ASSEMBLY COMMITTEE ON WAYS AND MEANS

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Ways and Means

Seventy-First Session

April 23, 2001

The Committee on Ways and Meanswas called to order at 7:49 a.m. on Monday, April 23, 2001. Vice Chairwoman Chris Giunchigliani presided in Room 3137 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:

Ms. Chris Giunchigliani, Vice Chairwoman

Mrs. Barbara Cegavske

Mrs. Vonne Chowning

Mrs. Marcia de Braga

Mr. Joseph Dini, Jr.

Mr. David Goldwater

Mr. Lynn Hettrick

Ms. Sheila Leslie

Mr. John Marvel

Mr. David Parks

Mr. Richard D. Perkins

Ms. Sandra Tiffany

COMMITTEE MEMBERS ABSENT:

Mr. Morse Arberry Jr., Chairman (Excused)

Mr. Bob Beers (Excused)

STAFF MEMBERS PRESENT:

Mark Stevens, Fiscal Analyst

Steve Abba, Principal Deputy Fiscal Analyst

Lila Clark, Committee Secretary

Linda Smith, Committee Secretary

Assembly Bill 21: Requires court to order person convicted of second offense of driving under influence of intoxicating liquor or controlled substance within 7 years to attend program of treatment for abuse of alcohol or drugs. (BDR 43-868)

Mrs. Cegavske started her presentation by stating that the fiscal note on the bill had been pulled. The bill focused on the second offense of driving under the influence (DUI). It would mandate that the person pay for their treatment themselves. It would be mandatory treatment and there was a provision in the bill that provided for a sliding scale of payment for anyone that could not afford treatment. One of the rationales behind the bill was that there was a lady in Las Vegas that was actually on her fifth DUI but the DUIs had all been bargained down so she actually only had two on her record. The bill would address that problem.

Vice Chairwoman Giunchigliani wondered if the bill had been amended but she said it appeared that the original fiscal note was zero cost.

Mr. Mark Stevens, Fiscal Analyst, interjected that the Health Division provided a fiscal note that reflected an estimated cost of $300,000 per year.

Mrs. Cegavske said the fiscal note had come back with a zero cost. She said she had a copy of the fiscal note that showed zero and offered to share it with Mr. Stevens.

Vice Chairwoman Giunchigliani asked Mr. Stevens to double check the adjusted fiscal note.

With no further questions or comments, Vice Chairwoman Giunchigliani closed the hearing on A.B. 21 and opened the hearing on A.B. 250.

Assembly Bill 250: Requires screening of certain newborn children for hearing impairments. (BDR 40-155)

Ms. Leslie explained that A.B. 250 was the newborn hearing screening bill. She said that the committee had probably received e-mails recently on the bill. The bill had already passed out of the Health and Human Services Committee and she provided the committee some background on the need for the bill. She said the bill dealt with the top birth defect in the country for children. It was for deaf children or hearing impaired children. Thirty-two states had already adopted universal newborn hearing screening. Ms. Leslie said that there would be 12,000 infants in our country this year born with a hearing impairment and of the 12,000, 4,000 would be profoundly deaf. In the United States, currently approximately 46 percent of the babies born were screened for hearing loss. In Nevada, only 16 percent of the babies born were screened. Many states screened 98 to 99 percent of newborns. She said it was very important to screen babies not just for the profoundly deaf, it was probably more important to find the babies who had a hearing impairment. Once babies had been identified as having a hearing impairment, they needed early intervention as soon as possible so that their brains could develop at a normal pace.

Ms. Leslie said there were two fiscal notes that had been revised. The bill was amended and basically, the hospitals in Nevada had agreed to the amendments. The mandatory insurance provision had been removed and the hospitals agreed to provide the screening throughout the state even in the rural areas because approximately one-half of the insurance companies were now covering the screening. The hospitals felt confident that the remaining insurance companies would agree to cover the testing as they renegotiated their coverage for the newborn package. The cost of the screening test would be rolled into the newborn package. Ms. Leslie described the testing as “a really good thing.” She said it was important for the committee to understand that before the costs were discussed.

Mrs. Cegavske was curious as to why the fiscal note was so high on the bill.

Ms. Leslie said the test was not mandatory and parents could elect not to have the test done. She said there were two fiscal notes on the bill and they appeared to be the same as the revised fiscal note received from the Department of Human Resources.

Yvonne Sylva, M.P.A., Administrator of the State Health Division, introduced herself. She said there was a fiscal note on the bill that estimated that out of 30,000 births in the state of Nevada, 5 percent of the newborns would have some sort of hearing issue that would be identified through the screening process in the hospital and would require additional diagnostic workups, primarily at the Special Children’s Clinic in Las Vegas. In Reno, 85 percent of the newborns were being screened so they were already receiving the services. It was estimated the provisions of the bill would add an additional diagnostic workload to the Special Children’s Clinic in Las Vegas of about 1,228 children. Ms. Sylva said she was not suggesting that all 1,228 children would go on to require intervention services. She believed, however, that of the 1,228 children, 675 children would actually become new cases at the Special Children’s Clinics and require somewhat more than the initial diagnostic services. She estimated that of the 675 children, 108 children would require long-term services at the clinic intervention services and that had been estimated to be 122 hours per year for each one of the infants. In Las Vegas there was currently a four-week waiting list for an initial appointment and then another two-week waiting list to see an audiologist. The division would have to hire additional audiologist staff and one account person to bill responsible third party insurers.

Ms. Leslie commented that she believed Ms. Sylva’s estimate of the cost was “a little high.” She did not believe as many babies would be identified as Ms. Sylva had identified. She said that the biggest part of the fiscal note was because she expected to find babies that had hearing impairments and had not been identified and were not being treated. Ms. Leslie asked Ms. Sylva to discuss the $30,000 included in the bill for the brochure that would educate parents as to the importance of the screening. Ms. Leslie stated that the waiting list was a concern for that particular health problem because the children should not wait. The point of the program was to identify babies with hearing impairments early and to get them intervention as early as possible, within the first three months if at all possible.

Mrs. Cegavske asked if the program would target a group of children that might be at-risk or would every newborn be tested. She then asked if the screening would take place in the hospital or by a pediatrician after discharge. She wondered if it would be less expensive to do the testing in the doctor’s office.

Ms. Leslie said the idea of the program would be to screen every newborn while they were in the hospital because there were many healthy newborns that had hearing impairments and those were the ones that were currently going undetected without the automatic screening. The idea was to do follow-up and intervention outside of the hospital. Some states had gotten the test down to as little as $12 because they had the equipment in the hospital and they did the testing routinely.

Mr. Dini asked how the program would affect rural hospitals that did not routinely deliver babies. He said that had not been provided for in the bill.

Ms. Leslie said that she had been concerned about that and believed that the wording in Section 10, “a licensed obstetric center” handled the problem. She said there were very few licensed obstetric centers in the rural areas. Those were hospitals that were actually licensed to deliver babies. Ms. Leslie said she believed Mr. Dini was referring to hospitals that cared for pregnant women that appeared at the rural hospital and could not get to an urban area. Those hospitals would be exempt from the bill because they were not “a licensed obstetric center.”

Mr. Dini said the rural hospitals were, however, licensed hospitals. Ms. Leslie said that maybe the bill should be amended to clarify that the rural hospitals were exempt. She said home births had been exempted for the same reason.

Ms. Jean Irwin, a teacher of the hearing impaired, introduced herself. She reported that she believed the figures in the fiscal note were too high. In Reno, there had been 3,000 births and 7 children had been found. There were typically 3 to 4 babies found in 1,000 children. If Las Vegas was used as an example, there should only be approximately 120 children identified. They would not all need to go to the Special Children’s Clinic. There were many private audiologists that physicians could refer to. She said that language had been written in the bill that babies would be referred to their physicians because insurance companies preferred their clients went to a primary care physician. They would go to the primary care physician and that physician could refer to private audiologists. Many of the physicians had audiologists that worked within their offices. She believed that not 100 percent of the babies would go to the Special Children’s Clinic.

Ms. Irwin said that the fiscal note indicated the cost of the test would be approximately $419. The test, according to Ms. Irwin, should cost approximately $30. Currently, insurance companies were being charged $170 per test and it really should not be that high. Ms. Irwin went on to say that each one of her students cost $500,000 to be educated through the 12^th grade. The reason for the high cost was that the children’s hearing impairments were not identified until they were about two years old. For example, if any one of the committee were “plopped down in Norway now” versus a baby, at the end of that three years if the adult studied Norwegian intensively they would not have learned as much as a three-year-old child would have. That was because a baby’s brain was ripe for language and if a problem was not diagnosed, you would have to do make up time. Ms. Irwin said her students cost $38,000 per year per student to educate because she was making up for lost time. If the committee took a long-term view, the program would save a great deal of money for the state in the education costs for the children once they entered the school system. Cost wise, the program was “cheap.”

Ms. Leslie said that Section 6 clarified Mr. Dini’s concerns about rural hospitals having to provide the testing. She believed the wording, “a licensed hospital in the state that provides services for maternity care” was designed to leave out the rural hospitals that did not provide services for maternity care. She said she supposed that if someone had a baby in a rural hospital, even though it was an unanticipated delivery, the hospital still provided services for maternity care. Ms. Leslie suggested that the language be reviewed by legal staff to be certain it did not apply to rural hospitals.

Ms. Helen Foley, representing Pacific Care and the Nevada Association of Health Plans, introduced herself. She said that she had concerns over the content of the original bill but she no longer had those concerns because after the initial screening, the child would be referred to the primary care physician so that the health maintenance organization (HMO) could provide appropriate services.

Ms. Janine Hansen, the state president of Nevada Eagle Forum, introduced herself. She said that she had had considerable concerns in the original bill that the personal information on the family and infant might go beyond the hospital and Ms. Leslie changed that so that only statistics left the hospital. Ms. Hansen said she was very appreciative of that change and the concern about the privacy issues for the family.

With no further questions or comments, Vice Chairwoman Giunchigliani closed the hearing on A.B. 250 and opened the hearing on A.B. 519.

Assembly Bill 519: Makes appropriation to Department of Taxation for implementation of Phase II of Business Process Re-Engineering Project. (BDR S-1429)

Mr. David Pursell, Executive Director of the Department of Taxation, introduced himself. He introduced Deputy Executive Director Woody Thorne, who was responsible for the department’s Information Services Section. Mr. Pursell said that a business reengineering study was conducted on the department and completed in March 1999. Recommendations resulting from the Business Process Reengineering Study (BPR) included a new integrated revenue management system to replace the current automated collection and enforcement system that contained functional limitations due to inappropriate design and programming deficiencies. The current system was not capable of integrating future emerging technologies such as electronic filing, electronic funds transfer, etc. In addition, some of the system processors had not worked properly since the implementation of the system in May 1995. Almost each and every month programmer intervention was needed when the current month’s statistics and distributions were compiled. A new revenue system should include all the functionality required to collect and distribute all taxes administered by the Department of Taxation. It should integrate tax programs with common processing functions and a shared database, interface with other business registration agencies for customer identification, and exchange information and statistical data.

At the department’s pre-session budget hearing in January 2001, and again at its hearing before the General Government Subcommittee, the department suggested pooling $800,000 that was currently in the department’s budget and would revert in June 2001, with the requested $1.3 million in A.B. 519 to accomplish the department’s technology goals. Mr. Pursell said he would like to have the committee consider amending the bill and adding the $800,000 to the $1.3 million for Phase II of the department’s new computer system. The original definition requirement, the $800,000 included in the current budget, was not implemented in calendar year 2000 for two reasons. The first reason was the Governor’s Fundamental Review of the department and the ongoing discussion of a proposed new Department of Revenue. During that year, there was discussion as to what revenues would fall under the umbrella of the Department of Revenue. Under consideration was revenue currently collected by Gaming, Taxation, Department of Motor Vehicles, and Employment Security.

The second reason for not implementing Phase II was the streamlined sales tax program. Late in the summer of 2000, it did not seem reasonable to define a system for taxation when the possibility of combining departments into a new Department of Revenue was under consideration. In approximately September or October 2000, the department met with the Governor, Mr. Goldwater, and Senator McGinness, and at that time an Executive Order was signed indicating that Nevada would become a participating member in the streamlined sales tax project. It was around that time that the department concluded it would be beneficial to Nevada if the $800,000 appropriation was redirected toward imaging and scanning technology to lay the foundation for an electronic processing of tax returns and the electronic registration that was a requirement of the streamlined sales tax project. The department had been working with the Electronic Records Review Committee, the Nevada State Library and Archives, Micrographics and Imaging Division, the state Records Manager, the Department of Information Technology, the Controller’s office and the Administration to identify and implement technologies that would provide a better collection system for the state of Nevada.

Mr. Pursell said the department had been prepared to take the proposal to the Interim Finance Committee in December 2000, but decided to wait for the 2001 Legislative Session to discuss the benefits of pooling the $800,000 with the $1.3 million to work toward the end result which would be Phase III of developing a new revenue collection system for the state.

Regarding the imaging and scanning program, the sales and use and business tax returns would be redesigned to enable proven technologies to reduce the requirement for human input. The same redesigned forms would be used as a foundation to enable the acquisition of electronic registration, electronic tax returns, and payments over the Internet. Once documents were available on images, the department would be able to take advantage of other process improvements. For example, taxpayers would be able to submit returns where there was no money attached to them, over a fax or the Internet. That would reduce the need for hand input by department staff when the department received the returns. The department believed the benefits at full implementation would include but were not limited to: immediate access to documents, possible staff redirection, reduction of printing costs and postage costs. The department believed that electronic funds transfer and credit card acceptance were key areas for successful implementation of Internet filing and payment of tax returns. While it was possible to implement electronic funds transfers and the use of credit cards without electronic document management, the department viewed the process as a sound foundation as the state moved forward in developing a new revenue collection system. Developing an imaging and scanning system to include Internet filing would provide a consistent data collection front end that would interface with the current Automated Collection Enforcement System (ACES) mainframe system and its future replacement. Mr. Pursell said the sales and use tax and business license accounts had increased from 49,000 in 1995 to 119,000 as of December 2000. That was almost a 250 percent increase over that time period. Approximately 1,700 of the sales and use tax accounts remitted 90 percent of the taxes remitted. That would be the test group. Those accounts represented the business leaders and companies that had reported that it would be more cost-effective for them if they could file either by fax or over the Internet rather than waiting for the department to mail the returns and then the businesses mailing the returns back to the department. The requirements definition initiative that was A.B. 519, Phase II, involved the development of a requirements definition document for a new integrated revenue processing and management system. That phase built on the findings of the previous study and business developments that had occurred in the interim. Finally, Phase III would include the implementation of a new revenue management system.

If A.B. 519 was approved, the department would develop a plan of action specifying new technical architecture necessary to support the business process and define the functionality required for the system to be obtained. In addition, a benefits funding model would be assessed to determine its suitability for financing Nevada’s revenue processing modernization initiative. The objectives of completing Phase II were to develop a comprehensive set of requirements for the state’s new revenue management system, identifying the changed management and organization development opportunities to support the state’s vision for revenue collections and to conduct the analysis for undertaking the implementation phase of Nevada’s new revenue management system and benefits funding, if appropriate.

Mr. Pursell went on to explain that the technological architecture would be defined that maximized its compatibility with the Department of Information Technology’s stated technical direction and standards and requirements of revenue processing systems. That technical architecture would address network switching, wiring protocol infrastructure, hardware that would be needed, back-end servers, Web support, mid-tier and general processing service, security, software, which would be the operating systems, language integrated environments, Web services software, and security infrastructure components that would address access and auditing.

The systems requirement would include key components such as data capture, customer identification, electronic registration, electronic returns processing, training, and other components.

Regarding the implementation of the plan, using information contained in the strategy, the technical architecture, and requirements, a high-level map would be prepared that would identify for the department and DoIT, the staffing requirements necessary to support the development of the Phase III part of the system. That would determine the staff that would need to be backfilled in the current operation to support the project.

Mr. Pursell said the benefits study that would take place during the requirements definition would determine whether there were enough untapped benefits in Nevada’s revenue processing operation to finance the development of a new, integrated revenue processing system. A benefits funded project required an understanding of potential benefit streams and maintaining a balance between benefits realized and the operating costs of the project. Areas that would be studied to determine if there were benefits included improved collection effectiveness, which would address the accounts receivable delinquencies, and improved collections efficiencies. That would come through management, use of e-mail, electronic filings, discovery of non-registered businesses both in-state and out-of-state, and non-filers that had previously submitted a tax return but for some reason had not continued to file. A critical component of the successful benefits funded project was to establish a baseline. That was a dollar amount against which benefits would be measured. There would be a natural growth in the revenue collection and it was not that natural growth that the department wanted to identify to fund the new system. It was what the new system could offer for the department that could be used to help pay for the system.

After completion of Phase II, the department would be in the position to prepare for the final implementation or Phase III in the development of an integrated revenue management system for the state of Nevada. The time line that the department anticipated to implement the program would probably start in July 2001. In July through December 2001, the department would start the imaging and data capture development. In August 2001 through January 2002, the Request for Proposal (RFP) process for Phase II, if approved, would start. In December 2001 through March 2002, the department would implement the imaging and data capture part of the project. From November 2001 through May 2002, the department would work on the Internet registration, filing, and payment development. In January 2002 through October 2002, the requirements definition and the review of benefit funding would be evaluated. That would put the department in a position to finalize funding needs for the next biennium budget to include any identified benefits that could be used to fund Phase III.

In summary, the department proposed to initiate a 15- to 18-month process to complete and implement an imaging and scanning system, complete the RFP process for Phase II, complete the requirements definition to include possible benefit funding, and to implement Internet registration, filing, and payment processing. Using the current staffing levels recommended in the budget before the legislature, the department requested the flexibility to redirect staff to one of the projects if needed and utilize other cost savings, such as postage or printing, to reduce any of the costs of the above-mentioned projects. The department’s proposal would be to do that through information reports to the Interim Finance Committee or any other means that the committee deemed appropriate. Mr. Pursell said that staff had handed out a copy of the proposed time line and the numbers associated with the imaging and data capturing process (Exhibit C) that the department had indicated would cost approximately $800,000.

Vice Chairwoman Giunchigliani asked for confirmation that Mr. Pursell was requesting $1.3 million plus $800,000 to look at going to the Internet and e‑mail for the filing of forms.

Mr. Pursell pointed out that the $800,000 was in the department’s current budget.

Ms. Tiffany described the department’s proposal as well thought-out and she liked the way it had been described. She believed the department had covered most of the details on what she thought was important for Phase II. She asked whether the scanning would be done through the State Archives, would a scanning system be purchased, or would a third party be used for data conversion.

Mr. Woody Thorne said the department planned on utilizing the scanning services of the Library and Archives, Micrographics Division.

Ms. Tiffany asked if the department had checked with any third-party providers to determine whether the costs charged by the Library and Archives were competitive. She suggested that the department might want to issue a Request for Proposal (RFP) on the project.

Mr. Thorne said that the electronic records committee did an RFP in approximately 1999 that was similar to the Master Service Agreement (MSA) contracts that DoIT used. They had a number of approved vendors for hardware, software, and services. The equipment was being purchased under that contract and the vendor that would be selected for the development of the proposal came from the approved list.

Ms. Tiffany said she thought the department would be working with the state’s scanning system. Mr. Thorne responded that Micrographics currently did all of the department’s microfilming and did imaging services for a number of agencies. The department was trying to build from that infrastructure.

Ms. Tiffany asked if hardware was built into the $800,000 appropriation for a third-party vendor. Mr. Thorne replied, “Yes, that is correct.” Ms. Tiffany asked if that meant that the state would be buying the equipment for a third‑party vendor. Mr. Thorne said, “No, the equipment that we have is adding to the infrastructure that will allow us to communicate with the servers that are being provided and utilized at Micrographics. They have the system as part of the rate they will be charging us. That is in the proposal that incorporates that infrastructure.”

Ms. Tiffany asked for clarification that the $800,000 was hardware interface for the department and data conversion. She also asked if an RFP had been done.

Mr. Thorne responded that the $800,000 was for hardware interface and data conversion but that no RFP had been done on the project. There was a general RFP done.

Ms. Tiffany asked how the number $800,000 had been derived. She wondered if that amount was chosen because it was left in the budget.

Mr. Thorne said the $800,000 was for the development of the system and the ongoing costs would initially be hard dollar costs but he expected operating efficiencies to more than offset the costs.

Ms. Tiffany asked if the $800,000 was just for the scanning. Mr. Thorne answered that it was just for the development of the imaging and scanning system.

Ms. Tiffany said her understanding was that the third-party software vendor would have to develop the software to do the scanning documentation to put it back into the system so that it was an application. She asked if that was correct.

Mr. Thorne said market software would be utilized. They would work with the department on the processes, the redesign of the forms, the development of the process flow for the department, and how it would be dealt with. There were configuration requirements in working with the software to process the scanning and imaging. The data would have to be captured and processed.

Ms. Tiffany asked if the state would own the software and would it be located on one of the state’s servers. Mr. Thorne answered in the affirmative.

Ms. Tiffany questioned, “Because you have done that RFP, does that mean they have an exclusive to us for the rest of the life or is this generic enough that any MSA could do what we need it to do in the future.”

Mr. Thorne stated that the RFP was general enough that any MSA should be able to do it.

Ms. Tiffany said that the $800,000 was just for development and she questioned what the $1.3 million would be used for.

Mr. Thorne said the $1.3 was the original request for the requirements definition, study of Phase II, including an evaluation of the benefits funding approach, and whether the potential was there to offset at least part of the development cost of the system.

Ms. Tiffany stated that the state would be spending $2 million on just putting the base together and she thought that was “kind of high.” Ms. Tiffany said the department had stated that the project would not cut down on staff and would not save on personnel expenses and yet the department had said that it was looking at how it could fund the next growth of the system. She said that if you did not save on staff, you did not cut down on personnel, and you did not collect revenue from someone, she wondered how the department could save money to pay for Phase III.

Mr. Pursell believed that the department would see savings in the imaging and scanning program on the number of individuals that were currently hand inputting the returns into the system.

Ms. Tiffany asked if Mr. Pursell meant that the department would end up replacing the data entry personnel.

Mr. Pursell said that he thought some of the personnel could be replaced. He said that the department would have to see how well the imaging worked. The less hand input required, the higher the percentage of image that would be correct.

Ms. Tiffany said that some of the savings would come from staffing. She asked if savings would also come from credit card charges or sales of data.

Mr. Pursell said there would be savings in postage because once the department set up the electronic filing the department would not need to mail a monthly return. There would also be savings in printing expenses because the department would not have to use State Printing to print the returns.

Mr. Pursell said the benefit funding portion of the proposal was part of the $1.3 million appropriation when the department considered the needs requirement for the ultimate integrated revenue system, or Phase III. It would define for the department what was needed and the difficult part of that was separating the normal growth from cost savings associated with the project. The revenue from the normal growth should be deposited into the General Fund for the local governments. That would be there regardless of the type of system used by the department. However, if a system was built that assisted the department in something that currently was not done that would better the system, those dollars would be kept to help pay for the ultimate Phase III cost of the integrated system.

Ms. Tiffany said she believed the funding of Phase III would be expensive. She asked if an RFP would be issued for the requirements for the $1.3 appropriation or would it be the responsibility of DoIT.

Mr. Pursell said there would be an RFP. He said he had been informed that there was most likely a federal grant that might be available to the department. The timing for the next grant application was August 2001 and the department would be applying for a grant to see if federal funding was available to mitigate some of the $800,000 necessary for the imaging and scanning system.

Ms. Tiffany said the department’s plan was thorough and she believed the department had done a good job of looking at the needs. She said she was impressed. Ms. Tiffany asked if the department would look at digital signatures. She wondered how the department would identify the taxpayer if returns were filed on-line.

Mr. Thorne said the department had had discussions with the Attorney General’s Office to determine what could be done. He said the department was fairly certain it could get around the problem with an initial agreement and then security through the use of personal identification numbers (PINs).

Ms. Tiffany said she knew of a vendor the department should talk to. She also asked about the use of credit cards for payment of taxes on-line. She asked who would pay the percentage charged by the credit card company to use the card.

Mr. Pursell said the state had two options regarding credit cards. The first option was that if a business wanted to use a credit card it would use its own credit card and the department would set up a process through a financial institution where the taxpayer would be responsible for their credit card. Some other states had identified a credit card for the state and the state paid for the credit card fee. He believed that would be a discussion with the legislature in the next session. It would be a policy decision as to which way the state would like to go on the use of credit cards for payment. For the present, Mr. Pursell said he would like to set up the process so that taxpayers could use their own credit cards and ultimately the other option of one credit card being used could be explored.

Vice Chairwoman Giunchigliani said that the savings predicted by the project was approximately $372,513 based on an estimated 50 percent reduction in data entry, FTE processing, and 20 percent returns sent by electronic methods. She asked what accommodations would be made for those taxpayers who did not have the availability of e-mail or Internet access.

Mr. Pursell said that out of approximately 54,000 sales and use tax accounts, 1,700 of them remitted 90 percent of the tax. There would have to be alternative methods available for less sophisticated taxpayers.

Vice Chairwoman Giunchigliani asked if the committee could take some of the $372,513 projected savings. Mr. Pursell requested that the committee allow the department to use that resource. He said the department was taking on four or five projects with no additional staff and he wanted to redirect the staffing toward the other projects. The savings projected would be after full implementation.

Vice Chairwoman Giunchigliani said she understood the savings would be realized after full implementation and she believed some of the misunderstanding was a matter of semantics. Technically, the $800,000 was not in the budget for the purposes that the department was now requesting. She said the committee would have to make a decision on whether or not to accept the department’s suggested re-diversion. Part of what the committee had heard was that there was a cost savings here and a cost savings there but nothing had materialized to help the committee deal with budgets. She suggested the committee take a look at the department’s proposal and she understood the department’s request to divert savings to other areas.

Mr. Don Hataway, of the Budget Division, confirmed the division’s support for the $800,000 addition. He had completed the final draft of the budget modification plan that he anticipated the Governor would accept. The modification was the reduction of the budget in anticipation of what the Economic Forum might project on May 1, 2001. He tried to take into consideration all of the known issues including the Medicaid adjustment in caseloads and discretionary rate increases. The $800,000 remained in the budget as an “add” in order to balance the budget.

There being no further testimony on A.B. 519, Vice Chairwoman closed the hearing on A.B. 519 and opened the hearing on A.B. 526.

Assembly Bill 526: Makes appropriation to Department of Taxation for purchase of new and replacement equipment. (BDR S-1360)

Mr. Pursell described A.B. 526 as a request for an appropriation for replacement equipment and new equipment at the Department of Taxation. The department had approximately 166 desktop and 76 laptop workstations used statewide that utilized three Novell servers and three Cubix integrated systems. Those personal computers supported the Revenue, Audit, Assessment Standards, Administrative Services, and Executive Divisions in Carson City, Las Vegas, Reno, and Elko. There were also 39 dumb terminals for access to the mainframe for inputting return information into the mainframe. The wide area network was connected to the statewide communications backbone through a T-1 line and ISDN was used for out-of-state dial in and a 56 KB for mainframe access. The department maintained a Web page and Mr. Pursell encouraged the committee to take a look at it. The department was now in the position of having all its forms on the Web. All agendas for the Nevada Tax Commission, the State Board of Equalization, and the Committee on Local Government Finance were posted on the Web site. In addition to general tax information there was a new feature of the site called “Frequently Asked Questions.” It compiled a database of the most commonly asked questions and the responses to those questions. The feedback from the business community had been very positive. The mainframe system used to post, bill, and collect various state taxes was done through the department’s network. They followed the two-year replacement policy for mainstream technology users outlined by DoIT and that was what was included in A.B. 526. Mr. Pursell said he understood that the Budget Division had made an adjustment due to the pricing of the equipment and the new amount would be revised from the $545,726 to $454,173.

Vice Chairwoman Giunchigliani asked Mr. Pursell to provide the backup information on the figures that had been presented to staff.

There being no further testimony on A.B. 526, the hearing was closed on A.B. 526 and the hearing on A.B. 569 was opened.

Assembly Bill 569: Exempts certain professional and occupational boards from provisions concerning state financial administration. (BDR 31-341)

Mr. Don Hataway, Budget Division, explained that A.B. 569 was a proposal from the Budget Division for the committee’s consideration. There were 34 entities addressed by the bill. They ranged in complexity from the medical board, the contractors’ board, the board of cosmetology, down to very small boards such as the public health sanitarian board. Some of the boards were larger in staffing than most of the divisions within the Department of Business and Industry. They were unique entities and Mr. Hataway said he wanted to walk the committee through what was unique about them and how or why the Budget Division believed it was logical to eliminate them or exempt them from Chapter 353 of the Nevada Revised Statutes (NRS). Each one of them had specific enabling legislation to regulate a specific segment of industry in the state. Examples included the regulation of engineers, sanitarians, medical personnel, cosmetologists, nurses, etc. Mr. Hataway said they were unique because they hired their own staff, they were independent of the classified and unclassified systems of the state, they maintained their own independent accounting systems, and it was not known from day-to-day where they stood financially. Additionally, they had their own payroll systems for the staff that they hired to implement their particular areas of control. Currently, the Budget Division monitored them through quarterly reports. The larger boards were good about providing quarterly reports as to where they stood revenue- and expenditure-wise but reporting was more problematic on the smaller boards.

Mr. Hataway said the Budget Division was not proposing in A.B. 569 that the entities be exempted from Chapter 218. The division believed that the entities should continue to audit their books and provide the division with audited financial reports. Most of the larger boards did so on an annual basis and the smaller boards did it biennially. Mr. Hataway said that some of the committee members might recall that Mr. Crews, of the Legislative Counsel Bureau, gave a report to the Audit Subcommittee a few years ago and there were a couple of boards that had not been heard from for four or five years. Senator Jacobsen had made a motion to inform them that if they did not provide audit reports within a certain time frame, there would be legislation to eliminate the board and the audit reports were promptly received. It was a constant oversight effort over the smaller boards that had no staff to help them.

Mr. Hataway raised the point that the boards were brought into The Executive Budget in 1987 for reasons that Mr. Hataway did not know. They had not been included in The Executive Budget this year for the specific reason that they had their own budgets and they were self-supporting. Mr. Hataway said, to his knowledge, he could only think of less than a handful of times that either the Committee on Ways and Means or the Senate Finance Committee had one of those entities in for a hearing on the budget. It was a fairly routine process. According to Mr. Hataway, if the bill did not pass, the division would continue to work with the entities to make sure they had work programs in place to identify what their revenues and expenditures were going to be and the oversight would be maintained. He believed, however, that the most logical thing to do would be to exempt them from the statute.

Vice Chairwoman Giunchigliani asked Mr. Hataway to provide a list of the boards referred to in the bill. Mr. Hataway said he would provide the committee with a list of the 34 boards. His recollection was that the Pharmacy and Architecture Boards were specifically in the Attorney General’s cost allocation plan. If the Attorney General’s Office had to provide services to the other boards they were billed. Some of the boards had their own attorneys.

Vice Chairwoman Giunchigliani asked Mr. Hataway who trained the smaller boards on the correct procedures for such tasks as conducting meetings. Vice Chairwoman Giunchigliani said her neighbor used to be president of the Podiatry Board and he ran its operations out of his garage. He was unclear on what the board was supposed to do.

Mr. Hataway said he had empathy for the smaller boards because every time he called the Barbers’ Board, he reached the John Jones Barbershop in Las Vegas. There was no real, ongoing training for small boards. Mr. Hataway said he referred small boards to Keith McDonald, who was the executive for the Pharmacy Board. He had been in state government for a long time, understood the systems, and had helped many boards set in place some of the needed operating mechanisms.

From a budgeting point of view, the Budget Division met with the boards periodically. Mr. Hataway said that from a layperson’s viewpoint the process could seem to be “bureaucratic nonsense.” Mr. Hataway said his office recommended in 1993 and again this year that possibly an agency in the Department of Business and Industry, Bureau of Occupational Services, could provide “account clerk” type services to handle the paperwork. Both times that was suggested it had not been approved. Many of the boards looked at that as a “camel’s nose under the tent” type of situation and were concerned that they would be taken over by a state agency.

Vice Chairwoman Giunchigliani suggested that possibly a better solution would be to make sure when the board was created it complied with the open meeting law and knew how to set an agenda. Many people did not know how to prepare for meetings or establish regulations. That would be something that the Department of Business and Industry could take a look at as an initial service. She said that was a concern for many of the smaller boards rather than the larger boards.

Mr. Marvel said the bill was a good idea and saved time as long as the entities were subject to a periodic audit.

Mr. Hataway said that regarding cost savings, the Budget Division had recommended in its budget that the position that had dealt with the entities before would be eliminated. If the bill was not approved, the Budget Division would continue to provide ongoing oversight.

There being no further testimony on A.B. 569, Vice Chairwoman Giunchigliani closed the hearing on A.B. 569.

BUDGET CLOSINGS

CULTURAL AFFAIRS ADMINISTRATION– BUDGET PAGE CULTURAL-1

Mr. Bob Guernsey, Principal Deputy Fiscal Analyst, Legislative Counsel Bureau (LCB), stated there were two adjustments, one on computer prices and one on decision unit E-275. Decision unit E-275 was a request to allocate $100 per employee for training for a total of $17,000. Staff recommended that the Micrographics budget share in that expense which would reduce the General Fund cost by $1,200.

Decision unit M-200 contained a recommendation for a new Personnel Analyst II position. Currently the department operated with no personnel support positions. The Administrative Services Officer (ASO) functioned as Personnel Officer in addition to being the ASO and currently he was also the Interim Director.

Mr. Guernsey said that there was a Senate bill that recommended a one-shot appropriation of $200,000 for the Nevada Humanities Committee. If that appropriation was approved, the committee might want to review the $9,000 each year that had been recommended in the budget also in support of the Nevada Humanities Committee. Mr. Guernsey said it appeared to be a duplication of funding.

Vice Chairwoman Giunchigliani asked if the cost could be split on decision unit M-200.

Mr. Guernsey said he had had a number of discussions in reference to the cost of that position with the director of the department. He thought the cost could be partially prorated. The majority of the cost would be a General Fund expense with the Micrographics budget supporting the position to a small degree. Micrographics was currently supporting a computer position that was located in the director’s office.

Vice Chairwoman Giunchigliani asked if it was a budget that was using tourism dollars to shift cost.

Mr. Guernsey said there was a change in recommendation from the Governor’s Office and the Budget Division. They proposed to reduce the General Fund appropriation in a number of the budgets and in the State Parks’ budget. In those department budgets it would reduce the General Fund by $1,245,200 in FY2002 and $1,305,597 in FY2003. The effect on the administration budget would be $12,335 in FY2002 and $18,747 in FY2003. The basic proposal was to eliminate the tourism dollars that were currently in The Executive Budget in the department and allocate those to four specific budgets. The recommendation from the administration was:

Director’s Office – 20 percent of the budget;

Nevada State Museum – 65 percent of the budget;

Railroads – 80 percent; and

Historic Preservation - $10,000 flat amount.

Mr. Guernsey referred to a letter that had been distributed to the committee dated March 5, 2001, from Nancy Dunn, Interim Executive Director of the Commission on Tourism, to Perry Comeaux, Director of the Department of Administration. He said the Committee on Ways and Means and the Senate Finance Committee realized in looking at the tourism budget that there was a significant reserve available. The administration and Ms. Dunn proposed to keep a reserve balance of $1,105,000 each year, leaving approximately $3.6 million the first year and $3.5 million the second year available for reallocation. The Governor proposed to reallocate those funds into Cultural Affairs and into the Parks’ budget. If $1,245,200 in the first year and $1.3 million in the second year was removed and the State Parks’ allocation of $567,204 the first year and $613,989 the second year was removed, reducing the reserve and adjusting the balance forward, it would still leave a reserve balance of $1,105,000. Mr. Guernsey said he was not in a position to either support or not support the proposal as it was a proposal from the administration.

Mr. Guernsey said the proposal would affect a number of the budgets that would follow and was a policy decision on the part of the committee.

Vice Chairwoman Giunchigliani asked for input from Mr. Hataway on the proposal to use tourism dollars for ongoing funding. She expressed concern that it would create an additional “hole” in the budget that would have to be dealt with in the next legislative session.

Mr. Don Hataway, Budget Division, said the tourism revenue stream continued to be strong although he was uncertain whether it would be sufficient to continue funding the budgets in the 2003-05 biennium. Every two years each budget was revisited to determine the needs. Mr. Hataway said the Budget Division ran out of time when the budget was being prepared. They realized that the tourism reserves were probably too high. Mr. Hataway said he believed it was a judicious use of tourism dollars, particularly in the Museums’ area and the Parks’ area. According to Mr. Hataway, the Governor supported the proposed modification.

Vice Chairwoman Giunchigliani said the committee should track the total diversion of ongoing money so the committee would have an awareness of what the impact would be on the next session of the legislature. She went on to say that the committee had discomfort in using short-term dollars for ongoing programs and that was being seen throughout the budgets due to the “budget crunch.” She believed that at some point, agencies would have to “bite the bullet” and deal with the problem.

Mr. Hataway said he appreciated Ms. Giunchigliani’s comments. He said the proposal was made in an effort to protect the programs as well as to balance the budget with the available General Fund resources.

Vice Chairwoman Giunchigliani stated that the legislature should not tie the hands of future legislatures but consider some of the proposed cost shifts that might occur. She said that should be kept track of and if a tax increase came about in the current session, the legislature should go back and fund the budgets with the correct dollars.

Mr. Guernsey said that there was a bill to change the name of the department from Museums, Library, Arts and Cultural Affairs.

Mr. Dini said he had some reservations about the budget. He said the price of gasoline was continuing to go up and the room tax revenue might not be what it was expected to be. He believed it was risky to use the tourism dollars. He said he would rather use the tourism dollars for the promotion of tourism because of the uncertainties of the gaming market in California with the Indian gaming, the high price of airfares into Reno, and other factors that might cause problems. He said it was a short-term fix but could cause a serious problem in the next session of the legislature.

MRS. CHOWNING MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR WITH STAFF ADJUSTMENTS, INCLUDING: PRORATING DECISION UNIT M‑200, SHARING WITH MICROGRAPHICS DECISION UNIT E-275, DELETING $9,000 FOR SUPPORT OF THE NEVADA HUMANITIES COMMITTEE AND UTILIZING THE RESERVE FUNDS FROM TOURISM RATHER THAN GENERAL FUND FOR THE PURPOSES OF FUNDING THE REMAINING BUDGET.

MR. PARKS SECONDED THE MOTION.

THE MOTION CARRIED WITH MR. DINI VOTING NO. (Mr. Arberry and Mr. Beers were not present for the vote.)

BUDGET CLOSED.

Ms. Leslie commented that she wanted the record to reflect that she did not support going from $9,000 per year to $200,000 per year for the Nevada Humanities Committee.

Mr. Stevens, Fiscal Analysis Division, explained to the committee that there was $9,000 in each year of the biennium built into the budget for the Nevada Humanities Committee. That was an historical figure that had been included in the budget for some time. There was also a one-shot appropriation that had been recommended by the Governor for $200,000 to support that same entity. It seemed to staff that if the committee approved one or the other appropriation that would be adequate. The committee could either approve the one-shot appropriation for $200,000 and delete the $9,000 in each year of the biennium or the opposite.

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MUSEUMS AND HISTORY – BUDGET PAGE CULTURAL-7

Mr. Guernsey said the budget functioned as the administrator for all the Museums and History budgets. The administration recommended removing the tourism funds and he had received a revised request to consolidate all the railroad operations into one budget. Currently the budget, in addition to performing all the administrative oversight functions, also had the expenses associated with the Boulder City Railroad in it. The railroad budget included the Ely Railroad Depot and the Carson City Railroad operation. The administration’s proposal was to pull the expenses associated with Boulder City out of the administration budget and move it into a railroad budget and then have each category track the expenses of each separate railroad operation.

Vice Chairwoman Giunchigliani asked for confirmation that the budget also took money from the tourism reserve.

Mrs. Chowning asked where the statewide railroad budget would be included. Mr. Guernsey said it would be included in the Nevada State Railroad Museum budget. Mrs. Chowning asked if the amounts would be the same and simply moved to the other budget.

Mr. Guernsey confirmed that there was no change in dollars other than a reallocation of some of the tourism funds.

MR. MARVEL MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR WITH STAFF ADJUSTMENTS.

MRS. CHOWNING SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY. (Mr. Arberry and Mr. Beers were not present for the vote.)

BUDGET CLOSED.

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STATE MUSEUM, CARSON CITY – BUDGET PAGE CULTURAL-12

Mr. Guernsey said the budget had a significant modification based upon the tourism funding proposal. Currently, the budget received no tourism dollars. The administration recommended that 65 percent of the operation of the Carson City Museum come directly from tourism funding and that would reduce the General Fund obligation by $1,020,029 in FY2002 and $1,071,793 in FY2003, and replace that funding with a transfer from the Commission on Tourism.

Vice Chairwoman Giunchigliani stated that the budget was one that did not have the precedent of having tourism dollars in the first place, whereas the other budgets at least had some tourism funding.

MRS. CHOWNING MOVED TO CLOSE THE BUDGET AS RECOMMENDED BY THE GOVERNOR WITH STAFF ADJUSTMENTS.

MR. MARVEL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY. (Mr. Arberry and Mr. Beers were not present for the vote.)

BUDGET CLOSED.

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NEVADA STATE RAILROAD MUSEUM – CULTURAL-21

MUSEUM & HISTORICAL SOCIETY, LAS VEGAS – CULTURAL-26

LOST CITY MUSEUM – CULTURAL-29

STATE HISTORIC PRESERVATION OFFICE – CULTURAL-36

NEVADA STATE LIBRARY – CULTURAL-40

ARCHIVES AND RECORDS – CULTURAL-46

NEVADA ARTS COUNCIL – CULTURAL-61

Mr. Guernsey reported that in addition to the transfer of tourism dollars, there were a few other changes in the budgets. On the Nevada Arts Council budget there was an adjustment for rent on the Las Vegas Museum and an adjustment for a sewer bill because the museum had not received sewer bills since it opened and it was finally discovered. Mr. Guernsey said that the Senate Committee on Finance closed the Nevada State Library budget by adding $14,442 in FY2002 and $15,506 in FY2003 to allow for an inflation increase for the purchase of books and publications.

Mrs. Chowning said that she had a concern on the Archives and Records’ budget. There was a position that was not approved in the budget that she felt was desperately needed. She believed the position was needed because she had heard many times in budget hearings that there was material that had been lost.

Vice Chairwoman Giunchigliani said that action on the budget had already been deferred once and she suggested adding the position. Mrs. Chowning was concerned about a list to be reconsidered if new revenue was received rather than deferring the budget again.

Mrs. Chowning agreed with Vice Chairwoman Giunchigliani’s suggestion. She said the position was a records manager and she had information on the position and its costs.

MRS. CEGAVSKE MOVED TO CLOSE THE BUDGETS AS RECOMMENDED BY THE GOVERNOR WITH STAFF ADJUSTMENTS INCLUDING: THE COST SHIFT TO TOURISM WITH THE INFLATION BUILT IN FOR BOOKS AND PUBLICATIONS, AND ADJUSTMENTS FOR SEWER EXPENSES AND RENT ON THE NEVADA ARTS COUNCIL.

MS. LESLIE SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY. (Mr. Arberry and Mr. Beers were not present for the vote.)

BUDGETS CLOSED.

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There being no further business to come before the committee, Vice Chairwoman Giunchigliani adjourned the meeting at 9:34 a.m.

RESPECTFULLY SUBMITTED:

Lila Clark

Committee Secretary

APPROVED BY:

Vice Chairwoman Chris Giunchigliani

DATE: