MINUTES OF THE meeting
of the
ASSEMBLY Committee on Ways and Means
Seventy-Second Session
February 4, 2003
The Committee on Ways and Meanswas called to order at 8:10 a.m., on Tuesday, February 4, 2003. Chairman Morse Arberry Jr. presided in Room 3137 of the Legislative Building, Carson City, Nevada. 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. Morse Arberry Jr., Chairman
Ms. Chris Giunchigliani, Vice Chairwoman
Mr. Walter Andonov
Mr. Bob Beers
Mrs. Vonne Chowning
Mrs. Dawn Gibbons
Mr. David Goldwater
Mr. Josh Griffin
Mr. Lynn Hettrick
Ms. Sheila Leslie
Mr. John Marvel
Ms. Kathy McClain
Mr. David Parks
Mr. Richard Perkins
COMMITTEE MEMBERS ABSENT:
None
STAFF MEMBERS PRESENT:
Mark Stevens, Assembly Fiscal Analyst
Steve Abba, Principal Deputy Fiscal Analyst
Tracy Raxter, Program Analyst
Catherine Caldwell, Committee Secretary
Connie Davis, Committee Secretary
Chairman Arberry introduced the Assembly Committee on Ways and Means support staff. Those included Mark Stevens, Assembly Fiscal Analyst, Steve Abba, Principal Deputy Fiscal Analyst, Reba Coombs, Committee Manager, Connie Davis, Committee Lead Secretary, and Committee Secretaries Anne Bowen, Kate Caldwell, Susan Cherpeski, Lila Clark, Linda Smith, and Carol Thomsen. Chairman Arberry welcomed the staff.
Mark Stevens, Assembly Fiscal Analyst, distributed for the Committee’s approval the Assembly Committee on Ways and Means Preliminary Committee Rules, 2003 Session (Exhibit C). Chairman Arberry brought to the attention of the Committee rule number 8 that expected Committee members to advise the Chairman if their Floor vote on an amendment or a measure differed from their vote in the Committee. The Chairman noted that the Committee sometimes started at 7:30 a.m., and the Committee normally adjourned at 10:45 a.m. Chairman Arberry added that sometimes the Committee continued to work beyond 10:45 a.m. He noted that the Committee would generally be meeting at 3:30 p.m. on Tuesdays and Thursdays but that could vary depending upon the Elections and Procedures Committee. The Chairman advised that the tone for business should be respectful and professional regardless of stress or individual opinion. Chairman Arberry stressed that the daily budget highlights were to be kept absolutely confidential. The Chairman noted that past experience had shown prior knowledge of the budget highlight contents could skew and bias testimony. He continued that Committee members were expected to read the budget highlights to know what would be discussed and that Mr. Stevens would be available to answer questions. The Chairman encouraged Committee members to ask budget-relevant questions. He noted that Committee members could store their materials in bins provided in the Committee meeting room.
ASSEMBLYMAN MARVEL MOVED THAT THE ASSEMBLY COMMITTEE ON WAYS AND MEANS ADOPT THE COMMITTEE RULES.
VICE CHAIRWOMAN GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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Chairman Arberry discussed the history of the creation of the joint subcommittee structure. He said the Senate and Assembly money committees had decided to change the structure of how they met. They had originally met as two separate subcommittees. In order to lessen the burden on staff that had to meet separately with the Senate Committee on Finance and the Assembly Committee on Ways and Means, they decided to form joint subcommittees. Through this structure the Assembly Committee on Ways and Means met with the Senate Committee on Finance. In this way the information could be provided to members of both committees at one time. He said this removed the burden of double testimony from the agencies and recording responsibilities from staff.
Mark Stevens, Assembly Fiscal Analyst, noted that the subcommittee lists had been distributed and that more copies were available.
Assemblywoman Chowning asked when the Tuesday and Thursday meetings would begin. Mr. Stevens said that the joint subcommittee meetings would begin the following week. He said typically the joint subcommittees would meet on Tuesdays, Wednesdays, and Fridays, and the full Ways and Means Committee would meet on Mondays and Wednesdays. He said that next Tuesday the Committee would begin its first joint subcommittee meeting. He added that each member had a storage area and bin located in the bookcase behind the Committee desks for storage of the hard copy budget and any other materials.
Mr. Stevens explained that the expanded program narratives would be available in a few days. Those would provide additional information on new programs and statutory authority of each of the agencies within The Executive Budget. He said since The Executive Budget had been voluminous, a large narrative could not be included at all times; therefore, the expanded program narratives would provide additional information for reviewing the budgets. He continued and said that as bills passed out of Committee, staff would provide bill explanations that would be put in a binder on the members’ desks on the Floor. He said those bill explanations could be utilized by whomever the Chairman had assigned to discuss that bill on the Floor when it came up for third reading. Mr. Stevens told the Committee the fiscal report, with additional budgetary information, would be available in mid-February. He said the fiscal report was a review of what had been included in the Governor’s Executive Budget. It also had information on the Capital Improvement Program, revenue projections, with a narrative as well as numbers, of what had been included in The Executive Budget for each of the agencies. He said full budget reports would be available in the committee room that would list all the positions that were recommended in The Executive Budget as well as the detailed information within each category. Mr. Stevens said he and Steve Abba would be happy to meet with any new or veteran members should they want to review what those reports contained. He said those reports would be available within a few days. He noted that some budgets were heard only once so questions should be asked at the time of each budget hearing.
Mr. Stevens noted that the Committee members would receive information outlining which budgets were recommended to be closed in joint subcommittee, full Committee, or budgets that were the staff’s responsibility to close. He said those budgets could be moved to suit the Committee’s needs.
Mr. Stevens said he had asked Andrew Clinger from the Budget Division to go through the Governor’s budget more thoroughly than would normally be done so that Committee members could become familiar with the various decision units included in each of the budgets. Each budget also had decision units unique to that particular budget.
Chairman Arberry noted that the Governor had been the architect of The Executive Budget presented in the State of the State Address and that The Executive Budget then belonged to the Legislature to balance.
OFFICE OF THE GOVERNOR
BUDGET PAGE: ELECTED-1 – VOLUME I
OFFICE OF THE GOVERNOR
BUDGET PAGE ELECTED-4 – VOLUME I
Andrew Clinger, Deputy Director, Department of Administration, Budget Division, began his presentation of the budgets for the Office of the Governor, 101-1000, and the Mansion Maintenance, 101-1001. He noted that the Office of the Governor budget was located in Volume 1 – Elected 1 of The Executive Budget. He said that the base budget had been built on FY2002 actual expenditures eliminating any one-time expenditures. He said that in the Governor’s budget there were General Fund appropriations recommended for 19 continuing positions, and that was actually 8 positions less than approved by the 2001 Legislature. He noted two additional positions, the Homeland Security Advisor and one assistant that were funded by transfers from the Department of Motor Vehicles and Public Safety Division of Emergency Management, and the Department of Human Resources, Health Division. The available funding for those two positions continued through September 30, 2003.
Mr. Clinger proceeded to the next decision unit of the budget of the Office of the Governor, Maintenance M-100, that covered inflation and per unit adjustments. He noted a table on page 8 in the Appendix in Volume 3 of The Executive Budget that contained the rates used to build the budget. He said that the M-100 decision unit represented rate adjustments for increases in buildings and ground rent, property and contents, employee bond, tort and other insurance rates. Also included in the M-100 decision unit adjustments were the assessments charged to the various agencies for purchasing, statewide cost allocation, Office of the Attorney General, and increases in the Department of Information Technology (DoIT) rates. Mr. Clinger noted that The Executive Budget appendix contained a table that outlined the various recommended rates for the 2003-05 biennium and for the previous biennium.
The Office of the Governor’s decision unit M-300 covered fringe benefit adjustments. Mr. Clinger noted that in The Executive Budget’s Appendix, page 7, a table contained the rate increases. He elaborated that the fringe rates included increases in group health insurance, the retired group health insurance, payroll and personnel assessment, and the Public Employees’ Retirement System.
Mr. Clinger concluded with The Executive Budget decision unit E-710, that recommended upgrades and replacements of computer hardware and software.
Chairman Arberry asked for questions from the Committee.
Assemblywoman Gibbons noted that she had discussed with the Governor and Air Force General Ron Bath a way to fund the positions of Homeland Security Advisor and an assistant. Mrs. Gibbons had information from the Pentagon that the federal government would fund the positions if they were in the military. Mr. Clinger said that he had not spoken to anyone about that possibility. Mrs. Gibbons suggested Mr. Clinger meet with her after the meeting and she would supply Mr. Clinger with the phone number of General Bath.
Assemblyman Marvel asked Mr. Clinger about the status of the Office of Science, Engineering, and Technology. He asked if there had been federal funds or grants for the office. He noted the Committee had worked on this in past sessions and he wondered if anything had happened regarding the office’s funding or function. Mr. Clinger noted there had been no funds requested in The Executive Budget for this office. He said that there was another account that had approximately $92,000. Mr. Marvel asked if that money could revert and if it had any purpose. Mr. Clinger said that there was no current proposed use of that money and he believed there had been a bill passed last session that allowed the money in that account to carry forward. Mr. Marvel asked if the Science Advisor position was currently filled. Mr. Clinger said the position was not currently filled. Mr. Marvel noted the purpose of the funding had been for seed money to get federal grants and said there had been no indication of any activity or results. It seemed the project had never gotten off the ground. Vice Chairwoman Giunchigliani agreed with Mr. Marvel and said there had been concerns about its creation. She suggested that the Committee should consider a reversion of the funds for the budget.
Assemblyman Beers asked for clarification about the Department of Information Technology (DoIT) assessment of $24,528 in the M–100 decision unit. Mr. Clinger responded that there were several line items for the $24,528, such as microwave channel rent and computer facility charges. Mr. Clinger said that the only assessments were $1,600 in the first year of the biennium and $1,200 in the second year. The remainder represented rate increases. Mr. Beers noted the amount recommended in M-100 was double the base budget amount for information technology. He wanted to know if there had been a doubling of rates with the Department of Information Technology’s new plan. Mr. Clinger said the increases were not across-the-board but that the Web services had increased significantly. Other rates varied according to projected usage. Mr. Beers wanted to know if DoIT had been providing support to change and maintain the Governor’s Office Web site. Mr. Clinger said he did not know if the Governor’s Office maintained its own Web site. He posed that the charges had been based on use rather than a flat fee and that the Governor’s Office had been a heavy user, which resulted in that particular fee increase. Mr. Beers reaffirmed there would not be a large increase through the budgets. Mr. Clinger noted that there had been a change in Web site billing methodology based more on traffic volume. As an explanation of the change in billing methodology, Mr. Clinger used the analogy of having set earlier rates by measuring the amount of water usage based on the size of the pipe to measuring the flow of water through the pipe.
Vice Chairwoman Giunchigliani asked Mrs. Gibbons to restate if there would be federal grant dollars available to pursue funding for the Homeland Security Advisor. Mrs. Gibbons confirmed the state should pursue the funding for a year and seek funding for other positions. Vice Chairwoman Giunchigliani suggested Mrs. Gibbons and Mr. Clinger pursue the question of what dollars might be available. She then asked how the position of Homeland Security Advisor had been filled as it had not come before the Interim Finance Committee (IFC) for review. Mr. Clinger responded that the authority for the position already existed and his office had processed an accounting-only work program to bring transfer funds into reserve funds to revert. Vice Chairwoman Giunchigliani asked Mr. Clinger when the position had been posted and when the work program had been brought to the Interim Finance Committee. Mr. Clinger did not have the exact date. Vice Chairwoman Giunchigliani asked Mr. Clinger to get back to the Committee with that information. She noted that the grant had been brought to the Assembly Committee on Ways and Means but not information regarding the position.
Mr. Clinger proceeded to the Mansion Maintenance budget created for operations and maintenance of the Governor’s Mansion in Carson City. The base budget was derived from actual expenditures in FY2002 with one-time expenditures having been eliminated. In the second year of the biennium the base budget reflected a slight increase for legislative activities. He noted that decision unit E-275 added $587 per year for out-of-state travel for the First Lady to attend one additional out-of-state function.
Chairman Arberry asked about the status of the Capital Improvement Program (CIP) project No. 01-M2, for repairs and renovations to the Governor’s Mansion and the cook’s residence as had been approved by the 2001 Legislature. Mr. Clinger said of the $539,000 allocated, $64,000 remained in project funds to be used to construct a shed and shop building.
Assemblyman Beers asked Mr. Clinger to explain the $4,500 recommended over the biennium in the M-100 decision unit for information technology. Mr. Clinger explained that the figure covered rate increases, facility charges, and planning assessment increases. He added that the planning assessment had been based on a full-time equivalent position (FTE) count. The Governor’s Mansion did not have a program application that resided on the mainframe or within the computer facility. Mr. Clinger said he would provide more detail if requested.
Mr. Beers asked how the maintenance items were calculated and how the Mansion was assessed for information technology. He asked if the increases were an assessment and if the charges had been based on the FTE position count. Mr. Clinger confirmed that the planning assessment had been an FTE-based-charge. The large increase in the M-100 decision unit of $674 in the first year and $610 in the second year had been in the computer facility charge. Mr. Clinger surmised the computer facility charge had been primarily billed as per hour for the service. The M-100 decision unit figure had been calculated by taking the projected utilization and comparing that figure to the base budget. The increase had been incorporated into the M-100 decision unit. Mr. Clinger added that this had been a general formula. Mr. Beers hypothesized that were he to plan a 30 percent expansion in a particular program, assuming that had been normal, then the 30 percent amount would be inserted into the M-100 decision unit. Mr. Clinger said an expansion of that size would have been put in a separate enhancement decision unit. Mr. Beers wanted further clarification of how to expand the base budget beyond the number of new people to be served. Mr. Clinger said it would had to have been expanded through a per hour rate charge.
Assemblyman Hettrick asked if the rate expansion covering the cost of planning would be reflected as the same percentage in every budget. Mr. Clinger said that the decision unit would appear in every budget, but that the percentage would not necessarily be the same. Mr. Hettrick asked for further clarification as to what drove the increase. If it were not a person or a percentage specific to purchasing or cost of services, Mr. Hettrick said it was not clear what drove the increase. Mr. Clinger said that the rate was driven by type of service and the components the agency used. The components could be hourly pieces, such as network technicians or programmers, or they could be assessments, such as planning. Mr. Clinger noted that detailed spreadsheets were available for those calculations for every budget account. Mr. Hettrick said that it would be helpful to the Committee to have those spreadsheets for each of the budgets to see how the rates had been increased. Mr. Clinger said that information could be provided.
Ms. Giunchigliani asked, in reference to the 30 percent increase hypothesized by Mr. Beers, what would be the threshold for an enhancement. Mr. Clinger responded that in Mr. Beers’ example, the increase had been called an expansion. If a project related to information technology had been new and different it would not fall into the M-100 decision unit as an increase. It would fall into a separate enhancement decision unit. Ms. Giunchigliani noted that in the example, the increase had not been for something new, but had been for maintaining the same work and process. She asked how the Committee would know how to probe within the M-100 decision units. She said the Committee needed some signal or indicator to know if something more were being done in that department or division.
Vice Chairwoman Giunchigliani asked for information to be presented so that the Committee could see what rate increases were tied to what services. Mr. Clinger affirmed the information would be presented. She also asked if they could see a breakdown within the M-100 decision units of the rate increases, assessment increases, and whatever else might be involved. Mr. Clinger confirmed there had been a spreadsheet for the entire budget broken down by areas, including programmers, network technicians, and assessments. Vice Chairwoman Giunchigliani said it would be helpful if the spreadsheet would show a comparison to an earlier budget.
Assemblywoman Chowning reconfirmed that Mr. Clinger would be giving the Committee a review as to what the $2,200 per year in M-100 represented in the present budget, which could be used as a guide for the rest of the budgets to come. She noted that the Committee had scrutinized budget items covering fax machines, coffee-making machines, and much less costly items. She said that it had not been helpful to be unsure as to what costs were represented and requested that the review be available soon to be used as a guide for the rest of the budgets. Mr. Clinger said he would provide that information for the Office of the Governor’s budget as well as all budgets.
Chairman Arberry thanked Mr. Clinger for his presentation.
OFFICE OF THE LIEUTENANT GOVERNOR
BUDGET PAGE: ELECTED-20 – VOLUME I
Lieutenant Governor Lorraine T. Hunt greeted the Chairman and the Assembly Committee on Ways and Means. She began her presentation of Budget Account 1020, Lieutenant Governor’s Office, with a summary of the duties, responsibilities, and mission of the office (Exhibit D). As a constitutional officer, she noted that the Lt. Governor served as Chief Executive whenever the Governor was absent from the state, as Chairwoman of the Commission on Tourism, the Commission on Economic Development, as Vice Chairwoman of the Board of Directors for the Department of Transportation, and as a member of the Executive Branch Audit Committee. Since taking office, Governor Guinn had also entrusted her with enhanced responsibilities as a member of his Cabinet.
As Lt. Governor, she said that her commitment had been to strengthen the tourism base in Nevada, as well as to develop a new broad base of economic diversification opportunities by creating entrepreneurial partnerships and encouraging global investment. She stated that across the nation many of the states were struggling to meet the economic challenges before them and that many states had made devastating cuts in their programs and budgets. She noted that as other states searched for answers to enhance and diversify their revenue streams they found themselves facing opposition to conventional tax increases and support for the establishment of lotteries and gaming. Nevada had been doing just the opposite, looking for tax revenue beyond its base. She emphasized that Nevada should not ignore the value of the very important industries of tourism and gaming that had protected the state from recession time and time again. The challenge lay in protecting, diversifying, and growing Nevada’s tourism industry base while aggressively pursuing economic development opportunities. She said that diversification was even more important to Nevada today as the gaming industry faced increasing competition in markets from which it had traditionally drawn, particularly from California. While continuing to support tourism and gaming industries, the biggest challenge for Nevada’s economic development and diversification remained in shaking the old Nevada image and creating a new image as an important player in the global economy.
Lt. Governor Hunt continued and said that to create an environment where economic diversification and entrepreneurial activity could flourish, her office led the Nevada technology partnership to promote high-tech business development and plans for the future by providing the tools necessary to build a skilled work force in the state. She noted that S. B. 558, which she had initiated and which had been passed during the 71st Legislative Session, had been designed to bolster the business community and to increase Nevada’s share of new businesses by providing additional protection for trade secrets and intellectual property. She commented that by becoming a safe haven for the creators of intellectual property, Nevada could bring talent to the state that would attract venture capital and major high-tech companies.
Lt. Governor Hunt noted that her office had been aggressively striving to maintain and enhance Nevada’s position as an international tourism destination and to promote Nevada as a hub of world trade. She said that by working in conjunction with the Commission on Tourism and Economic Development, a trade mission to China, Hong Kong, Shanghai, and Beijing was planned in June 2003 to promote Nevada as a tourism destination and international business partner. She added that at a time when most of the economies in the world were recessive or flat, China had been growing at a rate of 7 to 9 percent annually. She said that in 10 years it was anticipated that a quarter of a million travelers from China, 250,000 people from a country of 1.4 billion, would visit the United States. She asked the Committee to imagine the potential for Nevada if it were to get only a portion of those visitors to visit this state.
Lt. Governor Hunt turned to her office’s marketing activities. She said recently the Nevada Commission on Tourism had launched a bold new advertising campaign, “Nevada Bring It On,” which stressed the adrenaline-rushing experiences of Nevada’s great outback, targeting the adventure tourist in outdoor magazines, adventure guides, and various western newspapers. She noted rural Nevada had been a key component of her office’s overall marketing strategy. She said rural Nevada offered hard and soft adventure, being one of the top tourism draws in the United States. Nevada had barely tapped the growth potential in this tourism sector. Among the nearly 100 million adults who had not yet taken an adventure trip in the past 5 years, one-fourth said they were likely to do so in the next 5 years. She emphasized this market held tremendous potential for Nevada’s rural areas.
Lt. Governor Hunt said S. B. 583 established a grant program for the development of projects related to tourism that would assist rural communities with tourism development needs. This grant, the first of its kind, had been extremely popular and needed in the rural areas and had bridged the gap between economic development infrastructure and tourism marketing efforts. She went on to say that as Chairwoman of the Commission on Economic Development, she, along with a statewide network of 14 regional development authorities, had worked to create a stable, diversified economy, and to target businesses suitable for the Nevada environment.
Lt. Governor Hunt noted multi-media and high-tech as two such industries that had emerged as prime prospects. She said that Nevada had already seen the effects of the multi-media industry on the state’s economy. Literally hundreds of productions for movies, television, commercials, and music projects had occurred in Nevada. She observed that the increasing global demand for the products of entertainment and Nevada’s unique place in the world positioned Nevada as a major producer and exporter of high-tech multi-media entertainment and educational products in the 21st century. She added that Nevada had therefore been positioned as an exporter of manufacturing, research and development, and computer-based gaming devices to the world.
As part of her duties, Lt. Governor Hunt had overseen the Nevada Film Office, which had been proactive in establishing Nevada’s reputation as the most film-friendly state in the nation by eliminating roadblocks to production in the state. Since its inception in 1983, the Nevada Film Office had helped the state benefit from record-breaking recorded revenues, surpassing one billion dollars, for filming in Nevada. She went on to say that companies from all over the globe were visiting Nevada with a genuine interest in moving their companies, their businesses, and their families to this state. She noted from traditional corporations to “dot-coms,” high-tech to manufacturing and distribution companies, Nevada was now on the business world’s radar screen. She said the office’s recent aggressive marketing efforts at the Nevada Commission on Economic Development had produced a new reputation in the high-tech world. Nevada meant not only gaming and hospitality, but Nevada now meant business.
Lt. Governor Hunt reiterated her initial premise that in order to remain competitive the state should expand its tourism and business base. However, the state could never forget that tourism and gaming had been Nevada’s number one industries long before other states followed suit. With its history, knowledge, and infrastructure, Nevada had been unbeatable in those key revenue-producing areas. She said it had been her vision to expand those bases, diversify them even further, and to increase the revenue to the state.
Lt. Governor Hunt ended her preliminary remarks regarding the budget for the Office of the Lieutenant Governor and introduced Nancy Dunn, Deputy Director of the Nevada Commission on Tourism.
Ms. Dunn told the Committee she represented the Lieutenant Governor’s Office, but worked for the Nevada Commission on Tourism. The Business Office of the Nevada Commission on Tourism had been under contract to provide accounting and budgeting services to the Lieutenant Governor’s Office. She began her presentation by saying the base budget of the Lieutenant Governor’s Office provided for continuation of six unclassified full-time positions as well as the Lieutenant Governor. She said the Lieutenant Governor’s salary and the travel line item in the second year of the biennium had been increased due to the Lt. Governor’s responsibilities during the legislative session. One-shot and discontinued costs had been removed from the base per The Executive Budget instructions. She noted there had been no new programs in this biennium and said the 3 percent budget reductions were carried over from FY2003 into the new biennium, as recorded in decision unit E-600. Also, there were some Maintenance decision units in the budget, as had been discussed earlier, that had been calculated by the Budget Office, representing increases in property and tort insurance for state-owned building rent, DoIT communication and contract charges, and purchasing assessments. She noted those costs had been included in the M-100 decision unit. The M-300 decision unit included an additional amount in both years of the biennium for changes in employee fringe benefits. Ms. Dunn told the Committee there were some enhancement units in the Lieutenant Governor’s budget that needed explanation. She said The Executive Budget instructions required that changes within line item authority be put into the budget as an enhancement unit. Therefore, the Lt. Governor had not expanded the budget but realigned already existing authority to make it more beneficial to the office in the next two years.
Ms. Dunn said the Lieutenant Governor’s Office budget included a legislatively-authorized host fund. Those funds had been used to host domestic and foreign dignitaries to discuss new strategies promoting economic development, trade, and tourism to Nevada. The amount in the fund would fluctuate from year to year and could range from $800 to $5,000 depending on business trends and industry needs. As noted by the Lt. Governor, China had been an emerging market for the state of Nevada and had great potential as an international trade and tourism market. Millions of affluent and middle-class Chinese traveled outside of China each year and had expressed a strong interest in business and industry in Nevada. The budget had requested an increase in decision unit E‑175 of $1,000 in FY2004 for a total of $1,850 in the line item for host funds. Due to the budget instructions, the requirement to realign line item authority through an enhancement unit, the E-500 decision unit had been offset by line item decreases in the E-600 decision unit. The transfer of $12,339 from category 0-4 into the travel categories had also offset the increase.
Ms. Dunn stated the majority of changes in the budget were reflected in in-state and out-of-state travel. With limited funds in FY2002, the Lt. Governor had only been able to attend one of two National Lieutenant Governors Association conferences and to make one trip to Washington, D.C. to discuss issues of importance for tourism and economic development in Nevada with the Nevada delegation. She said that the budget requested $10,166 in FY2004 and $9,166 in FY2005 in the out-of-state category. The additional funding would afford the Lt. Governor, who served on the Executive Committee of the National Lieutenant Governors Association, as well as holding the position of Western Regional Chairwoman, an opportunity to attend and represent Nevada at the two National Lieutenant Governors’ Association conferences, and would allow her to consult with the Nevada delegation in Washington, D.C., key White House officials, and the President and Vice President of the United States.
Ms. Dunn said the additional request for increased funding would allow for two additional out-of-state trips per year for the Lt. Governor and two staff members per trip. Ms. Dunn emphasized it was imperative for staff to accompany the Lt. Governor while traveling nationally. There were many issues to be addressed in a short period of time, including transportation, alternative energies, public lands, and homeland security. The issues could not be covered by one person. She said the need to maintain an active travel schedule in FY2005 still existed, but the time served as President of the Nevada Senate overrode travel in a legislative year. Therefore, the out-of-state travel would be less in FY2005.
Ms. Dunn stated that the in-state travel had also increased by $6,108 in FY2004 and $1,405 in FY2005. Those funds would allow the Lt. Governor and staff to maintain and foster developing business relationships primarily in rural Nevada. In FY2002, the base year, Ms. Dunn said that three-quarters of the in-state travel budget had been spent in rural Nevada. The remaining quarter had been used to support the Lt. Governor’s active representation on various committees and commissions throughout the state. Ms. Dunn continued and said the operating category had been reduced in the budget request by $7,924 in FY2004 and $11,029 in FY2005. Those reductions had been made to offset the increases requested for travel. Although it would be difficult to maintain operations at existing levels, it had been proven through the years that investing time, sharing knowledge, and maintaining a presence through an aggressive travel schedule was the highest and best use of the available dollars in support of the duties of the office.
Ms. Dunn said the E-600 decision unit reductions included the 3 percent budget reductions that were transferred from FY2003 to FY2004 and FY2005. She noted that the E-710 decision unit represented funding for replacement equipment. She said that DoIT guidelines had been followed and in this budget the request included increases for computer replacements and software upgrades. In FY2004 there were two existing computers that would have reached their maximum usefulness and needed to be replaced. She said that in FY2005 there would be three computers that needed to be replaced. The budget requested software updates for Microsoft Office, Windows, and Norton AntiVirus for the seven existing computers in the Lieutenant Governor’s Office.
Ms. Dunn said she had concluded her presentation and asked for questions.
Chairman Arberry asked Ms. Dunn to explain the discrepancy between her statement that the operating expenses category had been reduced while the budget showed that they had increased. Chairman Arberry said he was referring to the operating expense in the base budget that showed the FY2001-2002 Actual column as $54,783, the FY2002-2003 Work Program column showed $45,443, while the Governor’s Recommended FY2004-2005 column showed $54,283. He asked Ms. Dunn to explain how the budget had been reduced. Ms. Dunn responded that the reduction was reflected in the M-150 decision unit adjustments that required backing out one-time expenditures and work program authority from the actual FY2002 expenditures. In the base year FY2002 budget, she said they transferred funding from the operating categories in support of travel. Therefore, when building this budget they put that authority back into the operating category where it had originally existed. She said that explained the apparent increase in the base budget and reduction in the operating expense column.
Ms. Giunchigliani asked Ms. Dunn to speak to the newsletter that had been funded at $8,800, had been reduced, but then had been put back in the E-500 decision unit. Ms. Dunn responded they had attempted to realign the authority so the budget for the Lieutenant Governor’s Office actually worked better for the Lieutenant Governor. Ms. Dunn said the newsletter in FY2002 had been a paper newsletter that required printing and mailing. More recently the newsletter had been automated and put on-line to be distributed through e-mail. The process might have appeared confusing because in FY2003 the office had reduced the category as a result of the 3 percent budget reductions. However, to build a budget for the next biennium, they needed to retrieve the line item authority where it was needed. Ms. Giunchigliani asked Ms. Dunn to address the dollar cost for the newsletter since it was no longer printed in-house and had been made accessible by e-mail. Ms. Dunn responded that the cost had been $7,738 in the first year of the biennium and $7,038 in the second year of the biennium.
Ms. Giunchigliani asked why, at $2,000 less, the costs were still so expensive to produce a newsletter electronically. Lt. Governor Hunt responded that the biggest challenge she faced when becoming Lieutenant Governor had been the lack of communication between the 14 development authorities, the chambers of commerce, and other relevant agencies throughout the state. She noted that geographically Nevada was a large state and that her office needed to reach constituents and business partners throughout the state, as well as the new companies that came on board. She said those entities needed to know what had been done in economic development and tourism. Lt. Governor Hunt emphasized that the database had been growing and communications had been very important. She noted that they had reached the point where the commission meetings for Economic Development and Tourism were videoconferenced in every part of the state with which they had been able to communicate. She said that her office had tried to find as many ways possible to keep everyone informed. She added that those efforts had produced results.
Ms. Giunchigliani asked if there was a way for the e-mail communications to allow the recipients to opt out of the list. Ms. Dunn responded that option was not currently provided but that it could be added. Ms. Giunchigliani said she would continue efforts begun in the 71st Legislative Session to provide e-mail recipients the ability to opt out from e-mail sent by state agencies.
Ms. Giunchigliani commented that since 1990 she had been asking the Lieutenant Governor’s Office to provide a budget showing what work had been done for economic development and tourism in the rural counties. She noted that these areas had been the focus of the Economic Development Authority of Western Nevada (EDAWN) and the Nevada Development Authority (NDA). She said those agencies were collecting funding and there should be no need to continue to duplicate their efforts. Ms. Giunchigliani noted EDAWN and NDA did their jobs well and that the state needed to get out of that business. She continued and said that the rural areas needed some support but she would like to see how that budget would be configured and what the dollar amount would be for supporting the rural counties in the area of tourism and economic development.
Lt. Governor Hunt remarked that her office had detailed information on that subject which would be provided to Ms. Giunchigliani. She emphasized that the State Commission on Economic Development had been the umbrella group for the entire state. She said that the Commission had been the clearinghouse for new companies looking to come into the state. She cited the example of national or international companies that contacted the Commission’s office that in turn would identify particular needs, whether transportation or corporate culture questions. The office would then refer them to one of the 14 regional development authorities. She said the process started with the Commission as the leadership at the top that then distributed those leads statewide wherever those companies might be served best. She continued and said the Commission was focusing to share leads with EDAWN and NDA for rural areas, creating a new theme of unity, “One Nevada, One State.” She said the Nevada Commission on Economic Development as the state lead agency had become more important than ever.
Ms. Giunchigliani appreciated Lt. Governor Hunt’s remarks, saying she had long advocated that the agencies either be combined or abolished. She said the issue revolved around point of service. She continued that if the state were looking at privatizing certain areas within state government it ought to discover whether or not the state should be involved in certain jobs. She commented this could be an opportunity for the Assembly Committee on Ways and Means to take a step back, review who should be doing what, and possibly make a change.
Assemblyman Goldwater remarked that the state would be going to Washington, D.C. to discuss issues regarding the Department of Energy and the Department of Transportation’s Yucca Mountain project and the state still had a Washington office. He asked what the Lt. Governor’s office would be doing that differed from the Washington, D.C. office activities.
Lt. Governor Hunt responded she had served on the Executive Committee for the Lieutenant Governor Association, a new and active association. She noted many lieutenant governors ran for office with their governors and would be future governors. The networking and personal relationships that she had begun to develop would be invaluable to the state of Nevada. She said she had been appointed by her fellow governors as the Western Regional Chair and had been given the opportunity to work on regional issues, such as water and public lands, which would affect the western regional states.
Mr. Goldwater asked if the Lt. Governor thought the state still needed a Washington, D.C. office.
Lt. Governor Hunt replied she believed the Washington office was important because it focused on particular economic development, tourism, and transportation specific to the western region, whereas the Nevada Delegation’s Washington office covered a broader base of issues.
Vice Chairwoman Giunchigliani thanked Lt. Governor Hunt for her presentation.
OFFICE OF CONSUMER HEALTH ASSISTANCE
BUDGET PAGE: ELECTED-13 – VOLUME I
Valerie Rosalin, R.N., Director, and Judie Noriega, Operations Manager, Office for Consumer Health Assistance, Bureau for Hospital Patients, introduced themselves to the Committee. Mary Keating, Administrator, Administrative Services Division, Department of Administration, State of Nevada, introduced herself. She noted in the capacity of Administrator she also served as a fiscal officer for the Office for Consumer Health Assistance.
Ms. Rosalin began her presentation of Budget Account 1003, Office for Consumer Health Assistance, with a brief history of the office to clarify the effects of the budget constraints placed on them (Exhibit E). She noted in the 1999 legislation, S. B. 37 had been Workman’s Compensation driven. She said five employees and the director had come to the Office for Consumer Health Assistance from the Employers Insurance Company of Nevada (EICON). At that time the budget had been high for the office. Subsequently only one staff was assigned to Workman’s Compensation issues. She noted currently the Office for Consumer Health Assistance had two offices and eight employees. The Las Vegas office had two nurses, one Bureau of Hospital Patients employee, and the director position. The Carson City office had an operations manager, two intake representatives, and a Workman’s Compensation quality assurance specialist.
Vice Chairwoman Giunchigliani asked Ms. Rosalin to confirm the staffing in southern and northern Nevada. Ms. Rosalin reaffirmed there were four staff in southern Nevada, four staff in northern Nevada. Vice Chairwoman Giunchigliani asked if any of that staff had to travel. Ms. Rosalin responded only the director traveled and her base was in Las Vegas.
Ms. Rosalin continued that prior to the passage of S. B. 37 in 1999, the prior management had a deputy director and an assistant. Those two positions had not been filled and were subsequently eliminated. She went on to say that, due to population increases, services to the consumer had increased and were based on health issues, billing, and Workman’s Compensation complaints. She said in FY2001 their cases increased by 71 percent and in FY2002 the contact cases increased another 38 percent. She said contacts represented about 14 percent of their cases. Ms. Rosalin explained that contacts were issues that were resolved by phone or referred to another agency. She said 2,171 of those cases needed further intervention or negotiation that required a specialized person such as a nurse or a Workman’s Compensation social worker. In July 2001, the Bureau for Hospital Patients was transferred to the Office for Consumer Health Assistance and was staffed by one employee. Ms. Rosalin said that from 1990 to 2000 the Bureau’s highest caseload number had been 167. The average had been 135 cases. The Office for Consumer Health Assistance had been averaging over 200 hospital patient cases. Ms. Rosalin testified that although it appeared that 30 percent of the caseload had been hospital patients, staff shortages required that work be redistributed to handle provider and facility billing complaints. Ms. Rosalin said expert nursing staff dealt with medical issues, appeals processes, denial of benefits, and quality of care, all of which were necessary for the effective operation of the office.
Ms. Rosalin continued and said that the Carson City office had housed the prior director and deputy director. She said they proposed to cut the size of the Carson City office from two suites to one suite. She noted Las Vegas had never had an office. She said they were in a temporary space in the Governor’s Office and the Division of Tourism. No budget request had been made for Las Vegas offices. Ms. Rosalin noted that their computers had come from EICON and were old and unreliable. She said the original request for computer upgrades was removed because of budget reductions.
Assemblywoman Chowning requested, in reference to the performance indicators, item 3 for clarification regarding cases that had been resolved within 30 days during FY2002. She noted the actual FY2002 column cited 60 percent of cases resolved, and the projected FY2002 column cited 85 percent of cases resolved. Mrs. Chowning asked how the office proposed to resolve the cases at a higher rate. She also asked how long it had taken in FY2002 to resolve the 40 percent of cases that took longer than 30 days.
Ms. Rosalin said when the agency had sufficient staff they were able to complete their caseloads within 30 days. With reduced staff it took a little longer to complete them. She noted working with case appeals added an additional 30 days from time of receipt to time of reply. A second appeal could add another 10 to 30 days. Workman’s Compensation cases with ongoing hearings took longer. She said they also had more cases on long-term disability and one or two of those had taken about a year to resolve.
Mrs. Chowning noted that the longest cases had taken one year. She said it was unclear how more would be accomplished with less.
Ms. Rosalin replied the workload issues were the reason their budget included a request to retain their current eight-person staffing level. She added that redistributing work helped decrease caseload time.
Assemblyman Hettrick asked for clarification regarding recoveries versus revenues. He noted the performance indicators reflected $450,000 in recoveries in the Projected FY2002 column and $735,000 in recoveries in the Actual FY2002 column. The budget showed $626,000 in actual costs for FY2002 and $900,000 in the FY2002 work program column. At those rates he observed the operation collected far less money than it cost to run it. He observed it would have been cheaper to pay the bills than to attempt recovery. He said the goal should have been to recover more than the cost of doing the recovery. Mr. Hettrick asked Ms. Rosalin to address that issue.
Ms. Rosalin said the answer to the question was in Other Tangible Benefits (OTB). She explained that many savings to consumers could not be counted as cash and therefore could not be shown as monetary gain. She provided examples such as savings to consumers who had to litigate or hire an attorney that could not have been shown as cash recoveries. Other examples of activities that could not have been shown as cash recoveries were the return of benefits while on Workman’s Compensation, receiving a medical procedure such as a $100,000 transplant, which had been denied and then reconsidered and approved by an insurance company. Ms. Rosalin noted their office provided research services with other health services divisions to garner necessary information to further a consumer’s case. She said this service for research was extremely costly for a consumer to hire out, whereas their office performed this service at their hourly rate. She said her office provided information to cover procedures to consumers, insurers, and third party administrators (TPAs). She noted some of the procedures were quite expensive for consumers, $25,000 or $50,000. Ms. Rosalin said the office was unable to show those savings. Often they did not know the dollar amount of a claim for which approval had been received. She said they had therefore put an estimated amount in Other Tangible Benefits but had no actual dollar amount.
Mr. Hettrick responded that the Committee needed the Office for Consumer Health Assistance to have information to document those consumer savings. He added the face value of the office’s budget showed it had cost more to operate the office than had been gained. He reiterated the Committee needed something to demonstrate that the office’s mission was truly cost-effective. The Committee did not disagree with trying to help people that needed help with medical bills or obtaining permission for medical procedures. He said the Committee needed to look for every possible way to assure that the work was being done as efficiently as possible. He added that without having shown the Committee the office was cost-effective it would be difficult to agree to continue funding. He told Ms. Rosalin her office needed to provide the Committee with that kind of information.
Ms. Rosalin concurred with Mr. Hettrick.
Vice Chairwoman Giunchigliani asked Ms. Rosalin to clarify her earlier reference to an hourly rate. Ms. Rosalin replied the rate was derived by converting salary to hourly rates, rather than using attorney’s rates of possibly $250 per hour. Vice Chairwoman Giunchigliani asked what Ms. Rosalin had projected as an hourly rate. Ms. Rosalin responded she would have to get back with that information.
Vice Chairwoman Giunchigliani asked what the office had charged for services. Ms. Rosalin said the office services were fee free. Vice Chairwoman Giunchigliani noted that the budget had listed $18,000 in charges for services.
Ms. Keating responded that charges for the services listed in the budget represented a transfer from the Human Resources, Medicaid Office. She noted the Office for Consumer Health Assistance was funded from four different funding streams. A very small piece of the funding came from Medicaid for specific services rendered in that area. The other two areas were transferred from the Division of Industrial Relations that handled Worker’s Compensation and from assessments on the Bureau of Hospital Patients. Those three funding sources had very specific statutory requirements as to how that funding could be spent. She noted the funding must have been spent for specially identified items. The fourth funding stream came from the General Fund and covered all other areas within the office’s charter. Ms. Keating continued and said the difficulty in preparing the budget had been to match specified activities to those three funding streams and then have the General Fund pay for the remaining activities. She concluded the office had not been charging customers for services but had been working within the appropriate areas for which they had been funded.
Vice Chairwoman Giunchigliani asked if, for the Worker’s Compensation section, the Committee needed to revise the allowable charges based on the type of cases under consideration. Ms. Keating said that the Worker’s Compensation Fund was statutorily prohibited for any other use than Workers’ Compensation activities such as the Occupational Safety and Health Administration (OSHA) or industrial insurance claims. Ms. Keating doubted that the funding streams could be matched to handle regular medical insurance claims on behalf of a customer.
Vice Chairwoman Giunchigliani turned to the 27 percent of the budget that was funded from the Workman’s Compensation Safety Fund. She noted the office had experienced a dramatic increase in Worker’s Compensation cases. She asked what had driven the increase. She wanted to know if the types of cases or automatic denial of claims had caused the increases. She asked what percentage of the figure had really gone up and should more revenue be captured from Worker’s Compensation to match the usage.
Ms. Keating responded the budget had been prepared using the 27 percent figure provided in previous years. She said the Committee was recently provided with Workman’s Compensation activity for FY2002, which was approximately 33 percent. She continued that in any given year the percent was a moving target based upon activity. Vice Chairwoman Giunchigliani asked for a brief comment on the cases and what had been driving the increase.
Ms. Rosalin responded the increase in cases had resulted from outreach education efforts of the office’s availability for fee-free services regarding Workman’s Compensation benefits and claim denials. She said her staff had extensive background in Workman’s Compensation and had made presentations to the Division of Industrial Relations providers’ classes. Those providers had then referred clients to the Office for Consumer Health Assistance.
Vice Chairwoman Giunchigliani asked if the office had found denials of Workman’s Compensation benefits that affected general health care services because people were utilizing medical care while their case were pending. Ms. Rosalin said in those cases the office would have separated the type of care for the injured worker and the medical issues.
Vice Chairwoman Giunchigliani noted the Committee expected to receive a revised report detailing that Workman’s Compensation activities represented 33 percent of the agency’s workload. She asked if the two positions in E-600 that had been eliminated were nurse positions. Ms. Rosalin noted the eliminated positions were the deputy director and an assistant to the director.
Vice Chairwoman Giunchigliani asked if the office had considered charging a penalty if a hospital were discovered over-billing patients or an employer arbitrarily denying claims. She surmised that could be an avenue to capture some additional revenue. Ms. Rosalin replied the office had no regulatory jurisdiction. She added there were letters of memorandum to the Attorney General’s Office, the Division of Insurance, and the Department of Industrial Relations (DIR) to the effect that if a penalty was assessed, those agencies had the jurisdiction to penalize.
ETHICS COMMISSION
BUDGET PAGE: ELECTED-66 – VOLUME I
Todd Russell, Chairman, Commission on Ethics, introduced himself and Stacy Jennings, Executive Director of the Commission on Ethics. He began the presentation on the Ethics Commission Budget Account 101-1343 by summarizing the Commission’s position and issues (Exhibit F). He commended the 1999 Legislature for providing the Ethics Commission its own operating budget, an executive director and legal counsel. He said the procedures put into place in 1999 by the Legislature had been well-thought-out with a due process initial proceeding, which had been very successful in reducing the number of actual cases that had come before the full Commission. The Commission had handled, and hopefully in the eyes of the Assembly Committee on Ways and Means, all matters in a professional, quick, responsive manner trying to be fair to both sides on every issue. He said it had not been easy trying to treat in an equal fashion the complainant as well as the persons coming forward to defend themselves. He hoped the Ethics Commission had succeeded at that. He acknowledged the Budget Division for their assistance in preparing the Commission’s budget. Mr. Russell said the Commission had some concerns with regard to the budget and Ms. Jennings would address those matters. He said the Commission’s concerns centered around two issues. He asked the Committee members to note nothing had been budgeted for investigations. He said it had been very difficult to hold hearings and properly investigate matters when there had been no money for investigations. The second issue Mr. Russell raised was the projected workload increase that would result from the City of Las Vegas Ethics Board having been terminated. The consequences of that action were the expectation that the state Ethics Commission would handle those additional complaints.
Mr. Russell said the Ethics Commission had come to seek additional funds and if funds were available they would appreciate consideration. One final issue raised was the possible move of the Commission’s funds from the Governor’s Office to the Attorney General’s Office. He said this had caused the Commission members some concern. In the last year the Attorney General’s Office had appeared before the Commission on several matters defending various public officials. The Commission wanted to maintain an independent status rather than being placed under the Attorney General’s Office. He said independence was the main focus of this issue. The Ethics Commission truly believed that it had tried to be fair to everyone. He said the Commission members wanted to avoid any appearance of impropriety or claim of favoritism in regard to being under anybody’s budget. Mr. Russell again thanked the members of the Assembly Ways and Means Committee for their time, and the 1999 Legislature for its good work in establishing the Ethics Commission. He concluded his remarks and turned the budget presentation over to Ms. Jennings.
Assemblyman Marvel asked Mr. Russell how many frivolous complaints had been filed. Mr. Russell answered there had been a significant number. He said the frivolous complaints were weeded out. He noted primary problems centered on incorrect filings or not following procedures. A good percentage of the complaints that came before the Commission were determined to be valid complaints by the panel of Commission members. If two Commission members determined there had been no basis for the complaint, those matters were immediately dropped.
Speaker Perkins asked Mr. Russell if he had any correspondence or any explanation as to why there was the suggestion to shift funds for the Commission’s office from the Governor’s Office to the Attorney General’s Office. Mr. Russell responded that neither he personally nor the Commission had had any communication on this matter.
Assemblyman Beers asked the members of the Ways and Means Committee if a policy change could be accomplished through the budget. He said he thought the issue was a statutory item specifically put in place four years ago.
Vice Chairwoman Giunchigliani agreed that the issue of the location of the Ethics Commission should be reviewed in Elections and Procedures. She agreed with Mr. Beers that it was not a budgetary issue. Mr. Beers asked if Vice Chairwoman Giunchigliani wanted to re-refer the budget as well to Elections and Procedures. Vice Chairwoman Giunchigliani said she was referring only to the organizational issue.
Stacy Jennings identified herself as the Executive Director of Nevada’s Commission on Ethics. She began her presentation with a brief overview of the Commission’s responsibilities. The Commission had three main duties under statute:
She mentioned forms for the financial disclosure statements of public officers were on the Commission’s Web site.
Ms. Jennings said the Commission was an independent Legislative Executive Commission in state government that served in a quasi-judicial capacity, and had been established by the Legislature in 1975. In 1999 the Legislature expanded the Commission from six to eight commissioners. The Commission assisted public officers, with regard to advisory opinions, in three areas. It issued advisory opinions about past, present, and future conduct of public officers. She clarified that the Commission could help public officers if asked for guidance in advance of an activity. Members could give an opinion on the activity in which the public officials wanted to engage and thereby help them avoid conflict with the Ethics in Government laws. Ms. Jennings noted advisory opinions were binding on the future conduct of public officers. The second area in which the Commission issued advisory opinions was third-party-opinion requests or ethics complaints. Ms. Jennings explained that area covered concerns filed with the Commission in the form of a complaint about the conduct of a public officer. She said the statute was very specific about the time frames within which complaints against public officers could be processed and adjudicated. She noted there was a panel process by which frivolous complaints were weeded out. She elaborated on the two steps for that process. The first step dealt with the initial phase of the complaint. She said if the complaint alleged a violation of the Ethics in Government statutes and concerned a public officer, the Commission would accept jurisdiction. The second step would take the complaint through a panel process. If the panel found just and sufficient cause for the complaint then it was heard before the full Ethics Commission. She said the third type of complaint heard was campaign practices complaints and those dealt with provisions that impeded the success of other candidates.
Ms. Jennings proceeded to say the Ethics Commission consisted of eight members; four appointed by the Legislative Commission and four appointed by the Governor. Regarding the four that were appointed by each body, at least two must have been former public officers and one must have been an attorney; additionally, not more than four members of the Commission could be from the same county and not more than four members from the same political party. She said that during their service on the Commission, the members were prohibited from holding another political office, from being actively involved in the work of any political party or any political campaign, and from communicating with any member of the Legislature on behalf of anyone other than themselves or the Commission. Ms. Jennings said the Ethics Commission was funded through the General Fund and had a staff of three.
Ms. Jennings next addressed the workload measures in Exhibit F, page 3. She asked the members of the Assembly Ways and Means Committee to look at the “opinion request filed” category. She said the Commission had requested an increase in the budget for the upcoming biennium because of the disbanding of the City of Las Vegas Ethics Commission. She said over the last nine years the Las Vegas Commission had been processing about five third-party-opinion requests per year and about three to five first-party-opinion requests per month and that explained the increased budget request in that area. She noted that some of the opinion requests might not have been in the Commission’s jurisdiction but they expected the Commission would be issuing more opinions, having more panel hearings, and accepting more opinion requests. She brought to the Committee’s attention the big increase in first-party advisory opinions. She said the Commission had projected at least 35 additional first party opinion requests a year and that would increase the workload of the Commission counsel. She said she would talk more about that issue further into the presentation. She pointed out that one of the provisions charged by statute had been to provide training on the Ethics in Government laws. Ms. Jennings explained that had not been done in the last fiscal year due to the vacancy of the Executive Director position and illness of the prior Executive Director. She said she had conducted many of the training sessions in the current fiscal year and intended to do many more for state and local government.
Ms. Jennings explained a pie chart on page 4 of Exhibit F that reflected the Ethic Commission’s current year’s operating budget. She noted there were some issues in the base budget, FY2002, that needed explanation. She indicated of the $320,000 annual budget, 69 percent was for personnel; she pointed out that of the 17 percent in operating expenses, a third went to rent. She noted that did not leave much extra money for other activities.
Ms. Jennings proceeded to the M-100 decision unit on page 5 of Exhibit F. She said in FY2004 $4,855 was recommended and in FY2005, $5,190. She noted of that, $4,200 represented new Department of Information and Technology (DoIT) Web service charges. She said those charges were based on Web site usage that resulted in about $350 per month in fees the Commission had not been paying but would be paying in the new biennium. She noted the charges were based solely on usage of the Web site. She said DoIT had done a fee calculation on the number of hits to a Web site, and the Commission fell into the 5,000 to 10,000 per month hit range, which was $350 per month in new Web site charges. She added that came to $4,200 each year of the biennium.
Ms. Jennings turned to the E-275 decision unit that dealt with the issues associated with the base budget. She said the Executive Director position had been vacant for almost half of FY2002 and the commissioners had been trying to utilize videoconferencing since the September 11, 2001, terrorist attack. She said the commission had used $1,200 of the roughly $11,000 budgeted for in-state travel. She remarked that the base budget figures had been complicated further since the Commission had not had any outside investigations to contract out and that resulted in $10,000 being unspent. She said the Commission had used some of those unspent funds for one-time expenditures. She said a combination of those factors created an almost flat budget. Because of those factors, Ms. Jennings said the E-275 proposal was to restore funding for 12 monthly full Commission meetings, 1 extra hearing, and 2 panel hearings per month. She noted the E-275 funding proposal would reinstate funds for the Executive Director and the legal counsel to attend meetings for the Commission on Governmental Ethics Laws, and would reinstate funding for in-state travel. She said the Commission had also requested restoration of the funding for court reporting, which had been an essential part of the budget. She explained that all of the Commission’s hearings and opinions needed to be transcribed for judicial review. She said computer training had been needed to develop a public officer database and construct a Web site.
Chairman Arberry asked for further explanation regarding the request for increased funding for out-of-state travel, operations, and court reporting service.
Ms. Jennings responded that the request for out-of-state travel funding was for staff to attend the annual conference for the Commission on Governmental Ethics Laws. She said the impression of an increase in spending was created because staff had not attended the conference during the base year. She noted the Ethics Commission had used funds for staff to attend the Commission on Governmental Ethics Laws in the current fiscal year, and explained the conference was held to share what different states had been doing regarding financial disclosures, ethics complaint processes, and other related topics.
Assemblyman Goldwater asked if the Commission was utilizing DoIT services. Ms. Jennings said the Commission did not currently use DoIT for Web site development. Mr. Goldwater asked Ms. Jennings to explain further. She responded the Commission had opted not to use those services because there had been no funding in the budget for them. She said the Commission had learned how to develop its own Web site. Mr. Goldwater noted the Committee on Ways and Means was now being requested to fund training rather than to fund DoIT charges. Ms. Jennings replied the Commission had not requested funding for DoIT to develop a Web site. She said the DoIT charges were a hosting fee to put the Commission’s site on the Internet rather than for labor costs to develop a Web site.
Mr. Goldwater commented that Jack Close, a former Committee colleague, had a hawk-like approach to the development of performance indicators. Mr. Goldwater added that had been a valuable asset that the Commission missed. He suggested that as Ms. Jennings progressed in her position she should take note to provide well-developed performance indicators.
Ms. Jennings responded that at the end of the year she had developed an agency strategic plan. She noted there had not been a plan in place nor had there been many performance indicators, but she intended to develop efficient and effective measures.
Ms. Jennings responded to Chairman Arberry’s question regarding court reporting charges. She said the contracting costs had not changed, but the number and length of hearings drove court-reporting costs. She gave the example of a lengthy campaign practices hearing in the current fiscal year that lasted a full day. The court reporting cost had been $2,000 and that had been a big hit to the current year’s budget. She reiterated the number and length of the hearings had increased court-reporting costs. She noted in the past the Commission had many two-day hearings whereas most of the current Commission’s hearings had been about half a day.
Chairman Arberry asked Ms. Jennings for further clarification about the duties of the Executive Director, particularly when dealing with investigations.
Ms. Jennings explained the responsibilities of the Executive Director position. She said, for example, when the Executive Director received a complaint it was submitted to the public officer against whom the complaint had been filed. The individual had the opportunity to respond in writing to the allegations in the complaint. The Executive Director reviewed the information received from the public officer against the allegations that had been made to determine if there was a violation of statute. She said the Executive Director prepared a report regarding just and sufficient cause that was submitted to a panel of two members of the Commission to render a finding. She added if the decision to dismiss was unanimous the complaint was dismissed; if the panel members disagreed then the case was forwarded to the Commission. Ms. Jennings noted money for investigations became an issue when the case was very large and required the review of several records. Such a case required funds for investigative services. She noted a few years ago $70,000 had been spent to hire an outside company to do investigations for the Commission. She added that in the last two fiscal years the Commission had been very fortunate not to have had huge cases so all the work had been done in-house.
Vice Chairwoman Giunchigliani asked if Ms. Jennings had a law degree. Ms. Jennings responded she did not. Vice Chairwoman Giunchigliani asked if the Executive Director position required a law degree. Ms. Jennings responded it did not. Vice Chairwoman Giunchigliani said the Commission had been designed not to require a law degree for the Executive Director position. She asked if the investigation costs were for outside attorneys or for other individuals. Ms. Jennings responded both were correct.
Mr. Russell added for the record that the Ethics Commission had in-house legal counsel and that the Executive Director position reviewed those matters with the legal counsel as well. Mr. Russell noted since 1999 there had not been many major cases. He added the Commission had been fortunate and the new procedures put in place by the Legislature in 1999 helped eliminate many of the investigating expenses. He emphasized that investigative expenses were an important budget item to meet unexpected costs for cases that could come up. He said without investigative funds the Commission would be very limited in what it could do.
Vice Chairwoman Giunchigliani noted reducing investigative activities would contradict the intent of the Ethics Commission, which was to investigate whether or not complaints were frivolous. Vice Chairwoman Giunchigliani asked if Las Vegas was the only local government jurisdiction that had its own Ethics Commission. She wondered if there were prohibitions against other local governments having an Ethics Commission.
Ms. Jennings said statute allowed for local governments to establish Ethics Commissions, but specified that if individuals chose to go to a local Ethics Commission they could not then come back to the State Ethics Commission.
Vice Chairwoman Giunchigliani asked Ms. Jennings whether or not training was provided to local government city attorneys who advised their council members.
Ms. Jennings responded the Commission provided training to local government officials. She had done presentations in Las Vegas, Boulder City, and Henderson, and with some of the deputy attorney generals who advised the state boards and commissions. She added she would be doing candidate orientation for Las Vegas, Boulder City, and Henderson in the upcoming week to assure the candidates understood the filing requirements. She said her office also worked with the city attorney’s office. She had done a presentation on ethics law for the Prosecutors’ Conference. She said many local jurisdictions had asked the Commission on Ethics for training.
Vice Chairwoman Giunchigliani asked if there were recommendations within the budget to provide for the cost of the computers. Ms. Jennings responded that the topic of computers would appear further into the presentation.
Ms. Jennings stated the Commission on Ethics’ budget contained $1,100 for an office security system. Ms. Jennings related several instances when people, who were angry about decisions made by the Commission, had appeared at the office and there was no system in place to alert security that there was a problem and help was needed. Several of the incidents had been frightening to the staff on duty. She concluded that those situations supported the request for a security system that would give staff the capacity to immediately alert law enforcement.
Ms. Jennings moved to the next slide in her presentation (Exhibit F, page 6). She reiterated that in the new biennium 76 percent of The Executive Budget was allocated for salaries and there was no money for investigations. She continued and said that of the $45,000 operating account, a third was allocated for rent. She noted there was little excess money in the Commission’s Budget for FY2004 or FY2005.
Ms. Jennings said the Commission had requested three additional budget items (Exhibit F, page 8). She noted of the $26,880 in FY2004 and $28,235 in FY2005, $15,000 would be for paralegal services. Ms. Jennings said she had talked with Lorne Malkiewich, Director of the Legislative Counsel Bureau (LCB), and Brenda Erdoes, Legislative Counsel, about purchasing those services from the LCB. She said the primary need for paralegal services was to provide attorney research and assistance in drafting opinions to meet the projected increase in first-party-opinion requests from Las Vegas. She proposed to have money set aside in the budget to contract with Ms. Erdoes for paralegal support. She said the Commission had returned $10,000 that had not been used for investigations in the last biennium. She said estimating costs for a large investigation was difficult and that the $10,000 would provide a starting point, after which the Commission could request funding from the Interim Finance Committee if needed.
Ms. Jennings moved to the third additional budget request, equipment replacement. She said the legal counsel’s laptop would need to be replaced. She noted the hard drive had been rebuilt twice in the previous six months and was still not a good piece of equipment. She proposed replacing it with a desktop computer, and in the second year of the biennium replacing the Executive Director’s laptop to handle that position’s extensive travel. The receptionist’s desktop personal computer also needed replacing. She noted all the equipment had been purchased in 1999 and would therefore be seven years old at the end of the biennium.
Ms. Jennings said the Commission’s Chairman, Mr. Russell, had previously discussed the administrative location of the Commission on Ethics. The Commission had discussed that issue at its January meeting and strongly recommended that it remain independent to avoid any appearance of impropriety. She added a Bill Draft Request 23-500 (BDR) regarding the location of the Commission had been finalized and that the Assembly Committee on Ways and Means might want to address this organizational issue.
Ms. Jennings outlined and discussed the issues in the BDR:
With regard to the database, she noted they had already begun this database and had participation from all the cities and counties, the Executive Branch of the Department of Administration, and from Mr. Malkiewich of the Legislative Branch. She said they had gotten 100 percent participation to develop the database so that both incoming filings could be tracked and “financial disclosure statement due” reminders could be mailed out. She said the purpose of the database had been to eliminate some of the late filing workload.
Ms. Jennings explained the fourth area of BDR 23-500. She said that current statute required the Commission to charge for training on ethics in government law. She noted that local governments and other state agencies did not have the money to pay for training, however, it seemed appropriate to charge outside groups. She added that by combining business the Commission could limit costs. Ms. Jennings said the Commission had proposed to change the statutory language for training from “shall” to “may” charge for training.
Ms. Jennings said the last part of BDR 23-500 proposed to remove provisions from the Commission’s statutes that had already been stricken down by a court and were no longer enforced by the Commission.
Ms. Jennings concluded her presentation and asked for questions.
Mr. Beers asked if the list of statutes could grow. Ms. Jennings agreed it could based on pending litigation.
Speaker Perkins asked for the percentage of cases the Commission’s office handled that were local government as opposed to state. Ms. Jennings replied that since her term as Executive Director, 75 percent of the cases had been from local government. Speaker Perkins asked if there had been a suggestion or a proposal to recover from the local governments on a cost allocation basis the costs of those investigations and the work performed by the Commission. Ms. Jennings replied that to her knowledge that had not been done. Speaker Perkins suggested it seemed only fair that local governments should share in the funding of the operations of the Ethics Commission. Ms. Jennings responded that her office would be willing to work with the Committee on Ways and Means’ fiscal analysts to provide information.
Vice Chairwoman Giunchigliani added the point was well taken. She suggested the Committee look at the statute and determine if it were still useful to enable others to create their own commissions, which would then relieve the State Ethics Commission of having to offset costs. Vice Chairwoman Giunchigliani said the Committee should take a look at both proposals. She added if 75 percent of their workload came from local governments there could be some kind of shared partnership on funding.
Vice Chairwoman Giunchigliani asked Ms. Jennings if the in-state travel had been underspent because the Executive Director position had been open.
Ms. Jennings responded there had been two reasons for under spending in-state travel funds. The first was that the Executive Director position had been vacant and there had been no travel for training. The second reason was that the Commission had been videoconferencing most of its meetings. She noted that four training sessions in southern Nevada for all three staff members came to $700 in plane tickets alone. The Commission had been planning another training session that spring. She said they planned to do videoconferencing to the extent possible, but videoconferencing incurred charges also, and those charges had not been included in the budget. She said videoconferencing would necessitate a transfer of funds from travel to operating to offset those costs.
Vice Chairwoman Giunchigliani said for future reference it would be useful to break out the costs of videoconferencing versus traveling to meetings.
Vice Chairwoman Giunchigliani turned to the paralegal question. She asked how the $15,000 figure had been derived, and whether or not it had been tied to the number of hours utilized in the past.
Ms. Jennings replied the figure had been a guess. She said she had recently talked with Ms. Erdoes and Mr. Malkiewich and did not know what they would charge for paralegal assistance. Vice Chairwoman Giunchigliani suggested when Ms. Jennings looked at the allocation plan suggested by Speaker Perkins she also talk to staff about how to better determine paralegal costs.
Mr. Russell thanked the Committee for its time.
Chairman Arberry recognized Janine Hansen.
Janine Hansen said she represented the Independent American Party. She encouraged the Assembly Committee on Ways and Means to “zero-fund” for enforcement of the campaign practices portion of the Ethics Commission mandate. She said, along with the people she represented, that area had been a real infringement on Article 1, Section 9, of the Constitution of the State of Nevada, which provided that ”every citizen may speak freely, write and publish his sentiments on all subjects being responsible for the abuse of that right and no law shall be passed to restrain or bridge the liberty of speech or of the press. In all criminal prosecutions and civil actions for libels the truth may be given in evidence to the jury.” She continued that in judicial cases, their research showed the Ethics Commission had been essentially operating as a quasi-criminal body. In this position it had been a constitutional no-man’s-land where constitutional rights were not protected. Ms. Hansen added that the Commission’s report asked for more money for investigations. She asked whether or not that meant they would provide the people with their Fourth Amendment rights as provided in the Constitution of the United States and Article 1, Section 18, of the Constitution of the State of Nevada, which provided for a warrant and no seizure of personal evidence without a warrant. Ms. Hansen asked whether or not the people would be forced to deny their Fifth Amendment rights, and to witness against themselves. She asked whether or not the people were denied “as provided in Article 3 of the Constitution of the State of Nevada, Article 1, Section 1, the right to trial by jury which in Nevada is not only for criminal, which this is quasi-criminal, and civil procedures.” She pointed out the Constitution of the State of Nevada had provided for trial by jury for both of those and said “Under this unelected bureaucracy our free speech has been denied since the Commission determined capriciously whether or not, as candidates, the people had done something that might offend someone.”
Ms. Hansen stated there were many frivolous complaints of which the Committee members were aware. She said, “They are abused and people are considered to be guilty until proven innocent. The Ethics Commission violated the basic and most fundamental right of free speech as guaranteed by our founding fathers and our Constitution.” Ms. Hansen said she encouraged the Committee members to stop the monitoring of free speech in election campaigns. She asserted this process had proven to be a way in which those who opposed a candidate could file many complaints against them and often the complaints had been dismissed, although the press had rarely covered the dismissal of those complaints and always covered the fact that they had been filed. Ms. Hansen pointed out that the process could be used to harm individuals in their campaigns. She noted that James Madison, father of the United States Constitution, said the combination of the three powers of government, legislative, judicial, and executive were the very definition of tyranny and we heard the Commission talk about being quasi-judicial. Although the Commission fell under the executive committee it had performed legislative functions. Ms. Hansen said that here we had seen how they “define the very definition of tyranny,” where in many cases they had been abused and their basic Constitutional rights, which, under quasi-criminal proceedings and where large fines were imposed, had been denied them. In fact, capricious enforcement had been a rule of the Ethics Committee. She said her brother received a fine of $80,000 that had been capriciously reduced to $6,000. She noted all the other Independent American Party candidates, who had not had a history with the Ethics Commission, had also been given a similar fine. She asked what those fines had been based on. Ms. Hansen said there were no rules that could be understood easily by the average person. She reiterated first and foremost their process continued to be a denial of the First Amendment rights and the rights of free speech as guaranteed in the Constitution of the State of Nevada. She again encouraged the members of the Assembly Committee on Ways and Means to zero-fund for enforcement of campaign practices and return to the people the opportunity to decide about campaigns and candidates rather than have the decisions made by unelected, unaccountable bureaucrats who denied the people’s constitutional rights. Ms. Hansen thanked Chairman Arberry.
Chairman Arberry thanked Ms. Hansen for her testimony. He asked if anyone from the general public would like to discuss the Ethics Commission budget.
Chairman Arberry called on the Legislative Counsel Bureau Audit Division to present its audit report summaries.
Paul Townsend, Legislative Auditor, identified himself for the record. He introduced Steve Wood, Chief Deputy Legislative Auditor. Mr. Townsend thanked the members of the Assembly Committee on Ways and Means for the opportunity to appear before them. He noted the importance of the Assembly Committee on Ways and Means in the audit process. He said the involvement of the Committee had played a key role in assuring that corrective action was taken by agencies when problems or areas for improvement were identified. He commented that the state had benefited from this process. The Audit Division had identified $20.5 million in savings or revenue enhancements in the last 2 years that resulted from their prior audit recommendations.
Mr. Townsend referred the Committee members to the document “Audit Report Summaries,” Exhibit G. He noted there had been some changes in format. He said the Table of Contents showed the page number for the Audit Summary and the corresponding page number in The Executive Budget. Mr. Townsend called attention to a new development in format called “audit highlights” that was in the form of one-page summaries of each audit. He said additional information had been provided regarding the most recent status of the audit recommendations as well as a copy of the Department of Administration’s six-month report.
Mr. Townsend said he wanted to go through a few of the audits to demonstrate how the new formats should be used. As an example, he asked Committee members to turn to page 4 of the Audit Summary Packet in Exhibit G for the audit on State Mail Services. He said this audit had been released earlier in the biennium with the object of determining the extent to which the state had maximized savings from consolidating and automating its mail functions as had been recommended in a prior audit. He said they found positive action had been taken by the agency. Savings had been significant, with over $600,000 in automation discounts taken on 8.7 million pieces of first class mail in FY2000. Mr. Townsend added that the Audit Division believed a greater savings could be obtained through further consolidation in northern Nevada and by seeking greater postage discounts. He said further consolidation opportunities existed with the University and Community College System of Nevada institutions (UCCSN) and the public employees’ benefit program. He added additional savings could be available if mail services took steps to achieve greater discounts than they had taken, because during FY2000 only 20 percent of first class letters had been sorted and mailed at the maximum discount. Mr. Townsend noted those were some issues that could be considered when hearing that budget.
Mr. Townsend turned to another example. He asked Committee members to turn to page 79 of the Audit Report Summaries, under the public safety tab. That page showed their audit on the Administrative Services Division of the Department of Motor Vehicles (DMV). He noted a major issue of this audit had involved problems in distributing tax revenue. He said the computer spreadsheet used to calculate tax distributions contained formula errors and resulted in $9.9 million sales tax revenue that had not been distributed to the General Fund during a 20-month period. He noted in addition, during an 8‑month period, $3.9 million in governmental services tax collections had not been properly distributed to the counties. Mr. Townsend said that although those specific errors had been corrected and the money subsequently distributed, the weaknesses that had allowed the errors to occur and go undetected also needed to be addressed. He noted a primary weakness had been a lack of procedures for reconciling revenue collected with revenue distributed. He said that account was a flow-through account that should not have any balances accumulating in it. He noted there had been no reconciliation procedures to ensure that when the money was collected for sales tax it would be distributed to the General Fund, or similarly to the counties.
Mr. Townsend said that in December 2002, DMV had testified to the audit subcommittee. As a result of the Department of Administrations’ six-month report, the DMV had spent about 5,000 hours of programming time to modify their system to accomplish reconciliation. The modification process had not yet been completed and DMV would not activate the process until sufficient testing had been performed. Mr. Townsend said that was understandable as DMV stated the account processed over $800 million in annual revenues with a transfer of gas tax collections from the Department of Taxation. He said the audit subcommittee had requested the agency return to the next meeting for an update and the Audit Division would continue to monitor progress on this issue and keep the Committee on Ways and Means informed throughout the session.
Mr. Townsend addressed a recently released audit on the Division of Forestry. He referred Committee members to page 104 of the Audit Report Summaries under the infrastructure tab. He said when possible the Audit Division checked to make sure agencies collected all the money to which they were entitled. He noted the Division of Forestry had failed to bill the federal government for $300,000 in fire suppression charges and the bulk of those charges had been related to air support from the Nevada National Guard in fighting wildland fires. He said the good news was when this had been brought to their attention they had promptly billed and collected the money. He added the Division of Forestry had taken steps to avoid that type of error in the future.
Mr. Townsend directed the Committee members to page 25 of the Audit Report Summaries. He said that was an audit the Audit Division had done on the reliability of performance measures that were used in the state’s budget process. He noted performance measures had been discussed during that morning’s hearings. He said in that audit, they found about one-half of the measures they had examined lacked sufficient documentation, and had been based on inappropriate methodologies, or had been calculated incorrectly. He said they had looked at 35 measures and found 15 that lacked sufficient documentation and, although the results may have been accurate, the lack of underlying records prevented the information from being verified. He said they also found 13 of the measures were based on flawed procedures. As an example, he cited the Northern Nevada Child and Adolescent Services’ method for tracking the average number of clients on early childhood services waiting lists had overstated the number of clients on the lists. The agency had included individuals who had inquired about services but had never followed up for an appointment. He said those individuals accounted for about 40 percent of the waiting list.
Mr. Townsend said related to this audit the Audit Division had undertaken a project he believed would be of interest to the Committee. At the last meeting of the Legislative Commission, the Audit Division had presented a six-month report on the Northern Nevada Child and Adolescent Services’ audit. The Commission had directed the Audit Division to perform some additional procedures at selected agencies, and to notify the money committees regarding the reliability of the measures presented in The Executive Budget. He noted that although the work they had done would not represent an audit, it would have obtained sufficient evidence to provide a reasonable basis for any conclusions. Mr. Townsend said currently they were verifying the reliability of selective measures at the Departments of Motor Vehicles and Public Safety, the Department of Information Technology, and the Department of Human Resources. He noted they would be releasing the results as they finished each agency and would have all the results to the members of the Assembly Committee on Ways and Means by the end of the current month. He added that the Audit Division had increased its emphasis on performance measures in the planning phase of their audits and would address them when applicable. He expected the findings on performance measures would provide a basis for doing similar analyses for the next legislative session if it were so desired.
Mr. Townsend asked for questions and said they looked forward to working with the Assembly Committee on Ways and Means, Assemblyman Goldwater, and the audit subcommittee throughout the session.
Chairman Arberry adjourned the meeting at 10:39.
RESPECTFULLY SUBMITTED:
Catherine Caldwell
Committee Secretary
APPROVED BY:
Assemblyman Morse Arberry Jr., Chairman
DATE: