MINUTES OF THE
SENATE Committee on Government Affairs
Seventy-First Session
June 1, 2001
The Senate Committee on Government Affairswas called to order by Chairman Ann O'Connell, at 3:55 p.m., on Friday, June 1, 2001, in Room 2149 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 Ann O'Connell, Chairman
Senator William J. Raggio, Vice Chairman
Senator Jon C. Porter
Senator Joseph M. Neal, Jr.
Senator Dina Titus
Senator Terry Care
COMMITTEE MEMBERS ABSENT:
Senator William R. O’Donnell (Unexcused)
STAFF MEMBERS PRESENT:
Kimberly Marsh Guinasso, Committee Counsel
Juliann K. Jenson, Committee Policy Analyst
Sherry Rodriguez, Committee Secretary
OTHERS PRESENT:
Brian Krolicki, State Treasurer
Scott Sisco, Interim Director, Department of Cultural Affairs
Larry Struve, Lobbyist, Chairman, Nevada Advisory Committee on Participatory Democracy
Janine Hansen, Lobbyist, Nevada Eagle Forum
Tom Stephens, Director, Nevada Department of Transportation
Brian Hutchens, Deputy Attorney General, Transportation/Public Safety Division, Office of the Attorney General
Fred W. Welden, Chief Deputy Research Director, Research Division, Legislative Counsel Bureau
Chairman O’Connell:
We will open the hearing and begin with Assembly Bill (A.B.) 567.
ASSEMBLY BILL 567: Revises provisions governing state financial administration. (BDR 30-358)
Brian Krolicki, State Treasurer
I apologize for the late arrival of A.B. 567, but this is probably one of the most important things the treasurer’s office has done for the state in many years. In 1970 the Supreme Court ruling in Nevada Building Authority v. Hancock, 86 Nev. 310,486 (1970) which essentially prevented the state from making any commitment beyond the biennium constituting a debt of the State of Nevada. This means when the state occupies real property, it must rent or buy outright, usually with general obligation bonds. These purchases have not been an option for this state. Several years ago we started to pry open the original Hancock ruling, and subsequently have gone through a test case, EICON (Employers Insurance Company of Nevada) v. the State Board of Examiners, 117 Nev. 24 (2001), to essentially push back the Hancock ruling even further, to allow for a lease purchase.
Just to give you an idea of the scope of the importance of this, Nevada leases about $15 million to $20 million a year of office space for its functions. That amortizes to about $150 million to $200 million in bonds. So, without adding one dime of taxpayer money, Nevada now, through lease purchase, could construct or enter into lease purchase for facilities valued at $150 million to $200 million. A favorable court ruling very recently rolled back Hancock. We had anticipated a positive ruling and drafted A.B. 567 to accommodate the possibility for lease purchase here in Nevada.
This concept might be somewhat familiar because you heard A.B. 601. I believe, in the back of this bill, it repeals A.B. 601. Assembly Bill 601 very quickly accommodated lease purchase, but it was not a piece of legislation; it was bare bones. This document really expands and fully utilizes the concept of lease purchase. This has been worked out with bond lawyers, security lawyers, and Wall Street types.
Assembly Bill 601: Restricts ability of state agencies to enter into certain agreements to purchase real property. (BDR 31-1106)
Mr. Krolicki:
What is included before you today is a nonappropriation clause mentioned in section 8, just to make sure the state is protected; in case of nonappropriation there is no liability to the State.
Section 9 provides the ability for the State to issue Certificates of Participation (COP). So, rather then selling a bond, we would be looking to underwrite a facility with COP. It is not the full faith and obligation of the State, but it allows us to undertake a much larger operation. For example, if the state were to build a building in the Capitol Mall for state employee procedures for operations, very few contractors who would build it would want to hold the property for 20 years until the note is paid off. You need to capitalize the obligation because contractors just want to build it and get out of it. So, you would access funds from investors in the market place on the COP, and the money would be used to pay off the contractors and the people who created the building. Then it would be our obligation, over a period of maybe 20 years or so, to pay off the liability; we could pay if off at any time. Again, it would not constitute a debt of the State of Nevada.
This also has a process which allows a noncompetitive bidding process the state normally undertakes, which is very critical for the private parties who would be potentially participating in this. Also included is a very detailed process of how lease purchase would be approved.
The legislature, either when it is in session or through the Interim Finance Committee, would approve an amount of money to proceed with a lease or lease purchase. It would have to go to the head of the budget division, the state treasurer, and would also have to go to the state land registrar for approval, so everybody is on the same page. Depending on whether or not the state actually owns a piece of land or whether it is a separate piece of land, it would go through both the board of finance and sometimes the board of examiners, and then the governor would have to sign off; that is the process. We think it gives great relief, potentially, to the hundreds of millions of dollars on the State’s balance sheet.
Lastly, on a completely different subject, section 21 of the bill provides for an ability to refund a general obligation, private placement Nevada has with Corrections Corporation of American and the Women’s Correctional Facility down south. Original authority was never allowed for bonding. This allows us to bond for it. We would want this, because if we have some refunding opportunities we can take advantage of the market. In fact, we have recently seen savings of potentially $1 million in present value; we just need to say the word “bonds” in this section so we can actually have a tool to access the $1 million in savings.
Chairman O’Connell:
Do you have a breakdown of the bill?
Mr. Krolicki:
I have a highlight of the bill (Exhibit C).
Chairman O’Connell:
Are there any questions from the committee?
Senator Care:
Mr. Krolicki, how did the Hancock case ever get to the court in the first place? I do remember A.B. 601, but I was under the impression we were just talking about a few cases. I think there was reference made to a project in Reno, or a lease in downtown Reno. What was the case all about?
Mr. Krolicki:
The case is very broad-based. Any obligation or liability entered into by the State Legislature, whether for real property or renting computer equipment, going beyond the biennium constituted the debt of the State, because of the Hancock decision. So, it was a very broad application. People in enterprises who are desirous of entering into lease purchase are scared away by that decision. We operate in a very gray area. There was actually a case involving the state treasurer and business computer rentals which opened it up for equipment and other nonfungible property. But at the time of the Hancock ruling, the court saw the procedure as a misuse of circumvention of debt. It involved some university facilities, I believe, and rather than direct funding, this was done off the balance sheet so one hand was handing it to another hand of the same person.
This actually has a third party operator. We would look at “turnkey” kinds of proposals. If we walked away from a lease someone else would own the building. Under the Hancock ruling, they felt there would be no other tangible use, and therefore there really was not a realism test for walking away from the liability; it really was a debt. It has taken a very long time to create a test case where we could visit the court with this question, which is now 30 years old. They did us a great service by expediting the hearings and understanding the way most states operate. Local governments can lease purchase; it is just the state which cannot do it. We were very backward and behind the times, and it really was a separate financial issue. Nevada was one of two states with these kinds of prohibitions; now there would be only one.
Chairman O’Connell:
One concern is if we encourage the government to buy more buildings with a lease purchase, then we are taking those properties off the tax rolls. You are talking about $20 million did you say?
Mr. Krolicki:
The state will always be in the office space rental business, but right now about $15 million to $20 million is spent leasing office space around the state; about $7 million to $8 million, just here in Carson City.
Chairman O’Connell:
We have such a small tax roll now when we are looking at property taxes. It is a concern to me if we start buying more.
Mr. Krolicki:
With all due respect, Madam Chairman, right now, for example, in Carson City we lease $6 million to $7 million worth of office space a year. We are paying somebody else’s profit and we need to make sure we cover their tax liabilities and those kinds of things. The state could just do its business much cheaper, and more efficiently. Rather than being scattered out, we could focus these same rental streams into a capitol office building of some kind, with not one extra dime of taxpayer money being used. This was one of the problems in getting a test case, because the rental folks were not excited about this. EICON was willing to step in and take the risks associated, even with a test case, of suing the state and the board of examiners for not hearing this contract. Because of the Hancock case parameters, I do not think there will ever be a significant amount of office space or real property taken off the tax rolls to make any difference.
Senator Care:
If this goes to computer leasing as well, not just real property, the governor has to execute some of these agreements. Are those only the ones with waivers coming into effect, or is it all of them?
Mr. Krolicki:
Several years ago in a case involving the state treasurer and business computer rentals, this issue was settled. It goes through state purchasing, similar to leasing a fleet of automobiles, but the state can lease purchase properties for longer than a biennium. This procedure I am showing you today would just be for real property; specifically, office buildings.
Senator Care:
The governor would actually execute those agreements?
Mr. Krolicki:
He would. He also sits as chairman of both the board of finance and the board of examiners. So, he would be in an “eagle’s seat” to make sure everything is fine. Just as he executes documents as chairman when we sell bonds; it would be very similar in this process.
Chairman O’Connell:
Are there further questions? We will close the hearing on A.B. 567 and open the hearing on Assembly Concurrent Resolution (A.C.R.) 38.
ASSEMBLY CONCURRENT RESOLUTION 38: Endorses support and expansion of programs that motivate students to learn more about democratic system of government. (BDR R-1554)
Scott Sisco, Interim Director, Department of Cultural Affairs:
Today we are here to speak on behalf of A.C.R. 38. The 1997 Legislature, in Nevada Revised Statutes (NRS) 378, created a repository for records concerning programs, activities, and events related to the participation of citizens in the development of public policy and the improvement of the operation of government, which was placed in the Nevada State Library and Archives, a division within the Department of the Museums, Library and Arts. The same Legislature also required the director of the Department of the Museums, Library and Arts to submit a report on the status of the repository, which we did on May 3, 2001.
Larry Struve, Chairman, Nevada Advisory Committee on Participatory Democracy:
We were mandated, as Mr. Sisco stated, to help the department prepare a report for consideration in this session of the Legislature, which is the booklet in front of you (Exhibit D. Original is on file in the Research Library.).
Basically, what we have tried to do, Madam Chairman, is prepare a report for the Legislature to appropriately measure how well Nevada citizens are participating in our democratic system. We thought an effective way to communicate this would be to prepare a report card on democracy.
This report card encapsulates what the substance of this report is all about. We have looked at four major areas where citizens have opportunities to participate in our democratic system. The first category is democratic institutions. Basically, we looked at our state constitution and measured whether it has the essential elements for a democratic system as currently viewed in the United Nations when they try to determine whether a system is democratic or not. We have given Nevada a very solid “A.” We have the three elements in place: we have a state which has been created by our admission to the Union; we have a system of government based upon free and fair elections, thereby making real government by the consent of the governed; and thirdly, we have a system of laws, which means people’s rights are protected by the rule of law, and there are very extensive discussions of this in the report.
The second category is in the area of voter participation. We have given Nevada a fairly low grade. The reason is, when you look at the number of citizens in Nevada who are eligible to vote, we find not enough of them are registering to vote, and of those who do register, we do not get a very high participation rate compared to other democracies in the world. In fact, in the hotly contested 2000 Presidential Election, only 39.9 percent of Nevada voters participated. Compare that number with the total state population of voters who would be eligible to participate.
Therefore, we feel this is raising a significant public policy issue and one which ought to get people in our school systems, our government institutions, our labor unions, and our business organizations talking about how we are going to address this. As our report shows, the number of participants has been dropping in the last 10 to 15 years. Don Classic, who is a member of our committee, bases this on some very careful study. All he did was check the statistics he got through the secretary of state, the state demographer, and the state library; and they all verified this unfortunate trend.
Mr. Struve:
The third category was education and civics. Here we find a lot of interesting potential to get the students of Nevada involved in studying democracy, Nevada governmental systems, and what it means to be a citizen in a democracy. The tragedy is, many of these programs only involve a handful of students, and many do not have adequate funding so teachers can be trained and materials can be provided to make civics and citizenship education come alive.
What you have before you (Exhibit E) is a copy of a newspaper article which was published this year when the Reed High School team in Sparks, Nevada won the competition called, “We the people.” It is an excellent program designed for civics classes. In fact, the competition is based upon the entry of a regularly enrolled class in civics, and the winning class goes to Washington, D.C. to demonstrate their knowledge of the Constitution in competition with 49 other state winners. You can see from the expressions on the faces, here are some students in Nevada who really have gotten involved with civics.
It would be the hope of our advisory committee to have a very broad-based experience throughout all Nevada classes in civics and citizenship which would reflect the same enthusiasm you see in this news article about the winning team from Reed High School.
Lastly, we talk about civic involvement. We looked at three areas. One was how active our citizens are in participating in public meetings, volunteering for citizen advisory boards, and so forth. We found there is very little information about this. We are not keeping much data on it, but the Nevada League of Cities and Municipalities, and the Nevada Association of Counties have established an award in which they honor local governments, each year, for excellence in citizen participation in democracy and innovations in government which involve citizen participation in forming public policy. We think this example should be strongly encouraged and local government should share in this repository.
Another area we looked at in civic involvement was how Nevadan’s responded to the 2000 census. This actually affects the amount of dollars we can get from the federal government based upon population. If our citizens do not participate, we get fewer dollars. Publicly, we would want to congratulate the Nevada Legislature, through the Interim Finance Committee, for funding a program which involved a media campaign to encourage Nevadans this last year to answer their questionnaires and to participate in the census. As a result, we did have very strong improvement in this category; we were one of the top states in the nation to improve its response rate in the census. Unfortunately, we are still about in the middle of the pack in terms of the overall rate, so there is a lot of room for improvement.
Mr. Struve:
Overall, we gave Nevada a “C” because we think there are some positive things going on, but there is significant room for improvement. The most significant one is in voter participation. Assembly Concurrent Resolution 38 is a way for this Legislature to respond to the work done. It has been done by citizens who believe this is a serious issue, and it needs to be taken more seriously by those in society.
Assembly Concurrent Resolution 38 would direct the director of the Legislative Counsel Bureau to disseminate this report card and the report on participatory democracy to state elected officials, school boards, the university, and any other organizations or associations interested in this topic, urging them to look at the contents and to make suggestions to be put in the repository on how we can improve our scores in the areas I have just elaborated. We have also asked the director of the Department of Museums, Library and Arts, I understand it is now the Department of Cultural Affairs, be encouraged by this Legislature to amend the regulation which established this committee so it can exist beyond its current sunset date of December 31, 2002. This is not a mandate, but we think it would show great support from the Legislature if you passed this resolution to encourage the administration to do this.
Thirdly, we have strongly recommended the civics and education programs be endorsed in this resolution so school boards look at how they can revitalize these courses and the resources available to make civics and citizen education more alive and meaningful for our students. The lowest voter participation rate is in the age category of 18 to 26, so something is not happening in our schools. By passing this resolution, you are asking the school boards to take a look at this.
Lastly, the resolution calls for a follow-up report in the 2003 session to indicate how the issues contained in this report on democracy have been addressed and whether we are making progress.
Chairman O’Connell:
Are there any questions from the committee?
Senator Neal:
Would you agree, voter participation is in direct proportion to their understanding as to whether or not their needs are being served?
Mr. Struve:
It could be. There is actually some support in our report for a connection, because the reason the response to the Census 2000 was higher than the response in 1990 is because of a media campaign which drove home the point: by participating in the census to get a better count, Nevada stood to gain more dollars for education, social programs, and so forth. There could be an argument here, when people see their participation results in benefits which raise the level of good for everyone, they might be more willing to respond and participate.
Senator Neal:
In that case, it becomes the quality of legislators rather than the voters we should be concerned about.
Mr. Struve:
You might need to elaborate a little, sir.
Senator Neal:
I was listening to what you were saying and I know we are seeing participation has dropped off, but studies show when participation was higher, the public perceived their representatives were meeting their needs. As a result, they felt they would come out in support. As my good, late friend Jim Joyce (lobbyist and political consultant said, he could take a candidate lying flat on his hospital bed and win an election for him by media and other things the advertising people do to get people elected. When you speak of voter participation, those thoughts come to mind as the reasons for some of the problems we are confronted with in terms of voters being able to exercise their franchise in great numbers.
Mr. Struve:
Senator Neal, our committee would agree the low participation rates are a matter of great concern, especially when you have a constitutional system premised on the fundamental principle that the power of government or the act of government is based upon consent of the governed. If you have a dwindling number participating, it raises the question, “Are we indeed getting the consent of those we wish to govern?” whether it is through imposition of taxes, provision of services, or asking for services of various kinds. Our committee believes, if the trend continues the viability of the democratic system may come into question. This is why we think it is important the content of this report be acknowledged and circulated and people be given an opportunity to respond to it. I am sure there are other answers to your question, but I think I can speak for our advisory committee, we are certainly concerned about it, and we think it has reached a level where it is a matter of public policy.
Senator Titus:
I commend Mr. Struve and the committee for all their work. I was a national judge on the Constitution competition probably 10 years ago. So I think anything we can do to encourage more participation is positive, especially getting people at a young age. A good example of getting young people involved, which has repercussions throughout the whole family, is recycling. We taught children to recycle in school and they went home and made their parents recycle. If you get children interested in the process, they will become good citizens. They might take some ideas home and get their parents involved also, so it will have a double effect.
SENATOR PORTER MOVED TO APPROVE A.C.R. 38.
SENATOR TITUS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS RAGGIO AND O’DONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman O’Connell:
We will now open the hearing on Assembly Joint Resolution (A.J.R.) 9.
ASSEMBLY JOINT RESOLUTION 9: Urges Congress to repeal provision of federal law requiring state to record social security number of citizen on application for driver’s license for state to receive certain federal funding. (BDR R-1290)
Janine Hansen, Lobbyist, Nevada Eagle Forum:
I am here today to support A.J.R. 9. Essentially this urges Congress to repeal the provisions of federal law requiring the state to record social security numbers of a citizen on the application of a driver’s license for a state to receive certain federal funding. This has become a much more poignant issue just in the last week. The gray letter (Exhibit F) contains testimony from the U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security. Representative E. Clay Shaw, Jr. chaired this subcommittee, and stated:
No wonder in a Wall Street Journal poll last year, respondents ranked privacy as their number one concern in the 21st century, ahead of wars, terrorism, and environmental disasters. When social security numbers were created 65 years ago, their only purpose was to track a worker’s earnings . . . . Although social security numbers are used for many legitimate purposes, the wide availability and easy access to this very personal information has greatly facilitated social security number-related crimes and has generated a growing concern.
The pink sheet (Exhibit G) contains testimony from the Inspector General of the Social Security Administration, James G. Huse, Jr. He said, “The misuse of the social security number has become a national crisis and is subject to limitless abuse.” He goes on to mention how dangerous this is and he says it is used by federal, state, and local governments not only for taxes and other legitimate purposes, but for everything from driver’s licenses to water bills and sewer bills as a convenience we can no longer afford.
Then Mr. Huse talks about the use of social security numbers in private industry, which has become reckless. He goes on to say he is calling for legislation with very few exceptions to the use of the social security numbers, such that no private citizen, business interest, or ministerial governmental agency should be able to sell, display, purchase, or obtain any individual’s social security number. Nor should they be able to use any individual’s social security number to obtain other information about the individual.
Then Mr. Huse talks about an issue of concern to many of us, the abuse. In the year 2000 he received over 92,000 allegations of misuse; 46,000 of those were social security misuse. You will notice one interesting thing. He mentions they are now in the process of investigating an Internet site where lists of social security numbers, obtained from a university, were being sold to the highest bidder. He talks about the need to stop this indiscriminate use.
Ms. Hansen:
One of the things A.J.R. 9 does is call upon the federal government to not mandate the states use social security numbers. On the white sheet (Exhibit H) I suggested a couple of amendments. These were proposed in the Assembly Committee on Constitutional Amendments, but because of a problem getting a quorum, they were never passed. This was the language obtained from Mr. Erickson (Robert E. Erickson, Research Director, Research Division, Legislative Counsel Bureau). They suggested adding “or another license issued by the state,” after “driver’s license” on page 1, line 8; and everywhere else it appears. In the section titled “List of Occupations” (Exhibit I), there are over 166 mandates now requiring the use of the social security number in the state of Nevada; including: to get married, to have a license to hunt or fish, and for every occupation, trade, or profession. There are several lawsuits going on with regard to marriage licenses and occupational licenses, not only in our state, but also in other states.
On the green sheet (Exhibit J) you will notice the Michigan Secretary of State has filed suit in Federal District Court against the federal government for requiring this. She felt their system for tracking people in their own state, with regard to child support and so forth, was much more efficient than the federal government’s system. It was also testified to in the Assembly committee, our state system was much better than the federal government’s system at the time.
The yellow sheet (Exhibit K) has some statistics about identity theft. It concludes more than 700,000 people became victims of identity theft in the year 2000 alone. It is almost always through the misuse of social security numbers.
One last item, the orange sheet (Exhibit L) is from the National Conference of State Legislators (NCSL) from several years ago. They passed a resolution asking Congress not to require social security numbers on driver’s licenses. They had asked members of NCSL to go to Congress and testify with regard to this. They felt it was an unfunded mandate, as well as an invasion of the states’ rights, with regard to family law. So this just calls upon Congress to follow their own advice; they should guard social security numbers and the privacy of individuals.
Chairman O’Connell:
Are there any questions from the committee?
Ms. Hansen:
There was powerful testimony provided in Congress about the problems of regaining your identity after you have been subject to theft, including some people having to declare bankruptcy. There was a woman in California whose identity was stolen by a receptionist in a doctor’s office; it caused no end of problems. With 700,000 people each year being subject to identity theft, it is the number one growing crime in America. So, we can take steps to try to prevent this and also raise awareness. We need to prevent it rather than just punish it.
Senator Care:
Ms. Hansen, page 1, lines 13 through 19, makes reference to the Tenth Amendment of the U.S. Constitution and the fundamental right of law-abiding citizens to be secure from unreasonable government intrusion and so forth. The reference to the Tenth Amendment states the newly acted provisions of Title XLII violate the Tenth Amendment; this would be a conclusion of law. I know it only came into effect in October of 2000, but has there been any case law? I know you and other people believe there is a violation, but I wonder if a court has ever ruled on this, because I think we are being asked to say, “It violates the Tenth Amendment,” but I do not know if there is any case authority to back it up.
Ms. Hansen:
I am not sure, but if you look at the case by the secretary of state in Michigan being adjudicated at this time, it is one of her arguments. I am not sure about other court cases, but I know hers is currently in the courts. I think, two sessions ago, the Nevada State Legislature unanimously passed the Tenth Amendment resolution demonstrating support, but in terms of specific court cases I do not know of any, and I do not think there was discussion in the Assembly committee. But I do know a violation of the Tenth Amendment is specifically referenced in the case filed by the State of Michigan.
Senator Care:
In the reference to law abiding citizens, I assume what is really contemplated here is any citizen?
Ms. Hansen:
I think the reason we used the term law-abiding citizens is, in some cases, special things apply to criminals. For instance, they would maybe have deoxyribonucleic acid (DNA) testing, but they are using social security numbers to track criminals now. So, I think it was intended not to thwart the attempt to track criminals.
Chairman O’Connell:
Is there anyone else who wishes to address A.J.R. 9?
SENATOR PORTER MOVED TO AMEND AND DO PASS A.J.R. 9.
SENATOR NEAL SECONDED THE MOTION.
Chairman O’Connell:
Amend and do pass A.J.R. 9, is there any opposition to the motion?
Senator Care:
I agree with the intent, but I am not prepared to conclude this federal statute violates the Tenth Amendment. I would have to see some case authority which says that. That would be the reason for my opposition.
Chairman O’Connell:
We will make that part of the committee minutes. OK, if there is no other opposition, then we will request the amendment and take the bill to the floor.
THE MOTION CARRIED. (SENATOR CARE VOTED NO. SENATORS RAGGIO AND O’DONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman O’Connell:
Mr. Tom Stephens, Director of the Nevada Department of Transportation, is here to speak to us about the whistle-blower bill which we have talked about before. Senator Porter had asked us to hold on Senate Bill (S.B.) 556 because of an ongoing court suit. Mr. Stephens, could you come up and give us some information on this? My understanding is you have no objection to the bill itself. Is it the amendment added on by the Assembly?
SENATE BILL 556: Prohibits reprisal or retaliatory action against officer or employee of local government who discloses improper governmental action. (BDR 23-793)
Tom Stephens, Director, Nevada Department of Transportation:
Yes, it was the amendment added on by the Assembly. If you are looking at the bill, page 2, lines 18 through 23 define “disclose” or “disclosure.” Basically, the thrust of the bill was to allow the state whistle-blower law to be applicable to local government. During the course of consideration on the Assembly side, they actually amended the state whistle-blower law and are changing the standard. I think the amendment was based on statements and information provided by one of the employees at Nevada Department of Transportation (NDOT) who is suing us under the whistle-blower law in a number of different venues. He provided information, which, certainly if I had been at the hearing, I would have taken exception to a number of the statements made and the characterizations of both the facts involved and the federal law.
My purpose here today is not to go through the details of this lawsuit which has been going on for 5 years, in one form or another. We are concerned it will have an impact on this particular suit, and it will certainly have an impact on whistle-blowers.
If you look at the definition, you can see there is not much of a standard for where complaints are made, or to whom you are blowing the whistle; it changes this. Mr. Hutchens, who is our deputy attorney general, certainly can tell you the legal ramifications.
Brian Hutchens, Deputy Attorney General, Transportation/Public Safety Division, Office of the Attorney General:
What is being distributed is a brief overview of the difference between the federal and state whistle-blower laws (Exhibit M). The purpose of this is just to show you how much more complicated the federal act is than one might imagine. It is certainly more complicated if somebody wants to put in the same standard on this disclosure definition. I believe the testimony has been to lower today’s standard in Nevada requiring an actual violation of law, to the standard of somebody’s good faith belief there has been a violation of law.
If you look at the handout, first of all, the federal act is very complex and it is found in several different places in Title V of the United States Code. The elements are as follows: Number one, the employee has to show by a preponderance of evidence a protected disclosure was made and it was a contributing factor in the personnel action. This is somewhat similar to current Nevada law. Number two, even if the employee meets this burden, there is not going to be corrective action if the agency then shows by clear and convincing evidence it would have taken the same action in the absence of the disclosure. This is not applicable to Nevada today and is not one of the things management can demonstrate, i.e., the action would have been taken in any event. Number three, personnel action shall not be taken against the employee because of disclosure which an employee reasonably believes is evidence of a violation of law, or gross mismanagement exists.
What I want to point out is the lower standard of good faith does exist in federal law, but there are several other thresholds. First, the employee must exhaust his administrative remedies. There are several administrative remedies or hurdles he or she must overcome. First, there has to be a corrective action sought from special counsel. Under the federal law, special counsel is appointed by the U.S. President for a 5-year term and is confirmed by the U.S. Senate. The special counsel then screens these complaints, investigates, recommends, and can report. Ultimately, he or she can report to the federal merit systems protection board, which is part of the whole system. After a complaint has been screened and the special counsel believes there is reason to believe there was a violation of the whistle-blower act, the merit systems protection board can refer the complaint. This is another protection which does not exist in Nevada.
Senator Neal:
I have a question. It is not mandatory, but it is permissible for an employee to seek some type of ruling under this merit protection board, is it not?
Mr. Hutchens:
Administrative remedies must be exhausted before an employee can seek any kind of judicial remedy. An employee can only seek an appeal to the federal courts after going through the merit systems protection board; this is my understanding.
Senator Titus:
This says “may” on the sheet you just handed out.
Mr. Hutchens:
Perhaps I misspoke. The intent was, after the special counsel has looked at the complaint and determined something can be done, there is the option of going to the merit systems protection board. However, special counsel may choose not to do this.
Let me read you a case out of the United States Court of Appeals for the Federal Circuits. This is a quote, “The purpose of the Whistle-Blower Protection Act is to encourage government personnel to disclose government wrongdoing to persons who may be in a position to remedy the problem without fear and retaliatory action by their supervisors or those who might be harmed by the disclosures.” In the case, the complaint was not adequately made. He did no more than voice his dissatisfaction with his superiors’ decision, and because the disclosures were not made to persons in a position to correct the alleged abuse, his disclosures are not protected.
For the purposes of this bill, the definition of disclosure would essentially say you could make a disclosure to anyone. This also does not exist in the federal system. Right now Nevada law does not have the screening process. A body does not ultimately review the complaints, but a single hearing officer from the Department of Administration reviews them. There are also other protections for employees, such as the grievance procedure to the Employee-Management Committee, Department of Personnel. Nevada law now attempts to strike a balance between the employees and the management. If a debate is needed regarding this good-faith standard and any attendant procedures, then perhaps a full debate should be held. But I do not think we have seen a full debate on this at this point. Maybe it should be left for another session.
Senator Porter:
I think there are a couple of issues; one is how this impacts a current case pending in a court of law, and the other is how it impacts the state as a whole and our policymaking. I would like to know a little bit about the case to help me understand exactly what we are talking about, as to how this can impact a pending case. I understand there are probably some confidential issues which could impact the case itself, but I would like to have an overview so I can have a better understanding of the problem with the amendment.
Mr. Hutchens:
The litigation followed a statement made about 5 years ago by an employee from the department who felt a management decision was not in accordance with law. The management decision to shift some divisions within the department was implemented, and ultimately an attorney general’s opinion rendered the action was in fact legal. This individual believed certain employment actions taken against him were because of his reporting what he thought to be an unlawful situation.
Senator Porter:
So, it was an issue of how he reported it, and to whom he reported?
Mr. Hutchens:
Those would certainly be among the issues involved. The main issue involves whether or not there had to be an actual violation of law, or, for his purposes, he only had to have a good-faith belief there was a violation of law. Ultimately, he had a disciplinary action against him which he took through the court system on judicial review. The First Judicial District Court ruled the good-faith standard does not apply in Nevada. The standard is, the individual has to show it actually was a violation of law, not just his good-faith belief there was a violation of law.
Senator Porter:
Which is why changing the definition of disclosure could impact this particular case?
Mr. Hutchens:
The appeal time is still running on the judicial review decision, I believe. I would have to check the exact date, but it would be of concern. Certainly it would be of concern if this statute were retroactive. I see no indication in this bill it is intended to be retroactive.
Senator Porter:
What you are saying, based on your written and verbal statements, is the federal law is very specific, under the Whistle-Blower Protection Act, regarding the steps to be taken.
Mr. Hutchens:
Correct. There are several other steps and thresholds which have to be taken.
Senator Porter:
This amendment could jeopardize those steps?
Mr. Hutchens:
No. All I am saying is, adding a good-faith standard alone to Nevada’s law is not really the end of the question. The federal law has the good-faith standard, but it has several other procedural aspects which show there can be a screening first to determine whether a person has a good-faith belief, and there is an investigation. In Nevada, it would automatically go to a hearing officer who would have to hold a hearing under the administrative process.
Chairman O’Connell:
I think Ms. Guinasso can perhaps speak to the issue as well, Senator Porter.
Ms. Guinasso:
Thank you, Madam Chairman. The committee did ask me to look into the issue of retroactivity for this particular bill, as it stands in its second reprint. It is our position, unless language within the bill itself specifically states it is meant to be applied retroactively, it is not retroactive. There is relatively substantial case law in Nevada to support this position. However, it certainly would not be a problem for our office if it were the committee’s desire to further establish this by putting in a transitory provision which would specify the amendatory provisions of the bill do not apply to any causes of action arising before the effective date of the act. This would further emphasize there is no retroactive application. It is my understanding, on the Assembly side the issue of retroactivity did come up and counsel did explain, unless a bill is specifically made retroactive in the language of the bill it is not retroactive. It was in the record the Assembly committee was not willing to make it retroactive. However, we can include an additional provision if it is the committee’s desire.
Senator Care:
Leaving the good faith standard aside, it would seem to me, if you are going to have a statute on disclosure, you might want to have a definition of disclosure. If you removed all references to a standard here, would you have any problem with what they did on the other side?
We had a bill earlier this session, I cannot recall what it was, and it may have dealt with threats. I think the issue there was, how do you define communication? I had suggested, by simply drawing my finger across my throat, I have perhaps communicated a threat. I do not think the bill went anywhere, but the same thing applies here. If you are going to talk about a disclosure, do you need to define disclosure? We have no statutory definition of disclosure. It is really the good-faith standard which has you troubled, not the attempt to define what is meant by disclosure, right?
Mr. Hutchens:
The reason for reading the quote out of the court of appeals case from 1998 was to show the purpose of the federal act, which is to encourage disclosures to persons in a position to remedy the problem. So, the direct answer to your question would probably be yes. It would be helpful to have a definition of disclosure if the intent of the Legislature is these disclosures should be made to somebody who is in a position to remedy the situation, not just anybody in the world. It would probably be important.
Mr. Stephens:
I think the federal law is fairly clear; they try to screen these things. The reason we talk about the federal law is this was presented on the other side, I believe, as bringing state law into sync with the federal law. I think if we had a screening procedure here, and we were talking about people who were trying to correct the situation, it is different; not just people who later got in some other kind of trouble and said, “This is one way I can block it.” It is almost like an injunction once they file a whistle-blower claim. Then they need a hearing officer, they need attorneys and so, this will block it for another 6 months, a year, or 2 years. I think the initial hearings, in this particular case which I believe evolved around a letter of reprimand, were 1½ or 2 years before the initial hearing officer consideration. Meanwhile, everything is stopped.
Senator Neal:
In NRS, when a whistle-blower complains and subsequent action is taken which he may describe as retaliation, then he has a hearing officer to figure it out. Is that not the intended purpose?
Mr. Stephens:
They also have the Employee-Management Committee, which takes up complaints and hears them out, in addition to a hearing officer. But under this provision you would go immediately to the hearing officer; you would not have the Employee-Management Committee.
Senator Neal:
We are talking about retaliation now. We are not talking about the initial complaint. We are talking about a person who complained, and then there is a subsequent action, which he or she feels has some aspect of retaliation. So under those constraints, is it not a fact the hearing officer is there to figure out this type of complaint?
Mr. Hutchens:
Yes, this is the law as it is today.
Senator Neal:
So, was the law followed in this case?
Mr. Stephens:
I am really oversimplifying it, but the circumstances in this case were, we created a new office within the department. We have 1600 employees, and we took 7 or 8 employees at the time, and created a program development office within the department. When I first came on board I did not feel southern Nevada and the Reno area were getting their due in the urban money. The department was oriented in a very rural fashion. Eventually, this program development office reported directly to the director, which pumped more money into and did more things for urban projects. This was a management decision and the individual took exception to it, because these people were formerly under him and he felt their movement was illegal. He asked the attorney general’s office about it some time later, when we were trying to affect the change. He was part of trying to get it done, but did not want to participate. We took action and sent a letter of reprimand. He said, “The reason you are punishing me is because I complained to an attorney 6 months ago.”
Senator Titus:
Madam Chairman, I think it is a little inappropriate for us to hear from one side about the details of a pending case when the other party is not here to give the other side. The other party is an employee who cannot get off work to come over here, as this bill is not on the agenda anywhere, but you all obviously knew it was coming up. I just do not think this is appropriate. We can talk about concurring or not concurring, we can look at this amendment, but we do not need to go into the details of this case.
Mr. Stephens:
I agree Senator, which is why I said I did not want to get into the details of the case. I am sorry, I got carried away and I apologize.
Senator Porter:
Madam Chairman, I would like the record to reflect we received an e-mail from Frankie Sue Del Papa (Attorney General) urging us not to concur on this. I will read her e-mail for the record: “We need to protect state employees who will legitimately disclose improper governmental action, but the amendment unnecessarily defines disclosure as reporting to anyone a good-faith belief of improper action. So, employees are protected by the current . . . law and by grievance procedures. The original intent of the bill was to include local government, not to change existing law applicable to the state. If I can help, please contact me.” I will provide this for our staff.
Senator Titus:
Madam Chairman, I just have one more quick question. Is it true, Mr. Stephens, you talked the Governor into vetoing our audit of the Nevada Department of Transportation (NDOT) bill?
Mr. Stephens:
No, it is not true.
Senator Titus:
Have you heard whether he is going to veto it or not?
Mr. Stephens:
I know it is under consideration. Prior to the passage of the bill, he made a public statement at a NDOT board meeting, which said he was concerned the audit bill to appropriate money from the highway fund was unusual treatment for a legislative audit. His concern was not about having NDOT audited, it was about the appropriation of the additional $10,000. I did not talk to him about it in advance, but it is what he came out with when we were discussing legislation in the board meeting. It was not part of my board briefing or any reasoning I had. It was his statement made on the record of the NDOT board meeting. We can provide you with the transcript if you want it.
Senator Neal:
Madam Chairman, this amendment seems to be similar to the bill we just passed on the floor dealing with the schools in terms of their reporting. We said any school, or employee who reasonably believes there is a threat to the school could report it. The same language I see here is defining disclosure to mean the reporting either verbally or in writing, by a state or local government officer or employee, of the government action the officer or employee reasonably believes in good faith to be improper government action. So, we have dealt with this language just today. In terms of government wrongdoing, we are saying we cannot use the same information or the same language to define what disclosure is?
Chairman O’Connell:
Committee, what is your preference on this?
SENATOR NEAL MOVED TO CONCUR ON S.B. 556.
(There was no second to the motion.)
SENATOR PORTER MOVED TO DO NOT CONCUR ON S.B. 556 AND GO TO CONFERENCE.
Chairman O’Connell:
OK, is there a second to Senator Porter’s motion?
Senator Neal:
So, you move to do not concur and go to conference?
Chairman O’Connell:
Yes. I could not get a second to your motion, Senator Neal, unless Senator Titus wishes to second it?
Senator Titus:
I support your decision. I think we should include this definition of disclosure in the bill and I think we should look at making it comply with the federal statute. But I am willing to go to conference to talk about it, if this is what you all want to do.
Chairman O’Connell:
Senator Neal, do you have a problem with doing this?
Senator Neal:
No, we can go to conference and talk about it. I do not want it to be an understanding we want to kill the bill, since we have been dealing with this language today.
Senator Porter:
Madam Chairman, I concur. I do not want to kill the bill. Both Senator Titus and I have a lot of time tied up in the original language of this. It is very important because of the problems we had with the health district in southern Nevada with employees who were afraid to be whistle-blowers for fear of the consequences. So the bill is very important, and I would not do anything to jeopardize the language in the bill as written.
Chairman O’Connell:
So, we do have a motion to do not concur with Amendment No. 798 on S.B. 556.
SENATOR CARE SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS RAGGIO AND O’DONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman O’Connell:
Senator Titus, you would like to address A.B. 219 with a prior motion?
ASSEMBLY BILL 219: Directs Legislative Committee on Public Lands to take certain actions relating to wild horses. (BDR S-1119)
Senator Titus:
Yes, Madam Chairman. It came up late in the day when we were wondering what to do about it. There was a notion of getting the Governor to do a resolution. I do not think we are at that stage yet, so I would move to reconsider the action we took on A.B. 219 and recede from our amendment.
SENATOR TITUS MOVED TO RECEDE FROM THE SENATE AMENDMENT ON A.B. 219.
SENATOR CARE SECONDED THE MOTION.
Senator Neal:
Let me understand what we are talking about now, when you said recede. Can we do that?
Senator Titus:
The original bill came over naming the mustang the state animal, but it was amended on the Senate side to take out the language to name it as the state animal and just do a resolution to the Bureau of Land Management (BLM) to control the wild mustang. It was sent over to the Assembly; they did not concur. It has come back to us and I am making the motion to recede from our amendment.
Senator Neal:
Oh, okay, so we have got the mustang as a second state animal?
Senator Titus:
Right.
Senator Neal:
All right.
Chairman O’Connell:
That is the result of the motion being made. Is there any opposition to the motion? Okay, we will take the bill down noting we are receding. Is there any question in anybody’s mind as to what is going on?
We had a do pass on A.B. 219. We got it to the floor where there was an amendment added to change it. We brought the bill back and we were talking about what we needed to do. The decision was made and the bill went over to the other side with the amended version. It has come back to us to agree with the amended version or not. Senator Titus came up with the idea, if we receded from our motion, it then puts the bill back to its original state because the amendment was added on this side. This deletes Senator Rhoads’ motion. The amendment would no longer be on it if we win the fight on the floor. So, by receding, the children would have the bill they initially requested. Interestingly enough, we still have to appoint a conference committee. It is just part of the rules and what the action imposes and how it must be carried forth. So, no one get excited if you see a conference committee on this; it is just part of the process we have to go through.
Senator Neal:
Now, the Assembly committee did not accept our amendment to the bill?
Chairman O’Connell:
No.
Senator Neal:
So when the bill comes back, we can recede from our action. We do not have to have a conference committee on it.
Chairman O’Connell:
No, sir, we do need to have a conference committee. Mr. Welden do you remember telling me I was going to have to appoint a conference committee regardless of whether or not we receded on the floor?
Fred Welden, Chief Deputy Research Director, Legislative Counsel Bureau:
No. I did, in fact, talk to Claire Clift (Claire Jesse Clift, Secretary of the Senate, Nevada Legislature) about it this morning. I was asked to check on this; I think I can explain it. Under one scenario, if you do not recede there will be a conference committee. If you have a motion to recede and it passes, then that is the end of it. The amendment comes off, you have agreed with the Assembly, and it is over. If you have a motion to recede and the motion fails on the floor, then you appoint a conference committee, because it would be just like not receding.
Chairman O’Connell:
OK, I misunderstood. That is the logical thing you would expect, but I thought I heard you say we would have to appoint a conference committee.
Mr. Welden:
Only if the motion to recede fails on the floor.
Senator Porter:
Madam Chairman, our decision today still goes to the floor?
Chairman O’Connell:
Yes, it will be on the floor tomorrow.
Senator Titus:
Did we find out if it is indeed the case, if you vote no you cannot serve on the conference committee?
Mr. Welden:
Again, I talked to Ms. Clift about this today because of the way the form is constructed.
Senator O’Connell:
My form includes all the names of those who cannot be appointed to the committee.
Mr. Welden:
I was told the joint rule is, a majority of the people, from each House, serving on a conference committee must have voted in favor of the measure, which would be two out of three, but it is the tradition of the House through the years for all three to have voted in favor. But it is just the tradition.
Senator Titus:
I say it is time to change tradition.
Mr. Welden:
The other thing is the majority leader initials the action as a final approval.
Chairman O’Connell:
We were kind of taken aback, because all the names of the people who had voted against the amendment to the bill were listed as not being able to serve on the committee, which was news to me.
Senator Neal:
Speaking of tradition, normally you do not put people who vote against a bill on the committee if you want it to pass. It does not mean these people cannot serve.
Senator Porter:
Madam Chairman, just to clarify, what is the request today?
Chairman O’Connell:
The motion made by Senator Titus is for us to rescind our original motion, which we will do, instead of not concurring to recede. Therefore, since the amendment was added on this side . . .
Senator Neal:
Let me put it in terms for him, Madam Chairman.
Chairman O’Connell:
OK.
Senator Neal:
To recede from our action whereby we amended the mustang bill, by taking the mustang out as the second state animal.
Senator Porter:
We are putting it back?
Senator Neal:
Yes, we are putting the horse back.
Chairman O’Connell:
So, is everybody clear on the motion to recede? Is there anybody in opposition to the motion?
THE MOTION CARRIED. (SENATORS RAGGIO AND O’DONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman O’Connell:
Assembly Bill 637 is our next issue.
Assembly Bill 637: Makes various changes concerning elections. (BDR 24-339)
Chairman O’Connell:
Assemblywoman Christina Giunchigliani (Clark County Assembly District No. 9) came over to talk to me today and said the Assembly concurs with the amendment we put on the bill so this is a non-issue.
Chairman O’Connell:
The last one is A.B. 326. I think Senator Titus had made the motion to include the university and she would like to rescind that action as well.
ASSEMBLY BILL 326: Makes various changes concerning disclosures relating to lobbying. (BDR 31-496)
Senator Titus:
Madam Chairman, this bill is very important to get the county and local governments to report, and I have been reassured all the information about the university is part of our state budget process, since they are a state agency. So, I would say we should recede from our amendment.
SENATOR TITUS MOVED TO RECEDE FROM AMENDMENT NO. 819 TO A.B. 326.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS RAGGIO AND O’DONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman O’Connell:
Now, we are back to A.B. 567. Committee, what is your pleasure?
SENATOR PORTER MOVED TO DO PASS A.B. 567.
SENATOR CARE SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS RAGGIO AND O’DONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman O’Connell:
We have been reminded, Amendment No. 819 to A.B. 326 has two points; one of which included the university, which we just voted to recede from.
Juliann K. Jenson, Committee Policy Analyst:
The second point of the amendment came from Stephanie Licht of Elko to make an exception for officers and employees who attend a legislative session for less than 40 days.
Chairman O’Connell:
OK, committee, what is your pleasure on the second portion of the amendment?
SENATOR TITUS MOVED TO RECEDE ON THE SECOND PORTION OF AMENDMENT NO. 819 TO A.B. 326.
Chairman O’Connell:
So, the motion now is to totally recede from our action on A.B. 326.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS RAGGIO AND O’DONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman O’Connell:
Now we have heard A.J.R. 5, which proposes to amend the Nevada Constitution to provide for limited annual legislative sessions. This is a bill from last session; from here it goes to a vote of the people. Committee, what is your pleasure on A.J.R. 5?
ASSEMBLY JOINT RESOLUTION 5 OF THE SIXTY-NINTH SESSION: Proposes to amend Nevada constitution to provide for limited annual legislative sessions. (BDR C-308)
SENATOR CARE MOVED TO DO PASS A.J.R. 5 of the Sixty-ninth Session.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION FAILED. (SENATORS O’CONNELL, PORTER, AND TITUS VOTED NO. SENATORS RAGGIO AND O’DONNELL WERE ABSENT FOR THE VOTE.)
*****
Chairman O’Connell:
Let us quickly go through A.J.R. 11. This is the lottery resolution; it is another “biggie.”
ASSEMBLY JOINT RESOLUTION 11: Proposes to amend Nevada Constitution to allow legislature to authorize state to operate lottery for support of public education of children and for support of health and welfare of senior citizens. (BDR C-1200)
SENATOR NEAL MOVED TO DO PASS A.J.R. 11.
SENATOR CARE SECONDED THE MOTION.
THE MOTION FAILED. (SENATORS RAGGIO, O’CONNELL AND PORTER VOTED NO. SENATOR O’DONNELL WAS ABSENT FOR THE VOTE.)
*****
Senator Raggio:
Madam Chairman, on A.J.R. 5 of the Sixty-ninth session, regarding annual legislative sessions, I understand you have a three to three vote.
Chairman O’Connell:
No, it failed with a two to three vote.
Senator Raggio:
I was not here for the vote, but I need to record my vote as in favor, as a commitment I made to Assemblyman Price (Assemblyman Robert (Bob) E. Price, Clark County Assembly District No. 17).
Chairman O’Connell:
Okay, let us go back to A.J.R. 5. I believe the negative votes on A.J.R. 5 were Senator Titus, Senator Porter, and Senator O’Connell. The votes for the bill were Senator Care, Senator Neal, and now Senator Raggio.
Senator Raggio:
I can tell you I do not favor annual sessions, but I did support the resolution.
Chairman O’Connell:
Again, we have a tie vote on the issue, so the motion fails. This committee hearing is adjourned at 5:34 p.m.
RESPECTFULLY SUBMITTED:
Sherry Rodriguez,
Committee Secretary
APPROVED BY:
Senator Ann O'Connell, Chairman
DATE: