MINUTES OF THE Meeting
of the
ASSEMBLY Committee on Taxation
Seventy-First Session
April 3, 2001
The Committee on Taxationwas called to order at 1:30 p.m., on Tuesday, April 3, 2001. Chairman David Goldwater presided in Room 3142 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. Bob Price
Ms. Sandra Tiffany
COMMITTEE MEMBERS ABSENT:
Mr. David Parks (Excused)
GUEST LEGISLATORS PRESENT:
Assemblyman Tom Collins, District 1
Assemblyman John Lee, District 3
STAFF MEMBERS PRESENT:
Ted Zuend, Fiscal Analyst
Kathryn Ely, Recording Committee Secretary
N. Jolene Jones Miley, Transcribing Secretary
OTHERS PRESENT:
Robert Crowell, Lobbyist, Las Vegas/Clark County Library District
Daniel Walters, Executive Director, Las Vegas/Clark County Library District
Clark “Danny” Lee, Lobbyist, Nevada Library Association
Duncan R. McCoy, Director, Boulder City Library District
Rachel Nicholson, Attorney, Nye County
Maureen Brower, Lobbyist, Nevada Association of Medical Products Suppliers and American Cancer Society
Richard J. Pozesky, President, Executive Director, Nevada Association of Medical Products Suppliers
Carol Vilardo, Lobbyist, Nevada Taxpayers Association
David L. Howard, Lobbyist, Nevada State Chamber Association
David Pursell, Executive Director, Nevada Department of Taxation
Chairman David Goldwater called the meeting to order at 1:36 p.m. Mr. Goldwater informed the secretary that Assemblyman David Parks was excused. Mr. Goldwater said the committee would hear Assemblywoman Dawn Gibbons’ bill A.B. 205, and stated Mrs. Gibbons would provide the amendments before the committee adjourned.
Mr. Goldwater opened the hearing on A.B. 317.
Assembly Bill 317: Makes various changes relating to library districts. (BDR 33-233)
Assemblyman Tom Collins stated he wanted to propose amendments to A.B. 317. Mr. Collins said the intent of A.B. 317 was to remove the guarantee of 6½ cents to library districts from proposed property taxes. He said the only tax rate higher was the rate for the medically indigent. Mr. Collins stated local government should determine their spending from the General Fund. Mr. Collins stated that most library board members were appointed and not elected and they had the ability and authority to levy taxes through general obligation bonds.
Mr. Collins submitted photographs, for the committee’s perusal only as no exhibits were available, of libraries that were constructed with taxpayer dollars. He said some of the structures were opulent and were more reminiscent of a mausoleum than a place of learning and conducive to study. He felt library districts should obtain their funding from the General Fund of their local jurisdiction and be allowed the right to sell funding bonds when needed and approved by the voters.
Mr. Collins stated the Las Vegas/Clark County Library District had received monies on properties that were now located in North Las Vegas. North Las Vegas was also paying taxes to the North Las Vegas Library District. He closed his testimony stating there was an inequity in how the library districts were funded in Clark County and A.B. 317 would address that inequity.
Mr. Mortenson said some people enjoyed the beauty of a building and found it very conducive to learning.
Mr. Marvel asked Mr. Collins if A.B. 317 would prohibit future bonding for library improvements or construction. Mr. Collins responded “no,” it would no longer allow the library districts to rely on the set-aside property tax, but the county commissioners or city councils would approve a bond issue instead.
Mr. Marvel inquired if the county commission or city council set the tax levy for libraries. He stated some counties had a 5-cent cap for tax bonds. According to Mr. Marvel the consolidated library district was unique to Clark County. Mr. Collins said the legislature sets the cap for the Clark County Library District and that cap was 6.59 cents. Mr. Marvel said he could not see where that information was included in A.B. 317. Mr. Collins stated that was not a part of A.B. 317.
Mr. Price said there had been a bill heard in Assembly Government Affairs that concerned the consolidated library districts and he asked if A.B. 317 would impact the other bill. Mr. Goldwater responded “no.” Mr. Goldwater asked if there were other proponents of A.B. 317 that wished to speak; there being none, Chairman Goldwater called for opponents to A.B. 317.
Robert Crowell, Lobbyist, Las Vegas/Clark County Library District, testified in opposition to A.B. 317.
Daniel Walters, Executive Director, Las Vegas/Clark County Library District, testified in opposition to A.B. 317, and stated the bill had significant deleterious, harmful effects on the library district. Mr. Walters stated he could only address A.B. 317 as it was written and not the amendments submitted by Mr. Collins. Mr. Walters stated some of his remarks might not be germane to the changes made by the amendments. He said both the county and city governments did not want to fund library services out of their general funds. It was the desire of the city and county governments to create a consolidated district to serve a large metropolitan area. He conceded that the Clark County Library District was the largest public library in the southwest. The district served 1.2 million people. Mr. Walters said the library tax was not levied on the city of North Las Vegas as North Las Vegas, contained a city-chartered library.
The operating funds were dictated by the legislature to the city of Las Vegas in order to retire the debt. Mr. Walters said if the county was to levy a tax, it would have to be a library district tax. Mr. Walters stated the proposed legislation was inconsistent with statute, as it singled out the consolidated district boards and ascribed budgetary authority to a county agency. The statute currently provided that a consolidated library district had more fiduciary oversight from the cities and counties than any other type of county library district within the state of Nevada. Mr. Walters stated the consolidated library district must submit its annual budget to be reviewed by the cities and counties 21 days prior to adoption. Mr. Walters said the district must also submit budget reports to the cities and counties quarterly. The consolidated library board was represented by five members appointed by the city of Las Vegas and five members appointed by the Clark County Commission. The board retained fiduciary oversight of the library. If A.B. 317 was passed, it would be tantamount to a $20 million dollar tax increase to Clark County.
Mr. Walters said Mr. Collins’ figure of 6.59-cent property tax was correct. However, a union of the city and the county did not form the district. He said the district was formed out of a library district that did not include all of Clark County; it excluded Henderson, Boulder City and North Las Vegas.
Mr. Goldwater asked Mr. Walters if the 6.59-cent tax levy was removed, would that eliminate the funding for the library district. Mr. Walters responded in the affirmative. He said that A.B. 317 did not provide for mandatory library service. Mr. Walters continued stating in the absence of a special revenue fund for the county, the current operating property tax portion exceeded $20 million dollars. He said removal of the tax of 6.59 cents was tantamount to a tax increase without a special fund if A.B. 317 was passed.
Clark “Danny” Lee, Lobbyist, representing Nevada Library Association said he was opposed to A.B. 317.
Mr. Goldwater asked if the rate was ordered by the legislature or the Tax Commission; did the library district need to go to the Tax Commission in order to lower the present tax rate. Mr. Lee said the Tax Commission had the authority to hear public input for change. Mr. Goldwater asked what procedure was followed to enable the general public to voice their concerns about the issues Mr. Collins had brought to the committee.
Mr. Lee responded that public hearings were held throughout the city of Las Vegas and Clark County. He said the public was active in all portions of the bonding issues and was aware of the type and locations of the new library buildings.
Mr. Walters said the statute provided for operating levies and open meetings were conducted, in addition to transmittals of the proposed budgets, 21 days prior to adoption to the city and county and the Nevada State Department of Taxation to facilitate public input. Mr. Walters stated that only the library district required those public hearings.
Duncan McCoy, Director, Boulder City Library District, testified in opposition to A.B. 317. Mr. McCoy stated the public expected a stable tax to fund their libraries and the ad valorem tax was the most stable and was the bedrock form of funding for libraries.
Mr. Goldwater stated A.B. 317 needed some attention and urged Mr. Collins to work with those who opposed the bill, in order to resolve their differences. Chairman Goldwater closed the hearing on A.B. 317, and opened the hearing on A.B. 433.
Assembly Bill 433: Makes various changes relating to property taxes.
(BDR 32-1140)
Assemblyman Roy Neighbors testified in support of A.B. 433, and spoke from prepared text (Exhibit C). He said that A.B. 433 sought to clarify the legislative intent in relation to the taxation of beneficial use or possessory use or interest of a person in property that would be exempt from taxation by clarifying the word “use” for purposes of Nevada Revised Statute (NRS) 361.157, 361.159, and 361.227.
Mr. Neighbors gave a brief history stating the federal government had claimed the law allowed taxes to be levied unconstitutionally against federal property, and had challenged the law in court. However, the Ninth Circuit Court of Appeals found the law to be constitutional and fully effective.
Mr. Goldwater thanked Mr. Neighbors for the history lesson and stated that Mr. Neighbors should be a hero in Nye County. Mr. Goldwater stated the purpose of A.B. 433 was simply to fine-tune some definitions and get them into statute.
Mr. Neighbors said the statute had been returned to the courts. Mr. Mortenson asked if the case was lost, would the counties need to repay the taxes. Mr. Neighbors said no.
Rachel H. Nicholson, Attorney at Law, representing Nye County testified in support of A.B. 433. Ms. Nicholson replied to Mr. Mortenson’s question, that there had been a refund of some monies paid between 1988 and 1992. The statute had been amended in 1993 to comply with the court order. The Ninth Circuit Court of Appeals had ruled the statute as written and as applied was fully effective and fully constitutional. Ms. Nicholson said she believed it was now just a matter of equity, i.e., if a building was occupied by a contractor on the test site, for a full 40 hours per week exclusively, the contractor stated their taxable interest should be reduced to 23.8 percent rather than 100 percent because they were making their calculations by the number of hours based upon a 40-hour week instead of a 24-hour day. Ms. Nicholson said A.B. 433 simply clarified what the word “use” meant in statute.
Assemblyman John Marvel asked Mr. Neighbors if a private contractor operated the army depot in Mineral County. Ms. Nichols responded Mineral County had entered into a settlement agreement with the contractor of the army depot. The Attorney General’s (AG’s) Office had subsequently ruled that the contract was illegal as written and unconstitutional. Mineral County and the contractor were currently in the process of rectifying the problem. Mr. Marvel asked if the AG’s opinion had been adjudicated in a court of law or was just an opinion. Ms. Nicholson responded that it was the opinion of the AG that cited the Ninth Circuit Court of Appeals ruling. Mr. Goldwater asked Ms. Nicholson if the county was involved in litigation. She responded “no.”
MR. ANDERSON MOVED TO DO PASS A.B. 433.
MR. MARVEL SECONDED THE MOTION.
THE MOTION PASSED UNANIMOUSLY. MR. PARKS WAS EXCUSED FROM THE VOTE.
Mr. Goldwater closed the hearing on A.B. 433, and opened the hearing on A.B. 411.
Assembly Bill 411: Proposes to exempt medical devices ordered or prescribed by providers of health care from taxes on retail sales. (BDR 32-1189)
Assemblyman John Lee testified in support of A.B. 411. Mr. Lee said he had been asked to introduce the bill on behalf of the Nevada Association of Medical Products Suppliers. He said A.B. 411 would provide a tax exemption for persons that needed wheelchairs, orthopedic devices, hospital beds, and other medical necessities.
Maureen Brower, Lobbyist, representing the Nevada Association of Medical Products Suppliers testified in support of A.B. 411. Ms. Brower said this legislation would correct inequities and inconsistencies that were in statute.
Richard J. Pozesky, President and Executive Director, Nevada Association of Medical Products Suppliers (NAMPS) spoke from prepared text (Exhibit D) in support of A.B. 411. Mr. Pozesky said the purpose of the legislation was to provide tax relief to persons physically ill and disabled that needed prescribed medical devices, and to resolve inequities and ambiguous language now in statute. Mr. Pozesky said NRS 372.283 and 374.287 exempted certain prosthetic, orthotic and ostomy products from sales tax. Drugs and medicines were also exempt from sales tax. Mr. Pozesky noted that medical devices were listed in statute defining drugs and medicine in NRS 639.007. However, many medical devices were still taxable, and A.B. 411 would eliminate that inequity.
Assemblywoman Freeman asked Mr. Goldwater if the committee had ever passed an exemption bill. Mr. Goldwater replied he could only identify one. Ms. Freeman said she liked A.B. 411 and urged the committee to pass it.
Mr. Marvel asked if Medicare or Medicaid paid for any of the medical equipment. Mr. Pozesky said that Medicare and Medicaid did pay for this type of equipment. He said he had submitted some amendments (Exhibit E) that specifically addressed the Medicare and Medicaid programs. He said the amendment would eliminate fraud and abuse. Mr. Marvel asked if Medicare and Medicaid paid sales tax. Mr. Pozesky said yes, in the state of Nevada. He said there was S.B. 528 that would eliminate sales tax charged to Medicare and Medicaid.
Maureen Brower, Lobbyist, representing the American Cancer Society stated they supported A.B. 411.
Mr. Goldwater said S.B. 253 of the Sixty-Ninth Legislative Session handled exemptions issues during the interim period.
Carole Vilardo, Lobbyist, representing Nevada Taxpayer’s Association testified in opposition to A.B. 411, because clarification was needed. Mr. Marvel stated that the 2 percent of the sales tax would not be exempt, local governments would lose money. Ms. Vilardo responded that she had not seen the amendments, but the bill as written required it to go to a vote of the people on the 2 percent.
Mr. Mortenson said he wanted to know why some persons paid sales tax on medical devices and some did not. Ms. Vilardo responded that it was determined by who pays for the device. An individual that purchased their own hearing aid or medical device would pay sales tax, but a Medicaid or Medicare client would not be charged sales tax because the provider could not submit a separate bill for sales tax, and governmental agencies were tax exempt.
David Howard, Lobbyist, representing the Nevada State Chamber of Commerce Association testified in opposition to A.B. 411. He said his association was against exemptions because it erodes the tax base.
Ms. Freeman asked if A.B. 411 could be used as a vehicle to express a need for some sort of policy changes for the taxation levied on medical devices. Mr. Howard said he agreed with Ms. Freeman. However, the state could not seriously address these needs unless it took an overall look at the tax structure of Nevada.
David Pursell, Executive Director, Nevada Department of Taxation, spoke as a neutral on A.B. 411 and offered an advisory opinion to the committee that was prepared on behalf of the Nevada Tax Commission (Exhibit F).
Mr. Goldwater closed the hearing on A.B. 411, and opened the work session on A.B. 205.
Assembly Bill 205: Makes various changes concerning state board of equalization. (BDR 32-493)
Mrs. Gibbons was unable to testify but she had her amendment (Exhibit G) distributed to the committee. Mr. Goldwater asked Mr. Pursell if there was any way A.B. 205 could be saved.
Mr. Pursell, Executive Director, Nevada Department of Taxation, replied he thought A.B. 205 could be salvaged. He said that in the review he did with the Governor’s Office, it was determined that appointing a vice chair was reasonable and having alternates was also reasonable. Mr. Pursell stated he saw no problems with the State Board of Equalization in terms of meeting their requirements to hear all property tax cases from the County Board of Equalization at the state level.
Ted Zuend, Fiscal Analyst, Legislative Counsel Bureau explained the amendments (Exhibit G) that were requested by Mrs. Gibbons. He said the first part of the amendment addressed Assemblyman Anderson’s concern about a member leaving late in his second term; in effect, overturning the term limit requirements then being reappointed by the Governor and essentially circumventing the term limit. The second part of the amendment addressed the language and changed the discretion of the Governor to, i.e., he “may” instead of “shall” remove a member. The third portion made an exception for the Governor to appoint. It clarified the board may hold meetings to address substantial tax issues.
MR. MARVEL MOVED TO AMEND AND DO PASS A.B. 205.
MR. BROWN SECONDED THE MOTION.
Mr. Anderson asked for assurance that the amendment did not violate the term limits provision. Mr. Goldwater said it did not.
THE BILL PASSED UNANIMOUSLY. MR. PARKS WAS EXCUSED FOR THE VOTE.
Mr. Goldwater closed the hearing on A.B. 205 and opened the hearing on A.B. 243.
Assembly Bill 243: Provides exemption from certain sales and use taxes for farm machinery and equipment. (BDR 32-866)
Mr. Zuend said the exemption needed to be clarified to ensure the exemption applied to farmers and not to farm equipment. The intent was for the farmer to receive the exemption, not the farm equipment.
Mr. Anderson stated he had no problem with the farmer receiving an exemption for farm equipment. He suggested clarifying what type of equipment would be exempt.
Mr. Pursell said that in terms of administering the exemption he would need clarification and definition of farm equipment. He said there was a requirement to determine if it was a farm or a ranch, i.e., amount of acreage, heads of livestock, growing of crops, etc.
Mr. Goldwater asked Mr. Zuend to contact Speaker Emeritus Dini for clarification. Mr. Goldwater closed the hearing on A.B. 243.
There being no further business Chairman Goldwater adjourned the meeting at 3:29 p.m.
RESPECTFULLY SUBMITTED:
N. Jolene Jones Miley
Transcribing Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: