ASSEMBLY COMMITTEE ON TAXATION

MINUTES OF THE Meeting

of the

ASSEMBLY Committee on Taxation

Seventy-First Session

February 20, 2001

The Committee on Taxationwas called to order at 1:30 p.m., on Tuesday, February 20, 2001. Chairman David Goldwater presided in Room 1214 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. David Goldwater, Chairman

Mr. Roy Neighbors, Vice Chairman

Mr. Bernie Anderson

Mr. Morse Arberry Jr.

Mr. Greg Brower

Mr. David Brown

Mrs. Vivian Freeman

Mr. John Marvel

Mr. Harry Mortenson

Mr. David Parks

Mr. Bob Price

Ms. Sandra Tiffany

STAFF MEMBERS PRESENT:

Ted Zuend, Deputy Fiscal Analyst

Kathryn Ely, Committee Secretary

OTHERS PRESENT:

Kami Dempsey, Executive Director, Nevada Pro-Education Alliance

David Howard, Public Policy Director, Reno-Sparks Chamber of Commerce

Lillie Englund, Director and Regional Director, Imprints Day School

Glen Guttry, Vice Mayor of Elko

Dennis Hellwinkel, President, Nevada Farm Bureau Federation

Willetta Kerschner, Small Business Owner

Samuel P. McMullen, Nevada Pro-Education Alliance

Carole Vilardo, Nevada Taxpayers Association

Robert J. Gagnier, Executive Director, State of Nevada Employees Association

Mendy Elliott, Vice President, Community and Government Relations for Wells Fargo Bank

Ray Bacon, Executive Director, Nevada Manufacturers Association

Pat Shalmy, President, Las Vegas Chamber of Commerce

Trish Marschall, No Regrets Deli, Reno

Richard Harjo, Chairman, Nevada Indian Commission

Warren Hardy, National Federation of Independent Businesses

Larry Osborne, Executive Vice President of Carson City Chamber of Commerce

Phillip Harrison, Plant Manager for Taiyo America, Inc.

Susan Terry, Small Business Owner

Penny Brock, Taxpayer

Tom Keeton, Taxpayer

Janine Hansen, President, Nevada Eagle Forum

John Wagner, Nevada Republican Assembly

Phil Stout, Executive Director, Nevada Association of Independent Businesses

Elaine Lancaster, President, Nevada State Education Association

Greta Peay, Teacher, Clark County School District

Gertrude Scruggs, Teacher

Barbara Serrett, Teacher, Washoe County School District

Lynn Warne, Teacher, Spanish Springs Elementary School

Ken Buhrmann, Teacher, McQueen High School

Irwin Schiff, Author

Initiative Petition No. 1: Nevada Tax Fairness And Quality School Funding Accountability Act.

Kami Dempsey, Executive Director of Nevada Pro-Education Alliance, provided an historical background of the Alliance (Exhibit C) and explained it was a statewide coalition of taxpayers, parents, and business representatives dedicated to the improvement of Nevada’s education system.

David Howard, Public Policy Director for the Reno-Sparks Chamber of Commerce, summarized concerns and listed (Exhibit D) impacts the initiative would have on Nevada’s tax structure. Special comments from John Bullis, Bullis, Crossley & Heimark, regarding the possible cost of compliance with I.P. 1, were included in Exhibit D.

Lillie Englund, Director and Regional Director, Imprints Day School, Las Vegas, opposed the initiative proposal because (Exhibit E):

· it required a totally new revenue stream with no agency or legislative body accountable for expenditures;

· it had no budgetary declarations;

· it included no specific statistical objectives to measure performance;

· the definition of a business was far reaching and included families who received income from rental property and people who managed businesses out of their homes;

· profit would be difficult to measure;

· the initiative would drive up business costs;

· the provisions established to collect and account for revenues were complicated and imposed a burden on the Department of Taxation.

Chairman Goldwater asked Mrs. Englund what her school spent on each pupil. Mrs. Englund explained Imprints Day School was a year-round school and offered an extended-day program. For a fifty-two-week year, the school invested approximately $9,600 per student.

Mr. Brower felt the committee needed to hear the specific reasons why this proposed tax could not work effectively in Nevada. He thought there was a “potential problem,” in education funding but only one idea had been put forth. While there was an agreement that education should be a funding priority, he needed to know why so many constituents were skeptical about the initiative being the right idea and reminded the committee the focus should be on the tax issue and why I.P. 1 was not the “right way to go.”

Glen Guttry, Vice Mayor of Elko and Chairman of the Elko County Economic Diversification Authority, declared the more taxes businesses paid, the slower the growth of the economy and the creation of jobs. Because of the way the initiative was drafted, Mr. Guttry’s “S” corporation would not pay the tax, but other small businesses set up as sole-proprietors, partnerships and limited liability companies could not avoid paying it by “expensing out owner’s salaries.” In fact, they would pay tax on their net profit as well as the amounts paid as owner’s salaries, retirement payments, health care premiums, and charitable contributions, which added together became the taxable income of the business. Mr. Guttry was concerned the tax would not produce enough revenue to fund the 50 percent requirement the tax called for, which required another tax increase to fund the shortfall. The impact to economic diversification would be substantial (Exhibit F).

In response to a clarification requested by Assemblyman Price, Chairman Goldwater stated that if the legislature turned down I.P. 1 but the voters passed it, changes could not be made to the petition for three years.

Dennis Hellwinkel, President of the Nevada Farm Bureau Federation, opposed the adoption of I.P. 1. In his testimony (Exhibit G) he revealed he owned a dairy farm, a single proprietorship, in Fallon, Nevada. He presented several concerns including the provision that the tax applied to taxable income of businesses over $50,000 or more. Though his dairy generated more than that annually, when operating expenses were subtracted, the farm was not profitable in three of the past five years. He did not believe he would be subject to the tax, but the petition stated he must file to prove he was not required to pay the tax and his books, papers and records were subject to review by the Tax Commission at any time. To him, the proposed business tax seemed like a personal income tax that he might at a future date be required to pay, and it was unfair that one segment of Nevada’s taxpayers should carry the brunt of increased funding for education.

Mr. Marvel believed any type of tax return should be filed with the Department of Taxation to determine if the business qualified for the tax or was exempt. Another question needed consideration: What would be the cost of administering this tax?

Willetta Kerschner, a small businesswoman in Nevada, opposed I.P. 1. Her company was an “S” corporation and the income generated was taxed on a personal basis. She also had a limited liability corporation (LLC), which was taxed on a personal income tax basis. The LLC income was subject to federal and self-employment tax, so she felt she was taxed twice.

Samuel P. McMullen, representing the Nevada Pro-Education Alliance, spoke of the legal issues and tax laws vis-à-vis the initiative petition (Exhibit H). The legal issues included workability, confusion, vagueness, or other problems related to legal standards, constitutional or otherwise. There was a tendency to think that a “natural person,” a term the constitution used, did business as a sole proprietorship and was subject to personal income taxation. Definitions and procedures adopted from the federal tax laws would cause instances where people would actually pay taxes under I.P. 1 on their personal salaries. Mr. McMullen believed the initiative was poorly drafted but the problems were fixable. The Federal tax code actually made a distinction between “compensation for services, including fees, commissions, fringe benefit items” as it defined gross income derived from business. Even the federal government had a list of fifteen items where it differentiated personal compensation from business income. The federal government, or any tax system, was attentive to the indicia of taxation in terms of where the burden was placed. Mr. McMullen made these points about I.P. 1: 1) The obligation to file the return was on the natural person in any business in which a natural person was involved; 2) The obligation to pay the tax was placed on the natural person; and, 3) The tax was measured on the basis of the natural person’s income tax Form 1040, not the business tax return.

The tax proposed by I.P. 1 was based on net profits of the business, the owner’s salaries, retirement paid for the owner, health insurance premiums paid for the owner, and charitable contributions of the business. Salaries were personal income; the federal tax law used it that way. The Nevada Constitution stated wages were not taxable. But in this case, the way I.P. 1 was drafted, those items, and items beyond those, would be taxed.

Chairman Goldwater asked Mr. McMullen if he opposed the initiative because he believed it was unconstitutional. Mr. McMullen responded in the affirmative. Chairman Goldwater reminded Mr. McMullen that this legislative body would not decide on the constitutionality of the initiative and, until the Supreme Court issued a ruling, it would be assumed it was constitutional. Mr. McMullen stated he believed that if the committee had decided it was unconstitutional, then all the testimony would not be needed. Chairman Goldwater assumed, for the purpose of debate, the initiative was constitutional.

Mr. McMullen stated this tax initiative required every partner, every sole proprietor, every member of a LLC to personally file a return themselves. Consider that a business had one thousand limited partners. This would cause a thousand tax returns to be filed. According to the language in the initiative, trusts and estates were taxable, regardless of whether or not there was a relationship to a business. That was clearly a problem.

Mr. McMullen pointed out that a definition of “activity for profit” was not included. Some language seemed to indicate that interest and dividends were taxable. Laws should clearly define in statute the taxability, the exemptions, all indices of taxation, and what was paid and not paid. Consequently, these questions could be fatal. The proponents relied on what Mr. McMullen termed a “safe harbor” by stating they would only tax to the extent it was constitutional with regard to personal income. If the provision was taken to its logical extension, a tax law could pass that would tax an individual to the extent constitutional. He stated this was not allowed in tax statutes. In conclusion, Mr. McMullen noted, if this was enacted, Nevada would be one of the only states to tax municipal and state tax-free bonds.

Assemblywoman Tiffany asked if the initiative was declared unconstitutional before or after it passed, could it be amended? Mr. McMullen stated the initiative could not be amended. Ms. Tiffany believed an initiative could be amended if it was found by the courts to be unconstitutional. He would check again, but he understood that it could not be amended, repealed or changed in any way for three years. Because the voters signed for it as a package, it was difficult to change a portion without changing the intent, Mr. McMullen said.

Mr. Mortenson queried Mr. McMullen about the list of five things that would be taxed, including the benefits. Mr. McMullen explained the federal tax received revenue either under the corporate income tax return or the personal income tax return. When the federal government transferred revenue over for purposes of including it in the 1040 Form for a person, items would be deducted from that. Nevada allowed no personal income tax, so the initiative was drafted to clean up those issues on the front end.

It seemed to Chairman Goldwater that the Nevada Pro-Education Alliance was uncertain about the initiative because of the way it was drafted and the inability to change it because it was a petition process. He asked Mr. McMullen if he was, in principal, for a tax but against the way it was drafted. Mr. McMullen responded the committee heard this panel state the need for a comprehensive response, rather than a single item that raised salaries by 6 percent and then caused other problems. The only accountability item found was how the revenue was spent. The teachers wanted a report of expenditures, but allowed only one hearing for the parents to attend. This was not the type of accountability expected. Taxes were investments; Nevada should want a good return on the investment. The dialogue for the last two years should have been about needs, filling the needs and funding them, rather than obtaining the revenue and then determining where to spend it.

Assemblywoman Freeman contradicted Mr. McMullen; the needs had been discussed at the state and local levels for several years. She asked him what he and his organization planned to do to address the problem. He replied the Nevada Pro-Education Alliance was heartened by the $100 million from the Governor, a portion of which would go to teachers’ salaries. The alliance would continue to be involved in resolving the problems.

Ms. Tiffany asked Mr. McMullen whether he thought the public was not fully aware of the implications of where these revenues were going to come from personally. She had never considered the possibility of paying taxes on benefits, trusts or activities for profit.

Mr. McMullen responded in the affirmative and stated there were rules, especially at the federal level, that already indicate what items would be taxed based on the terms used in the initiative. There would be taxes paid on items that not only have never been taxed in Nevada but theoretically should not be taxed under the Nevada Constitution.

Ms. Carole Vilardo, Nevada Taxpayers Association, opposed the initiative. The form was purported to be simple (Exhibit I). Though the form was short, it would take many pages to figure data. An individual could not “piggy back” on the federal tax form; it would be impossible. The initiative called for the Department of Taxation to set regulations as necessary. There was no question regulations were required, and these regulations would create more paperwork.

The initiative stated I.P 1 was a “fair tax.” “Fair tax” like “good tax” was an oxymoron; the best that could be hoped for was an equitable tax. The initiative was “a need for revenue identified by one segment of the community concerned with only how their need will be met and who can be taxed that would be subject, or have the biggest problem trying to oppose the imposition of the tax on its face.” If taxes were imposed, there must be ease of compliance. Additionally, a tax should not force economic decisions. While an income tax could be structured with provisions that eliminated some of the problems Mr. McMullen addressed, such as creative accounting and how to circumvent paying the tax, this tax was not. Companies that sought to relocate in Nevada might rethink the decision based on the tax situation. Businesses could only adjust expenditures for compensation and marketing/promotion to pay a mandate; a tax was a mandate.

A tax should have stability as a revenue source. Two of Nevada’s major revenue sources were percentage taxes. Seventy-five percent of the budget expended sales and gaming tax revenues, and both were very volatile. The income tax was the most volatile of taxes. As a result of natural disasters and the changes in the aerospace industry in California, the state income tax revenue diminished. In excess of $600 million was over-projected on just California’s corporate income tax.

The ease of administration of a tax should be considered. Nevada had approximately 70,000 businesses and approximately 80,000 corporations. The tax initiative failed to recognize the reams of paper that would be filed by these businesses. Furthermore, not enough time was allowed to actually develop the necessary compliance and procedures. The tax would not be online in six months; the computer hardware and software could not be “meshed” in that time nor could staff be hired and trained.

The initiative spoke to imposing, or capturing, projections of the Economic Forum against what would be actually budgeted. In 1996, 1992, 1982, 1981, 1978, and 1974, Nevada revenues were lower than projections. I.P. 1 created an expenditure base that was based on projections. If the revenues came in under the projections, the initiative provided that the state made up the shortfall from general revenues.

Section 13 of the initiative proposed the exchange of information with the Internal Revenue Service (IRS) would parallel the quid pro quo exchange of information between the IRS and employment security. Because the initiative targeted sole proprietorships, personal income tax information would be exchanged. Ms. Vilardo cautioned against creating an initiative as a policy statement. She claimed the legislature was hamstrung by the 1956 referendum on sales tax, which could not be changed without a vote.

Ms. Vilardo concluded her presentation with an “historical point of view.” In 1981, the legislature reversed the funding scheme of state and local government through the tax shift from property tax to sales tax. The imposition of the taxes occurred at the beginning of a recession, though the rate of sales tax increased, Nevada could not meet the projections. In 1991, Nevada imposed the largest tax increase in its history. It was a business tax: .75 percent attached to the local school support. This was businesses’ response to the teachers’ corporate initiative. By September of that year, no revenue projections were met. In 2001 there was a flattening economy.

Mr. Anderson commented that in 1991, his first session, they had the Price Waterhouse Study, which predicted the shortfall and recommended a new revenue source. How, he asked, could they return to that study and find a new revenue stream other than the traditional streams that were drying? Should the sales tax be raised to fund education?

Ms. Vilardo supported the business tax in 1991. Some of the recommendations the association made were not accepted, but they believed a tax structure must be reviewed periodically. Before new revenue sources were reviewed, study the mechanical quirks of the existing revenue sources. No one on the board, who set the policy for the Nevada Taxpayers Association, would recommend raising the tax rate higher than it was because that invoked the “law of diminishing returns.” The Price Waterhouse Study suggested taxing the sale of food to give stability to the sales tax base, but that was not politically palatable. A few things, such as e-commerce, could be studied and adjusted to increase revenue. Ms. Vilardo confirmed that the association was willing to work with the committee, but she would not present an alternative until more questions were answered.

Mr. Anderson asked whether Ms. Vilardo felt that all initiative processes were “fouled” because they excluded public discussion. Ms. Vilardo responded the association did not have a problem with the initiative process if it identified the policy issue and if it was put to the legislature for public dialog.

Assemblyman Mortenson reminded those present the Price Waterhouse Study reported that Nevada had a very repressive sales tax because it created a large portion of the revenue. He hoped there would not be an incentive to tax services. He asked Mr. McMullen, if I.P. 1 passed, after three years would he meet with the Governor to develop an alternative for the ballot? Mr. McMullen stated the goal of the Alliance was to defeat the poorly crafted initiative. He was uncertain that only one tax existed in the initiative. Section 53, conceivably by most fiscal analysts, including the Legislative Counsel Bureau and the Budget Division, stated approximately $150 to $180 million was stripped out of the other half of the budget. The budget of Nevada could not be cut by $150 million without serious damage. To just keep the budget whole, legislators, not the initiative process, would need to determine the second tax, which would fund that cut.

Mr. Brower asked Mr. McMullen for his opinion of how Nevada would fare relative to other states in economic development if this tax was put into place.

Ms. Vilardo commented that Nevada would lose a major portion. Other states requested exemptions and she would do the same.

Assemblywoman Freeman asked Ms. Vilardo to advise the committee of her recommendations and tell her whether public dialogue could be accomplished before the end of session. Ms. Vilardo had that discussion with a couple of members of the committee and she believed some things involved minor “tinkering” to generate some numbers. She opined anything that was substantive might need to wait until next session because the dialogue had to be disseminated to the community so the impacts to other types of businesses could be adjusted or corrected. As a result of the 1991 session, the business tax was technically enacted before it was signed into law; payment was due before the end of the quarter, and in the 1993 session, major revisions had to be done.

Assemblyman Price acknowledged Ms. Vilardo’s expertise, and asked how the business tax would impact Nevada’s most important industry the “only in Nevada” industry. Ms. Vilardo responded that obtaining the testimony from the transaction tax in 1991 might be helpful in answering that question.

Robert J. Gagnier, Executive Director of the State of Nevada Employees Association (SNEA) informed the committee that last spring the General Counsel of SNEA adopted a resolution (Exhibit J) opposing both tax initiatives and the gaming tax because SNEA always opposed earmarked funds and because the 50 percent language caused an erosion of all the other benefits. SNEA understood Nevada had to do something to change its revenue and thought the best place to do that was right here.

Mendy Elliott, Vice President of Community and Government Relations, Wells Fargo Bank, stated that Wells Fargo had embraced children’s education as a core company value. The commitment stemmed from the strong belief that Wells Fargo was only as strong as the community in which it resided and worked. The strength of any community was largely based upon its economic stability, and the education level of the local citizens to a significant extent drove its economic viability. Nevada paid an average of $15,501 per year to house a prison inmate and just $5,717 to educate a child. It was no coincidence that the average prison inmate read at a fourth grade level. An investment in children and education could play a part in improving the lives of Nevada’s children in the community as a whole. In light of comments made that businesses did not do enough for education, she cited examples that included providing project management teams, staff development, training and establishing new classroom computer systems. Wells Fargo, as well as the Nevada Banker’s Association, was against the initiative. Wells Fargo wanted to cooperatively establish a broad-based assessment, not just for K-12 education but for Nevada in general. Wells Fargo wanted Nevada to prosper.

Ray Bacon, Executive Director of Nevada Manufacturers Association, stated that most of the local funding for schools was property tax based and was overwhelmingly paid by the business community (Exhibit K). In most counties, business accounted for 60 percent or more of the property tax base. He was “miffed” by the statement that business did not pay for schools.

Pat Shalmy, President, Las Vegas Chamber of Commerce, stated there were approximately 15 programs that assisted in educating the children of Nevada. The chamber’s strategic planning process was revisited last month, and the board of trustees chose education as the top priority facing the community. The chamber wanted to improve on the programs already in existence and create new programs. Mr. Shalmy offered to provide to the committee the results of the strategic planning process and looked forward to working with the committee.

Trish Marschall, No Regrets Deli, Reno, opposed the initiative. It would be an additional burden a small business had to endure. A small business operation was a huge risk and success was against the owner, especially in the food industry.

Richard Harjo, Chairman of the Nevada Indian Commission, stressed he did not speak on behalf of the tribes. He stated there were 17 federally recognized tribes in Nevada, or a total of 27 if the bands and colonies that fall within the same jurisdiction were included. All of the tribes were grant-dependent nations and did not have huge undertakings such as gaming nor monthly checks from the federal government. Most of the areas had small smoke shops and existed, much like any small business, on a shoestring. In fact, 99.99 percent of the tribes did not have the resources to meet their own needs, even with federal assistance offered under the trust responsibility of the federal government. Education for Native Americans in Nevada failed miserably; Native Americans had one of the highest dropout rates. He thought it was ironic to tax the tribes’ meager businesses, for a failed attempt to meet the needs of the Indian children of Nevada.

Warren Hardy, National Federation of Independent Businesses (NFIB), introduced his organization as the largest small business advocacy group in the United States, representing the “mom and pop” businesses, not major corporations, government entities or publicly traded companies. Fifty-five percent of NFIB’s membership was comprised of small businesses with less than five employees and 75 percent employed fewer than ten. According to a book entitled The Job Generation Process, small businesses created two-thirds of all jobs in America. NFIB believed I.P. 1 might be one more hurdle faced by an individual considering small business ownership. He concluded that Nevada could not afford any more disincentives for small businesses.

Larry Osborne, Executive Vice President of the Carson City Chamber of Commerce, stated the chamber represented 1,000 local businesses that paid over $6 million annually in property taxes for the local school district. The chamber was a member of the Nevada Pro-Education Alliance and, to some degree, the chamber was in agreement with the Nevada State Education Association: the education system needed help. However, the chamber did not believe more money would make the system work. Several local governments had passed resolutions of opposition to I.P. 1 because it would take funding from their needs.

Phillip Harrison, Plant Manager for Taiyo America, Inc., contradicted two NSEA claims about the effects of the initiative (Exhibit L). First, NSEA estimated a family of four would pay approximately $84 per year. Taiyo America, Inc., had an employee profit-sharing plan, and the company estimated each employee would lose approximately $5,000 annually in profit-sharing compensation. Secondly, NSEA believed companies could pass this cost along to the consumer. However, in an already highly competitive industry, that was not an option Taiyo America could exercise and still remain competitive, he concluded.

Susan Terry, small businesswoman, spoke in opposition to I.P. 1. She pointed out the employee tax, which required employers to pay a tax on every employee, was established to fund schools (Exhibit M). She wanted to know if this was true. Another tax on her business would hurt Nevada’s economic diversity, she said. Mr. Goldwater said the employee tax was a general activity tax, which went to the General Fund. But, she replied, it was presented to the population for education, and now the proposal was to tax businesses again.

Penny Brock, a Nevada taxpayer, was a principal and teacher in a private school the year before and did not take any salary. The school charged $1,700 per student and academically was in the top 15 percent of private schools nationwide in that price range. Money did not produce quality education. The United States ranked number one in funding education when compared to other industrialized nations. However, worldwide studies showed academically the United States was third from the bottom of twenty-two nations. Only 21 percent of U.S. fourth graders could read at fourth grade level and only 26 percent of U.S. eighth graders could read at proficient eighth grade level. She concluded, “We are not getting what we are paying for, why should we put more money into a system that is failing our children.”

Tom Keeton, taxpayer, also felt that spending more money per pupil would not solve the problem (Exhibit N). Parental involvement and student accountability were two important elements. He implored the committee to do the right thing for the students and taxpayers of Nevada.

Janine Hansen, President, Nevada Eagle Forum, believed schools often did not respond to the needs and concerns of parents and children. Until conditions in the schools changed, parents and children would not be served by “more money for the same old things.” Ms. Hansen believed that I.P. 1 served the teachers’ union, not the children. She encouraged the committee to realize that the answer to improving education was not more taxes but rather “real fundamental change.”

John Wagner, representing the Nevada Republican Assembly, urged the committee to vote no on I.P. 1.

Phil Stout, Executive Director, Nevada Association of Independent Businesses, agreed with the testimony of other witnesses and urged the committee to vote “no.”

Chairman Goldwater stated Nevada could not allow the “perfect” to be an enemy of the “good.” To move forward with any tax proposal, no one could call any taxes perfect but that could not stand in the way of the good to be done. Chairman Goldwater concluded the opponents’ testimony and began the rebuttal testimony.

Elaine Lancaster, President, Nevada State Education Association, introduced Dr. Greta Peay, a literacy specialist for the Clark County School District. Dr. Peay stated in spite of her level of education, she loved teaching in the public school sector. She supported the initiative because it was the only plan presented that made sense. It was time to fund education properly. Teachers did not receive adequate training due to lack of funds. Many teachers spent their own money, and their own time, for professional development training. She had no materials budget for her kindergarten through fifth grade students who needed reading assistance. She spent her own money to purchase supplemental teaching materials. Nevada spent $1,200 less than other states on educating students. Teachers had a passion for what they did but needed to feel valued. She urged the committee to support I.P. 1 or produce another plan to accomplish the goal.

Gertrude Scruggs, second grade teacher, Mendoza Elementary School, Las Vegas, had been a teacher for 30 years. She would retire soon and her pension would be just $1,000 per month. Teaching was difficult and there ought to be a reward for a job well done. Her classroom was built to accommodate 26-27 students and one adult, but two teachers and 36 children used it. Ms. Scruggs said the children of today were different and sometimes did not see their parents because the parents worked a late shift. Teachers acted in “loco parentis” and assumed “the whole mode to help the kids get where they are going.” “Children are the hope of the world,” she exclaimed. They were in dire need that required the assistance of the entire community. She implored the committee to consider the petition as a means to pay for what was needed.

Barbara Serrett, a teacher in the Washoe County School District, received National Board Certification. In the 400-plus hours she spent preparing for the certification, she realized the process was all about the kids. Her responses to the questions on the 140-page document reflected the depth of her knowledge of the needs of children. Listen to the voices of the children! Other states have had the foresight to fully fund education. Nevada must now focus on the children. To provide quality education, to recruit and maintain quality professionals, and to provide students with the tools necessary to become competent productive members of society, it was imperative that the initiative passed. She urged the committee to support I.P. 1.

Lynn Warne, a teacher at Spanish Springs Elementary School, had taught for 15 years and never had a class with fewer than 30 students. She needed to scramble for desks, chairs and textbooks. Due to overcrowding, the school operated in a multi-track year round. She spent over $817 of her own money to purchase supplies, books and science experiment materials for her class. She had a master’s degree plus 32 credits, but she made less than other professionals with the same training and experience. She was appalled that no one other than NSEA presented a solution to the problem of education in Nevada. She strongly urged the committee to support “this quality schools initiative.”

Ken Buhrmann, a teacher at McQueen High School in Reno, stated this was his 34th year of teaching. McQueen High School was named one of the top four high schools in the United States, and its scores have far exceeded the national average. He spent over $2,100 of his own money for additional classroom materials that the school and the education system did not provide, including: Kleenex, furniture, white boards, donations to school clubs, pens and grade books. He had a Bachelor’s degree, a Master’s degree, a Reading Specialist degree and had almost completed his Ph.D., and he was not paid “even close” to what he thought he was worth. However, he did not teach for money but rather because he liked teaching and the students. He requested the committee’s support of this petition.

Irwin Schiff, an economist and author, said that businesses did not pay taxes; they passed them on to consumers as higher prices or to their employees as lower wages. He opposed this tax.

Chairman Goldwater closed the hearing and adjourned the meeting at 4:46 p.m. Exhibit O through Exhibit T were submitted in lieu of testimony.

RESPECTFULLY SUBMITTED:

Linda Lee Nary

Transcribing Secretary

APPROVED BY:

Assemblyman David Goldwater, Chairman

DATE: