SENATE COMMITTEE ON FINANCE

MINUTES OF THE

SENATE Committee on Finance

Seventy-First Session

April 26, 2001

The Senate Committee on Financewas called to order by Chairman William J. Raggio at 4:17 p.m., on Thursday, April 26, 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

Debra Petrelli, Committee Secretary

GUEST LEGISLATORS PRESENT:

Senator Margaret A. Carlton, Clark County Senatorial District No. 2

OTHERS PRESENT:

Lynsey Coffman, Intern for Senator Margaret A. Carlton

Judith Wright, Chief, Bureau of Family Health Services, Department of Human Resources

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

Kevin Higgins, Chief Deputy Attorney General, Fraud Control Unit for Industrial Insurance, Office of the Attorney General

R. Michael McCormick, Executive Director, Advisory Council for Prosecuting Attorneys

Allen Biaggi, Administrator, Division of Environmental Protection, State Department of Conservation and Natural Resources

Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities

Stephanie Licht, Lobbyist, Elko County Board of Commissioners

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

SENATE BILL (S.B.) 498: Revises authorized uses of appropriation made in previous session to Lincoln County School District and changes date of reversion of appropriation. (BDR S-1439)

Senator Raggio said that Senate Bill (S.B.) 498 was previously heard before the Senate Committee on Finance April 5, 2001, and it deals with the appropriation previously made to Lincoln County School District for construction and furnishing of the Lincoln County High School. He stated that the original bill included appropriations for construction and furnishing of a high school.

Senator Raggio stated that the Legal Division has been consulted and made a recommendation. He said, “Their recommendation is that we not use the language that was in subsection 4 of Section 1. We can merely change the date to 2003. In Section 2, the reversion date would also be extended to 2002.”

SENATOR RAWSON MOVED TO AMEND AND DO PASS S.B. 498.

SENATOR JACOBSEN SECONDED THE MOTION.

THE MOTION CARRIED.

*****

Senator Coffin said he understood that subsection 3 of section 1 of Chapter 511, Statutes of Nevada 1999, would be deleted. Senator Raggio responded that there had been discussion to delete that subsection; however, the Legal Division decided that was not the preferred method to use. Senator Coffin asked what had been done with the elementary school in Lincoln County.

Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, stated that testimony from April 5, 2001, indicated that Lincoln County had $200,000 in savings left after construction of the elementary school. He said that this $200,000 will be applied to the construction of a high school in Lincoln County. He pointed out that construction was to begin in early summer of 2001, with completion expected in February 2002.

Senator Coffin asked what the short-cut was on the construction of the elementary school to create a savings of $200,000. Mr. Ghiggeri responded that inmates from the Pioche Conservation Camp were involved in the construction of the facility, which reduced costs. Senator Coffin inquired why this $200,000 allocation needs to be passed at this time. Senator Raggio responded that according to testimony heard in the last legislative session, it was not only the elementary school that had serious structural problems, but also the high school had serious structural problems. He added that pictures of the structural problems were introduced at that time.

Senator Raggio commented, “A pretty compelling case was presented to the committee at the last legislative session, particularly since a fund has been established to assist this type of school district and this would be a good use of these funds at this time.”

Senator Raggio asked whether there was any further discussion on the motion. He asked whether there were any objections, and said, “Hearing none, we will recommend an amend and do pass on S.B. 498.”

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

Senator Raggio stated that A.B. 236 was heard on April 25, 2001, and there was a necessity to move ahead with this bill. He added that this is a small appropriation for the Department of Motor Vehicles and Public Safety (DMV&PS) in the amount of $31,015. He noted that no amendment would be required.

SENATOR NEAL MOVED TO DO PASS A.B. 236.

SENATOR RAWSON SECONDED THE MOTION.

THE MOTION CARRIED.

*****

SENATE BILL (S.B.) 422: Makes appropriation to Division of Child and Family Services of Department of Human Resources for establishing and carrying out public information campaign concerning perinatal substance abuse. (BDR S-1029)

Senator Margaret A. Carlton introduced her intern, Lynsey Coffman, and stated that Ms. Coffman was assigned this project with the Legislature, as part of her internship at University of Nevada, Reno (UNR). Senator Carlton noted there is a proposed amendment (Exhibit C) to S.B. 422. She pointed out that this bill allocated funds to the wrong source. She said the bill was submitted before the error was caught.

Senator Carlton remarked that the bill should be amended by taking out “Division of Child and Family Services” and inserting “Health Division,” which was the intention of this bill.

Ms. Coffman stated, from written testimony (Exhibit D), that during the past few months she has spent her internship conducting research for this bill. She said that she is aware of the budget crisis, but she believes this project is important and deserves consideration.

Ms. Coffman pointed out that a public information campaign on perinatal substance abuse is important for a series of reasons. First, she said, the effects of alcohol and drugs on fetuses causes these babies to be born with fetal alcohol syndrome, which afflicts from 1,300 to 8,000 babies each year in the United States. She said that these babies can suffer from low birth weight, be born prematurely, and suffer from intelligence and behavioral problems for the rest of their lives.

Ms. Coffman commented that babies born with so many difficulties need a tremendous amount of money to treat them. She pointed out that the request to fund this project would be far less than the cost of treating babies born to substance abusers.

Ms. Coffman said that another concern in Nevada is the problem with teen pregnancy and drug use. She added that Nevada continues to have one of the highest rates of teen pregnancy in the nation. She pointed out that Nevada also has higher statistics for alcohol and drug use among teenage women than nationwide.

Ms. Coffman indicated that she toured the intensive care unit of St. Mary’s Regional Medical Center in Reno to view the facility that is used to treat babies born to substance abusers. She opined these babies are suffering because their mothers were oblivious to warnings about the dangers of drinking and smoking while pregnant. She said that she believes a perinatal substance abuse campaign will help to correct this tragic issue.

Senator Raggio asked how the at-risk population would be targeted under this bill, and who is identified as the at-risk population. Ms. Coffman responded that the at‑risk population includes women in childbearing years. Senator Raggio asked whether this measure would be to carry out a public information campaign, what would be the best way to reach that at-risk population, and how the appropriation would be utilized.

Ms. Coffman, referring to correspondence from the Nevada Broadcaster Association (NBA) (Exhibit E), responded that they offered to run commercials on radio, television, and in high school newspapers. She said a 2-year contract has been proposed at a cost of $100,000 per year. For a $200,000 investment, she added, NBA would provide all production costs and, combined with statewide television and radio, would offer the state a guarantee of a 5 to 1 ratio, for a total of $1,000,000 worth of airtime.

Senator Carlton commented that the NBA has done work with the state before, as well as with other agencies, in being able to get messages out and make every dollar spent worth as much as possible. She pointed out that by doing this with a 5 to 1 ratio, it would greatly increase the amount of information to be disseminated. She said that these radio and television broadcasts would be in the ”off‑times.” She pointed out that teenagers often listen to radio and watch television broadcasts at “off” hours of the day.

Senator Raggio pointed out that he currently hears a lot of advertising on this subject. He asked who would sponsor the ads. Senator Carlton replied that different organizations are putting forth different types of messages including Baby to Baby, and Family to Family. “Our program,” she added, would basically be focused on drugs and alcohol, and directed at the youth.

Senator Coffin asked what types of radio and television stations need to be used for these ads, and whether broadcasting stations are better than cable stations for this target group. Ms. Coffman responded that the television and radio stations to be utilized would be stations that are geared toward young people. She pointed out that, according to the NBA, most NBA stations donate airtime for this type of programming. She added that the funding would be very well used and it would reach the audience it is intended for, which is young mothers.

Senator Raggio pointed out that very limited funding is available for the budget, and there will be possible reductions of current proposals in the budget. He asked whether there is any feasibility of the Health Division receiving funding other than General Fund for this purpose. Senator Carlton responded that she was unable to answer that question. She testified that it is unfortunate that funding is unobtainable through the General Fund, but the division would definitely work towards getting grants and proposals for this program. Senator Raggio commented that this is certainly a worthy cause.

Senator Jacobsen asked whether there is any merit in continuing this program in a high school senior class. Senator Carlton responded that, being the parent of two teenage daughters, she has first-hand experience and she knows that teenagers only absorb so much in class. She added that they receive some of this education in class, but outside of school they turn on the radio and television. She said teenagers tend to absorb things that come from the outside rather than from parents and teachers. She commented that she believes the more time they hear this message, the more they will actually listen to the message.

Judith Wright, Chief, Bureau of Family Health Services, Department of Human Resources, stated that, pursuant to the proposed amendments by Senator Carlton, S.B. 422 appropriates $200,000 to the Health Division to implement a perinatal substance abuse public education campaign. She said it requires surveys both before and after the implementation of the campaign to determine the level of knowledge regarding the dangers of perinatal substance abuse. In addition, she noted, the campaign is to target at-risk populations and those determined to have the highest rates of substance abuse.

Ms. Wright said the Health Division is currently mandated by Nevada Revised Statutes (NRS) 442.385 to conduct a public education campaign to increase public awareness about the dangers of fetal alcohol syndrome (FAS) and other adverse effects on a fetus that may result from the consumption of alcohol during pregnancy. She pointed out that the Maternal Health Advisory Boards Perinatal Substance Abuse Prevention and Fetal Alcohol Prevention subcommittees have both been meeting throughout the biennium to address the mandates of NRS 442.385.

Ms. Wright stated that during this biennium both subcommittees determined establishing a state law requiring retailers of alcoholic beverages to post notices that warn pregnant women of the dangers of drinking during pregnancy should be a priority. She remarked that both subcommittees conducted data analysis to determine the impact of FAS and other substance-related defects in Nevada that are measurable. She added that both subcommittees assisted in the search for funding for projects to reduce perinatal substance abuse in general and FAS in particular. She noted that at this point in time, no other funding has been identified for a campaign like this.

Ms. Wright said that both subcommittees participated in developing a website for the initiative that provides information about perinatal substance abuse and resources available in Nevada. She added that the FAS subcommittee has identified the screening instrument most appropriate for health care professionals to screen pregnant women for alcohol abuse.

Ms. Wright pointed out that the Health Division is developing curriculum to train health care providers and use of the screening instrument, and plans are to start the training with the members of the Great Basin Primary Care Association. Both subcommittees, she said, along with the Maternal Health Advisory Board have recognized the need for a perinatal substance abuse prevention public education campaign.

Ms. Wright said that, although the Baby Your Baby campaign has aired public service announcements on this topic, a public education campaign dedicated to this specific topic has not been implemented in Nevada. She pointed out that this campaign would not duplicate any prior or current campaigns.

Ms. Wright stated that the appropriation for S.B. 422 is not included in the Governor’s budget.

Senator Raggio asked whether there is currently any funding available to cover this type of program. Ms. Wright said there is not, but during the last legislative session, $25,000 was appropriated. However, the bureau was unsuccessful in efforts to obtain grants to leverage it to a larger amount.

Senator Raggio commented that on April 13, 2001, this committee heard Senate Bill (S.B.) 277, which requires signs to be posted in food establishments. He asked whether there is any funding available for that program other than what is requested in the appropriation. Ms. Wright replied that currently the department is purchasing signage, since they were unable to leverage the $25,000.

SENATE BILL 277: Requires posting of sign in food establishments in which alcoholic beverages are sold that warns of dangers of drinking such beverages during pregnancy. (BDR 40-24)

Senator Jacobsen asked whether the department is aware of any federal grants that are available or whether it is aware of any other states pursuing this area. Ms. Wright responded that the department has not identified any federal grants.

ASSEMBLY (A.B.) BILL 548: Revises provisions governing agencies eligible to receive distribution of proceeds of administrative assessments. (BDR 14‑1438)

Don Hataway, Deputy Director, Budget Division, Department of Administration, stated that A.B. 548 is the Budget Division’s proposal. He pointed out that it would implement the recommendations contained in The Executive Budget. He added the statutes provide that 51 percent of the administrative assessments go to the judicial branch and 49 percent go to the executive branch, and the division is not proposing any changes in that overall split.

Mr. Hataway commented that the only change in A.B. 548 is on page 4, line 1, where they propose to add “The advisory council for prosecuting attorneys” as an eligible entity. He remarked that if this bill is approved, The Executive Budget would still have the largest allocation going to the criminal history repository of approximately 63.5 percent. He said that of the 49 percent received by the Executive Branch, the Victims of Crime program would receive 19.8 percent, Peace Officers Standards and Training (P.O.S.T.) would receive 15.3 percent, and the prosecuting attorney’s council would receive 1.4 percent.

Senator Raggio asked whether this was previously funded by the General Fund. Mr. Hataway responded that it has been “piece-mealed” with gifts and grants, and by an appropriation in the 1999 Legislative Session, which does not revert. He pointed out that some funds would be carried over because the position of Executive Director has been vacant. He added that, if anything, it provides a “cushion.” He explained that this would provide a permanent funding base for ongoing operations.

Senator Raggio commented that this is a good program and one that should be retained. He asked where funds for the program could be found. Mr. Hataway replied that every year the Budget Division reviews the needs of the departments. He pointed out that 2 years ago there was a large reserve in the Victims of Crime Program, so the allocation was substantially reduced. He added that the division has since increased the program’s percentage. He added that the funds basically came from P.O.S.T., because it was felt P.O.S.T. had a fairly large reserve and could not justify it, so the allocation was reduced.

Kevin Higgins, Chief Deputy Attorney General, Fraud Control Unit for Industrial Insurance, Office of the Attorney General, commented that the Prosecution Advisory Counsel is housed in their office as a matter of convenience. He said that in the last 4 years there have been approximately 20 training sessions across the state, including subjects ranging from rural guardianships to prosecuting high-tech crime, and driving under the influence (DUI) cases. He noted that this training is provided for local and rural law enforcement. He added that prosecutors and civil deputies in district attorney offices and city attorney offices have been trained through this program.

Mr. Higgins stated that A.B. 548 would firm up the funding for this program. He declared it would be a shame to lose this program.

R. Michael McCormick, Executive Director, Advisory Council for Prosecuting Attorneys, and Deputy District Attorney for Douglas County, encouraged the committee to pass A.B. 548. He added that a stable funding sources is needed and this is a great program.

Senator Jacobsen asked whether there is any record of funds for the program that have been available over the last few years, and what current funds are in the administrative assessment program. Mr. Hataway responded that the administrative assessment program has been growing at approximately 5 percent to 7 percent a year. He added that it is a fairly stable funding source. He noted that the Nevada Supreme Court recommended increasing administrative assessments by 7 percent a year for the next biennium. He said he believes that funding base is fairly stable.

Senator Jacobsen questioned whether judges that are assessing the administrative assessment program are in the same county that is responsible for collection. Mr. Hataway replied that the county collects the assessments and keeps a portion of them, and the remainder is remitted to the state where it is divided between the Executive and Judicial Branches.

ASSEMBLY BILL (A.B.) 549: Increases amount of general obligation bonds that state board of finance may issue to provide grants to certain water systems. (BDR 30-1328)

Allen Biaggi, Administrator, Division of Environmental Protection, State Department of Conservation and Natural Resources, referring to his written statement (Exhibit F), said that A.B. 549 would increase the amount of general obligation bonds that may be used by the Nevada drinking water grants program. He explained that the increase would be from $50 million to $69 million.

Mr. Biaggi stated that Assembly Bill 198 of the Seventieth Session created a program to comply with the Safety Drinking Water Act. The program was designed to assist municipal drinking water systems in Nevada with the high costs of water supply improvement projects. He pointed out that these projects include system needs such as pipe replacements, treatment system capitalization, tank refurbishment, and other projects that assist and allow systems to provide an adequate and safe supply of drinking water to their customers. He said that these funds may be used by water purveyors in the future to meet the revised arsenic rule that is currently being reevaluated by the Bush Administration.

ASSEMBLY BILL 198 OF THE SEVENTIETH SESSION: Revises provisions governing grazing preference rights. (BDR 50-174)

Mr. Biaggi remarked that since the inception of the program, 29 recipients have obtained grants totaling $27 million. He stated that the majority of the systems utilizing these funds are small and rural. Currently, he added, $32 million in projects is being requested or is being held in a pending status. He said, additionally, $10 million has been specifically earmarked for conservation efforts related to water through Assembly Bill 237 of the Seventieth Session.

ASSEMBLY BILL 237 OF THE SEVENTIETH SESSION: Authorizes grants for certain costs associated with connections to municipal water systems and for certain improvements to conserve water. (BDR 30-951)

Mr. Biaggi stated that the total need at this time is $69 million. Nevada Revised Statute (NRS) 329.986 provides for the issuance of general obligation bonds of not more than $50 million. He pointed out that the funding gap for water pollution control and drinking water programs is not unique to Nevada. Nationwide, he added, it is estimated that there exists a $3 billion shortfall, per year, between funding and needs for system refurbishment and upgrades. He said that the State Department of Conservation and Natural Resources supports the proposed increase in bonding authority under A.B. 549.

Senator Jacobsen mentioned that he served on the Minden Town Board for a number of years and said the board used the water system as a revenue source, and as problems increased in town, the board increased water rates. He asked how many wells are in Nevada, and especially in the rural areas, that are in need of upgrades. Mr. Biaggi said he believes there are approximately 650 water systems throughout Nevada. He said that statistics bear out that, if the Bush Administration concurs with the arsenic standard, 126 of those systems will need upgrades and refurbishment to meet those requirements.

Mr. Biaggi remarked that there is a tremendous amount of need in the state, and, as Senator Jacobsen stated, one way to increase revenue is to increase water fees. He added that often these are very small systems and there are only a handful of people using them; therefore, fees can only be raised so much without putting the water system out of business. Senator Jacobsen asked what the agency does as far as monitoring or inspecting, and asked how often water samples are taken.

Mr. Biaggi replied that there is currently a bifurcation between this grants program and the Safe Drinking Water Act compliance program. He said that their “sister‑agency” at the Health Division manages compliance in terms of sampling water and overseeing those water systems from a quality standpoint. He added that his division is currently operating this grants program and providing assistance.

Senator Neal asked how much is in the redemption fund that will be used to redeem these bonds. Mr. Hataway replied that the Budget Division supports A.B. 549, primarily on the basis that it often takes years to get a funding package together to accomplish some of these projects. He added that besides the limit on the amount of bonds that can be issued, there is also another limit in the fact that the bonds have to be paid from the 15 cent tax rate limit that has been self‑imposed. He pointed out that the Capital Improvement Program (CIP) for the next 2 years includes a proposal for the issuance of $3 million per year for this program. He said that would be paid through the debt retirement of the 15 cent tax rate limit, unless there is a material change in the CIP.

Senator Neal asked what kind of change in the CIP would affect this program. Mr. Hataway responded that review of the process by the Legislature could affect this program, or adding more than the debt capacity. He added that he does not anticipate this happening. He pointed out that the Budget Division has taken into consideration the issuance of $6 million over the next 2 years, in addition to the other CIP projects that are recommended for this specific purpose.

Senator Neal asked whether these are tax-exempt bonds. Mr. Hataway said they are general obligation (GO) bonds that are paid by the full faith and credit of the state.

Senator Jacobsen asked whether the Safe Drinking Water Act has funds available for upgrades. Mr. Biaggi replied that the Safe Drinking Water Act has a revolving loan fund to assist, for example, wastewater treatment plants in their capital improvements and operations. He stated that this is related to the Safe Drinking Water Act and is for drinking water purposes. He added that this proposal is a dual federal program, one deals with wastewater and one deals with drinking water, and it ensures the two never cross.

Senator Jacobsen said:

With respect to Storey County and their new treatment plant, we’re the supplier of the water, the state is. Are we subject to any liability, since we are the water source and we don’t treat it? I suppose we treat it somewhat at Lakeview; however, it goes to an open reservoir from there, and then to Virginia City storage tanks.

Mr. Biaggi said he believes that it is the water purveyor that holds the liability and not the water supplier.

Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities, said that he believes Mr. Biaggi already covered the same points as the league and that they fully support A.B. 549. He added that since 1991 there have been 29 rural recipients and the money has gone a long way to help some of these communities that otherwise could not have been helped.

Stephanie Licht, Lobbyist, Elko County Board of Commissioners, stated that they support A.B. 549. She reported that Jarbidge was able to get partial funding through the board for financing water projects and thanked the committee for its help.

BUDGET CLOSINGS

Mr. Ghiggeri advised the committee that the budget closings to be covered reflect some revised recommendations that have been made by the Governor to utilize excess room tax dollars from the tourism budget. He added that basically these closing will reflect a revision from approximately $1.1 million in Fiscal Year (FY) 2002 to approximately $2.4 million in FY 2002, and $1.2 million in FY 2003 to approximately $2.5 million in FY 2003. He added that changes have been recommended by the Governor to replace General Fund dollars with room tax dollars.

Senator Raggio said there is no change in the budget otherwise because those amounts taken from the General Fund would be replenished with tourism dollars.

Cultural Affairs Administration - Budget Page CULTURAL-1 (Volume 1)

Budget Account 101-2892

Bob Guernsey, Principal Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, referred the committee to Closing List Number 9 (Exhibit G) and said there are several technical adjustments, one of which is an adjustment for computer pricing. He added that when the Micrographics budget was closed, a portion of the training costs were prorated that are proposed under decision unit E-275. He noted that decision unit E-275 is a proposal that would allocate $100 per employee, per year, at a cost of $17,000 to train all employees on an ongoing basis in the department.

Mr. Guernsey said it was decided to prorate a portion of that to the Micrographics budget because it has its own funding source, and has 12 employees. He added that this would reduce the General Fund obligation by $1,200.

Mr. Guernsey stated that the Assembly Committee on Ways and Means agreed with decision unit M-200, which would add a new Personnel Analyst position. He commented the Assembly Committee on Ways and Means also felt that if it is appropriate to prorate a portion of the costs of training, and to prorate a portion of the costs of the Personnel Analyst II position. He noted that equates to approximately 7 percent and approximately $3,475 the first year of the biennium and $4,318 the second year of the biennium, which are not reflected on the closing list (Exhibit G).

Mr. Guernsey said the budget contains $9,000 each year for support of the Nevada Humanities Committee, and this funding is in addition to the $200,000 “one-shot” appropriation recommended in S.B. 428. He pointed out that the Assembly Committee on Ways and Means removed that $9,000 appropriation from the budget. In addition, he added, the costs of the Personnel Analyst were prorated.

Mr. Guernsey said that the major changes in the budget for the Department of Museums, Library, and Arts is a substitution of tourism dollars for General Fund dollars, which total $1,245,200 in FY 2002, and $1,305,597 in FY 2003. He stated that the department also proposes that some of the budgets that contain tourism dollars be removed, and tourism funds would be allocated to four different budget accounts. He pointed out that those accounts are outlined on page 2 of Exhibit G. He said that 20 percent of the cost of the Director’s office would be supported from the Fund for Promotion of Tourism. He added that the Nevada State Museum, which currently has no tourism dollars, would have 64 percent of its budget supported by tourism, the state railroad operation would have 80 percent of its budget supported by tourism, and there would be a continuation of the flat funding for historic markers in the Historic Preservation budget. He pointed out a recap of all the pluses and minus for these budgets on page 3 of Exhibit G.

Mr. Guernsey drew attention to page 4 of Exhibit G, which is a letter from Nancy Dunn, Interim Director of the Commission on Tourism. This letter, he noted, takes the committee through an analysis of the reserve, which may end up being higher in the future. He remarked that the Commission on Tourism indicates an available balance of $3,594,285 the first year of the biennium, and $3,538,901 in the second year of the biennium. He added that the commission is suggesting that these amounts be reallocated. He pointed out that a revision from the Budget Office is proposing to reallocate a portion of funding of $1,245,200 in FY 2002 and $1,305,597 in FY 2003 to the Department of Museums, Library, and Arts.

Mr. Guernsey referring to page 10 of Exhibit G, said the Commission on Tourism also recommends that $567,204 in FY 2002 and $613,989 in FY 2003 go toward the Division of State Parks. With projections at this point in time, he added, it would leave a balance of approximately $1,105,000 each year of the biennium. He noted that this would be a policy decision for the committee and would affect a number of budgets. He commented that the Assembly Committee on Ways and Means, in closing these budgets, went along with reallocation of the tourism dollars and reducing the General Fund obligation.

Senator Raggio, referring to page 9 of Exhibit G, asked how the commission arrived at a balance of $1,911. Mr. Guernsey replied that this would be $1,911 over and above the reserve of $1,105,000. Senator Raggio said “In other words, you’re targeting $1,105,000 as a potential reserve.” Mr. Guernsey replied that this is the analysis and the recommendation from Nancy Dunn.

Senator Raggio asked what type of unforeseen contingencies could occur that would reduce that kind of reserve in the biennium. Mr. Hataway remarked this recommendation of exchange of revenue was put together before the general overall revenue of the state started “going south on us.” He said he believes it is imperative that the Legislature supports this proposal. He pointed out that the $1,105,000 projected ending-fund balance is basically providing a 60-day working capital fund because it is non-General Fund and the revenue is needed. What the Commission on Tourism anticipates doing for tourism programs, he added, is built into the budget and they feel very comfortable with what is there. He said the commission is comfortable with the $1,105,000 projected ending fund balance.

Mr. Hataway remarked:

We really, in all honesty, just ran out of time in preparing the budget. We knew there was a fairly sizeable reserve that was reflected in The Executive Budget and that is consequently why we asked Ms. Dunn to come back to us with a new analysis. Of course, the purpose of this was to fund the cost of living increases for the Legislative Counsel Bureau that we had left out of the budget.

Senator Raggio stated that the total recommendation is $1,245,200 for FY 2002, and $1,305,597 for FY 2003, in the cultural affairs budgets, which would be utilized and replaced by tourism. He inquired how much the proposal would add. Mr. Hataway replied that the Fund for Promotion of Tourism for parks, in lieu of General Fund, would add $567,204 in FY 02, and $613,989 in FY 2003.

Mr. Hataway commented the department felt that the overall funding should be changed. For example, he added, the Lost City Museum allocations would be replaced with all General Funds so that the funds could be concentrated in a more logical sequence, as outlined on page 2 of Exhibit G.

Senator Raggio, referring to page 8 of Exhibit G, said this addresses state lands, forestry, wildlife, and state parks, and asked whether there is any contemplation of using money in these budgets. Mr. Hataway responded there was a mere indication that it was feasible to fund these budgets with tourism revenue, but the Nevada Commission on Tourism chose to concentrate on Division of State Parks and the Department of Museums, Library, and Arts.

Senator Raggio asked whether the committee supports the concept that there are some serious reductions.

Mr. Ghiggeri remarked:

I would like the committee to be aware that you will be spending what is termed reserve or “one-time dollars,” to fund some ongoing costs. You need to be fully aware that those reserve dollars may not be available in 2003, to continue the funding and that will have to be made up with another funding source.

Mr. Hataway said he fully appreciated Mr. Ghiggeri’s remark, and possibly in 2 years the Budget Division will need to revisit this issue and see what the situation is, and make the best judgment on resources available at that time. He added that there is a fairly healthy growth in this tax, but he could not predict what it would be in 2 years.

Senator Raggio asked whether utilizing tourism dollars will impact the effort that needs to be put forth by tourism. He said there is concern, particularly in northern Nevada, about the potential impact of Indian gaming in adjoining states, and he did not want to diminish that effect. Mr. Hataway responded, ”I think they’ve taken that initiative, or series of initiatives, approved at a recent Interim Finance Committee [IFC] meeting, into consideration in this budget and are comfortable with this budget.”

Senator Raggio asked what the committee’s pleasure would be to utilize tourism dollars to balance these budgets. Senator Rawson stated that it would save over $1 million in General Fund, and said he believes it is critical to be as creative as possible.

SENATOR RAWSON MOVED TO ACCEPT RECOMMENDATIONS TO REPLACE PROPOSED GENERAL FUND IN BUDGET ACCOUNT 101‑2892 WITH THE FUND FOR PROMOTION OF TOURISM.

SENATOR O’DONNELL SECONDED THE MOTION. (SENATOR NEAL VOTED NO).

THE MOTION CARRIED.

*****

Mr. Guernsey commented that under issues contained in the budget is $9,000 each year for support of the Nevada Humanities Committee, which is in addition to the $200,000 “one-shot” contained in S.B. 428. He stated that the Assembly Committee on Ways and Means removed that $9,000 each year, plus they prorated the cost of the recommended new Personnel Analyst under decision unit M-200 to have the Micrographics division share in that cost.

Senator Raggio asked what would need to be done if S.B. 428 is not processed. Mr. Guernsey replied that there would be no direct support provided to the Nevada Humanities Committee from the General Fund. Mr. Hataway commented that $9,000 provides basic operating support for the Nevada Humanities Committee. He added that the Budget Division has no problem removing that from the budget, subject to the passage of S.B. 428.

Senator Raggio reiterated that S.B. 428 is a $200,000 appropriation to the Nevada Humanities Committee, and asked whether there is a likelihood that, if there are reductions, “one-shots” are going to be paired down. Mr. Hataway responded that the Governor has not made his final list of recommendations, but that is not on the “radar screen” to eliminate.

Senator Rawson commented, “Technically, if we cut this now, we would need to process as much as $9,000 in the bill, or whatever is available. We can easily make that adjustment in the bill, and I recommend that we cut the $9,000 now.” Senator Raggio asked whether he meant to take the $9,000 out of the budget. Senator Rawson replied that was correct.

Mr. Hataway remarked that the Budget Division has no problem with the cost allocation of the Personnel Analyst. Senator Rawson said that would be staff recommendation, and he would move that the budget be closed.

Senator Raggio stated, “The motion from Senator Rawson is to close the budget as recommended. That includes the funding from tourism and it would delete the $9,000 support for the Nevada Humanities Committee each year.” Senator Raggio added that this is in the base budget.

SENATOR RAWSON MOVED TO CLOSE BUDGET ACCOUNT 101-2892 AS RECOMMENDED BY STAFF, WHICH INCLUDES FUNDING FROM TOURISM, AND DELETES $9,000 SUPPORT FOR THE NEVADA HUMANITIES COMMITTEE EACH YEAR.

SENATOR JACOBSEN SECONDED THE MOTION.

THE MOTION CARRIED.

*****

Senator Mathews asked, if funds were to become available through this legislative session, whether the Nevada Humanities Committee could be funded later. Senator Raggio replied the committee has not acted on S.B. 428.

Museums and History - Budget Page CULTURAL-7 (Volume 1)

Budget Account 101-2941

Mr. Guernsey referred the committee to page 14 of the closing packet (Exhibit G). He said this budget provides administrative oversight to the museums and history functions of the department. He stated that the Fiscal Division received a revised request from the administration, which is a consolidation of all the railroad operations into one budget. Currently, he added, this administrative budget also includes the costs associated with the Boulder City Railroad.

Mr. Guernsey said this consolidation is the administration’s recommendation and it makes sense. He pointed out that to consolidate the costs of the railroad operations into one budget and remove it from an administrative budget, it would be displayed in separate expenditure categories so the cost could be tracked. He added that the administration would probably have done that when The Executive Budget was presented, if they had had more time.

Senator Raggio asked whether it would be possible to track all of the expenditures in each of those areas. Mr. Guernsey replied that it would.

Senator Rawson pointed out that he believes this is consistent with the action of the bill that consolidates all of the museum and history budgets into the new cultural arts budget, and centralizes the administration.

Senator Raggio asked whether 80 percent of funding would come from tourism for the railroad budgets in this biennium.

Scott K. Sisco, Interim Director, Department of Museums, Library and Arts, remarked that 80 percent of funding would come from tourism. He added that one reason was the fact that over several of the last biennia, the Fund for Promotion of Tourism was transferred into those budgets by line item. He pointed out that some of those line items were inconsistent with the Fund for Promotion of Tourism funds, as far as funding the overall purpose or mission of the agency. He added that, by putting all three railroad museums into a single budget, the department could utilize a flat 80 percent. He said it also no longer would have to track by line item, which may be in conflict with the statutes and what these line items should be funding.

Mr. Guernsey stated that committee staff found no other issues with this budget.

SENATOR RAWSON MOVED TO CLOSE BUDGET ACCOUNT 101-2941 AS RECOMMENDED BY STAFF WITH THE CONSOLIDATION OF THE RAILROAD BUDGETS.

SENATOR NEAL SECONDED THE MOTION.

THE MOTION CARRIED.

*****

State Museum, Carson City - Budget Page CULTURAL-12 (Volume 1)

Budget Account 101-2940

Mr. Guernsey stated that the effect of bringing tourism dollars in would be a substitution in this budget of over $1 million each year of the biennium. He added that 65 percent of the funding for the Carson City Museum would be coming from tourism. Other than this recommendation, which the committee has already endorsed, he added, there are no other recommendations to this budget.

SENATOR RAWSON MOVED TO CLOSE BUDGET ACCOUNT 101-2940 IN ACCORDANCE WITH STAFF RECOMMENDATIONS THAT GENERAL FUNDS ARE REMOVED TO THAT EXTENT.

SENATOR JACOBSEN SECONDED THE MOTION.

THE MOTION CARRIED.

*****

Nevada State Railroad Museum, Budget Page CULTURAL-21 (Volume 1)

Budget Account 101-4216

Mr. Guernsey stated the Governor’s revised recommendation is to fund 80 percent of the operation of the combined railroad museum budget from the Fund for Promotion of Tourism. Senator Raggio asked whether this budget includes all of the railroad budgets. Mr. Guernsey replied that it does. He added that includes the Ely Railroad Depot, the Carson City Railroad Museum, and the Boulder City Railroad Museum. He noted that each budget would be displayed in separate categories, which would give the department a consolidated railroad budget. He said, at some point in time, the committee may want to consider breaking it out if the Boulder City Railroad Museum grows by a significant amount. He added that it currently would make a lot of sense to consolidate it into this budget.

Senator Raggio remarked that it will be necessary to track those different categories.

SENATOR RAWSON MOVED TO CLOSE BUDGET ACCOUNT 101-4216, IN ACCORDANCE TO THE GOVERNOR’S REVISED RECOMMENDATION.

SENATOR NEAL SECONDED THE MOTION.

THE MOTION CARRIED.

*****

Museum & Historical Society - LV - Budget Page CULTURAL-26 (Volume 1)

Budget Account 101-2943

Mr. Guernsey stated that there is one technical adjustment recommended in budget account 101‑2943. He said the Las Vegas Museum has not been receiving sewer bills from the City of Las Vegas and it was recently notified that sewer costs will be incurred from this point on. He added that adjustments were made each year of the biennium to cover those costs. In addition, he noted, it has come to staff’s attention that this museum is operating a gift shop, and for all other museums the cost for staff who operate the gift shops are being funded from the Dedicated Trust Fund.

Mr. Guernsey commented that the revenues that are generated from the gift shops do not go to the credit of the General Fund, they go into the Dedicated Trust Fund account. He pointed out that the Dedicated Trust Fund is allocated by a separate board.

Mr. Guernsey said there is a half-time position for an Administrative Aide position that would operate the gift shop. He stated that it is committee staff’s recommendation that the Dedicated Trust Fund revenue be substituted to support that half-time position. He added that would save the General Fund approximately $21,057 in the first year of the biennium and $22,805 in the second year of the biennium.

Mr. Guernsey stated that the Assembly Committee on Ways and Means did not close this budget in this manner. He said this was because he was not aware of this issue at that point in time. Senator Raggio asked what the savings to the General Fund would be. Mr. Guernsey replied that the savings would total approximately $21,057 in FY 2002, and $22,805 in FY 2003, and those are offset by Dedicated Trust Fund revenue. Senator Raggio asked whether this is currently being reported. Mr. Guernsey said that it is not.

Senator Raggio asked whether there is adequate funding for this purpose. Mr. Guernsey replied that there is adequate funding.

SENATOR RAWSON MOVED TO CLOSE BUDGET ACCOUNT 101-2943 WITH RECOMMENDATIONS BY STAFF TO ADD THE REVENUE OF THE DEDICATED TRUST FUND REVENUE, AND THAT EXPENDITURES WOULD BE REDUCED BY THOSE AMOUNTS.

SENATOR NEAL SECONDED THE MOTION.

THE MOTION CARRIED.

*****

Lost City Museum - Budget Page CULTURAL-29 (Volume 1)

Budget Account 101-1350

Mr. Guernsey pointed out that the only substitution in budget account 101-1350 would be to remove $11,278 from the Fund for Promotion of Tourism each year of the biennium and replace it with General Funds.

SENATOR RAWSON MOVED TO CLOSE BUDGET ACCOUNT 101-1350 WITH STAFF ADJUSTMENTS.

SENATOR O’DONNELL SECONDED THE MOTION.

THE MOTION CARRIED.

*****

Nevada Arts Council - Budget Page CULTURAL-61 (VOLUME 1)

Budget Account 101-2979

Mr. Guernsey stated that the Governor’s recommendation for budget account 101‑2979 is to delete $62,000 from the Fund for Promotion of Tourism each year for the Nevada Arts Council, and to replace that funding with an increase in the General Fund appropriation. He pointed out that this would limit the number of budgets, which would require a transfer from the Fund for Promotion of Tourism. In addition, he added, the agency, in negotiating the rent and in moving into their new building, faces a rent shortage in its budget. He said it is necessary to adjust the rent by $1,562 in the first year of the biennium and $2,964 in the second year of the biennium.

Mr. Guernsey explained that there are two options to offset those rent shortage expenses, including a reduction in the grant categories, which would leave $730,486 in FY 2002, and $729,000 in FY 2003. He stated that last fiscal year, the agency expended $676,481 in this category, and it is staff’s feeling that this will not create a significant impact upon the agency. The other alternative, he added, would be to substitute General Fund dollars to offset that cost.

Mr. Guernsey commented that otherwise there are no other adjustments in this budget.

SENATOR RAWSON MOVED TO CLOSE BUDGET ACCOUNT 101-2979 WITH RECOMMENDATION OF STAFF TO MAKE AN ADJUSTMENT IN THE GRANTS CATEGORY IN ORDER TO ACCOMMODATE THE RENT EXPENSE.

SENATOR O’DONNELL SECONDED THE MOTION.

THE MOTION CARRIED.

*****

Mr. Sisco stated:

I would just like to make one plea on this issue, instead of actually reducing the grants category. As you know, there are several bills in there that are very unlikely to be funded in increasing any of the grants. This money here would have to come back and be taken away from one of the grantees.

Senator Raggio commented that the committee was only talking about $4,500 out of total of $732,000. Mr. Sisco remarked that is correct, but he wanted the committee to know of his request. He said the agency did “cough up” $21,000 per year in the Las Vegas Museum budget. Senator Raggio stated that he was aware of that. However, they expended $676,000, and the budget is recommending an increase in that amount to $732,000 each year. He reiterated, “We’re only looking at $4,500.”

Mr. Sisco stated that this increase was actually a “one-shot” that was converted into an enhancement unit this year. Senator Raggio said, “Everybody is taking a hit.” Mr. Sisco said he understood. Senator Raggio commented that there is no more General Fund to add. Mr. Sisco responded that he knows this, but when funds were pulled from the Las Vegas Museum, the department was hoping to hold on to this little bit. He stated the department has almost $1.9 million in grant requests this year, and it will be funding less than half of them this year.

Senator Rawson commented, “The message is that we needed $250,000 and you fought us down to $4,500. I’m very sympathetic to this; it is like cutting off a finger. It’s a small hit, but we’ll try to avoid any further hit on it. There are budgets that will take further hits.”

SENATOR RAWSON MOVED TO CLOSE BUDGET ACCOUNT 101-2979 WITH ADJUSTMENTS AS RECOMMENDED BY STAFF.

SENATOR O’DONNELL SECONDED THE MOTION.

THE MOTION CARRIED.

*****

ASSEMBLY BILL (A.B.) 548: Revises provisions governing agencies eligible to receive distribution of proceeds of administrative assessments.

(BDR 14-1438)

Senator Raggio stated that the committee can take action on A.B. 548, which was heard today, unless there is an objection. He pointed out that A.B. 548 is a recommendation from administration to add, as a funding source, the Advisory Council for Prosecuting Attorneys.

SENATOR JACOBSEN MOVED TO DO PASS ASSEMBLY BILL 548.

SENATOR RAWSON SECONDED THE MOTION.

THE MOTION CARRIED.

*****

Senator Raggio adjourned the meeting at 5:26 p.m.

RESPECTFULLY SUBMITTED:

Debra Petrelli

Committee Secretary

APPROVED BY:

Senator William J. Raggio, Chairman

DATE: