ASSEMBLY COMMITTEE ON WAYS AND MEANS

MINUTES OF THE meeting

of the

ASSEMBLY Committee on Ways and Means

Seventy-First Session

May 21, 2001

The Committee on Ways and Meanswas called to order at 8:41 a.m. on Monday, May 21, 2001. Chairman Morse Arberry Jr. 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:

Mr. Morse Arberry Jr., Chairman

Ms. Chris Giunchigliani, Vice Chairwoman

Mr. Bob Beers

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:

None

STAFF MEMBERS PRESENT:

Mark Stevens, Fiscal Analyst

Steve Abba, Principal Deputy Fiscal Analyst

Andrea Carothers, Committee Secretary

Carol Thomsen, Committee Secretary

The Chair opened the hearing on S.B. 196.

Senate Bill 196: Revises provisions relating to eligibility of school districts for grants of money to purchase library books. (BDR S-1124)

The Chair recognized Senator Bernice Mathews, District 1, to testify in support of S.B. 196. Senator Mathews stated that a bill in the previous session had been passed that dealt with library books for schools in all 17 counties of Nevada. The mechanism used was the school applied for the money through the Department of Education in the first year of the biennium and that money was to be used to buy library books and software for school libraries. If the money was not matched in the second year of the biennium then the school could not receive the second year’s money. Senator Mathews explained that some of the small counties had problems matching the first year’s appropriation. She was appearing before the committee not to ask for new money, but rather to ask that the appropriation not be reverted so that the program could continue at the discretion of the Department of Education. Senator Mathews reiterated that there was no money being requested from the current biennium and stated that the libraries in small counties might be able to receive books.

Ms. Chris Giunchigliani confirmed that books were funded in the per pupil budget. The bill from the previous session attempted to get schools up to par because there was a lag in purchasing library books. She asked if the per pupil fund could have been used as the match or whether schools had to fund-raise to meet the match. Douglas Thunder, Deputy Superintendent for Administrative and Fiscal Services, Department of Education, explained that the department had looked at the expenditures made for library books in previous years, and the first year appropriation could be up to half of what the school had expended in the previous year. The bill also indicated that the schools needed to spend at least as much in the first year as they had in the year before. Mr. Thunder explained that several districts had problems meeting that commitment for a variety of reasons. The department had allocated money for the current year based upon the amount the school had received the first year, if the school had met the conditions. There was still some money left, approximately $42,000, that had not been distributed and the department had been holding the money pending the outcome of the bill. Based upon a positive review of the reasons the schools had not met the conditions, the department would allocate the funds.

Ms. Giunchigliani asked if the department had reviewed policies from local districts to ensure that funding did not become diverted once it reached the school site. Mr. Thunder stated that there had been a lot of time spent on that issue. Ms. Giunchigliani asked that the board of trustees of a school district consider that in the process. She did not desire schools to remove 10 or 15 percent to be used on other general funds on campus. Ms. Giunchigliani explained that she knew other items were needed, but if the money was allocated to the local school and an administrator could remove money from the top then the policy needed to be looked at.

Mr. John Marvel asked how much money was left from the original appropriation. Mr. Thunder restated that there was approximately $42,000 remaining. He explained that the intent was not to revert the funding, but rather to redistribute it among qualifying districts.

Mrs. Barbara Cegavske asked if the reversion was a new idea, because Dr. Cram, the Superintendent in Clark County, had requested to have any monies not spent reverted back to the Clark County accounts. She asked if there was a concern with whether the school was old or new, or whether any school could apply for the book monies. Mrs. Cegavske also asked if technology was allowed along the same lines.

Mr. Thunder explained that the first question was a school district issue. He stated that when a school did not use all of its allocated money, the question arose of what would happen to the money. Mrs. Cegavske stated that she was slightly concerned because school districts had asked to not have money be reverted. Mr. Thunder noted that as far as technology, some software was allowable, but the primary interest was on books. Mrs. Cegavske said that there was a concern about how much technology would be allowed and whether it would be for the library materials only.

Senator Mathews stated the money in the bill would not have been reverted to the General Fund, but rather would be distributed to the counties that had qualified for the second year funding. There were small counties that were hurting that had not qualified, and Senator Mathews desired to have the small counties receive the money. The bill postponed the reversion date to July 2002.

The Chair closed the hearing on S.B. 196 and opened the hearing on S.B. 520.

Senate Bill 520: Authorizes optional registration of vehicles for 2-year period and makes various changes in provisions governing imposition and procedure distribution of governmental services tax. (BDR 43-1171)

Ginny Lewis, Deputy Director, Motor Vehicles, Department of Motor Vehicles and Public Safety, said that S.B. 520 allowed the department to issue a two‑year registration for those customers who chose to take advantage of the option. In the department’s ongoing challenge to balance the demand for service with available resources, the department continued to look for innovative ways to solve a very big problem. Ms. Lewis stated the department believed that by offering customers an optional two-year registration renewal there would be a reduction in the number of customers in field offices for annual renewals. Approximately 33 percent of renewals were currently being handled in offices. The department was excited about the concept, and Ms. Lewis noted that although it was hard to predict the number of people who would choose the option, it was important that the department offered the option as another way to renew registrations as opposed to standing in line.

Ms. Lewis explained that if the two-year registration renewal option was taken the customer would be provided a decal with a one-year expiration. Fees would be collected for the two-year period, and 35 days prior to the expiration the computer system would read the file. If an emission inspection was required a notice would be sent to the customer as a reminder. When the vehicle completed the inspection and the test results were transmitted to the department the decal for the following 12 months would be mailed to the customer. If there were any outstanding sanctions on the vehicle the owner would receive a notice advising them of what action needed to be taken to resolve the issues before the next year’s decal would be sent.

Chairman Arberry asked what the plan was if the decal was lost in the mail. Ms. Lewis stated that that would be handled as mail problems were handled today. If a customer called and stated that they were due for the second year decal, and operator would check the system and if everything was in order the customer would be issued a duplicate set of decals.

Chairman Arberry explained that the largest complaint that he had received was that a person was unable to receive assistance from a person, either in person or on the phone. He asked how that would be handled if there were large amounts of people requesting their second year decal. Ms. Lewis explained that since December 1999 a centralized phone room in Carson City had been instituted. It was staffed with 14 full-time employees that handled all phone calls. If there was an influx the staff should be able to resolve the customer issues.

The Chair inquired as to whether there would be a savings or other incentive for the customer that opted for the two-year decal. Ms. Lewis explained that the benefit to the customer was that they did not have to go to the field offices or deal with the department for two years.

Ms. Giunchigliani stated that it was possible to reregister on-line, and that was very efficient. She asked for further clarification about the benefit to the division. Ms. Lewis stated that once the customers chose the two-year registration renewal and paid for the two years, all resulting actions were automated. The system would automatically query the files 35 days prior to the expiration, the vehicle inspection was automated and would download into the system, and there was no human intervention. Ms. Giunchigliani asked why there was no incentive for a customer to complete the option, such as a 10 percent savings. Ms. Lewis said that the issue had been discussed, and the department had not embraced the idea. With some of the revenue issues it appeared not to be the right time to look at a discount.

Ms. Giunchigliani commented that as an individual she would be giving payment for two years that the department could use immediately without incentive. She stated that she liked the concept, but she desired an incentive. Ms. Giunchigliani noted that there was nothing in the Constitution of the State of Nevada that prohibited providing the incentive as long as everyone was treated equally. She suggested that legislation be moved that rewarded customers for registering for two years, or for registering on-line. Ms. Giunchigliani asked if the on-line registration would have the option of registering for the two-year period, to which Ms. Lewis answered in the affirmative. Ms. Lewis explained that at the current time, because it was unknown how many customers would choose the two-year registration option, the potential loss to the Highway Fund was unknown.

Ms. Giunchigliani asked if the department was setting up a trust fund with the monies. Ms. Lewis explained that in the bill a trust fund was established so that the second 12-month period would have interest earned that would go to the General Fund. Ms. Giunchigliani suggested that at the end of the experimentation stage a portion of the fee was rebated to the customers depending on the interest income.

Mr. Lynn Hettrick agreed with Ms. Giunchigliani. He stated that if he were offered a 5 percent discount on the second year if the payment was made in the first year, he would accept the option. If he was offered no incentive and the registration could be completed over the Internet he had no reason to pay the money up front. Mr. Hettrick suggested that the interest income not be placed in the General Fund, but be used to replace the revenue lost from the discount offered for the second year registration. He stated the discount made sense, but he did not understand why any customer would choose the option without the incentive. Mr. Hettrick reiterated that an incentive needed to be offered and the department should keep the revenue generated from the interest on the second year registration fee.

Chairman Arberry stated that in Section 60.3 of the bill it said, “Vehicles registered by widows and orphan children not to exceed the amount of [~~$1,000~~] $2,857,” and in Section 60.5 it said, “Vehicles registered by a blind person, not to exceed the amount of [~~$3,000~~] $8,571,” and asked why the amounts were being increased by such a large degree. Mr. Hettrick explained that the department had changed the way a vehicle was valued. The department had gone from valuing a vehicle at $1,000 at 35 percent to valuing it at full value and charging 35 percent of the value to calculate the tax. What had been completed was that the value had been divided by 0.35 and it increased everything by that percentage. The figures in the bill were the result. The result of the calculation was the same, but it changed the basis from which it started. Mr. Hettrick opined that the change was a clarification in the accounting procedure to make it, in theory, easier to determine the tax. Chairman Arberry asked if the consumer would be paying more. Mr. Hettrick stated that the change was revenue neutral, but there was some argument that could be made that it changed the cap that could ultimately be charged. The rates had been capped at approximately a dollar, and by changing the rate back to 35 cents and working off the full value of the vehicle a dollar on rate could be continued for a significant increase. The actual proposal before the committee in the bill was revenue neutral and did not increase or decrease tax for anyone, but changed the basis by which the tax was calculated.

Ms. Giunchigliani asked to have some information regarding the idea of using $50,000 of Highway Funds to start the trust fund and get some interest revenue, and pursue Mr. Hettrick’s idea of having a percentage off for the second year of the registration. At that point there would be some money in the account, and the Highway Funds could be paid back after the biennium. Ms. Lewis stated that she could provide the information, and confirmed that the idea was to give the department a start-up of $50,000 and any interest that accrued could be used as an incentive. This would be solely for the $33 registration fee, and not the privilege tax. If the privilege tax was included there could be issues with impact on the counties. Ms. Giunchigliani stated that the registration fee was a place to begin.

Ms. Sandra Tiffany was perplexed about the split of the $33 registration fee from the privilege tax, because both had to be coupled together before a person could register. Ms. Lewis explained that both were collected at the time of registration. If a discount was addressed on the privilege tax it had to be ensured that there was enough interest gained to offset what was distributed to the counties so that there was no impact to the counties. Ms. Tiffany asked what the department was gaining, because the privilege tax was going to have to be collected during the second year. Ms. Lewis clarified that all the fees for the two-year registration would be collected in the first year. Ms. Tiffany confirmed that the department was talking about uncoupling the two fees if the discount was granted. She then said that it did not make sense to discount the $33 registration fee, because the privilege tax was the larger fee. For a customer to pay a large check to the department would provide a large pool of money, and the only benefit Ms. Tiffany saw was that there could be a large chunk of money back to the General Fund.

Mr. Hettrick believed that the school districts that shared in the privilege tax portion of the registration fee would be smart enough to understand the future value of money, and would accept the 5 percent discount. The school districts would be well ahead to have the money to use for things like bond payments. He stated that the school districts could place the money in a savings account and receive interest revenue. The districts should accept the discounted rates because if the money was managed wisely, they would be money ahead. Mr. Hettrick noted that if there was only a 5 percent discount on the $33, there would be few participants. The possible potential of the bill would not be realized. If a customer was given a 5 percent across-the-board discount, people would take the discount. Mr. Hettrick said the people who benefited from the privilege tax ought to take their share and have the money in hand.

Ms. Lewis explained that the way the bill currently read was that the distribution on the second year of the registration would not occur until the end of the first 12-month cycle. In order to complete what Mr. Hettrick had suggested, the department would have to complete the total distribution for the full two years as it was completed today. Instead of holding the money in an account to accrue interest it would all have to be distributed, and the counties would make use of the monies they were receiving up front. Mr. Hettrick said that the beauty of the idea was that the customer would write one check, and the department would not have to process a second check. The department would save on “the front side” and on “the back side,” and the counties would have the money. Mr. Hettrick said the idea needed to be thought about because it was a simple way to cut the distribution workload in half.

Mrs. Marcia de Braga said that under the scenario that had been described there would not be the money to provide the discount for the second year, because the money would be distributed up front and not earning interest. Ms. Lewis explained that her understanding of the scenario that had been described was the department would collect the money up front with the percentage discount to the customer, the remaining funds would be distributed to the appropriate county, school district, and to the Highway Fund. Mrs. de Braga confirmed that the state would not receive the interest revenue under this scenario.

Kit Weaver, Assessor, Carson City Assessor’s Office, presented an amendment to the committee (Exhibit C). Mr. Weaver noted that the change in the bill of removing the 35 percent of the depreciated value that had been previously discussed had caused a major concern for the assessors because there were approximately 80,000 exemptions in Nevada that the assessors administered. Approximately 70,000 of the exemptions dealt with the motor vehicle privilege tax. Mr. Weaver explained that currently there were approximately 70,000 widows and veterans that had a $1,000 exemption on a vehicle, mobile home, house, or land. $1,000 was a very manageable exemption, and a widow and veteran might choose to split that between more than one exemptible item. The assessors were able to divide the $1,000 up, but had a concern with dividing $2,857 and informing the person that the increased amount did not mean more benefits and could not be used on a mobile home or house. The amendment had occurred because the exemption changes were noticed during the Senate Committee on Transportation hearing. Testimony regarding the issue had been heard in the Assembly Committee on Transportation, but the amendments were not available at that time. The amendment would return the language in the bill to 35 percent, change the rate back to the current rate, and would change the exemptions back to the current amounts.

Mr. Weaver noted that the second portion of the bill addressed a 24-month registration period and did not address the fact that exemptions could only be used for one year. If a person with an exemption registered for two years, they would not be able to use the exemption for the two-year period. The department officials had said that a refund could be had in the second year. The amendment proposed that if a veteran or widow was planning on renewing the registration for two years, that they would also be able to use two years of the exemption.

Ms. Giunchigliani stated that she appreciated the concept of the bill, but she wondered what in the bill was necessary to be moved at the current time. Ms. Lewis explained that Mr. Weaver’s testimony was appropriate. She stated that there was some confusion from the assessors as far as the 35 percent issue, and the amendment to remove the issue was appropriate. Ms. Lewis explained that if the exemption for widows and veterans was allowed for two years it would assist the assessors. As for the previous discussion, Ms. Lewis stated that the program should be set up so that the department could gauge the response, and return next session to apply a discount to the program. Ms. Giunchigliani asked if there were any concepts in the bill that were essential at the present time if the committee chose to wait on the program. Ms. Lewis explained the bill was just the implementation of the two-year registration program.

The Chair closed the hearing on S.B. 520 and opened the hearing S.B. 525.

Senate Bill 525: Revises provisions governing issuance of replacement license plates. (BDR S-1223)

Ms. Lewis stated that S.B. 525 accomplished two things. First, it gave an extended date of December 31, 2002, at which point the department must have completed the replacement of the Big Horn Sheep license plates. Secondly, the bill allowed the department to use the remaining funds originally appropriated for the project and required all monies remaining on June 30, 2003, to be reverted to the Highway Fund. Ms. Lewis noted that the 1997 and 1999 legislatures enacted a law, which directed the department to redesign and reissue a license plate to replace the current Big Horn Sheep license plates. In working through the implementation details of the license plate reissue during the summer and fall of 2000, the department recognized that the task had all the potential of a public relations nightmare for the department, the legislature, the Governor’s Office, and the state. Even the best plans would have created confusion for the motoring public. To minimize the inconvenience and confusion for the customers, the department implemented a phased-in approach. On January 1, 2001, the department began Phase I whereby all customers in the field offices to register a new vehicle or a vehicle for the first time had been issued the new “Sunset” plates. To date there had been over 325,000 Sunset plates issued through the field offices. Phase II would encompass the registration renewals processed by mail, Internet, phone, or at an emission station. The customers would be mailed the Sunset plates, so as not to compromise the use of the alternative services. The last thing the department wanted was to have customers come into field offices because they thought it was the only way to receive the Sunset plate. In light of the previous 18 months of challenges to stabilize the department and improve the customer service perception, it was critical the license plate reissue was accomplished with the least amount of inconvenience to the customers.

The Chair closed the hearing on S.B. 525 and opened the hearing on S.B. 145.

Senate Bill 145: Revises provisions governing distribution of money from state to school districts and charter schools. (BDR 34-169)

Mark Winebarger, Chief Deputy Controller, Office of the State Controller, explained the bill was requested to address the cash flow issues in the General Fund. The controller had not been able to complete the full quarterly Distributive School Account (DSA) payments on the first day of the quarter. The reason for the funding delay was that sales tax receipts were received and posted several days after the first of the month, but the DSA was due on the first of the month. Compounding the problem was the decision to make the payments four days in advance because of the new accounting requirements. In October of the previous year, the assistant controller and Mr. Winebarger had met with the Board of Education and financial representatives of the school districts to discuss the problem, and had initially requested to change the DSA payment from the 1^st to the 15^th of the month. At that point there was no opposition. When the bill had been introduced, Clark and Washoe Counties opposed the date change citing loss of interest. Mr. Winebarger stated that the bill had been amended by the Senate Committee on Finance to maintain the current first of the month due date, and added or as soon as thereafter was practical based upon the cash balances in the General Fund. The bill would place into statute what was currently being done.

Ms. Giunchigliani asked if there would be an impact in the local districts in loss of revenue based on the timeliness of the payments. Mr. Winebarger explained that currently the distribution was made in thirds as soon as cash was available in the General Fund, and there was a loss of interest when payments were delayed. Ms. Giunchigliani asked how frequently the payment had been delayed. Mr. Winebarger responded that the payments had been late in six of the previous nine quarters. The most recent distribution was May 1, and two‑thirds had been paid on May 1 and the final third was paid five days later. Ms. Giunchigliani asked if rather than codifying current practice that negatively impacted local school districts, there were other options that should be looked at. Mr. Winebarger explained that after discussions with Washoe and Clark Counties, he did not believe there were other viable options. Ms. Giunchigliani confirmed that the school districts counted on the interest, to which Mr. Winebarger stated that the counties appreciated the fact that payments were being made as soon as possible. Ms. Giunchigliani said the problem was the cash disbursement from the state as far as the date of payment and asked if the cash flow from the state had been discussed. Mr. Winebarger commented that he was unaware of a way to rectify the cash flow problem. It was a timing issue because the revenue was from sales tax and sales tax was not due until the 30^th of a month. In response to questions posed, Mr. Winebarger reiterated that it was a timing issue. Ms. Giunchigliani asked what other agencies were affected by lack of cash flow, to which Mr. Winebarger explained the one being discussed was the only one he was aware of. Ms. Giunchigliani asked if there was a way to make up the loss of revenue. Mr. Winebarger said that there was none that he was aware of. Ms. Giunchigliani stated that she did not like the idea of codifying something just because it was currently happening.

The Chair recognized Pat Zamora, Director of Accounting, Clark County School District. Mr. Zamora explained that at the current time, the Clark County School District was opposed to S.B. 145. The delay in payment of DSA funds by the practice that was currently in place would reduce the amount of funds available to the school district for investment. Mr. Zamora anticipated that the reduction would reduce the investment income as much as $560,000 per fiscal year for the Clark County School District. It was important to remember that investment was one of the factors that was taken into account when the Department of Education computed the per pupil basic education support. Any loss in investment earnings was actually a loss in per pupil support.

Ms. Tiffany asked a theoretical question; if Mr. Zamora was the State Controller, would he expect the state to pay a fee that was due when the state did not have the money collected. Mr. Zamora stated this was a concept of book balance versus bank balance. The book balance was what was posted to the accounts and bank balance was what was fiscally in the bank. If the money was in the bank then Mr. Zamora would make payments although not all of the accounts had been posted. If he did not complete that task while he was waiting for the DSA payment he would not have the book funds to pay his teachers. In response to questions Mr. Zamora clarified that the concept was that there was money in the bank, but it had yet to be posted to the appropriate account. Ms. Tiffany stated that the money was not in the bank in the question at hand because the tax collections had not been completed when the payment was due. Mr. Zamora explained he was unaware of when the sales tax was expected, but he knew from past practice the school district had been paid as late as the 15^th of a month. Ms. Tiffany stated that the reason given for that was the delay in receipt of the sales tax monies. Mr. Zamora desired to ensure that it was a delay because the cash was not collected, rather than because of not being posted to an account on the state’s books. Ms. Tiffany confirmed that Mr. Zamora believed that there was more of an accounting problem than a cash flow problem.

Tom Ciesynski, Chief Accountant, Washoe County School District, noted that a letter in opposition to S.B. 145 from himself and Mr. Zamora had been provided (Exhibit D). Mr. Ciesynski reiterated that the school districts desired to receive the money in a timely manner in order to accrue interest. The objective was to receive the money on the 1^st of the quarter if possible, but history had shown that partial payments were made up front and the balance was paid five to ten days later. He reiterated that the objective was to receive the payments as quickly as possible.

Mr. Bob Beers stated that sales tax payments were mailed on the 30^th to the state’s bank and should be posted within a day, and asked for confirmation. Mr. Winebarger explained that the state had improved the timelines in the posting of receipts. The Department of Taxation was posting the revenue into a liability account until it could be distributed, so it did show in the DSA cash account. To say that the money was in the bank, but not on the books, was not an accurate statement. Mr. Beers asked if Mr. Winebarger was aware if the checks went to a bank drop box. Mr. Winebarger stated that he believed they did, but that process was through the Department of Taxation. Mr. Beers commented that the posting of the revenue was lagging behind the deposit of the cash. Mr. Winebarger stated that the posting could be lagging by a day or two. Mr. Beers asked if that trend had generated the bill. Mr. Winebarger stated the bill was generated because, by the department’s records, the cash did not show up on the books, either because of lack of payments or the posting was not being received. The Department of Taxation had improved timelines in posting so there would only be a day or two in the lag. Mr. Beers confirmed that there would not be a 15-day lag in the posting. Mr. Winebarger reiterated that payments were made as soon as possible. There had been a 15‑day lag, but generally the final payment was made no more than 8 days late.

The Chair closed the hearing on S.B. 145 and opened the hearing on S.B. 26.

Senate Bill 26: Creates fund for aviation. (BDR 44-696)

The Chair recognized Steven Tackes, Carson City Airport Authority, to testify in favor of S.B. 26. Mr. Tackes explained that the bill had been requested by the Aircraft Owners and Pilots Association to create an aviation trust fund in Nevada. Most states currently had a trust fund, and the main benefit of the bill was that small airports in Nevada would be able to pool funds and receive larger federal grants. The smaller airports were able to receive federal grants for airport construction and maintenance programs in the range of around 6 percent of the airport money matched with 94 percent of federal funds. The bill allowed the airports to pool money and determine the priority listing for small airports around the state. By pooling the money, larger federal grants were able to be received. Mr. Tackes said the key feature of the bill was that it did not involve an appropriation of funds. The money was from fuel tax revenue that the small airports were currently receiving. The fuel tax revenues would be pooled, and a decision would be made about which project among the small airports should proceed. In the bill there was also the ability to receive bequests or charitable contributions. Mr. Tackes explained he was unaware of how large that component would be, and the primary funding would be the fuel tax revenue, which the small airports already received. He pointed out that the larger airports, in Clark and Washoe County, did not desire to participate in the program so they had been specifically excluded.

Mr. Dini confirmed that under the bill, the fuel tax that the city of Yerington currently received would be placed into the trust fund, and the city would have to apply to the trust fund if there was a grant they wished to apply for. Mr. Tackes stated that the description Mr. Dini had given was essentially how the program worked, and added that the program had optional participation. The small airports would discuss who would participate so that every year the trust fund could be allocated for set priorities. Mr. Tackes gave this example; if the small airports believed the Yerington field needed to be repaved, that would be where the funds would go to be used for matching funds. Mr. Dini asked if that would take away local control by the City Council or County Commissioners. Mr. Tackes stated that it did not because the local entity still needed to make the application to the federal government for the matching funds. Currently Yerington was on the same basis as Carson City, which was that they provided 6 percent of the funds and the federal government provided the other 94 percent. The process of making the decisions would remain local to Yerington.

Ms. Tiffany inquired who the director of the trust fund would be and who would select the director. Mr. Tackes explained that the director would be the director of the Department of Transportation. Currently the Department of Transportation worked as a subcontractor to the Federal Aviation Administration (FAA) and participated in airport activities. In the bill the director of the Department of Transportation would adopt the regulations and decide on the expenditure of the funds, however, Mr. Tackes noted, consultation with the Nevada Aviation Technical Advisory Committee in making the decision was included in the bill. Mr. Tackes explained that the thought was that work would continue with the Department of Transportation, and the decisions would be made. He stated that the decision was made by the director of the Department of Transportation, and conceivably the small airports could decide the money should go to Yerington, and the director could decide to have it go to another airport, but that was not envisioned to occur. Ms. Tiffany asked if the director of the Department of Transportation appointed a person to work with the small airports. Mr. Tackes said that within the Department of Transportation the task was assigned to other employees that were active in dealing with small and large airports in Nevada.

Mr. Marvel asked how much additional money could be leveraged by pooling the money. Mr. Tackes stated that for any particular project the amount could be significant, and then deferred to Jim Braswell, Minden-Tahoe Airport. Mr. Braswell commented that one of the issues was that under new federal legislation the small airports of Nevada that were on the state plan were guaranteed $150,000 for three years. The money could be saved and used in the third year, or it could be used each year. The match for the $150,000 was 6 percent. One of the ideas that the Nevada Technical Advisory Committee and the Nevada Airport Managers Association was interested in, was assisting all airports and that would result in cooperative work and compromise. Mr. Braswell reiterated that there was a pool of funding set aside by the federal government.

Chairman Arberry closed the hearing on S.B. 26. The meeting was recessed at 9:36 a.m. and reconvened at 10:22 a.m.

Assembly Bill 324: Revises various provisions regarding regulation of mortgage brokers, mortgage agents and mortgage companies. (BDR 54-491)

Mark Stevens, Fiscal Analyst, explained some potential amendment options for A.B. 324. He stated that the proposal would include language instructing the Department of Business and Industry to identify the revenues and expenditures in the Division of Financial Institutions budget for regulation of mortgage brokers, and agents. The amounts identified would be transferred to a new budget account and submitted to the Governor and the Interim Finance Committee (IFC) in the fall of 2001. The committee could decide on dates, but the date Mr. Stevens noted that had been mentioned was January of 2002. That would require the Department of Business and Industry to appear before the IFC to split the budget accounts in the fall and November 1, 2001, might be an appropriate date. The IFC usually met in early September and late October, and the budgets could be split November 1 and the regulatory functions could transfer in January of 2002. Mr. Stevens commented that it had been suggested that effective July 1, 2001, the mortgage license and related fees normally deposited to the General Fund would be deposited initially to the budget of the Division of Financial Institutions until a new agency was authorized, and the new agency created would receive the revenue once operations commenced. Authority should be provided to allow the mortgage license and other fees to be increased to ensure that fees would support the total cost of regulating the industry. The committee would need to determine who would have the authority to raise and regulate the fees. Mr. Stevens said authority would have to be provided to transfer fee revenues and amounts appropriated from the General Fund to the Division of Financial Institutions’ budget to the new agency, and then approval would need to be granted by the Governor and the IFC to split the budget into two pieces.

MS. GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 324 WITH THE FOLLOWING:

· THE TRANSITORY LANGUAGE,

· SELF FEE FUNDED,

· REPORT TO THE IFC WITH A PLAN FOR SPLITTING THE BUDGETS,

· AND A CHANGE IN LANGUAGE TO PROVIDE FOR THE CHANGE IN THE DEPOSIT OF REVENUE FROM THE GENERAL FUND TO THE SELF-FUND.

Mr. Hettrick asked to have a Letter of Intent added to the motion to state that any cost incurred needed to be paid by fees, to which the committee agreed.

MRS. CHOWNING SECONDED THE MOTION INCLUDING THE LETTER OF INTENT.

Mrs. Vonne Chowning explained that the correspondence that she had received indicated that there was no objection to the fees. She asked who would be given the authority to set and raise the fees.

Chairman Arberry stated that he believed that the board would have the right to set the fees.

Ms. Giunchigliani explained that she believed that would be a portion of the plan that would be presented to the IFC about splitting the division.

Mrs. Chowning commented that if that was clear, and that the fees would be set by the new commission she was in agreement with the motion.

THE MOTION PASSED UNANIMOUSLY. (Mr. Goldwater and Ms. Leslie were absent for the vote.)

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Assembly Bill 448: Provides for licensing and operation of railroad gaming. (BDR 41-1066)

Mr. Stevens explained that A.B. 448 would allow slot machines on trains and it was designed for the train in White Pine County. The bill also provided for a $2 million General Fund appropriation for the renovation of the track and a few locomotives.

MS. GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 448 WITHOUT THE GENERAL FUND APPROPRIATION.

MR. MARVEL SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY. (Mr. Goldwater and Ms. Leslie were absent for the vote.)

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Assembly Bill 460: Revises provisions governing remittance of fees collected by short-term lessors of passenger cars to department of taxation. (BDR 43- 589)

Mr. Stevens stated that A.B. 460 regarded short-term car leases, and staff had been working on the bill for the past few days.

Ms. Giunchigliani explained that a portion of the bill was a policy decision. Seven years previously the fees collected had been established so as not to hurt small businesses, but since then there had been a large increase in revenues, and approximately 4 percent was reverting to companies that did not need the revenue. In order to move forward without hurting the small businesses, Ms. Giunchigliani and staff had developed an idea that included a credit of the first $50,000 spent on registering vehicles based. Based on providing a $50,000 credit per year, 39 companies would be held harmless, and approximately $13,832,000 in General Fund revenue would be received. If the first $100,000 in registration costs were credited, 41 companies would be held harmless, 13 would have no benefit, and over $13 million in General Fund revenue would be generated. Ms. Giunchigliani explained that although she had not spoken to the representatives involved, she would suggest looking at having a $100,000 credit in the first year, and phasing that to a $50,000 credit in the second year. During the interim study about broad-based taxes, this item should be reviewed so a policy decision could be made in the next session. In this plan there would be revenue diverted, and a majority of the companies that had been discussed would be held harmless. The committee would also need to ensure that language was included that prevented the breakup of large companies into smaller companies for the purpose of qualifying for credit that the companies would not normally be qualified for.

Mr. Joe Dini stated that if a study was going to be completed then there should be no decrease from the $100,000 credit to the $50,000 credit. He opined that it would help to protect the small operators.

MR. HETTRICK MOVED TO AMEND AND DO PASS A.B. 460 WITH THE FOLLOWING:

· A $100,000 CAP ON THE RENTAL INCOME,

· AND INCLUSION OF THE MATTER IN THE INTERIM STUDY ON THE DISTRIBUTION OF TAXES.

MS. GIUNCHIGLIANI SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY (Mr. Goldwater was absent for the vote.)

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Assembly Bill 564: Makes various changes relating to public employees’ benefits program. (BDR 23-1346)

Mr. Stevens stated that A.B. 564 created a separate oversight committee for the Public Employees’ Benefits Program that was currently handled by the interim Retirement and Benefits Committee that oversaw the Public Employees Retirement System and the Group Insurance Plan under the Public Employees’ Benefits Program. It also required that active and retired state employees be pooled for rating purposes. Mr. Stevens noted that there had been a move in the previous cycle to rate retirees separately and there had been a negative reaction to that from the retirees. The rest of the bill was related to the Medicare carve out issue, which had been previously discussed. The bill required the Public Employees’ Benefit Program board to submit an annual report regarding administration and operation of the program not more than six months before the board would establish rates and coverage for members. A.B. 564 included a $100,000 appropriation in Section 9 relating to providing contraceptives and an issue that was related to the HMO that was included in the plan in northern Nevada in the current calendar year. Mr. Stevens was unsure about whether the bill would move or not, and noted that in the Public Employees’ Benefit Program closing on May 15 in the Assembly Committee on Ways and Means, a Letter of Intent was included to ask the board to revisit the Medicare carve out issue during the interim period. It had been incompletely addressed after the 1999 Legislative Session. The other major issue was rating active and retired state employees together, and that could be handled through a Letter of Intent or legislation.

MS. GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 564 WITH THE FOLLOWING:

· THE INTERIM COMMITTEE ON RETIREMENT AND BENEFITS WOULD OVERSEE THE OPERATIONS,

· A LETTER OF INTENT INDICATING THE CONTINUATION WITH THE MEDICARE CARVE OUT,

· REMOVAL OF THE $100,000 APPROPRIATION, AND DIRECTION TO REBID TO COMPLY WITH STATE LAW FOR THE COVERAGE OF CONTRACEPTIVES,

· AND A STATUTORY CHANGE TO ENSURE THE POOLING OF THE ACTIVE AND RETIRED EMPLOYEES.

Mrs. de Braga asked to have HMOs included in the language in Section 9. Ms. Giunchigliani stated that that was the intent to have both the PPOs and HMOs included.

Mr. Beers asked why the appropriation would be needed if the rebid was completed. Ms. Giunchigliani reiterated that her motion included the removal of the appropriation, and the issue was the ignorance of state law.

MRS. DE BRAGA SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY. (Mr. Goldwater was absent for the vote.)

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Senate Bill 26: Creates fund for aviation. (BDR 44-696)

Mr. Stevens noted that S.B. 26 had been heard earlier in the hearing and concerned small airport facilities.

Mr. Hettrick stated that given the testimony he believed that the bill would be beneficial.

MR. HETTRICK MOVED TO DO PASS S.B. 26.

MRS. CEGAVSKE SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY. (Mr. Goldwater was absent for the vote.)

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Senate Bill 145: Revises provisions governing distribution of money from state to school districts and charter schools. (BDR 34-169)

Mr. Stevens stated S.B. 145 was also heard earlier in the hearing and involved distribution of state funds to the school districts out of the DSA.

MRS. CEGAVSKE MOVED TO INDEFINITELY POSTPONE S.B. 145.

MR. BEERS SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY. (Mr. Goldwater was absent for the vote.)

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Senate Bill 196: Revises provisions relating to eligibility of school districts for grants of money to purchase library books. (BDR S-1124)

Mr. Stevens said that testimony on S.B. 196 was given earlier in the meeting.

MR. DINI MOVED TO DO PASS S.B. 196.

MS. GIUNCHIGLIANI SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY. (Mr. Goldwater was absent for the vote.)

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Senate Bill 249: Makes supplemental appropriation to Secretary of State for unanticipated shortfall in money budgeted for salaries and costs for information services. (BDR S-1253)

Mr. Stevens commented that S.B. 249 was the supplemental appropriation for the Secretary of State in the amount of $220,786. Committee members had a question regarding the amount of the funding that was General Fund versus funding from the Expedite Fees Account, as well as how much was salaries versus data processing. Mr. Stevens explained that the total shortfall was $335,541 and out of that the relative share of General Funds to Expedite Funds in the Secretary of State’s budget was 65.8 percent. The General Fund would contribute 65.8 percent of the shortfall, which totaled $220,786. The General Fund portion of the salary portion was $118,604. The data processing portion was $102,182. The total shortfall was $180,000 in salaries, and $155,282 in data processing.

Ms. Giunchigliani asked if the salaries should have been more appropriately accounted for in the Expedite Fees. Mr. Stevens explained that the major problem in the account was that there were a number of positions that had frozen merits. There were a fair number of turnovers in the positions, so the merit salary increases were provided to the employees, but were not budgeted. This caused the shortfall in the salary category. Mr. Stevens noted that he was unsure what caused the data processing shortfall, but there was a shortfall in that category. Ms. Giunchigliani confirmed that there was a proper split.

Ms. Tiffany inquired why the $102,000 for data processing could not be funded from the Expedite Fees as opposed to General Funds. Mr. Stevens explained that the way the bill had been proposed was to take the relative portion of the General Fund to the entire budget and split the cost in that manner. He would be able to see if the money could be legitimately charged to the Expedite Account, but that was how the bill was written. Since 65.8 percent of the budget was funded with General Fund, that was how much the Governor recommended was funded from the General Fund.

MR. DINI MOVED TO DO PASS S.B. 249.

MR. HETTRICK SECONDED THE MOTION.

THE MOTION PASSED UNANIMOUSLY. (Mr. Goldwater was absent for the vote.)

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Mr. Stevens stated that this was the two-year registration bill that had been heard earlier. The bill was not currently exempted, but Mr. Stevens opined that it could be due to the implementation of the budget.

Mr. Dini stated that he believed the bill should be exempted so that it could be worked on. He stated it was a good concept, but the bill was not the way to accomplish the idea.

Chairman Arberry explained that he was concerned about staff being overburdened, and if the bill was going to fail he hated to put pressure on them to work on the amendments.

Ms. Giunchigliani stated that since the budgets had not been closed yet, the committee could consider including a Letter of Intent to develop a plan to implement the idea with an incentive and report back in the following session. With this suggestion the idea would not be lost and it was enabling to the division, but the legislation was not needed. It would present the idea that the committee appreciated the concept, but there needed to be more planning.

Chairman Arberry agreed with Ms. Giunchigliani’s comments.

Mr. Stevens stated that he could exempt the bill.

MS. GIUNCHIGLIANI MOVED TO INDEFINITELY POSTPONE S.B. 520.

MRS. DE BRAGA SECONDED THE MOTION.

THE MOTION PASSED. (Mrs. Chowning voted no. Mr. Goldwater was absent for the vote.)

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Senate Bill 525: Revises provisions governing issuance of replacement license plates. (BDR S-1223)

Mr. Stevens stated that S.B. 525 had been heard earlier in the meeting, and was not exempt. The bill changed a reversion date from legislation in the previous session, and involved the reissuing of replacement license plates from the Big Horn Sheep plate to the Sunset plate. The date would be changed from June 30, 2001, to June 30, 2003.

MR. DINI MOVED TO DO PASS S.B. 525.

MRS. CHOWNING SECONDED THE MOTION.

THE MOTION PASSED. (Mrs. Giunchigliani voted no. Mr. Goldwater was absent for the vote.)

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Mrs. Chowning noted that there were bills coming out of the Assembly Committee on Transportation that had an affect on the state, and asked what would happen in light of the passage deadline. Mr. Stevens stated that he needed to know what the bill numbers were so that if an exemption notice was necessary that could be completed. If the bills had a financial impact or were within the exemption areas then they could be exempted and referred to the Assembly Committee on Ways and Means.

Mr. Hettrick commented that he had received e-mail from the employees at China Springs about how appreciative they were with the work the committee had completed on the salary issue. He thanked the committee for the work that had been accomplished because the employees had been two years without pay raises, and would have gone two more years without receiving a raise.

Chairman Arberry recessed the meeting to the call of the Chair. The meeting was reconvened at 8:25 a.m. on May 22, at which point Chairman Arberry disclosed he would not benefit more than any other person in regard to the passage of A.B. 324, and adjourned the meeting.

RESPECTFULLY SUBMITTED:

Andrea Carothers

Committee Secretary

APPROVED BY:

Assemblyman Morse Arberry Jr., Chairman

DATE: