MINUTES OF THE meeting

of the

ASSEMBLY SubCommittee on Government Affairs

 

Seventy-First Session

March 7, 2001

 

 

 

The Subcommittee on Government Affairswas called to order at 8:10 a.m., on Wednesday, March 7, 2001.  Chairman David Humke 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.

 

 

 

SUBCOMMITTEE MEMBERS PRESENT:

 

Mr.                     David Humke, Chairman

Mr.                     Harry Mortenson

Ms.                     Debbie Smith

 

 

GUEST LEGISLATORS PRESENT:

 

Assemblyman Douglas Bache, Assembly District 11

 

 

STAFF MEMBERS PRESENT:

 

Eileen O’Grady, Committee Counsel

Virginia Letts, Committee Secretary

 

 

OTHERS PRESENT:

 

Russell Guindon, Deputy Fiscal Analyst, Legislative Counsel Bureau

Ted Zuend, Deputy Fiscal Analyst, Legislative Counsel Bureau

Al Bellister, Director of Research, Nevada State Education Association

 

 

 

Assembly Bill 19:  Creates forecast council and related technical advisory committees to produce long-term forecasts of state revenues and expenditures and estimates of impacts of proposed programs. (BDR 31-203)

 

Russell Guindon, Deputy Fiscal Analyst, Fiscal Division, Legislative Counsel Bureau (LCB), stated he did not have prepared testimony but would answer any questions the subcommittee might have.

 

Mr. Humke questioned whether all or any of the councils or committees noted in the bill would be subject to the open-meeting law, and if the members were subject to state ethics and financial disclosure requirements.  Ms. O’Grady replied she had researched those questions and found the open-meeting law would apply to both the council and the technical advisory committees.  The ethics laws would not, by virtue of the makeup of their membership, as many were already public officers who were subject to the ethic provisions in the law.

 

Mr. Humke asked if those people serving on the board who were in state service would be covered under the ethics requirements of the state.  He understood the private citizens who were appointed were not covered.  Ms. O’Grady reiterated that was correct. 

 

Mr. Humke stated that if the bill passed, his thought was the subcommittee would want the open-meeting law applied to all the committee meetings mentioned under A.B. 19.  If the whole committee was not satisfied with the ethics coverage for private citizens, there could be an amendment showing what the coverage should be.  Speaking for himself, he was satisfied with counsel’s interpretation of the issues and felt the open meeting law was a critical factor in the bill. 

 

Mr. Mortensen wondered if the composition of the committees could be reviewed.  Mr. Guindon stated the first committee was the Forecast Council, and the task force recommended it consist of seven members:  the Senate Majority Leader, the Speaker of the Assembly, or designees from their respective body in the Legislature; the Governor, or a designee from the executive administration; someone from the executive branch or agency; and three members from the private sector appointed by the Governor. 

 

The Revenue Technical Advisory Committee would consist of nine members:  the Senate Fiscal Analyst, the Assembly Fiscal Analyst, the Director of the Department of Administration, the Chief of the Bureau of Research and Analysis in the Department of Employment Training and Rehabilitation, the State Demographer, the Vice chancellor of Finance of University and Community College System of Nevada (UCCSN), and three representatives from the private sector appointed by the Governor.  He pointed out only the private sector appointees were eligible to serve as chairman and served a four-year term.  The Expenditure Technical Advisory Committee included the first six members of the Revenue Technical Advisory Committee.  In addition to those were the Director of the Department of Prisons, the Director or the Department of Education, the Director of the Department of Human Resources, someone from a local government organization and a representative from the private sector, both appointed by the Governor.  The Task Force decided that only a private sector person should serve as chairman, and by default the person appointed by the Governor would be the chairman of the Expenditure Technical Advisory Committee.  It was the intent that rather than the Vice Chancellor of Finance from the University and Community College System of Nevada (UCCSN) serving on both the Revenue and Technical Advisory Committees, that individual could appoint a person from that body to serve on the Revenue and Expenditure Advisory Committees.  He would have the ability to appoint someone from one of the system’s economic, business school program, or one of the research centers to serve on the Revenue Technical Advisory Committee because of their background or technical knowledge in forecasting revenues.  Regarding the makeup of the Expenditure Technical Advisory Committee, someone could serve that had experience in the University’s appropriation and budget process as far as enrollment projections that drove the UCCSN expenditures.  If there was one person that had the background to serve on both committees that person could serve on both committees, but it would not preclude the Vice Chancellor from serving on one or both committees.  There could be a similar situation with the Chief of Research and Analysis, if that individual felt there was someone in his organization with the appropriate background he could be designated to serve on either one or both of the technical advisory committees. 

 

Mr. Mortensen questioned the reference to “public sector,” as the term usually applied to business or industry.  Mr. Guindon responded the intent of the task force was to clarify the meaning of “private sector.”  During the discussions it was made clear they did not want to exclude the possibility of the Governor appointing someone from the University system.  When looking at the language in A.B. 19 it did not exclude the Governor from appointing someone from the University system, but excluded anyone from state service. 

 

Mr. Mortensen said in forecasting expenditures he felt there was the possibility of influencing expenditures in meeting the needs of a particular organization if someone from the organization were sitting on the committee.  Mr. Guindon thought there could be some influence exerted, but given representation by the Senate and Assembly Fiscal Analyst and the Director of the Department of Administration, it would be difficult for one agency to influence the entire forecast process.  There was concern at previous hearings about the makeup of the committees, and why there were a separate Revenue Technical Advisory Committee and Expenditure Technical Advisory Committee.  The task force addressed that concern by keeping the committees separate so there would be no bias in the forecasting process.

 

Mr. Mortensen thought there could be integrity problems because the Expenditure Committee would be getting requests from everyone who had a favorite program that needed funding.  It seemed to him the Expenditure Committee would only consider what was available and listen to the people who requested certain programs, and would not consider the revenue side.  His concern was taxes would be raised in the process.  Mr. Guindon responded the forecasts were prepared each cycle under current law, so there would not be a platform for a particular segment of the population to request a particular program with the assumption it would automatically be funded.  The system was designed to do a series of ten-year projections and look at the resources available to fund the expenditure program.  It was not a forum for people to create or raise taxes. 

 

Mr. Humke followed up with a concern from the full committee.  That was the appointment of the Vice-Chancellor for Finance of the UCCSN to the Revenue Technical Advisory Committee and the Expenditure Advisory Committee.  Mr. Guindon responded he was appointed to both committees.

 

Mr. Humke asked if there was a way of determining who the former incumbents were in that position.  He knew the current incumbent was Dan Miles, who was a former State Budget Analyst, and a few years back the incumbent was Ron Sparks, who was a legislative fiscal analyst.  Two of the last three incumbents had good and valid legislative experience, and the trend in that direction made him comfortable with having the Vice-Chancellor on those committees.  He had served many years on the money committee and a person such as Dan Miles would certainly instill confidence in his neutrality and knowledge of how things should be done in making critical budget decisions. 

 

Ted Zuend, Fiscal Analysis Division, mentioned the Economic Forum Technical Advisory Committee was also represented by the Vice-Chancellor for Finance for UCCSN.  Those persons in the six positions on the technical advisory committees and the Economic Forum matched, so there was continuity but also separateness because of procedures employed. 

 

Mr. Humke related the title of the bill stated in skeleton form the creation of the forecast council, and the wording told him the task force reserved the right to add any other features to the bill if they were necessary.  He asked if Mr. Zuend and Mr. Guindon could confirm that the bill was essentially complete when they testified before the full committee, as there had been no provision for extensive amendments.  Mr. Guindon related the bill in its present form reflected the recommendations of the task force and was complete in applying a long term forecasting process to be used by the state.

 

Mr. Mortensen requested an explanation of the expenditure in the fiscal note.  Mr. Guindon replied the estimate from the Fiscal Division was $9,500, based on per diem and travel costs, when attending meetings.  The cost of funding the program did not include staffing or additional resources as the meetings took place during the interim so the support staff in the Fiscal Analysis Division of the LCB would be available. 

 

Mr. Humke thought most of the questions raised in the full committee had been answered.  However, there had been a suggestion there was too much involvement on the committees by the executive branch in the budget forecasting area.  He questioned if the bill, in essence, was a compromise in setting aside the concept of the legislative budget office being in charge.  He felt the sharing of power between the legislative and executive branches was a major compromise.  Mr. Zuend pointed out the legislative budget process was not really a discussion issue during the hearings.  The Governor had talked on several occasions about long-term planning and at that point in time Assemblywoman Evans had introduced a bill that leaned to the legislative side.  Throughout the process, it was deemed there was no reason for the executive and legislative branches to create separate processes for forecasting the economic outlook for the state.  It was felt there should be a joint effort between the two branches.  The reason the Governor was in charge of making appointments was because typically, when creating any state body, it was assumed the Governor would act in good faith.  There were legislative members included on all the committees and much like the Economic Forum, the Senate and Assembly Fiscal Analysts participated as technical advisors. 

 

Mr. Humke asserted he did not share the concerns of the members on the subcommittee who raised the independence issues.  He felt a blending of the forecasting ability of the branches was a positive thing.  One of the concepts of Assemblywoman Evans was a legislatively generated budget, and that had been resolved while Mrs. Evans was still serving in the Assembly. 

 

Mr. Mortensen thought it would be interesting to have two parallel committees and forbid the members from talking to each other and see how close they could come in projecting ten years into the future.

 

Mrs. Smith stated during the last hearing on the bill she had concerns about the funding mechanism for the proposed task forces.  She had been chairing a council that was created in a similar fashion, and one thing they discovered early on was that no one realized the volume of work and what it took to produce an end product.  For the number of individuals serving on these committees she was concerned about the staffing to do mailings, and the preparations needed for meetings.  She added her group had specifications on how often they met and her council ended up quadrupling the anticipated number of meetings.  There were also times meetings had to be held in other parts of the state which could be an added expense, and she wanted assurance the councils would be adequately financed without undue pressure on the legislative and other support staff.  Her other concern was over the designation of the chairman as it did not seem efficient to have a chairperson elected.

 

Mr. Guindon related the task force in the development of the proposed legislation was structured similar to the Economic Forum and the Technical Advisory Committee that supported the Economic Forum.  In those instances after the people were appointed, the chair was elected at the first meeting.  The task force felt comfortable with that type of framework, and stressed the chair must be elected from the private sector.  If the committee as a whole did not feel comfortable with the structure, he felt there could be an adjustment made to the language in the bill.

 

Mrs. Smith reiterated her concern with the chair position as it was a significant assignment and felt if the person was appointed ahead of time it allowed the committee time to prepare.  There needed to be a building of relationships and trust between the members before the meetings actually started. 

 

Mr. Guindon remarked there was some discussion during the first hearing regarding the appointed members.  The request was that they should be Nevada citizens or taxpayers, which the task force took into consideration when proposing the legislation.  The language agreed upon was used in the same manner when forming other committees, such as the Economic Forum and the Technical Advisory Committee.  Although expertise and experience were needed, it was up to the Governor when appointing people to assume they would be residents of the state.  Specific language would be up to the committee to request.  Another issue raised was the requirement to have videoconferencing of all the meetings and the task force had not considered that when drafting the bill.  The intent was to videoconference all the meetings, but given the shortage of rooms that could be used, there might be occasions where that feature could not be accommodated.  If the committee felt strongly about that issue he felt language could be incorporated into the bill.  There had been some discussion by Assemblywoman Freeman regarding the development of a letter of intent regarding the long-range forecast process.

 

Mr. Humke addressed the issue of having a Nevada residency requirement in the bill.  He felt having the Governor appoint someone from another area, if that person had the background and expertise, it should be his political choice.  He did not see the reason for having that requirement in the bill.  He told the committee of a gentleman who currently lived in Reno named Phil Satrye who had been a leader in the gaming industry for many years.  He first resided in the Reno area and relocated in Memphis, Tennessee, because of his company’s retirement.  Mr. Satrye, who had since returned to Reno, was a well-rounded executive and could possibly serve as one of the appointees to either committee.  Under the scenario it was possible for the Governor to catch the gentleman while he was residing in Tennessee and technically not a Nevada resident.  He did not know if that was a good example for leaving the residency requirement out of the bill, but he personally would leave it up to the discretion of the Governor. 

 

He added the videoconferencing issue seemed to be a detail that did not need to be included in the language.  It was a common sense requirement and both the administrative and legislative branches would videoconference if at all possible, and if the system happened to be down it could be a problem.  If it was in statute it could be a violation of the law.  He felt the issue of the letter of intent should be an issue for the full Assembly Committee on Government Affairs to address as well as perhaps the money committee in order to express direction for the various councils and committees.

 

Mr. Mortensen agreed with Mr. Humke and did not feel the committees should be encumbered by too many details.  Mrs. Smith also agreed.

 

Al Bellister, Director of Research, Nevada State Education Association (NSEA) testified he just had one question on the bill regarding lines 15-17 on page 8 where it talked about the “superintendent of public instruction who has expertise in the budget and expenditure programs of the department.”  He assumed that requirement was broad enough to include the Distributive School Account (DSA) and the total expenditures for K-12, and not limited to the programs of the department.  The DSA was a significant share of the General Fund and he hoped the committee would take into consideration those expenditure patterns.

 

Mr. Zuend stated the intent was to cover public instruction, K-12, and not just specific programs operated by the Department of Education.  If there needed to be an amendment to cover the specifics, one could be drafted to clarify the intent.

 

Ms. O’Grady felt it was advisable to clarify the language so there was no confusion.  Mr. Humke asked Ms. O’Grady to work with the Fiscal Division to draft an amendment clarifying the reference on page 8. 

 

Mr. Bellister referred to the revenue forecasting issue as he assumed the people participating in the forecasting would have knowledge of the revenues unique to school districts as well. 

 

Mr. Zuend remarked on the revenue side it was the intent to forecast all revenues, unlike the Economic Forum, which just forecasted General Fund revenues.  During the task force process there was discussion about property taxes, the local support school taxes were a natural spin-off of the state sales tax.  

 

Mr. Bellister stated the reason he raised that question was because of his experience in observing the Economic Forum and when forecasting the state General Fund, the Local School Support Tax (LLST) situation was not really addressed.  He realized the two taxes went hand-in-hand but he wanted to make sure revenues that went directly to the DSA, such as the LLST, and to a large extent property and motor vehicle privilege tax, were taken into consideration.

 

Mr. Zuend replied the intent of the committee was to match revenues with expenditures and on the K-12 side local sources of revenues could not be ignored.  Mr. Humke added all the taxes split the distribution between the state and local governments and were based on a formula.

 

Mrs. Smith asked if A.B. 525 of the Seventieth Session had given the direction for the present legislation and had it talked about local revenue and expenditures. 

 

Mr. Guindon related it was an issue directly addressed in A.B. 525 of the Seventieth Session and the task force did consider it in their deliberations.  However, the task force did not want to get so specific in the statute such as referring to “revenues in DSA” or “federal gas taxes,” because if changes were made, then the statute would have to be amended once again.  When specifics were too precise there was always the chance a law would be violated and then the entire process might have to be amended.  It was felt the members of the Forecast Council could direct the Revenue and Expenditure Technical Advisory Committees, as well as the work groups as to what revenues and expenditure components should be forecast.  Since they were public meetings, if there was an issue someone felt should be addressed it could be brought forward.

 

Assemblyman Bache, Chairman of the Assembly Committee on Government Affairs, and representative from Clark County, Assembly District 11, stated he wanted to remind the committee if they came to some conclusion a motion for recommendation would be needed from the subcommittee. 

 

Mr. Bellister mentioned he appreciated Mr. Guindon and Mr. Zuend’s clarification of the original intent, but he would still like to have further clarification on page 8 in referencing the DSA.  Mr. Humke related he would entertain an amendment to clarify the language. 

 

Mr. Humke suggested a short break in order to consult with the other members at 9:05 a.m. 

 

The subcommittee reconvened at 9:10 a.m., and Chairman Humke stated Assemblyman Bache would make a brief statement on the bill.

 

Mr. Bache said in the initial hearing on A.B. 19 there were concerns brought up, particularly by Assemblywoman Parnell regarding appointments.  In Section 5, Subsection g, it stated three people were to be appointed by the Governor and her concern was the commission was weighted to the executive branch rather than a balance of power.  He felt if there was an amendment drawn to clarify the appointment to the commission it might allay the concerns of Ms. Parnell. 

 

Mr. Humke said he felt the bill was a clear collaboration between the executive and legislative branches.  However, he was open to any discussion on that point.  Mrs. Smith thought perhaps the bill should be carried over for one more meeting with an invitation to Ms. Parnell to participate in the discussion, to see if there was any type of compromise that could be offered.

 

Mr. Mortensen wondered if the subcommittee should recommend the bill be brought before the full committee.  He realized it was the job of the subcommittee to bring a clean bill back to the full committee, but perhaps the full committee should be voting on whether the Legislative Commission or the Governor made the appointments.

 

Mr. Humke asserted that was one philosophy on how subcommittees should operate.  His feeling was the subcommittee should cover all the issues and attempt to reach a compromise or solution.  He thought having Ms. Parnell express her concerns before the subcommittee at a later date might provide some sort of compromise.  It would also allow time for Mr. Bellister to meet with the fiscal and legislative staff from LCB to draft an amendment, which could also be brought before the committee.

 

Mrs. Smith informed Mr. Humke she would take the responsibility of contacting Ms. Parnell and invite her to discuss her issues with the members at the next subcommittee meeting.

 

Mr. Humke adjourned the meeting at 9:20 a.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Virginia Letts

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Assemblyman Douglas Bache, Chairman

 

 

DATE: