MINUTES OF THE
SENATE Committee on Finance
Seventy-First Session
May 10, 2001
The Senate Committee on Financewas called to order by Chairman William J. Raggio at 4:33 p.m., on Thursday, May 10, 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 Bob Coffin
Senator Bernice Mathews
COMMITTEE MEMBERS ABSENT:
Senator Joseph M. Neal Jr. (Excused)
STAFF MEMBERS PRESENT:
Gary L. Ghiggeri, Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Bob Williston, Committee Secretary
OTHERS PRESENT:
Howard Skolnik, Assistant Director, Prison Industries, Department of Prisons
Theresa Lemus, Executive Director, Northern Area Substance Abuse Council, Inc.
Wayne Waite, Area Coordinator, United States Department of Housing and Urban Development
Kari Demetras, Chief Executive Officer, Step 2, Incorporated
Pam Becker, Special Projects, The Children’s Cabinet, Inc.
Eileen Piekarz, Private Consultant
Senator Raggio opened the hearing on Assembly Bill (A.B.) 4.
ASSEMBLY BILL 4: Allows money in fund for new construction of facilities for prison industries to be used to expand existing industries. (BDR 16-680)
Howard Skolnik, Assistant Director, Prison-Industries, Department of Prisons, explained that A.B. 4 expands the ability to utilize funds collected from inmate wages. It will allow those funds to be used not only for capital improvement to house new industries, but also to expand of existing industries. He stated that the original intent of this collection was to provide money for prison industry expansion and not for replacement. He pointed out that this bill would not allow the department to use the money for replacement in any existing operation, but to add on to existing operations and add new jobs.
Mr. Skolnik stated that the department started collecting money in Fiscal Year (FY) 1994, and it is anticipated that by the end of this Fiscal Year there will be approximately $640,000 in the fund. He stated the department hopes to use the funds for the purchase of the first building at the Southern Desert Correctional Center, a 20,000 square foot building.
Mr. Skolnik pointed out that, given the time it takes to collect the money, it would be very helpful if the department could expand onto existing industry and not have to wait until there is enough money for a whole building.
Senator Raggio asked for some examples of what kind of industries are presently operating of the prisons.
Mr. Skolnik replied that, since he had last been to the committee, the department has expanded with a card sorting industry providing up to 200 inmate jobs. He pointed out sorting playing cards is a unique Nevada industry. He explained that the cards come from the shoes of the casinos, and the inmates put them back into decks and clip the corners. He said they are then sold in the gift shops in Las Vegas and the Reno-Tahoe area. He stated that there are now such operations at Southern Desert Correctional Center, High Desert State Prison, Jean Conservation Camp, and Warm Springs Correctional Center.
Mr. Skolnik stated that this week prison industries is expanding into the spice business, packaging and blending spices for wholesale sales at the High Desert State Prison. He said the department is also negotiating with a fiberglass fabricator for use of part of the 20,000 square feet being added at Southern Desert Correctional Center. He said they also expect that 10,000 square feet of that facility will be a garment industry to make inmate uniforms.
Senator Raggio asked whether the department is doing some auto restoration.
Mr. Skolnik replied that the department is still doing auto restoration. He said they are doing the restoration for the Imperial Palace collection. He stated that the department has also expanded its own auto restoration shop by 5,000 square feet to a total of about 15,000 square feet.
Senator Coffin also inquired about playing cards from the casinos. He asked whether the cards that arrive at the prisons are in the same condition they are when they leave the casinos.
Mr. Skolnik replied that they are. He explained that the department is working with a private company that has a contract. He stated that the cards are all inventoried and there is a $10,000 per deck fine for every deck that does not come back out from the prison. He stated that one of the reasons the prison now has this program is because it has done a better job than people in the community were doing, both in terms of returning the decks and sorting the cards.
Senator Coffin asked what casinos the department has contracts with.
Mr. Skolnik replied that the private company has contracts with 20 to 30 casinos in the state. Senator Coffin asked for clarification on the amount of fine for decks that are not returned, and Mr. Skolnik reiterated that it is $10,000 per deck.
Senator Raggio asked for further clarification.
Mr. Skolnik explained that the cards come in to the prisoners unclipped, so every deck has to be accounted for because they are potentially still usable cards until the corners are clipped.
Senator Jacobsen indicated that he serves on the Interim Finance Committee's Advisory Board on Prison Industries, and stated that the Prison Industries program is one of the best things the prison system has going today. He stated the department has a ranch with 85 milking cows. He said all the other industries of the department are “first class.” He said the committee toured them twice last year. He stated that the committee is pleased with the direction Mr. Skolnik has given the industry program.
Senator Rawson pointed out that there was concern that one of the committee’s earlier actions in the session had eliminated all of the advisory committees. He asked whether the advisory board had been eliminated.
Mr. Skolnik replied that he believed the Advisory Board on Prison Industries was one of the groups proposed for elimination. He expressed hope that does not happen because the board serves the function not only of assisting the department, but also in meeting federal requirements and American Correctional Association (ACA) standards.
Senator Rawson suggested the chairman consider how the committee can, through the committee, write into one of its authorization bills or appropriation bills that the prison advisory board be carried on. He stated that is a critical concern.
Senator Raggio asked who is considering doing away with it.
Senator Rawson replied that there had been an omnibus bill that eliminated or consolidated all of the commission’s advisory committees in the state.
Senator Raggio asked where that bill was and whether this board is included in that bill.
SENATE BILL 286: Revises provisions relating to certain committees that review issues pertaining to criminal justice. (BDR 14-774)
Senator Jacobsen replied that the bill had passed out of the Senate and is on the Assembly side now. He stated that Assemblyman Marvel, who is chairman of the advisory board, had brought the issue to his attention. He said he believes Mr. Marvel is “on top of that.”
Senator Rawson stated that he does not want to lose that advisory board out of this session.
Senator Raggio suggested it could be included in A.B. 4. He stated that the committee can check with a bill drafter and amend this bill if the board is being deleted.
Senator Raggio closed the hearing on A.B. 4 and opened the hearing on Senate Bill (S.B.) 194.
SENATE BILL 194: Makes changes pertaining to interstate compacts for supervision of offenders. (BDR 16-107)
Senator Raggio indicated that no one was present to speak on the bill. He closed the hearing on S.B. 194, and opened the hearing on S.B. 348.
SENATE BILL 348: Makes appropriation to Northern Area Substance Abuse Council for expansion of and upgrades to its facilities. (BDR S-1496)
Senator Raggio noted that the committee had heard a little about the council when the bill was introduced, and he acknowledged that Ms. Lemus might have to be somewhat repetitive.
Theresa Lemus, Executive Director, Northern Area Substance Abuse Council (NASAC), Inc. (later renamed North Star Treatment and Recovery Center), applauded the committee’s efforts in a tight budget year. She acknowledged that there are not enough resources to commit to all of the needs that have been put before the committee.
Ms. Lemus stated that she is asking for an appropriation of $200,000 for the Lighthouse of the Sierra project and NASAC. She explained that this appropriation would serve the state well because it would be a catalyst for drawing in additional money to increase the treatment capacity in Nevada. She stated that NASAC is looking at a project-leveraging amount in excess of $5 million that would be brought into the state. She pointed out that the requested appropriation would assist her organization in leveraging this funding.
Ms. Lemus explained that Nevada, with this appropriation, would be investing in its future. She stated that addiction in this state is at an all time high, and according to statistics, Nevada is leading the country regarding unmet drug addiction needs. She stated that the partnership between “Lighthouse” and NASAC is “cutting edge,” and explained that it provides comprehensive treatment services to individuals and their families. She also stated that there is service in the state that is comparable to the partnership proposed.
Ms. Lemus pointed out this is one-shot funding. She stressed that the timing of this allocation would be critical to the ongoing project. She stated that in the summer months her organization will be approaching some funding sources for which the leveraging of this appropriation would be critical. She reiterated that the committee can position her organization to draw in additional cash.
Wayne Waite, Area Coordinator, United States Department of Housing and Urban Development (HUD), stated that his office is located in Reno, Nevada and the mission of his office is to assist communities throughout northern Nevada with housing and community development activities. He stated that his office works in partnership with public agencies, non-profit agencies, private lenders, developers, and community leaders so that “no community is forgotten and no person is “left behind.”
Mr. Waite explained that he had two important points to make concerning the Lighthouse of the Sierra projects undertaken by NASAC and Step 2. He said the first point is that the projects are essential to meeting critical needs. He stated that demographic trends point to increasing housing demands, especially for populations with special needs. He said the consolidated plan for Washoe County, which is a HUD required document, estimates that the total number of homeless persons on any given day is approximately 8,000. He pointed out that, of this population, based on national averages, 75 percent require job training, 80 percent have basic dental and medical needs, 60 percent require case management substance abuse services and housing placement, 25 percent have serious mental health needs, and 22 percent are victims of domestic violence. He stated that this translates to a need for approximately 1,300 emergency housing slots, over 2,500 transitional housing with supportive housing services, and over 4,000 permanent housing units with supportive services.
Mr. Waite added that, according to the Washoe County consolidated plan, there are another 16,200 households at risk of becoming homeless. He said this includes households that have incomes of 30 percent or less of the median area income, or are receiving Temporary Assistance for Needy Families (TANF). He reiterated that the demand for housing and services is there and is growing, and it is essential that the need be addressed.
Mr. Waite stated that his second point is that the housing strategies proposed by NASAC and Step 2 are cost effective and produce significant public benefits. He noted that a recent study funded by the Federal National Mortgage Association (Fanny Mae) found that the cost of leaving persons homeless is essentially the same as housing them. He said that, without a stable place to live and a support system to address the underlying problems, most homeless jump from one emergency system to the next. He stated that the Fanny Mae study found that the homeless mentally ill consume about $40,500 worth of publicly funded services annually, compared to $16,282 for persons in supportive housing.
Mr. Waite stated that another study of 9,000 veterans admitted to Veterans’ Administration hospitals found that 35 percent are homeless and utilize an extra $3,100 each per year in services.
Mr. Waite pointed out that nationally the cost per bed of supportive housing is about $34 compared to $68 per day for city shelters, $112 per day for city jail, $350 per day for state psychiatric wards, and over $600 per day for hospital beds. He stated that, from the perspective of the taxpayer who wants money invested wisely, and families and businesses that do not want homeless people living in their streets, supportive housing is a workable and cost-effective solution.
Mr. Waite stated that the Fanny Mae study concluded that, when incarceration, hospitalization, and shelter usage are taken into account for persons living in supportive housing compared to homeless persons, the net cost of health care and shelter is $995 per person per housing unit per year. He concluded that 95 percent of the housing costs are compensated by collateral service reductions attributable to housing placement. He added that it makes sense to put these people into housing instead of leaving them on the street.
Mr. Waite stated that there is more supporting evidence for this point of view. He pointed out other studies, some funded by HUD and some by private sources, have also shown that where the communities develop housing placement strategies which include transitional housing and supportive services, property values in the area actually increase. He observed that a considerable amount of public money is spent maintaining a state of homelessness, and the cost of the cycle of homelessness is extremely high in terms of human and economic costs.
Mr. Waite pointed out that what is important is that the projects being advanced by NASAC and Step 2 break this cycle. He said they will reduce public expenditures and benefit the cities.
Mr. Waite concluded that to succeed, from the perspective of HUD, partnerships and the capacity to meet these challenges must be built. He stated that HUD provides technical assistance to NASAC, and it is his hope that technical assistance will yield fruit and provide access to financing and funding resources, so the project “pencils out.”
Mr. Waite stated that Step 2 has broken ground on Lighthouse of the Sierra already, and it is one of the most innovative family housing and treatment facilities in the country. He stated that it has been his recent honor to nominate that project for a national Best Practice Award within HUD.
Mr. Waite stated that when all the resources “are nailed down” and committed, the state funding and the partnership that is being proposed by this bill will leverage millions of dollars in grants and private financing. More importantly, he added, that commitment will substantially advance projects in Nevada that will generate benefits for all Nevadans.
Senator Raggio asked how much $200,000 would leverage.
Mr. Waite replied that the funding for the NASAC project would be approximately $100,000 of the $200,000. He said that would leverage about $400,000 of home money from the Washoe County health consortium. He stated that his organization is cooperating with NASAC to put together an application for Affordable Housing Program (AHP) funding, which is a grant resource with the Federal Home Loan Bank in San Francisco. He said another $400,000 is expected from that.
Mr. Waite added that he and his partners are now working with several lending institutions to underwrite the project, so they will be bringing in some financing on this.
Senator Raggio asked what HUD contributes to this.
Mr. Waite replied that the home program is a HUD program. He said HUD also provides funding to state and local agencies through the Community Development Block Grant (CDBG) program.
Senator Raggio asked whether that is contingent on the present application.
Mr. Waite agreed it is not contingent on the appropriation. However, he stated that when HUD looks at doing housing deals there are many parts that must come together, and this is a vital part to making the whole deal “pencil out” with regard to “North Star.”
Senator Raggio asked what North Star referred to. He asked whether that is NASAC.
Ms. Lemus explained that NASAC recently changed its name to North Star Treatment and Recovery Center. She stated that she did not want to confuse the committee so she had decided to stick with what was in the bill. She confirmed that NASAC and “North Star” are one and the same.
Senator Raggio asked what the status of “North Star” is.
Ms. Lemus stated that both agencies in this proposal are non-profit organizations.
Kari Demetras, Chief Executive Officer, Step 2, stated that Step 2 is the lead agency for the Lighthouse of the Sierra project. She stated that the planning for this project started in the spring of 1998 and it took 3 years to get to the point where they were able to break ground, largely because it took a while to leverage some of those funds. She explained that her organization has received a lot of block grant funding through the state and support through staffing and resources for the planning, but it has have not requested or received direct state money to support this project. She stated that, from the perspective of the Lighthouse of the Sierra component of this, the leveraging allows them to proceed with future phases. She pointed out that the rentals foundation looks very favorable upon state support, and that would be to the tune of about $4 million for the next phase.
Senator Raggio asked where the residential campus is being constructed. Ms. Demetras replied that it is on Clear Acre Lane and Crystal Lane in Reno.
Senator Raggio asked whether there would be 25 cottages built.
Ms. Demetras replied that there would be 25 cottages and a resident manager’s unit. She said that construction is 80 percent complete, and it is expected that families will move in by July. She added that the project has some generally accepted accounting principles (GAAP) financing on Phase 1 and a payment on that is due to the Bank of America in July. She pointed out that is a critical trigger point for the project. She reiterated that the timing of this financing is essential for the project.
Senator Raggio pointed out that the state would not make an appropriation to repay a loan.
Ms. Demetras agreed. However, she explained that if there is a legislative commitment it can be used to help with the GAAP financing. She explained that there is about $400,000 in GAAP financing that needs to be raised in the next 2 years.
Senator Rawson asked whether the specific amount asked for is the critical number. He asked whether, if the committee were able to provide $250,000 or $150,000, the amount would still be of use.
Ms. Demetras stated she would be very happy with either amount. She stated that she and the others with her were present to request what is, in relative terms for the project, a small amount. She stated that they are trying to be sensitive to the fact that everyone is coming before the committee with multiple needs and there are difficult decisions to be made.
Pam Becker, Special Projects, The Children’s Cabinet, Inc., read the presentation she prepared for the committee (Exhibit C).
Eileen Piekarz, Private Consultant in development and financing of affordable housing, stated that she has been working on the Lighthouse of the Sierra project for the last 2 years, and she has been working in the field of affordable housing development in northern Nevada since 1994. Ms. Piekarz said that funding programs for facilities and capital funding for facilities to serve low-income households are always over subscribed. She added that some of these programs specifically prohibit admittance by households that have a prior substance abuse history, and therefore S.B. 348 would provide an appropriation of $200,000, which would be a very flexible source of funding to help NASAC expand their programs and to help Lighthouse of the Sierra to complete the development of their first phase and leverage their second phase.
Ms. Piekarz concluded that this appropriation would have concrete and immediate benefits for the Reno-Sparks community and northern Nevada. She expressed appreciation for the committee’s consideration of this request.
Senator Raggio closed the hearing on S.B. 348.
Gary L. Ghiggeri, Senate Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, advised the committee that the hearing on S.B. 194 would be rescheduled. Senator Raggio stated that, because of Senator Washington’s having had an accident, that bill would be heard at a later date.
SENATE BILL 443: Makes appropriation to Department of Prisons for stables for wild horses for prison industries. (BDR S-1379)
Mr. Ghiggeri stated that S.B. 443 is in the Governor’s budget, and provides a $200,000 appropriation from the state General Fund for the construction of corrals at the prison. He stated that, based on actions that have been taken by the committee in closing the prison industry budget, the bill could probably be indefinitely postponed.
Senator Raggio confirmed that the joint subcommittee closed that budget. He stated that if that budget is approved there will be no need for this bill, and he expressed confidence that it would be approved. He stated that if that occurs, then there would be no need for this bill.
SENATOR RAWSON MOVED TO INDEFINITELY POSTPONE SENATE BILL 443.
SENATOR O’DONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR NEAL WAS ABSENT FOR THE VOTE.)
* * * * *
SENATE BILL 135: Requires appointment of administrator for each veterans’ home in Nevada. (BDR 37-1032)
Mr. Ghiggeri stated that this bill was heard by the committee on April 13. He said that, at the request of the chairman, he discussed this legislation with Senator Care. He stated that Senator Care provided him with a mock-up version of the bill. He reported that Senator Care would like to keep Section 1, delete Section 2, keep Section 3 but end it on line 3-3 on page 3 at the end of the citation “654.170.”
Mr. Ghiggeri stated that is an amendment that was suggested when this legislation was heard, so Senator Care wants to keep all of section 3 with that change. Mr. Ghiggeri stated that Senator Care wants to ensure that the administrator is already licensed rather have an application for a license pending. Mr. Ghiggeri pointed out that would conform with state Health Division regulations.
Mr. Ghiggeri said that Senator Care has recommended that all of Sections 4, 5, 6, 7, 8, and 9 be deleted. He stated that Senator Care also wants the legislation to be effective on July 1, 2001 as indicated in Section 11.
Senator Coffin asked whether the changes to Sections 4 through 9 would change any existing law.
Mr. Ghiggeri stated that the gift account currently exists in statute. He explained that all this legislation would have done is provide for the revenue that is derived from the sale of license plates for veterans, which currently flows into the Veterans’ Home account, to flow into the gift account. He added that this legislation would also have allowed for the flow of revenue from the Veterans’ Home account for veterans’ exemptions on real and personal property to flow into the gift account instead of the home account as it does currently.
Senator Raggio asked whether Senator Care recommended that Section 10 be deleted.
Mr. Ghiggeri replied that it should be deleted according to Senator Care.
SENATOR COFFIN MOVED TO AMEND AND DO PASS SENATE BILL 135 AS RECOMMENDED BY SENATOR CARE.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR NEAL WAS ABSENT FOR THE VOTE.)
* * * * *
Senator Jacobsen stated that he and others visited the Governor’s Mansion on the previous day and everything “looked great.” He said the only thing requested is a chandelier for the family room. He explained that all the lighting fixtures were removed when the mansion was remodeled, none were ever put back, and the room has become very dark. He stated that the only estimate he could get is $900. He stated it is for a chandelier that would match the others that are in the building.
Senator Jacobsen added some miscellaneous dishes, especially cups are needed. He said the price he got for them is $500. He pointed out that the mansion needs 250 cups. He also added that plates are needed. He explained that they are expensive because the state seal is on them. He said the total cost would be $1,400.
Senator Jacobsen stated there was also a request for pamphlets describing the history of the mansion. He explained that he would not have a price for them until the following day. He said they would be put together by the State Printing Office.
Senator Raggio indicated that budget was kept open, so it can be looked at after Senator Jacobsen has the price for the pamphlets. Senator Jacobsen reiterated that he should have the cost by the next day. Mr. Ghiggeri asked to receive that information so he could prepare for the budget closure on Monday.
There being no further business, the meeting adjourned at 5:12 p.m.
RESPECTFULLY SUBMITTED:
Bob Williston
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: