MINUTES OF THE
SENATE Committee on Government Affairs
Seventy-First Session
April 13, 2001
The Senate Committee on Government Affairswas called to order by Chairman Ann O'Connell, at 1:48 p.m., on Friday, April 13, 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
Sherry Rodriguez, Committee Secretary
OTHERS PRESENT:
Robert S. Hadfield, Lobbyist, Nevada Association of Counties
Marvin Leavitt, Lobbyist, City of Las Vegas
Pat A. Zamora, Lobbyist, Clark County School District
Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities
Mary Keating, Manager, Financial Management, Training, and Controls, Internal Audit Division, Department of Administration
Madelyn Shipman, Lobbyist, Washoe County
Stanley Miller, Tort Claims Manager, Litigation Division, Office of the Attorney General
Wayne E. Carlson, Lobbyist, Nevada Public Agency Insurance Pool, and Public Agency Compensation Trust
We will open the hearing on Senate Bill (S.B.) 553.
SENATE BILL 553: Makes various changes concerning finances of local governments. (BDR 30-130)
Robert S. Hadfield, Lobbyist, Nevada Association of Counties (NACO):
We had submitted Bill Draft Request (BDR) 30-417 which turned out later to be S.B. 559. It is my pleasure to tear up this bill for you, as it appears to be a duplication of S.B. 553.
SENATE BILL 559: Makes various changes to procedures for borrowing by local governments. (BDR 30-417)
Chairman O’Connell:
We will show S.B. 559 as withdrawn and will vote to indefinitely postpone it on Monday, April 16, 2001.
Marvin Leavitt, Lobbyist, City of Las Vegas:
Senate Bill 553 provides for an installment purchase agreement with specific provisions where it can be over 10 years, but if that situation occurs, it must be taken to the debt commission. We ran into a situation where we did not have authority for regulations relating to some of the chapters, particularly for when medium-term financing is moved from Nevada Revised Statutes (NRS) 354.685 to NRS 350.516. We also found a problem with the business impact statement in that regard. We are proposing to eliminate the requirement to put money into extraordinary maintenance funds because there are other bills that do the same thing. I discussed this with you last week in another bill, but, it is this bill which creates a conflict.
There was a problem where debt proceeds were used for operating purposes. You might remember when White Pine County wanted to issue debt to use for operating purposes. The bill would prohibit this except in loans under 1 year. Mr. Swendseid (John Swendseid, Swendseid and Stern, Bond Counsel to the State of Nevada) has proposed an amendment which, when there is a financial emergency situation for an entity under the control of the Department of Taxation, would allow availability of short-term-emergency money. It would be under a controlled situation. There is one provision in the bill which addresses a problem in the Uniform Commercial Code. You have a copy of an amendment (Exhibit C), and I understand legal counsel is familiar with the details.
The capital plan requirement will be extended from 3 years to 5 years in this bill. It is complicated because there are so many references, but we have provided for the adoption of these regulations.
Chairman O’Connell:
Mr. Leavitt, will it codify what is written in the federal regulations?
Mr. Leavitt:
As it relates to the Uniform Commercial Code, I understand there is a national group that reviews and makes adjustments. I understand, nationally, there have been problems with the very language with which we have had problems, and this bill recommends a change to conform to what the national group recommends. It relates to liens and to debt which has been issued. From what I understand, the Uniform Commercial Code provisions work very well in a private situation but in a governmental situation where there is issuance of bonds, the lien requirements are not adequate. This has given the bond counsel problems.
Chairman O’Connell:
As it applies to government, this is where we run into our problem? Will the amendment specifically address this area?
Mr. Leavitt:
It will specifically address this area. The second part of the amendment suggests the deletion of sections 25 through 27. This relates to the business-impact bill. There is another bill, which has passed the Assembly, to comprehensively address this same situation. If sections 25 through 27 were left in the bill, we essentially would have a conflict situation. So, the best thing would be to delete those sections.
Many times when we have a dead issuance, it provides that the debt proceeds pay for operating expenses in the initial, or second year. There is a provision to allow that, as an exception to the general rule, debt cannot be issued for operating expenses.
Senator Raggio:
This bill just applies to local government?
Mr. Leavitt:
That is correct.
Chairman O’Connell:
For those of you who have joined us late, S.B. 559 has been withdrawn because it is almost a duplication of this bill, S.B. 553.
Mr. Leavitt:
The second page of the amendment is being proposed by the school district to cover a problem they have relating to the issuance of debt. They are requesting an amendment to this bill since it deals with the same subject matter.
The amendment relates to the issuing of debt to pay for buses. I understand the buses have a useful life of about 15 years. I think that would qualify for debt issuance. We have always assumed it would qualify.
Pat A. Zamora, Lobbyist, Clark County School District:
Essentially, the amendment does four things, three of which are clean-up items. We are already using bond proceeds for replacement schools as directed by Assembly Bill (A.B.) 368 of the Seventieth Session.
ASSEMBLY BILL 368 OF THE SEVENTIETH SESSION: Requires annual audit of certain expenditures by certain school districts and development of policy to renovate or reconstruct certain school facilities by certain school districts. (BDR 31-179)
Additionally, we have always used bond proceeds for furnishing any equipment of schools. Really, the new provision is for the use of student transportation equipment. Currently the district has approximately 1000 school buses. The replacement cost of a full-sized bus is approximately $100,000. There is a significant capital investment in school buses. The total replacement cost is currently over $100 million.
Essentially, we still have to meet all the requirements the voters approved in the bond issues. This would only address any monies left over after we have met all those requirements.
Chairman O’Connell:
Could you clarify something for me? I do not believe your bond issue covered transportation because I looked into this for a constituent. What I found was when they issued the bond, they included transportation to the buyers of the bond. But, in the question itself, transportation was not included.
Mr. Zamora:
My understanding is the 1998 bond program included two transportation facilities but not the transportation equipment for those facilities.
Chairman O’Connell:
I know you have spent the money on buses, because I have seen the yard with the new buses in it.
Mr. Zamora:
Actually, we have not spent bond proceeds on buses; we have been using mid-term bonds to finance buses.
Chairman O’Connell:
Was it from the same bond issue?
Mr. Zamora:
Those bonds are actually being paid for from the general fund and not from the bond proceeds from the 1998 program.
Chairman O’Connell:
I received two books and I looked at the question and the two books. I wonder if you would clarify it for us. It was real interesting, because, looking at the question and then looking at the information they sent to the folks buying the bonds, the question did not appear to cover transportation. But, the issuance of the bonding did have transportation in it.
Mr. Zamora:
I will get the information for you.
Chairman O’Connell:
Committee, any questions on the amendment being offered?
Senator Porter:
Madam Chairman, I have a question regarding the equipment used for transportation of students. We are looking at an amendment on a bill in natural resources having to do with funding going to schools with air quality violations. One of the amendments being proposed by Senator Titus has to do with using some of those funds for more efficient buses. What is the difference? Are there more efficient buses with variable fuels available for a few dollars more?
Mr. Zamora:
Currently, one of the options is compressed natural gas. My understanding is the additional cost per bus is $23,000 to $40,000 depending on the size of the bus. More importantly, there would be over $1 million in infrastructure improvements needed in order to fuel the buses.
Additionally, there are other alternatives such as low-sulfur or diesel fuel. Some of our newer buses could actually be converted in order to use that option.
Senator Porter:
Again, I know we are not in natural resources today, but in southern Nevada, diesel fuel is a major source of air quality problems, and school buses are the primary users of diesel fuel.
Mr. Zamora:
We do operate over 1000 school buses.
Senator Porter:
Madam Chairman, I assume we will be acting on this on Monday (April 16, 2001)? Prior to acting on this bill, I would like to look at the language to see if there is something we should do to improve the buses, as far as air quality issues.
Chairman O’Connell:
Were there any questions on S.B. 553? For those of you who were not here when we began the testimony, the amendment was basically to clean up some items.
We will close the hearing on S.B. 553 and open the hearing on S.B. 555.
SENATE BILL 555: Makes various changes in general laws governing cities. (BDR 21-352)
Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities:
This bill, S.B. 555, was one of the bills with an introduction on the floor, and was not reviewed prior to printing. For the convenience of the committee, we prepared the bill showing language to be removed in red; requested language changes in blue; and amendments to items missed in the original language in violet (Exhibit D). This was submitted to the Legislative Counsel Bureau (LCB) to draft language reflective of a similar bill introduced by Assemblyman Douglas (Doug) A. Bache, Clark County Assembly District No. 11.
Chairman O’Connell:
Mr. Grady, would you explain what the bill does?
Mr. Grady:
Sections 1-7, 24, 25, and 34-43 of S.B. 555 would change the class of cities from class one, class two, and class three, to population category one, two, and three, because city classes really address population figures.
Senator Neal:
What are the population figures? Do we have them listed here?
Mr. Grady:
Yes, it is the next change. Population one cities will be 50,000. The population category two would be from 5000 to 50,000. Population category three would be under 5000. For information purposes, we are talking general-loss cities. General-loss cities are Fallon, Ely, West Wendover, Winnemucca, Mesquite, and Fernley.
Page 4, section 10, changes from eight (municipal) wards to four or six because we have no cities with eight (municipal) wards.
On page 4, section 11, lines 25-29, we suggest removing “by NRS 193.120” at the end of the sentence since other NRS sections may be changed over time.
Senator Neal:
Las Vegas remains the same?
Mr. Grady:
Las Vegas is a special charter city. They are not under chapter 266 of NRS.
Senator Neal:
I just wanted to make sure of that.
Mr. Grady:
Also, page 4, section 12, we suggest keeping the first sentence, but would like to delete the word “temporary.” This change is repeated in subsection 2, section 12.
Page 5, section 14, line 38, add “city” before “council” so it would be consistent throughout the bill.
On page 6, section 15, defines the ward makeup. Section 18, lines 36-45 are removed and new language address the open-meeting law statute. The old language did not conform to the present open-meeting law.
On page 8, section 26, we suggest inserting the words, “or ordinance” so the sentence reads, “Nevada Revised Statutes (NRS) 266.415 except as or otherwise provided by law or ordinance.” Also, page 10, section 26, addresses staff appointments. Finally, page 10, section 27, addresses the compensation of local officials. There was some confusion with one of our entities where it said, “elected or appointed officials,” and they were taking “appointed officials” to mean any appointed official who was appointed by the council so, during their complete employment with the city, they could never have a raise.
Chairman O’Connell:
Questions committee? We will now open the hearing on S.B. 561.
SENATE BILL 561: Makes various changes concerning division of internal audits of department of administration. (BDR 31-392)
Mary Keating, Manager, Financial Management, Training, and Controls, Internal Audit Division, Department of Administration:
Good afternoon, Madam Chairman, what you have in front of you is S.B. 561, and if you would like, I will go through it with you. We do have an amendment we would like to make to the bill (Exhibit E).
Chairman O’Connell:
Did you have a copy of this before it was introduced?
Ms. Keating:
No, we do not. I would like to discuss two items in this bill. This first item is to establish the educational and occupational requirements for the position of manager of internal controls. Please see line 1-3 of the first page. That language is similar to what previously existed before the division of internal audit was in place for the chief of the financial management, training, and controls. We believe this should be reestablished in the statute.
Page 2, lines 2-21, 2-22, 2-40, and 2-41, contain corrections to the boards and commissions string of agencies.
On page 3, we would like to have included in this bill, for training purposes only, the definition of the agency excluding the following boards: the university system, the Public Employees; Retirement System, the Housing Division of the Department of Business and Industry and the Colorado River Commission. I believe as this was originally drafted, they were included for audit purposes as well, and our intent was to exclude them only for training purposes.
As you can see there, our intent was to move the numbering from page 4 to page 3, excluding them only for training purposes. All of those entities are required by law to have external audits, which would provide them with management letters and information regarding their internal controls, and we believe it may have been an oversight during the 1999 Legislative Session, as my section was not expanded and our resources are limited.
Chairman O’Connell:
Their request to be taken out of the state personnel system . . .
Senator Raggio:
These entities are outside the budget act. They do not have to present their budget to Governor; there is, however, a legislative review
Chairman O’Connell:
They are not affected?
Ms. Keating:
No. That would be the extent of the request that we have made. I have provided a copy of my name and phone number, if there are any questions.
Chairman O’Connell:
We will close the hearing on S.B. 561 and open the hearing on S.B. 568.
SENATE BILL 568: Allows risk management division of department of administration and attorney general to assess local governments for certain tort claims. (BDR 27-1447)
Madelyn Shipman, Lobbyist, Washoe County District Attorney:
I have an amendment (Exhibit F), which replaces the language in the current bill and accomplishes the same purpose. We have worked with the attorney general’s office which has sponsored or requested this initial bill. We are in agreement on the amended language. We request you amend and do pass S.B. 568. If you want the details as to the reason why the bill was brought, the attorney general’s office is here to provide background for you.
Stanley Miller, Tort Claims Manager, Litigation Division, Office of the Attorney General:
The reason this bill was proposed is currently we have two Nevada Supreme Court cases pending regarding the issue of whether court employees are state employees or county employees. If the court determines they are state employees, then the state would be liable for their actions and claims would be paid out of the premium insurance fund, without any contribution for these employees. Hopefully, this bill will correct that problem. We have reviewed the amendments submitted by the Nevada Association of Counties. We feel this amendment will serve the purpose and will also ease the concerns of the local entities about being unfairly assessed.
Chairman O’Connell:
How has it been handled over all these years?
Mr. Miller:
The issue does not come up very often. One of the Nevada Supreme Court cases we currently have involves Elko County. It came to our attention that Elko County does not provide liability coverage for court employees and, neither do they pay into the insurance premium fund. This was settled for $170,000 with the agreement the county would pay half and the state would pay half. However, the county turned around and sued the state on the basis that these people are state employees not county employees. The Fourth Judicial District Court ruled no, they are county employees, and, as a result, Elko County has appealed this to the Nevada Supreme Court.
Senator Neal:
Elko County appealed to the Nevada Supreme Court?
Mr. Miller:
Yes, sir.
Chairman O’Connell:
Do we have any idea when you are going to have a resolution on it?
Mr. Miller:
The case involving Elko County is scheduled for a settlement conference on May 4, 2001. The second case is Amy Harvey versus the Second Judicial District judges and I do not know the status of that one.
Senator Porter:
Madam Chairman, I have a question (section 1, subsection 3 of S.B. 568): “Deposit in the fund an amount, as determined by the risk management,” that is not an amount for a premium, so, is it cash in lieu of insurance?
Mr. Miller:
That language is very similar to language in the current statute. Under NRS 331.187, basically what happens, as far as funding the insurance premium fund, rates are set for each agency as determined by an actual report giving us an estimated cost of claims each year. The attorney general’s office sets those rates and each agency is assessed a premium per full-time equivalent and per agency automobile, and that is the money that generates the fund.
Senator Porter:
Madam Chairman, I guess my question may be for Ms. Guinasso (Kimberly Marsh Guinasso, Committee Counsel). Under section 1, subsection 1, it says this is a fund created for insurance premiums, but adding subsection 3, with paragraphs a., b., and c. (Exhibit F), appears to add premium dollars. Are we not establishing a cash fund?
Kimberly Marsh Guinasso, Committee Counsel:
I am not sure what you are referring to there.
Senator Porter:
Well, I want to make sure I am reading it properly; under section 1, subsection 1, it says they are creating the fund for insurance premiums. So, am I to assume that subsection 3, is just referring to premiums?
Ms. Guinasso:
Well, it is the amount that is determined, yes it could include premiums. It is the amount that is determined by, in its current form, the Risk Management Division and the attorney general in unison. They determine the amount necessary to cover those potential liability and administrative expenses.
Senator Porter:
How do you determine what is potential liability?
Ms. Guinasso:
I believe that is what risk management does.
Senator Care:
Regarding this fund, the county will have the options here, but is the county going to wait until a lawsuit is threatened or a lawsuit is filed? As soon as this statute becomes effective, the county has to do one of these things. Is that the way it would work?
Mr. Miller:
That would be my understanding, yes.
Senator Care:
It would stay that way, regardless of any lawsuits being filed or dismissed or adjudicated or whatever? There would still be this fund?
Mr. Miller:
If they chose to do paragraph a., subsection 3, then they would have to deposit into the fund. Again, it depends on the Nevada Supreme Court decision. If the court decides they are county employees, then really this bill is pretty much a moot point, because the counties will be responsible for those employees. So, until the decision comes down, we do not know.
Chairman O’Connell:
Now, did we resolve actually, what happens here? We can pass this law and the decision might validate it, but I guess this law will prevail because it addresses the issue regardless of what the Nevada Supreme Court says. But who is going to have to pay for the suit?
Mr. Miller:
Well, what this does, if the Nevada Supreme Court comes back and says they are state employees, then this bill has value. If the court comes back and says no, the court employees are county employees, then this bill really does not make any difference, because counties will be responsible. This is kind of a just-in-case bill; if they are determined to be state employees for purposes of liability, we need some way to assess a premium from them for the fund.
Senator Raggio:
Let me tell you how this happened. In Washoe County, for a long long time, the county clerk, who is an elected county official, but also serves as official clerk of the court, has had a long-standing argument about to whom those people are responsible. Particularly those who are assigned to the court. The courts feel they are their employees, and the county clerk has felt they are the clerk’s employees. So, it is kind of a situation where, if they are really employees of the court and under the direction of the court, there could be state liability for any act that is incurred by the particular individual.
Mr. Miller:
That is correct senator, and I think the Elko case has a more direct influence on this bill. It is my understanding that smaller counties do not provide for liability coverage for these people so, in essence, they have no liability coverage.
Chairman O’Connell:
Senator Raggio, when we, as a state, pass a law on something, would that not supercede the decision of the Nevada Supreme Court?
Senator Raggio:
No, I think what he is saying, it does not hurt to have this in the law because, there may be other situations of a similar kind which might occur. In this particular case involving Elko, they may come down and say this is a county employee. Then the state does not have any tort liability. I do not think it does any harm to have it in here, and, I think Ms. Shipman’s amendment is also appropriate because it would mean they would have an option to just enter into a written agreement that is just as enforceable between a county.
Chairman O’Connell:
I did not make myself clear when I asked the question. This only applies to the resolution of the court case? The law though itself, is from here on out?
Senator Raggio:
Yes.
Wayne E. Carlson, Lobbyist, Nevada Public Agency Insurance Pool and Public Agency Compensation Trust:
We also participated in drafting of the amendment. We are the provider for Elko County; they are a member of our pool. It stands correct, as it is an issue between us as to whether these juvenile detention employees are employees of the court, and therefore the responsibility of the state, or they are employees of the court and the responsibility of the court, if they have a fund for county employees. So, there are actually three possible court rulings. The judges have traditionally asserted they want control of detention facilities; they believe they belong to them, and that is the position we have taken in the issue. The state and we agreed to split the settlement of the case and then to go to the courts to ask them to sort out that issue.
If it is ruled they are court employees or ruled they are state employees, this bill enables our counties to fund these juvenile facilities anyway through the operating budgets. So, this gives them the choice as to what mechanism they want to use. They could fund it through us; they could fund it through the state or the courts themselves, if their court employees could determine which direction they wanted to go.
Chairman O’Connell:
Any more questions? Thank you all very much.
The meeting is adjourned at 2:35 p.m.
RESPECTFULLY SUBMITTED:
Sherry Rodriguez,
Committee Secretary
APPROVED BY:
Senator Ann O'Connell, Chairman
DATE: