MINUTES OF THE meeting
of the
ASSEMBLY Committee on Government Affairs
Seventy-First Session
February 21, 2001
The Committee on Government Affairswas called to order at 8:15 a.m., on Wednesday, February 21, 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. Vivian Freeman
Ms. Dawn Gibbons
Mr. David Humke
Mr. Harry Mortenson
Mr. Roy Neighbors
Ms. Bonnie Parnell
Mr. Bob Price
Ms. Debbie Smith
Ms. Kathy Von Tobel
Mr. Wendell Williams
GUEST LEGISLATORS PRESENT:
Assemblyman Morse Arberry Jr., Assembly District 7
STAFF MEMBERS PRESENT:
Eileen O’Grady, Committee Counsel
Dave Ziegler, Committee Policy Analyst
Virginia Letts, Committee Secretary
OTHERS PRESENT:
Wayne Carlson, Executive Director, Nevada Public Agency Investment Pool
Al Kramer, Carson City Treasurer
Bob Seale, Former State Treasurer, and Governmental Investment Services Inc.
Ron James, State Historic Preservation Officer
Mark Stevens, Assembly Fiscal Analyst, Legislative Counsel Bureau
Robert Gagnier, Executive Director, State of Nevada Employees Association
Janelle Kraft, Senior Financial Analyst, City of Las Vegas
Assembly Bill No. 96: Revises certain provisions governing financial administration of local governments. (BDR 31-338)
Wayne Carlson, Executive Director, Nevada Public Agency Insurance Pool, stated his group had requested an amendment (Exhibit C), which he wished to discuss; however, he would defer to Mr. Kramer before he continued.
Al Kramer, Carson City Treasurer, addressed A.B. 96, which was requested by the County Fiscal Officers Association (COAL) and which involved two issues. The first item gave an extra tool to those entities having a population under 100,000 that involved the local government investment pool. Page 2, item G of A.B. 96 covers CDs issued by banks in the originating county and CDs over $100,000 insured by credit unions or insured savings & loans. Currently a bank had to be located in the county wanting to purchase a CD, and A.B. 96 would broaden that base. At the bottom of page 3 in the bill, the county or city could invest in money market funds a little differently than was currently being done. There were restrictions to invest in only those funds backed by the federal treasuries. The bill would allow funds to be invested in commercial paper that was rated “A-1” ”P-1.” Acting as an individual, a treasurer could invest in any money market fund, but not one that was overseen by a professional manager. The bill expanded the ability to invest in a money market with a professional manager. Page 6, sections 3 and 4, allowed investment in either a CD or credit union. That issue was handled during the Seventieth Legislative Session but some of the sections left out coding needed for clarification and A.B. 96 addressed those issues. Section 6 was simply a housekeeping section and addressed the county auditor’s role in the tax roll. Currently the tax roll was declared on the third Monday in June and the treasurers would like to have that changed to the end of the fiscal year or June 30. That would bring the date into compliance with other documents within the fiscal system due at the end of the fiscal year. Mr. Kramer pointed out he had been in contact with the Clark County Treasurer as well as the State Treasurer and they were also in support of the bill.
Mr. Lee questioned the meaning of the “P-1” rating mentioned in the bill. Mr. Kramer replied there were several rating agencies and they all seemed to have a different way of rating. The state’s bond rating is “AA” but sometimes it was shown as “aa” and was just a difference in the way bond rating agencies rated an agency.
Mr. Lee said he also had a question on page 6, line 4, as it stated “with unanimous consent of his bondsman” and why was the phrase stricken. Mr. Kramer related that went back in history. If a person was a treasurer or clerk in 1870 that person could not go out and obtain insurance. So the treasurer would employ a bondsman who was a respected citizen in town and would vouch for the treasurer. The city does not work that way anymore. There was an ordinance allowing the treasurer to act, so it merely removed archaic language.
Mr. Lee pointed out as he read the bill it did not appear to be a county treasurer’s bill; however, on page 6, line 15 “all money placed to a county treasurer may deposit county money” had been struck out. He wondered if there was an assumption that only county treasurers would be affected. Mr. Kramer explained when the issue was handled during the Seventieth Legislative Session every spot they could find was picked out to allow money to be invested in credit unions. Sections 3 through 5 addressed omitted issues and those items that needed addressing that dealt with time accounts. Other issues addressing school districts and cities were addressed during the last session.
Ms. Parnell questioned the population differential between the under and over 100,000 populations. Mr. Kramer responded many counties were limited in funding and to be able to hire the expertise for investing was beyond a small county’s reach. Most of the investing was done through the local investment pool. When dealing with the larger counties such as Clark or Washoe those counties had staff that enabled them to achieve their own investing.
Ms. Parnell asked Mr. Kramer, since he represented a small county if he was comfortable with the procedures. Mr. Kramer explained virtually all of Carson City funds were turned over to managers. The local government investment pool was one of those managers and A.B. 96 should help with long-term trust funds.
Mr. Price inquired if Carson City was the only combined city/county in the state and were there problems if the city wanted to operate as a county. Mr. Kramer related Carson City operated mainly under county rules and the only difference between Carson City and any other county was to his advantage. The other counties invested at the direction of their board of county commissioners and because Carson City had a city charter the treasurer had the authority to invest for the city. There were a few different rules such as distribution of the gas and sales tax.
Mr. Neighbors seemed to recall there was a law on the books where “in-lieu-of” fees were collected for all state buildings. Mr. Kramer replied there were arrangements with the state, but it was nowhere near what property taxes would generate and was commonly referred to as PILT (payment in lieu of taxes).
Mr. Kramer related he and Mr. Carlson had been in touch with the County Fiscal Officers Association and they had no problem with the amendment.
Mrs. Gibbons asked Mr. Carlson if the amendment would conflict with existing laws, as it seemed to be in conflict with NRS 682. Mr. Carlson declared the amendment actually removed a conflict in the law. Originally the conflict was discovered in the workers compensation pool, where the legislature authorized investment in accordance with NRS 682A, the insurance investment act. When comparison was made with NRS 355, there was a derivative of government through the intergovernmental corporation act, so they did not feel there was clear authority to operate under NRS 682A. The workers compensation committee was approached during the interim requesting clarification, including other pools, not just liability pools. The commission felt it did not have jurisdiction and requested the language be put in as an amendment to the COAL bill. For clarification, he added the constitution prohibited investment in stocks by the pool, but it was available to insurance companies.
Mrs. Freeman stated she was confused by how Mr. Carlson’s organization fit into state government and asked for clarification. He responded under NRS 277, the inter-local cooperation act, local governments were authorized to form pools providing various types of insurance and his organization was a pool formed under that authorization so they did operate as a local government. Membership included all rural counties, most of the rural cities, eight school districts, as well as special districts. The workers comp pool formed under the same law included rural hospitals. His organization focused on combined rural agencies, enabling them to self-insure and jointly purchase excess insurance. He added the property and liability pools had been in existence since 1987, with the legislature authorizing pools in 1985. “Workers comp” was authorized in 1993, becoming effective in 1995, and the organization was effective in April of 1996.
Mrs. Freeman queried if his organization fell under the classification of the public employees. He indicated they provided coverage for all public employees and he was the executive director under contract. He managed both programs and served at the pleasure of a board of directors.
Mrs. Freeman asked who selected board members. Mr. Carlson replied the individual members of the programs chose their representative as well as an alternate. He added the workers comp board had 33 members.
Mrs. Freeman asked if members were chosen by elected officials of a particular public body. Mr. Carlson responded in the affirmative.
Mr. Price asked how many staff the board employed. Mr. Carlson replied there were four staff members reporting to him, contracts with others in the area of loss control and safety support, and claim management firms. He added they were not part of the state public employees’ insurance fund; there was a management contract for both pools.
Bob Seale, former State Treasurer, representing Government Investment Foundation, the State Treasurer and Clark County Treasurer, expressed he basically agreed with testimony previously given and was in support of the bill. It would allow both larger counties and the local government investment pools a broader spectrum of investments and enable a larger return more in line with the way the state treasurer invested.
Janelle Kraft, Senior Financial Analyst, City of Las Vegas, testified the city was in support of the bill, but had a suggested change (Exhibit C), changing “Investments” to “Public Investments.” The city manager had made the suggestion mainly to safeguard portfolio funds and would appreciate the committee’s consideration.
Mr. Bache closed the hearing on A.B. 96 and opened the hearing on A.B. 102.
Assembly Bill No. 102: Revises qualifications for membership on Comstock historic district commission. (BDR 33-546)
Ron James, State Historic Preservation Officer, testified the bill was being presented at the request of the Comstock Historic District Commission. It was a bill designed to resolve some of the conflict inherent in any commission providing architectural review for residents and property owners. Of the nine members, it was not uncommon for five to live outside the Comstock district. As part of the requirement to serve on the board, only four were required to live within the district. Two county commissioners were nominated to serve on the historic commission and were then appointed by the governor. On occasion the designated county commissioners did not live within the district, so there could be up to five people residing outside the district. There were no architects living within the district, so traditionally those were borrowed from one of the outlying areas. The bill provided more local representation. It had been proposed by Storey County and the commission agreed with the reasoning. The bill would allow licensed engineering or building contractors living within the district to be substituted for the architects. It was a positive step in providing the commission with local input, which would alleviate the perception of outside interference.
Mr. Lee asked if the physical structures were required to maintain the historic look and exactly how the commission operated. Mr. James replied NRS 384 established the Comstock Historic District Commission as a state agency and provided local governments with the opportunity to create ordinances to create the historic districts. There were many local governments, such as Washoe, Las Vegas, Reno, and Carson City, which had architectural review commissions established under NRS 384. The commission did not review the structural soundness of any project. They simply looked at the outside appearance of the project, whether it was a change of paint color or additional construction. The local building authority ascertained whether the project would fall down after construction or alteration. The philosophy of having someone familiar with construction was due to the fact many of the people involved in remodeling on the Comstock had not hired an architect but drawn up their own plans without expertise. He added he had served 18 years on the commission, but had asked to be removed and one of his staff would take over for him. During the 18 years he had found expertise from the architects invaluable. However, he felt the commission would loose little in turning the job over to the contractors. He felt they had the same type of knowledge to be of assistance to the owner of the property.
Mr. Lee inquired about the boundaries for the Comstock Historic District. Mr. James replied the national district register included 14,000 acres. The state district was slightly smaller and included Virginia City, Gold Hill, Silver City, and both Dayton and Sutro as islands, as they were not contiguous. Sutro was a very small island, containing the mouth of the tunnel and the site of the once conceived Sutro City.
Mr. Humke questioned why the district was limited to Lyon and Storey Counties. Mr. James answered the district was created in 1969 and amended in 1971 and those counties were designated because only Comstock land was involved. It could have included part of Carson City as its heritage was vitally linked to the Comstock, as well as Virginia Street in Reno because it was the original road to Virginia City. He felt the legislature at that time felt the need to place reasonable boundaries on the district. The commission was unique as a state agency, because while NRS 384 afforded local governments the opportunity to create historic districts, it also created the Comstock Historic Commission as a state agency. He believed the thinking in 1969 was due in part to the popularity of the television series “Bonanza.” The state was trying to recreate a “Wild West” feeling for the community. He felt it was a cultural and economic tool for tourism and a resource that was non-renewable, and if it was not preserved there was danger the area would disappear.
Mr. Humke asserted he felt Washoe County had an interest. The county commissioner in Mr. Humke’s Washoe County district had indicated there was an initiative to be introduced during the present legislature to invest funds for the modern day V & T Railroad. At first he thought it a bad idea, but the commissioner explained about the overarching regional nature of tourism and felt an additional attraction could boost tourism. Economic development was critical, especially with the current Reno Airport problems.
On a different note, Mr. Humke asked if the Sutro Tunnel had been punched all the way through. Mr. James disclosed it was originally drilled three-and-a-half miles down at a one-and-a-half percent incline that intersected the Comstock Lode at the 1,600-foot level.
Mr. Humke wondered if the western opening lay in Washoe County. Mr. James indicated it proceeded from Virginia City underground in a southeasterly direction ending at Sutro City in Lyon County and had no western branch.
Mr. Humke observed in the era of reapportionment he felt there needed to be a regional concept and the cow counties had to “hang together.”
Mr. Neighbors asked how often the commission met. Mr. James replied the statutes required applications be reviewed within 30 days so meetings were a minimum of once a month. In the off building season there were times meetings were not held; however, most of the time there were 12 or even 13 held each year.
Mrs. Gibbons asked Mr. James to clarify the statutes as NRS 623 and 624 seemed to conceivably put a member of the general public from the counties on the commission. Mr. James felt the language made it clear it had to be a general engineering or building contractor. If a local resident had the kind of expertise required under the statutes, the commission would likely approve the person. It worked best when rules were flexible and there was interaction with local residents.
Mr. Mortensen questioned if the Sutro tunnel was still open to the public. Mr. James responded it had a locked gate, as there was a minor cave-in near the mouth approximately eight years ago. There used to be a few tours conducted into the tunnel but that could no longer be done. There was also a bulkhead placed about 500 feet in from the entrance and the tunnel passively drained from the Comstock. The drainage fed a small reservoir, which he understood was stocked with fish and the locals fish there. The quality of water was fine and had been tested for problems after the cave-in.
Mr. Mortensen questioned if there were plans to try and shore it up. Mr. James informed him it was privately owned. It had been shored up in the early 1980s and that was why there were tours at one time, but since the slough-off occurred he had not been back. Now, because it was privately owned, there was a huge liability in allowing anyone near it. State Parks was interested in obtaining the property at the time. However, there were cut-backs in the parks department and they simply did not have the staff to maintain the property. The property owner was very proud of his property and was doing everything to see that it was preserved.
Mr. Neighbors thought he had read somewhere Storey County was 50 to 60 percent privately owned. Mr. James stated actually there was some question on ownership because the Virginia City plat map had never been adequately registered with the federal government. The only real trail of ownership was through private and patented mining claims. In fact, at one point, the Bureau of Land Management (BLM) thought they might own Virginia City and Gold Hill, and by default most of the county. Surveys were a nightmare and there was still a long way to go in establishing ownership.
Mr. Bache closed the meeting on A.B. 102 and opened the meeting on A.B. 138.
Assembly Bill No. 138: Clarifies formula for determining amount payable by State of Nevada toward cost of insurance for certain retired employees. (BDR 23-1065)
Morse Arberry Jr., Assembly District 7, testified he was speaking on behalf of Assembly Bill 138. The bill was the result of a hearing held in the Assembly Committee on Ways and Means pointing to a need in clarifying language regarding the cost of insurance for some retired employees. He had requested his staff to work with legal legislative staff to develop a piece of legislation, which became A. B. 138. He added Mark Stevens would present the bill and answer questions.
Mark Stevens, Assembly Fiscal Analyst, Legislative Counsel Bureau stated the bill amended NRS 287.046, which provided the state of Nevada contribute to the cost of group insurance premiums for retirees with at least five years of service. Current benefits were outlined in lines 19 through 23. With five years of service, 25 percent of the base rate was contributed by the state, and increased to 137.5 percent of the base rate with 20 years of service. The base rate was set by the legislature each session, and currently it was $208.92 cents; therefore, the current maximum was $287.27 for those with 20 years of service. During the interim it was discovered when a person retired from the system, the Public Employees Retirement System (PERS) calculated the years of service in determining benefits and it was found all years of public service were counted. What happened was if a person had 10 years of work experiences in either city, county, school district, or any public employer and subsequently transferred to the state and had 10 years of state service, 20 years was counted in determining the subsidy paid by the state when the individual retired. The bill would restrict the subsidy to years in state government, rather than counting all years, because it was the state paying the entire subsidy. If the bill passed, it would restrict group subsidy for retired employees only to those years in state government. One issue needing to be addressed was whether to include current or future retirees, based on the effective date of the bill.
Mr. Mortensen wondered how many employees would be affected under the current wording of the bill. Mr. Stevens replied he did not have those figures, as his office did not administer the program. It was administered either through PERS or the group insurance plan. He could probably obtain those figures for the committee.
Mrs. Gibbons requested clarification as she had heard previous testimony that in Washoe County a teacher had retired and then joined the state system, and asked if the bill was in response to that issue. Mr. Stevens thought the reason the bill was brought forward was no one in the budget office or his office realized the statute was being implemented in the manner it currently was. The feeling was if the state was going to subsidize the premium for state retirees it should be restricted to state service. The question was should the state subsidize 100 percent of the premium even though the state did not receive 100 percent of their service time.
Mrs. Gibbons inquired why people coming into the system joined the state plan. Mr. Stevens stated any state employee could remain in the state plan after retirement with options for those retiring from other public employers to opt into the state plan as well. Mr. Bache clarified that the section had been amended several sessions previously on scaling from a flat rate to a graduated rate. At the time there was no indication an employee could come from another governmental entity and have the two retirements combined.
Ms. Parnell stated if she understood correctly, someone worked for a school district for 20 years and then came in and worked for the state of Nevada for 5 years and retired, the 25 years would be subsidized by the state for the entire amount. Mr. Stevens replied as it was interpreted by PERS, that was correct. An employee with combined years of service when retiring from state service would be subsidized by the retiree’s group insurance premium. However, if someone worked for 15 years in state service and then worked for another public employer and retired from that public employer, that employee would receive no benefit from state service. One had to retire from state service to receive the subsidy.
Mr. Mortensen questioned if an employee from another governmental entity was getting a benefit from that entity and also from the state. Mr. Stevens reiterated a person would have to retire from the other entity and then work for the state for a subsidy. The person had to be employed by the state at the time of retirement.
Mr. Mortensen asked what would happen if a person worked for a school district and retired from the school district, and then went to the work for the state and retired from the state, would state retirement be added to school district retirement. Mr. Stevens responded he was not certain, only PERS or the group insurance plan could answer that question. He felt if one retired from the school district and went to work for the state, the insurance with the school district would be suspended until after retirement from the state, so there would only be one subsidy.
Mr. Price commented there were a number of legislators who had worked in previous local governmental entities, mostly school districts, and wondered if there would be any affect on the legislators as far as an affect on their previous employment. Mr. Stevens did not think so; however, he was not aware of the fine details of how the program was administered. He remarked perhaps the committee could request PERS or the Public Employees’ Benefits Program to appear before the committee and have them discuss the issue.
Mr. Bache indicated he was one of the legislators who also was a schoolteacher. He said Mr. Price’s question seemed to deal more with PERS, and not with the bill, which addressed the health benefit program. Because they were not really considered state employees under the supplement for health insurance it would not apply to legislators. As a teacher taking a leave of absence during sessions, the PERS contributions stopped. He did have his contributions from the legislative retirement system, and when his leave of absence was over then he accumulated service again as a teacher. That would essentially be true for those who took a leave of absence for legislative service.
Ms. Parnell clarified for anyone employed by a city or county when looking at the option of state health insurance, while serving during the legislative session or elected term, the options were similar to those when retiring. There was never an option to be covered as a state employee even though the legislators were paid during the sessions by the state. She added when she retired from the school district she would have to make a decision on whether to continue her health insurance through the school district, or sign on with the state of Nevada health insurance program. Neither option would allow her any subsidy, so she would not be subsidized under any circumstance.
Mrs. Smith said several questions were raised regarding who was covered, how many people were affected, and what the impact was to the people already in the system. She wondered if the bill could be heard again with the state insurance people in attendance to answer questions. Mr. Bache replied there would be hearings with the benefits committee in attendance.
Mr. Neighbors questioned if the bill needed to be re-referred to the Committee on Ways and Means. Mr. Bache pointed out there was no fiscal impact. The bill merely clarified who and how the benefits were to be administered.
Robert Gagnier, Executive Director, State of Nevada Employees Association, explained the problem arose from combining 1993 legislation with the existing statute already on the books. Prior to 1993 the direct subsidy was the same for all state employees regardless of the years of employment. At that time it seemed the problem had been resolved with the language on page 1, line 20 where it said five years of state service. To be eligible for the benefit the employee must have at least five years of service. However in the same sentence it referred to “each year of service” and that was throughout the statute. He felt the bill was merely clarifying the original intent. What confused the issue was on page 2, lines 6 & 7, “credit for service must be calculated in the manner provided by chapter 286 or NRS.” In NRS 286, retirement was accumulated by all service, no matter what public entity had employed the person. The additional language specified “State of Nevada” and clarified a person would have to work five years for the state to be eligible for the subsidy.
Mr. Bache closed the hearing on A.B. 102, and related there would be a work session on Friday and he would likely schedule it on that date.
The meeting was adjourned at 9:30 a.m.
Virginia Letts
Committee Secretary
APPROVED BY:
Assemblyman Douglas Bache, Chairman
DATE: