SENATE COMMITTEE ON GOVERNMENT AFFAIRS

MINUTES OF THE

SENATE Committee on Government Affairs

Seventy-First Session

April 6, 2001

The Senate Committee on Government Affairswas called to order by Chairman Ann O'Connell, at 12:12 p.m., on Friday, April 6, 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:

Brenda J. Erdoes, Committee Counsel

Juliann K. Jenson, Committee Policy Analyst

Laura Hale, Committee Secretary

OTHERS PRESENT:

Marvin Leavitt, Lobbyist, City of Las Vegas

John P. Comeaux, Director, Department of Administration

Donald L. Bailey Sr., Chief, State Printing Division, Department of Administration

Elizabeth Sorenson, Lobbyist, Communications Workers of America (CWA) Local 9413

Danny L. Thompson, Lobbyist, Nevada State AFL-CIO

Bruce Meyer, Press Operator, State Printing Division, Department of Administration

Joshua Schneider, Pressman, State Printing Division, Department of Administration

Gayel Helm, Supervisor, State Printing Division, Department of Administration

Janette Bloom, Clerk, Nevada Supreme Court

Barry Wynott, Owner, ABS Printing and Copy Center

Carole Vilardo, Lobbyist, Nevada Taxpayers Association

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

Ronald P. Dreher, Lobbyist, PORAN/Peace Officers Research Association of Nevada

Bob Gagnier, Lobbyist, State of Nevada Employees Association

James F. Nadeau, Lobbyist, Nevada Sheriffs and Chiefs Association

Gary H. Wolff, Lobbyist, Nevada Highway Patrol Association

Steve Barr, Lobbyist, Nevada Corrections Association

John P. Sande III, Lobbyist, Howard Hughes Corporation

Chairman O’Connell opened the hearing on Senate Bill (S.B.) 317.

SENATE BILL 317: Revises provisions governing local government finance. (BDR 31-353)

Marvin Leavitt, Lobbyist, City of Las Vegas, testified the Committee on Local Government Finance created this bill through a review of chapter 354 of Nevada Revised Statutes (NRS). Mr. Leavitt said it was clear the terminology did not conform to modern accounting standards, and budget items were located in various places making it difficult to use on a practical basis. He said the proposals included a change of name and various changes involving rules on budgets and finance statements.

Continuing, Mr. Leavitt explained most of the changes involved updating definitions to conform to modern accounting standards, some items had been moved around to streamline the bill, and obsolete language and references had been deleted. Section 4 of the bill, he said, would move the establishment of the Committee on Local Government Finance to chapter 354 from chapter 266 of NRS. Mr. Leavitt also suggested an amendment to remove paragraph (c), subsection 1, section 5, of the bill.

Other changes to S.B. 317 recommended by Mr. Leavitt were as follows: a change of name under section 7 to “Local Government Budget and Finance Act;” a change from $100,000 to $200,000 under subsection 1, section 9; a change at the bottom of page 7 to require capital improvement plans to conform to final budgets for the first year of the plans; and removal of provisions under subsection 3, section 28, requiring detailed budget information, due to the huge volume of the government chart of accounts.

Mr. Leavitt explained the new language on page 26 would create provisions for emergency situations. He described additional changes to subsection 3, section 50, which would provide for a panel composed of three members from the Nevada Tax Commission and three members from the local government finance committee to hold public hearings on local government financial emergency issues.

In response to a question from Senator Care, Mr. Leavitt explained the language changes under subsections 1 and 2 of section 11 reflected accountants were only obligated to determine the legality of issues related to financial matters.

Chairman O’Connell closed the hearing on S.B. 317 and opened the hearing on S.B. 426, calling on John P. Comeaux, Director, Department of Administration, to provide testimony.

SENATE BILL 426: Establishes requirements and procedures for strategic planning for state agencies. (BDR 31-429)

Chairman O’Connell asked Mr. Comeaux to testify with regard to questions on a fiscal note presented by Wm. Gary Crews, CPA, Legislative Auditor, Audit Division, Legislative Counsel Bureau. Specifically, she said, $1 million seemed steep and the committee needed some explanation.

Mr. Comeaux testified the $1 million in the fiscal note represented the cost to do a legitimate job of developing and maintaining strategic plans, as called for by the bill. He explained when strategic planning was done previously, it was made a priority so staff employees were pulled from other duties. He reported Mr. Crews asserted the department had not done a good job of reviewing and maintaining strategic plans since then, and although the current administration supported strategic planning as a valuable management tool, it did not have the priority status it previously had. Therefore, said Mr. Comeaux, resources were being spent in other areas.

The bill would add one-half full-time equivalent position to each department, resulting in more planning staff in his office, Mr. Comeaux said, and the fiscal note called for two more positions in his department to provide central review and assistance functions to various other departments.

Mr. Comeaux explained the fiscal note was created on the assumption the bill would require all state agencies to prepare strategic plans, with the Department of Administration responsible for providing training to these agencies. He noted the cost would be lower if fewer agencies were involved. He said some training had been provided at no cost through the College of Business and Administration, University of Nevada, Reno, but would be insufficient to the requirements of the bill. In response to a request from Chairman O’Connell, Mr. Comeaux agreed to provide the committee with information on what steps were being taken by the current administration toward the goals of the bill, due to concerns about the $4 million budget and accountability measures.

Chairman O’Connell closed the hearing on S.B. 426 and opened the hearing on S.B. 564.

SENATE BILL 564: Requires competitive bidding for printing of certain state publications and other printed materials. (BDR 29-568)

Mr. Comeaux testified, under chapter 344 of NRS, state agencies, with some exceptions, were required to use the state printer for their needs, and various provisions of the statute set priorities for the work of the Legislature. He said the bill would change the general requirement for state agency printing to allow use of commercial printers through competitive bidding. Other changes were “clean up,” he said.

Continuing, Mr. Comeaux said, through the Governor’s fundamental review, questions were raised about competitiveness and suggestions were made about privatization in connection with a number of state service providers, including state printing. He said because state printing was unique and provided convenient service to the Legislature, the Governor decided it would probably be wise to propose this change to allow competition with private printers for state business.

Mr. Comeaux reported Donald L. Bailey Sr., Chief of the State Printing Division, had been consulting with the administrators from the Purchasing Division and the Administrative Services Division to develop a workable plan. He said bids would be solicited on an annual or biannual basis and there would be prequalifications for specialized printing. If approved, Mr. Comeaux said, the Department of Administration would be ready for implementation by July 1, 2001. He added there might be some problems with turnaround from private printers in the case of printing services to the Legislature during session and the State Printing Division (SPD) would likely be competitive, both in terms of convenience and price. He said it would be up to the Legislature to choose the best option. In response to a question from Senator Neal, Mr. Comeaux said the proposal did not come from an external group, such as the fundamental review committee; it came from the Governor himself.

Senator O’Donnell clarified printing was taxable, however, state government entities were exempt and therefore their printing would also be exempt, whether the SPD or a private printer did the printing.

Donald L. Bailey Sr., Chief, State Printing Division, Department of Administration testified the SPD did a volume of $5.8 million per year, with an additional $1 million during the Legislative Session and the last audit conducted by the Legislative Counsel Bureau (LCB) was in 1993. He said a number of states maintained central state facilities: Kansas, Washington, Oregon, California, Utah, Arizona, and some others back east. He explained some of them were exclusive providers of state printing services, while others authorized private work as necessary, similar to what was done in Nevada. He noted only a few states still did major legislative work.

Senator Raggio remarked the Legislature received excellent service from the SPD and said it would be helpful to have a list showing which states had exclusive agreements for state printing, which states allowed for competitive bidding, and which states contracted out.

Mr. Bailey testified in support of the S.B. 564, and reiterated he had met with other department administrators to plan for conversion to a competitive operation. He asserted the division could be competitive, and had been for over 20 years. He stated they had done well, with a 70 percent ratio of prices being competitive, and since the administration had submitted this bill, the division would “try to maintain this as best we can if it is passed.”

Elizabeth Sorenson, Lobbyist, Communications Workers of America (CWA) Local 9413, testified in opposition to the bill as a representative of workers at the SPD. She stated, for more than 100 years, the SPD had provided valuable service to the Legislature and state agencies, as well as to the general public. She said she did not believe the proposal would provide any savings, but rather, the opposite. Because the SPD staff work 24 hours a day during legislative sessions, the process is kept moving and the “proof is in the pudding,” she said. Ms. Sorenson asserted the SPD was composed of “dedicated and hardworking, skilled tradesmen and women who would be lost to private industry under this measure” because there were “no real training programs and the state would not be able to recreate what we have.”

Danny L. Thompson, Lobbyist, Nevada State AFL-CIO, testified he first heard about S.B. 564 through the fundamental review committee, and he opposed it then. He asserted the proposal would cause so many problems for the Legislature, it would not be worth doing. He said he agreed private industry might be able to provide printing, but he said, convenience would be lost and trades-people would be lost who had skills specific to state-owned machinery. Mr. Thompson noted a lot of printers from the SPD were in attendance at the hearing and asked them to stand; 12 people stood. He explained to Senator Raggio, if work was bid out and the SPD lost contracts, there would be less work to do and so there was the possibility positions would be lost.

Bruce Meyer, Press Operator, State Printing Division, Department of Administration, stated he was a 26-year resident of Nevada and a 10-year state employee, with 25 years’ experience in the print industry, primarily as a press operator. He testified in opposition to the bill, and provided several examples of other state institutions which had in-house printing operations, noting there was no mention of privatizing them. He also gave several examples of private industries with in-house printing. He asserted there were legitimate reasons for in-house printing, including security, maintenance of quality, and lower costs. He gave an example of catching a mistake, himself, in the Nevada Legislative Manual which would have been missed by a private printer resulting in substantial costs to the taxpayers.

Mr. Meyer claimed a common practice in private industry is to lowball bids to lure clients in and drive competition out, and then raise prices back up when a monopoly is achieved. He stressed the workers at the SPD had demonstrated dedication to the Legislature and state agencies through working long hours and paying attention to detail. If the SPD were driven out by private industry, he said, it would be cost prohibitive to return to a state-run printing office.

Mr. Comeaux clarified the bill would eliminate current provisions which require the Legislature to use the state printer, and allow the option of bidding out printing work. With regard to Senator O’Donnell’s suggestion to develop a compromise to avoid printing delays for state agencies, Mr. Comeaux said the SPD already had the option of sending out state agency work that could not be completed on time due to Legislative priorities during session.

Mr. Bailey testified, if the bill passed and the SPD could not be competitive, revenue would be lost and people would have to be laid off. Senator Titus asked if there was a way for the SPD to become competitive without passing the bill, and whether there was anything the Legislature could do to help them, short of the bidding process proposed by the bill.

Mr. Bailey reported a recent study showed the SPD could be competitive for more than 90 percent of its work. However, Mr. Bailey said, he could not project into the future. He said he was confident of the staff, and noted the SPD had some of the best equipment in the industry, thanks to the administration and the Legislature. He stated he would stack his operation against any other printing operation in the country.

Joshua Schneider, Pressman, State Printing Division, Department of Administration, testified in opposition to S.B. 564 and said he had never seen a study showing a competitive bidding process was needed for state printing. He claimed states implementing competitive bidding processes also allowed their SPDs to pick up municipal printing to help offset the loss of state work; something, he noted, this bill would not allow, which he said he believed would result in a “shrinking pool of work.”

Gayel Helm, Supervisor, State Division of Printing, Department of Administration, provided written copy of her testimony (Exhibit C) and testified in opposition to the bill, saying it would result in higher costs for Nevada taxpayers because of the staff skills and experience, special equipment, and special services provided by the SPD. Ms. Helm noted as an example of a special service, the SPD prints materials sensitive in nature, such as state budgets and educational proficiency exams which could not be accessed prior to testing. She said the security concerns of other agencies were relieved because SPD was secure, with sign-in procedures at the front desk.

Mr. Comeaux explained to Senator Raggio the Department of Administration had not done any surveys to compare the cost of doing business under the state with the cost of operating through a bidding process. However, he reported, Mr. Bailey had conducted surveys which showed pricing was competitive with private industry.

Janette Bloom, Clerk, Nevada Supreme Court, testified S.B. 564 would impact the state judiciary and the timely publication of advance opinions. She said the court was dependent on the SPD and legal printing was highly technical and required expertise which the staff of the SPD had, particularly in the composition room. She asserted working through the SPD allowed maximum control over style and content, and the court could get what they wanted when and how they wanted it. She claimed there was no competition in the legal publishing industry, with only two publishers of court opinions, both of which were international conglomerates, located in Virginia and Minnesota.

Ms. Bloom said if S.B. 564 were to pass, the result could be a reduction of SPD staff, which could mean a loss of service in this very specialized field of work done by the composition room for both the courts and the Legislature. She pointed out the state constitution required printing of statutes and decisions of the Nevada Supreme Court be provided in a timely manner. She also expressed concern there may be problems with copyright laws, such as private publishers who may attempt to copyright head notes and page numbers.

Barry Wynott, Owner, ABS Printing and Copy Center, testified he did not think the SPD should be abolished, but would like to see some of the state printing needs opened up for bid. He asserted if there were niche areas for production at a cost savings to the state, they should be accessible to the private sector.

Carole Vilardo, Lobbyist, Nevada Taxpayers Association, testified support for S.B. 564, which she said was similar to provisions in Colorado and Texas allowing bidding processes in areas where private industry could compete, and have been quite successful. She noted, in 1993, the SPD in Utah was abolished and they had functioned without it. Ms. Vilardo said she did not support such an extreme measure in this case, but did support competition to achieve the most efficient services possible, as suggested in Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector, by David Osborne and Ted Gaebler. She explained to Senator Neal this bill might be similar to deregulation because it supported competitive bidding.

Chairman O’Connell closed the hearing on S.B. 564, and opened the hearing on S.B. 354.

SENATE BILL 354: Prohibits political subdivisions of state from hiring certain state employees for 1 year after termination of state employment. (BDR 23-1335)

Senator Raggio testified he sponsored the bill due to problems with local governments recruiting state personnel who had received specialized training at the state’s expense. He claimed the state did not have the capacity, even if taxes were raised, to pay higher salaries to be competitive with many of the local governments. He said the bill was intended to fairly provide a disincentive to local government recruitment of state personnel, would take effect July 1, 2001, and would only apply to employees who come into state employment after that date.

Senator Raggio explained an account for specialized training, as defined by state agencies, would be set up, costs would be amortized over a 10-year period at 10 percent per year, and employees receiving such training would be notified what the cost would be. He noted the adjusted cost would diminish each year.

Continuing, Senator Raggio explained if a local government entity hired a specially trained employee, the local government entity would have to pay three times the adjusted training cost so the state would receive some benefit for the cost of training employees. He pointed out under subsection 1, section 5 of S.B. 354, for 1 year following specialized training of a state employee, the adjusted cost would not go down and local governments could not recruit such an employee, resulting in a “1-year cooling-off period.” He said this was similar to current practices under the State Gaming Control Board. In conclusion, Senator Raggio said, any amount paid by local governments under this statute would go into a specialized training fund to be used by affected agencies to recruit new employees and provide training. He noted specialized training was typically provided by parole and probation offices and law enforcement agencies.

Thomas J. Grady, Lobbyist, Nevada League of Cities and Municipalities, testified concern with a similar bill sponsored by Assemblyman John W. Marvel, Assembly District No. 34, which contained a “laundry list” of costs to be reimbursed. Mr. Grady said he wanted to see costs defined and would also like reciprocity for cases when the state recruits local government employees. He provided some examples of such cases.

Brenda J. Erdoes, Legislative Counsel, Legal Division, Legislative Counsel Bureau, explained to Chairman O’Connell the fiscal note only showed an effect on state government and not on local government because there must be an “effect certain” in order to include a fiscal note. She said the only costs identified would be small record keeping costs for state government; the fiscal effect on local governments was speculative, based on LCB analysis.

Ronald P. Dreher, Lobbyist, PORAN/Peace Officers Research Association of Nevada, testified opposition to S.B. 354 and provided written testimony (Exhibit D). He said the 1-year restriction under the bill would penalize both employees and local government agencies. He claimed law enforcement agencies throughout the state were already having difficulty recruiting new officers and many were using “lateral entry programs” which allowed officers with Peace Officers’ Standards and Training (P.O.S.T.) certificates from Nevada law enforcement agencies to have a choice of where they would like to work. He asserted officers and other professionals should have the option of competing for those employment opportunities they were best qualified to take, and state employers should pursue methods to improve working conditions, pay, and benefits, in order to keep their employees.

Mr. Dreher suggested support for S.B. 84 which would provide a formula to calculate salaries of the Nevada Highway Patrol (NHP) and other Department of Motor Vehicles and Public Safety officers of the state.

SENATE BILL 84: Provides formula to calculate salaries of officers of Nevada highway patrol of department of motor vehicles and public safety. (BDR 23‑750)

Mr. Dreher said although the fiscal note for S.B. 354 showed no cost to local government, information relating to Assembly Bill (A.B.) 10 showed a cost of $54,000 for training a recruit for the NHP, and three times that amount as specified by S.B. 354 would be $162,000 which, he said, would have a definite impact on local government.

ASSEMBLY BILL 10: Requires agency of local government to reimburse agency of this state for cost of training peace officer under certain circumstances. (BDR 23-93)

Mr. Dreher asserted officers could also lose certification through this bill because they would be required to stay employed for 2 years with a P.O.S.T. certifiable law enforcement agency.

Bob Gagnier, Lobbyist, State of Nevada Employees Association (SNEA), testified opposition to S.B. 354. He said A.B. 10, sponsored by Assemblyman Marvel, “gets a little more to the heart of the matter.” Apparently, he said, there were people who intentionally came to the state for training in order to get positions in local government, and this happened particularly in law enforcement.

However, Mr. Gagnier said, S.B. 354 had much broader implications, beyond law enforcement. He claimed in state government, the only people who came to work for the state untrained were law enforcement officers who did not need prior skills or training, whereas most state employees were required to have prior training and skills. He expressed concern this bill would discourage employees from seeking additional training in order to maintain proficiency on the job in areas such as computer technology, licensing, and continuing education.

Mr. Gagnier pointed out the State Administrative Manual, which had been adopted by the State Board of Examiners, gave authority to state employers to require service in return for training. He explained if a state employee wished to further his or her education through college, the state could make reimbursement, but the employee must sign a contract to work a certain number of years for a certain amount of training. In response to a question from Senator Raggio, he said the provisions allow the employer to withhold payment from the employee’s paycheck, if necessary, to cover reimbursement. But, he said, he was not sure what would happen if the amount of the final paycheck was insufficient to cover the reimbursement costs.

In conclusion, Mr. Gagnier suggested the two types of training be separately addressed; i.e., new employee training versus proficiency training of longer-term employees. If the committee were to process this bill, he said, he recommended limiting its impact to the early part of an employee’s career, and not including employees who were career-minded and wanted to move on. In a small state, he said, “If you are career-minded, you are going to have to move on.”

Senator Raggio commented he wondered what would be a reasonable period of time to make a distinction between a new employee and a longer-term employee. Senator Neal asserted he did not think an individual could be legally bound from seeking other employment opportunities, because “then you’re getting involved with involuntary servitude.” Senator Raggio said he would defer to counsel, but did not think it was illegal to require payback for training. Also, he said, the employee would be notified of this condition before receiving training and it would be the local government entity which would incur the cost, not the employee. Senator Raggio reiterated his assertion S.B. 354 was an attempt to protect the state’s and taxpayers’ interests, and still be fair to state employees. Senator Neal concluded the consequences would be to limit the employee’s options by creating an expense for the local entities.

In response, Senator Raggio said, “That’s the reason for the bill. . . . They’re getting trained, it costs the state $54,000, and they’re getting paid a salary while they’re doing it, and then they leave. So, I’m trying to come up with something that’s reasonable.”

Mr. Thompson said he believed a bill like this, which would force people to stay in jobs, was like “putting a Band-Aid on cancer.” He said he appreciated the problem of keeping state employees, but this was not the solution.

James F. Nadeau, Lobbyist, Nevada Sheriffs and Chiefs Association, testified local governments in rural areas were losing employees to the state as part of a “feeder system,” and would like to recover costs too. He asserted the bill, as currently written, might result in heavy fees to local governments without prior notification if applicants do not divulge their state training. Mr. Nadeau suggested making employees responsible for training costs through contractual agreements to work for a certain number of years in return for training. Then, he said, the employee would make the decision about whether to commit to the time or pay the costs. Mr. Nadeau also expressed concern with how “specialized training” would be defined.

Senator Titus said she understood the problem, but did not think the committee should move forward. She asserted the state paid low salaries and provided limited benefits, and this bill would “trap” employees for 10 years. Senator Titus suggested fewer people would apply for jobs to work for the state, and this would effectively cut out a big pool of potential employees. She added local government was also supported by taxpayer dollars and this would just shift the burden. She pointed out the bill did not place any penalties on businesses in the private sector if they were to hire someone who was trained at the state-level, and said, “That’s not fair, so I don’t know why we’re even debating it. I say we kill it now and be done with it.”

Gary H. Wolff, Lobbyist, Nevada Highway Patrol Association, testified the Nevada Highway Patrol Division, Department of Motor Vehicles and Public Safety, had 20 new graduates who would be on probation for 1 year, and the furthest thing from their minds was going to another agency. He claimed, typically it was the troopers with 3- to 7-years service who were leaving. He said NHP did lots of specialized training and the provisions of S.B. 354 would be counterproductive because the training was required for the job. Agreeing with earlier testimony, he said if the committee was going to pass a bill for reimbursement, it should come from the employee through a contract.

Steve Barr, Lobbyist, Nevada Corrections Association, testified agreement with Mr. Wolff’s testimony. Chairman O’Connell closed the hearing on S.B. 354 and opened the hearing on S.B. 470.

SENATE BILL 470: Makes various changes relating to bonds issued by local government for local improvements. (BDR 21-1155)

John P. Sande III, Lobbyist, Howard Hughes Corporation, testified support for the amendment to the bill proposed by the Office of the State Treasurer to clean up archaic language related to variable interest bonds and tax-exempt bonds, including deletion of references to coupons. He said the bill would also allow payment of variable interest bonds for assessment districts at intervals determined by the governing bodies.

Mr. Sande also testified support for inclusion of additional language to ensure payment intervals not be more than a 1-year period, to avoid payment delays which could result in placing a burden on newer residents. He agreed to provide a written amendment to the committee. Senator Raggio disclosed his partnership in a law firm with Mr. Sande, and deferred to committee counsel to determine any conflict on the bill.

Senator O’Connell closed the hearing on S.B. 470 and adjourned the meeting at 2:08 p.m.

RESPECTFULLY SUBMITTED:

___________________________

Laura Hale,

Committee Secretary

APPROVED BY:

__________________________________________

Senator Ann O’Connell Chairman

DATE:____________________________________