MINUTES OF THE meeting
of the
ASSEMBLY Committee on Ways and Means
Seventy-Second Session
May 30, 2003
The Committee on Ways and Meanswas called to order at 8:28 a.m., on Friday, May 30, 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. Josh Griffin
Mr. Lynn Hettrick
Ms. Sheila Leslie
Mr. John Marvel
Ms. Kathy McClain
Mr. David Parks
COMMITTEE MEMBERS ABSENT:
Mr. David Goldwater
Mr. Richard Perkins
GUEST LEGISLATORS PRESENT
Assemblyman John Carpenter, District No. 33
Senator Dennis Nolan, Clark Senatorial District No. 9
Senator Dean A. Rhoads, Northern Nevada Senatorial District
STAFF MEMBERS PRESENT:
Mark Stevens, Assembly Fiscal Analyst
Steve Abba, Principal Deputy Fiscal Analyst
Carol Thomsen, Committee Secretary
Lila Clark, Committee Secretary
Chairman Arberry declared the hearing of May 29, 2003, adjourned and opened the hearing of May 30, 2003. After roll was called, the Chair declared the hearing in recess.
Chairman Arberry called the meeting back to order at 9:11 a.m., and opened the hearing on S.B. 51.
Senate Bill 51 (1st Reprint): Extends date by which certain prerequisites must be satisfied for State Board of Finance to issue general obligation bonds to assist in construction of California Immigrant Trail Interpretive Center in Elko County. (BDR S-674)
Assemblyman John Carpenter, District No. 33, testified in support of S.B. 51 and explained that the bill would extend the date from June 2003 to June 2007 for the issuance of General Obligation Bonds for the state’s share in construction of the California Immigrant Trail Interpretive Center in Elko County. According to Mr. Carpenter, the reason for requesting the extension was because the planning process had taken longer than expected, and $3.5 million in federal funding had been received rather than the anticipated $6 million. Mr. Carpenter noted that Elko was ready to allocate the equivalent in-kind contribution, as the county would be responsible for road and parking lot construction along with the appropriate “dirt work” involved in that process. The City of Elko would issue bonds, and the repayment of those bonds would be allocated from the room tax money that was currently being utilized to retire the bonds on the South Fork Dam project. Mr. Carpenter believed the Interpretive Center would be a very important addition to the Elko area, not only for the economy, but also to preserve the history of the Immigrant Trail. He advised the Committee that more people had traveled over the California Immigrant Trail than any of the other routes from the Midwest into California.
Stephanie Licht, representing Elko County, stated that the county would sincerely appreciate the Committee’s consideration of S.B. 51, which would extend the deadline.
With no further testimony forthcoming regarding S.B. 51, Chairman Arberry declared the hearing closed and opened the hearing on S.B. 214.
Senate Bill 214 (1st Reprint): Revises provisions concerning enforcement of requirement of registration of motor vehicle by new resident of this state. (BDR 43-1058)
Dennis Nolan, Clark Senatorial District No. 9, informed the Committee that S.B. 214 was a committee bill and was an effort to address a significant amount of lost revenue regarding motor vehicle registration. The issue was with persons who failed to register their vehicles when they became new residents of the state, or those residents who simply did not register their vehicles. Senator Nolan stated that the estimated loss was $10 million to $15 million per year in local and state revenue based on the failure to register vehicles.
Senator Nolan pointed out that Assemblywoman McClain had also introduced a bill to address the situation, however, that bill viewed the issue from a different perspective. Over the last four months, explained Senator Nolan, an effort had been underway to “marry” the two bills and create a seamless program to address the revenue loss.
According to Senator Nolan, S.B. 214 represented the enforcement side of the issue, with the Department of Public Safety (DPS) staffing phone lines or utilizing voice mail recordings on local phone lines, which had been publicly advertised predominantly in the urban areas of the state, and would provide an opportunity to the public to report persons who had moved to Nevada, but had not yet registered their motor vehicles. Senator Nolan indicated the bill was called the “fair share” bill because persons who registered their vehicles would pay their fair share, while those who did not register their vehicles would not.
Senator Nolan explained that a caller would be asked to submit very basic information and the Nevada Highway Patrol (NHP) would follow up on that information. The NHP would attempt to ascertain the identity of the individual and whether or not the vehicle in question had been registered in Nevada. Senator Nolan testified that individuals would receive notice informing them that a report had been received regarding their vehicle and if they believed the allegation was untrue they could call and refute the allegation, which would remove them from the registry.
Senator Nolan reported that if individuals who had been reported did not register or call within 30 days, the Highway Patrol would generate a list of reported vehicles for use by local law enforcement, since most of the revenue being lost was that which would be allocated to local entities. He explained that only $33 of every registration was actually returned to the Highway Fund. Senator Nolan advised that it was a violation of the law not to register a vehicle and it was believed that local law enforcement entities should enforce the citations.
According to Senator Nolan, there was a $100,000 fiscal note attached to S.B. 214 and he advised that the amount had been pared down significantly during the review process. The $100,000 would be expended on a media campaign initiated by the Department of Public Safety through local media outlets in support of public service announcements to address the issue.
Assemblywoman Chowning noted that the previously referenced Assembly bill would require that when a person applied for a Nevada driver’s license, their vehicle would be registered at the same time. She asked whether S.B. 214 envisioned that persons would be issued a Nevada driver’s license while their vehicles remained registered out of state. Senator Nolan stated the Senate bill would address that situation, while the Assembly bill would address action by the Department of Motor Vehicles (DMV). The Assembly bill stipulated that when persons applied for a Nevada driver’s license, information about the requirements for vehicle registration would be disseminated to those applicants, who would be solicited to register their vehicles at that time.
Senator Nolan indicated that the information gleaned from the new driver’s license would be entered into a database, which would be monitored, and if a person had not registered his/her vehicle after 20 days, a letter would be sent as a reminder. There would then be a query following the 30-day statutorily required period, and if the person who had relocated from out of state and had been issued a Nevada driver’s license had not registered his/her vehicle, a list would be generated and turned over to the Department of Public Safety. Senator Nolan explained that was where the interaction between the two bills would occur. He pointed out there would be an enforcement side of the issue for those persons who had received a Nevada driver’s license but had not registered their vehicles.
Assemblywoman Chowning stated it appeared that such action would cover the new people moving into Nevada, but in addition, she believed it would help capture the people who were already living in the state who had never registered their vehicles in Nevada. She agreed that the way to capture the persons living in Nevada who had not registered their vehicles would be through a phone call from an informant. Senator Nolan believed that was how the process would work. It was hoped that through the media campaign many good citizens would “step up to the plate” and assist in identifying those persons who were not paying their fair share.
Assemblywoman Giunchigliani asked about local phone numbers. Senator Nolan explained there would be a different number in each area. In an attempt to pare down the fiscal note attached to the bill, it was believed that available local numbers could be utilized for the purpose of reporting rather than “800” numbers. Ms. Giunchigliani noted that the original fiscal note was $537,796 and she asked whether there was a revised fiscal note. Senator Nolan replied that the first bill draft had been forwarded to the Senate Committee on Finance without further notice to the Senate Committee on Transportation, which had requested the bill. He explained that the original bill listed the Department of Motor Vehicles (DMV) as the agency that would initiate the program, which was the wrong department; however, the DMV had established a fiscal note regarding the costs involved in augmenting the program. Senator Nolan emphasized that the program should have been located within the Department of Public Safety (DPS).
Senator Nolan stated that when the fiscal note was discussed in the Senate Committee on Finance it was determined that if the program resulted in the number of calls anticipated, the time would come when the DPS would require additional staff. Senator Nolan remarked that the DPS would initially manage with its current staff and if the demand was quite high, the DPS could approach the Interim Finance Committee (IFC) and demonstrate the demand on its current personnel. At that point in time, a cost benefit analysis could be done and, if the program was generating the anticipated amount of lost revenue, the IFC could approve funding from the Highway Fund to continue the program. Senator Nolan believed there would be a point of diminishing return where the Department’s part-time staff would be overloaded.
Assemblywoman Giunchigliani remarked that the DMV had received funding for a public campaign in its budget closings. She referenced the discussion about utilizing public service announcements (PSAs) and asking employers to post numbers in businesses in order to lessen the cost impact.
Ginny Lewis, Director, Department of Motor Vehicles (DMV), explained that the $100,000 approved in the DMV budget closings was for promotion and advertising the use of alternative sites, such as the Internet, the kiosks, and the emissions stations for DMV services. She emphasized that the DMV had never factored in costs to address out-of-state registrations or educating new residents. Ms. Lewis noted that A.B. 30 would provide for brochures to be handed out to those persons changing their driver’s licenses, which would provide information regarding the laws pertaining to new residents. The brochures would also advise that the information would be transmitted to law enforcement if vehicles were not registered. Ms. Lewis noted that was something the DMV could do without a fiscal impact and which, hopefully, would educate new residents.
Ms. Giunchigliani stated that A.B. 476 had been sent to the Committee on Commerce, however, had not been heard. She believed that bill could also be “married” with the other bills. According to Ms. Giunchigliani, A.B. 476 would ask employers to assist in locating individuals who chose to break the law regarding vehicle registration, or were simply unaware of those laws. Senator Nolan indicated that he would review the bill. Ms. Giunchigliani believed there might be some complementary language in A.B. 476.
Ms. Giunchigliani asked what information would be reported by a person driving down the street who observed a vehicle with out-of-state license plates, such as license plate number and state. Senator Nolan indicated that the intent was not so much to report any vehicle on the street with out-of-state license plates, but rather to report persons who were actually residents but who had not registered their vehicles in Nevada.
Major Robert Wideman, Deputy Chief, Nevada Highway Patrol (NHP), stated the way the process was envisioned was that information would be received from neighbors or coworkers, rather than other motorists who noticed a vehicle with an out-of-state plate. The only piece of information that would be needed for reporting the vehicle would be the license number and the state where the plate had been issued. Major Wideman noted that names or any other additional information would certainly be helpful, however, once the information had been received regarding the license number and state, the NHP would commence with the process of locating records related to the vehicle or persons, which would substantiate that they were, in fact, acting as a resident of Nevada. From that basis, explained Major Wideman, the NHP would move forward and take the appropriate steps.
Assemblywoman Giunchigliani referenced the citation language in the bill and asked whether NHP officers would go to a person’s home to issue a citation. Major Wideman replied that it was not the intent of the NHP to send its troopers to individual homes or businesses to conduct that enforcement activity. The NHP would certainly make that information available to its troopers, and during the course of the business of patrolling highways the troopers could take enforcement action if necessary. However, stated Major Wideman, the provision of S.B. 214 was to refer that information to local law enforcement. Ms. Giunchigliani asked whether local law enforcement agencies could then issue citations. Major Wideman stated it would be up to those agencies to act on that particular issue. Ms. Giunchigliani thought that the law had been changed several years ago to give the NHP the authority to issue citations regarding vehicle registration.
Senator Nolan noted that the anticipated response to S.B. 214 would amount to an enormous task for the NHP, as it was currently understaffed and underfunded. According to Senator Nolan, once it had been established that the person in question was a resident, the Department of Public Safety (DPS) would contact the person via mail or telephone to advise him/her about the laws governing vehicle registration. A person would then be given 30 days from point of notification to register the vehicle, and if that were not done, the information would be forwarded to local law enforcement. Senator Nolan advised that local law enforcement entities were aware of the provisions of the bill, and it was hoped that those entities would act on the information provided by the DPS. Senator Nolan noted that persons could face large fines in the way of back registration, as had been done in the past where persons who owned vehicles such as motor homes had failed to change registration and were fined in amounts up to $25,000. Assemblywoman Giunchigliani advised that, conceptually, she understood the provisions of the bill, however, the downfall would be whether local law enforcement would actually follow up on the information provided.
Chairman Arberry asked whether there was any further testimony to come before the Committee regarding S.B. 214, and there being none, declared the hearing closed. The Chair opened the hearing on S.B. 500.
Senate Bill 500: Revises certain fees paid to Department of Motor Vehicles concerning control of emissions from motor vehicles. (BDR 40-1365)
Ginny Lewis, Director, DMV, explained that S.B. 500 was a recommendation from the committee that had reviewed the DMV budgets, and the bill would allow for a $1 increase on the emission certificate, increasing the cost from $5 to $6. The fee increase was deemed necessary to close out the Pollution Control Account budget for the next biennium. Ms. Lewis explained that the account subsidized other state agency budgets and also carried a statutory mandate to maintain $500,000 in the reserve; increasing the fee by $1 would accommodate those requirements. Chairman Arberry asked whether the request was based on budget closings, and Ms. Lewis replied in the affirmative.
Anthony Bandiero, representing the Nevada Emission Testers’ Council, advised that the Council was in support of the bill and had agreed to work out its concerns over the interim, preferably by regulation. He reiterated that the Council would offer support for S.B. 500.
Chairman Arberry asked whether there was further testimony to come before the Committee regarding S.B. 500, and there being none, declared the hearing closed. The Chair opened the hearing on S.B. 501.
Senate Bill 501: Requires Department of Motor Vehicles to charge and collect certain new fees relating to sale or lease of vehicle. (BDR 43-1360)
Ginny Lewis, Director, DMV, stated S.B. 501 was necessary to close the Department of Motor Vehicles’ (DMV) budget accounts. The DMV had a 22 percent limitation on Highway Fund authorization, and in order to close the DMV budgets under the 22 percent cap, it was necessary to find another revenue source as opposed to increasing the cap on the Highway Fund. Ms. Lewis explained that S.B. 501 would bring in new revenue by charging the dealer’s report of sale an $8.25 fee. The bill would also charge the long-term lessor’s report of lease an $8.25 fee, and for private party vehicle sales, there would be an assessment to the purchaser of $8.25. Ms. Lewis indicated that by instituting those fees, approximately $2.3 million would be generated in the first year of the biennium and $3.1 million in the second year.
Chairman Arberry asked how the amount of $8.25 had been established. Ms. Lewis replied that in statute there was currently an $8.25 fee charged by the DMV on permits, and that amount was used as the basis for the fees in S.B. 501.
Assemblywoman Giunchigliani indicated there was some question about a “yo‑yo” effect when dealers did not process the paperwork promptly, which in turn affected the person purchasing the vehicle. Ms. Lewis explained the yo‑yo effect had to do with the sales tax issue, and the fees referenced in S.B. 501 did not produce that effect. Ms. Giunchigliani believed it was a policy issue, and perhaps further discussion by interested parties should be held before the bill was processed. She realized that the fees were part of the DMV budget closings, but perhaps there was a policy issue that could be “tightened up.”
Ms. Lewis stated, to her recollection, there was a question about the sales tax being retained by the dealer in the event a customer decided not to keep the vehicle and returned it to the dealer. According to Ms. Lewis, the discussion was whether the sales tax should be reimbursed to the customer or whether it should be retained by the State Department of Taxation. Ms. Giunchigliani asked what had been resolved regarding that question. Ms. Lewis stated she would be unable to provide that information. Ms. Giunchigliani asked whether Ms. Lewis could offer a suggestion, as it appeared that if a customer returned a vehicle the sales tax should be reimbursed. Mr. Lewis indicated that she could not comment on that issue.
Assemblywoman Chowning stated she did not have all of the details surrounding the issue, but the problem appeared to be when a person purchased a vehicle and the dealer released the vehicle to that person, and after a period of time the dealer discovered that the person’s credit report was not sufficient and asked that the person return the vehicle. Mrs. Chowning indicated that the situation just described was prohibited in some states, and perhaps Nevada should consider taking that action as well. She noted that the purchaser of the vehicle believed he/she was the owner and when instructed to return the vehicle, the purchaser would lose a significant amount of money because of fees and registration costs that had already been paid. Mrs. Chowning believed that situation should be addressed.
Ms. Lewis stated that if Mrs. Chowning wanted to address that issue through S.B. 501, she would attempt to do so, however, she noted that the yo-yo effect regarding sales tax could be studied over the interim and legislation could be presented to the 2005 session. She emphasized that S.B. 501 was a critical bill to facilitate closure of the DMV budget accounts and she did not believe there was sufficient time to compile a package to address the yo-yo effect. Mrs. Chowning noted that perhaps language could be worked out very quickly to address the problem.
Assemblyman Parks stated he had prepared a bill for introduction during the current session, however, had discovered that most of the provisions were currently in statute. The problem appeared to be that there was very poor enforcement. Mr. Parks noted that persons who received a vehicle and later found that their credit was not approved usually had never received the “green” slip for the vehicle. Consequently, they had not registered the vehicle and had driven it for several weeks with a temporary permit. When a person’s credit failed, there was usually an attempt on the part of the seller to renegotiate a sales contract with much higher interest rates on the loan. Mr. Parks believed that, while there were issues that should be addressed, there were existing regulations that could be enforced.
Chairman Arberry declared the hearing on S.B. 501 closed, as there appeared to be no further testimony, and opened the hearing on S.B. 381.
Senate Bill 381 (1st Reprint): Authorizes pilot program to allow state agencies to retain certain cost savings. (BDR 31-936)
Dean A. Rhoads, Northern Nevada Senatorial District, author of S.B. 381, testified and explained that the bill would authorize a pilot program to allow state agencies to retain certain cost savings. Senator Rhoads stated that he had been working on that idea for approximately ten years, and pointed out that there were many government employees from the city level to the county level, the state, and the federal government who did an excellent job. The bottom line, stated Senator Rhoads, was that there was no incentive to save money, because if an agency saved money and reported that savings to the legislative money committees, the agency’s budget would be cut. Senator Rhoads reported that he had talked to countless people who stated that toward the end of the fiscal year, any money remaining in an agency’s budget would be spent because the agency would not want to have its budget cut.
According to Senator Rhoads, S.B. 381 would provide an incentive to save dollars; one-half of the savings would revert to the Rainy Day Fund, and one‑half would be used by the agency for equipment purchase and training. Senator Rhoads stated the bill would allow the Director of the Budget Division to select 16 agencies for the pilot program, which would allow for an annual review, and would expire on July 1, 2007. Per Senator Rhoads, that amount of time was deemed necessary in order to determine how well the program worked.
Assemblywoman Giunchigliani pointed out that a program had been created several years ago that allowed state employees to make recommendations to their entities regarding cost savings and receive monetary rewards for the best ideas. She noted that there had been a recommendation to eliminate that program because the results had been unsatisfactory. Ms. Giunchigliani asked whether the pilot program proposed by S.B. 381 would parallel that program. Senator Rhoads stated the pilot program would be a totally different concept, and would not affect the reversions built into the budgets. He explained that John P. Comeaux, Director, Department of Administration, supported the concept of the pilot program, along with several state agencies. Ms. Giunchigliani asked whether the program would encompass all state agencies. Senator Rhoads reiterated that 16 agencies would be selected for the pilot project.
Assemblywoman Leslie stated that as she understood the concept, it would not be similar to the program previously discussed by Ms. Giunchigliani where employees were rewarded for ideas to make their agencies more efficient. The pilot program proposed by S.B. 381 would give agencies that reached the end of the fiscal year with money remaining in their budgets the incentive to save that money rather than spend it. Senator Rhoads reiterated that one-half of the savings would revert to the Rainy Day Fund and the remainder would be used by the agency for equipment and/or training. Ms. Leslie advised that the number of agencies that would participate in the pilot program was delineated in Section 12(3) of S.B. 381.
Chairman Arberry declared the hearing on S.B. 381 closed, and informed the Committee that he would accept a motion regarding S.B. 500.
Senate Bill 500: Revises certain fees paid to Department of Motor Vehicles concerning control of emissions from motor vehicles. (BDR 40-1365)
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO DO PASS S.B. 500.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblymen Beers and Goldwater, Speaker Perkins, and Assemblywomen Gibbons and McClain were not present for the vote.)
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Chairman Arberry declared the Committee in recess.
Chairman Arberry called the Committee back to order at 10:31 a.m. and opened the hearing on S.B. 216. He advised the Committee that there was a proposed amendment to the bill, Exhibit C.
Senate Bill 216 (2nd Reprint): Creates interim legislative committee to review Tahoe Regional Planning Compact and oversee Tahoe Regional Planning Agency and Colorado River Commission of Nevada. (BDR 17-175)
Assemblywoman Giunchigliani informed the Committee that the amendment would add the Marlette Lake Water System and all public water authorities, districts, and systems in Nevada for review by the proposed interim committee, for a period not to exceed the year 2007. One of the concerns had been that the interim committee review would not include the entire issue regarding water systems within the state. Ms. Giunchigliani stated that the proposed amendment would accommodate the concerns voiced by all interested parties.
Assemblywoman Chowning asked who would conduct the review. Ms. Giunchigliani explained that S.B. 216 would create a legislative committee to conduct the review, which would include the Marlette Lake Water System along with all other public water authorities.
Assemblyman Marvel asked whether the bill would utilize the proposed committee and review would no longer come before the Legislative Committee on Public Lands. Ms. Giunchigliani replied in the affirmative.
Mrs. Chowning indicated that opposition had been voiced regarding the fact that the process worked quite well through the Legislative Committee on Public Lands, and if there was going to be an ongoing review, it should be conducted by that Committee.
Ms. Giunchigliani noted that the opposition believed that the Colorado River Commission (CRC) should conduct the review, however, the CRC had signed off for that type of review. Mrs. Chowning asked whether the bill would include every single water agency in Nevada, as she believed if a review was undertaken, it should include every entity. Ms. Giunchigliani replied in the affirmative.
Assemblywoman McClain asked whether the review would apply to all future water systems, and Ms. Giunchigliani replied in the affirmative.
Julie Wilcox, Director of Public Services, Southern Nevada Water Authority (SNWA), indicated that the amendment, Exhibit C, had been discussed with Assemblywoman Giunchigliani. The amendment would maintain a statutory committee for Marlette Lake and Lake Tahoe, and add a section to the Legislative Committee on Public Lands, which indicated that it would review the activities and programs of public water systems and districts including the CRC, SNWA, the Truckee Meadows Water Authority (TMWA), et cetera, throughout the state.
Chairman Arberry stated he would accept a motion.
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS S.B. 216.
ASSEMBLYWOMAN McCLAIN SECONDED THE MOTION.
Chairman Arberry explained the motion before the Committee. Assemblywoman Gibbons asked about the Tahoe Regional Planning Authority. Ms. Giunchigliani referenced Section 9 of the bill, which expanded on the duties of the Legislative Committee on Public Lands.
THE MOTION CARRIED. (Assemblymen Goldwater, Griffin, and Hettrick, Speaker Perkins, and Assemblywoman Leslie were not present for the vote.)
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Chairman Arberry opened discussion regarding S.B. 258.
Senate Bill 258 (1st Reprint): Makes appropriations to University of Nevada, Reno, for certain expenses of Pediatric Diabetes and Endocrinology Center at School of Medicine. (BDR S-1204)
Mark Stevens, Assembly Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau (LCB), stated that S.B. 258 proposed a $44,000 supplemental appropriation to the Medical School of the University of Nevada, Reno (UNR).
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS S.B. 258 BY INSERTING A FISCAL NOTE OF $250,000 FOR FAMILY AND CHILD TREATMENT OF SOUTHERN NEVADA (FACT), WHICH WAS A COMPLEMENTARY HIV/AIDS GROUP IN SOUTHERN NEVADA THAT WORKED WITH AID FOR AIDS OF NEVADA (AFAN) FOR DELIVERY OF AIDS PROGRAMS.
Chairman Arberry explained that the University and Community College System of Nevada (UCCSN) had agreed to assist with the administration of the allocation to FACT, which was the reason why the amendment was being proposed.
ASSEMBLYWOMAN McCLAIN SECONDED THE MOTION.
Assemblyman Parks disclosed that he sat as the president of the board of AFAN, which worked very closely with FACT, however, he would vote on the motion as it would have no effect on his position.
THE MOTION CARRIED WITH ASSEMBLYMAN BEERS VOTING NO. (Assemblymen Goldwater, Griffin, and Hettrick, Speaker Perkins, and Assemblywoman Leslie were not present for the vote.)
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Chairman Arberry opened discussion on S.B. 314.
Senate Bill 314 (1st Reprint): Requires Department of Taxation to collect and report data concerning electronic commerce that is conducted in this state. (BDR 32-36)
Mr. Stevens explained that the bill would require the Department of Taxation to investigate and collect data concerning electronic commerce. According to Mr. Stevens, S.B. 314 was built into the Department of Taxation’s budget closings.
ASSEMBLYWOMAN McCLAIN MOVED TO DO PASS S.B. 314.
ASSEMBLYWOMAN CHOWNING SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblymen Goldwater, Griffin, and Hettrick, Speaker Perkins, and Assemblywoman Leslie were not present for the vote.)
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Chairman Arberry opened the hearing on S.B. 352.
Senate Bill 352 (1st Reprint): Designates Nevada Cancer Institute as official cancer institute of State of Nevada. (BDR 40-650)
Mr. Stevens stated S.B. 352 designated the Nevada Cancer Institute as the official cancer institute of the state of Nevada. He explained that the appropriation had been amended out of the bill.
ASSEMBLYMAN MARVEL MOVED TO DO PASS S.B. 352.
ASSEMBLYWOMAN GIUNCHIGLIANI SECONDED THE MOTION.
THE MOTION CARRIED. (Assemblymen Goldwater, Griffin, and Hettrick, Speaker Perkins, and Assemblywoman Leslie were not present for the vote.)
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Chairman Arberry opened the hearing on A.B. 460.
Assembly Bill 460 (1st Reprint): Makes various changes regarding manufacture, sale and use of tobacco products. (BDR 15-1283)
Assemblywoman Giunchigliani questioned Section 80 of the bill, and noted there had been testimony in opposition to inclusion of manufacturers that paid into the escrow account. Section 84 read, “Section 81 of this act becomes effective on the date a court of competent jurisdiction enters a judgment determining that the amendatory provisions in Section 80 of this act are unconstitutional.” Ms. Giunchigliani asked whether it was anticipated that Section 80 was unconstitutional, however, would make manufacturers pay until that declaration was made.
Mr. Stevens explained that he was unsure of the mechanical issues in A.B. 460 regarding how to secure the money needed for regulation of the legislation by the Department of Taxation and the Attorney General’s Office. Under the proposed amendments the bill would generate a substantial amount of money, however, the Committee should ensure that the money could be accessed by the entities that would be required to regulate the legislation. Mr. Stevens reiterated that he had not had time to work out the mechanics of A.B. 460.
Alfredo Alonso of Lionel, Sawyer and Collins, representing R.J. Reynolds, stated that most of A.B. 460 encompassed the model act that was being passed throughout the country, and included the language that had been devised by the National Attorneys General. The purpose of the bill was to make certain that the non-participating manufacturers, who were not paying into the Master Settlement Agreement, were, in fact, paying the same amount of money into the escrow account as was being paid by those manufacturers who were part of the Master Settlement Agreement. Mr. Alonso indicated that was the logic behind A.B. 460, however, he could not answer the constitutional issue. With respect to the funding mechanism, Mr. Alonso stated that the impact fee would be paid into the Master Settlement Agreement to ensure that the provisions were enforced. Mr. Alonso stated that he believed it was constitutional and would work.
Assemblyman Marvel asked who was not paying based on the Master Settlement Agreement at the present time. Mr. Alonso explained that the signatories to the Master Settlement Agreement paid into the account and the non-participating manufacturers did not pay into the account, but rather paid into an escrow account, and the state never saw that money. Over the years, it had been discovered that there were non-participating manufacturers that were paying nothing. Mr. Alonso reported those manufacturers came into the state, sold their cigarettes very cheaply and then left the state, which meant that the state received no benefit whatsoever from the sales, however, the health issues remained.
Assemblyman Marvel asked how much money was in question. Mr. Alonso stated it was millions of dollars, which was why the National Attorneys General had decided to address the issue and ensure there was a “level playing field” across-the-board for anyone who sold tobacco. Assemblyman Marvel asked how those non-participating manufacturers were identified. Mr. Alonso stated that the bill would provide stronger regulations with respect to making certain that those manufacturers were registered and were reporting to the Attorney General’s (AG’s) Office, which would have additional reporting requirements, including the tax on cigarettes.
Assemblyman Marvel asked whether additional staff would be needed by the AG’s Office. Mr. Alonso stated that was his understanding, because there was only one person addressing enforcement at the current time, and the fiscal note attached to the bill would obviously be used to add additional investigators and another attorney to work on the issue. Mr. Alonso indicated that the impact fee amendment would pay the fiscal note. In essence, stated Mr. Alonso, the state stood to capture millions of dollars.
Mr. Stevens explained that the fiscal note was $300,000 to $400,000 each for the Department of Taxation and the AG’s Office, however, he was unsure whether the mechanics of the bill would work properly to allocate that money.
Assemblywoman Chowning requested clarification regarding Section 80 because, while there was no dispute that every entity should pay, it was her understanding that the requirements of the bill would practically “break” some companies, who would be required to pay between $10 million to $30 million. She believed that was an astronomical escalation, which should be clarified prior to the Committee voting on A.B. 460. Mrs. Chowning opined that the true goal of the bill was to ensure that all companies paid, however, she stated she would not vote for a bill that would create such a drastic increase for some companies that it would put them out of business.
Mr. Alonso indicated that was what some non-participating manufacturers would like the Legislature to believe. Currently, he explained, the situation was that those manufacturers were paying up to $1.50 less per pack into the escrow account, and that allowed very inexpensive cigarettes to be put on the market. According to Mr. Alonso, the issue was that children tended to purchase the cheaper cigarettes, as they were readily available and more easily accessible. He emphasized that the goal of Section 80 of the bill was to ensure that all manufacturers paid the same amount, whether it was into the escrow account or the Master Settlement Agreement. Mr. Alonso explained that the cost to manufacture cigarettes was a different issue, because those manufacturers were not being taxed, and the advantage over other manufacturers was $1 to $1.50 less per pack, which was a problem.
Samuel McMullen, Lobbyist, informed the Committee that the amount under discussion was the amount negotiated on a per-pack basis with those participating manufacturers and the AG’s Office. That amount should be standard across all manufacturers and the language of A.B. 460 indicated that non-participating manufacturers would pay that amount into the escrow fund, which would make the process the same for all manufacturers and “true up” the payments based on sales. Mr. McMullen indicated that the argument voiced by non-participating manufacturers was based on the amount stipulated when the original model law was passed, which would be less for those manufacturers. Mr. McMullen opined that the state’s point for the escrow fund was that it should be at parity across all manufacturers.
Assemblywoman McClain noted that A.B. 460 also presented a problem in the section which required Internet sellers to divulge names and addresses of people who purchased cigarettes. Ms. McClain stated it was inherently unfair to target Internet cigarette sales in the first place, as other products were not being targeted. Ms. McClain indicated that with the problem of identity theft that was occurring because of Internet sales, she believed the bill would severely infringe on an individual’s privacy.
Michael Sullivan, representing the Council of Independent Tobacco Manufacturers of America, informed the Committee that members of the Council paid into the escrow account and were not part of the Master Settlement Agreement. He further indicated members of the Council did not conduct business in every state in the nation but rather were regional, which was the reason those companies were not part of the Master Settlement Agreement. Mr. Sullivan advised that was the reason non-participating manufacturers did not pay as much, however, they did pay into the escrow account. According to Mr. Sullivan, if there were manufacturers who did not pay into either the agreement or the escrow account, those companies should be directed to pay. A.B. 460, stated Mr. Sullivan, would “hit” the companies that paid regularly into the escrow account and would bankrupt them; he opined that it was a very bad piece of legislation. Mr. Sullivan remarked that it was obviously the “big guys” trying to force the others out of the market. He did not believe it was fair to ask the smaller companies to pay the same amount as those companies that dealt across the nation and in other countries.
Chairman Arberry advised that it was not the intent of the Committee to open the bill for substantial discussion. He closed the hearing on A.B. 460, and declared the Committee in recess.
Due to time constraints the meeting of May 30, 2003, was not reconvened, and was adjourned by Chairman Arberry on May 31, 2003, at 3:49 p.m.
RESPECTFULLY SUBMITTED:
Carol Thomsen
Committee Secretary
APPROVED BY:
Assemblyman Morse Arberry Jr., Chairman
DATE: