MINUTES OF THE
SENATE Committee on Taxation
Seventy-First Session
April 10, 2001
The Senate Committee on Taxationwas called to order by Chairman Mike McGinness, at 2:47 p.m., on Tuesday, April 10, 2001, in Room 2135 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 Mike McGinness, Chairman
Senator Dean A. Rhoads, Vice Chairman
Senator Randolph J. Townsend
Senator Ann O’Connell
Senator Joseph M. Neal, Jr.
Senator Bob Coffin
Senator Michael Schneider
STAFF MEMBERS PRESENT:
Kevin D. Welsh, Deputy Fiscal Analyst
Rochelle Trotts, Committee Secretary
OTHERS PRESENT:
Keith L. Lee, Lobbyist, Southwest Airlines
Gaylyn J. Spriggs, Lobbyist, Nevada Taxpayers Association
Samuel P. McMullen, Lobbyist, Retail Association of Nevada
Dino DiCianno, Deputy Executive Director, Department of Taxation
Carole Vilardo, Lobbyist, Nevada Taxpayers Association
Chairman McGinness:
Scheduled today is a work session and the first bill is Senate Bill (S.B.) 39.
SENATE BILL 39: Expands purposes for which proceeds of certain taxes on fuel for jet or turbine-powered aircraft may be used by governmental entity. (BDR 32-789)
Chairman McGinness:
Mr. Lee talked about doing a preamble, but we do not have that language together. At this point, I suggest we get the bill moving, and if necessary try to get that language on in the Assembly.
Keith L. Lee, Lobbyist, Southwest Airlines:
Southwest Airlines supports air service development. We benefit from competition, and it is clear, if the community creates the demand, all of us will have an opportunity to fill the demand. The Legislative Counsel Bureau (LCB) has not yet had an opportunity to include a proposed preamble to the bill which would address our concerns. Primarily, we are concerned that going into the air aviation trust fund, as is proposed by this bill, should not be a basis for the airport authority to go to the respective county commissions to seek an increase in the jet fuel tax, simply because there has been a depletion of funds as a result of this.
Secondly, we want to get the word out to the community, everyone has a stake in air service development and they all should be involved with trying to create the demand for air service. With this committee’s blessing and permission, we would like to go forward with the bill as it is proposed. When the LCB has an opportunity to get the preamble out, we can work with the other side of the house to try to get that added, and then when it comes back to you for concurrence, we can answer any questions you may have about what we are trying to accomplish with our preamble.
SENATOR NEAL MOVED TO DO PASS S.B. 39.
SENATOR TOWNSEND SECONDED THE MOTION.
Senator Coffin:
Mr. Lee, the preamble would not address a certain situation in southern Nevada relating to the use of fuel taxes to help pay for getting the fuel to the airport, would it?
Mr. Lee:
No, this preamble is designed to address the present gas tax and its applications under the historic uses of the aviation fuel tax, and not to address the issue in S.B. 309.
SENATE BILL 309: Makes appropriation to Division of Emergency Management of Department of Motor Vehicles and Public Safety to purchase equipment that will provide emergency power supply for pumps that push fuel into Clark County. (BDR S-1158)
Senator Coffin:
This would be one of the historic uses of gas tax, correct?
Mr. Lee:
Correct.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman McGinness:
We are going to come back to S.B. 227 and will now consider S.B. 376.
SENATE BILL 227: Revises and repeals provisions that exempt certain property from taxation. (BDR 32-892)
SENATE BILL 376: Makes various changes relating to taxation. (BDR 32-187)
Chairman McGinness:
Committee, you have some large documents, including a proposed amendment to S.B. 376 (Exhibit C), and a “Draft Reprint” which includes the amendments in bill form, as provided by the LCB, Legal Division (Exhibit D). Pages 1 and 2 of the amendment refer to transient personal property in relation to a carnival, fair, or circus. Page 9 of the amendment changes language to “surviving spouses,” instead of “widows.” Also, the “committee for assessing livestock” is changed to the “state department of agriculture,” because they are going to be responsible for reviewing reports.
Senator Townsend:
The way the LCB has prepared these documents where you actually have the bill printed with the amendment makes it fairly easy to understand. It is very helpful for us to read, rather than going line by line trying to put new language back in, for a bill of this magnitude.
SENATOR NEAL MOVED TO AMEND AND DO PASS AS AMENDED S.B. 376.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman McGinness:
Let’s consider Senate Bill 468, which is Senator Rhoads’ bill.
SENATE BILL 468: Imposes additional tax on transfer of real property for certain purposes. (BDR 32-1473)
Senator Rhoads:
The Nevada Taxpayers Association has put together an amendment which Ms. Spriggs will review.
Gaylyn J. Spriggs, Lobbyist, Nevada Taxpayers Association:
This is the entire bill with the original changes in small italics and our proposed amendments to those changes in larger italics and bolded (Exhibit E).
Chairman McGinness:
The original bill would add a 1-cent tax on transfer of real property for invasive species, which covers weeds, fire ants, killer bees, etcetera.
Ms. Spriggs:
The recorders testified they collect the rest of the real property transfer tax on so many cents per $500, and they have asked this one be changed, instead of per $100 to per $500 so all the collections are the same. On page 1 of the bill with proposed changes (Exhibit E), the specific amount was written as “up to a maximum of” so many cents, because we felt there should be some flexibility for the legislature to set an upper limit, depending on the invasive species needing to be addressed. On page 2, number 4, we said that each fiscal year the State Department of Agriculture must present the proposed programs to the county commissioners for their approval. On page 1, the county commissioners will set the rate instead of it being set in the statute and they would have approvals of the programs so it would still be local control. The only other amendments to the original bill are on page 8, which used to say the funds collected from this new tax would be distributed 50 percent to the department for programs and 50 percent for grants to the counties. We took out the 50 percents, because it may be that one or another county needs it all, or everybody may decide the department should carry on a particular program rather than having it split 50/50, or it may be the counties need it all. The language we put at the beginning allows the county commissioners to have control over whether they have a program or an added tax and what it goes for. The last amendment is where the State Department of Agriculture had asked for a couple of amendments on the definition of invasive species. We added their definition, which was, “any living organism that may cause damage to the economy, environment, or public health and is not native to Nevada.”
Senator Rhoads:
With a maximum, should we leave it blank or put a top limit on it of 5 or 10 cents?
Ms. Spriggs:
If you put 5 cents on it, that is the same as the 1-cent per $100; you have made no change to the original bill and we felt that was a policy issue for the committee.
Senator Rhoads:
I would suggest putting in 5 cents.
SENATOR RHOADS MOVED TO AMEND AND DO PASS AS AMENDED S.B. 468.
SENATOR TOWNSEND SECONDED THE MOTION.
Senator Neal:
This bill shows most of this money would be coming from Clark County.
Senator Rhoads:
As I understand the bill, the county commissioners may adopt this assessment or they may not, they do not have to. When the money goes to the State Department of Agriculture, each county would prepare a grant and apply to the State Department of Agriculture which would decide where the money should be spent. The counties do not have to participate, if they feel they do not have a problem in that county.
Senator Neal:
Where is that in the amendment?
Senator Rhoads:
In the amendment (Exhibit E), page 1, the maximum of 5 cents “for each $500 of value, or fraction thereof, may be imposed by the county commissioners;” “may” not “shall.” The original bill would have done that but the amendment changes it.
Chairman McGinness:
On page 8 of the amendment (Exhibit E), the original bill had it being split 50/50 between the counties and the state, and this way the county could keep the entire amount if they so desired. So, if Clark County had a particular problem with killer bees, fire ants, or some weed, they could keep the entire amount.
Senator Coffin:
By sitting on the natural resources committee the last few sessions, I have seen an awful lot of stuff on noxious weeds and invasive species, enough to know this stuff goes from county to county just as it goes from state to state, country to country. Clark County might have to spend money or assess itself money that may end up getting spent across borders which in essence could help protect Clark County because there is quite a bit of agriculture in Clark County and of course, the fire ants and the Africanized bees are well established in Clark County, so we are going to have use for these sorts of things. I am for the bill.
THE MOTION CARRIED. (SENATOR O’CONNELL VOTED NO.)
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Chairman McGinness:
Senate Bill 527 is the “gray market” cigarette tax bill. Are there any amendments proposed?
SENATE BILL 527: Revises provisions governing licensing of cigarette dealers and taxation of cigarettes. (BDR 32-1326)
Samuel McMullen, Lobbyist, Retail Association of Nevada:
There were some amendments proposed and I believe they are in bill drafting but I do not know if they have been returned yet.
Chairman McGinness:
Unless we get them before the end of this meeting, we will bring it up on Thursday. We will wait on S.B. 527 and take up S.B. 528. This is the Medicare/Medicaid issue and there were no amendments proposed.
SENATE BILL 528: Clarifies provisions relating to taxation of medical devices sold to governmental entities. (BDR 32-1134)
SENATOR TOWNSEND MOVED TO DO PASS S.B. 528.
SENATOR RHOADS SECONDED THE MOTION.
Senator Rhoads:
It states there should be a fiscal note coming.
Chairman McGinness:
Mr. DiCianno were there any amendments proposed to this?
SENATOR RHOADS MOVED TO RESCIND THE SECOND ON S.B. 528.
Dino DiCianno, Deputy Executive Director, Department of Taxation:
My understanding was, there were amendments to this bill, proposed by the Nevada Taxpayers Association.
SENATOR TOWNSEND WITHDREW THE MOTION ON S.B. 528.
Carole Vilardo, Lobbyist, Nevada Taxpayers Association:
Senate Bill 528 was requested to solve a specific problem which occurred when the state human resources department stopped taking title to medical devices for which they had entered into contracts with medical suppliers to provide. That law dealing with Medicaid and Medicare, both federal and state, and Nevada sales tax law, are distinct and separate. You cannot reference what is required of a contract, either by federal law or in the Medicaid provisions we have, and say sales tax must conform to that; you have to change sales tax law to accommodate the problem.
The bill, as originally drafted and presented to the committee, opened Pandora’s box. It did more than what was requested to solve the problem, so the proposed amendment (Exhibit F) provides clarification of definition in both the state 2 percent portion, and in all of the local options, starting with school support tax. If the medical device was ordered or prescribed by a licensed provider of health care, within his scope of practice for human use, and the medical device is covered by Title XVIII (Medicare) or Title XIX (Medicaid) of the federal Social Security Act, and the provider has a contract with the Nevada Department of Human Resources or its successor agencies, the person who is providing the device, in effect the retailer, would not be liable for the sales tax. We narrowed it as much as possible to clarify its application to two agencies in conflict. When dealing with chapter 372 of Nevada Revised Statutes (NRS), you do not want anything to be done which sets a precedent for not going to a vote of the people, and this is allowable under a clarification of definition.
Chairman McGinness:
On page 2 of the amendment, “apply the exemption for the sale of a medical device to a governmental entity that is exempt pursuant to that section if: (the new language follows), the medical device was ordered or prescribed by a licensed provider of health care, within his scope of practice, for human use; and the medical device is covered by Title XVIII (Medicare) or Title XIX (Medicaid) of the federal Social Security Act; and the provider has a contract with the Nevada Department of Human Resources or its successor agency for providing the device,” and that language is mirrored again on page 1.
SENATOR TOWNSEND MOVED TO AMEND AND DO PASS S.B. 528.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS NEAL AND O’CONNELL VOTED NO.)
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Chairman McGinness:
Senate Bill 529 came from the Department of Taxation and gives the Department of Taxation .75 percent of the taxes collected from centrally assessed properties. Mr. Pursell (David Pursell, Executive Director, Department of Taxation) testified this bill was proposed from the fundamental review committee because the Department of Taxation is not being compensated for their services in collecting the taxes for the counties.
SENATE BILL 529: Revises provisions relating to assessment and collection of certain taxes remitted to each county. (BDR 32-342)
Senator Rhoads:
What kind of a “hit” did it have on the counties? One fiscal note shows only $7500 a year, but is there another fiscal note coming?
Chairman McGinness:
That effect is only for Carson City, but every county would be affected on their assessment.
Kevin D. Welsh, Deputy Fiscal Analyst:
We have not at this point received any further responses from other counties that would be affected by this; the only one that responded so far is Clark County. We can ask the Department of Taxation if they can help us determine what the statewide effect might be.
Chairman McGinness:
I have a note that says, $569,000 to the General Fund.
Senator O’Connell:
Mr. DiCianno, what is your actual cost of doing this?
Mr. DiCianno:
That would be something to be determined. The Department of Taxation was asked, several years back, about the cost associated with this and it is fairly close to the fiscal note we had provided. It has risen because of the magnitude of the amount of work necessary to put out those valuations, to bill, to collect, and to administer those taxes.
Senator O’Connell:
We only have a fiscal note for Carson City.
Mr. DiCianno:
The fiscal note for fiscal year 2000 is approximately $575,000, and for fiscal year 2003 it is $581,000. We do have a breakdown, which I can provide to the committee, which would have been attached to the fiscal note, as to the amount of the impact it would be to each of the individual counties.
Senator O’Connell:
Does this go to the General Fund?
Mr. DiCianno:
Correct, it does go to the General Fund.
Senator Rhoads:
I would like to see the county list before I vote on it. Mr. DiCianno, why does it go to the General Fund and not the Department of Taxation?
Mr. DiCianno:
There is not specific authority allowed by statute to implement that, it would be earmarking to a specific executive agency, and that does not occur.
(Mr. DiCianno provided a copy of the county list of “Estimated Tax to be Withheld” [Exhibit G] to the committee members.)
The two sheets (Exhibit G) show valuation and assessment for both centrally and locally assessed properties, which would include the net proceeds and minerals. The net proceeds and minerals are in the first column, showing the amount which goes to each individual county. From left to right, it shows the “Secured Utilities and the 6 month CWIP (construction work in progress)”billing, the “Unsecured and PET (property escaping taxation),” “Private Carlines,” and then the 12-month portion of new construction within the state for centrally assessed properties. Those totally combined would show in the column labeled “County Taxes Due from All Sources,” would be all the monies that the department would bill, collect, and distribute. Taking 3/4 of 1 percent of the tax withheld by the county would be the resulting amount in the final column, which, on the first page is for fiscal year 2002. The same analysis was done for fiscal year 2003 on page 2.
Chairman McGinness:
The final column (Exhibit G) is the amount for each county. Page 1 is for fiscal year 2002 and page 2 is for fiscal year 2003.
Senator Rhoads
Was this the result of a lawsuit or was this a decision by the Governor?
Mr. DiCianno:
No, this was not as a result of a lawsuit; it was part of the fundamental review.
Chairman McGinness:
Hearing no motion, we will move on to Senate Bill 557. This is another one of Senator O’Connell’s bills from an interim study. After Mr. Leavitt and others did an inventory of roads to change the way the fuel tax is distributed from a calculation using 50 percent road miles and 50 percent population to a calculation using 33 percent road miles and a 66 percent population.
SENATE BILL 557: Makes various changes concerning distribution of certain revenue from tax on certain motor vehicle fuel. (BDR 32-893)
SENATOR COFFIN MOVED TO DO PASS S.B. 557.
SENATOR O’CONNELL SECONDED THE MOTION.
Chairman McGinness:
I sat through the committee meetings and heard the committee went to extremes to do the road miles. I totally understand the reason behind the bill, but, although counties are held harmless, additional money cannot be raised, the price of asphalt and everything goes up, and there is going to be less work done. So, being from a rural county, I do have some concerns.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman McGinness:
Senate Bill 227 is one of the bills in a subcommittee.
SENATE BILL 227: Revises and repeals provisions that exempt certain property from taxation. (BDR 32-892)
Senator Rhoads:
Ms. Spriggs, was there a 3-page amendment already approved in addition to another current amendment?
Ms. Spriggs:
The only thing Ms. Vilardo mentioned to me was that this would allow recycling to come in from out of state, without another amendment on it.
Senator O’Connell:
This limits the recycling exemption time to 10 years, correct?
Mr. DiCianno:
Specifically, it was to keep the recycling portion of this bill ongoing, but the crux of the amendments was for the abatement and deferral of not only the sales tax, but also the business and property taxes. Senator Rhoads, you are correct, there was another amendment to this one, which was a request for deletion of a section to chapter 231 of NRS.
Chairman McGinness:
We are going to hold this bill until Thursday until we get all the amendments put together. The meeting is adjourned at 3:27 p.m.
RESPECTFULLY SUBMITTED:
Rochelle Trotts,
Committee Secretary
APPROVED BY:
Senator Mike McGinness, Chairman
DATE: