MINUTES OF THE meeting
of the
ASSEMBLY Committee on Ways and Means
Seventy-Second Session
May 28, 2003
The Committee on Ways and Meanswas called to order at 8:00 a.m., on Wednesday, May 28, 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
Anne Bowen, Committee Secretary
Carol Thomsen, Committee Secretary
Assembly Bill 519 (1st Reprint): Revises provisions relating to awarding of design-build contracts by Department of Transportation. (BDR 35-542)
Jeff Fontaine, Director, Nevada Department of Transportation (NDOT), testified in support of A.B. 519.
Assemblyman Marvel congratulated Mr. Fontaine on his appointment as the new director of the NDOT and stated that he was an excellent choice.
Mr. Fontaine stated that A.B. 519 was a bill that attempted to revise the language regarding the awarding of design-build contracts. There was no fiscal impact to that part of the bill. However, Mr. Fontaine continued, shortly after being appointed the new NDOT director he had requested an amendment to A.B. 519 in the Transportation Committee authorizing the appointment of a second deputy director for the NDOT, whose responsibilities would be southern Nevada operations. The second deputy director position would be located in southern Nevada. Mr. Fontaine stated a second deputy director position was important to address the transportation needs in the southern Nevada. The NDOT was beginning its largest work program to date and a deputy director in southern Nevada would help ensure that those projects in southern Nevada were completed on schedule and within budget. The second deputy director would also certify that ongoing needs were addressed in a timely manner. Furthermore, the southern deputy director would have decision-making authority, which currently resided in Carson City.
Mr. Fontaine stated that the second deputy director position did have a fiscal impact and the NDOT proposed to pay for the salary, operating, travel, and some equipment for the first year of the biennium out of the Highway Fund.
Mr. Fontaine requested an additional amendment to A.B. 519, that the act would become effective upon passage and approval, which would allow the NDOT to get their management team up and running as quickly as possible.
Chairman Arberry declared the hearing on A.B 519 closed and opened the hearing on S.B. 264.
Senate Bill 264 (2nd Reprint): Makes various changes to provisions pertaining to Department of Corrections. (BDR 16-1182)
Jackie Crawford, Director, Department of Corrections (NDOC), testified on behalf of S.B. 264. Ms. Crawford introduced Dorla Salling, Chairman, Board of Parole Commissioners, and Glen Whorton, Assistant Director, Operations, Northern Nevada, Department of Corrections.
Ms. Crawford stated that S.B. 264 related to a reentry program for prisoners and parolees into the community. There were several revisions in the statute, but it primarily encompassed reentry, work release, and compassionate release. There was some question in Section 29 of the bill as to whether offenders would be paying for their room and board. Ms. Crawford noted that, although it had been stricken in Section 29, it had always been the intention that prisoners would pay for their room and board. She surmised that the section had been stricken because it pertained to the work release section where the individuals were in their homes as opposed to being in the custody of the NDOC or the Division of Parole and Probation.
Ms. Giunchigliani asked if Section 29 of S.B. 264 was where the focus was being placed. Ms. Crawford replied that was correct.
Ms. Giunchigliani asked if there were a way to “unstrike” Section 29, but add some other verbiage that would allow the NDOC to accomplish their goal, otherwise the funding would be removed. Ms. Crawford said she would refer the problem to the Committee and the staff to give the Department some guidance as to how to accomplish it.
Ms. Giunchigliani recommended removing the strikeout in subsection (a) of Section 29, which she believed would correct the problem.
Chairman Arberry asked when S.B. 264 would go into effect if it passed.
Ms. Crawford replied S.B. 264 would go into effect in October 2003.
Chairman Arberry asked how S.B. 264 was going to work with the restriction prohibiting ex-felons from associating with each other.
Ms. Salling replied that while there was currently a condition of parole that stated ex-felons could not associate without the permission of the Parole Board and Division of Parole and Probation, it would be acceptable if such permission were given. Ms. Salling reiterated that the Parole Board was totally supportive of the program. Presently reentry funds were very limited, and to release someone out of prison with $21 and no transition into the community was definitely counterproductive and a public safety consideration as well.
Chairman Arberry declared the hearing on S.B. 264 closed and opened the hearing on S.B. 447.
Senate Bill 447 (2nd Reprint): Makes various changes relating to governmental financial administration. (BDR 31-302)
Brian Krolicki, State Treasurer, Office of the State Treasurer, testified in favor of S.B. 447. He stated that S.B. 447 accomplished three things:
Mr. Krolicki noted that S.B. 447 was a State Treasurer’s bill, but amendment language relating to redevelopment was not his area of expertise, although he did support it. Therefore, Mr. Krolicki said he would be limiting his remarks to two areas.
Mr. Krolicki stated that every public deposit in the state, whether state or local government, must be collateralized or insured. What S.B. 447 proposed to do was pool together all of the public fund deposits throughout the state, in every level of government. This would ensure that all public funds were properly collateralized. Mr. Krolicki said that he would suspect, without any malicious intent by certain local governments, that they were not properly collateralized. Those local governments did not understand some of the applicable statutes, but this bill was a good way of ensuring proper collateralization of public funds.
Ms. Giunchigliani asked about Section 11 of S.B. 447 and inquired as to how much money the pro rata assessment would generate.
Mr. Krolicki responded that a Management Analyst IV position would be required and all-inclusive costs would be approximately $75,000, but that would have to be presented to the Interim Finance Committee for approval.
Ms. Giunchigliani asked if that would be a new position. Mr. Krolicki responded that it would be a new position, but would be funded from private sources.
Ms. Giunchigliani asked why the new position had not been presented in budget discussions. Mr. Krolicki responded that the position had not been approved and would be required to be presented before the Interim Finance Committee.
Ms. Giunchigliani asked if Section 11 was necessary to S.B. 447. Mr. Krolicki replied that it was.
Ms. Giunchigliani asked about Section 12 of S.B. 447 and how much revenue the proposed administrative fine would generate. Mr. Krolicki responded that he hoped it would generate nothing. Ms. Giunchigliani asked if that language was necessary to the bill. Mr. Krolicki answered that he believed the language was important so that the banking community would comply with the regulations. Section 12 was intended to ensure that the collateral assignments and the reporting requirements were completed and transmitted in a timely manner; fees would be assessed only if the banks failed to meet those requirements.
Ms. Giunchigliani asked why the local government language remained when all the rest had been stricken.
Mr. Krolicki responded that was language that the LCB had worked with as essentially cleanup. Local government was a better, all-encompassing definition. The term local government would refer to any government with taxpayer money on deposit.
Ms. Giunchigliani asked what Mr. Krolicki’s previous comment had been regarding Senator Hardy and redevelopment.
Mr. Krolicki stated there was a section on pages 10 to 12 in S.B. 447 regarding redevelopment, which Senator Hardy had requested.
Ms. Giunchigliani requested that Mr. Krolicki elaborate on the new language in Sections 19, 20, and 21 regarding no lease installment purchase agreement.
Mr. Krolicki stated those sections all served to eliminate previously authorized debt obligations. There was approximately $226 million of previously approved, but not issued debt.
Ms. Giunchigliani stated she did not understand the verbiage “lease or installment.”
Robin Reedy, Deputy of Debt Management, Office of the State Treasurer, explained that Sections 19, 20, and 21 of S.B. 447 were removing previously authorized debt, and the language in the original authorization had been used. There had been lease purchase for the Women’s Prison and the excess authority was being removed because what had been needed had been used.
Ms. Giunchigliani commented that in Section 19 it referred to no installment, while in Section 20 it became no lease or installment. She asked if that referred to the prison.
Ms. Reedy stated the language in the authorizations was not consistent. In Section 19 where it stated “no installment” referred to the Department of Information Technology and it referred to an installment purchase of computer equipment.
Ms. Giunchigliani requested a list of what was affected by those sections in order to assist the Committee to understand more clearly.
John Sande, representing the Nevada Bankers Association, testified in support of S.B. 447. He stated the Nevada Bankers Association felt it was very important for the state to ensure that public money was secured at least 102 percent by securities that would be deposited with a third party depository.
Randy Robison, representing the City of Mesquite, testified in support of S.B. 447. The redevelopment portion of S.B. 447 referred only to municipalities with a population of under 25,000, which would apply to the city of Mesquite.
Ms. Giunchigliani asked exactly what S.B. 447 would accomplish with regard to redevelopment.
Mr. Robison stated that in redevelopment language there were three separate caps on the assessed valuation of a redevelopment agency. Currently, under the existing population cap, the city of Mesquite was under a 15 percent assessed valuation cap. Mesquite was right at that cap at the present time, which inhibited their ability to continue to increase growth for the redevelopment agency in that area. The amendment would temporarily raise that cap to 20 percent and the population cap of 25,000 would act as a natural sunset, and once that cap was achieved, Mesquite would move up to the next cap.
Chairman Arberry declared the hearing on S.B. 447 closed and opened the hearing on S.B. 496.
Senate Bill 496: Makes various changes concerning financing of Commission on Economic Development to carry out certain training programs for employees of businesses. (BDR 18-1348)
Robert E. Shriver, Executive Director, Division of Economic Development, testified in support of S.B. 496. Mr. Shriver stated that S.B. 496 came out of budget hearings in the Senate Finance Committee as a solution to the carryover provisions relative to the Train Employees Now (TEN) program. According to Mr. Shriver, the Senate Finance Committee had preferred that no more than $250,000 be carried forward into the next year. Currently, the law allowed the Division to carry forward the amount through any biennium and S.B. 496 would change that.
Chairman Arberry declared the hearing on S.B. 496 closed and opened the hearing of A.B. 238.
Assembly Bill 238: Makes appropriation to Interim Finance Committee for allocation to Eighth Judicial District of State of Nevada for operational expenses of mental health court in Clark County. (BDR S-1089)
Mark Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, explained that A.B. 238 would establish a mental health court in Clark County. The present plan was that some monies from A.B. 29 would be used and, therefore, the appropriation in A.B. 238 would not be necessary, but the bill would be a vehicle to establish the mental health court.
Ms. Giunchigliani suggested removing Section 1 and rewriting it as “Clark County courts are encouraged to utilize the assessments pursuant to A.B. 29 for specialty courts for the establishment of a mental health court.”
Mr. Marvel asked Assemblywoman Leslie, since she worked in the mental health area, if removing Section 1 from A.B. 238 would dilute the money.
Ms. Leslie stated that she believed removing Section 1 was wise because the Eighth Judicial District in Clark County had been somewhat slow in implementing a mental health court and now there would be enough money. She stated that, in her opinion, it was a good thing to do.
Mrs. Chowning stated that she was very much in favor of A.B. 238.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED AMEND AND DO PASS A.B. 238, STRIKING THE CURRENT LANGUAGE IN SECTION 1 AND INSERTING, “CLARK COUNTY AND THE EIGHTH JUDICIAL DISTRICT COURT ARE ENCOURAGED TO UTILIZE THE ASSESSMENTS GENERATED PURSUANT TO A.B. 29 FROM THE SPECIALTY ACCOUNT TO ESTABLISH A MENTAL HEALTH COURT.”
ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Goldwater, Assemblyman Griffin, and Speaker Perkins were not present for the vote.)
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Assembly Bill 508 (1st Reprint): Revises provisions governing academic standards for certain grade levels to include certain cultural studies. (BDR 34-1217)
Mr. Stevens explained that the proposal for the bill would remove mandatory language and replace it with permissive language in a number of sections in A.B. 508.
Ms. Giunchigliani stated that based on testimony, the fiscal note had been removed from A.B. 508 because it had been felt that most of what was contained in the bill was already being done.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED AMEND AND DO PASS A.B. 508 WITH THE PROVISION THAT THE LANGUAGE “AND MAY INCLUDE” BE ADDED TO PAGE 2, LINE 11; PAGE 3, LINE 20; PAGE 4, LINE 7.
ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.
Mr. Beers commented that with the amendments, A.B. 508 became harmless, but he would be voting no.
Mr. Hettrick commented that if the bill was not mandatory and was permissive, and could be accomplished already, he saw no reason to pass A.B. 508.
Chairman Arberry announced A.B. 508 would be held pending further review.
Assembly Bill 550: Increases certain fees collected by State Registrar. (BDR 40‑1357)
Mr. Stevens explained that A.B. 550 increased fees for birth and death certificates.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED DO PASS A.B. 550.
ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.
Mr. Stevens explained that the fiscal note for A.B. 550 had been built into the budget closing and amounted to a little over $300,000 per year to the General Fund.
THE MOTION CARRIED. (Assemblyman Goldwater and Speaker Perkins were not present for the vote.)
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Assembly Bill 537 (1st Reprint): Revises provisions regarding state personnel. (BDR 23-1155)
Mr. Stevens noted that A.B. 537 contained a significant fiscal impact. Section 1 contained a fiscal impact of $460,000 per year and involved state employees who worked a non-traditional schedule being paid for holidays. Section 2 allowed additional donations to the catastrophic leave bank with a fiscal note of $392,000. Section 4 allowed arbitration of grievances with a fiscal note of $14,588 per year. Section 5 would increase salaries for Department of Corrections’ maintenance employees with a fiscal note of $386,000 per year.
Mr. Stevens stated that only Section 4 regarding arbitration of grievances needed to be discussed at the present time.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED AMEND AND DO PASS A.B. 537, RETAINING SECTION 4 AND REMOVING SECTIONS 1, 2, 3, AND 5.
ASSEMBLYWOMAN McCLAIN SECONDED THE MOTION.
THE MOTION CARRIED WITH MR. HETTRICK, MR. MARVEL, AND MR. BEERS VOTING NO. (Assemblyman Goldwater was not present for the vote.)
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Senate Bill 164 (1st Reprint): Creates the Office of Disability Services within Department of Human Resources to coordinate and administer certain services and programs for persons with disabilities. (BDR 38-701)
Mr. Stevens explained that S.B. 164 would create an Office of Disability Services within the Department of Human Resources to coordinate and administer services and programs for persons with disabilities.
ASSEMBLYMAN MARVEL MOVED DO PASS S.B. 164.
ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Goldwater was not present for the vote.)
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Senate Bill 173: Exempts certain licensing boards from State Budget Act and certain provisions governing financial administration. (BDR 31-506)
Mr. Stevens explained that S.B. 173 would remove certain licensing boards from the State Budget Act. Professional licensing boards were once in The Executive Budget but had been removed. Mr. Stevens believed that S.B. 173 would impact the Private Investigator’s Licensing Board and the Board for the Regulation of Liquefied Petroleum Gas. Those boards would be removed from the State Budget Act, which would also remove them from the control of The Executive Budget and the Interim Finance Committee.
ASSEMBLYMAN HETTRICK MOVED DO PASS S.B. 173.
ASSEMBLYMAN PARKS SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Goldwater was not present for the vote.)
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Senate Bill 263 (1st Reprint): Makes supplemental appropriation to State Department of Agriculture for unanticipated shortfall in money for Fiscal Year 2002-2003 resulting from unexpected increase in expenses. (BDR S-1268)
Mr. Stevens stated S.B. 263 was a supplemental appropriation of approximately $41,000 for the Department of Agriculture, not included in The Executive Budget. There were various reasons why the Department of Agriculture needed the appropriation, such as employee reclassifications, operating costs, and a health insurance increase.
ASSEMBLYWOMAN CHOWNING MOVED DO PASS S.B. 263.
ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Goldwater was not present for the vote.)
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Senate Bill 264 (2nd Reprint): Makes various changes to provisions pertaining to Department of Corrections. (BDR 16-1182)
Mr. Stevens said that S.B. 264 had been heard this morning and while the Committee did not usually vote on a bill the same day it was heard, since it was near the end of the session, the Committee might want to consider taking action. An amendment on page 16, lines 26 and 27, suggested reinstating the stricken language. Mr. Stevens stated that the Department of Corrections was advocating for S.B. 264, which would allow transitional housing and was built into the second year of the Department of Corrections’ budgets.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS S.B. 264, SECTION 29, LINES 26 AND 27, BY REINSTATING THE LANGUAGE ALLOWING THE DEPARTMENT OF CORRECTIONS TO PAY FOR TRANSITIONAL HOUSING.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
Mr. Hettrick said he thought the amendment removed the money, but according to Ms. Giunchigliani’s motion, the amendment would allow the Department of Corrections to be funded from money already in their budget.
Ms. Giunchigliani stated that the language allowing the Department of Corrections to charge a lower rate while offenders moved through transition had been accidentally deleted. Reinstating the language in Section 29 would allow the Department of Corrections to implement that part of S.B. 264.
Mr. Parks requested clarification of the section and lines referred to in S.B. 264.
Ms. Giunchigliani responded that it was page 15, Section 29, lines 26 and 27.
Mrs. Chowning commented that on page 19 of S.B. 264 under Text of Repealed Section, it stated that the Department of Corrections could not contract with local entities for the housing and in the housing budget it stated that was what the Department intended to do. It was important to reinstate lines 26 and 27 in Section 29.
Ms. Giunchigliani noted the language was being reinstated in S.B. 264.
Mrs. Chowning said that it was explained further on page 19 and she wanted to emphasize that it was important to reinstate the language or the Department of Corrections would not be able to contract with local entities to provide housing.
THE MOTION CARRIED. (Assemblyman Goldwater and Assemblyman Griffin were not present for the vote.)
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Senate Bill 324 (1st Reprint): Makes various changes concerning Veterans’ Home Account and Gift Account for Veterans’ Home. (BDR 37-305)
Mr. Stevens explained that S.B. 324 involved the Veterans’ Home Gift Account and had been processed based upon budget closings that the Assembly and Senate had agreed upon.
ASSEMBLYMAN MARVEL MOVED DO PASS S.B. 324.
ASSEMBLYMAN PARKS SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Goldwater and Assemblyman Griffin were not present for the vote.)
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Senate Bill 456: Revises various provisions of Uniform Athletes’ Agents Act. (BDR 34-153)
Mr. Stevens explained that S.B. 456 involved the Secretary of State’s Office and the regulation of athletes’ agents.
ASSEMBLYMAN HETTRICK MOVED DO PASS S.B. 456.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Goldwater was not present for the vote.)
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Senate Bill 473 (2nd Reprint): Makes various changes to provisions governing abatement of taxes for new or expanded businesses. (BDR 32-1241)
Mr. Stevens explained that S.B. 473 involved changing the provisions that the Commission on Economic Development utilized in governing abatement of taxes for new or expanded businesses. There was a proposed amendment to Section 1, page 2, line 17, to change the number back from 30 to the existing 75. Businesses would have to employ 75 employees as in the current law. Page 2, line 38, would be amended to 15. Page 6, line 17, would be amended to the original $50 million versus $5 million, for the capital investment portion for a business that would be eligible for a tax abatement, and line 18, in S.B. 473, would be amended from $5 million to $2 million. On page 9, line 3, the words “the duration of the lease for” would be deleted.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED AMEND AND DO PASS S.B. 473.
ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Goldwater was not present for the vote.)
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Mr. Stevens explained that the Senate Finance Committee had introduced a bill regarding the Public Safety radio communications system which involved a significant Highway Fund appropriation and a $1.8 million General Fund appropriation (Senate Bill 499). Mr. Stevens noted that the session was coming to an end and the Committee might want information on the issue so it could be moved forward instead of waiting for the bill to be sent from Senate Finance.
Michael Hillerby, Deputy Chief of Staff, Office of the Governor, presented testimony regarding the Public Safety radio communications system. Exhibit C, “Radio System Cost Summaries,” was presented to the Committee.
Mr. Hillerby stated that a decision had been made a number of years ago to travel two different paths with radio systems for the state. One involved an 800 megahertz (800 MHz) system that was maintained by the Nevada Department of Transportation (NDOT) and the other was a VHF highband system that was maintained by the Department of Public Safety.
Mr. Hillerby said the reason he was before the Committee was that on February 27, 2003, the Governor’s Office had received a call and a memo from the Department of Public Safety stating that in the course of an audit of the Communications Division it had been discovered that of the 141 frequencies the system currently used on the VHF highband system, none of the frequencies was licensed. The Federal Communications Commission (FCC) was aware of that fact.
Mr. Beers asked what date the Governor’s Office had been notified of the problem.
Mr. Hillerby replied that it was February 27, 2003, and continued with his presentation. He stated that a team had been immediately recruited from the Department of Public Safety, the NDOT, Division of Emergency Management, and the Department of Information Technology (DoIT) to attempt to ascertain exactly what that meant and what would be needed to fix the problem. Exhibit C detailed the funds referenced in S.B. 499 needed to restore the system, a letter from the Governor’s Office, a plan submitted to the FCC, dated April 21, 2003, outlining compliance methodology, and letters from and to the FCC.
Mr. Hillerby reviewed the history of the radio communications system. Beginning in the late 1980s there had been decisions made about radio systems. At some point, the decision was made to proceed in two different directions by different agencies. Ultimately, the 1997 Session of the Legislature commissioned a study to help determine why two different paths were being pursued. That study seemed to support the “two path” decision and money was allocated to both, continuing that process. The present situation found the Department of Public Safety without any licenses from the FCC to operate their frequencies. The users of the Public Safety system also included much of the rural areas of the state as well as a handful of the General Fund agencies such as the Attorney General and Parole and Probation. Based upon the information the team had compiled, and after talking with the FCC, there was very little likelihood that the number of frequencies needed could be located to run the system as it was designed. Some frequencies had been identified that were potentially available, but procuring licensing and engineering was a significant task. The plan contained in Exhibit C would provide funding to the Interim Finance Committee (IFC), which Mr. Hillerby stressed as being very important. None of the money would be released without appearing before the Legislature, and in the interim it would require appearing before the IFC with updates on the progress of the plan.
Mr. Hillerby noted that there were other issues involved. A high priority of the federal government and all of the states, particularly after the events of September 11, 2001, was how to have interoperability among various communication systems. There had been standards advanced by the Department of Defense, there had been standards advanced by the Department of Justice, and there had been standards advanced by the Federal Communications Commission. The FCC had been reluctant to mandate any type of standard or direction, in writing, for the Department of Public Safety. Mr. Hillerby said that in telephone conversations with the FCC it had been made clear that 700 to 800 MHz bandwidths had been set up for public safety for a reason, and the FCC was pleased with the proposal to migrate to that system if the VHF system could not be licensed.
One of the issues that had been at the forefront of all discussions had been the other users of the system and the impact upon them, particularly the rural users. Some rural users were physically on the backbone part of the Public Safety system. Mr. Hillerby stated that essentially all of the rural counties, outside of Washoe County and Clark County, used the VHF system enabling them to communicate. The concern was that any decision should bear in mind the impact on the rural areas, and particularly the safety of the citizens who relied upon those first responders, as well as the safety of the first responders. Mr. Hillerby said that it would be an understatement to say that everyone involved was quite frustrated and disgruntled that this situation had emerged. It was a very sad state of affairs at this point, but the question was how could it be repaired.
Mr. Hillerby stated that the proposal before the Committee (Exhibit C) would appropriate approximately $14.6 million from the Highway Fund to the Interim Finance Committee and approximately $1.8 million from General Funds to the IFC. Before any of that money was spent, regular updates would be presented to the IFC.
Mr. Hillerby said that the hope was that enough frequencies could be identified in the VHF system to make the system operate in some type of functional manner, so that the Highway Patrolmen, the first responders in the rural areas, and the people who lived in the rural areas, were served. By June 9, 2003, a plan had to be submitted to the FCC and the Highway Patrol switched over to a conventional method of operation with enough frequencies to make that work. It had been acknowledged that the system would not work well, but it was believed that it could do something to respond to its users. Regardless of what was done there were likely to be some infrastructure improvements made. One of the discoveries made was that the frequencies were not only being run illegally, they were being operated at a much higher power than the system was designed for.
Mr. Marvel asked why the fines imposed by the FCC were so high.
Colonel David Hosmer, Nevada Highway Patrol, Department of Public Safety, responded that the fines could be very high if the FCC followed the letter of the violations. The fines could be imposed for every frequency, at every location, for every day that the system had been in use. If the fines were calculated at between $8,000 and $10,000 per day, over the three-year period of use, it could be as high as a billion dollars.
Mr. Hillerby stated that there was an active investigation underway in Nevada, and the FCC was conducting an investigation as well to determine exactly how the situation occurred. At some point temporary applications for the use of, and licenses for, those frequencies were filed, but no follow-up was done to obtain permanent licenses. Mr. Hillerby believed that was in the late 1990s according to the best information available. When an outcome to both investigations was determined, the Legislature would be supplied with the results.
Mr. Hillerby ventured an opinion after discussing this matter with the FCC. The FCC had ordered the Department of Public Safety to cease the illegal use of those frequencies. The likelihood of the FCC coming in and mandating that the Department shut down a major public safety system in the state was probably slim. The fines, however, were a very real possibility. Mr. Hillerby noted that the FCC seemed pleased with the plan that was in place to address the immediate concerns. The long-term issue was to get the Department either in legal operation on VHF or off the VHF system and into the 700 to 800 MHz system, which was set aside for public safety.
Mr. Beers asked how many frequencies were needed.
Mr. Hillerby replied that the present system used 141 frequencies in a trunked operational mode. He stated he could not begin to explain the system, but there were people present who could explain the technology better than he could. The system was still incomplete, but there were long-term plans to enable the system to carry more data. To continue the operation the way it was presently set up would require at least 141 frequencies.
Mr. Beers commented that since VHF was only “line of sight,” theoretically, the same frequency could be used twice in different areas, for example, Elko and Cold Springs.
Mr. Hillerby responded that potentially, that was correct, if someone else was not already using the frequency.
Mr. Beers asked how many usable frequencies the Association of Public-Safety Communications Officials (APCO) had identified.
Col. Hosmer replied that the Department had received a letter from APCO that stated there were 56 frequencies identified for the Las Vegas area. Approximately 54 of those frequencies would require a letter of concurrence or further engineering to conclusively determine if those frequencies could be used. However, a few frequencies had been identified as positives.
Mr. Beers commented that the Department would incur engineering expenses for new frequencies on the 700 to 800 MHz systems as well.
Col. Hosmer stated that the APCO coordinator had been a Nevada Highway Patrol employee for six to eight years of the period of time that the Department had been attempting to license the system, so he was familiar with the problems. The Department had not been able to license the system, to date, and Col. Hosmer stated his confidence that licensing could be accomplished with the present system was not high.
Mr. Beers stated the same issues applied to licensing a frequency anywhere. The licensure process was the same for a 150 MHz frequency as for a 700 to 800 MHz frequency.
Terry Savage, Director, Chief Information Officer, Department of Information Technology (DoIT), stated the main difference between the two systems was the available real estate within the two bands. In the entire public safety frequency range approximately 71 percent of the frequencies were in the 700 to 800 MHz range, while only about 8 percent were in the VHF highband 150 MHz range.
Mr. Beers commented that all of the VHF highband frequencies were in the western states where there were long distances to cover.
Mr. Savage replied that issue could be addressed technically as well. Mr. Beers noted, with more repeaters, locations, and money. Mr. Savage agreed that to some extent that was true. Mr. Savage stated that the 150 MHz band was substantially more congested than the 700 to 800 MHz bands, which made the engineering process for 700 to 800 MHz bands considerably cheaper and easier. It was not yet certain that it was possible to acquire enough frequencies to manage the system at 150 MHz. Mr. Beers commented that it had been done under temporary licensing until that had expired just six months before. Mr. Savage replied that he did not know the present status of those temporary licenses.
Col. Hosmer stated that it was his understanding that the Department had temporary licenses for a few of the frequencies, but clearly not for all of the 141 frequencies being utilized. Mr. Beers asked if there were licenses for all of the public safety frequencies. Col. Hosmer replied that some of the public safety frequencies were licensed, but he did not believe there were 79 public safety frequencies temporarily licensed.
Mr. Beers stated that, presumably, a 700 to 800 MHz system would require more frequencies and inquired as to whether an analysis had been done. He continued that he did not believe there was a substantially increased complexity to licensing 150 MHz frequencies as opposed to licensing 700 to 800 MHz frequencies. However, assuming that was true, more frequencies would be needed at 700 to 800 MHz, because more repeaters and more mountaintop locations would be required.
Mr. Savage stated that the NDOT had enough 700 to 800 MHz frequencies needed to make the NHP system operational. The difference between the 150 MHz and 700 to 800 MHz systems was not that the engineering per frequency was more difficult, but that the congestion was so much lower in the 700 to 800 MHz range and solutions were much easier. Even frequencies on the VHF highband that had temporary licensing were being run at three times the legal power. Mr. Beers interjected that it was a licensure issue; there was no technology issue. Mr. Savage replied that in terms of power, that was correct, but in terms of interference it was a problem with the licensing. The more the frequency was “pumped up” the more likely there would be interference at the edges.
Mr. Beers said the power could be reduced, because for what the Department was doing, which was line of sight, point to point, it would no longer be an issue. Mr. Savage stated the coverage would be reduced if that occurred; there would be bare spots with no radio coverage because the range would be reduced. Mr. Beers acknowledged that there was a power/distance correlation but he did not believe it would be an impediment to the success of the 150 MHz system.
Mr. Hillerby stated that the best information available to date suggested that running the existing VHF system at lower power would require the addition of some repeaters, which would also be required to finish the 800 MHz system and provide the same type of coverage presently in place. Mr. Hillerby pointed out in Exhibit C on the front page under Infrastructure Upgrades was a line item of approximately $2.6 million to provide the five or six tower sites that would be needed with either system.
Mr. Beers noted the overall course of action would require $30 million if the $15 million already spent was discounted and $15 million more was committed.
Mr. Hillerby stated there were a variety of issues involved. The VHF system, as it was envisioned, still needed another approximately $28 to $30 million to be fully functional. The P25 standard of interoperability that had not been adopted by the FCC, but had been adopted by the United States Department of Defense, would require an upgrade for every public safety radio in the state of Nevada to make it compatible. Mr. Hillerby stated there was clearly some energy at the federal level to discuss standards to enable more first responders to communicate with each other. There was also an interoperability question, as there were a variety of vendors offering stand-alone interoperability solutions that allowed different technologies and frequencies to work together. Mr. Hillerby said this would be an ongoing expense regardless of which system was in place because standards would change and the federal government would mandate certain things. On the other hand, the federal government would be likely to contribute funding to the problem as well.
Mr. Beers stated he believed Mr. Hillerby was telling him that proceeding with the VHF system would cost $3 million, and it would cost $15 million to replace it with a solution that had not been attempted in the rural areas of the state where the long distances existed.
Mr. Hillerby stated that was not what he had said. He had stated that at the very least, if licenses could be procured, which was doubtful from what the FCC was saying. Mr. Beers interjected by asking why it was doubtful. Mr. Hillerby stated for all the reasons that had been discussed, too much congestion on the system, serious engineering problems, and frequency and power overloads. Mr. Beers stated that he was not satisfied the solution to those problems had been pursued. Mr. Hillerby replied that solutions had been vigorously pursued since the problem was identified and would continue to be pursued. Mr. Beers asked if the Department had engaged in recent engineering studies on new frequencies that had been identified in Las Vegas. Mr. Hillerby stated that the Department continued to do those studies and continued with the licensing process to make those frequencies available to try to make the system work. Clearly, it would be in everyone’s best interest to try to find enough frequencies, but every indication so far had been that was not going to be possible. Mr. Hillerby stated they would continue to pursue that resolution because it made the most sense, but if those frequencies could not be licensed, the state would have a system that could not be operated, long before the Legislature reconvened. That was why they were requesting to appear before the IFC during the interim to provide updates and request expenditures.
Mr. Hillerby reiterated that at the bare minimum, continuing to operate the VHF system, if the frequencies could be found and licensed, would cost approximately $3 million. Long term, the VHF system was not finished and the estimates were that it would cost another $28 to $30 million to bring the system up-to-date. Mr. Beers asked how old the estimate was. Mr. Hillerby stated he did not have that information but would find out. Mr. Beers asked Col. Hosmer if he knew how old the estimate was.
Col. Hosmer said he believed the estimate was from 1999. Mr. Savage interjected that the estimate was from September 2002 and was an update to the estimate from 1999.
Mr. Beers asked what the total cost would be for repairing the present system. Mr. Hillerby replied that it was approximately $28 to $30 million to finish building the system as it had been envisioned.
Mr. Beers asked the cost for building the 700 to 800 MHz systems. Mr. Hillerby stated that the budget contained in Exhibit C would move the Highway Patrol onto the existing 700 to 800 MHz system and be operational. NDOT crews were also using the NDOT system in the rural areas of the state. There would be some engineering and testing to be sure that the areas where the Highway Patrol needed the system were the same places that NDOT was using to provide that coverage.
Mr. Savage stated there were two issues that were related but distinct. One was dealing with the Highway Patrol’s problem immediately and the other was the more global issue of interoperability. If the Highway Patrol were moved to 700 to 800 MHz it would not solve the global problem of interoperability. Part of the concerns regarding interoperability were that federal government agencies, such as the U. S. Forestry Department, used frequencies other than 700 to 800 MHz. People who needed to interact with the Highway Patrol in the rural areas needed interoperability as well. If the Highway Patrol migrated to 700 to 800 MHz, in those rural areas where they needed to interact with those still on 150 MHz, the intention was to have two radios in the patrol cars.
Col. Hosmer stated it was correct that two radios would have to remain in the patrol cars, which was probably not the best solution. Even if there were only one radio, frequencies would still have to be changed. Col. Hosmer said that very early in the process he had sent personnel to various regions of the state to perform side-by-side testing of the two different systems. With just a few exceptions in the northeast quadrant of the state, performance was almost equal. Col. Hosmer emphasized that for the trooper in the patrol car it did not really matter which system was in use, only that the system worked.
Mr. Beers stated that there were some very valid technical differences between those two frequencies. The 150 MHz frequency was well suited for longer distances, which was why it was used so widely in the rural west. All manufacturers produced equipment in both bands and Mr. Beers suggested finding a different manufacturer if necessary. In the amateur community, people with different brands of radios talked to each other all the time and interoperability had been accomplished. Mr. Beers noted that everyone was disappointed that the person who filed the temporary licensing requests did not follow through and file for permanent licenses, but apparently that still had not happened.
Mr. Savage stated the issue of the temporary licenses was still being addressed. The bottom line was that it would not be resolved prior to the adjournment of the Legislature. What the Department was requesting was that the Interim Finance Committee retain the authority to review the analysis and work, and to have the money available if it was determined to be appropriate to spend it for the planned upgrade.
Mr. Beers asked why the Department refused to file for additional frequencies. Mr. Savage stated that perhaps there had been refusal to file for frequencies in the past, but currently there was no refusal to file. The Department was attempting to get the people who said there were frequencies available to conduct the study and determine where the specific frequencies were available. Mr. Savage believed that information would be available by early July 2003. If those people found frequencies that met the needs of the Highway Patrol, that would probably be the path to take in the short term, however, if the study did not show that information then the Department would need to take the other path.
Speaker Perkins commented that while it was true that all manufacturers operated in all of the different wavelengths, they also built proprietary systems. Until a national standard had been established, different manufactured systems would not be able to talk to each other, because of the proprietary nature of the system.
Chairman Arberry asked if the Nevada Highway Patrol had cell phones.
Col. Hosmer responded that the Nevada Highway Patrol did have cell phones and they were also investigating other ways to keep the troopers and citizens in contact.
Mr. Beers emphasized that the FCC was not discouraging 150 MHz communication systems and had, in the past few years, split the frequencies because technology was allowing more frequencies on 150 MHz bandwidth. In large distance rural areas 150 MHz was a more appropriate frequency than 700‑800 MHz.
Mr. Hillerby stated that conversations with the FCC representatives had been crystal clear. The Department had been told specifically that the 700 to 800 MHz bandwidth had been allocated for public safety functions for a reason and the FCC was pleased that the Department had some interest in moving to that frequency and placed that statement in writing in their May 23, 2003, letter.
Mr. Beers interjected that the letter was from the FCC’s Washington, D.C. offices. Mr. Hillerby stated that was where their headquarters were. Mr. Beers stated the FCC had no idea about distances in the west, nor did they understand the west. Mr. Hillerby noted that regardless, Washington, D. C. was the nation’s capital, the FCC did have their headquarters there, and the FCC had significant influence over how the Public Safety Radio System was operated and whether they licensed the frequencies.
Chairman Arberry asked if the Department had prepared a cost breakdown if cell phones needed to be provided to Highway Patrol troopers.
Col. Hosmer replied that the Department did not have a cost breakdown available but would provide one as soon as possible.
Chairman Arberry asked whether there was any further testimony regarding the Public Safety Radio System.
Mr. Parks stated that since the Committee on Ways and Means still had bill draft request (BDR) authority, as Chairman of the Taxation Committee, he requested that the Committee on Ways and Means request a BDR for passive revenue generators.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED FOR A BILL DRAFT REQUEST FOR THE PASSIVE REVENUE GENERATORS PREVIOUSLY DISCUSSED BY THE COMMITTEE.
ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Griffin, Assemblyman Andonov, and Assemblywoman Leslie were not present for the vote.)
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Chairman Arberry stated that the Committee needed to vote on A.B. 519.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED AMEND AND DO PASS A.B. 519.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Andonov, Assemblyman Griffin, and Assemblywoman Leslie were not present for the vote.)
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ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO RESCIND THE MOTION ON THE FLOOR.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Andonov, Assemblyman Griffin, and Assemblywoman Leslie were not present for the vote.)
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ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS A.B. 519 BY ADDING “UPON PASSAGE AND APPROVAL.”
ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblyman Andonov, Assemblyman Griffin, and Assemblywoman Leslie were not present for the vote.)
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Chairman Arberry recessed the meeting at 9:42 a.m. and reconvened the meeting at 3:39 p.m.
ASSEMBLYMAN PARKS MOVED FOR A BILL DRAFT REQUEST FOR THE PURPOSE OF PUTTING THE ASSEMBLY TAXATION REVENUE PLAN INTO PLACE FOR THE NEXT BIENNIUM.
ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION CARRIED WITH ASSEMBLYMAN HETTRICK AND ASSEMBLYMAN MARVEL VOTING NO.
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DISTRIBUTIVE SCHOOL ACCOUNT (101-2610)
EXECUTIVE BUDGET PAGE K12ED-11
Mr. Stevens stated that the LCB staff had been requested to present an option for the Distributive School Account (DSA).
Mr. Stevens outlined the options for the DSA. The first item was full day kindergarten. The original closing by the Assembly Ways and Means Committee involved not approving full day kindergarten, but approving the iNVest Plan for a pilot program for a full day kindergarten. It had been suggested that the pilot program be eliminated and no funding be provided for full day kindergarten.
It was proposed for class-size reduction that the Governor’s recommendation of a ratio of 16 to 1 in first and second grades and 19 to 1 in third grade be accepted. Class size in kindergarten would be a ratio of 22 to 1 in the second year of the biennium at the cost of approximately $2.1 million.
Mr. Stevens stated that there were three stipends, or bonuses, built into the budget, two within the DSA, a $3,000 high impact stipend and a $2,000 at-risk school stipend. The recommendation and discussion had been on how best to provide an incentive to work at those schools and in discussions the stipend was eliminated and in its place a 1/5 retirement credit for each year served at a high impact or at-risk school. Mr. Stevens stated he believed the proposal was that a teacher would have to work at an at-risk school for two years before being eligible for the 1/5 retirement credit. The proposal in the Governor’s recommendation had been approximately $16 million for both stipends. The option being presented would provide a 1/5 retirement credit for high impact teachers in the second year of the biennium and would provide a 1/5 retirement credit for teachers at at-risk schools at a cost of approximately $2.7 million the first year and $12.8 million the second year.
Mr. Stevens said the Classroom on Wheels (COW) program was included in the Other State Programs budget. The $301,000 per year funding was eliminated to be placed in the Distributive School Account so that the program could be included in funding for Early Childhood Programs, which made it appear to be an addition of $301,000. That was misleading as the savings had been taken in the Other State Programs budget.
In the professional development area, the Nevada Early Literacy Intervention Program (NELIP) had been recommended to be combined with the Regional Professional Development Program at a savings of approximately $1.5 million the first year of the biennium and $1.6 million the second year.
Mr. Stevens stated that remediation funds were recommended by the Governor although there was some movement between summer and intersession funds and funds provided for low-performing schools.
In textbooks and supplies, the Governor recommended $50 per pupil for textbooks, instructional supplies, and instructional software. In the staff option being presented, that funding would be retained, and in discussing the DSA closing with the Senate, there had been an agreement to “fence off” funding in the DSA for textbooks, instructional supplies, and instructional software. Mr. Stevens noted that if the Committee on Ways and Means concurred, the Senate action would be matched in that particular area.
The Governor’s budget included a 10 percent increase in FY2004 and an additional 10 percent increase in FY2005 for inflation for health insurance rates. The current option would provide $5.8 million to the Interim Finance Committee for school districts to apply for if their health insurance rates were in excess of the 10 percent level. In the current biennium $18 million had been allocated to the Interim Finance Committee for the same purpose.
Mr. Stevens stated that the option for extending the school year would add one additional school day to the school year at a cost of approximately $10 million and also provided a 10 percent inflationary factor for operating costs for a total of $11 million in the second year of the biennium.
Mr. Stevens addressed K-12 teacher salaries by stating the option would include a 1 percent increase in addition to the 2 percent increase built into the base budget in the first year of the biennium and provide a 3 percent increase in the second year of the biennium. The dollar amount equaled $18.7 million the first year of the biennium and $79 million in the second year. Total cost in this particular option, compared to the Governor’s recommendation, would be approximately $5.7 million in the first year of the biennium and approximately $66.7 million in the second year of the biennium.
Mr. Stevens brought several things to the Committee’s attention that had not been presented before. Potential budget actions, under the category of ongoing funds, contained the Distributive School Account option that had just been discussed. S.B. 191 included an appropriation of approximately $13 million. There had been testimony about the Public Safety Radio problem and the request was for $1.8 million in General Funds and a significant amount of Highway Funds. The federal government had recently approved additional federal funds for essential services and also increased the state’s matching rate on a temporary basis for the Medicaid Program. There were approximately $68 million in flexible federal funds that could be used for essential state services. That money could be used to support the state budget according to Mr. Stevens. The option included a 3 percent salary increase in the second year of the biennium for other state employees. Overall, this option would result in the need to increase revenues by approximately $354 million in the first year of the biennium and $576 million in the second year.
ASSEMBLYWOMAN GIUNCHIGLIANI MADE A MOTION TO CLOSE THE DISTRIBUTIVE SCHOOL ACCOUNT BY AGREEING WITH THE SENATE INCLUDING THE FOLLOWING: NO FULL DAY KINDERGARTEN FOR THIS BIENNIUM; FOR CLASS-SIZE REDUCTION, STIPULATE 1 TO 22 FOR ALL KINDERGARTENS, BUT MAINTAIN THE LAW AS CURRENTLY WRITTEN WHICH IS 1 TO 16 FOR FIRST AND SECOND GRADES, AND 1 TO 19 IN THIRD GRADE; INSTEAD OF STIPENDS, 1/5 RETIREMENT CREDIT FOR BOTH THE HIGH IMPACT AND AT-RISK STIPENDS; CONSOLIDATE THE EARLY CHILDHOOD PROGRAMS AS WAS DONE IN THE BUDGET CLOSINGS; CONSOLIDATION OF PROFESSIONAL DEVELOPMENT WITH NEVADA EARLY LITERACY INTERVENTION PROGRAM; CLOSING ACTIONS ON REMEDIATION WITHOUT THE PUBLIC EMPLOYEES’ RETIREMENT SYSTEM (PERS) RECOMMENDATION BY THE GOVERNOR; APPROVE $50 FOR TEXTBOOKS AND INSTRUCTIONAL SUPPLIES, BUT THAT IT BE FENCED OFF PURSUANT TO NRS 288.150(T), SUBJECT TO COLLECTIVE BARGAINING; ADDITIONAL 2 PERCENT HEALTH CARE TO GO BEFORE THE IFC IN THE FIRST YEAR OF THE BIENNIUM; EXTEND THE SCHOOL YEAR BY ONE DAY; SALARY INCREASE OF 1 PERCENT THE FIRST YEAR OF THE BIENNIUM, WHICH WOULD MAKE IT 3 PERCENT, AND 3 PERCENT FOR ALL STATE EMPLOYEES, TEACHERS, PRISON EMPLOYEES, AND SCHOOL PERSONNEL IN THE SECOND YEAR.
ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.
Mr. Marvel asked what the rationale was for the additional school day.
Ms. Giunchigliani noted, “We had actually closed in our closings with five extra school days, three for instruction and two for professional development.” The state had been mandating 180 days of school and the districts were allowed to use professional days out of the actual instructional days, which resulted in 175 days of instruction. With all of the new standards that had been mandated over the past 10 to 15 years, the state had not added any time for teachers to actually be able to teach. The school system, through the No Child Left Behind Act, was up to 21 examinations in addition to examinations the local school district mandated. Ms. Giunchigliani stated she did not know when teachers taught, because they were lucky to have 100 days in the school year. Part of the rationale was if children were going to do better they needed more time to do so and one day added to the school year seemed to be a good start. The school superintendents had requested ten days and one day was being recommended to get the plan going.
Mrs. Chowning stated that in the 1997 Session the Nevada Education Reform Act had been passed, raising the bar considerably. No Child Left Behind had raised the bar even further and it was estimated that over half of Nevada’s schools would be in the needing improvement category. One of the options in the federal law was to add a day to the school year when the schools needed improvement. Mrs. Chowning opined that Nevada’s school children needed all the help they could get and this was just a drop in the bucket.
Ms. Giunchigliani clarified her motion by stating that the kindergarten class-size reduction ratio of 1 to 22 was to go into effect in the second year of the biennium.
Mr. Marvel requested to digress from discussion about the DSA and asked if General Fund actions of $930 million would mean raising that much more in taxes.
Mr. Stevens responded that revenues would have to be raised by $930 million in order to maintain a 5 percent fund balance.
THE MOTION CARRIED WITH ASSEMBLYMAN MARVEL, ASSEMBLYMAN BEERS, AND ASSEMBLYMAN HETTRICK VOTING NO.
BUDGET CLOSED.
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Chairman Arberry adjourned the meeting at 3:56 p.m. and reconvened at 7:18 p.m.
Mr. Parks stated that as the Chairman of the Assembly Taxation Committee he would like to report that a motion had been made in that committee to adopt a tax proposal that would ensure that the state prepared a balanced budget with the tax plan to be adopted into the appropriations bill.
Mrs. Chowning noted that she had only heard the statement that a motion was made and asked if there had been a second to the motion and whether it had been voted upon in the Taxation Committee.
Mr. Beers asked if there had been any discussion in the Taxation Committee about what specific events or world events were going to require a 40 percent increase in new taxes in 14 months.
Mr. Parks responded that the second year increase was primarily due to the implementation dates and the constraints faced by the Department of Taxation.
Mr. Beers said if he understood correctly, the second year increase was not dictated so much by the fiscal needs of the state, as much as by raising the taxes as quickly as possible.
Mr. Parks commented that the tax plan, as presented, balanced to the approvals that had taken place in the Committee on Ways and Means with regard to the appropriations that had been approved for the biennium.
Mr. Hettrick noted the tax proposal that had been distributed in the Committee on Ways and Means was different from the one that had been distributed in the Taxation Committee. He said the tax proposal he had received in Taxation said $298 million on the front page and the one received in Ways and Means said $321.6 million on the front page. Mr. Hettrick stated he did not believe this was the same tax plan that had been passed in the Taxation Committee.
Mr. Stevens stated the Fiscal Division had been requested to review the tax package and, if possible, review implementation dates. If those implementation dates could, potentially, be moved forward, the Fiscal Division was to do so. There were three dates that the Fiscal Division reviewed and moved. The live entertainment tax implementation date was moved to October 2003. The liquor tax, an existing tax, had its implementation date moved to July 2003. The implementation date for the commercial lease provisions was moved to January 2004. By the estimates of the Fiscal Division those moves represented approximately $23 million. Mr. Stevens stated that amount was the difference between the tax proposal provided in the Taxation Committee and the tax proposal provided in the Ways and Means Committee.
In addition, there were a number of other items this Committee could consider, according to Mr. Stevens. There were some changes in the amount that companies could retain from cigarette, liquor, and other tobacco taxes. If those were reduced from that particular revenue source it would amount to approximately $3.8 million per year. There was also a bill that contained some Secretary of State fees and security fees within the Secretary of State’s Office that would generate approximately $20 million per year. Those were some of the changes that the Fiscal Division had been requested to review since the Taxation Committee meeting.
Mr. Hettrick stated that one of the problems he had was that there was no bill presented in the Taxation Committee and there was no bill presented in the Committee on Ways and Means. The Committee was looking at the paper that had been distributed as if it were a bill that had been passed in Taxation and Mr. Hettrick objected to having something that had been voted on and passed in Taxation being changed by the time it arrived at the Committee on Ways and Means.
Mr. Goldwater stated that the way he understood it, the motion voted upon in the Taxation Committee was an overall biennial package in which some effective dates had been changed.
Mr. Stevens stated it was a combination of Secretary of State fees in a bill that was currently being considered and moving three implementation dates forward in order to implement those taxes somewhat earlier.
Mr. Marvel noted that if the two sheets were compared, the one that had been presented in the Committee on Ways and Means was approximately $23 million more than the one voted on in the Taxation Committee.
Mr. Stevens agreed that the amount was $23 million, and he reiterated that the live entertainment tax was moved to an implementation date of October 2003, and in the estimation of the Fiscal Division the value of that tax was approximately $10 million. The increase in the liquor tax, which was an existing tax, was changed to be implemented in July 2003, and was estimated to raise approximately $3 million in FY2004. The commercial lease tax that was being proposed, with an implementation date of January 2004, was estimated to raise approximately $10 million. Mr. Stevens said if those three items were added together, they would equal $23 million, which was the difference between the $298 million passed in the Taxation Committee and the $321 million currently being considered in the Committee on Ways and Means.
Mr. Marvel commented that it bothered him that an amount had been voted on in the Taxation Committee and another, higher amount, was being presented in the Committee on Ways and Means.
Speaker Perkins stated that, while he appreciated the concerns that had been raised, the action being contemplated in the Committee on Ways and Means was wholly different from the action that had been taken in the Taxation Committee. In order to meet the constitutional requirement of a balanced budget, implementation date adjustments had been made.
Mrs. Gibbons asked if the Committee on Ways and Means was just approving the tax, but not agreeing with the total concept presented.
Chairman Arberry explained that the earlier motion in the Taxation Committee had been supporting a concept; the motion before the Committee on Ways and Means was in support of the tax package.
Mr. Beers requested that staff explain how the $881 million reconciled with the approximately $930 million in the closed budget.
Mr. Stevens stated that in the first year of the biennium, based upon closing actions taken by the Committee on Ways and Means, approximately $354 million would be needed. The earlier action in the Taxation Committee and the changes in implementation dates totaled approximately $321 million. There were additional fees available from the Secretary of State, if they passed the Legislature, of approximately $20 million. There were also some items that were being called passive revenue generators, which basically reduced the amount of money that retailers of companies could retain for collecting various taxes. According to Mr. Stevens, passive revenue generators were estimated to raise from $360 to $365 million, which would be more than the $354 million needed.
In the second year of the biennium $576 million was needed, and the proposal that had been presented to the Committee showed $559.1 million available. Mr. Stevens stated there would be no additional revenues from the movement of the implementation dates in the second year of the biennium, but there would be additional revenues if the proposed Secretary of State fees were passed by the Legislature and, also, from the passive revenue generators. Those items would raise more than the $576 million needed in the second year of the biennium.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND THE TAX PACKAGE AND THE DISTRIBUTIVE SCHOOL ACCOUNT INTO THE APPROPRIATIONS ACT.
ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.
Mr. Beers asked if a tax package had ever been amended into the Appropriations Act in the history of the state of Nevada.
Mr. Stevens responded that it had never happened during his tenure with the Legislature.
Chairman Arberry stated that he had asked the same question and his understanding was that the Legal Division of the Legislative Counsel Bureau had rendered an opinion that amending the tax package and Distributive School Account into the Appropriations Act was proper and legal.
Mr. Hettrick commented that he disagreed with the action, believed it was inappropriate since it was not in writing, and would be voting no.
Assemblyman Andonov noted that any tax increase in the state of Nevada required a two-thirds majority vote of the Assembly. He asked if the tax plan were amended into the budget, would the budget require a two-thirds majority or a simple majority.
Mr. Arberry responded that two-thirds majority would still be required.
Mr. Beers stated that he shared the concerns of Assemblyman Hettrick regarding the tax plan and was going to vote no because he considered it “obscene.”
Speaker Perkins further stated that to some degree he shared Assemblyman Hettrick’s concern that the Committee was voting on a concept without a bill, however, since there were only five days until the scheduled end of the regular legislative session, there had been no opportunity to process the bill. The bill would have to be on the Floor and available for perusal 24 hours before it could be voted upon. No one was attempting to “pull the wool” over anyone’s eyes; the committee process was being expedited in order to get a printed bill in everyone’s hands so they could make the decision whether to vote for or against the measure on the Floor.
Mr. Marvel asked why it was being voted upon today.
Chairman Arberry replied, so the bill could be drafted.
Mrs. Gibbons stated that while she understood what Speaker Perkins had said, there was no way she could vote for the tax increase.
Ms. Leslie stated she was going to support the motion and wanted to point out that the Taxation Committee had spent the past four months discussing each point of the tax plan in great detail. She believed it was a good budget that met the criteria set out at the beginning of the session with a broad, comprehensive tax package that met the needs of a growing Nevada.
Mr. Griffin asked what the total amount for the tax package was.
Mr. Stevens responded that a total of $930 million would have to be raised over the biennium in order to balance the budget closing that had been approved by the Committee on Ways and Means. The additional revenues that were reviewed by the Fiscal Division could generate in excess of $20 to $30 million more than $930 million. That figure might need to be adjusted depending upon what happened with the budget closings and the reconciliation with the Senate.
Mr. Griffin stated that he had been comfortable with the amount that had been voted upon and passed in the Taxation Committee and the amount in the Committee on Ways and Means exceeded that by approximately $75 million. He did not know how he was going to vote on this measure.
Ms. Giunchigliani stated that although the total tax package was $930 million, if the $50 million earmarked to repay the Rainy Day Fund were removed, that figure would be reduced to $880 million. She believed that $880 million was the figure the Taxation Committee had discussed. At some point, the Rainy Day Fund would need to be repaid, but not necessarily at this time. Ms. Giunchigliani said she believed the tax package was reasonable and pointed out that the Taxation Committees in both houses had been dealing with each one of the proposed taxes in every way, shape, or form for four months.
Mr. Hettrick stated that what Ms. Giunchigliani said about the Rainy Day Fund was true, but when the $50 million was removed, it was spending, not tax. The taxes that the Fiscal Division presented to the Committee added up to $940 million and whether the $50 million to repay the Rainy Day Fund was removed or not, it was still $940 million worth of taxes.
Mr. Griffin stated that two hours before he had made the commitment to $857 million in taxes and asked if there was a way to amend the motion to not pay the Rainy Day Fund $50 million at the present time.
Ms. Giunchigliani stated that as the maker of the motion she would be happy to amend it to remove the $50 million repayment to the Rainy Day Fund out of the second year of the biennium.
ASSEMBLYWOMAN GIUNCHIGLIANI AMENDED THE MOTION ON THE FLOOR TO REMOVE $50 MILLION TO REPAY THE RAINY DAY FUND FROM THE SECOND YEAR, AND INCLUDING TECHNICAL ADJUSTMENTS.
Mr. Hettrick commented that the spending of $50 million had been eliminated, but the tax was still $940 million.
Mr. Beers commented that, in his opinion, tying education funding to the Appropriations Act still made it only marginally about education.
THE MOTION CARRIED WITH ASSEMBLYWOMAN GIBBONS, ASSEMBLYMAN BEERS, ASSEMBLYMAN ANDONOV, ASSEMBLYMAN HETTRICK, AND ASSEMBLYMAN MARVEL VOTING NO.
The meeting adjourned at 7:48 p.m.
RESPECTFULLY SUBMITTED:
Anne Bowen
Committee Secretary
APPROVED BY:
Assemblyman Morse Arberry Jr., Chairman
DATE: