECONDED THE MOTION.

Marty Bibb, Lobbyist, Retired Public Employees of Nevada, stated S.B. 298 did not impact A.B. 564. It provided for hiring of a specialized attorney to review compliance of laws affecting taxes and employee benefits at the state and federal level. They were concerned about accuracy and relevance of numbers developed in the program. Section 2, subsection 2(a), stated that relative to public entities under NRS 287.010, “any public entity, which is desirous of obtaining group insurance for its officers, employees and retired employees by participation in the program may have separate rates established.” Different groups could have different rate experiences based upon their loss experience. He expressed his appreciation to the committee for the hard work and dedication to improve employee benefits.

Mrs. Smith shared Mr. Bibb’s concerns about changing “shall” to “may” and the intent of establishing rates.

THE MOTION PASSED UNANIMOUSLY BY THOSE PRESENT.

Senate Bill 299: Makes various changes relating to Airport Authority of Washoe County. (BDR S-759)

Mrs. Gibbons explained she had talked to the Airport Authority’s attorney and they were taking action to implement the open-meeting law.

Senate Bill 356: Makes changes regarding filing of documents with secretary of state. (BDR 18-1206)

Chairman Bache explained S.B. 356 was Senator O’Connell’s bill and addressed the problem of filing papers without notifying interested parties. He had talked to the Secretary of State’s Office about developing regulations to prevent those problems. He would vote on the bill Monday after receiving those revisions.

Senate Bill 489: Makes various changes regarding powers and duties of state treasurer and revises Uniform Disposition of Unclaimed Property Act. (BDR 18-360)

Chairman Bache stated S.B. 489 had a conflict amendment that would need to be adopted.

ASSEMBLYWOMAN VON TOBEL MADE A MOTION TO DO PASS S.B. 489 AND AMEND WITH THE CONFLICT AMENDMENT.

ASSEMBLYWOMAN PARNELL SECONDED THE MOTION.

Mr. Humke believed the bill created a rightful relationship between getting unclaimed property back to the citizens of Nevada and other states. The function should be married to the duties of the State Treasurer.

Chairman Bache felt it was appropriate to leave the Unclaimed Property Division with the Department of Business and Industry, but would not oppose the transfer because it had been written into the budget.

THE MOTION PASSED UNANIMOUSLY BY THOSE PRESENT.

Senate Bill 553: Makes various changes concerning finances of local governments. (BDR 30-130)

Chairman Bache asked Mr. Zeigler to review the bill. He had some concerns about Sections 40 and 48.

Mr. Zeigler said the bill was proposed by the Committee on Local Finance and dealt with problems that arose after the Seventieth Session. The consolidation of debt statutes in NRS had created problems with leases issued by local governments. The bill provided restrictions and procedures for installment purchase agreements and defined what local obligations were not covered. The accumulation of funds for extraordinary maintenance was made optional. Section 48 was added in the Senate at the request of the Clark County School District and allowed the purchase of alternative fuel school buses with bond money.

Chairman Bache was still concerned about Section 40 and 48. He was concerned about purchasing “rolling stock” with bond money designated for capital improvements. He felt the audit report should not be deleted and the funds from the extraordinary maintenance fund should be monitored.

Mr. Zamora explained school buses were valued at over $100,000 each and had a current life of 15 years. Twenty-year bonds were issued for capital improvements and closely matched the life of school buses.

Ms. Von Tobel said it did not make financial sense to mortgage a house with a second to purchase a car. The cost of building schools was greater than the cost of buses and it did not make financial sense to purchase those buses with capital funds. The Assembly Committee on Education had not agreed with the concept either.

Mr. Humke asked if the life of the school buses made them a capital purchase. Mr. Zamora replied they leased buses because they did not have the necessary capital to purchase them.

Mrs. Smith was concerned about the description of bond money being applied to “equipment used in educating pupils.” She felt it was too broad and opened the field for inappropriate purchases.

Mr. Zamora stated the 1996 bond proposal included computer equipment at all schools.

Mrs. Smith asked how the new language affected furniture and equipment purchase. Mr. Zamora explained the school district’s current practice was to provide equipment and furnishings in school renovations.

Mrs. Smith was concerned about broadening bond money expenditures and the transportation issue.

Chairman Bache did not want to take action on the bill today. Seeing no further business he adjourned the session at 10:38 a.m.

RESPECTFULLY SUBMITTED:

Glenda Jacques

Committee Secretary

APPROVED BY:

Assemblyman Douglas Bache, Chairman

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