MINUTES OF THE meeting

of the

ASSEMBLY Committee on Ways and Means

and senate committee on finance

Joint subcommittee on general government

 

Seventy-First Session

February 21, 2001

 

 

The Assembly Committee on Ways and Means and the Senate Committee on Finance Joint Subcommittee on General Government was called to order at 8:07 a.m., on Wednesday, February 21, 2001.  Chairwoman Vonne Chowning 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.

 

 

ASSEMBLY COMMITTEE MEMBERS PRESENT:

 

Mrs. Vonne Chowning, Chairwoman

Mr.                     Bob Beers

Ms.                     Chris Giunchigliani

Mr.                     Lynn Hettrick

Ms.                     Sheila Leslie

Mr.                     David Parks

 

SENATE COMMITTEE MEMBERS PRESENT:

 

Senator William R. O'Donnell, Chairman

Senator Lawrence Jacobsen

Senator Joseph Neal

 

COMMITTEE MEMBERS ABSENT:

 

None

 

STAFF MEMBERS PRESENT:

 

Steve Abba, Principal Deputy Fiscal Analyst

Mindy Braun, Education Program Analyst

Mike Chapman, Program Analyst

Rick Combs, Program Analyst

Connie Davis, Committee Secretary

 

 

DEPARTMENT OF BUSINESS AND INDUSTRY – BUDGET ACCOUNT 4681, BUDGET PAGE B&I-1

Sydney Wickliffe, Certified Public Accountant (CPA), and Director of the Department of Business and Industry, identified herself for the record and introduced Doug Walther, Chief, Office of Business Finance and Planning, and Bill Maier, Administrative Services Officer.

 

Ms. Wickliffe provided information on the role of the director's office and stated she perceived the office existed to support the regulatory and consumer‑directed agencies within the department.  Ms. Wickliffe advised the members of the subcommittee that the department was comprised of 11 regulatory agencies, 8 other consumer-directed agencies and employed 600 people.  Ms. Wickliffe further advised that the role of the director's office was "with a commonality of purpose" to make life simpler and more productive for the operational agencies within the department.  Additionally, Ms. Wickliffe commented that the success of the director's office was measured by the increased productivity of their operational agencies, accomplished through the roles of 5 management positions within the director's office.  Ms. Wickliffe outlined the function of each management role and indicated that while the director had ultimate responsibility for the office, Doug Walther, an attorney and Chief of the Office of Business Finance and Planning, provided executive administrative support; Bill Maier, the Administrative Services Officer, provided financial support; a program officer in Las Vegas provided support for constituent services; and a personnel position which was currently vacant would be filled in the near future.  Ms. Wickliffe anticipated the personnel function would be expanded beyond handling grievances to take on additional responsibilities of monitoring, training, and coordination throughout the department.  Additionally, Ms. Wickliffe commented that 4.5 clerical support staff supported management and the half-time person was a student worker in the Las Vegas office, for a total of 9.5 positions.

 

Ms. Wickliffe advised the members of the subcommittee that the department's budget was modest.  Funding for software was requested in the amount of $2,600 for a visually-impaired receptionist in Las Vegas and the balance was requested for training which Ms. Wickliffe indicated was "vitally necessary" for the director's office to remain current with technological changes.  Additionally, funding was requested for continuing education for the director and the chief of business finance and planning to maintain their professional status and shoulder ethical responsibilities imposed on them.  Ms. Wickliffe noted that Nevada law permitted broad-based CPA training and continuing education in classes that improved work performance and permitted, in addition to technology training on auditing, taxes and accounting, continuing education for leadership, management, personnel, seminars and conferences. 

 

Ms. Wickliffe requested that Doug Walther report on the Bond Program within the director's office. 

 

Before Mr. Walther's report, Chairwoman Chowning addressed the department's work performance standards and pointed out it appeared about 12,000 calls were received and referred to other agencies within the department.  Ms. Wickliffe clarified that the many contacts received through phone calls, "walk‑ins" or by mail were referred to agencies within the department and were based on actual numbers of about 12,000.  In many instances, however, calls were from individuals who wanted to start a business, and those calls were referred to the Office of the Secretary of State.

 

Chairwoman Chowning addressed the performance indicator showing 18,000 to 20,000 calls from members of the public who requested public assistance documents.  Ms. Wickliffe responded the figures were based on historical information concerning the number of "hits" on the department's Web site.  Ms. Wickliffe commented that the department's Web site had the second largest number of hits within Nevada, and only the Office of the Secretary of State had more. 

 

Chairwoman Chowning suggested that since the department interfaced with so many other agencies, performance indicators should be developed that measured services, particularly how employee satisfaction was measured as well as services provided to other departments.  Ms. Wickliffe pointed out that the actual numbers of calls referred to other agencies had been included and explained that if the call was a simple referral, satisfaction resulted in the caller not calling back to report an incorrect phone number.  Ms. Wickliffe advised, however, that the department would look at "some efficiency rating" on services provided.

 

Chairwoman Chowning requested that the department address the transfer from the Industrial Development Revenue Bond Program (IDRB).

 

Doug Walther, Chief, Office of Business Finance and Planning, identified himself for the record and advised the members of the subcommittee he had held the position since the middle of September 2000.  Mr. Walther reported that, in compliance with a 1997 legislative Letter of Intent, the last of eight quarterly reports on the bond program was filed for the period of the second quarter of 1999.  Mr. Walther indicated the reports provided an excellent source of history for the program and outlined detail in the department's work with prospective applicants and the application process.

 

Mr. Walther reported on the department's accomplishments for the past year and advised that the bond for the monorail had been the largest bond issued.  Mr. Walther indicated continued involvement in the project insofar as oversight of the company, a public-interest corporation, to see that the project stayed on track and provided the public benefit for which it was intended.

 

Chairwoman Chowning addressed the amount of the bond and Mr. Walther reported it was a bond for $650,000,000 and confirmed Chairwoman Chowning's assessment that the bond issued for the monorail was the largest in the department's history.  Ms. Wickliffe added that the bond was the largest the state had ever issued as well.  Ms. Wickliffe affirmed Chairwoman Chowning's assertion concerning the 40-year length of the bond.

 

Mr. Walther addressed the following accomplishments.

 

• A direct mailing to legislators and other interested parties that addressed the bond program.  The mailing generated interest and would be continued in an effort to remind people of the program and what it had to offer.

 

• Two site visits were conducted to the plants of companies who were issued bonds; reports were issued on the benefits achieved from the bonds.

 

• Attended meetings of the Nevada World Trade Council and the Nevada Technology Council, which assisted in bringing economic activity to the state.

 

• Finalized and submitted a proposal for a bond facilitator to assist prospective applicants with the technical and financial aspects of bond application.

 

• Developed an information packet for the department's Web site that explained, in addition to the application process, issues involved in issuing bonds and legal documentation related to the bond program.

 

Mr. Walther discussed the following goals he expected he would accomplish in the next year.

 

• Develop regulations that would simplify the process for allocating the state's volume capacity.  Mr. Walther explained that a reversion period currently existed during which the cap dedicated to local government reverted to the state.  Mr. Walther further explained that the local governments had become creative in placing "conditions and contingencies on the use of the cap" which were difficult to follow.

 

• Develop regulations that would implement a small equipment bond program as authorized by legislation that resulted from the 1999 legislature.

 

• Study the possibility of pooling bonds.  Mr. Walther explained that bonds were not economical or feasible unless in the $1.5 to $2 million range.  However, he advised there was a lot of demand for equipment bonds for lower amounts, and he would explore the possibility wherein several parties participated in the pool for lower amounts and still received the economies of the lower interest bonds.

 

• Hire a bond facilitator.  As previously discussed, Mr. Walther indicated a need for an employee who could work with applicants to discuss the technical/financial tax ramifications of their projects.  Mr. Walther explained the "daunting" requirements involved in the application process, and that, often, with minor changes to their business plan, an applicant qualified.

 

Mr. Walther discussed the following prospects for the current year:

 

• An applicant for a 240-unit continuing care retirement community in Clark County. 

 

• Discussions with potential bond applicants that included:

 

• A utility pole manufacturer in Clark County.
• A manufacturer of commercial modular homes for Lovelock.
• Two companies that manufactured vitamins and food supplements.
• Modular furniture company.
• Business park in Clark County.
• Kitty litter manufacturing plant. 

 

Mr. Walther reported that the director had requested that he work with department staff on several issues.  Employees had met and teams were created that included representatives of the agencies.  Department goals were set and meetings occurred once a month.  Mr. Walther indicated issues included the following:

 

• E-commerce.  Mr. Walther reported that the department was working to develop "a well-thought-out plan" that would accept credit card and other financial electronic payment over the Internet.  The plan was to cut down on paperwork with greater efficiency provided for the public.  Preliminary reports of DMV's registration program were positive.

 

• E-document strategy.  Mr. Walther also reported on the work in progress to develop a document imaging system for the department's agencies so that documents could be submitted over the Internet.  It was explained that while most of the department's forms for all the agencies were on the Internet, most were static.  It was anticipated the forms would eventually be interactive so that the public could submit information directly to the agencies' information systems via the Internet.  Digital signature laws and other issues were also being reviewed.  Mr. Walther discussed the benefits that were expected included increased efficiency for the public, less paperwork for the agencies, and freeing staff who worked on document-intensive tasks to do other tasks.

 

• Web design - Mr. Walther discussed the department's work on Web design in conjunction with document imaging, and he reported it was intended that eventually the Web site would provide a centralized search source that tied all the agencies together. 

 

• Time tracking program for the director's office.  Mr. Walther reported on the time tracking program developed to keep track of how time in the director's office was spent and the projects on which they worked.  Mr. Walther reported the program had been in use for a month and anticipated a report on the activities of all the employees in the director's office could be provided in the near future.

 

Chairwoman Chowning addressed the increased workload that had resulted from the  $650,000,000 bond issued for the monorail and questioned whether the director's office had a sufficient number of positions to handle the workload.  Mr. Walther responded that although the bond program was technical and specialized, the department had hired outside bond counsel and financial advisors who provided the assistance required.  Mr. Walther also mentioned the department was in the process of obtaining bids for a bond facilitator who provided assistance for the bond application process.  Mr. Walther anticipated that once the bond facilitator position was filled, more of his own time would be spent in marketing, general administration, and monitoring activities for the monorail.

 

Chairwoman Chowning questioned whether the $50,000 transfer from the IDRB was sufficient to cover the costs associated with the monorail project.  Ms. Wickliffe responded that the director and the chief of the office of business finance and planning, with clerical support, monitored the monorail project.  Ms. Wickliffe pointed out that the monorail project was long term and existed over the 40-year term of the bonds.  Further, it was indicated the Governor delegated the assignment to the director, and Ms. Wickliffe said she believed the contract entered into with the monorail company for $50,000 a year was sufficient.  Ms. Wickliffe could not recall a provision that increased the amount of the transfer, but, because of the long-term nature of the project, she believed there would be some provision for reassessment after five or ten years.

 

Ms. Giunchigliani stated she remained unconvinced the monorail project was a wise move and voiced her opinion that "there wasn't any place in the world that used a monorail to transport people appropriately from one place to another." 

 

Ms. Giunchigliani addressed the reduction in the General Fund by the transfer from the IDRB program of $91,158 in each year of the 2001-03 biennium and reiterated an earlier question on whether the $50,000 transfer was adequate to cover costs.  Bill Maier, Administrative Services Officer, identified himself for the record and responded that during the budget building process, the base of $41,000 was repeated and $51,000 was added. 

 

Ms. Giunchigliani indicated it appeared the program was administered solely by the Chief of the Office of Business Finance and Planning; however, she questioned whether other positions in the director's office had been assigned to monitor the program.  Ms. Wickliffe responded that only the director and the chief of the office of business finance and planning, with assistance from a management assistant, administered the program.  In response to Ms. Giunchigliani, Ms. Wickliffe confirmed the management assistant was paid out of the director's office budget. 

 

Ms. Giunchigliani questioned whether there was an opportunity to secure revenue from the individuals who requested the bond to increase their contribution to pay for the cost of the management assistant.  Ms. Wickliffe indicated that while it was possible to secure an increased contribution, the amount of time required from the clerical support was minimal.  Ms. Giunchigliani asked that the director provide figures on the actual cost and time impact provided by the clerical support and indicated that the General Fund should not subsidize the project.  Ms. Wickliffe responded that one of the purposes of the time tracking program that had been implemented was to better track the time spent on various duties in the director's office.

 

Mr. Walther noted that activity related to monitoring the monorail was a small percentage of the overall time and effort required for the bond program.  He said it was not intended, when the fee was negotiated, that the individuals who requested the bond were going to support the entire bond program.  However, Mr. Walther indicated it was recognized there was an increase in work associated just with the monorail project; however, he noted there was a lot of work involved with other applicants and revenue generated from that source as well. 

 

Ms. Giunchigliani questioned the total capacity available that could be used for other projects.  Mr. Walther responded that application and processing fees were charged for all applicants and that the monorail, because of its size and need for ongoing oversight, was a "specially" negotiated fee.  Mr. Walther advised that typical bond applicants did not require ongoing oversight but paid a processing fee that allowed the department to pay outside consultants and advisors and also supported the administration of the bond program.

 

Ms. Giunchigliani questioned whether the state was obligated to fund additional costs that had not been negotiated for the monorail project.  Mr. Walther responded that the $50,000 a year was more than adequate to fund the costs associated with the monorail oversight.  He said, however, that oversight was a small part of the overall bond program; the bond program would go on and the department would work with other applicants and issue other bonds. 

 

Ms. Giunchigliani questioned whether a formula was used to establish charges and, if so, whether the charges were based on the size of the bond.  Mr. Walther affirmed that the application and processing fees were based on a formula for the size of the bond.  Ms. Giunchigliani requested a copy of the formula, which Mr. Walther agreed to provide.

 

Senator Neal requested that department staff address the $187,500,000 bond limit established by federal tax law and the projected increase to $225,000,000 beginning in January 1, 2002.  Mr. Walther responded that the federal tax code was driven by a population-based formula and that Nevada had always received a minimum of $150,000,000 because of its population.  Mr. Walther explained that meant the state could issue $150,000,000 worth of bonds for private activities on which the interest would be taxable; but up to that limit, the state could issue tax-exempt bonds.  Mr. Walther further explained that Congress, in December 2000, enacted a law and raised the limit across the board.  Nevada's continued minimum was raised to $187,500,000 and increased to $225,000,000 in 2002 to provide more bonding authority to issue tax-exempt bonds for private activity.

 

Senator Neal questioned the amount of the state's bonding capacity that remained as of February 21, 2001.  Mr. Walther responded the department "did their best" to allocate 100 percent of the volume cap year-to-year and that had been accomplished for the year 2000.  Mr. Walther explained that bonding capacity not used by the local governments reverted to the state and was then distributed to entities that could use it.  Additionally, Mr. Walther explained that some of the bonding capacity could be carried forward for public housing projects.  An example cited was that if bonds were not issued in a particular year, a portion could be carried forward for two years and used in subsequent years.  Mr. Walther indicated meetings would be held in the near future to discuss initial allocations for 2001.  

 

Senator Neal asked Mr. Walther to comment on the reversion from the counties in the year 2000.  Mr. Walther advised that $12,000,000 was reverted and reallocated to several multi-family housing projects.  Mr. Walther explained that a portion of the state cap and the reverted unused cap contributed from local governments was used to issue bonds for multi-family projects.

 

Senator Neal questioned whether representatives from Elko County had approached the department concerning funding a $100,000,000 gas line they wanted to bring into the area to build a power plant.  Mr. Walther responded he had seen a reference in historical documents; however, he had not had any recent conversations with the sponsor of that project.  While Mr. Walther indicated some preliminary discussions had taken place, he was of the opinion an application had not been filed. 

 

Senator Neal asked Mr. Walther to comment on any funding provided by the gaming industry for the monorail project on the Las Vegas Strip.  Mr. Walther advised that the casinos had agreed to purchase some of the bonds that were issued to support the project.  In response to a request from Senator Neal for clarification on gaming industry involvement in the project, Ms. Wickliffe indicated there was $50,000,000 in what was termed "the third tier of debt" which was purchased by the casinos and in addition to that $50,000,000, the casinos were required to put capital improvements on their properties.  Senator Neal questioned whether the casinos received tax-exempt bonds to fund their capital improvements.  Ms. Wickliffe clarified the casinos funded their capital improvements and did not receive tax-exempt bonds.  Further, Ms. Wickliffe stated that in addition to the casinos, part of the $50,000,000 came from two separate companies, the company involved in construction of the project and the company providing the cars. 

 

Senator Neal asked for comments on the percentage of the state's bonding capacity for the monorail project.  Ms. Wickliffe clarified for the record that the $650,000,000 was not part of the state of Nevada's volume cap and said the bond would not endanger funds that had been allocated for multi-family housing or new businesses.  Ms. Wickliffe expressed her desire to make certain that when bonding capacity was addressed it was not being confused with volume cap.  Senator Neal requested a more detailed explanation; Ms. Wickliffe explained the bonds were issued by the state but came from Salomon Smith Barney and were sold to private investors.  Ms. Wickliffe further stated the investment from the companies building the monorail, between capital improvements and the third tier of bonds, was approximately $120,000,000. 

 

Mr. Walther responded to a question from Senator Neal concerning the process for the state's sale of bonds to private interests, and explained that the private activity volume cap was a part of the federal tax code which allowed the limit, that was recently raised, to be issued for private activities.  Mr. Walther further explained that a separate part of the tax code allowed tax-exempt bonds to be issued for certain public interest types of projects that Congress wanted to encourage and for which state authority had been provided.  The bonds for the monorail, which was considered public transportation, were issued under the public interest type of authority and one of the favored activities under the tax code.  Mr. Walther added that it was not necessary to use any of the state's volume cap which was dedicated to bonds for private activities. 

 

Senator Neal asked for information on ownership of the monorail after it was completed.  Mr. Walther responded that a "limited-liability company" was formed to own, operate and contract with their experts to run the monorail.  He indicated the state's limited oversight of the company included approval of members of the board of directors, budget review, and ensuring that promises made when the bonds were issued were kept.  Mr. Walther further stated that the assets of the corporation were considered the collateral for the bonds so that in the event a default occurred; the bondholders had an interest in the assets of the project.  Mr. Walther further clarified the bondholders were the individuals who invested in the project by purchasing the bonds and that the state would not be "left holding the bag" in the event of a default. 

 

Mr. Walther responded affirmatively to Ms. Leslie's question that the purpose of the IDRB was for economic development and diversification.  Ms. Leslie addressed the department's performance indicators and questioned whether the department kept track of the number of jobs and salary levels created from companies that located in Nevada under the IDRB program.  Ms. Leslie recalled the controversy that occurred when the kitty litter plant was proposed for Washoe County and criticisms from her constituents that addressed the number of jobs and salary levels.  Mr. Walther advised that one of the purposes of the IDRB program was to keep track of the number of jobs and advised that he visited company sites after the bonds were issued to review operations and determine the number of people employed and their salaries.  Mr. Walther indicated that historically the jobs created were above average although not always because some of the manufacturing plants hired at close to minimum wage.  Ms. Leslie requested a report that provided salary levels and compared the number of jobs created to the number of jobs it was indicated would be created in the applications.  Mr. Walther advised that the department issued a quarterly report that provided detailed information and included the number of jobs for the quarter ending June 1999.  Mr. Walther further advised that the monorail project had consumed the past year; however, he had visited the sites of two previous projects and would provide Ms. Leslie a copy of the reports issued for those visits as well as a comparison to the number of jobs the companies indicated they would create to the number actually created.  It was Ms. Leslie's opinion that the comparisons for the number of jobs intended to be created and those actually created should be included in the department's performance indicators.

 

Chairwoman Chowning agreed that information was needed on the benefits Nevadans received under the IDRB program.  Specifically, Chairwoman Chowning indicated the requested information should include the number and types of jobs, salaries, gender, and ethnicity on jobs being filled so that the types of opportunities provided for Nevadans was known.

 

Senator Jacobsen addressed the department's in-state travel budget and requested information on the necessity for the director to be in Carson City each day of the legislative session.  Ms. Wickliffe responded that the most conservative approach had been taken and it had been determined it was best to budget for the director to be in Carson City for each day of the session.  Ms. Wickliffe indicated she lived in Las Vegas and this was the sixth or seventh day she had attended meetings and she would be in Carson again at the end of the week for a meeting.

 

Chairwoman Chowning also addressed the recommended $11,140 budgeted for the director's travel to Carson City in FY2003 and indicated further review was necessary.  Additionally, Chairwoman Chowning questioned who administered the office in Las Vegas while the director was in Carson City and how the director's travel was currently paid.  Mr. Maier identified himself for the record and indicated he would meet with the fiscal analyst to determine the amount.  Ms. Wickliffe assured the members of the subcommittee that she would remain in Las Vegas as much as possible.

 

Chairwoman Chowning questioned travel that occurred in 1999 when $1,100 was approved for the chief to attend an IDRB conference in Washington.  Chairwoman Chowning noted that the chief did not attend the conference, and the director used the travel allotment to attend a Women Executives in State Government conference.  Chairwoman Chowning further indicated that the IDRB expenditure was requested again in the budget for each year of the biennium and funding was also requested for the director to attend the Women Executives in State Government conference.  Chairwoman Chowning asked that information be provided on the benefits to the agencies within the department and to the taxpayers by staff attendance at the conferences.  Ms. Wickliffe explained that the department's base year budget was out of the norm in that the chief of business and planning did not attend the IDRB conference because of an extended illness and then later resigned.  In lieu of the chief's travel, the director attended the Women Executives in State Government conference held twice a year and restricted to women who had either been elected or appointed to a position by the governor of a state.  Ms. Wickliffe advised that the conferences covered technology and leadership issues as well as problems in state government.  Ms. Wickliffe found the conference was beneficial and indicated she would like to continue to attend.  It was her opinion Nevada's representation was a necessity.  On behalf of the agencies within the department and the taxpayers, Chairwoman Chowning requested a report on the benefits derived by the director's attendance at the Women Executives in State Government conference.  Ms. Wickliffe responded to a question from Chairwoman Chowning on the attendance of other Nevada representatives and advised that Kathy Augustine, the State Controller, and Carol Jackson, a past director of a state agency, were members of the Board of Directors, and the Lieutenant Governor had been a past member.  Ms. Wickliffe further advised that the annual conference was being held on the day of this meeting and that she "obviously" would not attend.  She further indicated she would provide the report on the benefits of her attendance at the Women Executives in State Government conference as requested.

 

Senator Jacobsen also indicated he would like to see a brief report on the advantages to the director and to the taxpayers.

 

It was Chairwoman Chowning's opinion that reports should be required from all state agencies on the benefits provided by their attendance at conferences.

 

Senator Neal questioned the availability of information on the projected route of the monorail.  Mr. Walther indicated he would provide a proposed map of the monorail project and clarified that while the route could be modified, it was a route that was well established.

 

Senator Neal asked Mr. Walther to discuss the benefit of using tax revenue bonds to build the monorail.  Mr. Walther indicated the benefits included:

 

·        Financing a project that had a public benefit with private investment and no taxpayer dollars. 

 

·        Tax-exempt bonds encouraged private investors to purchase them because the interest on the bonds was tax-free and made them less expensive than bank loans or the sale of stocks.

 

Senator Neal asked if the tax-exempt bonds benefited the casinos.  Mr. Walther replied that the casinos benefited in the same way anyone would who bought tax‑exempt bonds.

 

Chairwoman Chowning discussed issues related to the removal of the Division of Agriculture from Business and Industry, during the previous session, and the recommended removal of the Unclaimed Property Division, the Commission for Hospital Patients and the privatization of the Housing Division.  With the proposed removal of several agencies, Chairwoman Chowning questioned whether as many positions would be required and whether it had been determined how removal of the agencies would affect the remaining agencies in the department.  Chairwoman Chowning noted that the Housing Division was currently budgeted to transfer $41,935 in FY2002 and $43,869 in FY2003.  Additionally, Chairwoman Chowning noted the recommendation to privatize the Housing Division was a result of the Governor's Steering Committee to Conduct a Fundamental Review of State Government and asked whether the Governor had determined to concur in the recommendation for privatization. 

 

Ms. Wickliffe responded to the issues raised by Chairwoman Chowning and indicated that the Commission for Hospital Patients was a two-person agency and the Division of Unclaimed Property an eight-person agency.  Ms. Wickliffe said that the loss of those agencies and only 10 people out of 600 employees had a "miniscule" impact on the workload of the director's office.  Additionally, she said that any allocation passed on to those agencies would be reallocated to the remaining divisions.  Ms. Wickliffe indicated the Housing Division provided a large amount of budgeting to the director's office and that Mr. Charles Horsey, Administrator of the Housing Division, was next on the agenda and would present the Housing Division's budget.  Ms. Wickliffe reported that the recommendation from the Governor's Steering Committee to Conduct a Fundamental Review of State Government went to the Governor without a favorable or unfavorable recommendation and the issue remained for the Governor to decide.  Ms. Wickliffe indicated that at a recent meeting the Governor requested information on expanded authority for the Housing Division.  Ms. Wickliffe explained that state law currently restricted the Housing Division to make loans by income level, and it was proposed by Mr. Horsey that the qualification be measured by employment rather than income so that teachers, or prison guards, could qualify for assistance.  Ms. Wickliffe discussed the Governor's current interest was to expand the loan qualification rather than move the division out of the Department of Business and Industry; however, she was uncertain as to the Governor's timetable. 

 

Chairwoman Chowning recalled the department's past loss of the Divisions of Agriculture, Minerals, and the Predatory Animal and Rodent Control Committee and questioned the continued need for certain employees.  Ms. Wickliffe responded that the loss of the divisions occurred as a result of the 1999 Legislative Session and before her appointment as director.  Ms. Wickliffe was not familiar with the number of employees involved in the work of the divisions that were moved, although she said she believed it was not a large number and would have had a minimal impact on the department. 

 

Ms. Giunchigliani stated that the loss of agencies during the previous session affected the department's cost allocation plan and that the recommended loss of additional agencies, if approved, also affected the cost allocation.  Ms. Giunchigliani requested information on the status of a Letter of Intent issued after the 1999 Legislative Session that addressed the shortfall in revenue that was not passed on to the other agencies in the department.  Ms. Wickliffe indicated she was aware of an inter-local agreement but was not aware of a Letter of Intent.

 

Bill Maier, Administrative Services Officer, identified himself for the record and advised Ms. Giunchigliani that the department had complied with the Letter of Intent.  Mr. Maier recalled a $76,000 shortfall and that the previous director had indicated that expenses would be reduced.  Mr. Maier further clarified that during the current biennium, $50,000 was transferred from the IDRB program that assisted the agency and more closely associated the true costs of the program.  Ms. Giunchigliani asked Mr. Maier if he felt the transfer would cover the director's office costs and that the other agencies would not be impacted by additional cost allocation.  Mr. Maier advised additional allocation for expenses associated with the proposed salary increases and information services' charges were built into the budget allocation to the agencies.  Ms. Giunchigliani requested that information be provided to the subcommittee on how the department's cost allocation plan was developed. 

 

Ms. Giunchigliani reiterated an earlier question concerning the reduced number of agencies with no apparent reduction in staff in the director's office.  Mr. Maier replied that he concurred with the director's previous discussion concerning the differences between an administrative function and a process function and indicated the department had an administrative function to assist all of the agencies within the department.  Mr. Maier also addressed a previous question concerning performance measures and said that department staff spent a lot of time assisting administrators of divisions within the department with various work-related issues.  Mr. Maier explained that type of assistance was reflected on the processing end, however, existed at the agency level.  While those performance measures improved agency performance, Mr. Maier said the department staff did not want to take credit for an increase in performance on the processing that they did not control.  Ms. Giunchigliani expressed the fact that she understood the "dilemma of the administrative process."  However, she continued to question why a reduction in staff was not seen when there were fewer agencies and fewer staff to manage.  Mr. Maier replied that the reality of the situation was that an agency with a complete staff was depended on and assisted in accomplishing the department's goal.  Mr. Maier explained that losing staff provided more work since additional duties needed to be assumed by staff in the director's office.  Ms. Giunchigliani asked how many vacancies existed within the entire Department of Business and Industry and the length of time the vacancies had existed.  Mr. Maier responded that he would provide the requested information.

 

Senator Jacobsen discussed the movement of agencies each session and subsequent problems that resulted from those moves.  Senator Jacobsen questioned the possibility that the Governor should be required to provide justification on the moves to legislative staff during the budget preparation. 

 

Chairwoman Chowning agreed with Senator Jacobsen's comment and asked if the department had been in agreement with the movement of the Unclaimed Property Division, Commission for Hospital Patients and privatization of the Housing Division.  Ms. Wickliffe reiterated that the privatization of the Housing Division was still being considered by the Governor.  Chairwoman Chowning reminded Ms. Wickliffe that privatization of the Housing Division had been a recommendation that resulted from the Governor's Steering Committee to Conduct a Fundamental Review of State Government and asked if she, as the director of the department, was in agreement with the recommendation and whether she had been a member of the committee.  Ms. Wickliffe responded that she testified before the committee, however, had not been a member.  It was Ms. Wickliffe's opinion that there were pros and cons concerning the privatization issue.  In reference to the Unclaimed Property Division, Ms. Wickliffe said the office existed in most states within the Treasurer's office.  Ms. Wickliffe advised that pros and cons also existed for moving the Commission for Hospital Patients, which dealt with medical billings for overnight hospital stays and resolved consumer questions concerning those billings.  Chairwoman Chowning asked the director if it was correct to assume she was not taking a stand on the issue.  Ms. Wickliffe indicated, "she guessed that would be a correct statement."

 

Ms. Giunchigliani referred to the privatization issue and asked if the director had any idea when a determination would be made.  Ms. Wickliffe indicated she believed the answer was in the Governor's recommendation to include the division's budget in The Executive Budget.  Ms. Giunchigliani pointed out that when the Housing Division budget was examined, the subcommittee would have to find out if the issue was adequately addressed by the Governor's Steering Committee to Conduct a Fundamental Review of State Government in order to decide whether the agency should be privatized.

 

Chairwoman Chowning addressed the additional in-state travel for $6,846 in each year of the biennium recommended for the DoIT position and noted the position had not been hired until near the end of FY2000.  Chairwoman Chowning requested that the director provide information to staff on whether any in-state travel costs for the DoIT position were incurred during FY2000.  Chairwoman Chowning indicated that in‑state travel costs included in the base budget should not be funded in decision unit E-225 . 

 

Chairwoman Chowning referred to the additional $2,071 in-state travel requested for the IDRB budget in each year of the biennium and noted that only $211 was used in FY2000.  Additionally, Chairwoman Chowning referred to  a $1,592 increase that was requested in the base for a total of $3,663 and asked whether the additional expenditures for the promotion of the IDRB program should be funded through an additional transfer from the IDRB account.  Chairwoman Chowning noted that the decision unit was currently funded entirely through a General Fund appropriation and cost allocation revenue.  Chairwoman Chowning requested that the director's office provide the requested information to staff.

 

Chairwoman Chowning moved to funding for additional training requested in the amount of $1,500 in each year of the biennium for the director's office staff.  Chairwoman Chowning requested that specific details be provided to staff that included the type of training and the employees who would receive the training.

 

B&I, INDUSTRIAL DEVELOPMENT BONDS– BUDGET ACCOUNT 4683, BUDGET PAGE B&I-6

Chairwoman Chowning referred to the agency's first performance indicator and noted that only one bond application was processed during FY2000 and three applications were projected to be processed during FY2001.  Chairwoman Chowning reiterated Ms. Leslie's question and requested that information be provided on the benefits Nevadans gained as a result of processed applications.

 

The agency's second performance indicator indicated that they issued $3.5 million in bonds and projected $655 million; Chairwoman Chowning requested that detail be provided that regarded the project or projects for which the bonds were issued.  Ms. Wickliffe responded that the Board of Finance approved the bonds for the monorail project in August 2000 or FY2001.

 

Chairwoman Chowning asked for an explanation of the department's projected $90 million in bonds for FY2002 and $16.5 million for FY2003.  Mr. Walther responded that the department had recently received an application for a 240‑unit continuing care retirement community for $80 million to which $10 million was added for a few small manufacturing bonds.  Mr. Walther explained that the projected figure for FY2003 was a conservative one since they were not able to look into the future.

 

Chairwoman Chowning also addressed the performance indicator based on the amount of state volume cap allocated and asked that the department work with staff to determine whether an adjustment was required.

 

Senator Neal questioned whether the funds for the bond application for the continuing care retirement community were from the Housing Division.  Mr. Walther responded that the bond would not take away from the volume cap for private-activity, tax-exempt bonds because it would be issued under the section of the tax code for a non‑profit public interest corporation.  Mr. Walther responded to a question from Senator Neal and advised that the bonds would not be tax exempt under the volume cap provisions of the federal tax code but would be tax exempt under the private non-profit public interest activity bonding authority provided by the federal tax law.  Mr. Walther responded to an additional question from Senator Neal and explained that the private-activity volume cap was a portion of bonding authority that was set aside by Congress to issue private-activity bonds to private-for-profit companies that engaged in economic and profit-making types of activities. 

 

Mr. Walther addressed a question from Senator Neal that concerned the dollar amount of the bonds and explained that Congress encouraged some private activity, however, established a cap in limited bonding authority to finance those activities of $187.5 million for this year and $225 million the following year.  Senator Neal questioned whether Housing bonds were involved.  Mr. Walther explained that a lot of the Housing bonds came out of the private‑activity volume cap.  However, Mr. Walther indicated that the continuing care retirement community qualified under a separate provision of the tax code that allowed tax-exempt bonds to be issued to a non-profit public interest  corporation. 

 

Senator Neal asked if all the limited bonding authority of $187.5 million could be utilized for Housing.  Mr. Walther responded that the money by state statute was split 50/50 between the state, of which 50 percent was administered by the director's office, and the other 50 percent on a pro rata basis, based on population, to the counties and cities to do with as they wished.  Mr. Walther responded to a question from Senator Neal and indicated the $187.5 million in bonding capacity could be used for Housing if all the local governments resolved that was how they wanted to use their portion and if there were no bond issues that needed to be capped for small manufacturing or any of the other IDRB type of activities. 

 

Senator Neal questioned whether bonding used for other sources took money away from low-income housing.  Mr. Walther affirmed that any time volume cap was allocated to a project other than low-income housing, the cap was not available for low-income housing, and he said the demand on that volume cap was broader than low-income housing.  Mr. Walther clarified that the funding for the monorail project was a separate bonding authority provided by the tax code not related to the volume cap.

 

 

B&I, HOUSING DIVISION– BUDGET ACCOUNT 3841, BUDGET PAGE B&I‑92‑98

Charles Horsey, Administrator of the Housing Division, identified himself for the record and introduced Lon DeWeese, Chief Financial Officer.  Background material on the Housing Division was distributed to the subcommittee (Exhibit C).  Mr. Horsey provided a brief history of the Housing Division and recalled that in 1975 the Nevada Legislature recognized that Nevada had a shortage of decent, safe, affordable, and sanitary housing.  The legislature also recognized that the private sector was not meeting the affordable housing needs of Nevada citizens by themselves.  As a result, the Housing Division was created to augment the lending activities of the private sector and expanded the base of Nevada citizens that could live in affordable housing.  Mr. Horsey indicated that 25 years had passed since the Housing Division made their first loan and currently the division was a $1,300,000,000 financial institution.  Instead of augmenting the lending activities of the private sector, the Housing Division was the primary lender of affordable housing in the state, and the private sector now augmented the Housing Division's activities.

 

Mr. Horsey pointed out that the budget before the subcommittee reflected the continued demand for affordable housing the division had experienced since 1994.  In addition, Mr. Horsey discussed Senator Neal's question on tax-exempt bonds and advised that all of the states were limited on the total number of tax-exempt bonds that could be issued.  Mr. Horsey explained that the Housing Division competed with utilities and small manufacturing companies for bonding authority or the right to issue bonds for certain types of projects.  Mr. Horsey clarified that the monorail project fell into a different section of the tax code that did not require a bonding cap and, therefore, did not compete with Housing Division projects.

 

Mr. Horsey moved to the division's performance indicators and said that for the last several sessions their measures had been exceeded by significant amounts.  Mr. Horsey attributed the division's high performance to the demand placed on them for affordable housing assistance and indicated they had used "practically all" of the bonding capacity available to the state.  Mr. Horsey reiterated Mr. Walther's earlier explanation that all local governments in Nevada received half of the bonding authority allocated by Congress.  He further indicated that local governments prioritized the use of their bonding authority to coincide with that of the state's which meant that the state's IDRB program was first in line and the Housing Division's multi‑family and single-family programs stood second in line for bonding authority. 

 

Mr. Horsey advised that when the division's performance measures were developed, the continued high level of demand placed on them was considered, but at the same time, because local government controlled half of the authority, the division did not feel it was their right to exceed the performance indicators and assume local governments would give them their cap.  Mr. Horsey explained that the priorities of local governments were also subject to change and he used Las Vegas as an example.  Mr. Horsey explained that Las Vegas had plans to revitalize the downtown core area and had requested financial assistance from the Housing Division.  He pointed out that the Housing Division also prioritized issuing bonds that the local governments had prioritized for the rehabilitation of existing developments. 

 

Mr. Horsey addressed the privatization issue and advised that when privatization of the agency was reviewed by the Governor's Steering Committee to Conduct a Fundamental Review of State Government, he testified in support of the initiative because of the additional flexibility and streamlined operations that could be "garnered" from such an arrangement.  Mr. Horsey brought up the 240-unit continuing care retirement community discussed earlier by Mr. Walther and indicated the Housing Division was also "geared up" to move toward more specialized-needs housing.  While it had been acknowledged that the Housing Division had done an excellent job and had met the affordable housing needs of the general population, Mr. Horsey said the division had barely "scratched the surface" for assisted-living facilities for individuals with Alzheimer's disease or other dementia.  Mr. Horsey noted that the Governor supported the division's expanded authorities and recognized they needed to broaden into other types of financing that they had not been able to do in the past.  As suggested by the Governor, Mr. Horsey indicated the Housing Division staff had prepared language for legislative consideration that would amend Chapter 319 of Nevada Revised Statutes (NRS).  Mr. Horsey said the language achieved projected goals and maintained the Housing Division as a state agency.  He also pointed out that if the Housing Division remained a state agency, the director's office budget would not be impacted. 

 

Chairwoman Chowning questioned the reasoning behind the recommended privatization since the agency had been doing an effective job for 26 years.  Mr. Horsey responded that the Governor was satisfied with the division's performance and, therefore, it had been determined they would work on amending language that improved some areas of their operation and maintained the division within the Department of Business and Industry.

 

Chairwoman Chowning disclosed that she was a state of Nevada licensed real estate agent, but that it had been many years since she had sold any property that had a mortgage through a state agency.

 

Mr. Horsey advised that 35,000 Nevada families lived in homes or apartments financed by the Housing Division at no cost to the taxpayers.

 

Mr. Hettrick addressed Chairwoman Chowning's question on the reason the recommendation was made to privatize the Housing Division and advised that he had served on the Governor's Steering Committee to Conduct a Fundamental Review of State Government.  Mr. Hettrick recalled that the recommendation had not been initiated by the committee but rather was presented to the committee.  In defense of the committee's action, Mr. Hettrick said he believed the intent was that privatization would have allowed the division to continue to do the same job and would have provided them additional flexibility to work in areas currently restricted by state law and, therefore, the committee saw no reason not to approve the recommendation. 

 

Mr. Horsey additionally advised that one of the factors behind the actions of the Governor's Steering Committee to Conduct a Fundamental Review of State Government was that 39 other housing finance agencies in the country were in the "quasi-public."  Mr. Horsey also indicated that if the amended law was approved this session and the division found the expanded application was not practical, the Governor had shown some willingness to review the issue again and the division would return to the next session of the legislature.

 

Ms. Giunchigliani requested that the division staff address their "unique need" for general ledger (GL) software, the cost of the software, and whether the new

Integrated Financial System (IFS) system provided any assistance.  Lon DeWeese, Chief Financial Officer for the Housing Division, identified himself for the record and explained that the software they had requested was not a true general ledger package, but rather a series of communication interfaces between various private banking systems that worked in conjunction with their bond issues.  Mr. DeWeese further advised that the private money that flowed through their bond transactions was not subject to state budgetary control and, therefore, assistance could not be provided by the IFS.  Additionally, Mr. DeWeese pointed out that vendor packages were available that addressed some of their needs and one had been selected and included in the current year's budget.  However, Mr. DeWeese indicated the selected vendor's performance had become "spotty" and the division was reluctant to commit resources until they could see improved performance or until a further evaluation of alternative packages was concluded.

 

Ms. Giunchigliani requested information on the cost of the requested software.  Mr. DeWeese advised that the current budget requested $160,000 in development, implementation, and training for the package that was selected two and a half years ago.  Mr. DeWeese further indicated that as a "known alternative," the division would stay with the current budget request.  Ms. Giunchigliani asked for information on the length of time the division expected to give the vendor to improve.  Mr. DeWeese responded that after the division concluded their mid-year audit preparation, alternative packages would be evaluated and a side‑by‑side comparison would be conducted to determine whether the original vendor package would perform as expected.  Additionally, Mr. DeWeese indicated that because the software was communications-oriented and involved several hundred million dollars worth of transactions a year, it had to be extensively tested, which took time and money.  Mr. DeWeese said the division was reluctant to expend resources until they saw improved performance.  Mr. DeWeese replied affirmatively to Ms. Giunchigliani's question on whether the division would interface with all of the banks in Nevada with whom they conducted business.  Ms. Giunchigliani asked if the banks used any special program that would guarantee they could communicate with each other once a vendor was selected.  Mr. DeWeese explained that the primary communication on the division's part was between the trustee bank that received all of the bank remuneration and the Housing Division and its current general ledger packages.  Mr. DeWeese further explained the division had an additional $300 package on the shelf that had not been implemented.  Mr. Horsey discussed the pressure placed on their accounting personnel and emphasized the division had not neglected the software purchase.  He said it was his opinion the division's highest priority was to select the right vendor.

 

Chairwoman Chowning thanked the division for their assistance in providing 35,000 Nevada families with housing and expressed her interest in raising the number of single-family mortgages.  Chairwoman Chowning addressed the increase in new single- and multi-family mortgages seen in FY2000 and asked why the numbers were projected to drop in FY2002 and FY2003.  Chairwoman Chowning also asked for information on the current interest rate for single‑family mortgages. 

 

Mr. Horsey responded that the single-family program was the division's number one priority doing $75 million worth of lending, 90 percent of which was in Clark County.  An advisory committee established five or six years ago provided the division with information from Nevada residents who benefited from the program.  Mr. Horsey discussed the large influx of new residents into southern Nevada who were disproportionately weighted by lower-to-moderate income persons and were not in a position to buy a home until they could save for a down payment.  The advisory committee indicated a need to house people, whose incomes were in the lower‑to‑moderate range, in housing that was "decent, safe, sanitary, and affordable" while they waited to go up the economic ladder to home ownership.  Mr. Horsey indicated the division would be selling bonds for their first single-family program of the current calendar year in another week or so and the last time the division went to market, they offered a 30-year fixed rate, 7 percent mortgage with no points, which was about 75 basis points below the competition at the time.  Mr. Horsey advised that the division liked to go to Wall Street with a differential of three-quarters of a point to make the sale attractive.

 

Mr. DeWeese discussed the following two points regarding the multi-family program:

 

• A large portion of multi-family housing in the last biennium was for housing new senior residents.  Mr. DeWeese explained that demographically, seniors were the largest moving group of people and a large number had taken up a disproportionate amount of multi‑family housing in the last 18 months.  It was pointed out that the problem had to be addressed, or there would be a huge differential between the ability to afford a rental property and supply. 

 

• The decline for both single-family and multi-family housing in the coming biennium was driven by the same economic forecast for housing that was the basis of the state's economic forum forecast reported by the Wharton Econometrics organization.  The Wharton group indicated a slowdown in the growth and development of new housing would be seen through the first two-thirds of the current year and had already been seen in the current quarter. 

 

Chairwoman Chowning indicated there were affordable programs that assisted buyers with down payments and closing costs but there were many individuals who lacked that knowledge.  Chairwoman Chowning suggested that perhaps the Housing Division could provide potential homeowners with information to let them know they did not have to stay in multi‑family housing.  Mr. Horsey discussed the division's plans that accelerated their outreach efforts and plans for bilingual loan officers who were capable of providing information on the advantages and responsibilities that went with home buying.  Chairwoman Chowning requested that information on the division's accelerated outreach efforts be provided to the subcommittee. 

 

An item of interest pointed out by Mr. Horsey was that developers had been made aware of the fact that the placement of elevators in senior housing avoided the problem of first-floor units being rented while upstairs units remained vacant.

 

Chairwoman Chowning requested comments from the agency on decision units M-200, E-150, E-151 and E-710:

 

·        M-200 - Mr. Horsey attributed the reason for a new half-time Deputy Attorney General position to multi-family transactions that were unique and required more legal representation from the Attorney General's office.  Mr. Horsey further advised that when the division switched from 100 percent single‑family transactions to 50/50, the division's legal needs increased at the same time.

 

·        E-150 – A recommendation of $43,000 was requested for the second phase of a study on the need for specialty housing that included affordable housing for the senior, disabled, and chronic disease populations.  Chairwoman Chowning asked Mr. Horsey to address what had been learned from the first phase and what was expected to be accomplished with the recommended funding.  Mr. Horsey discussed the statewide lack of definitive data concerning the types of housing needed and indicated the three groups that needed special attention were as follows:

 

o      Senior citizens;

 

o      New lower-income workers moving into the state who created a demand for multi-family housing;

 

o       Single gaming industry workers within the downtown core of Reno and Las Vegas who created a need for studio-type units.

 

               Chairwoman Chowning requested a copy of a report on what was learned from the first phase of the study and when it was anticipated the second phase would be completed.  Mr. Horsey explained that a full year of staff time was devoted to development of the base population growth data in Clark County and the last legislatively authorized monies allowed the division to duplicate the basic facts in northern Nevada.  Mr. Horsey referred to statistics contained in material that had been distributed to the subcommittee (Exhibit D) that outlined basic facts on affordable multi-family housing units, created incentives to help overcome demographic changes, and growth of the disabled population that needed affordable housing.  Mr. DeWeese pointed out that current census projections indicated Nevada had in excess of 150,000 people categorized as "handicapped in activities of daily living."  A large number of the handicapped population was unable to work at full-time jobs which created a lack of affordable housing for them.  Mr. DeWeese further explained that not all of the 150,000 people required the same kind of housing and pointed out that an unsighted person's needs differed from a person who was wheelchair bound.  The intent of the Phase II portion of the study was anticipated to inventory the supply and demand differential of the housing needs for the population categorized as handicapped.  Additionally, Mr. Horsey discussed the Housing Division's excellent relationships with the various local governments and the developers who participated in the program.  However, he said the local governments and developers could not be steered in a direction that produced special-needs housing unless they could be provided with better data so that they could obtain financing.  Chairwoman Chowning reiterated her request for copies of the reports on special-needs housing and expressed her appreciation to the Housing Division staff for their work in serving the targeted populations.

 

• E-151 – A recommended expenditure of $600,000 in each year of the biennium for the cost of issuing revenue bonds to assist school districts in recruiting and retaining teachers in critically short areas.  Ms. Giunchigliani requested additional information on the source of funding and how the program was proposed to operate.  Additionally, Ms. Giunchigliani indicated she preferred to see the money put into salaries.  Mr. Horsey discussed the widely publicized need for teachers and the Housing Division's attempt to contribute to the overall effort.  Additionally, the teachers' group was selected because they were a good credit risk, and Mr. Horsey said it was his first priority to maintain the financial integrity of the Housing Division.  Ms. Giunchigliani anticipated that after four years of flat salaries, teachers had problems with financing. 

 

Mr. DeWeese responded to a question from Ms. Giunchigliani that addressed federal programs, and he explained that the program would be attractive both to the borrower and as a recruiting tool for the school districts.  Mr. DeWeese explained that the program included a lower interest rate than the current Housing and Urban Development (HUD) insurance program, down-payment assistance, and first-two-years rate relief, which allowed the inbound teacher recruited from outside the state to get settled in before having to take on their full normal mortgage payment.  Mr. DeWeese suggested that George Ann Rice, Ph.D., of the Clark County School District, be contacted for her opinion on the program's sufficiency.

 

Ms. Giunchigliani asked if the program would be geared to special education, mathematics, and science teachers.  Mr. DeWeese responded that those categories were the school districts' highest priorities although other teachers were not precluded.  Mr. DeWeese responded to Ms. Giunchigliani's question that concerned the rural counties need for home ownership assistance and said the program was statewide and not limited to one school district.  Ms. Giunchigliani questioned what the $600,000 expenditure actually provided.  Mr. DeWeese responded that the $600,000 was the actual federal statutory limit on the total cost of issuing $30 million worth of bonds a year.  Mr. DeWeese further clarified that the bonds would be issued in stages to ensure full use of the money. 

 

Mr. Horsey indicated the division had the Federal Home Loan Bank on board to buy bonds and that Fannie Mae agreed to lend their down‑payment assistance program.  He said, however, the missing component was one of the large banks that would be willing to buy the interest rate buy-down for the two years.  Mr. Horsey explained that it took a financial institution willing to make an investment and get their return over a period of time as the Housing Division does when they recoup the cost of issuance.

 

Mr. DeWeese responded to a question from Ms. Giunchigliani on the interest rate and explained that the program currently had a 1 percent buy‑down in the first year so that hypothetically if the market rate was 7 percent, the first year rate would be 6 percent, the second year would increase to 6.50 percent and the third year would increase to 7 percent.

 

Ms. Leslie addressed Nevada's nursing shortage and questioned whether similar assistance would be provided for nurses.  Mr. Horsey indicated that the Housing Division was aware of the critical shortage of nurses, especially in the rural areas, and that future plans included assistance for nurses.  Mr. Horsey responded to a question from Ms. Leslie and explained that assistance for teachers was the first priority because the division had better data on the teachers.

 

Chairwoman Chowning requested that the same opportunity for assistance be provided to existing teachers.  Mr. Horsey indicated the Clark County School District had made the same point, and it was the division's goal that assistance be provided to existing teachers.  Mr. Horsey further explained that once the division had the lender on board, the fine points would be addressed.  It was Chairwoman Chowning's opinion that the policy should be "first‑come, first served" for existing teachers and anything left over should be used as a recruiting tool.  Mr. Horsey indicated that once the lender was on board, he would be willing to listen to anything. 

 

Mr. Horsey referred to an earlier question from Ms. Leslie and said that the Housing Division was entirely self-sufficient and could only entertain "new and innovative programs" from the monies available to them.  Mr. DeWeese added that the division's current definition of an eligible family would not permit them to lend to nurses at their current income level, but it was a question the Governor was examining.  Mr. DeWeese indicated the division was statutorily bound to the low-to-moderate income level and the income for most nurses was in excess of 120 percent of meeting income.  Mr. Horsey indicated the amended language the division was working on would provide additional flexibility for just such a situation as the shortage of nurses' issue.  Ms. Giunchigliani requested documentation that showed teachers were in the low‑to‑moderate income group level.

 

• E-710 – The subcommittee did not discuss decision unit E-710.

 

B&I, WEATHERIZATION– BUDGET ACCOUNT 4865, BUDGET PAGE B&I‑103

Chairwoman Chowning requested that the agency address why the total number of units to be weatherized was projected to drop in each year of the coming biennium and whether the Department of Energy (DOE) grant would increase for FY2001.

 

Mr. Horsey introduced Craig Davis, the state Weatherization Coordinator.  An overview on the Weatherization Assistance Program was submitted to the subcommittee (Exhibit E).  Mr. Davis responded to Chairwoman Chowning's question and indicated that the number of units was linked to the federal funding received from the DOE.  Mr. Davis explained that in 1995 the state Weatherization Assistance Program was cut 50 percent, and, since that time, had received only 7 percent increased funding.  He said inroads were made on the importance of weatherization for low-income families and increased production would be seen with a corresponding increase in funding.

 

Mr. Davis further indicated that the agency's advisory committee recommended that they attempt to provide assistance to the rural communities for which costs were projected to increase.  Mr. Davis said the weatherization budget had been supplemented by housing trust funds of $142,000 in the current program year.  He emphasized the office wanted to assist the rural communities but the per unit cost would increase by their participation.  Mr. Davis responded to a question from Chairwoman Chowning and affirmed that the $1,750 per-unit cost in FY2000 would increase to $2,400 per unit in FY2002 and FY2003. 

 

Chairwoman Chowning extended her appreciation for the good job Mr. Davis did to assist Nevada citizens achieve a better and more comfortable living environment.  Mr. Davis discussed the energy burden placed on Nevada's low‑income citizens.  He described situations that included people on fixed incomes that had no ability to control their energy costs or their earnings and who fueled their homes with pallets they had gathered.

 

Ms. Leslie asked if there was a waiting list for weatherization services.  Mr. Davis advised there was a six-month waiting list in Clark County and that it increased proportionately with the rate increases.  Ms. Leslie recalled the many calls she received for weatherization services when she was a Washoe County employee and the dilemma she faced in not wanting to refer those calls to a waiting list for an extended period of time.  It was Ms. Leslie's opinion the program should be expanded with state funding, especially having heard that people were fueling their homes with pallets.  Mr. Horsey advised that the Senate Committee on Commerce had met concerning an increase. 

 

Chairwoman Chowning thanked Mr. Davis for his testimony and indicated legislative staff would be directed to provide "some avenues" for additional funding.  Chairwoman Chowning further suggested that Mr. Davis include information concerning the waiting lists on the performance indicators.  Mr. Davis agreed.

 

 

B&I,CONSUMER AFFAIRS– BUDGET ACCOUNT 3811, BUDGET PAGE B&I‑119

Patricia Jarman-Manning, Commissioner of the Consumer Affairs Division, identified herself for the record and advised that the division had 20 full-time positions, a main office in Las Vegas, and a second office in Reno that serviced the entire state of Nevada. 

 

Ms. Jarman-Manning briefly described the duties of the Consumer Affairs Division, which included the regulation and enforcement of statutes that assisted consumers in complaint filing, determining the specific agency a caller should be referred to if a caller mistakenly called the Consumer Affairs Division, monitoring the marketplace for fraudulent activity, and bonding and registering businesses in Nevada that required prepayment. 

 

 

Ms. Jarman‑Manning provided background information and reported that in 1994 the Consumer Affairs Division held approximately $2,700,000 in bonds and registrations on businesses.  The division had vastly increased their monitoring activities since 1994 and currently held $7,600,000 in bonds that ensured that businesses were bonded for the protection of consumers.  Additionally, the division protected consumers through education outreach that included seminars, published brochures and public service announcements, identified as Noncommercial Sustaining Announcements (NCSAs). 

 

Ms. Jarman-Manning also described the division's Alternative Dispute Resolution (ADR) Mediation Program, initiated in March 1998.  The 698 cases, that had been resolved through the program, provided a 49 percent success rate through mediation for consumers who did not fall under the division's jurisdictional authority and who would have had to obtain an attorney or go to small claims court for resolution.  Ms. Jarman-Manning described the program as unique in that it was voluntary and reported the division's success in convincing business owners it was in their best interest to try to find a resolution.  Ms. Jarman‑Manning advised that consumers were restituted in the amount of $135,633.15 through the voluntary mediation program.

 

Chairwoman Chowning applauded the Alternative Dispute Resolution (ADR) Mediation Program's success in relief of $135,633.15 for the consumer and addressed the recommended funding of $3,212 in each year of the coming biennium to continue the program.  Additionally, Chairwoman Chowning noted that there were no performance indicators directly tied to the effectiveness of the program.  Chairwoman Chowning discussed the $12,283 that had been legislatively approved for the program in 1997 and the reduced funding during the 1999 session that was attributed to a lack of activity.  Chairwoman Chowning noted the program's recent effectiveness and questioned why funding was not recommended to be increased.  Ms. Jarman-Manning indicated the $3,212 recommended funding was the amount of money the division had expended in the base year and the funding recommended for the next biennium.  Ms. Jarman-Manning took the opportunity to commend the program's mediator, Sharon Cooper, who had been trained by the Neighborhood Justice Center in Clark County and nationally trained through the Neighborhood Justice Center in Atlanta.

 

Ms. Jarman-Manning responded to a question from Chairwoman Chowning that concerned arbitration and reported the division's arbitration program was utilized with automotive repair problems, which she was happy to report had seen a decrease in activity which was attributed to education.  Ms. Jarman‑Manning discussed the division's education program that ensured that businesses statewide were aware of new changes in the law and that they complied with the law.  It was the division's responsibility to educate businesses as well as consumers concerning their responsibilities and Ms. Jarman-Manning found there had been a change in that members of the public were now trying to resolve their own problems and going to the division only when they could not resolve those problems. 

 

Chairwoman Chowning asked Ms. Jarman-Manning if she believed the division needed additional money for the mediation program.  Based on the division's expenditure of $3,212 for the previous year, it was Ms. Jarman-Manning's opinion that the recommended funding was sufficient. 

 

Chairwoman Chowning addressed consumer complaints and requested that a separate report from the division be provided that elicited the highest number of consumer complaints.  Ms. Jarman-Manning responded that while automotive repair had the highest number of complaints in Nevada, nationally automotive repair was number four and the number one complaint nationally was home repair.  Ms. Jarman-Manning added that while automotive repairs remained high in Nevada, the complaints were one-third of what they had been several years ago.  To their credit, Ms. Jarman-Manning cited the automotive repair industry's statistics on the millions of automotive repairs they completed each year versus the number of complaints.  However, Ms. Jarman-Manning indicated automotive repair remained a problem given the number of consumers whose cars were worked on and the lack of faith still involved in working with an automotive repair technician.

 

Chairwoman Chowning agreed that ground had been gained in the area of automotive repair because of education, mandatory estimates, and the consumer bill of rights posted in every repair shop.  Chairwoman Chowning commended the division's work concerning the decreased number of complaints. 

 

Chairwoman Chowning moved to the recommended funding of $12,430 for FY2001-02 and $12,475 in FY2002-03 for Information Services and questioned what appeared to be a 250 percent increase over the amount authorized for FY2000‑01.  Ms. Jarman-Manning responded that the division's computers had last been replaced in 1997 and that they had ceased to work efficiently.  It was projected that 10 computers would be replaced in the first year and 10 in the second year, which would cover their 20 positions.  Chairwoman Chowning requested that a report be provided to staff on the division's computer equipment replacement as well as information on how replacement would enhance their program operation and benefit the consumers.

 

Chairwoman Chowning addressed the additional funding of $88,496 received by the division as a result of a settlement which included $68,496 for consumer education and $20,000 for the implementation of a statewide monitoring program and requested a report on how funds were used during the 1999-2001 biennium.  Ms. Jarman-Manning responded that the money from the settlement was the result of a statewide investigation on deceptive advertising practices and discovery of out-dated food on shelves in a particular supermarket.  Numerous undercover purchases were made and information was gathered that resulted in an "assurance of discontinuance" and a total fine of $250,000.  A total of $100,000 of the fine was held in abeyance provided that the company did not make any additional violations.  Ms. Jarman‑Manning reported that additional violations were made and the matter had been turned over to the Office of the Attorney General to go after the money held in abeyance in addition to other fines as well.  The  $150,000 portion of the fine was used for public education which allowed the division to purchase more brochures, more time for NCSAs and giveaways, such as pens with the division logo, that would be distributed at seminars.  Ms. Jarman‑Manning responded to the question that concerned statewide monitoring and reported the division was "given $10,000 to monitor last year and $10,000 to monitor this year."  

 

Chairwoman Chowning asked how the projected decrease of NCSAs would affect the consumer being "educated in the best manner possible."  Ms. Jarman-Manning explained that, through cooperative efforts and a contractual agreement with the Nevada Broadcasters Association, the division was guaranteed a 3:1 return which translated to $20,000 spent by the agency guaranteed $60,000 worth of coverage that the division had always exceeded.  Ms. Jarman-Manning indicated that the division made 2,300 public service announcements statewide in television and radio last year. 

 

Ms. Jarman-Manning responded to a question from Chairwoman Chowning and indicated she had participated in undercover and sting operations in all areas of consumer fraud.  Chairwoman Chowning requested a report be provided to the subcommittee on the benefit of undercover operations to the consumer.  Chairwoman Chowning further requested information on the number of businesses that had closed and the number of fines that had been implemented as a result of undercover operations.  Ms. Jarman-Manning agreed to provide the information.

 

Ms. Giunchigliani asked for information on implementation of the lemon law that was enacted during the 1999 Legislative Session.  Ms. Jarman-Manning responded the division had not had many lemon-law cases, however, indicated that the consumer response had been that "the lemon law was a lemon." 

 

Ms. Giunchigliani requested information on the issue of "cash for car titles."  Ms. Jarman-Manning indicated that as she traveled statewide it appeared that the problems related to "cash for car titles" occurred near military bases.  Ms. Jarman-Manning described some military personnel as being a "step above poverty" and very often used their car titles as cash.  Ms. Jarman-Manning reported that division representatives traveled to military bases on an outreach basis and spoke with new recruits concerning the issue.

 

Ms. Jarman-Manning responded to a question from Ms. Giunchigliani and indicated that division representatives wore a device called a Kel that resembled a beeper.  Ms. Jarman-Manning reported the division was looking at purchasing a more sophisticated device since the current device required a two‑person team, constant monitoring, and necessitated being within a certain radius of the targeted individual.  Ms. Giunchigliani indicated she was attempting to gather information on the number of people who might be violating the law that regarded one‑party, two-party consent on wire taps within the state of Nevada and asked if the Kel device taped people without their knowledge.  Ms. Jarman-Manning responded that conversations, during an undercover investigation, were taped without the knowledge of the involved parties.  Ms. Jarman-Manning further advised that division staff who enforced the division's statutory responsibility were considered regulatory.  Ms. Jarman‑Manning also pointed out that the recording equipment was purchased with the knowledge and advisement of the Office of the Attorney General.

 

Chairwoman Chowning questioned whether the Consumer Affairs Division still had the 1-800 consumer hot line.  Ms. Jarman-Manning responded that the consumer hot line was a nationwide toll-free hot line outside of Clark County and that the division received about 2,000 calls per month.

 

Chairwoman Chowning commended the division on their improved performance indicators, however, pointed out that the indicators did not appear to include information concerning the number of calls received.  Ms. Jarman-Manning responded that division representatives were told, during performance indicator training, not to report the number of phone calls.  Chairwoman Chowning advised that calls received, translated into cases opened and closed and were important to the total picture.  Chairwoman Chowning noted that 2,000 calls were received on the hot line and the total number of other calls could say a lot about what the division's 20 positions did.  Ms. Jarman-Manning reported that the division, at a high point, received over 120,000 telephone calls in a year and currently averaged 85,000 and 95,000 calls a year; one person in Reno answered calls and five people in Las Vegas took the bulk of the calls.  Ms. Jarman-Manning pointed out that the division also provided education on the phone and directed callers to the correct agency when they mistakenly called the division for assistance.  Chairwoman Chowning extended her appreciation to Ms. Jarman-Manning for her testimony and requested that Ms. Jarman-Manning contact her regarding her concerns on tour operators.

 

B&I, INDUSTRIAL RELATIONS– BUDGET ACCOUNT 4680, BUDGET PAGE B&I‑127

Chairwoman Chowning apologized that time would not allow hearing the Industrial Relations budget presentation and indicated Budget Account 4680 had to be rescheduled.

 

 

B&I, NEVADA ATTORNEY FOR INJURED WORKERS – BUDGET ACCOUNT 1013, BUDGET PAGE B&I‑150

Nancyann Leeder, Nevada Attorney for Injured Workers (NAIW), identified herself for the record.  Statistical data was distributed that provided information on the agency's performance indicators (Exhibit F).

 

Chairwoman Chowning addressed the FY1999-00 projected appeals officer cases appointed to represent, 1,848, versus the actual number of cases, 1,443, and the projected hearings held, 1,738, versus the actual number of cases, 1,792, and asked for comments on the projections.  Ms. Leeder explained the projections were made after having come off an "extremely high" number of case appointments that followed legislative changes in the workers' compensation statutes in FY1991-93 and FY1993-95.  Ms. Leeder indicated that those predictions were reduced and performance indicators were changed as reflected in the program narrative on the last three pages of the document distributed to the subcommittee (Exhibit F).

 

Ms. Leeder referred to page 4 and page 6 (Exhibit F) and pointed out the appeals officer case appointments list and the carryover cases from one year to another.  Ms. Leeder indicated that data in the footnotes illustrated that in any given year about a third of the cases the officers were working on were actually appointed in the prior year.  When the NAIW caseload went down, Ms. Leeder indicated the officers were actually "catching up" but because the workload per case had gone up, they were losing ground.  Ms. Leeder further stated that their staff tried to represent people as the first priority of their three mandates, which meant that they were not answering all of the requests for information and that they were only able to track compliance in less than 30 percent of the cases.  Ms. Leeder further explained that if a claimant won a benefit, staff had to ensure the benefit was provided, which could only be accomplished in 30 percent of the cases.  Ms. Leeder indicated there was a need attributed to workload, not caseload, which the NAIW could not fulfill. 

 

Ms. Leeder advised that the cases from the appointments by the appeals officer decreased for a period but were currently increasing and referred to page 1 of Exhibit F that illustrated the number of cases appointed by the appeals officer in FY2001.  Ms. Leeder explained that all of the appointments by the appeals officer during this current biennium were listed on page 1 (Exhibit F) and then after six months, estimates were doubled for the current fiscal year for a total of 1,587.  Ms. Leeder pointed out that the number of cases appointed for January totaled 144.

 

Ms. Leeder responded to a question from Chairwoman Chowning and indicated the revised NAIW performance indicators were provided with the expanded program narratives.  Ms. Leeder pointed out that page 150 of The Executive Budget showed the projected number of appeals officer cases for FY2001 at 1,500 cases and indicated that should the cases double over what they had in the first six months, the NAIW would have 1,587 cases.  Chairwoman Chowning requested that the NAIW work with legislative staff on their performance indicators.

 

Ms. Leeder agreed that for FY2000 1,848 cases were projected while the actual number of cases totaled 1,443.  Ms. Leeder explained that for FY2000 fewer appeals officer appointments were received, however, the NAIW "gained ground" on the carryover cases but because the workload per case had gone up, the NAIW "lost ground."  Chairwoman Chowning referred to page 4 of Exhibit F and pointed out that it appeared that the actual number of appointments for FY2000 was 2,281.  Ms. Leeder clarified the 2,281 figure was a combination of new appointments plus carryover cases that they had continued to work on during that year.  The statistics were further illustrated on page 6 of Exhibit F and were broken down in the first column by new appointments during the fiscal year and in the second column by cases unfinished from the prior year and added together because the NAIW was required to continue work on those cases.

 

Chairwoman Chowning addressed the issue of unfinished cases and asked how long it would take the NAIW to complete those cases.  Ms. Leeder responded that there would always be some carryover and indicated, as an example, cases appointed in June would probably not be completed until the following year.  However, Ms. Leeder indicated there should not be as many carryover cases as there were in 1994, 1995, and 1996. 

 

Chairwoman Chowning asked for comments on what would help the agency attain a less than 50 percent number of unfinished cases.  Ms. Leeder indicated the number of case appointments had been decreased by almost 400.  In addition, the Interim Finance Committee approved an increase in staff in September with a new attorney and a new secretary for the Las Vegas office to handle the greater number of cases that were received in Las Vegas.  However, Ms. Leeder pointed out that two attorneys had been on extended medical leave for the past two months and that all open cases, if averaged by an actual working attorney, numbered 103.7 cases per attorney. 

 

Ms. Leeder responded to a question from Chairwoman Chowning on whether the NAIW proposed to approach the Interim Finance Committee again and explained that when the NAIW went to the Interim Finance Committee in September, it was accomplished through the Workers' Compensation Hearings Reserve account that held funding in reserve for four positions.

 

Mr. Parks questioned the NAIW's ability to track the average duration of cases.  Ms. Leeder discussed the difficulty involved in tracking the length of time cases were open given the case management program.  Ms. Leeder indicated she maintained a caseload in both Las Vegas and Carson City and that cases in Las Vegas were open six months on an average and in Carson City four and a half to five months.

 

Chairwoman Chowning requested that the NAIW provide staff with information on how funding for the computer system had been expended during the current biennium and why additional funding was needed.  Additionally, Chairwoman Chowning requested that information be provided to staff on the recommended funding for replacement of computer equipment, two fax machines, and what appeared to be a duplication of software in that both Microsoft Word and WordPerfect had been requested.  Ms. Leeder explained that the NAIW used Microsoft Office for accounting and statewide communication purposes and WordPerfect as the legal industry standard.

 

Chairwoman Chowning moved to decision unit E-720 that recommended an additional $45,553 in FY2002-03 for a System Enhancement Project and requested that information be provided on how the project would assist the agency in achieving a more efficient and reliable operation.  Ms. Leeder explained the project was needed to gather statistics, such as the information requested by Mr. Parks on the length of time cases remained open.  The project was recommended by the Department of Information Technology (DoIT) based on three weeks of work at $79 an hour by a DoIT programmer.

 

Ms. Giunchigliani said it appeared the complexity of the cases had increased and asked if Ms. Leeder was able to determine where the actual caseload came from.  Ms. Leeder responded that 50 percent of the cases were from Employers Insurance Company of Nevada (EICON) and that motion practice, discovery practice, interrogatories, depositions, and many other requests drove the caseload. 

 

In response to a question from Ms. Giunchigliani on funding, Ms. Leeder indicated that funding was provided by the Workers' Compensation Fund and pointed out that the NAIW was not an agency funded by the General Fund.  Ms. Giunchigliani indicated an interest in being provided a breakout on where the remaining caseload came from.

 

In response to a question from Ms. Giunchigliani on whether the assessment matched the percentage of cases, Ms. Leeder responded that the assessment was prorated with all insurers. 

 

Mr. Hettrick noted that decision unit E-720 recommended funding for seven WordPerfect suite software licenses and indicated that normally the operating system was included in a suite.  It was Mr. Hettrick's opinion that the NAIW should perhaps purchase a Microsoft license and a WordPerfect license rather than a suite for WordPerfect.  Additionally, Mr. Hettrick questioned the request for 28 Window upgrades and 35 anti-virus software.  Ms. Leeder explained that some of their newer equipment already had the software upgrades and that in reference to the WordPerfect suite, the NAIW required the use of the WordPefect software that was considered the professional version.  Mr. Hettrick explained that usually a suite involved all of the applications and it appeared that if the NAIW bought the suite they would have all of the applications they needed.  Ms. Leeder responded that it was her understanding that the purchase involved the number of licenses.  In reference to an earlier question from Chairwoman Chowning, Ms. Leeder indicated that the funding for the agency's computer equipment was on their replacement schedule.  Chairwoman Chowning reiterated her earlier request that the agency provide staff with information on how funding for the computer system had been expended during the current biennium and why additional funding was needed. 

 

Ms. Leeder introduced Vicki Nowling, the NAIW's office manager.

 

With no further business to come before the subcommittee, the meeting was adjourned at 11:02 a.m.

 

 

 

RESPECTFULLY SUBMITTED:

 

 

 

Connie Davis

Committee Secretary

 

 

APPROVED BY:

 

 

 

                        

Assemblywoman Vonne Chowning, Chairman

 

 

DATE: