MINUTES OF THE meeting

of the

ASSEMBLY Committee on Taxation

 

Seventy-Second Session

March 20, 2003

 

 

The Committee on Taxationwas called to order at 4:09 p.m., on Thursday, March 20, 2003.  Chairman David Parks presided in Cashman Theater, Las Vegas.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

 

COMMITTEE MEMBERS PRESENT:

 

Mr. David Parks, Chairman

Mr. Bernie Anderson

Mr. Morse Arberry Jr.

Mr. Josh Griffin

Ms. Kathy McClain

Mr. Harry Mortenson

Ms. Peggy Pierce

 

COMMITTEE MEMBERS ABSENT:

 

Mr. David Goldwater, Vice Chairman

Mrs. Dawn Gibbons

Mr. Tom Grady

Mr. Lynn Hettrick

Mr. John Marvel

 

GUEST LEGISLATORS PRESENT:

 

Lt. Governor Lorraine Hunt

 

STAFF MEMBERS PRESENT:

 

Brian Davie, Legislative Services Officer

Melisa Aguon, Secretary/Information Services Support Specialist

Ted Zuend, Fiscal Analyst

Joyce Hess, Committee Manager

Mary Garcia, Committee Secretary

 

OTHERS PRESENT:

 

Manuel J. Cortez, Executive Director, Las Vegas Convention and Visitors Authority

Jeff Beckelman, President and CEO, Reno‑Sparks Convention & Visitors Authority

Van Heffner, Commissioner, Nevada Commission on Tourism

D. Taylor, Secretary-Treasurer of the Culinary Union, local 226

Danny Gonzales, parent

Maria Posadas, parent

Paul Rutledge, parent, former teacher, MGM employee

Sheila Moulton, President, Clark County School District Board of School Trustees

Denise Brodsky, Clark County School District Trustee, District E

Mary Beth Scow, Clark County School District Trustee

Larry Spitler, Associate State Director for Advocacy for the American Association of Retired Persons Nevada (AARP)

Vikki Courtney, teacher, parent, and mother

Paul R. Brown, Southern Nevada Director, Progressive Leadership Alliance of Nevada (PLAN)

Buffy Kilarski, citizen

Mark Nichols, Executive Director, National Association of Social Workers—Nevada Chapter (NASW)

Vic Davis, President, National Alliance for the Mentally Ill in Nevada (NAMI)

Richard Fenske, parent

Allen E. Van, Viet Nam veteran

Lori Lipman Brown, former teacher

Jessica Van Alfen, third grader, Lummis Elementary School

Terri Janison, citizen

Doug Bache, former Assemblyman

Carolyn Edwards, citizen

Larry Allen, United Food and Commercial Workers (UFCW)

Tony Dane, parent

Chad Leavitt, Student Body President at Green Valley High School and president of the Student Advisory Committee to the Clark County School District  

Amanda Vertner, junior, Foothill High School

Jana Pleggenkuhle, teacher, Clark County

Patricia Harris, parent of autistic son

Dorothy Nolan, State Board of Education

Mellyn Anderson, parent

Tami Taylor, parent

Ashley Taylor, freshman, Cimarron-Memorial High School

 

 

Chairman Parks called the meeting to order and attendance was taken.  The Chairman welcomed the crowd and thanked them for taking the time to come.  He announced that testimony would be given regarding the state of Nevada’s economy and several presentations would be heard from invited individuals.  He called forth a panel, consisting of Lieutenant Governor Lorraine Hunt; Manny Cortez, Executive Director of the Las Vegas Convention and Visitors Authority; and Jeff Beckelman, President and Chief Executive Officer (CEO) of the Reno‑Sparks Convention & Visitors Authority, to the witness table.

 

Lieutenant Governor Hunt introduced herself as not only the Lieutenant Governor, but also as chair of the Nevada Commission on Tourism (NCOT) and former chair of the Las Vegas Convention and Visitors Authority.  She thanked Chairman Parks for his invitation.  She then read from prepared testimony (Exhibit C).  Observing that the country had just embarked on the first war of the 21^st century, Ms. Hunt pointed out that the fragile nature of the state’s tourism industry presented a major challenge to Nevada’s economic stability.  She referred to tourism as Nevada’s “$35 billion baby,” saying that it was the engine that drove the state’s economy, providing paychecks to 229,000 Nevada families, or 30 percent of the workforce.

 

Lt. Governor Hunt announced that on the previous Monday she had reconvened the Tourism Stability Panel, consisting of state tourism leaders, which had been created following the destruction of the World Trade Center by terrorists on September 11, 2001.  The goal of the Panel, she said, was to unify efforts to get out the message that Nevada was “still open for business 24/7” as a safe haven in which to relax and enjoy a variety of recreational and entertainment opportunities.  She stressed the importance of the public perception of Nevada as secure, and announced that the Panel had been working with Jerry Bussell, Nevada’s Homeland Security Advisor, and with public safety and law enforcement agencies throughout the state to achieve that perception.  The Panel expected, she said, that the war would cause a decline in tourism that would last about one week, just until people tired of watching the war on television and returned to their normal routines.  She noted that Bill Bible, president of the Nevada Resort Association, had told the Panel that he expected the war to have a short-term impact, but that procedures adopted by the tourism industry following September 11 were still in place, and Nevada’s tourism packages were still the best deal available.

 

Lt. Governor Hunt reminded the Committee that tourism in Nevada still had not fully recovered from the staggering blow it took following September 11, especially with international tourists who generally stayed longer and spent more money than their domestic counterparts.  She stated that Nevada would be investing more heavily in the global tourism market in the future.  She cited China as an example, saying it had the world’s fastest growing economy and nearly 1.4 billion people, almost 100 million of whom could afford to travel.  She explained that a share of the lucrative Chinese market was currently only number 20 on the state’s international list, but that a bigger investment in the international market on Nevada’s part could bring a larger share.

 

Lt. Gov. Hunt stated that Nevada’s economy had relied on tourism for decades, but that the industry was actually an unstable revenue source vulnerable to war, terrorism, and a troubled national economy.  She called this a compelling reason not to tie public school funding to tourism dollars.  She stressed that the security of our children’s education should come first, and that it was absolutely imperative that it relied not on uncertain revenue, but on a stable tax base that would not fluctuate in times of national crisis.  She maintained, however, that tourism, while subject to fluctuation, carried its own weight, and that Nevada did not spend money on tourism, it invested in it.  She claimed that for each dollar Nevada spent on promoting tourism, it received $121 in direct visitor expenditures.

 

Lt. Gov. Hunt further pointed out that Nevada gaming, the foundation of the state’s tourism industry, was facing unprecedented competition from Indian gaming and the proliferation of gaming nationwide.  She stated that the state’s tourism industry would have to stay at the forefront of developments such as Internet gaming and cyber entertainment.  She described the tourism industry in Nevada as imaginative, innovative, visionary, bold, and amazingly successful, but pointed out that in order to continue being that successful, the state must follow a wise course and that actions must not be taken that could discourage visitors.  Every state, she noted, was trying to attract more tourists, and Nevada’s leaders needed to continue marketing and promoting Nevada as a desirable destination.  Ms. Hunt went on to say that promotion needed to be a statewide endeavor because, although some cities had their own marketing entities, others could not afford to do it on their own.  She mentioned that Colorado had lost 30 percent of its tourist market share after it dropped its statewide program.  She asked Committee members to imagine what might happen if Nevada were to lose 30 percent of its $35 billion market.

 

The Lt. Governor reemphasized the importance of tourism to Nevada’s economy, going on to say that the state had welcomed 48 million visitors during the previous year, ranking fifth as an international tourist destination and sixth in the domestic tourism market.  War, she said, would most certainly hurt the state’s economy, but she commented that Nevada was prepared and resilient.  She pointed out that one of the goals of war was to protect American lives and liberty, and that those of us at home had to go on with our lives.  After a while, she added, people wanted, needed, and sought a break, and that even during the darkest days of World War II, the nation had the United Service Organization (USO) to entertain the troops and provide relief from the stress and tragedy of war. 

 

Lt. Governor Hunt commented that the state had assets that gave Nevadans every reason to be optimistic about the future, including desirability, easy and convenient accessibility to the West, secure hotels and airports, and great values.  She cautioned that Nevadans needed to use their experience in marketing and promotion to ensure the state’s high visibility in tourism markets.  She concluded by saying that whether the current war reached a quick, decisive conclusion or dragged on for a prolonged period, Nevada’s tourism industry was prepared to deal successfully with either scenario and would bounce back.  Once again, she thanked the Committee for its invitation.  She introduced Manny Cortez, Executive Director of the Las Vegas Convention and Visitors Authority (LVCVA).

 

Mr. Cortez thanked the Committee for inviting him to speak.  He began his PowerPoint presentation (Exhibit D) by showing a list of the sources that supplied the data for the presentation.  First of all, he said, he needed to define tourism.  No longer was it a matter of “throwing the family in the car and driving to Water World.”  Tourism now, he explained, was a multi-billion-dollar industry.  In fact, he went on, the tourism industry was one of America’s largest employers.  He claimed that one out of seven employees was in a job related, directly or indirectly, to tourism.  He stated that tourism was one of America’s largest exports, having brought in over 91 billion foreign dollars the previous year. 

 

Mr. Cortez said those travelers and the industries that were associated with them were more than just the Las Vegas Convention Center and the hotels on the Strip and downtown; they were also the air carriers, motor coaches, buses, trains, rental car agencies, recreational vehicle (RV) parks, and other passenger vessels.  They were all part of the tourism and travel industry, or the leisure industry.  He explained that the money filtered down from these industries to travel agencies, conventions, gas, food, lodging, campgrounds, amusements, personal recreation, and entertainment.  Ultimately, he added, the money made its way to the end user, the consumer, in the form of wages, salaries, profits, and taxes.  Once the money had filtered down that far, he said, it made its way to the community, to the theaters, shops, schools, museums, banks, bakeries, farms, and anything else.  The purpose of his presentation, he pointed out, was to show that tourism was a major industry and a major player in contributing to the economy not only of Southern Nevada, but also of the entire nation.

 

Mr. Cortez stated that he did not know what the “tourism landscape” looked like now, due to the outbreak of the war in Iraq.  He added that he could, from experience, describe it as soft at the current time.  He said that the factors involved, which he had enumerated on his slide, boiled down to one word:  anxiety.  People were anxious, he explained, because of the uncertainty of the economy, their job security, their investments and retirements, and uncertainty about their own personal safety and that of their families.  He stated that, as a result, people were retreating into their safe havens and changing their spending habits, saving more money, taking on less debt, and making more home-related purchases aimed at making themselves and their families more comfortable.  Consumer confidence, he said, had continued to decline due to those uncertainties and the growing global unemployment rate.  Consequently, he went on, business travel had suffered, as had international travel.  He pointed out that, had it not been for the outbreak of war in the previous 24 hours, travel would have been expected to return to near-normal pre-September 11 rates. 

 

Mr. Cortez claimed that America’s share of international travel had declined 30 percent since 1992, and even without the outbreak of war, international rates were not expected to climb back up to 2000 levels until 2004.  He stated that Singapore Airlines, a major non-stop carrier from Asia to Las Vegas, had dealt a blow to Nevada’s hopes for increasing its share of the Asian market when it announced it was suspending its flights to Las Vegas and Chicago for 60 days and reducing its flights to Los Angeles and New York. 

 

The lodging industry, Mr. Cortez announced, was down 1 percent from 2001 to 2002, partly because the number of rooms had increased 1.8 percent during that period, while demand had risen only 0.8 percent.  He stated that a recent study of the relationship between gas prices and occupancy rates had shown that a 1 percent increase in gasoline prices resulted in an average decline of 1.7 percent in room nights occupied.  He pointed out that gas prices had risen by $1.00 in the past year, and they were projected to rise even higher.  He said that the only way for the lodging industry to compete nationwide was by lowering prices and offering good deals in order to draw visitors to their destination.  After terrorism alerts, he explained, hotel occupancy had dipped 3.5 percent, and reservations and travel planning had been put off until the last minute.

 

Next, Mr. Cortez looked at the transportation situation in the U.S. due to the recession, terrorism, and the war.  He mentioned that Interstate 15 (I‑15) was important to the survival of southern Nevada.  Crude oil prices, he said, were at a two-year high, while gasoline prices were at record levels, with higher increases in the West reflecting the greater dependency on the individual automobile in the West than in other parts of the country.  He stated that the airline industries were not faring much better.  Since September 11, he said, the airline industry, suffering a 13 percent decline in domestic passengers, had lost $18 billion and cut 100,000 jobs; some airlines had even declared bankruptcy, including the world’s second-largest carrier, United Airlines.  He said the industry expected to lose $6.7 billion in 2003.  Mr. Cortez predicted that if the war continued, the airline industry could expect an additional $4 billion loss, with more bankruptcies and the loss of 70,000 more jobs.  He commented that increases in security costs, taxes, insurance premiums, rent, and fuel surcharges all contributed to the industry’s woes.

 

Mr. Cortez described the current traveler as waiting until the last minute to plan a trip, taking shorter trips, making arrangements for travel and accommodations through the Internet, shopping for deals, and expecting flexible booking and cancellation policies.  He said travelers now were more value-oriented than ever before, with no brand loyalty toward a particular hotel.  As a result, he observed, destinations, amusement parks, and cruise lines could price themselves right out of the market.  Travelers were, he added, taking shorter trips and feeling a high level of anxiety, partly brought on by terrorism alerts.  Mr. Cortez stated that Las Vegas had always been able to overcome adversity and rebound more quickly than anyone else.  Las Vegas had long been considered recession-proof, he said, but it was possible that that was no longer the case and that Las Vegas was subject to questions of value and convenience just like any other destination.  He maintained that what kept Las Vegas in the forefront as a tourist destination was research and a partnership between the resort industry and local elected officials to keep the infrastructure viable and to keep offering better deals to attract visitors. 

 

Mr. Cortez briefly mentioned a comparison between Las Vegas tourism in 2002 and in 2001 and between 2002 and 2000 (page 17 of Exhibit D).  He commented that the one big plus in the comparison was in average daily automobile traffic, due in part to reduced service and added hassle involved in post-September 11 air travel.  At the rate gasoline prices were going up, he said, that market was in jeopardy.  He commented that room inventory had also risen from 2000 to 2002. 

 

Mr. Cortez’s next slide showed that visitors were spending less on food, transportation, shopping, shows, and lodging.  He stated that the face of tourism in southern Nevada was changing.  Twenty years ago, he said, most of the industry revenue came from gaming, but gaming currently accounted for only about 51 percent, while the balance came from ancillary services such as shopping, food and beverage, and other related services provided by the hotels and community.  Next, Mr. Cortez displayed charts showing the decreasing number of airline seats and the decline in international visitors coming to Las Vegas.

 

Mr. Cortez stated that all this boiled down to the end user, the tourism employee.  At the time his presentation was prepared, he said, Nevada had 187,000 people directly employed by the hospitality/gaming industry, slightly below 2000’s peak level of 200,000.  He claimed that two‑thirds of Nevada’s total employment was involved with tourism, while 43 percent of that was involved indirectly.  He reiterated that Las Vegas had historically fared better than much of the rest of the world in rebounding from a recession, but he cautioned that competition had gotten stronger.  He stated that tourism had become an industry pursued by the governors in all 50 states, and that 48 states had some type of legalized gaming.  He stressed that competition from other states constituted a very real threat, and that Nevadans needed to galvanize their forces to fight that competition and maintain their way of life.  He compared Las Vegas facing Indian gaming to Custer at the Little Bighorn.

 

Mr. Cortez stated that other municipalities had decided that conventions were a viable base on which to build a tourism industry, and they were going after it.  He reiterated that business travel was down due the state of the economy and the fear factor after September 11.  He said that the number of tradeshows remained the same in 2002, but that attendance fell 41 percent in 2001 and 25 percent in 2002, although the decline was not nearly that drastic in Las Vegas.  He pointed out that meeting space was growing by millions of square feet in Las Vegas, Chicago, Orlando, New Orleans, and Houston, and everyone was trying to attract the same people.  He said places that had not been in the convention business before were getting into that business now because Las Vegas had shown them that if you can attract someone to a trade show, he would come back time and time again as a visitor.  He asserted that the thing to do was convert people from business attendees to tourists.  He announced that now, when there was a marked decline in Las Vegas’s tourism business, was exactly the time to market it as a destination, advertise, and offer incentives to attract visitors.  It was not, he went on, the time to cut back on marketing or burden visitors with more expenses; it was the time to offer bargains to entice visitors to continue to travel to Las Vegas.

 

Mr. Cortez repeated that war, terrorism, and recession created anxious consumers who were reconsidering their plans.  He noted that Las Vegas planned to add 8,300 new hotel rooms, which reflected the confidence of investors in the future of Nevada, but that those additional rooms would require 4 million additional visitors each year just to maintain the same occupancy level as in 2000.  He stated that now was the time for Las Vegas to start marketing to ensure its place at the forefront as a tourist destination.  He said he could not emphasize enough how fragile the tourism industry was, and that which destination travelers chose depended on the value, safety, and comfort that the destination had to offer.  He claimed that visitors to Las Vegas were going to get value for their dollar, a lot of entertainment, and a lot of security, and by ensuring that, by banding together as a team, the people of Las Vegas could maintain their quality of life, employment, and education.

 

After a surge of applause from the spectators, Lieutenant Governor Hunt thanked Mr. Cortez and introduced Jeff Beckelman, President and CEO of the Reno-Sparks Convention and Visitors Authority (RSCVA). 

 

Mr. Beckelman thanked the Committee for the opportunity to make his presentation (Exhibit E).  He announced that he brought greetings from the 33,000 employees in the hospitality industry in Washoe County.

 

Mr. Beckelman stated that northern Nevada suffered from continued poor gaming and room revenue, and that proliferation of Native American casinos would only cause further deterioration of the market.  He said the Committee had heard the report on what the “big bear” of Nevada was experiencing, and now it was time to hear from the “little cub.”  Northern Nevada, he claimed, was hard at work coming up with new marketing strategies to complement gaming and bring in new customers.  He noted that casino operators in northern Nevada were trying to adapt to the extremely difficult new business climate with plans including increased room and food and beverage revenues to improve performance and increase margins.  He pointed out that such plans took time to implement and make successful, and lots of money to execute.

 

Mr. Beckelman described the current fiscal year as a “roller coaster ride” in terms of room revenue and occupancy.  Through January, he said, room revenue had been down 3 percent compared to the previous year, and occupancy remained flat.  He explained that casino operators were utilizing a strategy common throughout the country, cutting room rates in order to maintain occupancy levels.  He commented that room revenues had been up 3 percent in January, but were expected to drop 10 percent in February.  The war added to the uncertainty of the situation, he said, noting that business had dropped 18 percent during the Gulf War.  He admitted that he and his colleagues were apprehensive about the future.  He stated that northern Nevada was struggling mightily to improve its market position, but that competition for visitors was fierce, and competing destinations were also suffering.  As a result, he said, room rates, food and beverage costs, and other revenue expenses were all part of negotiations.  He mentioned that the economy was fragile in northern Nevada as well as in the south.

 

Mr. Beckelman asserted that, though it had not always been the case, it was important that bed tax revenues in northern Nevada be used for sales and marketing to improve the market position of the area as a destination, as that was the only source of funding for that purpose.  He stated that RSCVA had made great strides in the last two years to reduce building debt service payments in its budget and move those dollars into sales and marketing, but that the continued business decline could jeopardize those dollars.  However, he added, RSCVA believed that there would be some new marketing money for the following fiscal year. 

 

Mr. Beckelman described Reno-Sparks as a value destination for both leisure and convention business.  He claimed RSCVA had a plan that was being executed, and that positive results were expected.  He mentioned one new event planned for the following fiscal year, the ESPN Great Outdoor Games, which would involve more than 60 hours of television programming and provide a huge opportunity for northern Nevada to move toward adopting a “gaming‑plus” strategy.  He said that gaming would always be a part of any destination in Nevada, but that RSCVA was trying to reposition its destination, focusing on the recreational opportunities that the area had in abundance and packaging them with gaming.  That was the reason, he said, why they had moved to a new campaign of “Reno-Tahoe, America’s Adventure Place.”  He stated that ESPN was planning to spend $15 million over a period of several months to position the Great Outdoor Games in northern Nevada.  He noted that, as RSCVA did not have $15 million to spend on advertising, ESPN’s plan would provide a great opportunity for the area.

 

Another event that Mr. Beckelman said was planned for northern Nevada was the Nevada Basketball Classic, to be hosted by RSCVA and the University of Nevada in December 2003, and in which the University of Kansas and the University of California, Santa Barbara had agreed to participate.  This event, he said, would give the Reno-Sparks area tremendous positioning as a basketball destination.  Mr. Beckelman stated that the focus for the following fiscal year was to continue efforts to establish “America’s Adventure Place” for new customers.  Recent statistical analysis had shown, he said, that 70 percent of northern Nevada’s business was “drive market,” up from 59 percent two years before.  Of that 70 percent, he continued, 59 percent came from Sacramento, the Central Valley, and the Bay Area of northern California.  It was obvious, he went on, that emphasis must be placed on attracting that drive market.  He noted that only 4 percent of first-time visitors came from northern California, and he saw that as indicating a tremendous opportunity.  He stated that visitors to northern Nevada, like those in southern Nevada, were making their destination decisions less than two weeks ahead of time.

 

Another upcoming project, Mr. Beckelman said, was the Truckee River Recreational Plan on which RSCVA was working in concert with the Lieutenant Governor and the NCOT.  This plan, he said, would turn the Truckee River into a true recreational kayak course from Verdi all the way to Sparks.  He cited a study, commissioned by the RSCVA to show the economic impact, which estimated that the plan could bring 100,000 new visitors to the area in one year to experience the Truckee River.  He said the RSCVA thought it made sense to focus on bringing recreational activities coupled with gaming to the forefront.  The RSCVA, he said, would appreciate any ideas or help the Committee might have to get the plan funded.  He noted that the RSCVA would be moving very aggressively into the private sector to try to gain support and joining with the Governor and other funding sources that might be available in order to get the job done. 

 

Mr. Beckelman said he was sure the Committee members were aware that Reno was known for its summer events, without which Reno would not have had nearly the tourism that it did.  Those events, including everything from Hot August Nights to barbecue cook-offs, Artown, the Reno Air Races, and more, were all critical to the success of Reno-Tahoe as a destination.  He stated that RSCVA would ensure the continuation of those events, as they constituted the base of the area’s business in the summertime.  He also mentioned the newly expanded convention center, which, he pointed out, had come in under budget and ahead of schedule.  He claimed the expansion had enabled RSCVA to book 35 new pieces of business.  Mr. Beckelman admitted that conventions in northern Nevada were not generally as large as those in Las Vegas, but noted that a couple conventions had had over 20,000 people, and that the Safari Club, which had brought in over 16,000 people, had extended its contract for four more years.  Mr. Beckelman expressed hope that the convention center would provide the community with a new base of business that would go together with gaming to try to solve the Reno-Sparks area’s problem of preventing a decline in tourism revenue.

 

Mr. Beckelman wrapped up his presentation by emphasizing that the Reno‑Sparks area was a value destination for both leisure and convention business.  He stated that RSCVA thought it had the right plan in place and was moving aggressively forward with the support of all entities involved in the tourism promotion, from Lake Tahoe to Carson City to Virginia City, toward a bright future.  He commented that the war would undoubtedly cause problems, and that Indian gaming was a major threat, but that those concerns would be dealt with by enticing new customers from drive and short-flight markets to come for new reasons, including gaming.  He thanked the Committee for its support and invited questions.  He claimed that his job was difficult, but that the job of the Committee members was more difficult.

 

Chairman Parks thanked Ms. Hunt, Mr. Cortez, and Mr. Beckelman for coming.  He called on Assemblyman Griffin to ask a question.

 

Assemblyman Griffin noted that there had been talk about raising room taxes and having the additional amount go the state’s General Fund.  He asked what impact that might have on the lodging and tourism industries.  More specifically, he stated that room taxes had traditionally been used for convention- and tourism‑related activities.  He asked if a cap was perceived to exist and, if so, if expensive marketing aimed at attracting the China market would bump into any ceiling.  He said his question was probably aimed mostly at Mr. Cortez.

 

Mr. Cortez said yes, there had been rumors about room tax increases, and his reply was that any increase in any fees directed toward visitors would not be very well received by those visitors and, far from being to Nevada’s advantage, might be considered regressive.  He asked the Committee to understand that visitors were looking for values and that they spent a lot of money when they came to southern Nevada not only on hotels, but also on shopping, food, and all the other opportunities that area had to offer.  He made the comment that he thought the room tax would not be advantageous, given the myriad other taxes visitors were burdened with.  He said he had heard people say to go ahead and tax the visitors, because “they come in, they spend, they leave town, and locals will never see them again.”  However, he said, visitors voted with their feet; if they perceived that a product was too costly, they would not buy it.  He pointed out that the danger was in pricing a location right out of the market.  He said Nevada needed the flexibility to put its marketing into any segment of the market that had been deemed “soft” for any particular month in order to make it stronger. 

 

Mr. Cortez stated that, prior to September 11 and the current war, Nevada had aimed its marketing at regional and domestic markets because those were the state’s bread and butter.  He added that the future of Las Vegas as a destination now lay in the international market.  In response to Mr. Griffin’s question about China, Mr. Cortez stated that there was no cap.  He said that southern Nevada had to come up with a message that would entice international visitors to the area, and that meant dealing with the state and federal governments in terms of visas and the amount of money allowed to be brought in.  One of the often-overlooked byproducts of bringing visitors from China, he pointed out, would be a sizeable economic development project that the Chinese or other international visitors might decide to establish as a result of having come first as tourists and taken note of the climate, the tax base, and the quality of life.  Mr. Cortez said that adding to the burden on visitors by increasing fees was not going to generate any additional revenue for Nevada but might, instead, do just the opposite as people stopped coming.

 

Mr. Beckelman spoke up to give northern Nevada’s perspective on the issue.  He stressed that northern Nevada was fighting to accomplish a change in the image of the destination, trying to bring it back to life.  He felt that increasing the tax burden on customers could exacerbate a difficult situation.  He stated that Reno‑Sparks already had a higher tax than many of the cities they were competing against.  He said Reno needed every advantage.  He added that there was no question that Reno was a value destination, but that RSCVA was trying to build demand for Reno as a destination in order to get room rates up.  He recounted his chagrin when he received his hotel bill on a recent trip to Seattle and noticed an extra $40 charge.  That extra charge had been a bed tax.

 

Chairman Parks thanked the gentlemen for their answers and recognized Assemblyman Mortenson.  Mr. Mortenson asked Mr. Cortez about a graph that was part of his presentation showing a drop in the percentage of international travelers.  He wished to know if that reflected a drop in the number of foreign travelers or an increase in domestic business.  Mr. Cortez replied that the number of visitors grew by over 100,000 visitors, but that the percentage of international visitors was down.

 

Assemblywoman McClain asked for the panel’s opinions on service taxes.  Lt. Governor Hunt responded that when she and the Committee were back in Carson City, there were myriad taxes that could be discussed, specifically taxes on services utilized more by the wealthy that were of more of a luxury nature.  Those taxed, Lt. Gov. Hunt replied, should have little or no impact on the tourism industry.  She added that taxes on personal services could have some degree of impact.  Ms. McClain asked about the amusement tax in particular, or any other tax that had been proposed, other than a room tax, which might affect tourism.  The Lieutenant Governor said that taxes on such activities as bowling and movies would obviously affect the locals, but added that visitors coming in for a major fight or rock concert would probably not be concerned about having to pay $5 or $6 more for a ticket.  She said surveys indicated that that was the case.  Part of the proof of it, she said, was the prices paid to scalpers on the street. 

 

Ms. McClain asked if Lt. Governor Hunt saw a room tax as the biggest problem.  Lt. Governor Hunt agreed that a room tax would be a problem, and said that tourism was an “enterprise fund.”  She stated that Nevada was much better off spending money on marketing, because every dollar so spent would generate $121, which was a much better deal.  This statement received much applause from the spectators.

 

Assemblyman Anderson thanked Mr. Cortez for the use of Cashman Theater.  He stated that he was troubled by the airline seat question.  As a resident of northern Nevada, he said, he was particularly aware of the impact fewer airlines and airline seats coming into a destination, and the resulting reliance on automobile travel, could have.  He asked Mr. Cortez what he attributed the loss of airlines and airline seats into Las Vegas to.  He asked if it was due to fewer tickets being sold, the higher cost of fuel, or solely because of the war. 

 

Mr. Cortez replied that it was probably all of the above, plus a couple of other factors.  He stated that airlines made decisions based on revenue generated per seat per mile.  In their view, he said, the business traveler who booked his trip no more than a week of so ahead of time paid full fare, while leisure travelers who booked well in advance were always looking for discount fares.  Last year, he observed, the more than 4 million visitors who came to Las Vegas to attend conventions were considered by the LVCVA to be business travelers, but were considered leisure travelers by the airlines because many booked their reservations a year in advance.  He claimed that the demand was there, but the airlines did not feel they generated enough revenue per seat/mile.  Another issue, he added, was that of downsizing and changing equipment.  He said some airlines were changing to smaller aircraft and more frequent flights.  He stated that he could not predict what any air carrier would do, but that they were very competitive and that they did not seem to voice many concerns other than revenue generated per seat/mile.

 

Mr. Anderson asked if the convention authorities in northern and southern Nevada were actively trying to work with the airline industry to meet their needs in terms of providing more traffic and helping Nevada become a more attractive destination.  He cited Southwest Airlines as doing a good job for the state, but remarked that the other airlines seemed to be ignoring Nevada. 

 

Mr. Cortez stated that Mr. Anderson was correct.  What had happened in southern Nevada, he said, was that a partnership had been created called the Las Vegas Parties, made up of LVCVA, Nevada Development Authority, Nevada Resort Association, Las Vegas Chamber of Commerce, and the McCarran International Airport.  He asserted that the purpose of the partnership was to meet with the airlines and increase domestic and international traffic into Las Vegas.  He stressed that they worked on that on a regular basis.

 

Mr. Beckelman announced that northern Nevada had a group called the Regional Marketing Committee composed of RSCVA, Reno hotels, the North Lake Tahoe Visitors Association, the Airport Authority, the NCOT, and Carson City all working together on marketing programs with the airline companies.  Mr. Anderson asked if the airlines had offered any hope that they might be turning their market around in the near future.  Mr. Beckelman stated that the first program in support of Southwest Airlines had already been put in place, and that there was another program with Southwest that would support the summer season.  He said that the first program had obtained positive results.  Prior to the war in Iraq, he observed, the group had had other airlines expressing interest in come into the Reno-Tahoe Airport, but that had been put on hold due to current events. 

 

Chairman Parks again thanked the panel members for their enlightening presentation.  He announced that the next speaker on the agenda, John Hensley, chairman of the California Gaming Control Commission, had been unable to attend, but he had sent a report to the Committee (Exhibit G).  Chairman Parks then read from page 3 of the report. 

 

In the next seven years, California is projected to generate gross revenues of approximately $9.5–$10 billion annually from gambling, putting it on a par with or possibly even surpassing Nevada.  The growth is expected to be realized in tribal casino gaming.  There are 108 recognized tribes in California.  The state has entered into compacts with 61 tribes, of which 46 are gaming.  Growth is anticipated across the board in those tribes that currently have and do not have gambling.

 

The bottom line, Chairman Parks said, was that Nevada was facing quite an economic assault from tribal gaming in California, and it was going to get much worse.  He cited an article in a newspaper that morning stating that tribal gaming would devastate Reno’s casinos.  He said he thought there would be a big impact in other areas as well, including downtown Las Vegas.  The Chairman then called on Mr. Van Heffner to come to the witness table, followed by Mr. D. Taylor.

 

Mr. Van Heffner, President of the Nevada Hotel and Lodging Association, and Commissioner of Tourism, rose on behalf of the industry, representing 182 hotel-casinos that employed more than 160,000 workers throughout Nevada.  He announced that the Association and those in the industry were opposed to any consideration of increasing the room tax.  He stated that impact studies (Exhibit R) had shown that a 2 percent increase resulted in 5.1 percent drop in sales and bookings.  He added that a study in Atlanta, Georgia, two years previously showed that a 2 percent bed tax increase there had cost 8,410 jobs and dropped combined state and local tax collections by more than $80,000.  He said that concluded his brief remarks, but that he would be more than happy to provide all his information to the Committee members for review as they debated the issue.  He invited any questions relating to a room tax increase. 

 

Chairman Parks asked Mr. D. Taylor to the witness table.  The invitation was greeted by enthusiastic applause.  Mr. Taylor came forward to the table accompanied by three other adults and several children.

 

Mr. Taylor introduced himself as the Secretary-Treasurer of the Culinary Union in Las Vegas, and introduced the adults with him, as well as much of the audience, as fellow union members.  He thanked the Committee for coming down to Las Vegas.  Reading from prepared testimony (Exhibit F), Mr. Taylor stated that Nevada was at a fork in the road, and that the Legislature’s decision about which road to take would be felt for generations. 

 

One road Nevada could take, he said, was the same one the state had been on before, patching a few tax holes, raising current taxes, and flipping a coin to decide whether to cut critical funds from schools, public safety, or health care, which together represented 91 percent of the state budget.  He stated that following that road had already led Nevada to being last, or almost last, in the education of children and the health care offered, or not offered, to citizens.  He said the state could continue to rely on a tax base that was not only cyclical but also unstable, and was shrinking on a per capita basis as the population grew faster than the tax base.  He added that Nevada could also continue to ignore the fact that businesses other than gaming contributed next to nothing to the state’s tax base and that Nevada had grown beyond the means of one industry. 

 

Or, he went on, Nevada could take a different road with good schools, affordable health insurance, and a broad-based tax structure supported by the businesses in Nevada and which would grow as the state grew.  That statement was greeted with more loud applause. 

 

Mr. Taylor said that there had been a lot of talk about Nevada facing a crisis in spending, not a crisis in revenue, but one only had to look at education to see that that was not the case.  He announced that the most recent figures, those for the 2000-2001 school year, ranked Nevada 46^th in per-pupil spending for grades kindergarten through twelfth, a dramatic fall from Nevada’s ranking at 36^th in 1998.  Mr. Taylor cited figures from the U.S. Census Bureau showing that Nevada spent 21 percent less than the national average per pupil.  He claimed that, in the wake of September 11, schools in Nevada had had to cut $100 million from their budgets because of insufficient tax revenues.  What that meant in practical terms, he said, was that there were frequently 40 children to a classroom, some students had to go without desks, teachers had to pay for their supplies out of their own pockets, and schools in some parts of Las Vegas did not have books for every student.  He stated that Clark County had 38,000 students and 15,000 preschoolers who were children of culinary workers.  He said that members of the Culinary Union worked hard to provide opportunities for their children, but those opportunities were being taken away by substandard education.  Administrators, teachers, parents, and Governor Guinn had all asked for increases in educational funding to bring Nevada’s schools closer to the national average, but he said that could not be accomplished with the existing tax structure. 

 

Mr. Taylor stated that the business activity tax (BAT) was the only tax businesses paid to the state’s General Fund.  He claimed that better schools in Nevada depended on big non-gaming businesses in the state contributing to education.  He cited two examples.  First, he said, was the banking industry.  He stated that the finance sector paid $2.4 million in BAT in 2002, amounting to less than 1 percent of the state’s General Fund revenues.  During the same year, he added, Bank of America made a net profit of over $9 billion, or more than 4 times Nevada’s General Fund.  Mr. Taylor stated that Bank of America paid income tax in nearly every state.  He claimed it paid state income taxes of $364 million in 2001, none of which went to the state of Nevada. 

 

The second example Mr. Taylor gave was the retail industry.  In 2002, he said, the retail sector paid an estimated $19 million in BAT, or 1 percent of Nevada’s General Fund revenues.  Wal-Mart alone, he said, made $8 billion in profits during the previous year’s recession, yet paid less than $1 million in BAT.  He claimed that in 2001, other states received $310 million in taxes from Wal‑Mart.  Mr. Taylor further claimed that Wal-Mart also burdened Nevada with the cost of its uninsured workers, saying that more than 60 percent of Wal-Mart employees lacked health insurance due to the high cost of Wal-Mart’s insurance plan, which cost workers 35 percent of their paychecks.  He stated that University Medical Center had commissioned a study in 2000 to show what percentage of uncompensated care paid for by taxpayers was used by working families and what industries they worked in.  The study found that the retail industry was among the worst. 

 

Right now, Mr. Taylor stated, the gaming industry, which paid the largest percentage of the state’s taxes, also provided the best health care for its employees, paying entire premiums to cover 150,000 employees and dependents.  He said he knew of no other plan in Nevada that provided full family coverage without deducting premiums from workers’ paychecks.  He stated that, although gaming revenues had dropped significantly following September 11, the gaming industry still did its share by funding health care despite skyrocketing costs.  He observed that workers also did their part, having foregone a raise during the current fiscal year in order to maintain their health care coverage.  On top of paying for health care coverage for its workers, Mr. Taylor stressed that the gaming industry also funded much of the state budget, having paid, in 2002, $555 million in gross gaming receipts tax, $65 million in casino entertainment tax, and $20 million in BAT that amounted to 25 percent of the state’s BAT revenue.  Gaming, he claimed, directly funded 38 percent of the state’s budget.  He reiterated that the retail industry funded 1 percent of that budget, and the banking industry funded less than 1 percent.  The rest of the budget, he observed, was paid for by citizens in the form of sales tax.

 

Mr. Taylor cautioned that Nevada could no longer ignore the fact that large corporations other than gaming paid next to nothing to fund education and, in many cases, depended on taxpayers to fund their health care.  He then compared national gaming profits with those of Bank of America and Wal-Mart.  Harrah’s Entertainment, he said was a national gaming company whose profits in 2002 totaled $235 million; Park Place Entertainment, the country’s largest gaming company, made $160 million; Bank of America made $9 billion; and Wal-Mart made $8 billion.  He stated that gaming had generated more and more revenue for the state over the years, although it could prove to be a volatile revenue source in times of crisis.  He commented that gaming revenues plummeted following September 11.  He expressed hope that the current war would not cause the same devastating drop in revenue.  Mr. Taylor stated that Nevada should not forget that it was no longer a one-industry state, and that population growth was outstripping gaming revenue growth.  The industries that were growing the fastest, he pointed out, were banking and retail.  He noted that in the five years between 1996 and 2001, finance sector jobs grew 46 percent, retail jobs grew 33 percent, and gaming jobs increased by just 18 percent.

 

Mr. Taylor announced that the choice was clear.  Nevadans would have to choose the better road for the future.  They would have to choose, he said, that Nevada workers and their children deserved better education than 46^th in the nation and that Nevada seniors deserved affordable drug coverage.  The state, he went on, deserved a tax structure that reflected the diversity of Nevada business and rewarded those who carried their weight.  A tax on services, he emphasized, was not a broad-based tax, but another tax on working Nevadans.  He asked if working Nevadans should be made to pay more taxes because the Legislature would not tax Bank of America and Wal-Mart on the money they made in Nevada.  He stated that it was up to the Legislature to make that choice.  Mr. Taylor then introduced Mr. Danny Gonzales.

 

Mr. Gonzales introduced himself as a resident of Las Vegas for 40 years and the father of four teenagers currently attending Clark County schools.  He said his 16-year-old son played baseball and was already being eyed by scouts.  His 13‑year‑old son was in junior high school.  He said the schools were about to cancel sports and arts and crafts programs, and his 13-year-old would never get the chance his older brother was being offered.  Sports, he said, provided an incentive for students to get good grades, since they could not play sports unless they kept their grades up.  He observed that there were already enough young people on the streets and, he added, if sports programs were cut, there would be plenty more out there. 

 

Mr. Taylor introduced Ms. Maria Posadas.  Ms. Posadas said she represented the people of Clark County.  She stated that she worked as a housekeeper at a hotel-casino, and that she was the mother of three small children who were attending elementary school.  She said she had attended school in the United States since the second grade, and she commented that the schools had been much better when she was a student.  Her mother, she recalled, never had to buy any school supplies or fill out a lunch application for her.  She stated that schools then had provided everything the students needed, including books, educational programs, and great hot lunches.  Now that her own children were going to school, she observed that many things had changed.  Her children, she said, did not have textbooks to bring home, but merely photocopies from which to do their homework.  She stated that each classroom only had three computers but approximately 23 students, necessitating the students taking turns.  She noted that now 20 percent of the students in her children’s school spoke English as a second language. 

 

Ms. Posadas stated that she had dreams for her children, and each of her children had a dream.  One wanted to be a doctor, one wanted to be a lawyer, and one wanted to be a police officer.  She asserted that the only way these dreams could be realized was if state government would force those corporations that were not paying taxes to start paying taxes to fund Nevada’s schools.  She claimed that the people of Clark County were already paying enough taxes and could not afford to pay more.  She asked, on behalf of the people of Clark County, for the state to start making corporations pay taxes so children could have a better education and a better future.  She thanked the Committee.

 

Mr. D. Taylor introduced Mr. Paul Rutledge.  Mr. Rutledge said he had worked at the MGM Grand as a food server for ten years, had lived in Las Vegas for 23 years, and was a former high school teacher and a registered Republican.  He stated that he had four children who had graduated from Clark County schools, one of whom was currently attending the Community College of Southern Nevada on a Millennium Scholarship on her way to realizing her lifelong dream of being a school teacher.  He said he had had some surveys faxed to him by Carlos Garcia, Superintendent of Schools for Clark County.  The surveys, he said, had been taken at meetings and included questions about what school programs should be cut if funding was not increased.  He listed the programs mentioned most often in the surveys.  They were special education, gifted and talented education (GATE), sports, music, arts, busing, counselors, school supplies, and textbooks. 

 

Mr. Rutledge had brought a copy of a government and economics textbook that his son had available to him.  He said that his son’s teacher taught three classes, each with more than 30 students, and that there were 35 textbooks to go around.  The students, he went on, were not allowed to take the textbooks out of the room.  Instead, if a student wanted to take a textbook home to do homework, he stated that the student could check out a two-thirds-sized photocopy.  The copy Mr. Rutledge had was so poor that he defied any member of the Committee or the audience to read any part of the “Focus on Life” section.  He claimed that it was as expensive, if not more so, to make photocopies of textbooks than it was to buy the books, and that was why, he said, the school could not make a copy for every student to take home.  He asserted that Nevadans did not have to cut the budget, but instead had to fund programs in order to have the school textbooks for school kids.  Wild applause and cheers followed Mr. Rutledge’s testimony.

 

Mr. Taylor thanked the Committee for letting the Culinary Union members have their say and said they would be glad to answer any questions.  Chairman Parks asked if anyone had a question.  Assemblyman Anderson mentioned that he was a schoolteacher.  He said he was sure Mr. Taylor had reviewed the Clark County School District’s budget and knew their sources of funding and the problem they were having with the locally produced sales tax, which made up a large percentage of their overall budget.  He asked if Mr. Taylor thought the state Legislature should mandate to the school district how the budget should be spent to meet the questions of computers, textbooks, and other program changes, or if he thought such choices should be left to local responsibility. 

 

Mr. Taylor replied that great choices could always be made if there was enough money, but if there was not enough money, the choice was always bad.  That was greeted with more wild cheers and applause from the audience.  Mr. Taylor also stated that the greatness of this country was in the “American Dream” that anyone could rise, and that opportunity was due to the egalitarian education system.  He remarked that what the Committee had just been presented with showed a need for a broad-based business tax.  He claimed that the dreams of Nevada’s children were being taken away because the people of the state lacked the courage to take action and tell large non-gaming corporations such as Bank or America and Wal-Mart that they had to pay their fair share.  He said he thought questions of budget management should be left to the school districts that could do a good job if they had the money.  The audience applauded loudly.  Thanks all around were greeted with more cheers and applause.

 

Chairman Parks called three elected Clark County School Board trustees to the witness table.  He announced that the next speaker following the three trustees would be Mr. Larry Spitler, representing the American Association of Retired Persons (AARP). 

 

Ms. Sheila Moulton, Clark County School Board of Trustees President, thanked the Committee for the opportunity to testify.  She stated that she appreciated the work the Legislature did for the state, and for the next generation of Nevadans.  Reading from prepared testimony (Exhibit H), she announced that in 2002, Clark County School District had had the smallest percentage of growth in nearly 12 years.  That growth, less than 5 percent, had still added 10,000 students, bringing the number of students in the District to 255,000.  Ms. Moulton said the 3 percent cost of living increase the District received was insufficient to maintain its buying power.  She added that the District expected to gain almost 12,000 more students in the fall of 2003.  She stressed that the District, in order to accommodate the increasing demands for safety, technology, socioeconomic challenges, and English language learners who needed additional resources, had needed to cut $97 million in programs over the last 3 years.  She added that if the Governor’s Budget was not funded, those cuts could rise to nearly $200 million in Clark County alone.  Currently, she said, Clark County’s classes in grades 4 – 12 were some of the largest in the nation, and the county’s spending per student was more than $1000 below the national average, and $200 below the Nevada state average.  She noted that if one were to multiply that $200 times Clark County’s 255,000 students, it would amount to nearly $51 million.

 

Ms. Moulton stated that Clark County School District had held 4 town hall meetings in the previous 12 days asking the public for assistance in deciding where to make cuts that would not adversely affect students.  She emphasized that the overwhelming demand was that no cuts be made, but for the tax structure to be revised so as to increase and stabilize taxes.  She listed a few preliminary results from nearly 13,700 people surveyed at the town hall meetings.  She stated that more than 85 percent of those surveyed did not want to cut education.  Over 78 percent agreed to increase taxes to maintain current education programs.  More than 52 percent, she said, strongly agreed to support Governor Guinn’s tax increase, while over 28 percent agreed, for a total of 81 percent in support of the Governor.

 

Ms. Moulton asserted that the Clark County School District was not there to support any particular tax increase, but merely to urge that taxes be raised and stabilized to a level where educational needs could be met for all students and districts could plan on continued resources.  She suggested that the way to strengthen and diversify the state’s economy was through education.  New business, she said, would follow a great education program.  She thanked the Committee for its commitment to the students and staff, and she invited questions.  When none were forthcoming, she introduced Denise Brodsky, Vice President, Clark County School Board of Trustees; and Mary Beth Scow, Trustee.

 

Denise Brodsky introduced herself as a School Board Trustee for District E, representing more than 70,000 voting households.  She announced that she would speak briefly about the iNVest plan that she said the Committee had had an opportunity to study (Exhibit I).  She stressed that the iNVest plan was the unprecedented result of 17 county school districts laboring for more than two years to analyze and identify statewide fundamental education needs.  The mission of iNVest, she said, was to secure adequate, reliable funding for public education.  On behalf of iNVest, she urged the Committee to pass a comprehensive tax package during the 2003 Legislative Session. 

 

Ms. Brodsky asserted that timing was critical.  She stated that Clark County School District’s dilemma was that it would get no information about funding until the end of the legislative session on June 2, while the Board of Trustees had to hold its budget hearing on May 7 to determine a contingency budget reduction.  She added that the Board had to formally adopt its budget based on current funding no later than the latter part of May.  A final budget based on action taken in the Legislature, she went on, was due 30 days after the end of the legislative session.  She stated that based on current funding, the District would have to cut its budget by approximately $160 million over the biennium.  The District would also have to cut at least $75 million from the budget, effective July 1, in order to present a balanced budget as required by statute. 

 

Ms. Brodsky reemphasized the importance of passing a tax package that would bring stability to the state’s economy without relying on any one revenue stream.  She noted that the Committee was faced with a daunting task.  If the Legislature failed to pass a tax package during the current session, she made it clear that the School District would also have a daunting task facing them, that of taking critical programs and services away from the public schools.  She commented that this would have a “chilling” effect on the state’s children, who were, she pointed out, Nevada’s future.

 

Ms. Brodsky concluded her testimony by reminding the Committee that the cost of restoring previous fund reductions would be $139 million; the funding of books, supplies, and equipment would cost $39 million; the cost of funding English-language-learning programs would be $76 million; but she observed that the investment in Nevada’s children and future was priceless.

 

Assemblyman Arberry asked Ms. Brodsky to clarify the figure of $39 million for funding books, to which she replied that that figure was calculated by the 17 school districts in iNVest.  Mr. Arberry asked if that $39 million would provide a book for every student.  Ms. Brodsky stated that it would amount to about a $50 increase per student statewide.  Mr. Arberry repeated his question of whether that increase would provide all students with books to take home.  Ms. Brodsky commented that that was an interesting thought.  She stated that the six children she had had go through the Clark County School District had all had books, so a lot of that issue, she said, was determined by administrations of particular schools.  She added that it was an issue that was being looked into, but that it appeared that most students did have books.

 

Mary Beth Scow introduced herself as representing the southeastern portion of Clark County, with roughly the same number of constituents as Ms. Brodsky.  She made the comment that it was not always best, or even possible, to let textbooks drive curriculum.  She noted that schools were following the state standards, and that was why they were not necessarily following a certain textbook, but rather using the text to supplement other materials. 

 

Ms. Scow said she appreciated the time the Committee had taken to come to southern Nevada, and also the huge task the Committee was faced with.  She stated that 2003 was her seventh year as a trustee, and she had been through six budget cycles (Exhibit J).  She stressed that the School District was required to submit a balanced budget each year, and was dependent on the state for its operational budget.  She said the community had been very supportive in passing bond issues for the construction and modernization of schools, but pointed out that that money could not be used for operations.

 

Ms. Scow stated that nearly 90 percent of the District’s budget went to salaries for roughly 16,000 licensed employees and 10,000 support staff.  She noted that education was a “person-intensive” business, and that a classroom of children could not be educated merely by placing a computer screen in front of them, but that a teacher was needed to keep them on task.  She stated that revenue had not kept up with growth and the increase of urbanization.  Over the past three years, Ms. Scow said, the District had cut $97 million, including cuts affecting class size, supplies, transportation, staff size, administrative costs, custodial services, and even the end fund balance and contingency fund.  She pointed out that such deficits rolled over to the next year, causing the District to begin every year in the hole.  Audits had been performed by the same group that performed audits for the state and for other school boards in the state, she said, and those audits had shown responsible money management.  The Clark County School District, she announced, had received budget awards from the state every year.  She said they welcomed the proposed audits that had just been passed by the Assembly.  She mentioned that Chris Whittle, CEO of the Edison schools, which operated five of the schools in Clark County, had publicly stated that he did not understand how Clark County School District could operate the kinds of programs that it did on the amount of money it received. 

 

Ms. Scow mentioned the iNVest plan, which was developed by all 17 superintendents in the state and endorsed by all 17 school boards.  She said the plan showed what was needed to bring students up to the desired achievement level.  She stated that the Clark County board’s focus was student achievement, and that funding needed to be increased in order to improve achievement levels.  Cutting the budget and school programs, she said, was not the way to excellence.  Ms. Scow urged the Committee to present a stable tax base in order to secure stability for the children who were the future of the state.  That, also, was greeted with enthusiastic applause.

 

Chairman Parks asked if there were any questions from the Committee.  There were none.  He thanked Ms. Moulton, Ms. Brodsky, and Ms. Scow for their testimony.

 

Larry Spitler, Associate State Director for Advocacy, American Association of Retired Persons (AARP), described AARP as a “nonprofit, nonpartisan membership organization dedicated to making life better for people 50 and over” that provided “information and resources,” engaged in “legislative, regulatory, and legal advocacy,” and assisted “members in serving their communities.”  He stated that AARP offered members a variety of benefits, products, and services (Exhibit K).  He said there were over 258,000 AARP members in Nevada.  Mr. Spitler affirmed that AARP trusted the Legislature to balance the needs of the state with the citizens’ ability to fund those needs.  He acknowledged the monumental nature of that task.  He pointed out some items in the Governor’s proposed Budget that, he asserted, were critical to the people of Nevada, specifically prescription drugs and Medicaid.

 

Many seniors, Mr. Spitler stated, were suffering because of their inability to purchase needed medication.  As the federal government tried year after year to devise a prescription component for Medicare, he said, seniors were able to see a physician to find out what was wrong with them, but not to get better, because they could not afford the necessary medication.  He stated that AARP was continuing to work on the problem on a national level.  He observed that a similar situation had existed in Nevada until the 2001 Legislative Session addressed the prescription needs of seniors 62 and older.  Now that the Governor had seen the positive effects of that tobacco-settlement-funded program, Mr. Spitler said, he had recommended a contribution be made from the General Fund to augment the program.  That recommendation, if passed, could nearly double the number of seniors served by the prescription program, according to Mr. Spitler.  He added that AARP applauded the Governor’s courage in meeting that issue head-on. 

 

Mr. Spitler stated that AARP also supported Governor Guinn’s compassion and courage in funding budget enhancements for the Division of Aging for such services as increased waivers for CHIP recipients, elder protection, group care, and personal assistant services.  These services, he said, were critical in enabling seniors to age with dignity in their own homes.  He added that in the long term that approach would be far less expensive for the state than nursing home care.

 

Mr. Spitler declared that the Governor was faced with a “darned if you do, darned if you don’t” situation, wherein everyone was trying to second-guess him.  He said that, despite criticism, Governor Guinn had taken the hard road, not passing the problem on to future generations.

 

AARP, according to Mr. Spitler, thought the legislative process was working quite well.  The Committees on Finance and Ways and Means were doing their job evaluating the budget, and the Committees on Taxation had held hearings in preparation for funding the state’s needs as identified by the Governor and the money committees.  In the end, he said, the time would come to secure the resources necessary to fund those needs.  Mr. Spitler commented that while such decisions might not be popular, making those decisions based on critical evaluation of the Nevada’s needs was the job for which the legislators had been elected.  He stated that AARP asked that, in making those decisions, the Committee keep in mind that most of the Governor’s proposals just kept up with Nevada’s growth.  Education, Medicaid, public safety, and prisons, he noted, were driving major costs that no governor could have ignored.  None of what the Governor had proposed, he added, was window dressing, nor would it move Nevada to the top of any national statistics.  He commented that it would be wonderful if Nevada could be number one in at least one category. 

 

Mr. Spitler said AARP supported fiscal responsibility, and added that they viewed taxes from the perspective of five principles: equity, economic neutrality, administrative efficiency, stable and reliable revenue potential, and social and economic goals.  He asked the Committee to consider those principles as it made its deliberations.  He then thanked the Committee for the opportunity to present AARP’s views.

 

Ms. Vikki Courtney introduced herself as a parent, a teacher, and a citizen of Nevada.  She asked the Committee to bring the state’s education funding up to at least the national average (Exhibit L).  She stated that she currently taught kindergarten for the first half of the day, then, in the afternoon, she tutored struggling readers in first and fourth grades.  She said she had 28 students in her kindergarten class.  One of her goals, she said, was for each of her 5- and 6-year-olds to be ready to read, if not actually reading by the end of the school year.  She stated with confidence that 20 of those children would meet that goal, but 8 of them, she added, were on very shaky ground due either to not being developmentally ready, not having a support group at home, or a variety of other reasons.  She pointed out the “harsh reality” of the situation; if she retained those 8 children, she would start the next year with 36 children, bringing her success rate down even lower.  She said her function as a teacher of future achievers would then change dramatically to one of a monitor in charge of crowd control.  She added that the problem would continue to exacerbate.  That, she said, was where the legislators came in. 

 

Ms. Courtney stated that previous legislators and teachers, in their wisdom, had provided a realistic and workable solution in the form of class size reduction.  However, she pointed out, the implementation of that solution required money.  Nevada’s problem, she said, was not in finding dedicated, committed individuals, but in finding enough money to support workable choices and make them successful.  Smaller classes did mean greater success by providing each student more individual attention, but, she emphasized, it required funding on at least the national level.

 

Speaking as a parent of three children in middle and high school, Ms. Courtney asserted that she understood the critical need for funding to attract quality teachers.  Her eldest daughter, she said, had been in math and biology classes of 40 or 50 students.  She claimed there were not enough desks, books, or teachers to go around, and that class sizes would continue to grow, with fewer opportunities for students to practice and acquire needed skills.  She asked what message Nevadans were sending their youth and why learning should be made a hardship and a test of endurance rather than a compelling and motivating experience.  She stated that providing mediocrity and making do without was no way to produce a nation of achievers.  She said a child could not prepare for college or acquire the knowledge necessary to become an active member of a global economy without a quality education.  Teachers, she added, had spent too many years learning their skills to be denied the opportunity to do what they did best. 

 

Funding education to at least the level of the national average, she added, was the key to Nevada’s future.  Ms. Courtney stated that, as a citizen of Nevada, she wanted the rest of the nation to look to Nevada as a state that did not turn its back to the future, but embraced the challenge and had the leadership to realize that tough choices and sacrifices had to be made to empower the next generation.  She implored the Committee to help her to help children become the very best they could be.

 

Chairman Parks commented that the Governor’s Budget proposal included a recommendation to change kindergarten from a half-day to a full-day class, targeting those schools that needed it most.  He asked Ms. Courtney for her comments on that proposal.  Ms. Courtney said that full-day kindergarten could be a real asset, but not if it meant twice as many students per class.  She wondered what schools would do about needed space and additional teachers.  She said she liked the idea, but wanted to know how it would work and how it would be funded.  Chairman Parks stated that he thought the funding for additional space was included in the budget proposal. 

 

Assemblyman Anderson expressed his sympathy toward Ms. Courtney’s concerns.  He asked if Ms. Courtney’s work in reading recovery during the second half of each day was a decision of the school or of the district.  Ms. Courtney replied that it was the school’s decision.  Mr. Anderson asked if freeing her for that half day had, in any way, had an effect on classroom size at the school.  She responded that she had begun the year as a literacy specialist, but that the school had lost a half-day kindergarten teacher due to there being fewer students than had been projected.  As a result, she had gone from being a full-time reading recovery teacher to being part-time reading recovery and part-time kindergarten teacher.  Mr. Anderson noted that the school had lost part of the use of a reading recovery teacher.

 

Paul Brown came to the witness table, congratulated Chairman Parks on being named outstanding legislator in the Las Vegas Review-Journal, and introduced himself as representing the Progressive Leadership Alliance of Nevada (PLAN), a statewide coalition of 45 organizations.  He announced that PLAN was in support of Governor Guinn’s proposal for increased taxes to adequately fund education and social safety net programs.  He stated that PLAN had, in 2002, released a report including a tax plan proposal to fund Nevada’s social service needs (Exhibit M).  That plan, he said, had documented a need for increased taxes.  He pointed out that the meat of the report began on the bottom of page 10.  He noted that the report quoted such headlines as “Nevada Among 10 Worst States for Kids’ Well-being,” “State Rated Low on Education Funding,” “Bleak Statistics Tarnish Nevada’s Glitter,” and “Medicaid Suffering Big Shortfall.” 

 

Two years ago, Mr. Brown said, PLAN hired two economists from outside Nevada to examine the state’s budget and rate it as to how stable, fair, progressive or regressive it was.  The economists reported their findings in the summer of 2000.  They said Nevada had one of the most regressive tax structures in the nation, meaning it was extremely burdensome on working families and the poor.  They deemed the tax base too narrow and unstable due to its reliance on two main taxes, sales taxes, which were inherently regressive, and gaming taxes.  The accounting firm of Price-Waterhouse, in a different study, found Nevada “clearly regressive,” with an unfair state and local tax system.  PLAN had kept these findings in mind when it came up with its tax proposal, which was not based on sales and gaming taxes.  Instead, a key component of Plan’s tax proposal was a business revenue tax.  Mr. Brown observed that the Governor’s tax proposal incorporated variations of three out of PLAN’s four proposals.  Forty-six states, he said, had some sort of business profits tax or income tax, and Nevada’s failure to do so had left a huge hole in the state budget.  He noted that corporations such as Wal-Mart and Bank of America paid such taxes in other states and still remained profitable.  Business leaders were demanding better-educated employees, yet, he pointed out, they refused to support education through business taxes.  He claimed they could not have it both ways.

 

Mr. Brown asserted that Nevada did not take in enough tax revenue to fund adequate education and social safety net programs.  He stated that the situation was so bad that Nevada had had to postpone buying textbooks the previous summer.  Nevada, he said, was dead last among states in per capita Medicaid funding to provide health care to the poor.  If the Medicaid situation got any worse, he asserted that more people would end up at county hospital emergency rooms.  Not only was that expensive, he said, but it also unfairly shifted health care costs from the state to the counties.  Mr. Brown quoted The New York Times as having said, “Pick almost any index of social well-being, and Nevada ranks at or near the very bottom of the 50 states, though it ranks near the top in personal wealth.”

 

Mr. Brown stated that the problem was not one of rearranging priorities or cutting out waste.  Taxes needed to be raised, he said, and raised fairly.  Businesses, he reiterated, were not paying their fair share, leaving much of the tax burden to be paid by the working poor, a situation that would only be exacerbated by an increase in sales tax.  He urged the Committee to do the right thing by imposing a business tax.

 

Chairman Parks asked if, after reviewing the exemptions to Nevada’s sales tax, Mr. Brown still thought the sales tax was regressive.  Mr. Brown said yes, it was regressive according to the figures arrived at by the accountants from Illinois.  He applauded Nevada lawmakers for not taxing groceries, as that would have made the sales tax even more regressive, but that Nevada was still a regressive state.

 

Buffy Kilarski introduced herself as a parent residing in Assemblywoman McClain’s district.  She stated that she and others had been asked at town hall meetings a couple of weeks previously which school programs they thought were more important.  She said her son Jeremy, a junior in a semi-at-risk high school, was musically inclined.  She noted that when she had been shown the list of programs, she had wondered how she, as a parent, could decide that her son’s music was more important than another child’s ROTC or yet another child’s athletic program.  She added that that was the decision the Board of Trustees would have to make if the schools did not get a stable base for increased taxes.  Children, she asserted, were the biggest responsibility and biggest investment.  A good education, she went on, was what was most important to all Nevadans.  She remarked that she had grandchildren in Tonopah, and that the education situation there was very different from that in Clark County.  She said Tonopah’s classrooms were much roomier and better equipped.  Ms. Kilarski asked the Committee to please fund education, no matter what they had to do or how unpopular it might be.

 

Mark Nichols, Executive Director, National Association of Social Workers, Nevada Chapter (NASW), introduced himself as a “True Blue Nevadan” in absolute support of raising taxes responsibly.  He stated that NASW’s number one priority during the current legislative session was to pass a comprehensive reform of Nevada’s tax system (Exhibit N).  NASW believed, he said, that the current system was fundamentally flawed and in need of significant reform.  Their position, he added, was that there were three critical weaknesses that needed to be addressed.  First, he said, revenue generated by the state was inadequate to support education and human services needs.  Second, the tax structure was unfairly regressive, taxing poor people at a significantly higher rate than the super rich.  Third, the system was extremely unstable and revenue sources needed to be diversified. 

 

The True Blue Nevadans, he stated, were tired of being at the bottom of the list for nearly every quality-of-life indicator.  Nevada, he noted, was 49^th in suicide prevention.  Social workers were aware, he claimed, that Nevada underfunded programs for abuse of alcohol and other drugs, and mental health services, which were two contributing factors in many suicides.  He pointed out that five of the states with the highest expenditures in those areas had the lowest suicide rates.  NASW members, he said, were tired of not having the programs and services necessary to address their needs and those of their clients.

 

Mr. Nichols stated that the True Blue Nevadans were concerned for the future of Nevada’s students if all they got from the state was more budget cuts.  He said they feared what would happen to all Nevadans, especially the vulnerable and those in need, if Nevada had to cut an additional $700 million in services.  He pleaded with the Committee not to cave in to the wealthy and powerful of the state who placed their financial wealth above children in the child welfare system.  NASW, he stated, was tired of businesses and the wealthy refusing to pay their fair share.  He said NASW believed that for every dollar of waste in state and school spending there were at least $10 worth of unmet needs.  The True Blue Nevadans, he went on, were fed up with balancing Nevada’s undersized budget on the backs of children, seniors, the working poor, and the vulnerable.  Budget battles, he went on, were described as everyone trying to get his fair share of the pie.  He added that Nevada, though, did not have a pie, it had a cookie, and Nevadans were fighting over crumbs. 

 

Mr. Nichols asserted that Nevada deserved better.  He said the state deserved to be average in something.  He said he understood the political pressure Committee members were under from everyone who did not want to pay more taxes.  It all translated to one thing, he observed, and that was greed.  The True Blue Nevadans, he stated, were wearing their blue buttons to show their support for raising taxes responsibly in Nevada.  They cared about Nevada’s needs, today and in the future.  He urged the Committee to pass a fair, comprehensive, broad-based tax reform package for all Nevadans.  He thanked the members for coming to Las Vegas.

 

Vic Davis, President of the National Alliance for the Mentally Ill in Nevada (NAMI), introduced himself and thanked the Committee for the opportunity to testify on the need for proposed taxation to support the mental health budget (Exhibit O).  He acknowledged that many people were opposed to any increase in taxes.  Mr. Davis stated, though, that according to the state mental health administrator, at least half of the estimated 85,000 seriously mentally ill persons residing in the state and relying on the state were not receiving any services.  The following budget proposals were essential, he said, to provide minimum care for those individuals currently receiving services, with no provision for population growth.

 

First, Mr. Davis said, was the need to reinstate monies for the purchase of atypical medicines.  He noted that Nevada had had an excellent reputation for supplying such medications in the past, and it needed to continue doing so.

 

The second and most important budget item, according to Mr. Davis, was the construction of a new mental hospital in Las Vegas.  He called this an absolute necessity.  He stated that when someone suffered a physical injury to the brain, it was expected that he would be taken to a hospital for treatment and then released to a safe environment for rehabilitation and recuperation.  No one denied the need for these services, he remarked, even though they were lengthy and expensive.  He asserted that mental illness was no different, and that during a psychotic episode the brain was undergoing trauma equivalent to an injury, and that the same types of services were required.  Without diagnosis and hospitalization, he said, there could be no recuperation or recovery. 

 

Mr. Davis pointed out that the population of Las Vegas had nearly doubled in the past ten years, but that state services for mental health had not.  He stated that a shortage of mental hospital beds had led to a situation where more than 30 people per day were waiting in emergency rooms and involuntary commitments were the primary source of admissions.  He said the new hospital would take two years to build and would relieve the situation, but in the interim, additional staffing was required to bring the current 86-bed capacity up to the licensed 103-bed capacity.

 

Mr. Davis stated that in order for a patient to recover, it was essential that he continue to receive care after being released from the hospital.  Outpatient services in Nevada were woefully lacking, he said, and the addition of an another PACT (Programs for Assertive Community Training) team would assist in providing needed care to those who were too seriously mentally ill to care for themselves.  He pointed out that the Olmstead decision required that persons be treated in the least restrictive environment available.  He said the additional PACT team would satisfy this requirement for about 70 additional persons.  According to Mr. Davis, inadequate outpatient services were causing many individuals to leave the hospital when only partially treated, and, with no other options available, to end up homeless, in jail, victims of suicide, or at home where their relatives were virtual prisoners.  He commented that Clark County detention was the largest mental health provider in Nevada.   

 

Mr. Davis stated that the police knew the plight of the mentally ill.  Las Vegas Metro Police, he noted, had just graduated its first Crisis Intervention Team (CIT) class of 31 officers, including 2 from North Las Vegas.  He said the special 40‑hour training course was designed to accomplish two things.  First, he said, was to prevent injuries to a mentally ill person or the officer in a crisis situation.  Second was to divert the mentally ill person away from jail and into treatment.  NAMI strongly supported the CIT program.  Mr. Davis stated that Clark County, the cities, and the hospitals were getting together to start a crisis triage unit, which was actually already in operation.  That unit, he said, would provide a place for voluntary patients to receive treatment instead of being taken to an emergency room.  He stated that the CIT officers were specifically trained to persuade people to volunteer to get treatment instead of taking them to jail.

 

Another effort in the works, according to Mr. Davis, was a mental health court, which would provide another means for people to be diverted from jail and into a treatment program.  Unfortunately, he added, this only worked if there were services available, and such was not currently the case in Nevada.  He stated that the President’s Commission on Mental Health had reported that those circumstances were common nationwide.  He pointed out that, although Nevada was not unique, it did remain near the bottom of the list.  The exception, he said, was number of suicides, in which Nevada had ranked number one or two for the past ten years.  He echoed Mr. Nichols in saying that the states that provided the services had the lowest suicide rates.  The western states, he noted, generally had fewer services and more suicides. 

 

Mr. Davis noted that the solution lay in more resources, and that those were not going to be forthcoming until the community decided that mental health was a problem.  He commented that people did not want to admit that the problem actually existed, but he stressed that the problem was real, repeating that mental illness affected 85,000 people in the state.  Those 85,000, he said, did not constitute a serious voting block, but their families did, and they were getting energized in hopes of resolving their problems in the future.  He thanked the Committee for its attention.

 

The Committee had no questions for Mr. Davis.  Chairman Parks mentioned that the members had flights to catch, and time was running out.  Mr. Anderson asked the staff to find pertinent data regarding the Olmstead decision. 

 

Mr. Richard Fenske introduced himself as a retired professor of chemistry, chairman of the department, and Associate Dean of the College of Letters and Science of the University of Wisconsin at Madison.  He asked the Committee to take a look at him, as he was the reflected face of the mentally ill.  He announced that he had two mentally ill sons, one of whom was dead, a suicide.  That his twin brother was alive and functioning in the community today, he said, was due to two important factors. 

 

The first factor was modern psychotropic drugs, which Mr. Fenske noted were expensive but which had changed his son from a depressed and paranoid individual into a functioning member of society.  He showed the Committee a letter from the Department of Commerce, Unclaimed Property Division, which he described as praising his son’s contribution to that department in 1992. 

 

The second factor, Mr. Fenske said, was his son’s participation in the PACT.  He stated that that unique approach had originated in Wisconsin and spread throughout the United States.  He cited, as an example of what the PACT team did, the fact that his son did not like to take his medication, and for two years someone from the PACT team showed up every night to give him his medication and watch as he took it.  The program, he said, had kept his son sane.  He emphasized how much that meant to him as a parent. 

 

PACT, Mr. Fenske pointed out, was very cost-effective and would be effective for Nevada because it would cut down on the need for hospitalization.  He stressed that the community desperately needed a second PACT team to begin to help people.  Money, he noted, was not the only need; hospital space was also desperately needed.  He noted, too, that money was not the only cost of mental illness, but pain and suffering of family members were costs as well.  He said he was aware of the state’s budget crisis, and asserted that Nevada’s humanity was in crisis as well.  He urged the Committee to include support for the PACT team and the new mental hospital when it considered tax increases.

 

Mr. Allen E. Van stated that he had lived in Nevada for 40 years and was mentally ill.  He said he was initially diagnosed with clinical depression, general anxiety, and panic attacks.  He had joined NAMI in 2000, but later, he said, he had lost his private insurance coverage and was forced to go to the Veterans Administration (VA) for help.  He commented that he could find no fault with their service, and that he said he still received medication, psychiatric oversight, and group therapy from the VA.  In 2000, he went on, the VA changed his diagnosis to Post Traumatic Stress Disorder that had its roots in his experiences in Viet Nam. 

 

Mr. Van said he had continued with NAMI and attended weekly consumer support groups.  He defined a “consumer” as one who consumes mental health services, and noted that he was one of those.  He stated that he attended meetings every Tuesday at the Southern Nevada Adult Mental Health Center, and that he interacted regularly with people who were having trouble with the state mental health system.  Most of the people there, he said, were low‑income and had no resources other than those they received from the state.  A huge problem with consumers, he noted, was failing to follow their medication regimens.  He said his motto was ”Get off the meds, and get into trouble.”  Medications and therapy, he said, were big keys to combating mental illness.  Mr. Van related that at his Tuesday meetings he had seen numerous people come in looking for help.  He said the Southern Nevada Adult Mental Health Center had tried to help, but that their help was necessarily limited. 

 

Mr. Van gave the example of a biker who came in one night crying uncontrollably.  He said he escorted the biker to the acute care unit and tried to get him in, but the biker first had to go the emergency room to be cleared medically before he could get psychiatric care.  He said he then took the biker to the University Medical Center (UMC) emergency room, where he was checked out physically.  He added that he left the biker there and had not seen him since.  He announced that people who came to meetings who were not already in the system and were not threats to themselves and others could expect to wait anywhere from six weeks to three months to see a psychiatrist for a brief visit to get their medications.  He said there were no strings that could be pulled, and that those people just had to wait because there simply was not enough mental health help available.  Mr. Van commented that if he had had to wait that long when he was at the bottom of his depression, he would have killed himself by then.  At that point, he went on, it seemed that death was the only relief available, and he had planned it before his medication took effect.  Finally, though, he said his medication took hold and pulled him back from “the abyss.”  He called mental illness a serious issue, and called upon the Committee to allow people like him to get help in Nevada.

 

Lori Lipman Brown came to the witness table, introduced herself, and promised to cut two paragraphs from her written handout (Exhibit P).  She stated that when she began teaching secondary English, speech, and drama for the Clark County School District in 1988, she taught 125 students in 5 classes per day at an at-risk school that was known as the heart of gang territory.  Two-thirds of her students, she noted, had been minority children, and virtually all of her students had lived in poverty.  She said her English classes had included many English language learners and special education students.  She claimed that she loved teaching in 1988 despite all the additional needs of her at-risk students, and was able to teach the students and have meaningful contact with nearly all their parents or guardians.  She said she had been able to give each and every student the attention and assistance that assured a superior education.  She added that she had won awards for her teaching, but that her excellence had been facilitated by two factors essential to good education:  small classes and parental involvement. 

 

When she resigned from the district in 2001, Ms. Brown said, she had been teaching 185 students per day, and had heard talk of teaching over 200 students per day in the following year, still in only 5 classes.  She noted that she had substituted for teachers who taught up to 220 students in 5 classes where she had to manage rather than teach, as not much teaching occurred in classes of more than 40 students.  She added that she did not believe that teachers who were dealing with that many students had much time to involve parents in any meaningful way.  The only way to lower class size, she asserted, was through additional funding. 

 

Ms. Brown stated that Nevada was one of only four states that did not have a corporate tax.  She pointed out that the Chamber of Commerce had opposed both the profits tax proposed by educators during the previous legislative session and the Governor’s current corporate tax proposal, although both taxes had provisions for exempting small businesses.  Large corporations such as Bank of America and Wal-Mart, she said, did not charge more for their goods or services in states that did charge them a tax, and she added that they had not closed up shop.  She stressed that Nevadans would pay for education one way or another, and she expressed hope that it would be paid for by meaningful revenue now by passing the Governor’s tax bill, and not later as a result of expensive litigation regarding adequate education.  She thanked the Committee for its time.

 

Chairman Parks thanked Ms. Brown and invited Valerie Curby and Leslie Cuddy to come forward.  Several women and a group of girls in Brownie uniforms approached the witness table.  Jessica Van Alfen, a third grader, stated that she and her entire Brownie troop had come to ask the Committee to support education.  She said music, art, library, and physical education were important programs for children, and she urged the Committee to raise money to preserve the education she and her schoolmates deserved.  She thanked the Committee.  Ms. Terri Janison pointed out that the girls were all wearing blue to show they were True Blue Nevadans.  Chairman Parks thanked them for coming.

 

Chairman Parks called on former Assemblyman Doug Bache to come forward.  Mr. Bache commented that the Committee already knew what the needs were in education, health care, and mental health.  He said he wanted to address some issues regarding how to enact the tax policy.  He stated that a business tax, whether it was on net profits or gross receipts, should be the centerpiece of the tax policy.  He stressed that the decisions of the Committee regarding how the tax was implemented were critical.  He recommended an adjustment for gross payroll as an adjustment to the gross receipts tax, which would encourage businesses to increase their payrolls, either by hiring more employees or paying their employees more, if they wanted to reduce their taxes.  The effect down the road, he said, was that more or better-paid employees would pay more sales tax.  He noted that Legislative Counsel Bureau fiscal analysts had the knowledge and ability to plug different parameters into a formula to come up with the amount of increased revenue that was needed. 

 

As for the Governor’s proposed amusements tax, Mr. Bache remarked that creating a new tax would probably not be the best idea.  He suggested that levying a sales tax on ticketed events would be the simplest way to accomplish almost the same thing. 

 

He said he was aware that there was a proposal for increasing the taxes on cigarettes and alcohol.  He expressed the opinion that the tripling of the cigarette tax would impose a hardship on low‑income smokers, especially if combined with other legislation currently before the Committee on Judiciary.  He offered to answer questions from the Committee.

 

Assemblyman Anderson asked what Mr. Bache thought of claims that an increase in the liquor tax included in the so-called “bridge tax” package would have an adverse effect on tourism.  Mr. Bache responded that he thought such an increase could, indeed, have a negative impact on tourism, and also, at a local level, on working-class consumers, resulting in a decline in consumption. 

 

Carolyn Edwards introduced herself as a parent and long-time resident.  She announced that she was there to advocate education and ask that it be adequately funded, but added that what she had to say was somewhat different from what the Committee had been hearing.  She noted that education was currently inadequately funded.  She urged the Committee to raise her taxes.  She stated that she meant to pay for the education that Nevada’s children deserved.  She declared children to be the state’s most precious resource.  She said she would still want to pay for education even after her children were no longer in school.  Children, she said, were the ones who would support their elders after they retired, and were the ones who would be running the government in another thirty years.  She urged the Committee to raise taxes equitably across the board, and to raise hers, too.  She reemphasized her willingness to pay and said she represented a lot of other parents who were also ready to “step forward to the plate” and help bear the burden of what should be done for their children.  She thanked the Committee.

 

Larry Allen introduced himself as a full-time employee of the Wal-Mart Super Center in Las Vegas.  He said he was paid $8.35 per hour.  He stated that he had no insurance through Wal-Mart, as he could not afford it.  He noted that a “halfway decent” medical plan covering only his wife and him would cost $91 every two weeks.  He added that there was also a $350 deductible per person.  That, he said, was not affordable insurance. 

 

Mr. Allen mentioned that he had been ill earlier in the year and had had to go to UMC county hospital for medical treatment and the county had had to pay for it.  He said his blood pressure had been extremely high, and he had spent the next two days in the hospital.  He said he was told he had a “bleeder” in the brain.  He stated his opinion that, had he had insurance so that he could have gotten the proper medication earlier to control his condition, that would not have happened.  He noted that most of his co-workers at Wal-Mart were also unable to buy insurance. 

 

Mr. Allen claimed that Wal-Mart was the largest employer in the United States, with more than one million employees and annual sales of $220 billion.  He said the corporation should be able to provide health insurance for its employees instead of making them rely on tax dollars.  He stated that something should be done to make companies responsible.  He said a business tax should provide an incentive for companies that did provide health insurance for their employees.

 

Tony Dane introduced himself as a parent, uncle, and long-time Las Vegas resident.  He stated that he was in full support of funding schools, but added that he did not believe schools had been acting in the community’s best interests.  He said there was a need for a computer on every school desk.  He claimed that the Clark County School District had destroyed 100 Pentium II™ computers during the past month because they said the information on the hard drives was too sensitive for the computers to be used by students.  Mr. Dane observed that a hard drive cost $40 while a computer cost $1000.  Destroying those computers, he said, was not being fiscally responsible.  Having 200 company cars, he added, did not benefit the students, either.  He stated that the school district needed to start looking for ways to put its money to better use before anyone started raising taxes.  Once that had been done, he said, he would be in favor of doing what was necessary to fully fund the school district.

 

Chad Leavitt remarked that those 200 company cars would be cut as of July 1.  He introduced himself as a student of the Clark County School District, Student Body President at Green Valley High School, and President of the Student Advisory Committee to the Clark County School District.  He said he represented many students.  He commented that he was aware that the Committee did not want to cut any of the many great education programs.  He stated that Nevada had had an overabundance of growth in the past 50 years, and that the state had hoped the tax structure would be able to keep up, but it had not.  Mr. Leavitt announced that he was a Republican, and added that his father, one of the most conservative people he had ever met, was saying, “Raise my taxes.”  He said it was time for a big tax increase that would affect everyone.  He urged the Committee to “do it, get it over with, and move on.” 

 

Mr. Leavitt noted that everyone wanted students to get a quality education, but no one wanted to pay for it.  He stated that all Nevadans would have to pay for it.  He noted that tourism was not a revenue source that could be counted upon to be there forever.  He pointed out the instability of the tourist industry and the possible effects of the current war.  He stated that a stable revenue source was needed and that all Nevadans, from his mother to Steve Wynn, should be responsible for it, and so should visitors to the state.  He concluded by urging the Committee to “dare to be average and invest in me.”

 

Amanda Vertner introduced herself as a 16-year-old junior at Foothill High School.  [She forwarded a copy of her testimony the next week (Exhibit S).]  She expressed the opinion that any cut in educational or social programs would be devastating to the community.  She observed that Nevada ranked near the highest of all the states in high school dropouts.  She asserted that cutting programs that enabled and encouraged students to keep their grades up and stay out of trouble would cause dropout rates to skyrocket.  She stated that Nevadans should be ashamed of the small amount of money the state spent on education.  Nevada’s educational system, she said, ranked 46^th in the nation. 

 

Ms. Vertner pointed out that many students shopped at Wal-Mart and other huge retailers, and most had savings accounts at Bank of America or other banks.  If students were investing in them, she asked how could they not invest in the students.  She commented that children were the future, and she urged the Committee to help them become the best professionals they could be.

 

Jana Pleggenkuhle introduced herself as a teacher, a parent, and a 30-year resident of Las Vegas whose mother was very politically active.  Reading from prepared testimony (Exhibit Q), she observed that many people had said, in essence, “Don’t raise my taxes.”  What the situation boiled down to, she said, was that not enough money was put into education.  She said she knew politics, having been politically involved since she was a baby.  She told the Committee members that they had to do the right thing.  It was not a matter of whether or not they would get reelected, but a matter of doing the right thing for the future of Nevada.  She claimed that the state was in a crisis.  She stated that, as a classroom teacher, she had seen the best of the best leaving Las Vegas to go elsewhere.  She stressed that that was the reality, not what they had been told by unions or propaganda.  She said she experienced it on a day-to-day basis.  She said the issue was not about politics but about putting money into education.  She emphasized that Nevada’s current tax structure was not equal to the task.  The legislators, she said, were the ones who had to change it.  She urged the Committee to do what was right for the future of Nevada.

 

 

Patricia Harris introduced herself as a Republican, a long-time resident, and the single parent of a 28-year-old autistic young man.  She said she had come to address needs that were not being met in Nevada.  She stated that the schools had been doing a good job with programs for developmentally disabled children.  Her son, she said, had been out of the school district for ten years and had been on a waiting list to get a group home.  She described him as having severe behavior problems.  She said he had been approved to get into a special home, and that he needed an Individual Specialized Living Arrangement (ISLA), but there had been no funds available to provide those services.  The needs of the developmentally disabled and mentally retarded were not being met in Nevada, she said.  She stated she fully supported increased taxes and anything else that needed to be done.  She mentioned that she was a former vice president of the Autism Society and so was aware of the large community of people who were autistic or otherwise developmentally disabled.  She stated that they were in need of services and could not help themselves.  She thanked the Committee.

 

Dorothy Nolan, State Board of Education, said she had come to wish the Committee well.  She acknowledged that it was late, they were tired, and they had a lot of conflicting ideas going through their heads.  She stated that her support was with them, and that she, too, was fighting for education.  She stressed that public education was not free, and she expressed a belief that every citizen, from student to homeowner to big business, had rights and responsibilities toward public education.  She thanked the Committee members for their time.

 

Mellyn Anderson introduced herself and thanked the Committee for coming to Las Vegas.  She said that she and her mother were both native Nevadans, and that three generations of her family had been educated in Nevada.  She stated that she grew up with the hotels and casinos paying for everything.  She observed that that was no longer a reality.  She acknowledged that a broad‑based tax was important.  What she said she wanted to emphasize was that the change needed to come about during the 2003 Legislative Session, especially for education.  She said she knew Nevadans had to pay more taxes, and that the state had simply outgrown the days of there not being very many taxes.  She urged the Committee to pass something that would take care of business.

 

Tami Taylor thanked the Committee for its time and said that her daughter had recently started high school.  She noted that the transition to high school could be a difficult one and could affect years of a student’s life.  She stated that joining the Student Council had made a wonderful difference for her daughter and had helped her through many difficulties.  She said her family was grateful for that program and hoped it could continue.

 

Ashley Taylor introduced herself as a freshman at Cimarron-Memorial High School.  She stated that she had come to express to the Committee just how important extracurricular activities at school were.  She said they helped students keep their grades up and keep out of trouble because if they did not, they could get kicked out of their activities.  She stressed that if extracurricular activities were taken away, a lot of her friends might drop out or get in trouble.  She urged the Committee not to jeopardize students’ further education by letting extracurricular activities be discontinued.

 

No one else wished to speak.  Chairman Parks adjourned the meeting at 7:20 p.m.

 

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Mary Garcia

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Assemblyman David Parks, Chairman

 

 

DATE: