MINUTES OF THE

SENATE Committee on Finance

 

Seventy-First Session

April 25, 2001

 

The Senate Committee on Financewas called to order by Chairman William J. Raggio at 7:57 a.m., on Wednesday, April 25, 2001, in Room 2134 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Attendance Roster.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

COMMITTEE MEMBERS PRESENT:

 

Senator William J. Raggio, Chairman

Senator Raymond D. Rawson, Vice Chairman

Senator Lawrence E. Jacobsen

Senator William R. O’Donnell

Senator Joseph M. Neal Jr.

Senator Bob Coffin

Senator Bernice Mathews

 

STAFF MEMBERS PRESENT:

 

Gary L. Ghiggeri, Senate Fiscal Analyst

Bob Guernsey, Principal Deputy Fiscal Analyst

ElizaBeth Root, Committee Secretary

 

OTHERS PRESENT:

 

Dennis Colling, Chief, Administrative Services Division, Department of Motor             Vehicles and Public Safety

Don Hataway, Deputy Director, Budget Division, Department of Administration

Frank Lewis, Public Citizen

Frank Daykin, Public Citizen

Dennis Bryan, Commissioner, Commission on Mineral Resources, Department of             Business and Industry

Alan R. Coyner, Administrator, Commission on Mineral Resources, Department of             Business and Industry

Patricia Cafferata, District Attorney, Esmeralda County

Andrew A. List, Lobbyist, Nevada Association of Counties

Janine Hansen, Lobbyist, Nevada Eagle Forum

Norman C. Robison, Senior District Judge, Supreme Court of Nevada

Edmund K. Rybold, Jr., Commander, U. S. Navy, Executive Officer, Naval Air             Station, Fallon, Nevada

Kami L. Dempsey, Lobbyist, Las Vegas Chamber of Commerce

Peter D. Krueger, Lobbyist, Nevada Petroleum Marketers and Convenience Store Association

Daryl E. Capurro, Lobbyist, Nevada Motor Transport Association

Carole Vilardo, Lobbyist, Nevada Taxpayers Association

Keith L. Lee, Lobbyist, Southwest Airlines

F. Alex Ortiz, Lobbyist, Clark County

Stacy M. Jennings, Executive Director, State Dairy Commission, Department of Business and Industry

Doug Busselman, Lobbyist, Executive Vice President, Nevada Farm Bureau             Federation

Dave Coon, Vice President, Sales, Anderson Dairy, Las Vegas

Kevin W. McLaughlin, Advance Milk Commodities

Jim Breslin, General Manager, Model Dairy, Reno

Wm. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau

Michael O. Spell, CPA, Audit Supervisor, Audit Division, Legislative Counsel Bureau

Scott K. Sisco, Interim Director, Department of Museums, Library and Arts

 

Chairman Raggio:

We will open the hearing on Assembly Bill (A.B.) 236.

 

 ASSEMBLY BILL 236:  Makes appropriation to Department of Motor Vehicles and Public Safety for funding of shortfalls resulting from 1998 reclassification of personnel. (BDR S-1306)

 

Dennis Colling, Chief, Administrative Services Division, Department of Motor Vehicles and Public Safety:

Good morning, Mr. Chairman and members of the committee.  In 1999 the Legislature passed Senate Bill (S.B.) 517.

 

SENATE BILL 517 OF THE SEVENTIETH SESSION: Makes supplemental             appropriation to Department of Motor Vehicles and Public Safety for             additional expenses for registration of motor vehicles. (BDR S-1446)

 

Mr. Colling:

This bill provided a Fiscal Year (FY) 1999 supplemental appropriation to the old Motor Vehicles Registration Division.  At this time we are asking an additional $31,015.09 to be added to that appropriation.  The former registration division is no longer in existence and we would ask this money be placed in budget account 201-4741, which is the central services budget. 

 

Chairman Raggio:

The proposed bill does not provide for that.  The bill provides for an appropriation from the State Highway Fund to the Department of Motor Vehicles and Public Safety (DMV&PS).  Committee staff will have to advise us as to how to proceed.

 

Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau:

What DMV&PS will be doing is depositing this money into its central services budget account and then reverting it back into the State Highway Fund.  This complete transaction is a housekeeping endeavor based on not having sufficient funds to make the payments back into the appropriate fiscal year.  I believe the payments have already been made to the employees in question.  This merely trues up their bookkeeping matters.

 

Chairman Raggio:

Committee staff, do you have any objection to processing the bill in this form?

 

Mr. Ghiggeri:

No, Sir.

 

Chairman Raggio:

Mr. Colling, do you understand that?

 

Chairman Raggio:

This is included in the budget.  Mr. Hataway, do you have any objections?

 

Don Hataway, Deputy Director, Budget Division, Department of Administration:

No, Mr. Chairman.

 

Chairman Raggio:

Are there any questions from the committee?  There being no one else to be heard on this bill, we will close the hearing on A.B. 236.  At this time, we will open the hearing on S.B. 106.

 

SENATE BILL 106:  Requires division of minerals of commission on mineral resources to identify and map certain roads. (BDR 35-1040)

 

Frank Lewis, Public Citizen

I am a citizen residing in Reno, Nevada, and have interests in several mining districts in Nevada that have to do with private deeded properties.  My handout (Exhibit C) details my support of S.B. 106.  In the past I have traveled the properties of the Federal Bureau of Land Management (BLM) terrain, as well as Forest Service lands on roads that existed prior to 1976.  These roads were built pursuant to 1866 land laws that granted those who built roads across federal lands a “grant of easement,” which is a property right.  Attached to my notes (Exhibit C, page 6) is a summary of the laws prepared by Frank Daykin. 

 

This law was repealed by The Federal Land Policy and Management Act of 1976, which also preserved all of the access developed across roads prior to 1976.  These roads are essential to afford transportation on federal lands so elderly people and people with disabilities can go on the land and enjoy them, as well as have access to private deeded parcels.  The idea that some or all of the land should only be available to the young and healthy is un-American and discriminatory against elderly and crippled people.  The federal government should stay out of it.

 

The right of access is clearly one of the rights that accompany any piece of real property, where a road, trail, or way was constructed or used.  The Forest Service and BLM have been closing some of these roads, taking away the peoples’ rights to use them.  There are people who would like to close most of these roads.  Utah has appropriated $3 million for each of the next 10 years to bring suits against the federal government where they are trying to close roads.  They are also appropriating $300,000 per year to give grants to counties to work on their own roads. 

 

Revised Statutes 2477 (RS 2477) was adopted in 1866 and is a very short law, only one sentence long. It states, in its entirety, "the right-of-way for the construction of highways across public lands not otherwise reserved for public purposes is hereby granted." RS 2477 protects every road that exists on public land to private property built prior to 1976. 

 

In S.B. 106 we have asked for $50,000 to commence mapping these roads.  I realize that is not very much money, but we were afraid to ask for more, knowing the financial shortage of funds in the state.  I would be happy to answer any questions.

 

 

 

 

 

Frank Daykin, Public Citizen:

I would add that this body has forwarded to the Assembly, and it is presumably on its way, Senate Joint Resolution 1, which would urge Congress to pay for this mapping. 

 

SENATE JOINT RESOLUTION NO. 1:  Expresses support of Nevada Legislature for amendment to Federal Land Policy and Management Act of 1976 to require identification, mapping and recognition of certain rights of way across land administered by Federal Government. (BDR R-1039)

 

Mr. Daykin:

Mr. Lewis said S.B. 106 will cost us something, but as to relying entirely on the federal government, I would remind us of what Thomas Jefferson said: “If we wait for word from Washington when to sow and when to reap, we shall soon want bread.”  So, we should do this ourselves.

 

Chairman Raggio:

We shall take special note of that, Mr. Daykin.  Is there anyone here from the Division of Minerals, or Commission on Mineral Resources?

 

Dennis Bryan, Commissioner, Commission on Mineral Resources:

Over the last 30 years when I began my career, the philosophy of the federal government regarding public lands was one of multiple use.  Over that time it has changed to a lot of single-use applications.  The erosion of access to public lands does not abate every year.  It seems to get more stringent.  Just this past year, look at what happened to the Black Rock area.  In Washoe County they withdrew 160,000 acres from mineral entry.  Where will it all end? 

 

I fear that down the road, in 20 or 30 years, we may regret the opportunity that we had to make sure the roads on public lands remain open.  It seems to me there are authorized officers in the Forest Service and the BLM that can close roads at any time.  I recommend the Legislature look favorably upon this bill and the request for $50,000 funding.  This is an inadequate amount to do a completely thorough job.  We can, however, begin to identify where the information lies.  Down the road it would be a start to identifying these roads and keeping them open for the public.  It is not just for the miners, but also for the “recreational people” and everybody that uses public lands in Nevada.  I thank you for hearing my testimony.

 

Alan R. Coyner, Administrator, Commission on Mineral Resources, Department of Business and Industry:

I am here to indicate a willingness on the behalf of the division to take on this chore should the Legislature approve this bill.

 

Chairman Raggio:

As you know, this matter is not in the budget.  It is an additional appropriation and with the projections coming in, additional funding is probably not going to occur.  This appropriation request is for $50,000.  What would you be able to accomplish with that appropriation if funding were approved?

 

Mr. Coyner:

The start of the program would be one of gathering information from the counties because some counties have begun this effort.  It would be an information‑gathering exercise to determine which counties have done RS 2477 mapping, to determine what level of credibility that has, and to start a database.

 

Chairman Raggio:

Let us look at a worst-case scenario because the outlook is not bright for funding matters that are not in the budget.  What would you be able to do, within your available resources, toward this aim if there were no funding?

 

Mr. Coyner:

We currently have no mandate to start this program.

 

Chairman Raggio:

I understand that, but this is a worthwhile program.  What can you do if we cannot fund this?

 

Mr. Coyner:

Without any funding to start this program, we would not put any effort towards it.  Our requirements to close abandoned mines and other issues within the division are our priority.

 

Chairman Raggio:

Are there any questions from the committee?

 

Senator Jacobsen:

Speaking for Douglas County, I have the same question the Chairman has.  Where would you start?  Would you start in Douglas County or all over the state?

 

Mr. Coyner:

My focus would be to start on those counties that have put forth effort to begin to lay down a framework of where these roads might be.  There has been work done towards the project.  Counties like Clark County, Esmeralda County, and Washoe County that have devoted resources to this project would be the counties in which to start this program.

 

Mr. Bryan:

Another example is this money would allow the division to identify the sources of information that could be used in the future to identify these roads.  For instances, old government maps, U.S. Geological Survey maps, topological maps from the vintage 1950s, and BLM files show many of these roads.  These sources of information could be gathered and included in a database. 

 

Senator Jacobsen:

You are indicating only to map, not to sign them in any manner?

 

Mr. Coyner:

This bill does not require any kind of signage function.  It is strictly a mapping function.  The information is accumulated and, at some point in the future, submitted to the BLM and Forest Service for validation of that right-of-way.

 

Senator Jacobsen:

Those mappings would be available to the public?

 

Mr. Coyner:

Certainly.

 

 

 

 

Chairman Raggio:

We also have a letter from Mr. Philip Bender, whose testimony supports S.B. 106 and will be made part of the record (Exhibit D).

Senator Neal:

Is the attempt here to determine the status of the roads, rather than identify the roads?

 

Mr. Coyner:

Yes, the status of the road is in question, as well as ownership or who occupies that right-of-way.  Part of that validation process is to make that determination.  Again, the objective is to identify these roads, which are currently being closed and are disappearing off maps.  We need to establish that right-of-way that existed prior to 1976.

 

Senator Neal:

If you do not have usage of the road, why would it be necessary to have a map of it?

 

Mr. Coyner:

Usage is a temporary item in terms of what we may not be using today that we may need to use in the future.  It is a property right that was established in the past and we, as a government, are exercising or claiming that right.

 

Senator Neal:

Was it a property right based on usage?

 

Mr. Coyner:

Yes.

 

Senator Neal:

So, if you do not have usage of the property, a person may lose the right.

 

Mr. Coyner:

As I understand the process, the usage would have to be abandoned by the county.  Mr. Daykin might properly respond to that question in greater detail.

 

Mr. Daykin:

The property right was granted by the U.S. Congress in 1866 and expressly preserved with the Federal Land Policy and Management Act of 1976.  As has been indicated, it is not a matter of not using the land for a year or two.  There would have to be an affirmative abandonment of the land, as with any other property right.

 

Senator Neal:

How would abandonment be determined?  I have seen roads that have been cut across and have a sign stating, “Travel at your own risk.”

 

Mr. Daykin:

That would neither constitute nor demonstrate an abandonment because a person may enter private property and do damage, but does not thereby deprive the owner of that property.  It demonstrates a desire not to have the road used, but someone might desire that I not plow my cornfield.  I still have the right to plow it. 

 

Senator Coffin:

I was going to add that I attended the hearing in the Senate Committee on Natural Resources.  For the benefit of this committee, since I am in the map business, let me explain.  The federal government has been revising maps of the United States.  They have done their best to do a good job at mapping, concentrating mostly on topography and leaving off cultural features.  In many ways, cultural features include roads, but they are primarily leaving off old mining properties and dwellings that previously had been occupied.  These dwellings were evidence of previous occupation and usage that now does not exist. 

 

These cultural features have been left off for a couple of reasons.  One is that people were worried about folks pillaging and robbing the landscape of valuable artifacts.  I understand their thinking, but a good rock hound or ghost town hunter can find them anyway.  In leaving these items off maps, roads and cultural features have been deleted from the new maps.  This has, in essence, buttressed an argument for lack of usage because they just do not show on any map.  That is what I learned from the miners and prospectors I deal with in my business.  They are very frustrated.

 

Chairman Raggio:

Is there any one else who would like to speak on this bill?

 

Patricia Cafferata, District Attorney, Esmeralda County:

I would like to comment on S.B. 106.  This bill is very important to the rural counties.  As you know, we use all those roads for access for hunting, fishing, camping, hiking, and other recreational activities, in addition to mining and agriculture.  What we really need to do is prove that these roads were in existence before 1976.  A lot of these roads are mapped, but many are not. 

 

A few years ago Esmeralda County went through that process and designated some of its roads as RS 2477 roads.  They did not do all of them.  What the committee needs to spend the money and time on is the legal research to see when these roads were established.  That is a time-consuming effort.  The Department of Transportation has maps on many of these roads.  It is the legal research that needs to be accomplished.  Going to the counties, looking at old maps, olds deeds to establish that date.  If the committee were going to spend $50,000 for a pilot project, I suggest taking a county such as Esmeralda County, and going through the process to see what it takes to establish all of the roads that may be established as RS 2477 roads.  Esmeralda County has started that process.  Your $50,000 would be better spent conducting research.  Then a person could take that formula, procedure, or process and apply it to the other counties. 

 

Clark County and Washoe County have completed some work on RS 2477 roads, but the counties that are hurt the most are the rural counties.  If the committee could find the money, Esmeralda County would be a good start to spend the money for that project.

 

Chairman Raggio:

Your suggestion would be that money appropriated be earmarked for that specific reason, rather than what was previously discussed here by other interested parties.

 

Ms. Cafferata:

That is correct, Mr. Chairman. 

 

 

Chairman Raggio:

Any questions of Ms. Cafferata?  Are there any other speakers?

 

Don Hataway, Deputy Director, Budget Division, Department of Administration:

We are neither for nor against this particular proposal, but I have three observations.  The first is that the Commission on Minerals is a self‑supporting organization that derives its income from fees charged to the industry it regulates.  We are concerned about the possible precedent of placing General Fund appropriations into that agency. 

 

The second issue, which Ms. Cafferata previously alluded to, is the belief that $50,000 would cover the state that we have to research in this project.  We would prefer a pilot project, whether it is Elko County or Esmeralda County, just to see how much time and effort this would take. 

 

The third concern is a fundamental review process.  If the committee has an appetite to fund this project, I believe the Division of State Lands is a more appropriate agency to handle this project.  They have worked with these counties through the years and have a database on certain aspects of land use in these counties.  They are the official state interface with the federal government, working with agencies such as BLM and the Forest Service.  The Division of State Lands would be the most appropriate agency to receive this money to conduct the project.

 

Chairman Raggio:

At this point in time, the Governor is not recommending any additions to the budget expenditures.  So, we are limited as to how to implement funding.

 

Senator Rawson:

Mr. Hataway, could there be an appropriate rationale for using some money from an environmental restoration, or is there not something set up regarding the restoration of property following mining leaving the state? 

 

Mr. Hataway:

There are some environmental funds.  We would have to talk to the State Department of Conservation and Natural Resource to see whether this type of aspect might fall into that category.  That may be an alternative.  The funds are there, Mr. Chairman, but whether they can be used for this particular purpose requires inquiry.

 

Andrew A. List, Lobbyist, Nevada Association of Counties:

We are in support of S.B. 106.  Should the $50,000 be appropriated, we think it would be well spent.  As you are well aware, the counties and the state have already expended money trying to document some of these roads.  Some of these roads get tied up in lengthy lawsuits and can become quite costly.  A pilot project could be well spent documenting the history of any questionable road that may be an RS 2477 road.  The $50,000 would be well spent and would save money on future litigation.  I do not have an opinion on whether the money is spent in any given county or which county to begin with. 

 

As far as which agencies should do this pilot project, this was the subject discussed in the Senate Committee on Natural Resources.  That committee decided the Division of Minerals would be best suited for this project for reasons that are on the record. 

 

Janine Hansen, Lobbyist, Nevada Eagle Forum:

We supported this bill in the Senate Committee on Natural Resources.  One thing that is important to remember is these roads are the lifeline for our rural counties.  Because of the economic hardships created by the federal bureaucracy in our rural counties regarding mining, ranching, and recreational activities, we are losing a tremendous amount of tax dollars.  It is also harmful to the local communities.  They are now losing population and this is a small amount of funding to help establish these roads.  There has been a moratorium on a federal level in recognizing these roads.  Nevada needs to take the first step in recognizing the problem and the tremendous tax base Nevada is losing.  I encourage you to support this measure because it will cost far less than what we will lose if we do not do it.

 

Chairman Raggio:

Thank you. At this time we will close the hearing on S.B. 106.  We will open the hearing at this time on S.B. 181.

 

SENATE BILL 181:  Makes various changes to retirement benefits of justices of supreme court and judges of district court. (BDR 1-518)

 

Norman C. Robison, Senior District Judge, Supreme Court of Nevada (Prepared Speech is Exhibit E.):

S.B. 181 is basically the same bill that was passed by the Senate in the last legislative session.  It did not pass the Assembly because of a decision to perform an interim study of the justices’ and district judges’ pension plans.  The interim study resulted in A.B. 232, which is pending in the Assembly.

 

ASSEMBLY BILL 232:  Establishes judicial retirement system for certain justices of             the supreme court and district court judges. (BDR 1-208)

 

Judge Robison:

I understand the Governor set aside approximately $14 million for a “one-shot” funding for that Assembly bill.  With the economic uncertainties currently faced by the state, it is unknown at the present time whether A.B. 232 will be considered and processed during this legislative session.  If enacted, its effective date would be January 1, 2003.  Two of the provisions of S.B. 181 are contained in A.B. 232 and the fiscal impact of S.B. 181 is less than $16,000 per year.

 

Currently, the Supreme Court Justices and district judges are equally divided between two retirement plans.  The first, Public Employees Retirement System of Nevada (PERS), is a funded plan.  The other is the judicial retirement plan, which is basically “pay as you go,” funded each biennium by the Legislature.  The Committee to study a Pension Plan for Certain Justices and Judges recommended funding the judicial plan and placing it under PERS.  The Nevada District Judges Association requests that S.B. 181 be passed to make the two systems more equal in the two years that are not covered by A.B. 232, if funded and enacted.

 

PERS judges currently accumulate benefits at 2-1/2 percent per year beginning in year one with a 75 percent benefit in 30 years.  Judges in the judicial plan earn 4.16 percent per year beginning in year five and reaching 75 percent after 22 years of service.  In the first four years of service, a judge on a retirement plan receives no credit.  At the end of a 6-year period, a judge participating in the PERS program has 15 percent vested and a judicial plan judge currently has 8.2 percent.  This bill would change the percentage of accrual to 3.4091 percent for a judicial plan judge beginning in year one.  A judge would then have 20.4 percent vested after six years. 

The fiscal impact, as noted in Attachment A of the fiscal note for S.B. 181, is an amount estimated at $6,285 per year.

 

Chairman Raggio:

According to the fiscal note to S.B. 181, the combined total, including Attachment A and Attachment C is $22,077 for each year of the biennium.  Is that correct? 

 

Judge Robison:

That is correct.  It does three things.  First, it more fairly equalizes the two pension plans.  Second, a PERS judge is allowed to take a reduced amount under Option 2 and provide for the spouse after death.  In the judicial plan, this option is not available.  The surviving spouse receives $450 per month, if not remarried, and at age 60 is entitled to receive the widow’s allowance of $2,500 per month.

 

Last, the Legislature provided an incentive to encourage judges that had retired to take senior status and help out, where needed, if a vacancy occurs.  This benefit allowed a recalled judge to earn additional pension benefits for each year of additional service.  This legislation, as enacted, failed to include judges in the PERS system.  There are two PERS retired judges that currently sit as needed and they receive no benefits, because this would not be feasible under the PERS plan.  This bill would correct that oversight and allow the PERS judges to accrue the same increase as judicial retirees.  The fiscal impact of this proposal, as indicated in Attachment C, is estimated at $16,000 per year.

 

Chairman Raggio:

So that we on the committee understand this, presently PERS judges are those who were under a PERS plan holding some other office in the state.

 

Judge Robison:

If judges were vested after five years and in PERS, they could elect to stay in PERS.

 

Chairman Raggio:

Do they make a personal contribution?

 

Judge Robison:

No, it is entirely contributed by the state.  Several years ago legislation was passed for a state funded retirement contribution. 

 

Chairman Raggio:

This would be requested particularly in the event A.B. 232 is not processed.

 

Judge Robison:

First, A.B. 232 contains two of the three provisions in S.B. 181.  So there would be no conflict.  Also, if A.B. 232 is processed, it still does not become effective until 2003, and any judges who wanted to retire and take the second option in the meantime, would not be able to do so. 

 

Chairman Raggio:

Any questions of Judge Robison?  There being no question or others to testify on this bill, we will close the hearing on S.B. 181.  At this time we will open the hearing on S.B. 309.

 

 

 

 SENATE BILL 309:  Makes appropriation to Division of Emergency Management of Department of Motor Vehicles and Public Safety to purchase equipment that will provide emergency power supply for pumps that push fuel into Clark County. (BDR S-1158)

 

Senator Bob Coffin, Clark County Senatorial, District No. 3 (Senator Coffin’s

prepared speech is Exhibit F):

Thank you, Mr. Chairman and members of the committee for consideration of this bill.  S.B. 309 is one of those measures that does not attract a lot of attention until you need it.  If you pulled into a gas station and could not buy gasoline, you would want to know why.  Unfortunately, in Nevada we are at the tail end of thousands of miles of pipelines that service our state.  We are in jeopardy of an urgent situation, especially facing potential future power shortages even worst than occurred this past winter.

 

We are in the lull of the storm at this point.  There are no promises in the situation in California.  What we are here for is the second consideration of a bill, the first hearing having occurred in Senate Committee on Commerce and Labor on April 13, 2001. In order to be exempt, this bill needed to be amended and passed and sent to this committee to remain exempt.

 

On January 17, 2001, I learned from the CalNev Pipe Line Company that, as a result of power outages in California, our fuel supplies in Nevada were seriously depleted.  Southern Nevada is served by two pipelines: one, an 8-inch line, which exclusively carries Jet-A fuel for McCarran International Airport; and the other a 14-inch line, carries gasoline, diesel, aviation gas, and Jet-8 (military) fuel for Nellis Air Force Base.  Northern Nevada is served by a single 8-inch line, which carries all of the above fuel to the Truckee Meadows, surrounding counties, and Jet-8 fuel to Fallon Naval Air Station.

 

Our entire economy in Nevada is dependent on three hollow threads of steel linking us to the California refineries.  I was contacted by certain individuals indicating that Nevada was dangerously low on gas.  Our alarm bells were not ringing because the lights had not yet gone out and the gas pump had not yet gone dry at the tank. 

 

We are elected to try to accomplish the people’s business when we can and when we see there is a need.  In this case that is the origin of this bill.  To recap, on January 17, 2001, I learned we were down to two days of gasoline in Las Vegas, no days of diesel, other than the usual inventory held for purchase, and I learned that McCarran International Airport had notified airlines they would have to either start bringing in fuel and/or pay $1 million so the airport could hire trucks to truck jet fuel into the airport.

 

I felt there was only one person that could be of assistance.  I called the Governor and, fortunately, they verified the information with the people who had contacted me.  Given the gravity of the situation, Nevada Governor Guinn contacted California Governor Davis and started a process of diplomacy that saved southern Nevada from disaster.  We were in crisis at that point.  We were two days from catastrophe.  Two days from the economic engine of this state running down.  It was not as bad in northern Nevada, but it could have been.  For some reason, the pipeline companies had enough inventory in northern Nevada and people were not as worried.  Although the reserves were running down, they were not at the same danger level as in southern Nevada, where the pipe tank farm is located.

 

I initiated legislation the weekend the crisis was known to me.  At that time, I requested a bill not knowing what we were going to do or what it would cost to fix this dilemma.  One of the calls I made was to Bill Bible, the Executive Director of the Nevada Resort Association.  We began brainstorming, and he called me back later that evening and said, “Have you thought about putting temporary generators on that line, so that when the power fails, it can be boosted up as if it was not a problem?”  I told him I had not thought about that because my main idea had been wheeling power down from plentiful power in northern Nevada. 

 

That ran into territorial problems relating to franchises in California and Nevada.  So that idea fell through.  We have worked hard in the past three months trying to find an alternative.  We cannot find a better idea than the bill before this committee. 

 

The Kinder Morgan Energy Partners (Kinder Morgan Pipeline), which owns most of the pipelines in the West, has since purchased CalNev Pipeline Company.  I will let Kinder Morgan Pipeline testify if they have chosen to appear here today.

 

The point is we are in danger.  If we do not act soon, we will have a catastrophe on our hands.  This bill is no longer an appropriation bill, but would be considered a tax bill.  We do not use the word “tax” in this bill, just as we do not use the word in other legislation and other areas where we have managed to stay constitutionally correct in relationship to Article 9 of the Nevada Constitution, which requires that money from fuels go to the State Highway Fund.

 

We feel that after the Legal Division of the Legislative Counsel Bureau (LCB) staff has looked at this bill, and our bond counsel has concurred, that if we were to levy a fee for two years, we would be able to pay for the acquisition, installation, permitting, and maintenance of a system and have that up and running rather quickly.  That may not be possible for use this summer, but certainly by late summer, using temporary generators, which would run off of fuel that comes up the pipeline.  In effect the source of fuel would be the pipeline pumped into day tanks, which would sit next to temporary generators of sufficient capacity to continue the flow of fuel.  Permitting is not as difficult for this kind of diesel or jet turbo operated engine because it would only be running intermittently. 

 

Chairman Raggio:

The issue is not the lack of fuel, but the power to generate the transmission.

 

Senator Coffin:

That is correct, Mr. Chairman.  This is a result of the deregulation in California.  We have a 2- to 4-year problem in this state, because that is how long it will take, according to California officials, for them to have built sufficient power plants to provide what they have been lacking for many years.  At times the alarm bells can stop ringing, but they are literally ringing now and will continue to ring for a few years. 

 

The testimony of Kinder Morgan Pipeline is they cannot guarantee service.  They feel that matters have been relieved, but they cannot guarantee how many blackouts there will be.  With the continuation of moisture shortages in the Northwest, upon which California is heavily dependent for hydropower, there are no guarantees that blackouts will not occur for the next few years.

 

I need to let Commander Rybold give his brief remarks to reinforce my statement of the urgency of this bill.  There are many municipalities, both in the North and South of Nevada that have endorsed this concept.  You, Mr. Chairman, and three others of this committee are sponsors of this bill.  You would not have recklessly placed your name on a $10 million appropriation knowing we had very little in the General Fund.  We have less money available in the General Fund than a few months ago, and that is the reason for the change in the source of funds in this bill.

 

Edmund K. Rybold, Jr., Commander, U.S. Navy, Executive Officer, Naval Air Station, Fallon, Nevada (Commander Rybold’s prepared speech is Exhibit G.):

We welcome the opportunity to speak on behalf of S.B. 309.  The Naval Air Station (NAS) has been in operation since 1942.  Initially, the focus of the base was squadron level air-to-ground combat training until 1984, when the Navy established the Naval Strike Warfare Center and began focusing on training entire air wings in an integrated fashion. 

 

Over the years, Naval air training has evolved and entire wings with 1500 personnel and 70 aircraft conduct training in an integrated manner.  Between the air wings and the Naval Strike Warfare Center, the base has conducted an average of 40,000 flights a year for the past five years, with a 4 to 5 percent increase over that period. 

 

The primary provider of the jet fuel for the base is Kinder Morgan Pipeline of Sparks, Nevada.  The fuel is shipped in a 63-mile pipeline to the base where it is stored in 3 different tanks.  The total capacity of the storage tanks at the base and the feed tank in Sparks is 5.8 million gallons.

 

If a long term power interruption were to occur upstream of the Sparks feed tank in California, it could have a serious impact on training activity at the base.  There is virtually no back-up means of fuel delivery in that instance because fuel trucks would not keep up with demand.  Given the consumption levels of peak activity at NAS, depending on the levels in the storage tanks at the time of occurrence, the estimated supply on hand would last between 15 to 20 days.  After that time, any transient aircraft would have to leave Fallon and all training would cease. 

 

In addition to the obvious training shortfalls created, there would be a tremendous taxpayer expense should an air wing be grounded at Fallon.  The amortized cost of having an air wing equates to an average of $950,000 per day.

 

Ten of the last 12 air wings to train at NAS have flown into combat conditions with 4 months of their departure from the base.  To negatively impact their training with a disruption in fuel deliveries would result in degradation in both combat effectiveness and aircrew safety.  Senate Bill 309 would protect those interests.  I will be happy to answer any questions.

 

Senator O’Donnell:

It is true Nevada relies heavily on that pipe and the fuel that flows from the California area to the Las Vegas area.  However, is it not true that we produce power that is transmitted to California?

 

Commander Rybold:

I cannot speak on behalf of the power company.

 

Senator Coffin:

In the southern Nevada area, the Mohave power plant generates power for the Arizona-California area.  I cannot go into great detail, but the Governor himself can fill you in on the conversations with Governor Davis.  I believe the power generated in southern Nevada was helpful in reaching an agreement to continue to take off the exemptions to allow power to go through the pipeline. There was horse trading going on between the chief executives of our states.  This is one of the reasons this bill vests the power to negotiate the purchase to keep things going.  We are in the hands of the Governor.

 

Chairman Raggio:

In the interest of time, please discuss the proposed amendment and its funding.

 

Senator Coffin:

The proposed amendment is at the end of the handout entitled, “Third Version April 16, 2001” (Exhibit F).  The preamble is repetitive of what I previously stated.

 

Chairman Raggio:

This removes the appropriation and provides a tax on the fuel.

 

Senator Coffin:

That is correct, Mr. Chairman.  The fee is defined in such a way to document its correct terminology.  The funding would come in the normal course of events as it is currently assessed.  That is in a state of flux because responsibility for the collection of taxes is shifting, some as of January 1 and some as of July 1.  So, departments and divisions names can change, but we have confidence that the language here will transfer to any department or division of state government.  At that point, an agency would become vested with the responsibility to collect the fee.

 

One of the key sections is Section 10, which gives the authority to the Division of Emergency Management.  That is the division the Governor needs to rely upon.  The Governor is bringing that agency into a cabinet level position.  There may be legislation divorcing that division from the DMV&PS. 

 

The Governor has recognized we have problems in Nevada, but it was this agency the Governor relied upon as an action group during the crisis this winter.  Because of that experience and their handling the Division of Emergency Management has been brought in to handle that.  They would apply for permits in conjunction with the pipeline company and enter into the agreements to lease or purchase equipment, whichever is the smartest economical move at that particular moment.  An exact dollar amount that the state will need cannot be identified because the market for generators changes daily. 

 

It would be best to use the language that is used for our underground petroleum storage tank fund, which is that the state collects a fee until the state does not need the revenue.  In this case, we feel confident the fund will not be needed after FY 2003.  Should the state need this additional fund at a future time, the bill has the necessary options built into it.  The state fee, in the future, may be a 1-cent fee, or a mill, or nothing at all.  Another option is the state could re-establish the fee for a few months, build up the fund and keep it going until no longer necessary.

 

By 2003, California should have solved its power supply problems.  The Division of Emergency Management has the ability to borrow.  The State Treasurer is confident that securities can be placed quickly at a low coupon, so the interest will not be high even if they are taxable.  The State Treasurer and his consultants are capable of finding the markets quickly to privately place this if they chose.  Language is placed in this bill to circumvent the normal bidding process because it slows the process down. 

 

I knew we needed this bill when I inquired about the cost of generators from the State Purchasing Division and they had no concept of the idea of the size of generators the state needed.  They are used to buying 2.5- and 5-kilowatt generators.  We are talking about generators from 1 megawatt to 3 megawatts.  So, the language should stand the test of scrutiny.  The Legal Division has reinvented it many times in the past few months and we believe we have passed the legal test.

 

Senator Rawson:

The surprise to me was to find out that we did not have this capability.  To realize how vulnerable the state is, I do not know Senator Coffin stated the position strongly enough.  It takes very little to put us out of business in Nevada if we have this interruption of fuel.  I do not want to delay this bill, but I would like added language regarding fuel storage. 

 

Does this bill provide all of the authority needed to be able to do this?  In other words, I am assuming we cannot force the company to do it.  Are they willing to comply with the bill?

 

Senator Coffin:

That is one of our problems.  We do not know where Kinder Morgan Pipe Line stands at any given moment on the bill because of the change of ownership and the different corporate cultures.  Calnev Pipe Line Company, which is now owned by Kinder Morgan Pipeline, was cooperative and revealing in what was necessary to accomplish resolution of this crisis.  What we have found is that Kinder Morgan Pipe Line does not necessarily like this approach, but has an alternative approach, which fits Senator Rawson’s idea of storage.  I do not want to represent what they think.  They know they cannot guarantee breakdown in electricity.  Additional storage is a sensible idea.  However, that is a long-term process.

 

Senator Rawson:

The first problem is to guarantee the pumping capability.  Secondly, we ought to be putting in more storage.  I hope you would not let this go in the future.  We need to have greater supplies on hand. 

 

Senator Coffin:

Thank you, Senator.  I cannot second-guess Kinder Morgan Pipe Line.  The industry is market driven and they are obviously not at fault.

 

Senator Rawson:

We should not interfere with the company.  We just want to put up the financial support necessary to see the capability exists.

 

Senator Coffin:

The citizens of this state will approve this proposal because it is better to have the fuel than not to have it at all.  It is a penny a gallon increase, which under current rates would be .5 percent of the cost of the fuel.  I did not want to use stronger words in this crisis because the last thing the state needed was publicity or to alarm the public.  If we had announced we had two days of gas in the tanks in southern Nevada, we would not have had any gas because of public panic.  Everybody would have gone to the gas stations, topped off their cars and there would have been nothing left.  There would have been no way for a tourist to visit Reno or Las Vegas.  There would have been no way for an aircraft to land and guarantee that it could take off, and this may have thrown some companies into bankruptcy.

 

I do not believe stronger language is necessary.  I will add one postscript to Commander Rybold’s testimony.  I have been in frequent contact with Nellis Air Force Base.  Their storage situation is not quite as good.  I cannot go into further details, but they have enormous demands for fuel.  If this had occurred during the Red Flag exercises, they would have had to cancel those exercises.  It took six weeks to build the reserves back up in Las Vegas.  That is how full these pipes are right now, and the March Red Flag exercises would have had to be cancelled.  Fortunately, they did take place, but Nellis Air Force Base has several exercises scheduled for this year and hope they do not have to cancel aircraft coming in from all over the world to practice.

 

Chairman Raggio:

Does the administration have a position on the proposal as amended?  That would be deleting the appropriation and imposing a fee of 1 cent per gallon on fuel.

 

Don Hataway, Deputy Director, Budget Division, Department of Administration:

Mr. Chairman, obviously anything to eliminate further impact on the General Fund would be of interest to us.  What the Senator is talking about in terms of the alternative is doable.

 

Chairman Raggio:

I would appreciate your looking into this issue and getting back to us regarding the administration’s position.  Is there anyone else on this issue?

 

Senator Jacobsen:

Commander Rybold, what is your schedule now for air groups for the balance of the year?

 

Commander Rybold:

We have already had one carrier wing visit us.  We are currently training one at this time.  We have two more carrier air wings rolling in this fall.  That is not to mention other various training that will be occurring.  We are a growth business and we are getting other joint services rolling in on our facility.

 

Senator Coffin:

The backers of this bill include the Las Vegas Convention and Visitors Authority, McCarran International Airport, Airport Authority of Washoe County, Reno-Sparks Chamber of Commerce, the cities and/or counties of Henderson, Boulder City, Clark County, Reno, Las Vegas, Carson City, Sparks, and the Nevada Gasoline Retailers.

 

Chairman Raggio:

Who wishes to speak next?

 

Kami L. Dempsey, Lobbyist, Las Vegas Chamber of Commerce:

We believe this is an important and new-line issue, most particularly for the southern Nevada area.  This pipeline fuels so many activities in Nevada, that if there were a disruption for any region, it would drastically affect our revenues.  By not requiring a General Fund appropriation and having that 1-cent fee makes this doable for Nevada citizens because it is spread over a wide group of people.  That is why we support this bill and especially like the sunset clause.  This bill is important for business and we do support S.B. 309.

 

Chairman Raggio:

The addition of the fee and the bonding is acceptable?

 

Ms. Dempsey:

Yes, Mr. Chairman.

 

Chairman Raggio:

Senator Coffin, are these general obligation bonds?

 

Senator Coffin:

Mr. Chairman, they are revenue bonds, sophisticated in nature.  Section 12 of the bill indicates they are general obligation bonds, ultimately having full faith and credit of the state.  They would be based upon a revenue stream, which will be insured.

 

Chairman Raggio:

Who wishes to speak next?

 

Peter D. Krueger, Lobbyist, Nevada Petroleum Marketers and Convenience Store Association:

I would like to bring to your attention a couple of our members concerns.  We are those wholesalers who actually take possession of the fuel once it is delivered through the pipeline into the terminal in Las Vegas and Sparks.  Two questions come to mind: Section 8, subsection 1 of the proposed amendment dated April 16, 2001, is the imposition of the tax of 1 cent.  This is patterned after the Nevada Petroleum Fund (later referred to as Fund) fee, which in essence is a tax and has never been challenged in court.  There is concern on our part about this funding mechanism. 

 

I refer you next to subsection 3 of Section 8 in which the exemptions are discussed.  Subparagraph (a) is the federal government.  We just heard from the Fallon NAS as to the great benefit of S.B. 309.  I do not believe the Navy or any other federal agency ought to be exempt, because they are deriving a tremendous benefit.  Another item that troubles me is the exemption for railroads.  Again, these exemptions follow the cleanup Fund language, and the railroad should not be exempt from the provisions of this proposed amendment. 

 

Chairman Raggio:

What is the exemption for being transported through the state in interstate commerce?  What does that mean?

 

Mr. Krueger:

It is my understanding that is for interstate commerce and items of interstate commerce are exempt from state taxes.   

 

While there is a sunset clause in the preamble of S.B. 309, we would want to see a specific date set into this sunset language.

 

Chairman Raggio:

Senator Coffin, is there any sunset provision?

 

Senator Coffin:

The fund cannot collect any more money than is necessary for the program.

 

 

 

 

Chairman Raggio:

Section 12, subsection 3, contains language stating “Any remaining balance of the allocated amount authorized in subsection 1 must not be committed for expenditure after June 30, 2003.“  I am not sure that is a sunset clause. 

 

Senator Coffin:

I can change the language of that section.  I have other answers to Mr. Krueger’s concerns. 

 

Mr. Krueger:

Finally, Mr. Chairman, we believe that language needs to be developed that spells out who is going to operate the subject matter of this bill.  If this were to go forward, a turnkey operation would require a private operator to come in and construct the paths, provide and operate the generators, and be sure the generators are hauled away when no longer needed.  That concludes my testimony, Mr. Chairman.

 

Chairman Raggio:

Would these generators be located along the line in this state and outside this state?

 

Senator Coffin:

Yes, Mr. Chairman.  There are four points on the northern corridor, what we call the Interstate 80 corridor, starting at the coast at Concord in the east bay of California, running very close to Interstate 80 and around Sacramento.  The first extra booster would be needed at Rocklin Station, which is where the Sierra Mountains begin to climb at an abrupt rate.  In the south, their first booster or gathering station is at Watson, California, near the oil refineries.  The second station is Colton up Cajon Pass to Baker, California (Baker being the lowest point), and the next booster point. 

 

There are two additional pumping stations for maximum flow on that line.  The state believes an operation is best that would operate intermittently keeping fuel flowing in the pipeline and, essentially, keeping the reserves from dropping as drastically as they were. 

 

Chairman Raggio:

Mr. Kruger, your suggestion was for some independent agency to be designated?

 

Mr. Krueger:

There needs to be consideration given to a private company to operate this as opposed to a public agency, such as the Emergency Management Division.  The language is unclear as to which agency the operator may be.  I caution the committee on whether a government or private agency should operate and maintain this operation.  Purchasing is one thing, but operating, maintaining, and servicing this equipment does not sound like a proper role of a state agency.

 

Senator Coffin:

The legislation gives that agency the authority to enter into a contract with any independent third party, or it could include the pipeline company, which knows its operation best.  By hooking up to the pipeline company, they assume areas of liability that we would not want a third party involved in, nor would we want.  If the pipeline companies cooperate with us they want it done right.  We should listen carefully to what they have to say and want to do. 

 

On another issue Mr. Kruger raised, we have a letter from the railroad indicating that they will pay their fair share.  Even though it was written in the proposed amendment dated April 16, 2001, that railroads are exempt, they have indicated their desire to pay for fuel they received through the pipeline.  As to the federal government, Nellis Air Force Base has been talking to Defense Energy Supply Command trying to find some “in lieu” money because we cannot tax the federal government. 

 

Lastly, the clause is boilerplate language placed there to protect oil that has been drilled and exported out of the state from Railroad Valley.  We typically do not tax what is transported through the state without some delivery.  Equity demands that such matters not be taxed.  So, how could we tax that which is merely being transported through the state without delivery within the state? 

 

Senator Mathews:

Senator Coffin, I would like to be sure about what you said about the railroad and their exemption, given you have a letter indicating their willingness to contribute to this fee.  Would it not be better if we deleted this exemption out of this proposed amendment?  In my opinion, when dealing with the railroad in Reno, we are going to need something stronger than just a letter. 

 

Chairman Raggio:

I am assuming that Senator Coffin will propose that section be deleted from this proposed amendment if we processed the measure.

 

Daryl E. Capurro, Lobbyist, Nevada Motor Transport Association:

Our position over the years has been unchanged about the use of money for other purposes that is particularly generated for highway purposes, although we recognize that, in this case, there is a problem.  Most of what I had to say was said by Mr. Kruger.  Ordinarily the one-cent fee on gasoline and special fuels produces about $11.5 million per penny per year.  The committee is appropriating approximately $25 million, and we would feel better if there were a sunset clause on the collection of a fee at no later than either July 1, 2003 or January 1, 2004.  Further, if there are any revenues remaining in that fund, those fees would revert to the State Highway Fund because that is the traditional receiver of this type of fee. 

 

I also concur that there should be no exemptions for the federal government agencies.  We also agree that the railroads should also be included in this and we would support a specific amendment to eliminate that exemption.  I hope the federal government would pay their fair share.

 

From a practical standpoint there is a problem in Section 1, subsection 3 with the definition of “Department” meaning the Department of Taxation, which will be the collecting agency for the gasoline tax until January 1, 2002.  At that point in time, DMV&PS will then be collecting all fuel taxes on gasoline and special fuels.  It seems that creates a problem because, if S.B. 309 is processed and goes into effect upon passage and approval, there may be a changing of the respective state agency duties in the middle of the process.  The committee should give consideration to either speeding up the process of DMV&PS collecting all of the fuel taxes, or of specifically collecting a certain tax by some appropriate means. 

 

Again, I believe one of the most important factors, if S.B. 309 is passed, is that there be a definite sunset provision and that any revenue left in that fund revert to the State Highway Fund.

 

Chairman Raggio:

Are there any others who wish to speak on S.B. 309?

 

Carole Vilardo, Lobbyist, Nevada Taxpayers Association:

One issue we have is that there should be a specific sunset provision, which is not identified in the bill.  The second issue we have is the one that was just raised by Mr. Capurro regarding changing over responsibility for collection from the Department of Taxation to DMV&PS. 

 

We had a bill yesterday that dealt with another fuel tax issue.  Staff of the Department of Taxation has indicated they can do a Microsoft Excel spreadsheet to put in the necessary mechanics for the collection for a 6-month period.  The Department of Transportation and DMV&PS were meeting today with Lockheed Martin Aeronautics Company (Lockheed), which does the collection for the International Registration Program (IRP) and International Fuel Tax Agreement (IFTA).  The purpose of the meeting is to set up the mechanism for collections.  Yesterday’s bill changes the second tier fuel tax distribution formula.  If DMV&PS is aware this is going to happen, it could include this within those discussions to make sure Lockheed knows what has to be done relative to distribution and collection.

 

Keith L. Lee, Lobbyist, Southwest Airlines:

We do not necessarily support this bill.  I wish Kinder Morgan Pipeline personnel were at this meeting.  They testified before a Senate committee about 10 days ago.  As Senator Coffin indicated, they own both the northern and the southern pipelines.  Although there are concerns about power outages, they said there were concerns that are a greater threat to the long-term interruption of fuel supplies to both the North and South. 

 

Among those were pipeline breaks.  They have to continually monitor for those with sensors.  Earthquakes would cause great disruption to the fuel flow, and there are other natural disasters that concern them more than blackouts. 

 

Kinder Morgan Pipeline talked about interruptible contracts it has with Southern California Edison Corporation in the South and Pacific Gas and Electric Company in the north.  Those contracts allow the power company to cut them off for up to 18 hours a day and up to a certain number of hours every year.  That is what happened in the South.  The number of hours they can cut off power has been used up almost completely in the North and the South.  The threat is going to be rolling blackouts to both the North and the South. 

 

I am trying to recall the Kinder Morgan Pipe Line testimony at the meeting ten days ago.  They feel that, although there are going to be blackouts, they are instituting procedures in California now that will limit those blackouts.  There are no guarantees this state will not have electrical power interruptions, just as there are no guarantees we are not going to have an earthquake or other natural disaster that will cause a serious break in this pipeline.  Kinder Morgan Pipe Line representatives said they do not believe this bill is either a short-term or long-term solution to Nevada’s problem.

 

Chairman Raggio:

Are you referencing the proposed amendment to S.B. 309?

 

Mr. Lee:

That is correct. 

Chairman Raggio:

The committee would be interested in hearing from personnel representing Kinder Morgan Pipeline on this bill. 

 

Mr. Lee:

I have talked with Mr. Randall H. Walker, Director, Department of Aviation, McCarran International Airport, and while he recognizes there is a problem, he has represented to me and other air carriers that he feels he can work within the present system.  Under an agreement with McCarran International Airport, Southwest Airlines now pays .75 cents for every gallon of aviation fuel transported through the pipeline and stored at McCarran International Airport.  That is just the transport and storage fee that we pay.  We pay other fees as well, of course.  Mr. Walker advised us he feels he can work within that system to supply the short‑term solutions, whatever those are going to be.  Southwest Airlines wants to be part of the solution.  We are just not convinced this is the proper solution.

 

I believe there is a mechanism in place now in Chapter 414 of the Nevada Revised Statutes (NRS), which is the emergency management chapter, that allows the Governor and the Chief of the Division of Emergency Management to bring together all of the people who are most affected by any fuel shortage.  These people include representatives from Southwest Airlines, other airline carriers, Mr. Kruger’s clients, and the wholesalers and retailers of fuel.  The Governor’s coming together with Senator Coffin several months ago to give us a short-term fix to that problem requires us to look at and expand upon that concept. 

 

Southwest Airlines is willing to sit down and be part of any kind of a committee the Governor would put together under Chapter 414 of NRS to help develop potential solutions.  We just do not think that, at the end of the day, putting a penny a gallon tax on aviation fuel is going to supply the answer to this problem. 

 

Again, Kinder Morgan Pipeline is crucial to any discussion of this issue, and I wish their representative were present at this hearing.  If generating stations are the answer and we can get them permitted, online, and operating, there have to be additional sensors and many other improvements to the pipeline.  What happens to these generators when we do not need them?

 

Chairman Raggio:

You are saying that, in addition to generators, there is other equipment that needs to be discussed?

 

Mr. Lee:

That is my understanding.

 

Chairman Raggio:

I can see we are going to have to have Kinder Morgan Pipe Line present during any discussion of S.B. 309 to get definitive information.

 

Mr. Lee:

Again, we want to be part of the solution, but we are not convinced this bill is the proper solution, short-term or long-term.  We need to work with the pipeline companies to identify what they believe the solution may be, because, at the end of the day, they are the source that is most knowledgeable.

 

 

 

Senator Coffin:

I have a verbatim transcript of the Kinder Morgan Pipe Line testimony that I would be happy to share with the committee.  It may refresh Mr. Lee’s recollection; particularly where they say “Yes, they have temporarily solved the interruptible problem in northern California, except for blackouts, which they cannot control.” 

 

The southern Nevada area is in deep jeopardy, not only from the interruptible situation, but also from the blackout situation.  There is a lot of testimony here from Kinder Morgan Pipe Line and I will make copies and provide them to each committee member.

 

Kinder Morgan Pipeline has been notified of this hearing, with ample notice to attend, through e-mails, telephone calls, and other acknowledgements.  They have chosen not to send a representative to this meeting.  I consider that an insult to this committee.

 

Senator Rawson:

We have an obligation to deal with this while we are in session.  It is true the Governor has certain power when we are not in session.  However, there are matters for which the Governor would call legislators back to a special session.  I am not comfortable leaving this session without solving this problem.  If you are not happy with this solution and are willing to come to the table, then I urge that we do that while we are in session to resolve this issue.  I would like to see these generators in place and see an additional tank farm built somewhere.  I know there are implications with storage costs, but the state is vulnerable. 

 

The state is just now recovering from the 1991 session when we suffered the downturn.  If we have any serious interruption, it affects the entire state and it affects it for a long time because of the budgets the Legislature ends up having to cut. This is a matter of utmost importance to us, and I hope that Southwest Airlines would work with us on the solution.

 

Mr. Lee:

We are certainly committed to doing just that, Senator.  It is my understanding the real solution to this problem is increasing capacity, both in the pipeline and the capacity of the fuel farms.  There are discussions among Kinder Morgan Pipeline, the airlines, and McCarran International Airport about increasing the 8-inch pipeline to a 12-inch pipeline that comes from Barstow, California, and goes directly to McCarran International Airport, as well as increasing the fuel capacity storage at that airport. 

 

Senator Rawson:

If the state is going to put these generators in place, they should not be placed there for any short-term period, but for a year and a half.  These generators should properly be built into the system and should be a permanent part of the system.  If we deed them over to the pipeline after a certain time, there is value to that concept.  However, whatever we do should be a permanent solution.

 

F. Alex Ortiz, Lobbyist, Clark County:

I support the proposed amendment to S.B. 309.  We definitely do not want to experience another crisis in southern Nevada like that experienced in January of this year. 

 

 

 

Chairman Raggio:

That will conclude the hearing on S.B. 309.  I will ask Senator Coffin to work with committee staff to arrange an appearance from the Kinder Morgan Pipeline.  Also, any information we can receive from the Governor’s office on this will be appreciated. 

 

Senate Bill 505 will be taken out of order on the agenda to accommodate time constraints from some of the individuals present for that bill.

 

SENATE BILL 505:  Makes various changes relating to transfer of responsibility for dairy inspection program to state dairy commission of department of business and industry. (BDR 51-401)

 

Stacy M. Jennings, Executive director, State Dairy Commission, Department of Business and Industry:

I have prepared a handout (Exhibit H) on the issue of S.B. 505.  This bill proposes a transfer of regulatory authority for the dairy inspection program from the State Health Division, Department of Human Resources, to the State Dairy Commission, Department of Business and Industry.

 

The concept of S.B. 505 was submitted to the Governor’s Steering Committee to Conduct a Fundamental Review of State Government (fundamental review). However, the committee did not have an opportunity to address these issues, so the Dairy Commission, through the Governor’s office, did bring it to the Legislature for consideration. 

 

The Dairy Commission met with the Administrator of the Health Division, the Director of the Department of Human Resources, and the State Board of Health and they have no objections to this bill.

 

We believe that if you combine these two programs, it will provide for continuing regulation.  Currently, the Dairy Inspection Program ensures compliance with safe practices and quality standards in all phases of milk production and processing; provides oversight for pasteurization, milk testing, milk hauling, and inspection of equipment and facilities at dairy farms and dairy processing plants; and certifies milk plants for inclusion on the federal Interstate Milk Shippers List.

 

If these two programs were combined, the Dairy Commission would then inspect, license, and regulate all segments involved in the production and sale of dairy products from farm level production to the final sale to the consumer.  We believe there are many benefits to this consolidated regulation, including greater authority to enforce existing statutes as found in NRS 584.410, which charges the Dairy Commission with ensuring adequate and continuous supply of pure, fresh, wholesome fluid milk and fluid cream.

 

Currently there are 35 dairy farms, 11 pasteurizers that process milk and ice cream products, 25 to 30 milk haulers, and 6 milk testers regulated under this program.  There were approximately 520 million pounds of milk produced in Nevada during calendar year 2000.  About 53 percent of what was processed at plants in Nevada would be subject to regulation by this program.  Also, about 54 percent of the milk that was purchased and consumed by consumers in Nevada in the last calendar year was produced at plants in this state.

 

The Health Division informs me it currently has 1.5 full time equivalency (FTE) positions dedicated to this program, which results in about $60,000 a year from the General Fund.  That is offset by $5,000 in permit fees, which would go to the Dairy Inspection Program under this bill.  What we would propose to do is explained by the fact there are three levels of overlapping regulation in dairy inspection.  First, there are inspectors who go to the farms, look at the equipment and look at all of the health and safety aspects in the farms, in the trucks, and in the plants.  Second, there is regulation, which requires a federal rating and survey officer that certifies the work of the inspectors and tells the federal government those items are satisfactory.  Third, the federal government steps in and checks the work of the inspectors and rating and survey officers.  If everything meets federal government standards, those plants can be listed on the Interstate Milk Shippers List, which allows them to participate in interstate commerce.  If any part of the system fails, such as the dairy farms or plants not passing their inspections or if the state fails in its oversight duties, then the plants are taken off the Interstate Milk Shippers List and cannot participate in interstate commerce; that would have a financial impact on our industry.

 

Currently, we are proposing 3 positions for this program, funded by the Dairy Commission Fund.  Two of these employees would be dairy farm and plant inspectors, with one located in Las Vegas and the other in Reno.  We also propose a federally-certified rating and survey officer, which would be stationed in our office in Reno.  If we are able to get the program up and running, we are projecting $258,600 in first year costs and $223,800 annually; those costs would be funded from the Dairy Commission Fund.

 

The Dairy Commission Fund revenues are generated from licensure and amendment fees and from assessments on regulated dairy products.  Assessments are also levied on distribution of butter, ice cream, sherbet, cottage cheese, and yogurt.  Fluid milk and fluid cream assessments were suspended in October 1994.  The Dairy Commission proposes to reinstate fluid milk and cream assessments, changing the formula from butterfat content to bulk distribution.  The reason for this is there is a lot less butterfat in products than there used to be and I am not confident we could fund the program using a butterfat formula.

 

We propose a change in fluid milk and cream assessment to a statutory cap of .25 cents per pound distributed.  Full assessment would generate .2 cents per gallon of milk sold.  However, this would be a statutory cap and we would not implement the full assessment.  We would only implement what is necessary to fund the program at the levels we are proposing; that level is .05 cents per pound, or .43 cents per gallon of milk sold. 

 

Page 6 (Exhibit H) reflects the Dairy Commission budget, which has already been approved by this committee.  We currently have 14 employees and an operating budget of $1.2 million.  We have fewer employees currently as a result of voluntary downsizing in FY 1999 when we gave up three employees and reorganized our agency.  The passing of this bill would propose adding three new employees and $223,800 a year in ongoing costs.

 

We placed a special provision in this bill to ensure meeting the concerns of the public heath.  Again, we worked with the Health Division, the Department of Human Resources, and the State Board of Health to ensure those concerns would be met.  We can bring resources to this program that have not been there in the past.  Additionally, our agency can provide additional training opportunities, not only for the dairy inspectors and rating and survey officers, but also for the employees at the plants and farms so they are up to date with current regulations ensuring public health and safety.

There are more than 400 Nevadans directly employed on dairy farms in this state.  The dairy industry generates $80.3 million in payroll; $1.2 billion in dairy products sold last year; and there is an estimated economic stimulus of $320 million in purchasing from all the facilities involved in dairy in this state.

 

I would like to note the General Fund would lose $5,000 in permit fees.  This bill would provide that any fines, penalties or assessments that our agency generated would go to the General Fund.  We would at minimum offset that $5,000 loss to the General Fund.  Thank you.

 

Vice Chairman Rawson:

Thank you.  That was very precise.  Are there any questions from the committee?  The Senate Committee on Human Resources has already acted on this bill.  Is there any further testimony on this bill?

 

Doug Busselman, Lobbyist, Executive Vice President, Nevada Farm Bureau Federation (Prepared speech is Exhibit I.):

We are here today to speak in support of S.B. 505.  Our organization’s policy on this matter states our support for transfer of authority of the dairy inspection program to the State Dairy Commission.  The State Dairy Commission is extremely capable of receiving this authority and is well tuned to the needs of the state’s dairy producers for appropriate operation of the inspection program.  This change is necessary to protect the dairy industry from potential problems in not having timely filing of interstate shipping documents completed as required.  The State Dairy Commission is well aware of these requirements and understands the crucial nature of meeting these deadlines.  Their priority attention to such matters will provide reassurance for producers, as well as consumers.  Dairy producers currently pay a fee for the services they receive for inspection and will continue under the proposed change.  We support the changes and urge your favorable consideration of S.B. 505.

 

Dave Coon, Vice President, Sales, Anderson Dairy, Las Vegas (Prepared remarks are Exhibit J):

We are here to go on record as being in favor of S.B. 505.  It is in everyone’s best interest and we would appreciate your consideration.  Thank you.

 

Senator Jacobsen:

Do the current commissioners on the State Dairy Commission represent the complete industry?  Is marketing in Las Vegas represented?

 

Mr. Coon:

Robert R. Barengo is the banking or financial representative appointed by the Governor; Michael N. Compston is the agricultural economist; and A. Randall Thoman is the Certified Public Accountant.  We are the loan processor in southern Nevada, and not only are we in favor of this bill, but Kevin McLaughlin, who represents our dairy farmers, is also in favor of this bill, as is the union, Teamsters Local No. 14, that represents our employees.

 

Kevin W. McLaughlin, Advance Milk Commodities (Remarks are Exhibit K):

We are in favor of S.B. 505 and appreciate the State Dairy Commission’s ongoing efforts, knowledge, and capabilities in regulating and providing for reasonable payment back to producers.  The inspection program is key to the ongoing success of the dairy industry, as is being witnessed by worldwide problems experienced in Great Britain.

 

Jim Breslin, General Manager, Model Dairy, Reno:

With our 200 employees in northern Nevada, we support S.B. 505.

 

Vice Chairman Rawson:

There being no one else to testify, we will close the hearing on S.B. 505 and open the hearing on S.B. 426.

 

 SENATE BILL 426:  Establishes requirements and procedures for strategic planning for state agencies. (BDR 31-429)

 

Wm. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel

Bureau:

The Legislative Commission approved this audit of strategic planning in state government in 1998.  Last year we presented this to the Legislative Commission’s Audit Subcommittee.  Generally, state governments have undertaken strategic planning since 1994.  There was testimony in the Assembly Committee on Government Affairs during which this was first heard before being heard by this committee regarding the strategic planning efforts. 

 

In our handout entitled, “Executive Summary, Strategic Planning Process” (Exhibit L. Original on file at the Research Library.), we have prepared information regarding this issue.  We have information on a study undertaken by Syracuse University, which identifies the different states on a scorecard for planning as it relates to the budget process.  There is also a table of contents on the instructions that have been developed by the Department of Administration undertaking strategic planning by state agencies.  Additionally, there is information on budget instructions for FY 2002 and FY 2003 requiring state agencies to develop strategic plans as part of the budgetary process.  Finally, we do have our full audit report in Exhibit L.

 

There are a couple of matters that need to be pointed out.  First is that the Council of State Governments (CSG) recently identified strategic planning as one of the more effective management tools designed to deliver value for each tax dollar.  According to the CSG, the number of states using strategic planning has increased significantly.  The benefits include establishing management direction, clarifying agency priorities, and setting guidance for policy decisions.

 

As part of our audit, we surveyed five other states that have performed strategic planning over the last few years.  Officials from the legislative and executive branches of those states indicated that strategic planning has been well worthwhile.  A few of the many benefits mentioned include better decision-making, increased accountability, and improved resource allocation.  One of the officials stated that strategic planning has enabled them to do more with less.  Because of the issues we identified in our audit, made recommendations that would require strategic planning for state agencies.  The Department of Administration would provide guidance to state agencies on how to utilize strategic planning as a management tool, and would provide oversight for the development of those strategic plans.

 

Various statutes currently require some elements of strategic planning in Nevada.  However, none require agencies to prepare a complete strategic plan and tie all of those elements together.  Therefore, we have a fragmented statutory framework at the moment.  I know this committee has been struggling with performance measures since legislation was passed in 1991.  There has been testimony, time and time again, that legislators were not happy with the performance measures developed by the Executive Branch of the government. 

 

We believe state agencies will continue to struggle with developing adequate performance measures unless they go through the proper process in developing those performance measures.  That would include determining their mission, establishing goals and objectives, and then, developing performance measures.

 

Michael O. Spell, CPA, Audit Supervisor, Audit Division, Legislative Counsel Bureau:

The purpose of our audit was to evaluate the state’s strategic planning efforts and identify opportunities for improvement.  It included a review of the current strategic planning process and the most recent strategic plans for selected Executive Branch agencies.  We found that, although Nevada law requires agencies to develop elements of strategic planning, there is no requirement to prepare a complete strategic plan.  Consequently, agencies have conducted strategic planning for a variety of reasons.  This has lead to a number of different formats being used and a wide variation in the quality in the agencies plans.  Recent reports issued by the Legislative Auditor illustrate how inadequate strategic planning has resulted in ineffective management of state programs.  Therefore, legislation is needed to provide direction and to help ensure the state’s strategic planning efforts are an ongoing priority. 

 

State agencies have done strategic planning in recent years, but improvements are needed.  For instance, the plans we reviewed lacked basic elements of a strategic plan, such as goals and objectives.  Without these basic elements the benefits of strategic planning may not be fully realized.  The state’s strategic planning can be enhanced by providing additional guidance and oversight to agencies on the preparation and benefits of strategic plans.  That concludes my presentation.

 

Mr. Crews:

In FY 2000 the state spent $4 billion in operating without an adequate strategic plan.  I do not see how we can afford not to require such a planning process.  When we presented this to the Senate Committee on Government Affairs, Senator Raggio was concerned about the fiscal note that has been attached to this particular bill, which requires over $1 million a year.  We looked at the fiscal note and we feel it is over-inflated probably by 10 fold.  Other states are able to accomplish what is laid out in this bill with 10 percent of the effort that is being called for in the fiscal note. 

 

However this committee decides to treat this bill, Section 1, subsection 2, is permissive for the Director of the Department of Administration to determine the number of agencies that will be reviewed during the biennium.  The fiscal note has been built around the fact that every state agency will be audited during this period of time.  That is part of the reason for the large fiscal note.  If this is scaled back, perhaps to audit three or four agencies in the first year, we do not have to do every state agency in state government.  Establishing a pilot program with only a few state agencies may be beneficial.  The committee may want to reevaluate the fiscal note and look at scaling this note back to some extent.  We would be glad to answer any questions the committee may have at this time.

 

Senator Jacobsen:

Will every agency be required to follow this strategic planning and its guidelines so that we may follow these measurements?

 

Mr. Crews:

We would expect the Department of Administration to develop guidelines, instructions, and a framework.  The decision would be up to that department’s management prerogative regarding how to develop the strategic plan.  Hopefully, we would obtain uniformity in the development of the plans, which would include performance measures.  Performance measures have become an important guide to the budgetary process.  We believe committees will continue to have a tough time understanding performance indicators unless state agencies go through the performance process in strategic planning.

 

Senator Jacobsen:

That certainly sounds encouraging.  There is nothing more confusing for committees than to experience differences in each agency’s budget accounts relative to procedures used and that makes tracking accounts difficult. 

 

Vice Chairman Rawson:

We had high expectations of changing our budget format with a focus on performance indicators.  By and large that process has been very disappointing.  There are a few examples in which there has been a sincere effort and we tend to see a strong mission statement in those agencies.  I think promise exists in our past format, if we can expound upon the area of strategic planning.  Although there are exceptions, I believe we have weak management in this state.  Maybe that might not be the case if we, as a state government, were more mature.

 

Mr. Crews:

Mr. Vice Chairman, I believe if you are a good manager, the factors of strategic planning are inherent.  State government may not have state managers that we need who were chosen for certain reasons, but this would be a training process.  It would be teaching administrators the importance of strategic planning and helping them to develop themselves as managers.

 

Vice Chairman Rawson:

You believe that going through the process of strategic planning is in the nature of management school.  What about the fiscal note?  Do you believe that should be reduced to a few hundred thousand dollars?  Rather than getting into a debate with the agencies about that, maybe the best approach is to scale the fiscal note down.   Do you have any suggestions as to which agencies might be brought forward to conduct strategic planning first?

 

Mr. Crews:

I do not believe I would be in the best position to make that recommendation.  The Department of Administration would be the better agency to do so, or, perhaps, the legislators themselves as they have been working with each agency’s budget.

 

Vice Chairman Rawson:

You are correct.  We do have our thoughts about that topic. 

Mr. Crews:

To further explain the fiscal note, what the Department of Administration contemplated is a half-time position for each agency and two additional positions in the planning office.  With 26 agencies, that is 13 positions plus the two planning positions.  That is going full board for the entire process.  If the committee wanted to scale that back, it would be somewhat proportional based on the number of agencies.

 

 

Don Hataway, Deputy Director, Budget Division, Department of Administration

You have heard the Legislative Counsel Bureau, Audit Division’s, spin on this particular bill, and now we would like to give you the practical management spin on this bill.  This is a very important issue that needs to have all of the factors stated before this committee decides.

 

Vice Chairman Rawson:

Remember Mr. Hataway, the auditor’s work for us.

 

Mr. Hataway:

I understand that, Mr. Vice Chairman.  I appreciate what they do.  We have accepted most of the recommendations they have made in this audit.  The fact of the matter is this bill is “all-encompassing.”  It is not a piece-meal process.  We put together a fiscal note and it was downsized considerably from what we started with.  We feel the fiscal note is very reasonable.

 

The people involved in strategic planning responsibilities are the deputy directors and the management and management analyst types and they are balancing a number of balls in the air at any one time, including budgeting, accounts payable, accounts receivable, internal controls, personnel issues, citizen complaint issues and other organizational matters.  When a deadline approaches on their radar screen, whether it is an Interim Finance Committee meeting, strategic planning, or whatever, things tend to get shuffled to the side and they start concentrating on priorities.  It is a piece-meal process.  It is not a crisis management process.  It is just that they only have so much time to give. 

 

A tangent issue here is that some of these positions do not get overtime and some do, and that causes organizational problems.  This bill creates two horns of a dilemma in the sense that if the committee does not give us the adequate resources we feel are needed to do a good plan, which is an expensive, ongoing, and dynamic process, the committee is setting the government up for failure.  Then, the next time the auditors come in, the same results will occur as in this previous audit.  Well, at least, their audit will be shorter next time because they can use the same conclusions they came up with on this particular plan.

 

On the other side of the dilemma is that if we develop proper strategic plans, the committee will be wasting money if you expect the government to maintain the status quo of current state government.  If you want us to set reasonable goals for this state to direct us in management decision processes and give us the allocation of funding, the Legislature has to accept the responsibility in being in control and guided by those same strategic plans. 

 

The committee also has to be willing to commit the revenue necessary to fund those problems that are identified in the audit.  What exacerbates the issue is that with every new governor who comes into office, or each legislative session, or with every energy crisis that raises its head, or whatever else, whatever the strategic plan may say, may have to be totally reinvented or redone.  What we are stressing is we need staff to provide an ongoing process for the agencies and the fiscal note before you is not unreasonable.  Be that as it may, it is a major issue that the Legislature will be controlled by.  If not, then all the efforts that we do in strategic planning must be redone and so forth.  This is not an easy issue, but an ongoing, dynamic issue.  The state would have to have proper staff to do this kind of strategic planning.

 

 

Vice Chairman Rawson:

Recognizing the separation of powers, is there any room for the Legislature to be involved in the strategic planning process?

 

Mr. Hataway:

We would most definitely have to have the input of the Legislature in terms of what your goals and ideas are, because if we did this in a vacuum and set up some nice strategic plan, starting with the Governor’s Office on down, what purpose would that have?  We would have to know what the overall strategic plan of the state is, and we cannot have that without the individuals elected by the people helping to determine that.  If we go through this great planning process and it does not meet with the acceptance of the Legislature, or you are not willing to fund answers to the problems that arise to get us to various benchmarks that are identified in the plan, you have wasted your resources as well.  That is the dilemma the committee faces.  If you do not fund this properly, then it is a waste of money.  If you do fund us appropriately and you have lower expectations for this state, or you do not agree with the strategic plan, it is a waste of money, as well.  But most certainly the Legislature and its advisory committees and Governor appointees must be involved in that process.

 

Vice Chairman Rawson:

This bill has been heard and it is here for this committee’s consideration.  I have strong feelings that we need to take a step in this process as the Legislature.  Otherwise, as Mr. Hataway indicated, it simply sets up political purposes and frustration and it is wasted effort.  I need to communicate with committee staff about this bill.  Thank you.

 

Scott K. Sisco, Interim Director, Department of Museums, Library and Arts:

Let me take off one hat for a minute and go back to my Administrative Services Officer III hat.  Our department happens to have a strategic plan.  It has been updated several times.  Quite frankly, we updated it just prior to submitting our budgets and we did a very poor job.  We just do not have the staff to do it properly.  When it was originally completed we brought all of our people together and it was a 2 to 3 day project.  When we updated it the first time it was a 2 to 3 day project and we brought staff together for that meeting.  It is devastating to staff when we put all that work into something we planned and, as the funding comes and goes and as leadership changes, plans changes and none of those factors in the plan materialize. 

 

The second issue has to do with performance measurements because that has been a bigger issue for state agencies for the last several years.  In our agency’s budget overview, there was a particular phrase that has to do with performance measurement and it states the following:

 

The work performed by the Department of Museums, Library and Arts is difficult to measure as the true value may be determined in as many as twenty or two hundred years into the future.  Everyone agrees that history must be preserved and that citizens must have access to cultural activities; however, that future value is a missing link that prevents us from fully and accurately measuring the value or outcome of what we are now accomplishing.  The continued popularity and use of our services by the public is the best current measurement of our success.

 

That deals with the Department of Museums, Library and Arts, but I have nine years of experience in the Health Division and it was the same thing.  I was part of a strategic planning process for the Health Division where we looked at the Special Children’s Clinic in Reno and tried desperately to come up with outcome measurements.  Without having the funding to track those children that went through the Special Children’s Clinic and figure out five, six, seven, or eight years in the future what the outcome was of what we were doing, there was no real way to measure.

 

My last point is that I made a plea when we presented our budget request to the Budget Division and the Governor’s representative.  I talked about the new added responsibilities that we as state management have had to deal with over the last few years.  Those massive responsibilities include new procedures for tracking internal controls, new Executive Branch internal audits, new federal reporting requirements, new Office of the Controller requirements, performance measurements, new integrated financial system requirements, new personnel tracking requirements, new Americans with Disabilities Act requirements, new equal rights requirements, and new federal leave requirements regarding family and maternity leave and so on.  The list goes on. 

 

The funds are simply not there to support additional staff and things change so quickly.  What we did to upgrade our plan last July 2000 was outdated three months later.  It is not that we did not do a good job in updating the plan; it just changes because of circumstances that arise.  Again, while the concept is great, performance measurements for some agencies are extremely difficult and I am not sure they mean as much as they should or could.  Again, our department is a perfect example of how difficult it is to measure what we do.  Yet, we all sit here and know for a fact that what we do is important.  Thank you.

 

Vice Chairman Rawson:

I appreciate that statement.  Thank you.

 

Mr. Hataway:

On the area of performance measures, they definitely have to tie back to some overall guide.  A couple of years ago your auditors did an audit of the Department of Education.  Basically, they stated the department has a good strategic plan, but its performance measures do not tie to the plan.  So, Jeanne Botts and I met with department personnel every other week for almost a year during the interim to get those up to date.  That was a time commitment on everyone’s part to do so.  Once it was completed, there has not been much done since that time.  It is a dynamic process and I feel those performance measures are already out of date. 

 

Vice Chairman Rawson:

I appreciate your attention.  Thank you.

 

Senator Jacobsen:

Before we adjourn, could we revisit S.B. 505?  Have any of the committee members heard in the presentations that S.B. 505 will affect the price of dairy products in Nevada?

 

Vice Chairman Rawson:

The assurance to us was that it would not.

 

 

 

Senator Mathews:

I thought I heard Ms. Jennings say the bill would increase the price of products by 1 percent.  Possibly I heard that wrong.  My first reaction was, “What do you say to your constituents when you are working door to door that milk has gone up again?”

 

Gary L. Ghiggeri, Senate Fiscal Analyst:

Page 6 of Exhibit H indicates the proposed initial assessments to be set by the Dairy Commission at .0005 cents per pound or .0043 cents per gallon of milk.  It is less than half a penny.

 

Mr. Ghiggeri:

The Joint Subcommittee on General Government closed the State Dairy Commission’s budget and this is not included in that closure.  If the Senate Committee on Finance does act on this legislation, this would require an adjustment to the closed budget for the State Dairy Commission.  Additionally, the state Health Division testimony this morning indicated there is $6,000 in fees that are received annually by the Health Division for the activities they perform in this area.  It was alluded to that the Health Division may lose that funding.  I spoke to Alex Huartz this morning and asked that he advise me if that would create an impact to his budget.

 

Vice Chairman Rawson adjourned the hearing at 10:14 a.m.

 

RESPECTFULLY SUBMITTED:

 

 

 

ElizaBeth Root

Committee Secretary

 

 

APPROVED BY:

 

 

 

                       

Senator William J. Raggio, Chairman

 

 

DATE: