ASSEMBLY COMMITTEE ON TAXATION

MINUTES OF THE Meeting

of the

ASSEMBLY Committee on Taxation

Seventy-First Session

April 5, 2001

The Committee on Taxationwas called to order at 1:38 p.m. on Thursday, April 5, 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. David Parks

Mr. Bob Price

Ms. Sandra Tiffany

GUEST LEGISLATORS PRESENT:

Assemblywoman Chris Giunchigliani, District 9, Clark County

STAFF MEMBERS PRESENT:

Ted Zuend, Fiscal Analyst

N. Jolene Jones Miley, Recording Committee Secretary

Glenda Jacques, Transcribing Committee Secretary

OTHERS PRESENT:

Charles W. “Chuck” Fulkerson, Executive Director, Office of Veterans’ Services

Barbara G. Byington, Assessor, Douglas County

Robert S. Hadfield, Executive Director, Nevada Association of Counties (NACO)

Ryan J. Works, Lobbyist, Reno/Sparks Chamber of Commerce

Tim Tetz, member, American Legion, State of Nevada

Ron Gutzman, Commander, American Legion, State of Nevada

Carole Vilardo, Director, Nevada Taxpayers Association

Nash Sena, Citizen, Henderson, NV

Ned Phillips, Representing Palm Mortuary

Martin Johnson, President, Johnson Consulting Group

Steve Williams, School Planner & Governmental Affairs Representative, Washoe County School District

Dotty Merrill, Lobbyist, Washoe County School District

Gregory Ferraro, Lobbyist, Nevada Resort Association

Patrick Coward, Lobbyist, Nevada Association of Realtors

Hoyt Suppes, Executive Vice President, Nevada Association of Realtors

Kathy Burke, Recorder, Washoe County

Margaret Lowther, Recorder, Storey County

Dave McNeil, Building Efficiency/Renewable Energy Projects Manager, Department of Business and Industry, Energy Office

Robert Schriver, Executive Director, Nevada Commission on Economic Development

Mike L. Baughman, Ph.D., Nevada Test Site Development Corporation, Lincoln County, City of Caliente, Eureka and Lander Counties

Dino DiCianno, Deputy Executive Director, Nevada Department of Taxation

Alan Coyner, Administrator, Nevada Division of Minerals, Department of Business and Industry

Bjorn P. Selinder, County Manager, Churchill County

Gaylyn Spriggs, Lobbyist, Nevada Taxpayers Association

Chairman Goldwater opened the hearing on A.B. 404.

Assembly Bill 404: Revises provisions relating to exemptions from certain taxes for veterans. (BDR 32-129)

Assemblyman Roy Neighbors, Assembly District 36, stated the Veterans’ Service Commission was represented by himself and Senator Lawrence Jacobsen. A.B. 404 expanded the eligibility for certain tax exemptions for veterans over a three- or four-year period. Section 1 increased the property tax exemption from $1,000 to $1,500 effective July 1, 2002. Section 2 increased the exemption by another $500 effective July 1, 2003. Section 3 and Section 4 increased the amount of exempted property tax assessed valuation for veterans with service-connected disabilities. Nevada had over 247,000 veterans that could be affected by the bill (Exhibit C).

Chairman Goldwater indicated the fiscal note on A.B. 404 was $9 million the first year and $13 million the second year. Mr. Neighbors said many veterans did not apply for exemptions. The counties he spoke with did not have a problem with extending the exemption.

Chuck Fulkerson, Executive Director, Office of Veterans’ Services, stated there were a total of 20,907 Nevada veterans who received service-connected compensation (Exhibit D). Only 3,376 veterans received 60 to 100 percent of the compensation allowed in the Nevada Revised Statutes (NRS). Changing the requirement from an “honorable discharge” to an “other than dishonorable discharge” would add .07 of 1 percent to the eligible veteran pool. The proposed amendment would tie the Consumer Price Index (CPI) to the bill and provide meaningful benefits to Nevada’s veterans. All veteran benefits and services are “earned opportunities.”

Mr. Brower asked why veterans’ benefits should be extended to those who did not receive an honorable discharge. Mr. Fulkerson explained there were three categories of honorable discharges, a general, and a dishonorable discharge. The general or administrative discharge was used when veterans could not handle military service. The addition of those veterans would increase the eligibility pool .07 of 1 percent.

Mr. Brower wanted to expand the amount of exemption rather than widen the eligibility pool. Mr. Fulkerson clarified there had been many meetings about the language of A.B. 404. Heads of major service organizations and veteran groups had agreed with the bill and what it was trying to accomplish. Mr. Brower had no quarrel with the intent of the bill, but would rather see the exemption increased.

Mr. Anderson disclosed he would exempt himself from voting on A.B. 404. He asked whether a National Guardsman would qualify under the new requirements. Mr. Fulkerson replied a guardsman would not qualify because of the continued “90-day active duty requirement.” The bill included those who had served more than 90 days of active duty.

Mr. Anderson felt any serviceman who served on active duty should be eligible for extended benefits. He was concerned that National Guardsmen might be eligible if they served 90 days of active duty during combat situations. Mr. Fulkerson explained the armed forces had changed radically over the last 20 years. Many National Guardsmen were deployed for periods of 17 to 25 days during combat situations and maybe the issue needed to be revisited at a future date.

Mr. Marvel asked whether A.B. 404 affected local governments more than the state. The bill had little fiscal impact on the state but might be disastrous for local governments. Mr. Fulkerson replied he did not have those numbers.

Mr. Neighbors stated many veterans donated their automobile exemption to the veteran’s nursing home. Mr. Fulkerson added the veteran’s home had received approximately $36,000 through veteran exemption donations. The Department of Motor Vehicles and Public Safety (DMV&PS) had taken a proactive approach to notify veterans of their exemption benefits. Many benefits were overlooked because they were voluntary. They hoped to work with the DMV&PS and determine how many veterans were not taking advantage of the exemptions.

Mr. Neighbors felt A.B. 404 was a good bill and he welcomed any amendments from the committee to keep the bill alive.

Chairman Goldwater thanked Mr. Neighbors for his work for the veterans of Nevada. The Assembly Committee on Taxation was continuously looking for better ways to process exemptions. It would be difficult to reduce any revenue in Nevada because of the soft economy. He thought it was important the advocates of the bill discussed revenue spending before bills were brought to the legislature. Local governments needed to work together to reduce spending so other important legislation was able to come forth.

Mrs. Freeman asked where the $36,000 came from. Mr. Fulkerson replied $36,000 had been donated to the nursing home by veterans checking that option on the card that was sent back to the county assessors.

Mrs. Freeman asked whether an amendment could be added to address nursing homes. She asked how many “notch babies” were still receiving Social Security.

Mr. Fulkerson did not have any information on “notch babies” and asked for clarification of what “notch babies” were. Mrs. Freeman explained “notch babies” were born between 1920 and 1929 and received a reduced Social Security benefit.

Mr. Neighbors reminded the committee that veterans were dying at the rate of 1,000 per day. Nevada had over 21,000 veterans that participated in the WWII campaign. Mr. Fulkerson added veterans realized increasing revenue was difficult and they would work with Nevada’s counties and cities to develop new legislation.

Barbara Byington, Assessor, Douglas County, stated they were neutral on A.B. 404. She felt the qualifications for “veteran” status should be defined better.

Robert S. Hadfield, Executive Director, Nevada Association of Counties (NACO), was confused about the extended status of veterans. He was concerned the 18,000 veterans taking advantage of the exemption could increase to 240,000. He wanted to make sure the numbers were accurate and thought it might be more fiscally responsible to increase the benefit for those veterans who already qualified for benefit status. The schools might be adversely affected by decreasing their share of property tax revenue.

Mr. Neighbors commented they would work with NACO and other interested parties to draft amendments to the bill.

Ryan J. Works, representing the Reno/Sparks Chamber of Commerce, opposed A.B. 404, A.B. 434 and A.B. 480. In 1997 the Assembly Committee on Elections, Procedures and Ethics directed the Legislative Counsel Bureau (LCB) to study tax exemptions in Nevada. The LCB reported a conservative estimate of lost revenue that exceeded $677 million and damaged Nevada’s tax base (Exhibit E). Nevada faced a potentially devastating budget shortfall of $40 million that affected education, energy, or other funding issues. The Reno/Sparks Chamber of Commerce supported an equitable tax structure that spread the tax burden equally among citizens. They felt the entire tax system needed to be evaluated and any new exemption needed to be addressed in terms of Nevada’s needs. In a time of economic conservatism, energy shortfall, and educational demands, Nevada could not afford to exempt its citizens from paying their fair share of taxes.

Tim Tetz, member, American Legion, supported A.B. 404. He clarified that 45,000 veterans utilized the veterans’ exemption and 42,000 resided in Clark County. Many veterans qualified for the exemption but chose to not use it. Mr. Schofield, Clark County Assessor, explained to the Senate that 7,500 veterans in Clark County did not take advantage of their benefit exemptions. The total cost to Clark County was $1.5 million. He felt eligibility needed to be increased to all veterans and either A.B. 404 or S.B. 156 would accomplish the intent of the bill.

Ron Gutzman, Commander, American Legion, state of Nevada, supported A.B. 404. He did not have actual exemption figures but felt the ones expressed in the committee were a little high.

Carole Vilardo, Director, Nevada Taxpayers Association, opposed A.B. 404. She did not feel Nevada could afford the exemption. Nevada had a revenue shortfall and it was inappropriate to consider any action that further eroded the tax base.

Chairman Goldwater replied the committee was worried about the soft economy, property taxes, and the estimated taxes needed for schools and local governments.

Mr. Neighbors responded that the cost to local governments would be $8 million if every eligible veteran took advantage of the exemption. The cost would not be that high because many veterans did not use the exemption.

Mr. Hadfield commented the fiscal note was based on the worst-case scenario and he did not know how “partial enrollment” could be addressed. He felt it was difficult to recognize the needs of Nevada as a whole because budget bills were not coordinated with each other.

Mr. Marvel clarified that whatever was taken away from the local governments had to be guaranteed by state government. Because of the soft economy it was not a good year to ask for additional state funding.

Chairman Goldwater closed the hearing on A.B. 404 and opened the hearing on A.B. 480.

Assembly Bill 480: Proposes to exempt funeral supplies from taxes on retail sales. (BDR 32-613)

Assemblyman Robert Price, Assembly District 17, explained A.B. 480 proposed to exempt sales tax from funeral supply items. Death was hard on the families of the deceased and he did not feel there should be added expenses. The sales tax from funeral supplies was not a significant amount (Exhibit F).

Chairman Goldwater asked about the definition of “funeral supplies.” Mr. Price replied the description was provided by the LCB and was a fairly narrow description.

Nash Sena, resident of Henderson, supported A.B. 480. On September 23, 1999, he made funeral arrangements for his wife and realized there was a “hidden” cost of sales tax. Six of eight mortuaries in Clark County had told him they did not like charging sales tax on funeral supplies. S.B. 221 of the Seventieth Legislative Session repealed funeral sales tax, but was indefinitely postponed. He felt the reduced revenue could be supplemented by possibly taxing apartment owners, adding fees to credit cards used in Nevada, introducing a state lottery, or adding a “toll fee” to I-15. The bill benefited senior citizens and others who could not afford the high cost of funerals.

Ned Phillips, representing Palm Mortuary, supported A.B. 480. Sales tax was not charged on pre-paid funeral plans and was collected when death occurred. It was difficult to explain to families that additional money was needed for burial when they understood the funeral to already be paid for. Sales tax was not collected on charity or “at need” cases.

Ms. Vilardo commented the tax on funeral expenses was unpleasant, but it was not an appropriate time to ask for tax exemptions because of the flattening of the economy and the potential shortfall of funds to Nevada. There had been more exemption bills drafted during the Seventy-First Session than during any other session. S.B. 253 outlined specific criteria for exemptions and she felt any exemption needed to be “means” tested. All exemptions needed to be looked at in total concert with the budget.

Mr. Price responded A.B. 480 would be decided by a vote of the people. Ms. Vilardo felt any voter would repeal any tax they could. She did not believe Nevada was in a position to put any exemption on the ballot.

Chairman Goldwater closed the hearing on A.B. 480 and opened the hearing on A.B. 501.

Assembly Bill 501: Makes various changes relating to taxes imposed for support of school districts. (BDR 34-1004)

Assemblywoman Chris Giunchigliani, Assembly District 9, testified A.B. 501 was a companion bill to A.B. 137 and was recommended to the committee from the interim committee on school construction. A.B. 501 allowed local school districts to assess room taxes and other revenue sources for construction of schools by direct vote from the people.

Martin Johnson, President, Johnson Consulting Group, stated the only revenue source available to school districts was property taxes. The school districts used bonds for capital project improvements. A.B. 501 allowed school districts to bring forward other revenues that could be available for school districts and was consistent with property taxes. Residential construction taxes, one-quarter cent sales tax, room tax, or real estate transfer tax could be available to local school districts with voter approval.

Ms. Giunchigliani noted a problem had arisen in Elko County and possibly NRS 482.181 could address the issue (Exhibit G).

Mr. Johnson explained in 1979 or 1981, whenever the tax shift was put into place, NRS 482.181 outlined how a portion of the motor vehicle privilege tax would be allocated to school districts. A portion of privilege tax revenue was allowed for capital projects of school districts. NRS 482.131 tied that rate specifically to the rate the district levied for debt service. Elko County School District had made the decision to pay cash for their projects instead of financing projects. They used a capital projects tax and did not receive the motor vehicle privilege tax portion allocated to capital projects. The capital projects tax levy could be used to determine the tax rate motor vehicle tax would be allocated at. Elko School District could lose up to $5 million dollars over the next ten years.

Ms. Giunchigliani did not want to penalize any program that used the “pay-as-you-go” system.

Steve Williams, School Planner and Governmental Affairs Representative, Washoe County School District, appreciated any additional revenue source for school districts. A.B. 501 was well thought out and constructed and contained a fair procedure for local governments to decide what tax was necessary for the schools.

Dotty Merrill, representing the Washoe County School District, read a statement from Dr. Craig Kadlub of the Clark County School District (Exhibit H).

Although the Clark County School District is exempted from A.B. 501 by virtue of its size, we support this measure because it reflects practices we currently employ, which have been essential to our ability to sustain programs of school construction and renovation, and we believe other Nevada school districts can benefit as well.

Carole Vilardo, Director, Nevada Taxpayers Association, opposed the expansion of the tax provisions in A.B. 501. Rural counties had the problem of addressing diminishing growth and declining revenue bases. A residential construction tax was not feasible in counties where no residential construction was done. The harm came when voters passed a tax to solve problems and additional taxes were needed because the original tax provided no revenue. The counties that needed help in their school systems were not generating any revenue from room or real estate taxes. She felt other mechanisms were needed and did not feel A.B. 501 was viable for any school district outside of Clark County.

Gregory Ferraro, representing the Nevada Resort Association, questioned raising taxes without demonstrating a need. It became problematic for Washoe County if a room tax for school construction was passed without demonstrating the need for the revenue. He did not feel it was appropriate to finance schools that way. Washoe County School District had restored much of its credibility with the community and recently passed a school bond issue. The public supported the needs of the school district. Room tax was used to recruit and entice tourism in Nevada. The passage of room tax for schools in Clark County was a unique situation that did not apply to the rest of Nevada.

Mr. Anderson asked whether the sole purpose of room tax was exclusively for the Reno-Sparks Convention & Visitors Authority (RSCVA). Mr. Ferraro clarified room tax had been applied to different and special circumstances. Washoe County did not need an additional room tax for school construction.

Mr. Anderson had been informed the proposed monies would be used for increased maintenance or renovation costs. He thought the additional funds could be set aside in a “rainy-day fund.”

Mr. Ferraro replied the last bond issue addressed renovation and maintenance of older schools. Bond issues had met that need and he felt they would continue to do so.

Mr. Anderson felt it was important to recognize public tax dollars, such as room tax, could be used for the public in the maintenance and upkeep of schools, parks, and other recreation areas. School districts would benefit from having a constant revenue source flow into their district for school construction.

Mr. Ferraro replied Nevada had used room tax revenue primarily for recruitment and enticement of tourists and visitors. Four years ago Clark County had a school space emergency and the county commissioners voted to use part of the room tax to help finance school construction in Clark County. The same situation did not exist in Washoe County and he had reservations that A.B. 501 enabled county commissions to impose a tax without public support. He did not feel the sequence to set the tax was proper.

Mr. Anderson appreciated Mr. Ferraro’s point of view and agreed to disagree with him on the subject. Mr. Ferraro stated he had spoken with Ms. Giunchigliani and would continue to work with her to achieve the intent of the bill.

Patrick Coward, representing the Nevada Association of Realtors, introduced Mr. Suppes, the Executive Vice President of the Nevada Association of Realtors.

Hoyt Suppes stated they had concerns with Section 6 of A.B. 501 and the real estate transfer tax. Realtors supported education for the children of Nevada because they were the future leaders. The transfer tax was passed on to real estate buyers and increased the cost of homes. The tax was discriminatory because it was paid by a few people and not everyone benefited from it. The tax was an unstable source of revenue for governments because it was directly related to a strong economy or weak economy. He urged seeking other broad-based revenues for Nevada schools.

Chairman Goldwater asked Mr. Suppes if he had lived where there was a transfer tax. Mr. Suppes replied North Carolina had a real estate transfer tax of $1.10 per thousand and the funds went into the General Fund.

Mr. Marvel felt the highs and lows of the economy would not affect the bill because the revenue went into the Operating Fund and was used for repair and maintenance costs.

Kathy Burke, Recorder, Washoe County, stated S.B. 238, S.B. 468, and A.B. 501 were all competing against each other for real estate transfer taxes. She supported Nevada schools and any education efforts, but opposed A.B. 501 because it affected the recorder’s ability to collect fees. The transfer tax was collected when a piece of property was sold or gifted to another, and many citizens complained when they had to pay it. There was no collecting mechanism to collect the fees and it could be problematic to add an additional fee. The current transfer tax was $150 on a property valued at $100,000. The proposed bill increased the fee to $280 for the same piece of property in Washoe County. The tax was attached to closing costs and could not be rolled into the cost of the loan. The recorders had not received any support in raising fees to help collect the tax.

Margaret Lowther, Recorder, Storey County, opposed A.B. 501.

Dave McNeil, Building Efficiency/Renewable Energy Projects Manager, Department of Business and Industry, Energy Office, supported A.B. 501. The proposed income could help offset retrofitting of older schools to reduce energy costs and the related school district budgets throughout the state. Eureka High School had spent over $100,000 on heating oil last year. Increased energy costs would significantly raise that.

Chairman Goldwater felt it was important to be honest with the schools and address budget concerns as a whole for the future. Seeing no further testifiers, the Chairman closed the hearing on A.B. 501, and opened the hearing on A.B. 434.

Assembly Bill 434: Provides exemptions from certain taxes for property used in researching, developing, constructing and operating facilities to generate electricity from renewable resources. (BDR 32-1054)

Assemblyman Harry Mortenson, Assembly District 42, advised the committee that A.B. 434 did not ask for an exemption on existing facilities. The time lines in the bill prohibited existing agencies from taking advantage of tax breaks outlined in the bill (Exhibit I). The intent of the bill was to bring business and industry into Nevada by giving them a tax exemption and mitigating the problems with energy generation. Sales tax abatement was given to entities that located in Nevada to do research, development, or construction of energy generating facilities that used environmentally sensitive and renewable energy sources. Renewable resources were defined as geothermal, wind, solar, hydrogen fuel, or biomass. There was an enormous potential to develop fuel cell energy in rural areas where transmission lines did not exist. Fuel cells were reliable and efficient and were used by car manufacturers as alternative fuel sources. Chrysler had developed a second fuel cell vehicle concept that had zero tail pipe emissions with double the fuel efficiency of a standard sport utility vehicle. General Motors, Chrysler, BMW, Volkswagen, Toyota, Ford, and other car companies were developing fuel cell vehicles for the future.

Chairman Goldwater asked if companies developing alternative energy sources had committed to locate to Nevada if the tax exemption passed.

Mr. Mortenson replied negatively. Fuel cell technology could not be developed in populated areas because of the volatility of one of its components, hydrogen. He felt the expansive areas of Nevada were ideal for hydrogen testing. The tax exemptions would only be available to new companies migrating to Nevada.

Dave McNeil, Building Efficiency/Renewable Energy Projects Manager, Department of Business and Industry, Energy Office, supported A.B. 434. He felt the current tax exemption should be maintained as outlined in NRS 361.0785 (Exhibit J). He wanted to streamline the tax exemption bureaucracy, remove any reference to the Office of Science, Engineering and Technology (OSET) in the bill, and wanted the date of passage the effective date. The renewable energy community of Nevada wholeheartedly supported the bill.

Chairman Goldwater asked why the current sales and use tax abatements were not enough to attract industry. Mr. Mortenson replied A.B. 434 contained fewer restrictions and promoted energy generation. No tax was lost to Nevada because of the time line of the bill. A technical problem existed because the Department of Taxation was the only department allowed to authorize tax exemptions. A possible sunset clause of five years had been discussed, but not decided upon. The Nevada Power Company wanted the exemption for facilities that used renewable energy 75 percent of the time.

Robert Schriver, Executive Director, Nevada Commission on Economic Development, felt the bill had potential to develop and attract renewable energy sources to Nevada. S.B. 227 addressed similar energy issues, but A.B. 434 encouraged the development of renewable energy resource technology. He felt the tax incentives addressed new research and development coming into Nevada and encouraged further development of “green” resources for export. Tax incentives provided a contract for the “first right of usage” for Nevada.

Chairman Goldwater felt the extension of abatements to any environmentally sound project should be extended to socially and economically worthwhile programs as well.

Mr. Mortenson felt Nevada would benefit from any worthwhile company moving into the state. Any incentive that brought them here was worthwhile.

Mike L. Baughman, Ph.D., Nevada Test Site Development Corporation (NTSDC), Lincoln County, the city of Caliente, Eureka and Lander Counties, supported the concepts of A.B. 434 and developing renewable energy projects in rural areas. NTSDC worked with the rural counties to create employment and income opportunities around the Nevada Test Site. The bill created incentives for renewable energy firms to locate to Nevada during rapidly escalating energy prices. The development of geothermal and other renewable sources reduced Nevada’s dependency on fossil fuels and helped stabilize energy prices. The companies produced income, employment, and stimulated other types of economic development. The Bureau of Land Management (BLM) had proposed to thin Pinyon-Juniper woodlands in White Pine and Lincoln Counties through selective harvest. The thousands of tons of biomass produced would provide energy comparable to coal (Exhibit K). The bill needed a sunset clause because five years was sufficient to attract new businesses. They were concerned about the Commission on Economic Development approving or denying tax exemptions that did not meet the initial criteria but were in the best interest of the state. They felt “undue uncertainty” should not be present in a program that was clearly designed to benefit Nevada.

Chairman Goldwater suspended the hearing on A.B. 434 and reopened the hearing on A.B. 361 to address Mr. Marvel’s amendment.

Assembly Bill 361: Revises provisions governing tax on net proceeds of minerals. (BDR 32-1078)

Ted Zuend, Fiscal Analyst, Legislative Counsel Bureau, stated the amendment established a fixed payment date for all mines. The mines would report the prior years’ net proceeds and tax estimation for the current year by February 16 and pay the tax by May 10 of each year.

ASSEMBLYMAN ANDERSON MOVED TO AMEND AND DO

PASS A.B. 361.

ASSEMBLYMAN MORTENSON SECONDED THE MOTION.

Mr. Price asked why May 25 was selected for the date of reporting. Dino DiCianno, Deputy Executive Director, Nevada Department of Taxation, replied that would place the payment within the current fiscal year.

THE MOTION PASSED UNANIMOUSLY.

********

Chairman Goldwater reopened the hearing on A.B. 434.

Alan Coyner, Administrator, Nevada Division of Minerals, Department of Business and Industry, supported A.B. 434 and any development of geothermal energy in Nevada. Nevada had 14 geothermal plants and he felt there should be tax consideration for expansion of existing facilities.

Chairman Goldwater asked if geothermal success was contingent upon geographical location. Mr. Coyner explained Nevada had unique geographical and geological properties that were very conducive to geothermal energy. Tax incentive packages might include geothermal, long-term power purchase agreements, access to public lands, and the cost of building the facility.

Robert Hadfield felt A.B. 434 affected different counties in different ways. NACO wanted to make sure no existing facility would be impacted by the bill. They felt it was important for new businesses to consult with local governments and the possible impact they could have on that area. Historically, businesses affected the assessed valuation of the county and the net proceeds of mineral tax received by school districts, Nevada, and counties. He recommended the committee review economic development mechanisms already in place and include local governments as partners when approving proposed exemptions. It was important for state and local governments to work together and develop projects that benefited the citizens of Nevada as a whole.

Bjorn Selinder, County Manager, Churchill County, concurred that local governments should be consulted prior to granting tax exemptions. Churchill County had 11 percent of their assessed valuation in geothermal/mining energy (Exhibit L). There was a significant amount of known geothermal energy that could be developed. County commissions and school boards needed to be advised they would be foregoing taxes from new businesses developing particular resources. An alternative might be to exempt the development of new technology.

Chairman Goldwater stated Ted Zuend had pointed out that geothermal energy was already exempt from the net-proceeds tax. Mr. Selinder clarified they were exempt at the state level, but counties received a portion of the tax and 55 percent of that tax went to the school districts. Chairman Goldwater advised Mr. Selinder to work with Assemblyman Mortenson on developing the bill further.

Gaylyn Spriggs, representing the Nevada Taxpayers Association, felt it was important to have a sunset provision on the tax exemption.

Chairman Goldwater closed the hearing on A.B. 434 and reminded the committee they would be discussing the streamlined sales tax project in their next meeting. There being no further business the meeting was adjourned at 4:10 p.m.

RESPECTFULLY SUBMITTED:

Glenda Jacques

Transcribing Secretary

APPROVED BY:

Assemblyman David Goldwater, Chairman

DATE: