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
March 13, 2001
The Assembly Committee on Ways and Means and the Senate Committee on Finance Joint Subcommittee on General Government was called to order at 8:05 a.m. on Tuesday, March 13, 2001. Chairwoman Vonne S. 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
Ms. Chris Giunchigliani
Mr. Lynn Hettrick
Ms. Sheila Leslie
Mr. David Parks
SENATE COMMITTEE MEMBERS PRESENT:
Senator Lawrence E. Jacobsen
Senator Joseph M. Neal, Jr.
Senator William R. O’Donnell
COMMITTEE MEMBERS ABSENT:
Mr. Bob Beers (Excused)
STAFF MEMBERS PRESENT:
Mark Stevens, Fiscal Analyst (Assembly)
Rick Combs, Program Analyst
Russell Guindon, Deputy Fiscal Analyst
Lila Clark, Committee Secretary
Department of Taxation (101 – 2361)
TAX 1 – Volume I
Chairwoman Chowning welcomed Mr. David P. Pursell, Executive Director of the Department of Taxation. Mr. Pursell introduced Forrest (Woody) Thorne, Deputy Executive Director, who was responsible for the Administrative Division that included the Information Services Section; Lynne Knack, Administrative Services Officer; and Dino DiCianno, Deputy Executive Director, who was responsible for the Compliance Division that included the Revenue and Audit Sections of the department.
Mr. Pursell started his presentation by discussing two of the department’s performance indicators. He referred to The Executive Budget, TAX, page 1 of Budget Account 2361 for indicators 7 and 8. During the 1999 legislature there was some concern expressed of a perception that the Department of Taxation was using quotas to evaluate the activity of both auditors and revenue officers. Because of those concerns, the department decided to take another look at how the information was gathered regarding what the auditors and revenue officers were doing.
Performance indicator number 7, total audit billings, was generated using a system that was developed based on a $60,000 appropriation that the 1999 legislature approved for the department. The system was a portable, stand‑alone tax auditing system. The system was not a part of the Automated Collection Enforcement System (ACES) but it gathered statistics on a district-wide basis in terms of the hours spent on an audit at that location. From that, the department was able to determine the number of audit billings completed for any given fiscal year. At the time the performance indicators were put together, the actual FY2000 amount was indicated at $28.5 million. At the time the number was calculated, the department was still in the process of finalizing the portable tax audit program. That figure was not correct and should be changed to $33.2 million. In addition, in 1999 there was a major piece of legislation that was passed specific to the Department of Taxation, Senate Bill 362 of the Seventieth Session, commonly referred to as the Nevada Taxpayer’s Bill of Rights, in which the department was given direction on how it should put together the process of conducting audits for the benefit of businesses. That information would allow businesses to know the “rules of the game.” When the department conducted an audit, the audited business had 45 days to petition the audit. Once the original bill had been sent out, the petition process started. For example, even though the department billed the $33.2 million in FY2000, there were a number of events that could have taken place that would have changed the amount. The department might have received additional information that caused an adjustment to the original billing, or taxpayer or department errors could have been discovered that caused an adjustment. In the process, if there were credits that would have offset debits within the audit period, that was taken into consideration by the department. Also, there could have been a settlement offer approved by the Nevada Tax Commission that affected the original amount billed. Hearing officers’ decisions could also have affected the final amount billed.
The department planned to use performance indicator 7 to determine the costs to generate the billings by district. For example, of the $33.2 million billed, $18.6 million was billed in Las Vegas, $8.6 million was billed in Reno and $6 million was billed in Carson City. Mr. Pursell said his goal was to develop the costs associated with those billings so the costs per district could be worked into the performance indicator. The portable tax audit program continued to be refined and Mr. Pursell felt that an outcome-based indicator such as cost per district would be available in the future. Unfortunately, because the data had not been captured in that format in the past, there was no history and it would take approximately a year to develop some type of baseline for comparisons. He said the department would attempt to build the database for past years as much as that was possible.
Mr. Pursell continued by discussing the department’s performance indicator number 8, revenue officer’s collections. The ACES program had not provided the statistics that the department felt it needed to track what the revenue officer’s efforts had provided to the department and to the taxpayers of the state of Nevada. Late in 2000, the programmers that were working on the ACES program developed the ability to access and query information contained in the ACES from personal computers. The department could now download the ACES database to an Excel spreadsheet and from that queries could be made. The department recently finished a program that allowed the department to review the 30-day, 60-day and 90+ day delinquent active accounts receivable. They could be reviewed by account number, business name or address, city, state, zip code and the type of tax. The types of tax included business tax, sales tax, use tax or excise tax. The recently completed changes would allow the department to do queries of the data and that was not possible when the data was in the ACES system. Mr. Pursell said the first query he would ask for was the oldest delinquent active accounts receivable by month so that comparisons could be made to determine whether businesses were chronically behind and how many new businesses were joining the oldest category that was the hardest to collect. The department would have a better chance of putting together some historical data of that nature because the data had been captured in ACES and it would be a matter of downloading the data for each fiscal year. The department would begin analyzing the data as soon as the program was complete. The department would look from month to month to see which were the oldest, highest dollar accounts receivable active within the system. With that information, the effort of the department’s revenue officers could be directed toward those accounts. The department felt that the data retrieved should be formatted so that the costs per district could be determined in order to monitor the efforts of the revenue officers separately in Las Vegas, Reno and Carson City.
Chairwoman Chowning said she appreciated the update on the performance indicators and she asked Mr. Pursell to explain why the audit percentage decreased in FY1999-2000 although eight new auditor positions were approved by the 1999 legislature and why were the projections for the future higher when the performance did not indicate an increase.
Mr. Pursell explained that there were a couple of reasons for the decrease in the number of audits. He said that from June 30, 1995, to June 30, 2000, the number of accounts, sales, use and business tax, had increased from 48,900 to 114,000 accounts. In the current fiscal year, through December 30, 2000, the number of accounts had increased to 118,900. He said the percentage of samples was smaller against the larger population. Another reason for a smaller sample was that there had been a tremendous amount of vacant positions in the department. Mr. Pursell went on to say that when the department was reorganized, one of the auditor positions was used to fund some of the reclassifications of other positions. The reclassifications were made to ensure that the department was able to fully implement the Information Services section of the department. Mr. Pursell indicated that he felt the major reason the number of audits decreased was because the department had had so many vacant positions for such a long period of time. He said that in the pre-session report that he had provided to the joint committees, there was a schedule included that showed by month the number of vacant positions. He said he would supply the information to the subcommittee if it were desired.
Mr. Pursell continued that the other change that had occurred since he had been appointed director of the department was that he had tried to educate the business community regarding the “rules of the game.” Mr. Pursell reminded the subcommittee that at a prior meeting of the Legislative Commission’s Budget Subcommittee, he had discussed the Small Business Development Center and the association the department had with the business community and the University of Nevada. The department had held workshops through the Small Business Development Center. The center had offices at the University of Nevada, Las Vegas (UNLV) and rural Nevada. The workshops targeted specific business types in order to discuss what was done at the department and the responsibilities of a business in Nevada. Topics included the audit process and the submission of revenue returns to the department. Mr. Pursell believed that the department’s goal was to achieve 100 percent compliance through the education of taxpayers.
Chairwoman Chowning said that it did not seem to make sense to eliminate an auditor position when the audit percentage was decreasing. She asked Mr. Pursell to explain the elimination of the auditor position in decision unit E‑805.
Mr. Pursell answered that the elimination of the auditor position would give the department better flow of its information services needs, especially in Las Vegas where the majority of the accounts were. He said that certain staff members, both auditors and revenue officers, were maintaining the network. That took the employees away from their responsibilities of auditing or functioning as revenue officers. Losing one auditor position to help fund the network specialist positions helped to regain the function of the auditors and revenue officers in Las Vegas who were spending time maintaining the network. Mr. Pursell said that the FY1999 Annual Report showed 2,429 audits with billings of $20.6 million. In FY2000, 1,768 audits were completed with $20.6 million in billings. The billing amount did not change significantly even though fewer audits were performed. Mr. Pursell said the department picked a percentage of coverage to determine the number of audits to be completed yearly. Mr. Pursell continued that the “Taxpayer Bill of Rights” contributed to the fact that the department conducted fewer audits. The “Taxpayer Bill of Rights” put more procedures into the audit process including the timing of how the audits were completed. It would take longer to complete each audit.
Ms. Giunchigliani asked Mr. Pursell what was the primary function of the department. Mr. Pursell answered that the primary function was the collection of a variety of taxes including sales and use tax, excise tax, and business license tax. Ms. Giunchigliani said that she assumed that subsequent to the collections, the department would need to verify that the collections were made in the correct amounts. Mr. Pursell answered, “Yes, the compliance would be the second part of that.” Ms. Giunchigliani said that was an audit function and from the “Taxpayer’s Bill of Rights,” which was a global piece of legislation, she did not recall any testimony that that would drive the need for less audits. Mr. Pursell said there had been discussion regarding the “Taxpayer Bill of Rights” that the percentage of audit coverage in Nevada was often higher than surrounding states. He recalled that surrounding states had approximately 3 percent coverage and Nevada was higher. Ms. Giunchigliani asked if Nevada was collecting better than other states or did Nevada have a problem with collections and verifications of what should be collected. Mr. Pursell stated that the department was doing a good job but could do better. For FY2000, the department collected and distributed almost $3 billion dollars in revenues. On a monthly basis that was approximately $246 million per month. On average that had been consistent over the last fiscal year; there was approximately $15 million of accounts receivable that were delinquent. That equaled about 6 percent delinquency. Of the 6 percent, the department collected approximately $2.5 million through the revenue officers’ collection efforts. Mr. Pursell said that the department had done a good job when those statistics were considered. Mr. Pursell said later in the meeting he would discuss his ideas for reducing the $15 million delinquent payments.
Ms. Giunchigliani asked what the figures had been in 1999. Mr. Pursell said that he did not have those numbers with him but they were similar to the 2000 numbers. He said the department had collected and distributed $2.7 billion in revenues in FY1999. Ms. Giunchigliani asked if there was a pattern since the “Taxpayer Bill of Rights” had been enacted. It appeared to Mr. Pursell that in FY2000 and the first six months of FY2001, the delinquencies remained steady at approximately $15 million. Ms. Giunchigliani said it would be helpful for the subcommittee to examine the figures because if the projected audit penetration was not going to happen, she assumed the eight auditor positions allowed by the 1999 legislature were not needed and might need to be cut from the budget. In the alternative, if more delinquencies would be collected, the subcommittee should see a justification for auditor positions but she hoped that the department would make an effort to improve the penetration and the collection of delinquent taxes. Mr. Pursell said that the positions had been utilized; it was only one position that was used to fund the reorganization that had been implemented through the Governor’s Fundamental Review of the department.
Ms. Giunchigliani said Mr. Pursell’s comments led her to her next question and that was a request that Mr. Pursell explain the savings identified in the budget based on the fundamental review of state government. Mr. Pursell pinpointed that in decision unit E-805 the numbers would change because some of the position reclassifications recommended by the department did not meet the approval of State Personnel. That would change the numbers for both fiscal years and Mr. Pursell said he would update the figures based on the reclassifications that had been approved. Ms. Giunchigliani asked if there were any actual savings based on the fundamental review or were the changes only a reorganization of the department. Mr. Pursell replied that it was a reorganization.
Chairwoman Chowning said that in decision unit E-805 there were seven positions and two were denied by State Personnel and one was reclassified to a lower grade so that decision unit should be revised with correct figures.
Chairwoman Chowning said it still did not make much sense to her to lose the auditor position. She would think that the department would try to keep the staffing at the same level and she believed the subcommittee should look at that. She said she knew there were more people and more businesses coming into the state and it did not make sense to eliminate an auditor position.
Chairwoman Chowning asked Mr. Pursell if there would be a Bill Draft Request asking that the department’s name be changed to the Department of Revenue. Mr. Pursell said that was a concept that was discussed at length by the Governor’s Committee to Conduct a Fundamental Review of State Government but the Department of Revenue concept did not make it into The Executive Budget. He was not aware of any enabling legislation for the name change from the Department of Taxation to the Department of Revenue.
Chairwoman Chowning asked Mr. Pursell to discuss the $800,000 that was approved by the 1999 legislature for Phase II of the Business Process Reengineering (BPR) study. The $800,000 should revert to the General Fund at the end of FY2000-01 but the department had requested that it be used for other purposes. Chairwoman Chowning said the $800,000 was not included in The Executive Budget and she wondered how the Governor felt about its use. Mr. Pursell said that he believed it would be a good idea for the legislature to look at the $800,000 that had been appropriated for the second phase of the department’s technology needs. During the Governor’s fundamental review process, it was brought to the department’s attention that it should stop the second phase as it was originally contemplated for several reasons, including the internal changes being made in the department. Other reasons for stopping the second phase were the possible impact to the department if the Teacher’s Initiative had required the department to implement a new tax. The tax might have required a different format than what the department’s mainframe system was able to calculate. Also, late in FY2000, the Governor met with Senator McGinness and Mr. Goldwater, the Chairmen of the two taxation committees, and talked about the streamlined sales tax project that was being considered on a nationwide basis. Mr. Goldwater was representing Nevada through the National Conference of State Legislatures (NCSL). At that meeting it was decided, and the Governor executed an Executive Order, that made Nevada a participating state in that project. Mr. Woody Thorne had been the department’s representative participating in the project. Some of the criteria for the project had been presented previously to the legislature in a pre-session report according to Mr. Pursell. The idea behind the project was to simplify the tax structures on a nationwide basis and address federal legislation. Two Supreme Court cases, Quill and Bella Hess, basically stated that if a business did not have nexus in the state, the department could not collect taxes on out-of-state purchases whether they were made through the Internet or mail order catalog sales. The project had attempted to have as many states as possible look at the definitions and how sales tax statutes were applied with the hope that if the process was simplified, states might be able to reduce the sales tax rates and Congress would reconsider the nexus issues and allow for the collection of taxes on out-of-state purchases.
Mr. Pursell continued that after the department determined not to go forward with Phase II of the BPR, the department began meeting with the Department of Information Technology (DoIT), the State Library and Archives, and Micrographics. The department was prepared in December 2000, to go to the Interim Finance Committee and ask for a change in direction for the $800,000 to a scanning and imaging system. That system would help the department manage the paper flow in the department. After discussion with the Department of Administration, it was decided not to go to the Interim Finance Committee and to wait until the legislative session. Mr. Pursell referred the subcommittee to Exhibit C and said that the department originally anticipated beginning the project in January 2001. He went on to say that if the legislature had an interest in proceeding with the project, it would be delayed until the approval of the change in the appropriation of the $800,000.
Mr. Pursell stated that he would explain the basic concept of the department’s proposal. The department currently dealt with approximately one million sales tax documents a year. There were approximately 390,000 other types of correspondence associated with the collection of the excise taxes, use taxes and business license taxes. In total, the department dealt with approximately 1.4 million documents a year. Most of that information was hand input into the ACES database. The concept the department proposed for using the $800,000 would be to image the information and send the image to micrographics so the department would not have to keep track of the 1.4 million pieces of paper. The documents would be put on laser disk and there would be instant access to the material. The department would no longer need to worry about the manual hand batches. The department currently batched the returns in groups of 40 and if information needed to be tracked, the batch number and posting date had to be known before a document could be retrieved. Through the coding used in the imaging system, the document could be immediately retrieved.
The second part of the system was a scanning system. That would take the image and scan the information into the database. The department felt that between the imaging and scanning there would be a savings to the state and the department would be more efficient in its handling of the information. Mr. Pursell gave two examples. The department currently had approximately 15 individuals who did nothing but hand input the sales tax returns into the system. The system automatically generated and sent out the next month’s return so there was a lot of postage costs involved. If the department could implement the imaging and scanning system, the goal would be to become as interactive as possible, including the possible use of the Internet. For example, the department received monthly a number of “zero returns” which were returns that had no money associated with them but still had to be entered into the system. He believed that if the returns could be scanned in it would save a tremendous amount of time. As the business community became educated and started to use faxes and e-mail, the department believed there could be a large savings in postage. Mr. Pursell also believed the department would be able to eliminate some of the ongoing costs of those 15 individuals that were manually entering information into the system. It would not take as many individuals to implement the proposed system.
Chairwoman Chowning stated that the proposed system was not included in the budget and the subcommittee had many questions. She asked why the system had not been included in the budget and what could be cut out of the budget if the $800,000 system would produce savings. She said she was unsure there was enough time to answer all the questions and it seemed to her that it was a little late to develop the system for the next biennium. She added that it might be a good, efficient plan that would make the work easier for businesses and the department.
Mr. Pursell answered that if he had known about the possibility of an imaging and scanning system a year ago, he would have included it in the budget but it had not come to his attention until the department started considering the implications of the Teacher’s Initiative and the streamlined sales tax project in October and November 2000. The budget had already been completed at that time.
Chairwoman Chowning stated that Mr. Pursell had discussed the department’s proposal at a hearing on January 30, 2001, and she did not understand if it was brought up then why the details were just being released in March.
Ms. Giunchigliani asked Mr. Pursell why the proposed system was withdrawn from the December 2000 Interim Finance Committee meeting. Mr. Pursell said the department had prepared for the IFC but decided to bring it to the legislature instead. Ms. Giunchigliani asked if the proposal was supported by the Budget Division and would the subcommittee see a commensurate $263,000 reduction in the department’s budget based on the savings that had been projected. Mr. Pursell said there would be a savings once the proposal was implemented. Mr. Pursell directed the subcommittee’s attention to Exhibit C, page 7, for the projected savings. Ms. Giunchigliani asked if the Budget Division had reviewed and recommended the proposal.
Mr. Andrew Clinger, Budget Analyst with the Budget Division, said the Budget Division had received a work program from the department in December 2000, and after discussions between the department and Budget, it was decided by both departments to wait until the legislative session to go forward with the proposal. Mr. Clinger continued that it would be a recommendation of the Budget Division to go forward with the work program.
Ms. Giunchigliani said the subcommittee would need to see something in writing from the Budget Division because that type of issue had never been handled in that way. Normally, there would be a letter from the Budget Division recommending a modification that the subcommittee could either accept or not accept. She continued that the subcommittee needed to hear from the Budget Division as to why the proposal was not included in the budget. She said since the budget was not completed until January, there should have been time to put the proposal in the budget.
Mr. Clinger said that since the money was included in the current budget, it would require a work program. Ms. Giunchigliani pointed out that the money would revert at the end of the fiscal year. Mr. Clinger reiterated that it would not require a change to the budget; it would be a change in the current fiscal year. Ms. Giunchigliani said the program could not be implemented in the current fiscal year.
Chairwoman Chowning emphasized that the subcommittee would need to know how the projected savings figure had been projected. She wanted backup documentation on how the figure had been derived.
Mr. Mark Stevens, Fiscal Analyst, apprised the subcommittee that the project would not be able to be completed prior to the end of the current fiscal year and when something could not be completed by the time the books closed in August, it would not be appropriate to fund it out of that fiscal year. While it was true that a work program change would be necessary to implement the project, he was sure that the time period for completing it would be beyond a six-month period. It would not be possible to get approval of the project until April or May 2001, so it would go past June 30, 2001. The only way the subcommittee could approve the project would be to put specific language in the appropriations act that would allow the money to go forward. The original appropriation was built into the department’s operating budget. It was not a one-shot appropriation and any monies that were in the operating budget that had not been expended by the end of the fiscal year would revert. While it would be possible, it would be very unusual to handle the department’s request in that manner. He believed that something more than a work program change would have to go through in order for the money to be utilized in the next biennium.
Chairwoman Chowning thanked Mr. Stevens for the clarification. She said that it appeared to her from reading Exhibit C that only an analysis and review would be completed by the end of June 2001, and that was based on a start date of January 2, 2001.
Senator O’Donnell concurred with Mr. Stevens and echoed the comments made by Ms. Giunchigliani. He said the subcommittee needed documentation from the Budget Division. It had been done in the past and unless documentation was required in the future, the subcommittee would not know where they stood. He said the subcommittee would want to make sure that $800,000 would revert. The subcommittee would want to be certain there was $800,000 in reversion if they were going to approve an appropriation for the imaging and scanning project. He said he did not believe it would be a “big deal” to have the Budget Division do the necessary paperwork.
Chairwoman Chowning asked about the one-time appropriation (BDR 1429) of $1.3 million to renew Phase II of the BPR. She said she wanted to know the planned use of the funds as the requested information had not been submitted to the subcommittee’s staff. She wanted to know when the information had been requested by staff and why there was not enough time to respond to the staff’s questions.
Mr. Pursell explained the difference between the three-phase program that was developed prior to his appointment as director and how he currently viewed the program. As he viewed the original three phases, that was the type of process that had not succeeded in Nevada. It had been a business process reengineering study of the department with Phase II being a systems requirements phase and Phase III would have the state build the system at state cost. For the most part, there had been trouble with the contractors when there was a problem with the program. At the time the budget was developed, he was not aware of benefit funding contracting. He believed that for the benefit of the department and the state, it should be considered. It was brought to Mr. Pursell’s attention through interaction with DoIT that there was a new concept in contracting services. He said that the department had provided a white paper on the concept not long after the department learned about it. Mr. Pursell directed the subcommittee to Exhibit C (Attachment Two). He said that was a summary of benefit funding. It seemed to Mr. Pursell that it was a concept where the private sector and the public sector joined together in the funding of large projects. He believed an integrated system for the Department of Taxation would meet that criteria. Mr. Pursell said the contractor would not be paid for the development of the system until it had been delivered in working order to the department. Mr. Pursell said he did not have backup data for the subcommittee. He said they were working as quickly as possible to gather as much information as possible to determine whether it would be a good idea for the state of Nevada and the department.
Mr. Pursell reminded the subcommittee that of all the taxes the department dealt with, only the sales and use tax and the business license tax were included in ACES. All other taxes such as insurance premium tax, short-term leasing tax, utilities, net proceeds and anything else the department did, was stand-alone. Each one of those systems had to be maintained by the department rather than an integrated system being maintained. When DoIT shared with the department that there was a new form of funding those types of projects, the department felt that it would be a better idea than what had been proposed in the past. If the policy decision in the state of Nevada was to build an integrated system, the benefit‑funding strategy would be a better route to go than having the state saddled with paying for what could be a $15 or $20 million system. Instead, have the contractor develop the system and the state would not accept the system until it had been demonstrated that it would do what it was supposed to do. The other benefit was that a fund would be set up and funds deposited to it would come from cost savings that were generated specifically from the development of the system. The developer would then be paid from the fund. Mr. Pursell said he believed the department would be better off spending more time addressing that and using the $1.3 million to seed that type of project. He would want input from DoIT, administration, and the legislature.
Chairwoman Chowning asked why the $1.3 million “seed money” would be needed if the private sector would provide the “seed money.” She wondered how much the private sector would provide.
Mr. Pursell said it would be a partnership with costs to the state and costs to the private sector. Chairwoman Chowning asked if Mr. Pursell knew the amounts and Mr. Pursell responded, “No, this type of funding has not been established in the state of Nevada so we are, again, attempting as quick as we can to establish that information; we are trying to gather it to present it to this body.”
Chairwoman Chowning said that this appropriation had been included in The Executive Budget and she thought Mr. Pursell was saying that there was new information received by the department since the budget was developed. She concluded that there had been one plan approved in the budget and the department had another plan that it believed was better but it did not know the details and dollars of the plan. Chairwoman Chowning asked Mr. Pursell when he would know the details and also when the appropriations bill would be heard.
Mr. Pursell stated that the department met regularly with DoIT and the company that brought the concept to the department’s attention and it would make every effort to get the information to the subcommittee as quickly as possible to help the subcommittee understand and have a comfort level with what the $1.3 million would be used for. He said he would qualify it all by saying that the effort of pursuing a new shared cost system was better than going the route of the state paying to develop an integrated system. Mr. Pursell said if there were ever any plans to add any other type of tax to the system, the integrated system would be prepared to handle the new taxes. The current ACES system could not be expanded and all new systems would have to be stand-alone systems. Mr. Pursell suggested that it might take more time to quantify the proposed new integrated system but it would be worth the effort.
Chairwoman Chowning said that the legislature was limited by the fact that the session lasted only 120 days and all decisions had to be made during that time period. If not, the decisions would have to wait two years or a special session would have to be called. There were items on the table, the $800,000 request and the $1.3 million request both had to be dealt with. One way or another, a decision had to be made and no one on the subcommittee wanted to say that just because there was a $1.3 million project written down, that was what should be done. Chairwoman Chowning said that what Mr. Pursell had said made great sense, that the new plan would reap better benefits for the state. She asked Mark Stevens to comment on how quickly information needed to be submitted by the department.
Mr. Stevens said that budgets would begin to be closed in approximately two weeks but the Department of Taxation’s budget probably would not be closed until late April. He stated that the subcommittee would need any information it felt necessary to make decisions within the next month so the decisions could be made before the budget was closed.
Chairwoman Chowning asked when all of the details would need to be submitted to make the decisions before the close of the budget.
Mr. Stevens said that he believed the committee would need to define what information it wanted from the department. Mr. Pursell interjected that the department could give staff as much information as they wanted on the imaging and scanning project, the $800,000 project that had been developed by the department, DoIT, Library and Archives, and Micrographics. The department could not provide the committee with details on the benefit funding proposal, the $1.3 million project. Mr. Pursell said the department would have to deal with the contractor to determine how the contractor would be paid for the product that would be developed.
Chairwoman Chowning suggested to Mr. Pursell that he might tell the subcommittee why the department needed the $1.3 million. She went on that Mr. Pursell had said the department was doing a lot in-house and with the $800,000, she wondered why another half million dollars was needed. She proposed that Mr. Pursell look at all the information and attempt to provide more information to the subcommittee. Mr. Pursell said the department had answers and would respond to the request. Chairwoman Chowning asked Mr. Pursell if the information could be provided in a couple of weeks. Mr. Pursell said the concept could be clarified and the $800,000 proposal could be detailed. Regarding the $1.3 million project, it would first have to be determined whether the project simply included an integrated system for the department or was a system that would integrate any tax that might be added in the future due to policy changes. The size of the system would have to be defined. Mr. Pursell said that both of the projects, the $800,000 project and the $1.3 million project, would put Nevada in a position to deal with what the Governor had said, and the legislature’s staff had substantiated, and that was that costs had outgrown revenues. For the department to address that, it had to become more efficient and the way to accomplish that was through technology. Mr. Pursell went on to say that he did not mean to bring the proposal and dump it on the legislature. He believed that what could not be answered in the 120-day session certainly could be carried forward through reports to the Interim Finance Committee. The projects were aimed at what could be done best for collecting the taxes and making the process as efficient as possible for the business community and the department. He reiterated that the department was dealing with 1.4 million pieces of paper on a yearly basis and that did not include what was being done with the Local Government Budget Act, utilities and mining. The projects were the department’s efforts to streamline the system.
Chairwoman Chowning said that if the Internet tax proposal or any other tax was passed that would just add to the department’s load. Mr. Pursell agreed.
Ms. Giunchigliani said she thought the $800,000 would be used for getting rid of as much paper as possible through the use of technology. She went on that the department should be entering Phase II of the BPR and $600,000 had been spent on Phase I that looked at new computer technology to integrate the state’s system. She asked if her statements were correct and Mr. Pursell said that Phase I of the BPR analyzed how the department conducted its business. It reviewed all of the revenue and audit positions and defined how the processes worked. They did not look at computer technology as that would have been Phase II. Phase II would have looked at the functionality and system design to determine how the department would need to be set up.
Ms. Giunchigliani asked Mr. Pursell if the department now wanted to take the $1.3 million that was intended for Phase II and instead start the benefit funding program. Mr. Pursell agreed that was what the department was attempting to do. Mr. Pursell said that the functions completed in Phase II and Phase III would be done in one phase in the benefit funding proposal. As one went through the process of developing the system one would actually be defining what the functionality of the system would be.
Ms. Giunchigliani asked if Phase II was not done at that time, would the legislature still need to fund another computer program sometime later. Mr. Pursell said that eventually if it was decided that the department needed an integrated system it would have to be developed later.
Ms. Giunchigliani asked where the planned use of credit cards and the Internet were in either the benefit funding proposal or the imaging and scanning proposal. Mr. Pursell said that was in question and he started by discussing the use of credit cards. The department had identified two different processes that had been put in place across the United States. One was that a credit card was established at the state level. That would be where the local governments in the state paid for the use of the credit card; they would pay the transaction fee. The second option was to simply allow businesses to use a credit card. That would have to be coordinated between the controller and treasurer’s offices on the appropriate setup and coding of the account. Those options were being reviewed by the department. Mr. Pursell said that the state of California had reported that by using credit cards, especially on delinquent accounts, they were increasing collections on the delinquencies by 30 to 40 percent. That was something the department should look into according to Mr. Pursell.
Ms. Giunchigliani asked if that fit with the benefit approach or would it stand alone. Mr. Pursell responded that the department would follow through with the research but it would take, in his opinion, legislative action to use credit cards globally in terms of everyone paying for the costs. Ms. Giunchigliani said that had been an issue with the Department of Motor Vehicles (DMV). She said she did not recall what had been decided for DMV on the transaction fee and its impact on the state. Mr. Pursell said he had been shown a interesting statistic recently and that was that of the last month’s tax revenue, 6.8 percent or 3,780 businesses, paid 90 percent of the sales and use tax. Mr. Pursell said he believed the department should start a pilot program with those businesses. He would start by going to those businesses and ask them if they would like to use credit cards or would they like to use e-mails through the Internet for submission of returns. Mr. Pursell said some businesses would be more computer literate than others and that would have to be taken into consideration. Ms. Giunchigliani said she believed the local governments would be able to use credit cards as well as the majority of the businesses.
Ms. Giunchigliani asked Mr. Pursell to point out where in the budget the subcommittee could find the potential implementation and the costs associated with the credit card and Internet concepts. Mr. Pursell said the Internet concept was included in the request for $800,000. The process of allowing businesses to use credit cards and setting up those accounts so the department could work with the controller’s office for collection was not included in the $800,000. Ms. Giunchigliani asked what the cost would be for the use of the credit cards and would the department recommend that there should be a slight fee for the transaction paid by the user or by the agency. Mr. Pursell said that he did not believe there would be a cost to the state for the business to use its own credit card. The only way there would be a cost to the state would be if it was decided that everyone must participate in a state card and that would take legislation to enact. Ms. Giunchigliani said that in the DMV the state had to pay the transaction fee and it was an unanticipated budget impact. She said the subcommittee would want to know if there was a liability or impact to the department if there was going to be a transaction fee.
Mr. Woody Thorne stated that the statewide contract for credit card transactions was with VISA and the current fee on the contract was 1.25 percent of the transaction. That was low compared to the survey information that had been received from other states. The question was, would the state absorb the cost or would the state and local governments absorb it with it coming off the top before any distribution. That would require legislative authority and that would be an impact to both state and local collections. It was not known whether there was enough potential collection to offset the costs. The department believed there would be but it was unsure. Otherwise, the fee would have to be “tacked on” to the taxpayer when they paid by credit card. On the electronic funds transfer method, which should be the target method for the larger accounts, there would be no fee impact on using electronic funds transfer. Either one of those were the option of choice according to Mr. Thorne.
Ms. Giunchigliani said that if the state chose the latter option where the state would absorb the transaction fee, there would be a budget impact and she asked if the department had any idea what that impact would be. She added that if it was not considered in the budget it would have to be assessed to the user. Mr. Thorne agreed that it would be assessed to the user by default.
Ms. Giunchigliani acknowledged that the department had some good ideas but the subcommittee was frustrated with a lack of planning in knowing where the state should go in regard to the budget. It looked to her that the Internet was included in the $800,000, plus streamlining the paper flow, and she asked if that would complete that project.
Mr. Thorne said that part of the imaging and scanning program for the $800,000 included a proof of concept for the use of the Internet for registration and filing of returns. That would be the testing of the best method to do that. With the ACES system, the department was looking at developing a front end to gather information, edit it, and make sure it was clean before it was entered into the system. It was a different way than sitting at a keyboard and entering information from paper; the data would be collected electronically and then input into the ACES system. The department would need to develop that interface whether the data was obtained through the scanning process or whether Internet filings were used.
Ms. Giunchigliani asked whether the department would want to create its own form that everyone could use and thereby eliminate a step. Mr. Thorne said that the elimination of the step ideally would be through the Internet. The form would be on the Internet, there were edits for the math errors and typical errors found that would need correction, there was confirmation to the taxpayer that the form had been received, and they would be able to pay and get confirmation of that by credit card or by the electronic funds transfer.
Ms. Giunchigliani said that she thought Mr. Thorne had responded that the answer to the question of whether the $800,000 would cover the entire project was “sort of yes and sort of no.” Mr. Thorne said that the $800,000 would cover the project to the point of proving that it could work but it would not cover the actual implementation.
Ms. Giunchigliani asked what the department would need for the actual implementation. Mr. Thorne said that he believed that with the programming staff the department had it could implement the program. Ms. Giunchigliani asked whether that would be a Web-based system and Mr. Thorne said that was correct. Ms. Giunchigliani said that should be able to be accomplished fairly “cheaply” and very quickly. Mr. Thorne responded that that was the department’s thought.
Mr. Hettrick asked Mr. Thorne to reiterate the plans regarding the Internet. He said that he had heard from Mr. Thorne that someone would use the Internet, fill out the form, send it to the department and it would be reviewed and hand entered into the system. He asked if that was what Mr. Thorne said. Mr. Thorne responded, “God, I hope not.” He continued that the Internet would be a substitute for taxpayers filling out a form, sending it to the department and the department staff entering it into ACES. The taxpayer would complete the electronic form across the Web, the data would be automatically checked there for accuracy and completeness and they could also pay through either credit card or electronic funds transfer. It would provide immediate confirmation to the taxpayer, the department would get the information sooner and the funds would be received without any paper handling on the part of the department.
Mr. Hettrick said he understood the concept and he totally agreed with the direction. He said that Ms. Giunchigliani had said it very well when she said that the department had a lot of good ideas and good direction but that the subcommittee was frustrated with the fact that it was late in the legislative process. Mr. Hettrick continued that if the department could get the programs done for $800,000 he would give the department credit and he hoped it could be done. He had been frustrated on another issue in another agency and that was simply trying to remove a social security number from a payroll report and he had been told that that would cost over a half million dollars. Mr. Hettrick said if the department was successful, it would put together and implement an entire system. He said that if the department was able to develop and implement the system for $800,000 it would give the legislature leverage to work with some of the other agencies.
Mr. Pursell said he wanted to add that it was recently brought to the department’s attention that there might be federal funding available for the imaging part of the system. The federal government was interested in the archiving of information and the department was pursuing leads on federal funding. He said that he had requested assistance from the Department of Administration because the department was not familiar with grant writing. Mr. Pursell was unaware of the amount of funding that might be attained but he had been told that there was a program that addressed projects of the nature proposed by the department.
Chairwoman Chowning said that she would like to reschedule the department to come back before the subcommittee in a couple of weeks to look at updated budget proposals by the department on the two technology projects. She asked if the department could complete everything within two weeks so that the subcommittee could meet again. Mr. Pursell said that the department could detail the $800,000 project, but the $1.3 million project and the funding for the integrated system would take longer and he was unsure whether it could be completed in two weeks. Chairwoman Chowning asked Mr. Pursell to keep the committee advised and to contact the contractor for input. Mr. Pursell said he would ask the contractor for input at the next meeting the department had with them and Chairwoman Chowning asked when the next meeting was scheduled.
Mr. Thorne reported that the department was expecting additional information from the contractor by the end of the week and he had not scheduled another meeting. He was awaiting the additional information that would flesh out the very scant proposal the department had originally received. After that, they would conduct a follow-up meeting, probably in the next week.
Ms. Giunchigliani asked who the contractor was. Mr. Thorne said the department had been having discussions with American Management Systems, Inc. (AMS). Ms. Giunchigliani asked if the contractor had been paid to do an analysis and Mr. Thorne replied, “No.” He went on to say that AMS was assisting the department because they had done tax systems in a number of states and had done benefits funding in four or five states.
Ms. Giunchigliani asked whether the department could ask AMS to provide a revised budget if the subcommittee was to consider the $1.3 million implementation for the benefits functionality plan and get something back to the department within two to three weeks. Mr. Thorne said he would ask AMS. Ms. Giunchigliani asked the department to contact AMS and then report back to the subcommittee. Ms. Giunchigliani said that she believed the subcommittee needed a revised plan for the $800,000 and a revised plan and budget for the $1.3 million project. Ms. Giunchigliani added that since Mr. Thorne would be talking to AMS by the end of the week, the department would know one way or the other whether they could put together the requested information within a three-week period. Mr. Thorne responded, “Yes.” She asked Mr. Thorne to advise the subcommittee by the next Monday whether the information would be provided.
Chairwoman Chowning announced that she appreciated all the hard work the department had done and was trying to do to make the system more efficient and user-friendly.
Nevada Department of Agriculture
AGRI 1 – Volume I
Chairwoman Chowning announced that the committee would like to review all the budgets shown on the agenda in approximately one and one-quarter hours. She welcomed the representatives of the Department of Agriculture and said she would like the representatives to discuss the department’s accomplishments, its organizational changes approved last session, and the proposed organizational changes recommended in The Executive Budget.
Mr. Paul Iverson, Director of the State Department of Agriculture, introduced himself. Mr. Iverson directed the subcommittee’s attention to the department’s Exhibit D. Mr. Iverson said that he wanted to start the presentation with a discussion of the department’s proposed reorganization because he thought that would help the subcommittee understand the individual budgets. In most of the department’s budgets, the only major, significant change was in the E-900 series of decision units that were transfers from one budget to another. The purpose of the transfers was to make the budgets clearer and more workable.
Mr. Iverson introduced Mike Nolan, Budget Analyst with the Budget Division. He said that the department’s administrative services officer was in Hawaii. He pointed out that the department’s division heads were in the audience and he would ask them to come to the witness table if there were questions on specific budgets.
Mr. Iverson said one of the most important parts of the budget was the proposed reorganization. He referred to Exhibit D for a list of six reasons why the department felt the reorganization would be advantageous to the department, to the state, and to the legislature. Primarily, the reorganization followed the concept of the Governor’s fundamental review that attempted to make government more efficient, cut down on unnecessary paperwork, and at the same time give both the executive branch and the legislative branch the opportunity to carefully review the budgets. The reorganization reduced some of the department’s budget accounts that were only there for accounting purposes. The department felt that some of the accounts could be added to existing budgets and reflected separately in program project categories. That would give the legislature an opportunity every two years to consider the programs. He said that in some years, the legislature had approved budgets by ”consent” without having the opportunity to consider certain budgets individually. The reorganization would put each item into a budget that could be examined. The reorganization would provide the department an opportunity to reduce a tremendous amount of work in the maintenance and development of the budgets and in budget closing. Mr. Iverson reiterated that the division was not trying to dissolve any budgets; the department simply wanted to put certain budgets in special categories within major budgets so they could be tracked by project code. Mr. Iverson said the department had a system to track budgets. Each budget would be tracked and the legislature would have an opportunity to see how the dollars were spent.
Mr. Iverson continued his explanation of the department’s budget accounts before and after reorganization as shown on page 3 of Exhibit D. He said the department currently had 19 budgets and it would like to consolidate those budgets into 6 major budgets. The department would add the High School Rodeo budget to the Division of Administration budget. The High School Rodeo budget was a very simple budget that helped Nevada’s young people participate in the national finals and only one check was issued each July 1 of every year. The department proposed adding Budget Accounts 4541, 4543, 4544, 4545, 4549, and 4552 to the Division of Plant Industry budget. Budget Account 4553 would be added to the Division of Administration’s budget. It was used for mediation and making loans to young people for agricultural projects.
The budget for the Division of Animal Health, Budget Account 4550, would be maintained as before the proposed reorganization.
Under the reorganization, Budget Account 4537, the Pollution Fund, would be added to the budget for the Division of Measurement Standards. Mr. Iverson said that Edward M. Hoganson Jr. was the Administrator and both Budget Accounts 4537 and 4551 would be included in the budget for the Division of Measurement Standards.
The budget for Livestock Inspection would stay the same as before the reorganization.
The Division of Resource Protection, Budget Account 4600, was a program that was funded one-half through federal funds and one-half through state funds. That account would continue to be a separate account.
The budgets for Commissions, Councils, and Boards would continue to be separate budget accounts.
Mr. Iverson continued explaining the proposed reorganization. Most of the budget accounts would transfer into Budget Accounts 4540 and 4554 as shown on Exhibit D. Eight budgets would be eliminated and six of the eight eliminated budgets included only one program. Those budgets would be tracked by separate categories and job codes that would ensure that the integrity of each program was maintained. Mr. Iverson said that he believed the subcommittee wanted to be certain that the integrity of each program was maintained.
During the 1999 legislature, the department was given a directive by the legislature to develop a cost allocation plan. The legislature had been kind enough to give the department two years to develop the plan. Budget Account 4554 would be paid through the cost allocation plan according to Mr. Iverson. Through the cost allocation process, the state would save $317,000. Each major budget would pay a portion of the funding; 37 percent would come from General Fund, 52 percent from Cost Allocation, and 9 percent from other funds. Mr. Iverson pointed out on page 5 of Exhibit D the percentages of cost allocation as a total of revenue authority.
Mr. Iverson said that the department had developed a funding policy for every single program. That amounted to approximately 40 different funding policies and those policies had been approved by the Board of Agriculture. If a program impacted the general population of the state of Nevada, then the department requested that the program be funded through a General Fund appropriation. If the program impacted a specific industry, the department asked the industry to pay for the program. If a program impacted both the general population and a specific industry, the department would ask for a 50–50 shared funding policy. Examples were the Nursery Inspection Program and the Pest Control Program. Those programs had experienced increased fees and it was the department’s goal within the next couple of years to balance the funding so that it equaled a 50–50 shared funding between the industry and the General Fund.
Mr. Iverson continued by referring to the list of significant maintenance and enhancement requests that had been included in the budgets (Exhibit D). He said that there were no more than ten major issues. Mr. Iverson mentioned that at the Legislative Commission’s Budget Subcommittee meeting in January 2001, he had provided a binder that contained information on the department’s organization and the programs administered by the department.
He said Exhibit D also contained maps that showed what the department intended to do with the brand inspectors and the new agricultural inspectors. The final picture in Exhibit D was included to remind the subcommittee what the department had done with the Comstock Wild Horse Training Program.
Mr. Iverson indicated that if the budget transfers were not approved by the legislature and the legislature believed it would be better to leave the accounts as individual budgets, the department would continue to maintain the budgets as it always had.
Chairwoman Chowning said she appreciated Mr. Iverson’s comments but that the subcommittee and its staff had just received the proposed budget changes at the hearing and would need some time to review the material. Chairwoman Chowning stated that she appreciated all Mr. Iverson’s work on the reorganization as the legislature had given the department a task to separate the budgets into categories by whether they were supported by fees from the affected industries. She stated that one reason that the Administrative account had been created was to isolate administrative costs and if fee-based costs were mixed in, she wondered how they would be separated out. She also wondered if the cost allocation process would be even more difficult to track by mixing costs. She said that the subcommittee would like to have the funding, the policies, and the cost allocation broken out.
Mr. Iverson said that the department had provided staff in the past a complete breakdown of the cost allocation and where each dollar would come from for all the various budgets to pay for Budget Account 4554, the Administrative Budget. He said a concern that should be addressed was the state’s Integrated Financial System (IFS). There would be a time when individuals could enumerate the time spent on various programs. That was not presently available in the IFS but the department had the means in its own tracking program to track the amount of money received from fees. The department also had the ability to utilize a special project code that would show exactly how the dollars were spent. Before the fee increase became effective in the Nursery Inspection Program, the department determined how much money the state and the nurseries were contributing to the budget. He said that he thought 70 percent came from the state and 30 percent from the nurseries. When that information was presented to the nurseries, they came to a consensus that they should pay half of the costs. The problems arose when year-end reversions were discussed. The department did not want to revert fee-generated money. The nurseries were currently paying more than their 50 percent share and the department did not want to divert that money back to the General Fund. He said the department would try to spend the money. For every 50 cents spent of General Funds, the department wanted to spend 50 cents of fee-based money. The department did not want to spend all the General Fund money, then start on the fee money, giving the department more to revert back. The department was attempting to spend according to its fee policy, which was 50 percent General Funds and 50 percent other funds.
Chairwoman Chowning said this was a new and different concept and she requested that Mark Stevens comment.
Mr. Stevens pointed out that the general consensus for the past 20 years had been that General Fund dollars were spent last. The department’s proposed spending plan was a dramatic departure from past practices and if it could be done with the Department of Agriculture, it would have serious implications for the amount of reversions that could be generated to the General Fund. That would affect not only that account but budgets throughout The Executive Budget. Besides that, Mr. Iverson said that there were complications that arose at the end of the year in deciding what to balance forward and what to revert. Mr. Stevens understood Mr. Iverson’s concern that he did not want to revert any more money than he had to but Mr. Stevens’ concern as the legislature’s fiscal staff was that the General Fund should receive all the reversions that it was entitled to receive. One of the things Mr. Stevens thought the subcommittee should consider was the consolidation of the accounts in order to make it easier for the agency to administer. However, in the Plant Industry account there were 24 separate funding sources and 35 separate expenditure categories and General Fund dollars were going to be commingled with numerous non-General Fund dollars in the Plant Industry account. Mr. Stevens suggested that the department could comment on the fact that the Plant Industry’s account reserve would go from virtually nothing to $1.3 million. That was a lot of money in the non-General Fund area from all of those programs. Mr. Stevens said that one option would be to set up a separate budget account for all of the non-General Fund activities and then there would be no discussion about whether the funds would revert or balance forward; the funds would just balance forward. There had been a couple of instances when the budgets were closed last fiscal year where there were some problems with what was reverted and what was not. If the department went to the structure that was recommended in The Executive Budget, it would be infinitely more complicated than it had been in the past to determine what funds would revert. In Mr. Stevens’ estimation, the subcommittee should take into consideration putting all the non-General Fund programs into a separate budget account that did not have any General Fund dollars in it so there would be no complications on what would revert and what balanced forward. All of the funds would balance forward in that particular account.
Chairwoman Chowning said that Mr. Stevens had been talking about Budget Account 4540 where reserves would go from approximately $19,000 to $1.3 million. She asked Mr. Iverson to comment.
Mr. Iverson said that he had anticipated the subcommittee’s concern and he felt that the 1999 legislature had indicated that it wanted private industry to pay its share on certain programs. He thought the legislature wanted to reduce the General Fund spending as much as possible when a program affected a particular industry. The department realized there was a complication with that plan. He said the department could do exactly what Mr. Stevens suggested although the department would need to go back to the Budget Office to restructure the budget. Mr. Iverson acknowledged there would be a significant increase in the reserve. He said the department had developed its spending plan based on what it thought the legislature, as representatives of its constituents, wanted. He felt that General Fund money should be spent on general, public issues. Fee-based money should be spent on issues that addressed a particular industry. He said that if he was a pest control operator who had just had his fees increased by 500 percent, he would not want those fees reverted to the General Fund. He would want a 50–50 shared funding.
The Board of Agriculture, the department’s policy-making body, determined that the Pest Control Operators’ Program should be a 50–50 match and that was exactly what the department had attempted to accomplish. He said that when an industry was willing to pay more for a program, it did not want its fees to revert back to the state. Mr. Iverson said he might have made a mistake when he talked to industry representatives because he told them that for every 50 cents the state spent, the department would spend 50 cents of the fee money to operate the program. At the end of the year, the department would revert back to the General Fund the state dollars that were not spent and the department would retain the fee-generated dollars so that there were funds available to start the following year. He said that theory had given the department the opportunity to make the program more effective. Mr. Iverson said he would have a problem changing the spending plan unless he was specifically told by the legislature and the Governor’s Office that he had to spend the fee-generated money first and revert General Fund dollars. He believed the best thing the department could do was to do the 50–50 match.
Chairwoman Chowning stated that the subcommittee would need to make some decisions regarding Mr. Iverson’s proposal and Mr. Iverson asked Chairwoman Chowning if it would be appropriate for the department to discuss the issue with the Budget Office. He suggested the development of one account that would be called the Fee-Based Plant Industry account and all of the fee-generated dollars would be placed in that account. Chairwoman Chowning said that would be better because otherwise the subcommittee would not be doing its job and that was protecting the General Fund. She said that the subcommittee could not have two sets of rules to be applied to different agencies. Chairwoman Chowning asked Mr. Stevens to comment.
Mr. Stevens suggested that time was getting short and if the department intended to contact the Budget Division, perhaps his office could be included in the discussions and the department could make the decision on what recommendation would go forward to the subcommittee. That might reduce the time necessary to set up the budgets.
Mr. Iverson said that he would contact the Director of the Department of Administration in an effort to set up a meeting with the department’s staff to develop a proposal. He would then contact Mr. Stevens to resolve the problems so that it would not be necessary to spend a lot of time before the subcommittee. Chairwoman Chowning asked if that could be accomplished within two weeks and Mr. Iverson answered in the affirmative.
Administration (101 – 4554)
AGRI 1 – Volume I
Mr. Iverson described Budget Account 4554 as the department’s administrative budget. There was one major issue in that budget that was very important to the state, according to Mr. Iverson. That issue brought up the same point that Mr. Stevens had referred to and that was that the department was talking about splitting a program. Mr. Iverson stated that in the interest of time, he would focus on the major issues and if the subcommittee had questions, he would answer them. The major change in the budget would be to move four individuals out of the Livestock Inspection budget (Budget Account 4546). Those four positions would be moved into Administration and they would service the entire agency as law enforcement officers. Currently, those individuals were law enforcement officers only in the Brands Program; they only dealt with livestock. Mr. Iverson said that there was a major issue in our country dealing with invasive species, bees, insects, and plants. The department would like to fund the positions with 50 percent General Funds from the Plant Industry’s budget; 25 percent from the Animal Health budget (Budget Account 4550); and 25 percent from the Livestock Inspection budget (Budget Account 4546). Those individuals would spend almost 100 percent of their time on law enforcement issues dealing with agricultural products. They would become agricultural inspectors. The state of Nevada did not have the luxury of having port of entries. Anything could come into the state. Mr. Iverson said that the subcommittee members who lived in Las Vegas were familiar with the problems in southern Nevada with imported fire ants, rats, scorpions, and a variety of things that came in with agricultural stock that was not properly licensed. Mr. Iverson said the situation was not getting any better. California was currently spending hundreds of millions of dollars fighting the imported fire ant problem.
Chairwoman Chowning asked Mr. Iverson if the department had requested enough funds, in his opinion, to accomplish all the goals of the department including education and investigation. She said that it sounded like the staff was doing a very good job and in Las Vegas she had seen the department’s representative on Channels 1 and 39. She said it appeared to her that a lot was being done in reaction to the problems but she was unsure if there was enough preventive work taking place. She asked if the proposed budgets included appropriate funding for the department’s needs. She went on to say that her son-in-law was a lineman with a telephone company and he told her about the education he had received regarding the precautions that should be taken prior to servicing properties. Closed boxes were opened very carefully to avoid injury. She asked if there was enough money in the budget to provide for the preventive activities as well as the reactive measures.
Mr. Iverson said the department had done the best it could with the dollars allocated. The 1999 legislature had been kind enough to provide enough money to start a very aggressive program and he credited the legislature with the success the department had enjoyed. If the department had not gotten the dollars it could not have accomplished as much with imported fire ants and with the bees. The department had a good education program but most of the department’s work was reactive, according to Mr. Iverson. When the department removed a bees’ nest above a school two weeks prior to the meeting, it became an issue. Mr. Iverson said that a departmental employee was in the Peace Officers Standards and Training (POST) currently and would be an agricultural inspector when she finished the program. That employee would still be working on the bee problem but would also go out on the highways for enforcement. The department believed that one of the ways to stop the problems was to have a departmental presence on the highways. Transportation was the biggest source of the problems coming into the state and the best way to stop the problems was to have department employees who understood the problems on the highways. Mr. Iverson stated, “We have to, and we do, support the Governor’s budget. Education is very, very important and it is something that will continue to grow and will continue to be something of absolute importance in Clark County.” He discussed the department’s excellent relationship with all of the local governments in Clark County.
Chairwoman Chowning asked, “Do you have enough money in the Governor’s budget, in your opinion, to accommodate all the education that is needed.” Mr. Iverson replied, “My answer to that is that I support the Governor’s budget and, yes, we have enough money, in my opinion.”
Senator O’Donnell indicated to Mr. Iverson that he needed to hear what the subcommittee should do. Senator O’Donnell stated that when the Governor crafted the budget, he crafted it on revenue sources the Economic Forum said would be available. He said that the legislature was faced with a huge deficit in the state. He referred to the March 13 Nevada Appeal that headlined a projected $33 million shortfall. Senator O’Donnell said that the Governor had crafted the budget based upon projections the Economic Forum had made. That being the case, the projected revenue numbers were not going to come to fruition. Senator O’Donnell said there were a number of fluid options available. It would take a two-thirds majority vote by both houses and the Governor’s signature for any kind of revenue enhancement. Senator O’Donnell said he wanted to know from Mr. Iverson what was needed in the department’s budget to protect the citizens of the state of Nevada. He said in order to balance all aspects of the budget, he needed to know what Mr. Iverson really thought was needed.
Chairwoman Chowning added to Senator O’Donnell’s comments that there were four three-quarter-time positions requested. She said when she drove from Nevada to California she saw far more enforcement activities going on than she saw from California coming to Nevada. She asked what, realistically, could the four three-quarter-time positions accomplish.
Mr. Iverson answered that the four positions were funded three-quarter time from a state appropriation but the positions were filled with four full-time individuals plus there would be one more in Las Vegas when a current department employee completed POST. Revising his earlier testimony, Mr. Iverson indicated that the positions would be funded three-quarters from a state appropriation and one-quarter of the funding would come from the Brands program. Mr. Iverson said the department needed the positions to inspect livestock trucks on the highways, especially with the recent outbreak of foot and mouth problems going on around the world.
Mr. Iverson said that Senator O’Donnell’s questions were wonderful and they gave the department an opportunity to explain its needs. Invasive species were major issues for the state. The spread of noxious weeds would change Nevada. They would change the wildlife and Nevada as we know it now if they were not controlled. Those problems had to be attacked and the department needed to be proactive. If approved, the department’s law enforcement officers would have the ability to patrol the highways 75 percent of their time. They would patrol I-80 and I-15 and all major routes entering the state of Nevada. Mr. Iverson said that the department did the best it could do with the funds available. He went on that as a part of the executive branch of government, it was incumbent upon him to support the Governor and his budget. He had requested the transfer of four positions from the Livestock Inspection account and an additional person in Las Vegas for the enforcement program. According to Mr. Iverson, those were major issues that had to be addressed and would get more expensive as time passed. He stressed that education was important and was the reason the department had been so successful in Las Vegas. He believed that Nevada had been more successful than any other state in the country with the Africanized bee program and that was due to the department’s tremendous educational program and the support offered by the counties.
Chairwoman Chowning asked Mr. Iverson to describe the department’s plan for the employees who would be patrolling the highways. She wanted to know whether trucks would be stopped randomly and how the department would be able to identify trucks carrying agricultural loads.
Mr. Iverson said that those employees would all be placed under the supervision of the Administrator of Livestock Identification. He, along with the nursery people, the Highway Patrol and the counties, would schedule the employees’ time on the highways. They would randomly stop agricultural trucks. Mr. Iverson said that hundreds of trucks entered Las Vegas with palm trees protruding from the trucks and those trucks needed to be stopped and the load examined. He said that the nursery industry, in a strong voice, asked the department to stop the trucks because loads were entering the state without licenses or certification. Mr. Iverson said that many of the truckloads did not go through nurseries. The trees were planted in a development without anyone ever looking at the trees. The department would attempt to stop as many of those loads on the highway as it could.
Chairwoman Chowning asked Mr. Iverson if the department had been able to stop any of the trucks on the highways to date. She stated that with the four positions the department could accomplish much more than it had in the past.
Mr. Iverson said that the department would accomplish five times more than it had in the past because there would be five times more people on the highway looking at agricultural stock than there had been in the past. He said the department’s employees had stopped trucks in the past but the inspectors had been only in the Brands Division and in the future they would have total responsibility for the inspection of all agricultural products.
Chairwoman Chowning asked whether the employees had the appropriate education that would be needed to move from the Brands Division to the inspection of all agricultural products. Mr. Iverson said the individual the department was hiring for the Chief Livestock Inspector position was a past Chairman of the Board of Agriculture. He had a broad knowledge and a degree in agriculture. The most important thing the department needed was the law enforcement experience. He said the department had experts such as the state entomologist and the state plant pathologist. The new Chief Livestock Inspector would do the scheduling and make sure that the law enforcement officers were doing everything necessary. Five people were not very many people to cover 110,000 square miles or 70 million acres. Mr. Iverson viewed the program as step one. He said Senator Rhoads had requested the department consider establishing ports of entry. He said that would cost millions of dollars to build ports of entry. California, Utah and Arizona were very fortunate to have ports of entry and they stopped a tremendous amount of stock entering those states. A lot of that stock was turned around and ended up in Nevada because the state did not have ports of entry. Mr. Iverson reiterated that the department was doing the best it could with the available budget.
Chairwoman Chowning said Nevada formerly had the same type of problem with mobile homes. There were very strict safety requirements for mobile homes in Arizona but the mobile homes entering Nevada did not have the same requirements.
Senator O’Donnell raised his concern that palm trees and other nursery stock were being purchased directly and he asked Mr. Iverson what the solution was to the problem other than patrolling the highways and stopping trucks entering the state. He also wanted to know if the department’s law enforcement officers were POST trained. He asked if the state should make it illegal to purchase nursery stock from anyone other than an approved nursery.
Mr. Iverson said it was currently illegal to buy from anyone other than registered nurseries. The stock should have been inspected before it left the nursery. Currently, in Las Vegas no trucks were being stopped and there was an outcry from the nursery industry. The large nurseries, such as Plant World, had to buy from registered nurseries. There were 792 nurseries in the state that had to buy from registered nurseries and the department inspected them yearly to be certain their stock was healthy. He said the problem was that in the new housing areas in Las Vegas, temporary nurseries appeared overnight. The department had no idea where those temporary nurseries came from and the department needed to be able to send an employee onto the site to determine where the stock had come from and whether it had been inspected. Mr. Iverson said that in one day, the department stopped approximately 50 vehicles and 30 of those did not have their paperwork with them. The truck drivers knew that they did not need to carry the paperwork when coming to Nevada. Mr. Iverson said the four law enforcement employees working the highways would awaken the truck drivers to the fact that they might be stopped. A couple of years ago, the department stopped every nursery truck coming into the state on I-80 and it only took the truck drivers about one week to conclude that they could not enter the state without a certificate. Mr. Iverson said that any major infestation would cost the state millions of dollars to cure. He referred to the department’s proposal to put law enforcement personnel on the highways as a start, a pilot program. He said he thought the department would be back next session with a report on the program and possibly asking for additional funding to increase the surveillance on the highways.
Senator O’Donnell asked Mr. Iverson how much money he would need next session. Mr. Iverson said the department would evaluate the program’s success before the next session and then report back to the next session on the needs. Hopefully, the Governor would support the department’s needs as he was sure that the Governor was very concerned about the invasive species issue in Nevada.
Chairwoman Chowning asked if Mr. Iverson had any idea what he might be asking for in the next legislative session as that would probably be closer to what the department really needed. She said she wanted Mr. Iverson to give the subcommittee a projected list of what was needed and she asked that the list be returned to the subcommittee within two weeks. Mr. Iverson agreed to provide the list.
Ms. Giunchigliani asked for clarification on whether truck drivers were required to carry paperwork. She asked whether it was just their attitude that they did not need to carry the paperwork or a statutory omission that they did not require the paperwork.
Mr. Iverson said the truck drivers were required to carry the paperwork with them but because there had only been sporadic enforcement they just did not feel that they needed to.
Ms. Giunchigliani said that maybe it was time for the two legislative transportation committees to consider the port of entry issue. She said that there had been businesses in Las Vegas frustrated several years ago because lumber that was coming in from Utah was not inspected and no sales tax was being paid. The businesses had considered doing a joint port of entry and splitting the fees or collections. She said that maybe it was time for the transportation committees to consider the issues. Mr. Iverson added that the taxation issue was a big issue. He said that palm trees were very expensive and all of a sudden, there would be a palm tree forest in a development. If the trees did not come from a registered nursery, the tax might not have been paid. He said that nursery stock in Las Vegas was a big issue.
Chairwoman Chowning explained that she had sold a tiny house for approximately $40,000 not too long ago and the house was unique because there were approximately 100 palm trees on the lot. She said the palm trees were worth more money than the house was.
Chairwoman Chowning asked Mr. Iverson to address decision unit E-300 and the one-shot appropriation for $80,000 that was to be used for the development of a statewide database of the grazing trends on public lands. She wanted to know if the funds had been used to complete the database.
Mr. Iverson said the database had been completed and the report was being finalized. The department had contracted with the Nevada Association of Counties (NACO) for the completion of the database. They had a land use specialist do the report and it should be submitted to the legislature at the end of March. He said that the department had spent $80,000 developing the system and the department would like to ensure that it was maintained. For that purpose $19,500 would be required in FY2002 and $5,000 would be required in FY2003. From that time on, Mr. Iverson believed the requirement for funding would decrease as only maintenance would be required. Mr. Iverson felt that maintaining the database would help to avoid a request for a large amount of funding in the future. Mr. Iverson said he felt the program was very worthwhile for rural Nevadans.
Chairwoman Chowning asked why the department needed more than $5,000 for maintenance if the database had been completed. Mr. Iverson said that in the first year the software and hardware would have to be purchased for the database. Chairwoman Chowning said she thought the equipment was included in the $80,000 that had already been spent. Mr. Iverson said the $80,000 was only for the development of the report. The department would need to purchase the computer and software necessary to maintain the database. Chairwoman Chowning asked how the department had developed the database without the computer and the software. Mr. Iverson pointed out that the project had been contracted out to the NACO. NACO subcontracted with Resource Concepts to develop the database. Chairwoman Chowning asked Mr. Iverson to prepare a report showing all the details on who was paid, what was spent, and what remained to be completed.
Plant Industry (1010 – 4540)
AGRI 8 – Volume I
Chairwoman Chowning asked about decision unit E-175 that would establish a program to address emergency situations that resulted from infestations of Africanized honeybees or imported fire ants. She said that to date only $2,000 had been spent and she wanted to know if $5,000 for each year of the biennium was necessary.
Mr. Iverson said the department had no way of predicting the amount needed for emergency situations. He said the department had had a tremendous relationship with some of the pest control companies in Las Vegas. Those funds would be used only on an emergency basis. He said that last week a huge nest of bees was located above a school and the department did not have time to find out who should pay for the removal. Mr. Iverson could not recall the name of the school but he said he would report the name of the school to the subcommittee. Rather than going to the school and negotiating who would pay for removal, the department took action to have the nest removed immediately. The department called a pest control operator who removed the nest with the assistance of the Fire Department. The pest control operator was paid $150. Mr. Iverson said the department had three contractors who did that type of work for them and most of the time the owner of the property paid for removal but the department had had situations where it paid the bill. In one situation, there was an elderly lady living behind the department’s office on Charleston Boulevard who had an entire wall that had to be destroyed to eliminate the bees. The animals in the neighborhood were being stung to death and the department felt that it had to eradicate the problem because of the children in the neighborhood. The fund gave the department the opportunity to spend the money when needed without going through the official contract process. In emergency situations there was no time to go out for bid. In emergencies, the department had the work completed by one of the three contractors it used and worried about how to pay for it later.
Senator O’Donnell said that it was very tenuous for the department to do what it was doing without the authority. He said that the department could be given that authority and he asked Mr. Stevens to determine whether language needed to be added in the appropriations bill that would allow the director of the department to determine whether or not an emergency existed and to use the funds for emergency purposes only. That would protect the department and the problem could be corrected.
Mr. Stevens said that he believed that the director currently had the authority to use the funds at his discretion for emergency purposes.
Weights and Measures (101 – 4551)
AGRI 22 – Volume I
Chairwoman Chowning asked the department to explain the reasons for decreasing the percentage of the expenditures that were funded through the transfer from the Department of Motor Vehicles & Public Safety (DMV&PS) from approximately 21.8 percent to approximately 15.46 percent.
Mr. Mike Nolan, representing the Budget Division, introduced himself. He said that the last session of the legislature appropriated approximately $3 million to fund activities at Lake Tahoe from the Emission Control Fund. That fund had been plagued by declining revenue, therefore, the reserve amount in Budget Account 4537 was reduced. The account had a fair amount of reserve and the Budget Office told the department to buy some equipment from the account’s reserve rather than through additional transfers from the fund and the transfer from the fund to Budget Account 4557 was reduced from 21 percent to 15 percent of the total budget for the account.
Senator O’Donnell said that on March 12, 2001, the subcommittee had been briefed by some representatives of Clark County regarding a proposition to change the Environmental Protection Agency (EPA) consortium in Las Vegas. The Clark County representatives said they were interested in doing the analysis on whether additives were added to the fuel. He asked whether that would be duplicative with the department’s work and he wondered if Mr. Iverson was aware of Clark County’s plans.
Mr. Iverson said the department had worked very closely with Clark and Washoe Counties. The department had the only fuel labs in the state and worked closely with the counties on octanes, vapor pressures, and emissions reductions. It was the department’s responsibility to make certain that the fuels burned properly in an internal combustion engine. Mr. Iverson said the department knew there was a lot of activity going on in Clark County regarding those issues but the department had been on the advisory board to Clark County and attended the meetings. His opinion was that there were two labs set up, one in Washoe County and one in Clark County, and they had very good petroleum chemists working in those labs and good equipment. It would be very advantageous to utilize the existing labs rather than to develop new, very expensive labs. He reiterated that the department worked very closely with Clark County and he would hope that there was not a duplication of effort.
Senator O’Donnell said that there was a fee proposed by Clark County and that Clark County was going to take over the job. If the department was doing the job and Clark County was doing the job, gas station owners would have to respond to the department’s inquiries and Clark County’s inquiries. Senator O’Donnell thought that the gas station owners would get irritated and the taxpayers should not have to pay for two services doing the same thing. Senator O’Donnell suggested keeping the budget item open until it could be determined exactly what Clark County intended to do and how it would be crafted. The state should not pay for the Department of Agriculture to do the same thing the county was going to do or the county should not be allowed to raise fees to do what the department was already doing.
Mr. Iverson stated that the money received all came from the Pollution Control Fund and the department could do more, according to Mr. Iverson, if Clark County would join the department. Now every gas station was sampled once a year because that was all there was time for. It took time to run the tests. He said that it was difficult to locate trained petroleum chemists who understood fuels and were certified by the American Society for Testing and Materials (ASTM). Those programs should be married, not separated.
Ms. Giunchigliani expressed her concern that the efforts would be duplicated if Clark County and the department both had programs. If Clark County chose to raise fees, they would have the revenue to do it whereas the state did not.
Senator O’Donnell said he did not know whether Clark County was talking about changing the state personnel to county personnel or what was going on.
Chairwoman Chowning said that she understood that Clark County wanted to hire inspectors but she believed the committee needed to understand Clark County’s program better.
Chairwoman Chowning referred to decision unit E-275 and asked why the department estimated the cost of attending the National Conference on Weights and Measures at $4,084 in FY2002 and $3,984 in FY2003.
Mr. Iverson said that the costs included in the budget were for two conferences. Mr. Ed Hoganson, Administrator of the Division of Measurement Standards, introduced himself and said the National Institute of Standards and Technology was a federal agency that was in the business of making sure that commerce between the states was conducted in a manner that made it easy for people to ship goods and do business. Part of the Weights and Measures Program was to perform the necessary inspections and tests that were required for commercial devices. The handbooks that were developed to determine the specifications as to how the tests were conducted were done at the national conference. As an administrator, he had the only voting position to enact the changes to the regulations or the specifications that would affect the state of Nevada.
Chairwoman Chowning asked Mr. Hoganson if that conference cost $4,000. Mr. Hoganson said the actual request that he had included in the budget was for approximately $2,400 for a one-week’s conference in Washington, D.C. The second year the conference would be in the Midwest and would probably cost approximately $200 less than the first year.
Chairwoman Chowning asked about decision unit E-720. Since the decision unit included funding for a truck and other equipment for a position approved by the 1999 legislature, she asked what the position approved by the 1999 legislature was currently using to conduct inspections. She also wanted to know what was not purchased, what was supposed to be purchased in the future, and any other details on the equipment.
Mr. Hoganson reported that the department had recognized that there was probably going to be a shortfall in the income portion of the budget due to receipt of less fee revenue than anticipated. Even though the department was allocated an inspector, the department did not purchase the equipment normally supplied and some of the test standards utilized for measuring fuel and checking scales. The equipment was still needed and the division would like to purchase the equipment in the next biennium.
Chairwoman Chowning said that $8,559 had been reverted and $39,527 had been balanced forward at the end of FY2000. Mr. Iverson answered that $8,559 had been reverted and $39,527 had been carried forward because of the fee issue. Last year, the department “messed up” on its budget and projected an inaccurate number. He said the department was approximately $100,000 short of what it should have requested. Rather than returning to the legislature for help, the department increased its workload, cut costs, and made it through the year with only $76,000 of general appropriations. The budget had been underestimated from the beginning but the department had made it through the biennium by not hiring an employee or buying any equipment for the position. The department asked the other employees to shoulder more of the workload rather than returning to ask for more funds. The employee had now been hired but the equipment had not been purchased.
Chairwoman Chowning asked what equipment the employee was using. Mr. Iverson said the employee was using an older truck. The trucks that the department was currently purchasing had boxes in the bed to carry the equipment, scales and weights. The employee had only been hired two weeks prior to the hearing and he was in the process of being trained. By the time the new fiscal year started, the department would like to be in a position to buy the needed equipment. Chairwoman Chowning asked Mr. Iverson to provide a list of all the needed equipment.
Chairwoman Chowning asked Mr. Iverson to discuss the $202,440 one-shot appropriation including a description of the items that were being requested.
Mr. Hoganson said the division performed inspections by following the protocol included in their handbooks. Specific equipment that met the standards set forth in the handbooks was required. That was especially true in testing liquids and scales. The division’s fleet of vehicles was approximately 10 to 15 years old and they had experienced maintenance problems with the vehicles. The division had five vehicles used to test dispensers at gasoline stations, two of them were vintage 1976 and 1985 models and the tanks that were on them had been transferred from vehicle to vehicle since the early to mid-1960s. They were starting to crack and leak and they were unsafe to use. Two of those tanks needed to be replaced and an additional tank was needed due to the growth in Las Vegas.
Chairwoman Chowning asked Mr. Hoganson to supply a list of the needed equipment to the staff. He said he would supply the information immediately.
Livestock Inspection (101 – 4546)
AGRI 55 – Volume I
Chairwoman Chowning referred to decision unit M-200 that requested a position to be funded with new laboratory testing fees. She asked if the department had the authority to impose the new fees or if legislation was required to impose the new fees.
Mr. Iverson said the Governor’s position on new fees was that there be no fee increases. The Governor had been supportive of the department when the affected industries supported the fee increases. The position was a half-time position in the food quality assurance program and that was a big issue currently. Mr. Iverson said he had talked to the Governor’s Office the week prior to the hearing and determined that if support was not received from the industry, the position would not be filled. However, the industries had been recently contacted and the department had a letter of support from the dairy industry, which was a major component of the fee increase. The letter indicated they would support the fee increase and, in fact, wanted a greater fee increase and have the department do additional testing for them. The department would attempt to seek support from the Cattlemen’s Association and the position would not be pursued until the Governor had given the approval to move forward.
Chairwoman Chowning asked Mr. Iverson to discuss the four livestock inspectors the department wanted transferred to the Administration account. If the positions were not transferred, there would be a shortfall in the budget and the Chairwoman asked whether the department had developed a plan to ensure that the expenditures in the account would not exceed the revenues for the account if the recommendation to support the costs of livestock inspector positions with General Funds was not approved. She also asked if the department planned to fill the Chief Brand Inspector position.
Mr. Iverson stated that the department did not feel there would be a budget shortfall if the positions were not transferred. He said the four positions to be transferred would become agricultural inspectors, not just brand inspectors. The only function they would have in Brands was as supervisors. There were 100 brand inspectors statewide who were doing part-time inspections and there would not be a shortfall. Many years ago, the department had to come back to the legislature because of a problem with Brands. If the positions were not transferred, the department would work with the industry and do what was needed to make it work. There was $375,000 in reserve and the department would make it work as it had done before if the approval was not received.
Chairwoman Chowning said that she understood there could be a shortfall of $145,000 and she asked for comments from staff.
Mr. Rick Combs said that, according to the budget adjustment submitted by the department the prior week, if the decision unit to transfer the positions and then fund 75 percent of those positions with General Funds was not approved and they stayed in Budget Account 4546, and continued to be funded by the same level of fee revenue, there would be a shortfall in the second year of the biennium.
Mr. Iverson said there would not be a shortfall in the second year. The department would eliminate a position if necessary to make the budget whole. The department needed to start collecting the head tax and felt that after the second year the head tax revenue in the budget would be increased. If the four positions were not transferred to the Administration budget where they could be used for agricultural inspections, the department would develop a plan to make sure the Livestock Inspection budget stayed whole.
Chairwoman Chowning said the subcommittee had received something in writing from Mr. Iverson that said the department would not be able to balance the budget without the transfer of the employees. If there was a change, Mr. Iverson should put in writing what the changes were and how the budget would be balanced. Mr. Iverson agreed.
Veterinary Medical Services (101 – 4550)
AGRI 67 – Volume I
Chairwoman Chowning referred to decision unit E-150 and asked whether the budget included enough funding for the care and feeding of the wild horses. She said she saw on that morning’s news that someone had rounded up some horses and planned to sell them for $200 a piece. The Department of Wildlife interceded and let the horses go. She reiterated that she wanted to know if the budget was sufficient to accomplish everything the legislature required the department to do. She also wanted to know if the Prison, Washoe County or Clark County should help fund the Athletic and Recreation Specialist position.
Mr. Iverson said that the department’s law enforcement officials let the horses go that Chairwoman Chowning was referring to. The department found the horse trap and they went to the trap in Washoe County with a Special Weapons Assault Team (SWAT) because they had heard that horses were disappearing. Mr. Iverson said that he felt the prison position was a very positive position. The position was transferred from the prison to the department in October 2000, so the program could begin. It was a way to get horses adopted. Every horse the department caught had been adopted. The department would have another adoption on March 31 and the inmates in the program would actually ride the horses into the arena. The legislature had given the department the responsibility for 1,000 horses in northern Nevada. When the position was filled, Mr. Iverson thought the department could make money on the sale of the horses, however, he had come to realize that making money on wild horses was an extremely hard thing to do. Even though the horses were ridden into the arena, buyers would only bid $200 for them although the horses were worth much more than that. Mr. Iverson said the department had no idea what the program would cost. He said that at any time the department could be told to remove 200 horses from the Virginia Range within a couple of weeks if the land owner issued an ultimatum to remove the horses. If that happened, the department would have to return to the legislature asking for money to feed the horses. Currently, the department was budgeted for approximately $18,000 and in previous years the budget had been $25,000. Mr. Iverson said that funds had always been depleted. The department was fortunate because the prison charged only $2 per day but if the department had to take care of more horses, it would have to return for more money.
Chairwoman Chowning said the proposed budget had been reduced from $25,000 to $18,000 and in previous years the department had spent every bit of the $25,000. That indicated a problem. She asked if some other entity would step up and provide additional funding. If not, why had the department not requested adequate funding.
Mr. Iverson said no one was expected to step up and provide funding. Mr. Iverson said the reduction had been made in the budget in a balancing effort. He said that he supported the Governor’s budget that had recommended the $18,000. Chairwoman Chowning asked if the horses would be forced to starve. Mr. Iverson said that the department would have alternatives if it needed additional funding. It could go to the counties and ask for additional funds or the department could request funding from the public. It could also return to the legislature to ask for additional funds.
Mr. Nolan pointed out that out of the initial $25,000, $7,000 or $8,000 was spent for corrals and fencing and that would be a one-time expense. He believed that the budget included the funding requested for feeding expenses that had been incurred in the past.
Chairwoman Chowning asked that the budget be reviewed to ascertain whether it included enough for the care and feeding of the horses. She said that 85 percent of the cost of the Athletic and Recreation Specialist position was to be paid from the General Fund and she asked the department to try to find another source of funding for the position.
Chairwoman Chowning then addressed the FY2000 over-expenditure in the budget and the appropriateness of using the revolving account to make up for over-expenditures in other accounts. The department had to request a supplemental appropriation for the account and the subcommittee wanted to know what steps had been taken to ensure that supplemental appropriations were not necessary in the future because it was specifically against the law.
Mr. Iverson asked if Chairwoman Chowning was referring to the $4,990 supplemental appropriation recommended in The Executive Budget and Chairwoman Chowning answered in the affirmative. Mr. Iverson said that he was sorry for the over-expenditure. It was a mistake and he could point fingers at others but he preferred to point the finger at himself. It was his responsibility. He said that a bill had been submitted and the department thought it had been paid and it had not been paid. The charge was from a laboratory in Washington for animal disease issues. The department received the returned bill too late to pay it and the money was paid from a $10,000 account. The department made a mistake but the bill had gotten paid. Mr. Iverson said that the department had implemented a program that was a much more detailed tracking program. Mr. Iverson said the department was very serious about the program and had not made that type of mistake in five years. That was the first time that Mr. Iverson knew of that the department had been in that position. The mistake had put the department on alert that it had to be more careful and the department had a tracking program to track every dollar spent. The department also used the state’s system for tracking expenditures. Mr. Iverson went on to say that the division had had an employee in Ely who became ill and retired unexpectedly. Upon the employee’s retirement, the department had to pay the overtime, annual leave and sick leave costs. That had not been budgeted because the department had no idea it was going to happen.
Predatory Animal & Rodent Control (101 – 4600)
AGRI 67 – Volume I
Chairwoman Chowning asked about a position located in Carson City. Her understanding was that there was no clerical support for the position. She questioned whether the position should be eliminated from Carson City and sent to Reno or should everybody from Reno move to Carson City. She did not understand why the position would be separated from the clerical support. She asked Mr. Iverson to provide information on that issue later as it was not part of the current hearing.
Chairwoman Chowning said that the Ely District Supervisor position was converted to a federal position because the position required biological knowledge and experience. She asked why the federal government would not fund the position if the person hired to fill the position would be a federal employee.
Mr. Robert H. Beach, a federal employee with the United States Department of Agriculture (USDA), introduced himself and said that he oversaw the Wildlife Services Program. He said the position that had been converted was the position discussed earlier in the hearing. That employee had become ill and retired unexpectedly. The department determined that it could hire wildlife biologists with previous training and experience in the type of work from other states but could not find an employee from within their program. In order to avoid retraining, it was more advantageous to hire a federal employee. The program was funded 50 percent with state funds and 50 percent with federal funds. The state had three districts and currently there was one district without a supervisor because of a shortage of funds. In order to maintain the supervision, the department needed to transfer the state money to the federal position. The department continued to accomplish the same things; the only difference was that a federal employee was in the position. Mr. Beach did not believe that the transfer changed anything other than the fact that the position was paid for through the federal program.
Senator O’Donnell asked if Mr. Beach was a federal employee paid for by the federal government who supervised state employees. Mr. Beach answered that he was a federal employee and stated that one-half of the employees in the Nevada Animal Damage Control Program were state employees and one-half were federal employees. There was an agreement that put the state employees under the supervision of the federal program. Wildlife Services, on the federal side, oversaw the employees.
Senator O’Donnell asked why the agreement existed. Mr. Beach said that there was a national program for wildlife services that did the resource protection and the agreement existed because the federal employees had the expertise in the field and the research facilities. Senator O’Donnell interjected that actually the federal program did not have the employees, it had the state’s employees that had the expertise. Mr. Beach said that they had both because 50 percent of the employees were state employees and 50 percent were federal employees. There had been one supervisor that was a state employee that supervised both federal and state employees. When recruiting for employees, they found the best expertise available in the federal program because the federal government had a training program across the country. The employee came in from another district in California so the expertise in the program was maintained.
Senator O’Donnell asked Mr. Beach how long the staffing of the program had been handled in that manner. Mr. Beach was unsure but it had been done since the Predatory Animal and Rodent Control (PARC) committee began. The Sheep Commission had worked in cooperation with the USDA that at that time was Animal Damage Control. It had been done for decades.
Senator O’Donnell indicated that he would like the subcommittee to look at the responsibilities for the program more carefully and find out if there was a separation of state and federal government responsibilities. He wanted to know whether the state was paying too much money or not enough money. He asked staff to look into the program and its funding.
Chairwoman Chowning indicated that one-half of a position had been funded by Clark County during the 1999-2001 biennium and she wanted to know if Clark County was still funding one-half of the cost of the position. She also asked for a description of the costs associated with the position that had been transferred from The Woolgrowers’ Predatory Animal Control account by the 1999 legislature.
Mr. Beach said the department received enough money from the sheep tax from the Sheep Commission to pay for one-half of one position. In reality, because the tax came from funds generated all over the state, it was not really funding one position; it was funding parts of many positions. The department considered that if the sheep tax dwindled down to where the one-half position was lost, it would endanger the position. In order to prevent that from happening, the department would rather have the sheep tax going into the budget that covered the whole state and if it was lost it would not endanger the half of a position. The department had asked that the sheep tax money go into the part of the budget that was designated for aerial hunting and the money that was in the aerial hunting program go to support the position.
Chairwoman Chowning asked if Mr. Beach was requesting a change in policy since that was not the way the position was currently funded. Mr. Beach answered affirmatively.
Senator O’Donnell found it odd that a federal government employee was appearing before a legislative subcommittee telling the subcommittee where the state money should be allocated. Mr. Beach said that he was a federal employee but he served as a division head for the state’s Resource Protection program at no cost. That enabled the state to use the three airplanes that were available in the federal system. The programs worked hand in glove, state and federal, using the available resources.
Senator O’Donnell said he would like to have an understanding of what was going on as it seemed “bizarre” to him.
Mr. Iverson communicated that even though Mr. Beach was a federal employee he served as the Administrator of the Division of Resource Protection because there were state employees involved and the department needed to be certain that there was some administrative support of those individuals.
Chairwoman Chowning said that if there was a change being requested, she wanted Mr. Iverson to talk with the subcommittee’s staff.
Chairwoman Chowning asked Mr. Iverson to discuss decision unit M-200 with the staff. The subcommittee needed to know if the Division of Wildlife supported the use of its funds for a new one-half time position.
There being no further business, the meeting was adjourned at 10:59 a.m.
RESPECTFULLY SUBMITTED:
Lila Clark
Committee Secretary
APPROVED BY:
___
Assemblywoman Vonne S. Chowning, Chairwoman
DATE: ___