SENATE COMMITTEE ON GOVERNMENT AFFAIRS

MINUTES OF THE

SENATE Committee on Government Affairs

Seventy-First Session

February 21, 2001

The Senate Committee on Government Affairswas called to order by Chairman Ann O'Connell, at 2:00 p.m., on Wednesday, February 21, 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 William R. O’Donnell

Senator Jon C. Porter

Senator Joseph M. Neal, Jr.

Senator Dina Titus

Senator Terry Care

STAFF MEMBERS PRESENT:

Kimberly Marsh Guinasso, Committee Counsel

Juliann K. Jenson, Committee Policy Analyst

Laura Hale, Committee Secretary

OTHERS PRESENT:

Fred L. Hillerby, Lobbyist, Verizon Wireless

Pat Coward, Lobbyist, Washoe County

John J. Slaughter, Lobbyist, Washoe County

Carole Vilardo, Lobbyist, Nevada Taxpayers Association

Marvin Leavitt, Lobbyist, City of Las Vegas

Robert E. Campbell, Lobbyist, City of Henderson

Robert S. Hadfield, Lobbyist, Nevada Association of Counties (NACO)

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

James J. Spinello, Lobbyist, Clark County

Mark Gregersen, Assistant Manager, County Manager’s Office, Washoe County

Jeanine Coward, Assistant State Controller, Office Of The State Controller

Chairman O’Connell stated that the hearing on Senate Bill 163 would be rescheduled per a request from Senator Townsend.

Chairman O’Connell opened the hearing on a request for a bill draft.

Fred L. Hillerby, Lobbyist, Verizon Wireless, testified that a bill draft is requested to implement the “Mobile Telecommunications Sourcing Act” (Exhibit C) that was passed by the 106th Congress of the United States of America, Second Session, as H.R. 4391, to go into effect August 1, 2002. This bill will determine where revenues will be taxed on sales of wireless telecommunication systems, he said. Specifically, the bill will clarify that tax will be charged by the primary use area, eliminating duplication that has occurred when cell phones are used in the roaming mode. (Later introduced as Senate Bill 563.)

SENATOR RAGGIO MOVED TO REQUEST A BILL DRAFT TO IMPLEMENT MOBILE TELECOMMUNICATIONS SOURCING ACT.

SENATOR O’DONNELL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell opened the hearing on the request for a bill draft.

Senator Raggio stated that the bill should do two things: 1) If a state employee leaves a current position and is hired into a similar position in the public or the private sector, the new employer would be responsible for the cost of any specialized training incurred by the previous state employer; 2) For future state employees, a 1-year cooling off period would be required before an employee could transfer to another, similar, public sector position. (Later introduced as Senate Bill 354.)

SENATOR O’DONNELL MOVED TO REQUEST A BILL DRAFT ON THE ISSUE OF STATE TRAINING EMPLOYEES WHO LEAVE AND GO TO OTHER ENTITIES.

SENATOR PORTER SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell opened the hearing on Bill Draft Request (BDR) 20-499.

BILL DRAFT REQUEST 20-499: Repeals prospective expiration of certain provisions concerning surcharges on telephone services in certain counties for enhancement of telephone systems for reporting emergencies in those counties. (Later introduced as Senate Bill 225.)

Pat Coward, Lobbyist, Washoe County, testified Washoe County is seeking a permanent funding source to enhance 911 service. The county has worked with representatives from the cities of Reno and Sparks, the enhanced committee on 911, and industry representatives on this bill draft to do away with sunset language.

SENATOR RAGGIO MOVED TO INTRODUCE BDR 20-499.

SENATOR O’DONNELL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell opened the hearing on BDR 23-320.

BILL DRAFT REQUEST 23-320: Removes limitation on amount of cost of premiums for health insurance that certain governmental entities may pay for retired employees. (Later introduced as Senate Bill 226.)

John J. Slaughter, Lobbyist, Washoe County, testified the bill would remove portions of chapter 287 of Nevada Revised Statutes (NRS) that currently prevent flexibility in the provision of health benefits for county employees. The statute provides that local governments may not pay more for their retirees’ coverage than they pay for their employees. He stated this bill would allow counties to pursue other options for health benefits for employees, such as cafeteria plans, which are not possible under current law.

SENATOR RAGGIO MOVED TO INTRODUCE BDR 23-320.

SENATOR PORTER SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell opened the hearing on BDR 32-892.

BILL DRAFT REQUEST 32-892: Revises and repeals provisions that exempt certain property from taxation. (Later introduced as Senate Bill 227.)

Carole Vilardo, Lobbyist, Nevada Taxpayers Association, testified this bill resulted from a conversation with Robert E. Shriver, Executive Director, Division Of Economic Development, Commission On Economic Development. This bill would allow exemptions beyond the 50 percent and 10-year limits of the current statute. She pointed out that assessors from the Department of Taxation reviewed what exemptions might be given under these conditions.

SENATOR RAGGIO MOVED TO INTRODUCE BDR 32-892.

SENATORS CARE AND NEAL SECONDED THE MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell opened the hearing on S.B. 123.

SENATE BILL 123: Makes various changes concerning municipal obligations and procedures of debt management commissions. (BDR 30-699)

Marvin Leavitt, Lobbyist, City of Las Vegas, testified that increasingly, combined tax rates have moved toward the $3.64 statutory limit and there are competing debt issues and operating expenses that would go beyond that limit. He stated additional concern regarding competing projects. If, for example, a local entity is entitled to a levy rate of 75 cents, based on the formula in NRS 354.59811, but does not choose to utilize that full amount in a particular year, another entity can request the remaining amount from the debt management commission, resulting in a possible permanent loss to the first entity. If this were the case, he stated, everyone would levy the maximum rate allowed for fear that someone would “move in on them.”

Mr. Leavitt continued to say that currently, the debt management commission can only accept or reject a proposal. This bill would allow them to serve as a mediator and would require them to notify local governments that would be affected if the proposed debt goes over the $3.64 statutory limit. Also, he said, there is a provision in this bill to allow an entity to reserve a portion of the debt limit, as in the language at the bottom of page 2, line 46 of S.B. 123:

(2) Provide a method for resolving conflicts over the remaining allowable increase of ad valorem taxes between municipalities whose tax-levying powers overlap, which must be based upon the highest and best use for the remaining allowable increase of ad valorem taxes.

Mr. Leavitt stated the debt management commission would be responsible for providing a method for resolving conflicts. He concluded that if something is not done to resolve this possibility of conflict, there will be an intolerable situation with school districts, city councils and other local entities.

Responding to a question from Senator Raggio, regarding who should determine the best use, Mr. Leavitt explained that, currently, rates are levied for local projects on a first-come, first-served basis. If overlapping local government entities request projects simultaneously, there is currently no method for working out a negotiated agreement. Further, he stated the total rate available would only satisfy a portion of the requests and there needs to be a process that would allow multiple entities to get some portion of the allowable rate to implement their projects.

Again, responding to Senator Raggio, Mr. Leavitt explained there would have to be affirmative approval by the debt management commission for a project to go forward with a levy rate. The debt management commission used to be just for debt issues, but the Legislature expanded its authority as a result of some problems in White Pine County. Mr. Leavitt said that he is unaware of any other groups that could serve this function.

Robert E. Campbell, Lobbyist, speaking as a member of the Debt Management Commission, Clark County, testified that the Clark County Debt Management Commission has 11 members, including representation of every tax entity involved and 2 lay members. He suggested that all members should have input regarding implementation of guidelines, to come up with a workable policy. Although this would be a major burden to the debt management commission, presentations are usually formal and are subject to NRS. He stated that it is sometimes difficult to know the practical effect of the decisions made by this commission. However, this bill would require more and better information and would create a process for dealing with multiple requests that go over the statutory limit.

Robert S. Hadfield, Lobbyist, Nevada Association of Counties (NACO), testified a representative from the City of Elko reported that in a recent meeting, a request from the school district was limited by the debt management commission due to insufficient information to justify the full amount requested. The representative from the school district was absent from the meeting. Mr. Hadfield stated the debt management commission in Elko consists of five members. He said he believes all the smaller counties have five members on the debt management commissions, and offered to get specific information for the committee.

Mr. Leavitt responded to several questions from Senator Raggio regarding how this bill would be implemented. He clarified that this bill would take effect when there is a proposal that would go over the statutory limit of $3.64. Also, an ad valorem-tax problem may be created because of the limitation set forth in NRS 361.453. He added the project must be within the capital improvement plan, as required by subsection 4 of NRS 350.004.

Mr. Leavitt explained that this bill would allow the debt management commission to evaluate the legitimacy of a project that is brought to them by a local entity, and cited subsection 5, section 1 of the bill, S.B. 123:

If the commission receives a proposal to which an objection has been raised pursuant to subsection 3, the commission shall resolve any conflict between the municipality and the entity over the use of the remaining allowable increase in ad valorem taxes and determine whether to approve, in whole or in part, or reject the increase in ad valorem taxes set forth in the proposal.

Further, Mr. Leavitt stated that this would allow some negotiation between competing entities, and noted that the potential for “mischief” among competing entities exists currently, and without this bill, there is no means for resolution.

Mr. Hadfield also responded to Senator Raggio’s concerns. He said there is not a lot of debt in rural counties, and where it does exist, it is usually from school-related issues. Currently, there is no protection from a single entity usurping the available tax rate. Although the debt management commission may not be the perfect group to resolve these conflicts, it does allow elected officials to have a dialog, he stated. In the absence of this bill, counties are at the greatest risk, because in the past, they had to “buy everyone down.” Mr. Hadfield suggested the response to this bill will be well thought-out plans and added the notification requirement puts everyone on notice if there is a big project coming up that will affect other local entities. He summarized that NACO supports this bill in the absence of other options and will work with the committee.

Mr. Leavitt noted a current problem in small districts is that a high rate is needed for very small projects and, in that circumstance, no other debts can be issued. Responding to Senator Neal’s concern regarding an overall standard for egalitarian resolution, Mr. Leavitt cited paragraph (b), subsection 7, section 1 of the bill, regarding “The commission:”

Shall establish a method for determining the highest and best use for the remaining allowable increase of ad valorem taxes for municipalities which must be based upon a comparison of the public needs to be served by the proceeds from the proposed debt or tax levy in a proposal submitted pursuant to NRS 350.004 and the public needs to be served by other possible debts or tax levies by other municipalities whose tax-levying powers overlap . . .

Mr. Leavitt clarified that proposals would need to be evaluated on an individual basis and that it would be hard to provide additional detail in the bill language. Responding to Senator Raggio’s concern regarding whether an entity would commit to “no intent to levy ad valorem taxes” upon approval of proposal, as in subsection 3, section 1 of the bill; Mr. Leavitt stated that it would depend upon the relationships of the competing entities, and they may try to work something out in advance.

Responding to Senator Porter, Mr. Leavitt estimated that the remaining rate amount under the existing cap in Clark County is about 25 to 40 cents. The current provision regarding the rate limit is 90 percent.

Mr. Hadfield responded to a question from Senator Porter, reiterating NACO’s support for this bill because the current process does not give any protection. He said, at least with this bill, there is notification so that an entity cannot rush to lock up a tax rate, in effect, locking others out. Although there is natural tension among entities, this bill provides an opportunity for review of proposals.

Mr. Campbell testified support for the bill as a member of the Debt Management Commission in Clark County. He stated that issues are coming up soon that will hit the 90 percent limit, and there is no way to deal with them. This bill will give more information and a process for dealing with competing entities.

Mr. Leavitt responded to questions from Senator Neal regarding the current process for reviewing projects. He stated that once 90 percent of the $3.64 statutory limit is reached, the “highest- and best-use” standard takes effect. Below 90 percent, the commission is not allowed to consider that. He pointed out this cannot resolve a problem, because the commission can only approve or disapprove a project. Currently, the debt management commission has the final decision on projects if 90 percent of the $3.64 statutory rate is exceeded. The authority for the commission to determine “highest and best use” would be carried over into the new bill.

Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities, testified support for the concept of the bill. He added the Department of Taxation can assist debt management commissions in rural areas that may lack expertise. Further, he stated the committee on local government finance used to meet once per year and is now meeting on a monthly basis to review these issues. The debt management commission could work in the same way. This bill may bring people together with good debt management plans to work out local area problems and plan further into the future.

Carole Vilardo, Lobbyist, Nevada Taxpayers Association, testified support for the bill, but suggested an amendment to allow debt management commissions to annually set a percentage range, not to exceed 85 percent and not less than 70 percent, rather than the current 90 percent that does not provide sufficient notification of financial emergencies. She offered to get specific language for this proposed amendment.

Mr. Leavitt responded to questions from Senator Titus regarding whether an entity would commit to never raising taxes. He explained that the property tax rate is fluid. Maximum rates change from year to year, depending on the debt issue. If assessed value grows, the rate decreases. Therefore, a particular rate is not locked in forever, and an entity could come back with a proposal after the rate changes. Regarding Senator Titus’ concern with increasing authority for nonelected bodies that are not held accountable, Mr. Leavitt stated that there is no single board elected to represent all these local entities, other than the Legislature. And the Legislature would not want to be put in an administrative role to implement these policies. He concluded that there is a good relationship between the committee on local government finance and the state Department of Taxation, which has monitoring responsibility over local government financial matters.

Ms. Vilardo added although members of the debt management commission are not elected specifically to this body, they are predominantly elected officials in other capacities. Required qualifications for members include experience with public finance accounting or governmental background. She also explained that five Nevada Tax Commission members are required by statute to have experience in specific areas of industry, and three members are required to have general business experience; none are elected. Regarding Senator Titus’ concern with whether people know who the members are, Ms. Vilardo responded that some people do not know who their elected representatives are. In California, members are also appointed, rather than elected.

Chairman O’Connell closed the hearing on S.B. 123 and opened the hearing on S.B. 150.

SENATE BILL 150: Authorizes board of county commissioners to provide by ordinance for civil liability for person who violates certain ordinances relating to control of animals. (BDR 20-413)

Mr. Hadfield provided a written copy of his testimony (Exhibit D) and testified support for the bill to allow counties flexibility to use civil citation for minor offenses related to animal control responsibilities. Counties are seeking the ability to pass an ordinance to impose civil penalties rather than criminal penalties, for minor offenses, he asserted. This bill would allow greater consistency across areas within a county and give counties the same authority as cities. Penalties for more serious offenses would not be changed. He clarified for Senator Care that the bill would have the same $500 limit on fines that is currently applied to cities under NRS 268.019.

James J. Spinello, Lobbyist, Clark County, testified support for the bill. John J. Slaughter, Lobbyist, Washoe County, also testified support for the bill. He added that he spoke with staff from animal control and the district attorney’s office in Washoe County who were very supportive. He also stated these cases can be very contentious with neighbors against neighbors and civil liability would be more appropriate than criminal penalties.

Kimberly Marsh Guinasso, Committee Counsel, clarified that this bill does not affect current criminal penalties for violent offenses. The intent is to leave criminal penalties in place. This bill authorizes civil penalties so that the county could give a ticket rather than prosecuting through the criminal system for minor offenses. Ms. Guinasso will check on statutes for criminal penalties to provide additional information to the committee.

Chairman O’Connell closed the hearing on S.B. 150 and opened the hearing on S.B. 151.

SENATE BILL 151: Makes changes to provisions relating to terms of employment for county employees. (BDR 20-319)

Mark Gregersen, Assistant Manager, County Manager’s Office, Washoe County, testified this bill would allow counties to adopt an ordinance pertaining to elected and appointed officers that would allow expense reimbursement for use of personal vehicles at a fixed monthly payment rather than per mileage, as under existing statute. He explained there is a pattern in Nevada, and throughout the nation, to make reimbursement through a monthly allowance and this is needed in Washoe County in order to be competitive with other employers. Cities of Henderson, North Las Vegas, Reno, and Sparks all have monthly rates for council members, chief executive officers, and department heads. Further, he stated, a monthly allowance is more efficient than processing individual reimbursement requests.

Mr. Gregersen added this bill would also allow counties to set annual leave rates for new employees in excess of the current statutory limit of 3 weeks. The City of Reno established a flat rate of 5 weeks’ vacation for department heads. Other employers look at how many years of experience an employee has in previous jobs, and calculate accrual on that basis. He explained that currently, if the county wants to hire someone with 15 years of experience, that person is asked to start over again with regard to vacation accrual schedules because of the 3-week cap for new employees. The county is not suggesting a “highest-bidder” process; rather, it is an issue of equity for county employers. Mr. Gregersen reported the Washoe County comptroller calculated a cost of $15.12 to generate a reimbursement check for travel mileage that can sometimes exceed the actual amount of reimbursement.

In response to questions from Senator Neal, Mr. Gregersen said the proposed monthly allowance would be offered to elected and appointed officers, usually department heads, only. Also, the bill draft does not address the amount of allowance. It would be up to county boards of commissioners to establish rates. Mr. Gregersen cited variable rates currently effective in Nevada. Among city councils, rates range from $600 to $4800 per year. For department heads, rates range from $3600 to $5400 per year. Rates are often determined based on use.

Responding to a question from Senator Care, Mr. Gregersen stated that he is unaware of any case picked up by the press involving people receiving money without incurring any travel expense. Further, the bill does not require record keeping of travel costs. Any regulation would come from county ordinances that would have to also comply with Internal Revenue Service (IRS) requirements. He noted a common approach is to look at different categories of jobs and how much travel they would incur, explaining that often there is an initial period of record keeping to determine category assignment. Long-term records would depend on what the board of county commissioners establish by ordinance.

Mr. Spinello testified that in Clark County department heads receive $400 per month that is reported on an IRS Form W-2 as taxable income and it is up to the individual to deal with deductions. There is no variation by department or degree of travel in Clark County. He added the debt management commission does not receive any allocation. Responding to Senator Titus, he said the state has various methods for payment of travel costs, including carpools, assigned vehicles, and reimbursement.

Ms. Guinasso responded to Senator Titus’ question regarding vacation schedules for state employees. New state employees get 3 weeks per year and the accrual rate increases after a specified period of service.

Mr. Gregersen referred to the Attorney General’s Opinion of the State of Nevada, AGO 2000-19, that a fixed monthly allowance could not be substituted in lieu of the per-mile reimbursement addressed in chapter 245 of NRS. Mr. Gregersen stated what Clark County is doing is only available to appointed department heads and is dealt with as compensation on IRS Forms W-2. The individual employee must produce documentation for his or her tax report to get the deduction. He added Washoe County could do the same, but it would be considered a compensation model, and not reimbursement, as required by statute. Furthermore, elected officials would not be eligible under the current statute.

Responding to a question from Senator Porter, Mr. Gregersen said the current county reimbursement rate is the same as the IRS deduction rate per mile. He would need to ask the Washoe County controller for clarification regarding the tax impact of a fixed monthly allowance. With regard to annual leave, Mr. Gregersen stated the accrual rate for long-term county employees can be changed to above 3 weeks under current statute. The bill request is to allow the board of county commissioners to establish higher accrual rates for new employees to be competitive with local governments.

In response to a question from Senator O’Donnell, Mr. Gregersen said Washoe County employees are required to turn in time slips and trip reports that include mileage. Supervisors review and sign these reports, using the rule of reason. The rule of reason would also be used for monthly allocation amounts. Further, he stated that cities are not subject to the same NRS for reimbursement of travel costs and counties have a lot of elected department heads who would be left out under the current statute.

Chairman O’Connell closed the hearing on S.B. 151 and opened the hearing on BDR 18-663.

BILL DRAFT REQUEST 18-663: Authorizes state controller to appoint persons to certain positions in unclassified service of state. (Later introduced as Senate Bill 228.)

Jeanine Coward, Assistant State Controller, Office Of The State Controller, testified this bill would move supervisory positions to unclassified service, which, she said, the controller believes better reflects their job description.

SENATOR O’DONNELL MOVED TO INTRODUCE BDR 18-663.

SENATOR PORTER SECONDED MOTION.

THE MOTION CARRIED UNANIMOUSLY.

*****

Chairman O’Connell closed the hearing on BDR 18-663 and stated that the Nevada Press Association had made a request for an amendment to S.B. 125.

SENATE BILL 125: Makes various changes to provisions relating to financial reporting of local governments. (BDR 31-898)

Chairman O’Connell reported that the Nevada Press Association has requested an amendment to this bill to require that the financial report that is used in some publications continue to be generated. Ms. Guinasso clarified if the quarterly report is put back in, there may well be a more significant fiscal effect on the local governments.

Mr. Hadfield suggested that the proposed report to be forwarded to the Department of Taxation be part of the public record that could be accessed by the press. Chairman O’Connell suggested a review of the bill language to work something out with NACO.

Chairman O’Connell announced there would be no committee meeting on March 2, 2001, and adjourned the meeting at 4:01 p.m.

RESPECTFULLY SUBMITTED:

Laura Hale,

Committee Secretary

APPROVED BY:

Senator Ann O'Connell, Chairman

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