MINUTES OF THE meeting

of the

Assembly Committee on Ways and Means

AND THE

Senate Committee on Finance

JOINT Subcommittee on General Government

 

Seventy-Second Session

February 11, 2003

 

 

The Assembly Committee on Ways and Means and the Senate Committee on Finance, Joint Subcommittee on General Government, was called to order at 8:04 a.m., on Tuesday, February 11, 2003.  Chairwoman Vonne S. Chowning presided in Room 2134 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.

 

Assembly COMMITTEE MEMBERS PRESENT:

Mrs. Vonne Chowning, Chairwoman

Mr. Bob Beers

Mr. Josh Griffin

Ms. Kathy McClain

Mr. David Parks

 

Senate COMMITTEE MEMBERS PRESENT:

 

Senator Bob Coffin

Senator Dean A. Rhoads

Senator Sandra Tiffany

 

STAFF MEMBERS PRESENT:

 

Steve Abba, Principal Deputy Fiscal Analyst

Bob Guernsey, Principal Deputy Fiscal Analyst

Joyce Garrett, Program Analyst

Anne Bowen, Committee Secretary

Carol Thomsen, Committee Secretary

 

B&I,  HOUSING DIVISION –  BUDGET ACCOUNT 3841,  BUDGET PAGE B&I-89

 

Chairwoman Chowning welcomed everyone back for the first Joint Subcommittee meeting and commented that the state had the best employees in the world.

 

Charles Horsey, III, Administrator, Housing Division, identified himself for the record and introduced Lon DeWeese, Chief Financial Officer, and Arthur C. Thurner, Chief of Federal Programs.  Mr. Horsey thanked Chairwoman Chowning for being allowed to go out of order. 

 

Mr. Horsey stated that the Housing Division’s budget for the upcoming biennium represented their continued role as the state’s preeminent leader for affordable housing.  Approximately 38,000 Nevada families lived in a house or apartment financed by the Housing Division program.  The budget also represented a new role, that of financing for special groups.  For a number of years the Division had been acknowledged as having done a good job meeting affordable housing needs of the general, low-to-moderate income population, but had barely scratched the surface of the special needs groups.  Budget Account 3841 was the primary operating budget and was structured to reflect the subtle shift in priorities to more specialized housing. 

 

Mr. Horsey pointed out that the major budgetary impact for specialty housing programs was shown in decision unit E-151.  This represented the Division’s goal to have a $30 million bond issue for groups such as teachers or nurses for the rural areas, people with Alzheimer’s, and many other special needs groups.  The Division would be having a bill introduced that would give them expanded lending authority because current statutes, designed in 1975, were earmarked for first-time homebuyers, as well as low-to-moderate income families.  In putting together programs for special groups, it was discovered that not all were first-time homebuyers, nor were all in the low-to-moderate income bracket. 

 

Mr. Horsey directed the Subcommittee’s attention to decision unit M-597 and decision unit E-150, which were the direct result of Congress increasing the amount of tax credits to be allocated in the upcoming year.  The Tax Credit Program had been a huge success.  Credits were allocated on a pro rata basis across the state.  In the rural areas there might not have been any multifamily construction, if it had not been for the Tax Credit Program.  Mr. Horsey stated it was a very worthwhile program, and since Congress had seen fit to increase the amount of tax credits at the Division’s disposal, there would be more tax credits to allocate.  It was the consensus of the industry that the President’s plan to eliminate taxes on dividends would have a devastating effect on demand for tax credits.  The budget contained replacement funds for a telephone system and two laptop computers, both in decision unit E-710.  A color printer to minimize the cost of outside printing services was requested in decision unit 720.  Overall, the Division continued to exceed their performance indicators.  While there had been a substantial decline in the number of single-family mortgages financed, there was an increase in multifamily mortgages.  Multifamily in this context meant apartment complexes as well as specialized housing groups. 

 

Mr. Horsey emphasized that not included in the Division’s performance indicators, was the fact that more stringent energy conservation measures were incorporated in financing.  The Weatherization Program dealt with funds that came from different sources, but 1,700 to 1,800 units had been financed in the past two years, with increased energy conservation measures required.  Mr. Horsey stated that he believed that was good public policy. 

 

Mr. Horsey commented that some projects, for instance the one going before the State Board of Finance today, had large amounts spent on energy conservation.  He inquired of Lon DeWeese, Chief Financial Officer, as to the actual dollar amount.  Mr. DeWeese responded that $4.7 million was being earmarked for energy and weatherization on a $30 million project. 

 

Mr. Horsey stated the presentation had been an overview of the base budget for the Division and welcomed questions from the Subcommittee. 

 

Chairwoman Chowning disclosed that she was a state real estate licensee.  She stated it had been many years since she had been able to sell a home using the state bonding financing.  Part of that was disappointing to her, because the lower interest rates helped families buy more expensive houses, but because of escalating home prices it was becoming more difficult to find a house under $132,000.  Chairwoman Chowning commented that, overall, with lower interest rates and more federal programs available, there were more opportunities for people to become homeowners instead of renters. 

 

Chairwoman Chowning inquired about decision unit E-150 and decision unit M‑597.  She asked Mr. Horsey the estimated number of compliance audits represented in decision unit M-597. 

 

Chairwoman Chowning stated that something of great concern had been whether the Division would be able to meet the recommendations contained in the Audit Highlights issued on May 8, 2002. 

 

Mr. Horsey stated that Arthur C. Thurner, Chief of Federal Programs, had been placed in charge of audit compliance efforts statewide.  Mr. Horsey further stated that in the audit Chairwoman Chowning had referenced, the Division had been justly criticized for monitoring compliance.  Procedures had been different in southern Nevada and northern Nevada.  The entire operation had been restructured and Mr. Thurner had been placed in charge of the entire state.  The structuring of bond issues and bringing the projects online had long been the more appealing operations.  Monitoring compliance had been more labor intensive, not a revenue producer, and, therefore, had been deficient.  Mr. Horsey reiterated that since Mr. Thurner had been placed in charge of monitoring compliance great strides had been made, and the Division would be able to remedy the audit findings. 

 

Chairwoman Chowning noted that the six-month audit report had been due February 3, 2003, and presumed it had been issued and would provide a follow-up for the Subcommittee.

 

Arthur C. Thurner, Chief of Federal Programs, stated the Division had submitted audit advancements to the Department of Administration in early January 2003.  Mr. Thurner explained that the Division had taken an underutilized computer system and brought it to 80 to 90 percent capacity, and they were in the last phase of updating to provide a fully automated system.  In the northern half of the state the audit compliance person had input approximately 65 projects and the target date for completion was March 31, 2003.

 

Chairwoman Chowning asked what the approximate number was in decision unit M-597.

 

Mr. Thurner responded that the Division had approximately 25,000 units between bond and tax credits.  That number would change as new projects were implemented and grantees received the 8609 form, which was the tax credit form. 

 

Chairwoman Chowning asked the number of projects that would be estimated to be in compliance.  Mr. Thurner responded 95 percent. 

 

Chairwoman Chowning inquired whether that figure would be 95 percent of 25,000.  Mr. Thurner responded that he had given her a units figure; actual projects numbered approximately 195.  All of those projects had been financed, but not all had come online. 

 

Senator Tiffany asked of the units, or projects, how many were rural and how many were in the south.  Mr. Thurner responded that roughly 65 to 70 percent would be in southern Nevada, probably 16 percent in the Reno area, and the remainder would be rural.  Senator Tiffany asked if that had changed from three years ago.  Mr. Thurner answered, yes, and noted that Las Vegas would be increasing because the majority of allocation in tax credits and the bonding authority went to the Las Vegas area.

 

Senator Tiffany asked how many of the people working in the Compliance Section actually went into the field.  Mr. Thurner responded that everyone, including himself, went into the field.  Senator Tiffany asked how often that happened.  Mr. Thurner replied that the compliance auditors were in the field roughly 80 to 85 percent of their time.  The supervisor in the south was on-site approximately 60 to 70 percent of the time.  Everyone involved in tax credit and bond compliance went into the field. 

 

Senator Tiffany asked if compliance auditors used cars from State Motor Pool.

 

Mr. Thurner replied that for the most part they used personal cars, however, occasionally they used motor pool cars, and in the rural areas in the north they definitely used motor pool cars.  Senator Tiffany asked if the compliance auditors could use motor pool cars when the projects received federal funding.  Mr. Thurner responded that, technically, tax credit projects were not federal funds, they were private investor dollars, so that would not come into play. 

 

Assemblywoman McClain requested an explanation of what those funds actually financed and what was needed to qualify for various programs.

 

Mr. Horsey responded that it depended upon the actual program.  The Tax Credit Program was developed in 1986 and it produced the equity that a “bricks and mortar” project needed.  In 2003, the Division would have approximately $3 million to allocate.  The first thing to be done would be to multiply it times ten, because it was not an interest deduction like a mortgage expense, it was a bottom-line deduction for ten consecutive years.  Therefore, the $3 million to be allocated statewide, was $30 million worth of equity.  Mr. Horsey continued that if a developer submitted an application based upon the qualified allocation plan for that particular year, and the Division allocated that project $500,000, that would equal $5 million.  There was a market for this and people bought and sold tax credits just like they bought and sold gold contracts.  When the program was first initiated, people did not realize how valuable it was, so people were only willing to pay 55 cents on the dollar.  Today, the market is approximately 80 cents on the dollar.  If a developer went on the open market for a tax credit syndicator taking the $500,000 award, which was $5 million, and sold it for 80 cents on the dollar, he would be able to raise $4 million, which would be the equity needed for a “bricks and mortar” project. 

 

Mr. Horsey stated that Congress determined income limits for a single-family home loan, but generally, the Division could lend up to 80 percent of median income.  For the Tax Credit Program, the Division had more influence on the income levels that could receive funding.  They have ranged from 30 percent of median income to 60 percent.  For the bonding program, 60 percent of median income seemed to be the benchmark.  Mr. Horsey reiterated that it depended upon the program.

 

Ms. McClain requested an example of how the Division would determine what units would be rented at what rates in a senior housing project.  Mr. Horsey stated that the first thing a developer would do is approach the local government where the project would be domiciled because the developer must receive bonding authority.  All states were limited as to how many tax-exempt bonds could be issued in any year.  Local governments received half of that bonding authority and the rest went to the Business and Industry Director’s Office.  The developer received half of their bonding authority from the local government.  After receiving bonding authority from the local government, they would approach the Housing Division.  Although the federal requirement was that 40 percent of a project had to be set aside for low- to moderate-income families, the demand had been so great that most projects had been set aside 100 percent for low- to moderate-income families.  Income limits and rent levels were determined by the  United States Department of Housing and Development (HUD). 

 

Mr. DeWeese replied to Assemblywoman McClain’s question regarding rent levels; they were determined by federal formula.  Sixty percent of median income would be multiplied by family size, or it would be determined by the room arrangement.  Most senior projects were studio or one-bedroom apartments. 

 

Ms. McClain asked how many projects were currently being worked on and how successful had the program been for low-income teachers and nurses.

 

Mr. Horsey responded to the last part of the question.  He stated the program for teachers and nurses had not been successful, and that was the reason a BDR would be introduced to amend the statutes.  The statutes went back to 1975 and were geared toward first-time homebuyers and low- to moderate-income people.  Groups such as teachers and rural nurses were not necessarily low- to moderate-income.  Mr. Horsey stated the Division needed expanded authority to lend to those groups, as they had not been able to do so.

 

Chairwoman Chowning inquired as to what had happened to the $600,000 approved last legislative session for loans for teachers and rural nurses and whether that program would be continued in the coming biennium.

 

Mr. DeWeese replied that the legislative session had approved budgetary authority for the issuance of $600,000 in bonds, however, the bonds were not issued, and the money had not been expended.  Mr. DeWeese explained that because of the income limitations within the statutes, only first-time homebuyers could be addressed, which was very problematic for the rural areas where experienced nurses were needed.  Those nurses could have had an ownership interest in a home within the previous three years, which would exclude them from the use of a bond issue.  As a consequence, when this problem surfaced for special education teachers, science teachers, and math teachers, only first-year teachers straight out of school could take advantage of the program.  This did not address the problem either for teachers or nurses.  The Division was working with bond counsel and with the Legislature to receive bonding and budgetary authority to continue with the program to aid those specific groups. 

 

Mr. Horsey commented that decision unit E-151 showed the cost contemplated for a bond issue for those groups. 

 

Senator Rhoads commented that rural Nevada was in an economic decline and wondered if the Division had any projects in those areas.

 

Mr. Horsey stated that the Tax Credit Program had been a lifesaver for the rural areas.  A project had been funded every year in the rural areas.

 

Mr. Thurner stated that in 2002, a major senior project was completed in Pahrump, Nevada, as well as two major rehabilitation projects in Elko County.  A project in Jackpot, Nevada, had come online, and another rehabilitation project in Winnemucca would be implemented in 2003. 

 

Chairwoman Chowning stated that it was her understanding that the funds in decision unit E-150 were being increased from $2.5 million to $3.5 million.  She inquired whether it was the Division’s intention, along with the Department of Corrections, to use those funds for a project to provide low-income housing for parolees, and whether the prohibition against parolees associating with each other would be an impediment.  She further inquired about the nonprofit aspect and what would happen if the nonprofit did not have a strong commitment. 

 

Mr. Horsey responded that there were two provisions in the Tax Credit Allocation Plan that came to bear.  First, it was decided, on a pro rata basis, how many tax credits were to be distributed to every area.  It had proven to be very beneficial, as the Division had never wanted to be in the political position of having to decide between a Las Vegas project and an Elko project.  They did not compete against each other because a rural project competed against a rural project and a Las Vegas project competed against a Las Vegas project.  The Division had approximately $3 million in tax credits to allocate in 2003, but the most any project could receive would be $750,000 in tax credits.  This was the first year that the limit had been that high.  Historically, the limit had been $500,000 for any one project.  Mr. Horsey stated that while the Division hoped to be successful with the prison parolee project, it would be only one of four or five projects financed in any one year. 

 

Second, applications were due by April 2003, so the Division would not know for sure until then which nonprofit entity would be competing for the funds.  The Division was very hopeful that the prison parolee project would be successful, because there was no question as to need or merit.  That need had been clearly identified by the Department of Corrections and the Division’s independent study.  Mr. Horsey explained that the award of tax credits was a business decision, and once the tax credits were awarded to the nonprofit entity, they would have to find someone willing to purchase the tax credits.  The amount of tax credits that the nonprofit would apply for would be $500,000, which would raise $4 million in equity.  Before anyone would put up $4 million for a project they would decide on the dollar amount of the cash flows and the safety of the cash flows.  Mr. Horsey noted that people paroled from prison had little money and their prospects for high-paying jobs were not good.  The problem that the nonprofit entity would have would be finding someone to pay 80 cents on the dollar, because cash flows were much more tenuous for the parolee project than they would be for a senior citizen project. 

 

Chairwoman Chowning asked if Nevada was the first state in the nation to consider the prison parolee project.  Mr. Horsey stated that he had not seen anything that indicated that other states had done such a project with tax credits.  However, it could have been done in other states with other programs.  Mr. Horsey commented that there were tax credit syndicators that were more socially responsive, and it was the hope that one of those entities would have an appetite for purchasing those tax credits.  The Division had awarded tax credits to projects in the past, and they had not been able to commence construction.  If construction could not be started within 270 days, the tax credits reverted to the Division and another round of funding began. 

 

Senator Tiffany commented that she loved this project and found it very innovative.  She asked if the land and the building could be purchased with the parolee project, or if it was just the building.  Mr. Horsey stated in Budget Account 3838 a public purpose commitment had been made to purchase the land for the parolee project and an assisted living project for Clark County. 

 

Senator Tiffany asked Mr. Horsey if he had said special legislation would be needed to broaden the types of people to be served.  Mr. Horsey stated that was correct, under the bonding program.  Senator Tiffany asked if it had been submitted.  Mr. Horsey responded that the BDR would be introduced today or tomorrow.

 

Ms. McClain asked if any tax credits had reverted back to the Division because zoning could not be passed.  Mr. Thurner answered that the Division had a number of situations in which tax credits had been reserved and for various reasons the credits were returned.  Mr. Horsey stated that if the Division allocated tax credits to eight projects, for example, approximately every other year a project would have tax credits that would revert back, because they could not proceed due to reasons such as zoning.  Ms. McClain commented that over the past few months she had heard of a couple of projects where the neighborhoods did not want the projects in their area.  Mr. Horsey stated that the not in my backyard (NIMBY) issue was the single largest impediment for projects.  He opined that it was unfair, because affordable housing projects produced today were as nice, physically and aesthetically, as you could find but the old connotation survived. 

 

Ms. McClain inquired if the Division was concerned about the proposal to stop taxing dividends, and if that happened did they have an alternative plan.  Mr. Horsey stated that at the last bond closing in San Francisco, three weeks ago, it had been brought to his attention that the President had a plan for dividend exclusion from income tax.  Tax credit syndicators had brought it to his attention and the Division had joined the National Council of State Housing Agencies to lobby for an amendment should the President’s bill pass.  The Division would be in serious difficulty without the tax credit program.  Mr. DeWeese informed Ms. McClain that the alternative was a small bond issue pool that would address the smaller projects should tax credits evaporate. 

 

Assemblyman Griffin noted that the median price of a house in Clark County was increasing by $1,000 to $1,500 every six months and every year 2,000 to 3,000 families could not afford to buy a home.  He further noted that if it were not for the budget crisis, the health care crisis, the education crisis, and the drug crisis, we would have a real housing crisis on our hands.  He asked if there were any long-term predictions available.  Mr. Horsey stated that the Division had experienced this on two other occasions, this was nothing new, and was an economic cycle issue.  Those projects succeeded only if the private sector produced something that the Division could finance.  The Division’s research had shown that after 18 months to 2 years, the market started to adjust and developers saw that there was money to be made in affordable housing. 

 

Chairwoman Chowning thanked Mr. Griffin for his comments and noted that if there were no affordable housing, every other crisis that was on the rise would be affected even more.  She inquired about decision unit E-710, and wondered if State Printing services were available in Las Vegas so that the Division would not have to purchase their own “high-end” laser jet color printer. 

Mr. Horsey explained that like many state agencies, the Division produced several publications, including a color calendar for the children’s art contest, and brochures in bilingual form.  He said he did not know the cost differential between in-house printing and sending it out, but would find out and inform future joint subcommittees. 

 

Chairwoman Chowning requested that the Division supply that information and commented that she was certain the State Printing office could print all publications.  She further complimented the Division on their children’s art calendar.  Mr. Horsey said the Division had never expected the calendar to be the enormous success it had become.  There had been 1,600 entries for the 2003 calendar, and it may have been the best public relations tool the Division had ever used. 

 

B&I,  LOW INCOME HOUSING TRUST FUND –  BUDGET ACCOUNT 3838,  BUDGET PAGE B&I-96

 

Mr. Horsey stated the Low Income Housing Trust Fund was created by the Legislature in 1991, but a funding source was not developed until 1993.  The Trust Fund was created because Congress required that all states, if they wanted to receive federal home funds, must have a matching fund.  The Low Income Housing Trust Fund serves as that matching fund requirement in Nevada.  In 2003, $12 million in home funds will come into all of the various jurisdictions and a matching fund requirement was needed.  Historically, 90 percent of the Trust Fund had been allocated to local governments on a pro rata basis with 10 percent retained by the Housing Division.  On average, between $3 and $4 million comes into the Trust Fund each year.  Local governments used the Low Income Housing Trust Fund for a variety of purposes:

 

·        Down Payment Assistance

·        Rehab Projects

·        Multifamily New Construction

·        Tenant Based Rental Assistance

·        Emergency Rental and Utility Assistance

 

The Division’s subtle shift in priorities to more specialized housing appeared in this budget in decision unit E-400.  Funding had been reserved for two special projects, the prison parolee project and the assisted living project for Clark County.  Mr. Horsey explained that the assisted living project had been placed in this decision unit because Harrah’s Corporation had made a pledge of $800,000 toward that project if the state pledged the same amount.  The Trust Fund represented the matching funds.  The Division utilized the Trust Fund for the same things that local governments did, such as, down payment assistance, rehab projects, and new construction.  In addition, there was a very bad flood in 1997 in northern Nevada, and the Federal Emergency Management Agency (FEMA) had required matching funds before providing FEMA funds. 

 

Chairwoman Chowning asked if this was a positive experience for local governments and explained that she was primarily talking about the assisted living project for Clark County.  Mr. Horsey answered that by statute approximately 90 percent of the Trust Fund had to be disbursed to local governments for their use.  The Trust Fund was the tool that was used for the lower-income projects.  The Trust Fund represented state money, whereas the home funds represented federal money.  Mr. Horsey stated that the red tape required to use Trust Fund money, paled in comparison to the red tape required to use federal home monies. 

 

Chairwoman Chowning asked if an anticipated completion date had been set for the Department of Corrections’ parolee project.  Mr. Horsey replied that since no applications had been received yet, he could not tell how far along the project was. 

 

Chairwoman Chowning asked why there was a projected $10 million reserve when that money could be used to help people.  Mr. Horsey responded that the Trust Fund had approximately $8 million in it and those funds had been allocated, but there was a time lag.  For example, $2 or $3 million in trust funds were received, and the Division notified the local governments that those trust funds were available.  The federal government allowed two to three years before home funds had to be spent; therefore, when local governments knew the funds were going to become available, it might be two to three years before the designated project funds were actually spent. 

 

Chairwoman Chowning referred to the Real Property Transfer Tax and inquired why it was projected to remain flat and not increase.  Mr. Horsey replied that the Trust Fund had been created in 1991 but no funding source was identified and that came along in 1993 with an increase in the Real Property Transfer Tax.

The Division had used a weighted average over the past two or three years to arrive at an amount.  Chairwoman Chowning asked if it was a mistake that the Real Property Transfer Tax had been projected to remain flat and reminded Mr. Horsey that there had been an increase in the tax in the 1999 Legislative Session as well.  She requested that the Division provide those figures to staff.

 

B&I,  WEATHERIZATION –  BUDGET ACCOUNT 4865,  BUDGET PAGE B&I-100

Chairwoman Chowning stated that S.B. 4 proposed to eliminate the Universal Energy Charge (UEC) and requested that Mr. Thurner comment on that in addition to presenting the Weatherization budget.

 

Mr. Thurner stated he would appreciate the opportunity to comment and introduced Craig Davis, Weatherization Manager, Housing Division.  Mr. Thurner commented that he was not sure which budget had been submitted to the Subcommittee, but he would explain the budget for the remainder of FY2003 and FY2004-2005.  The budget submitted represented the first full biennium subsequent to A.B. 661 and the changes that resulted from A.B. 661.  The FY2003 Weatherization budget was the first budget fully funded with increased Department of Energy (DOE) funds and Fund for Energy Assistance and Conservation (FEAC) or Universal Energy Charge (UEC) funds.  The additional funding had allowed the Division to increase the level of subgrantees delivering services to targeted populations from two to four subgrantees.  The new subgrantees had expanded service areas in Henderson and rural Nevada.  The addition of a rural specific subgrantee would allow for improved and expanded weatherization for rural Nevadans. 

 

Mr. Thurner reviewed the production levels for the past two fiscal year cycles.  In FY2001, with strictly DOE funding, 191 units were weatherized.  In FY2002, the first time some of the FEAC funding was received, that number was increased to 379 units.  The projected FY2003 figures, with the first full year of FEAC funding, were 1,403 units of which 560 units had already been completed.  Mr. Thurner stated the Division supported The Executive Budget.  Now that full funding production levels could be expected, anticipated production goals would require them to appear before the Interim Finance Committee to expend any reserve dollars in the next two fiscal years.  The Division would be submitting new numbers to the Budget Office to supplement the Governor’s submission.  With the Budget Office concurrence, the Division projected goals of 1,364 units in FY2004 and 1,327 units in FY2005. 

 

Mr. Thurner informed the Subcommittee about program highlights of the past year, specifically training for subgrantees.  The Division had trained over 20 individuals for basic weatherization skills and associated safety and health skills.  In the technology area, the Division had automated subgrantee databases, which meant the production of each subgrantee could be sent to the Housing Division by the tenth day of the following month.  This enabled a detailed energy savings analysis to be completed for each household that received weatherized units.  A link with the Welfare Division had been completed to identify those households that were high-energy users to subgrantees for weatherization services.  Mr. Thurner stated that within three days the program provided 2,215 potential recipients for weatherization. 

 

Chairwoman Chowning complimented the Division on the speed with which they were able to notify potential recipients and further informed the Subcommittee that the performance indicators in The Executive Budget were not correct.  She asked Mr. Thurner when corrected numbers would be given to the Budget Department.  Mr. Thurner stated he would talk to Mr. DeWeese and attempt to provide those numbers to the Division’s Budget Analyst as soon as possible, as they were already developed. 

 

Ms. McClain asked who the subgrantees were and whether weatherization was performed on rental units.  Mr. Thurner stated that currently there were four subgrantees; CSA, Inc. in Reno, Help of Southern Nevada in Las Vegas, Neighborhood Services in Henderson, and Rural Nevada Development Corporation (RNDC) in Ely.  The subgrantees each had a different delivery system, depending on the area, with some providing all services and others subcontracting some of the services.  Mr. Thurner replied to the second part of the question by stating that weatherization was done on three types of units:

 

• Single family units
• Mobile homes
• Apartment units with two to four bedrooms

 

Chairwoman Chowning asked if the single family home was rented and not owned by the occupant, would the Division still complete weatherization on the unit.  Mr. Davis stated that the Division had determined that approximately     70 percent of low-income people were renters and to deny them services would seem contradictory to assisting low-income people.  While capital-intensive measures were not provided to renter-occupied dwellings, as that was the responsibility of the owner, health and safety inspections were done.

 

Senator Rhoads asked whether the UEC helped pay low-income utility bills.  Mr. Thurner responded that UEC did pay those utility bills, however, the Housing Division did not administer that part of the program, as the Welfare Division handled that function.

 

Senator Rhoads asked if there were more funds collected in another budget, aside from the $2 million in Budget Account 4865.  Mr. Thurner responded that Budget Account 4865 would show a combination of DOE and UEC/FEAC funds.  Senator Rhoads asked if the $2.2 million for FY2001-02 was only from the UEC collection.  Mr. Davis responded that was correct.  Senator Rhoads asked what would happen to the budget if the Universal Energy Charge (UEC) were eliminated.  Mr. Davis stated the Division was different from the average contractor in that the subgrantees required specialized training because of the type of work that was done.  Beyond the households that would not receive weatherization if those funds were eliminated, a great deal of money had been invested in training and equipment.  The Division had been able to partner with Sierra Pacific Power and Nevada Power because of UEC/FEAC funds. 

 

Senator Rhoads inquired if Sierra Pacific Power had not had a program similar to the Weatherization Program before A.B. 661 had been passed.  Mr. Davis responded that Sierra Pacific Power’s program had addressed households that were at or in excess of 150 percent of poverty.  It had been for a higher poverty level than the Division’s federally funded program.  Senator Rhoads asked if Sierra Pacific Power still had that program.  Mr. Davis answered that he believed they did, but it was his understanding the program would sunset June 30, 2003. 

 

Senator Rhoads inquired whether the total amount of money in the budget was the total amount collected.  Mr. Thurner answered that the total amount of funds in the proposed budget would be a combination of DOE and FEAC funds.  The funding from DOE for FY2003 was approximately $845,000 and the funding from the FEAC was approximately $2.3 million.  If the FEAC funding was eliminated the budget would have approximately $800,000 remaining.   

 

Chairwoman Chowning commented that according to the report given to the Subcommittee, the Division had gone from 191 units to 1,392 units and she felt that was “phenomenal.”  Mr. Thurner stated that was attributable to the increased funding and increased training.  He further stated if you thought of the weatherization function as a start-up company, you would build some capital assets, add vehicles, and hire a larger staff, and those things were time intensive from a development point of view.  Planning, staffing, and training had become predominant issues for the Division since FEAC was instituted.  Mr. Thurner stated the Division was now in a position to level out and produce services on a constant basis. 

 

Senator Tiffany asked how much staff had been added to the Division in order to administer the Universal Energy Charge (UEC).  Mr. Thurner stated the Division had added one position, a Grant Analyst.  Senator Tiffany wondered how the funds had been disbursed for the training and equipment that had been discussed.  Mr. Thurner stated that the funds had gone to subgrantees.  Senator Tiffany asked whether the Division paid for the training or sent staff to train the subgrantees.  Mr. Thurner responded that in some cases Craig Davis went on‑site and added additional training, but the formal training was in Stockton, California, at the training center. 

 

Senator Tiffany commented that she used to be involved in Welfare-to-Work, her clients had been able to take advantage of this, and between DOE, UEC, and Nevada Power, they had made no attempt to pay their utility bills themselves.  Senator Tiffany continued that she knew the Division had nothing to do with it, but she would have no problem with the UEC being eliminated.  She asked if the UEC were eliminated would the Grant Analyst position be eliminated as well.  Mr. Thurner stated that the Division did not anticipate that happening because there would be some additional DOE funding; he pointed out, however, that the Weatherization Program only received 25 percent of the UEC funding.  Mr. Thurner commented that although the Grant Analyst would remain employed, there were approximately 144,000 people at 150 percent of poverty, so even with increased funding the Division was barely scratching the surface. 

 

Chairwoman Chowning agreed and commented that there was a big difference between paying someone’s utility bills for a month or two and weatherizing their dwelling for long-term effects.  Mr. Thurner noted that that was a more permanent solution.

 

Ms. McClain disclosed that she was a member of the Board of Trustees for Help of Southern Nevada.  She further commented that she knew of thousands of people, especially senior citizens, who would have been in dire straits without the UEC helping them with utility bills.  She opined that it had been a lifesaver for many senior citizens and low-income families and while she did not support subsidizing landlords, she realized that it was the renters living in the house that paid the high utility bills. 

 

Chairwoman Chowning questioned the increase in the reserve to $3.3 million from $1.2 million and asked if there were requirements that explained the increase.  Mr. Thurner explained that most of the reserve amount had been for start-up costs, but the Weatherization Program would be on a more level production within the next two years, and the reserve could be eliminated.  Chairwoman Chowning requested that information be given to the Budget Division and then passed on to the Subcommittee. 

 

B&I, CONSUMER AFFAIRS – BUDGET ACCOUNT 3811, BUDGET PAGE B&I‑115

 

Sydney H. Wickliffe, CPA, Director, Department of Business and Industry, introduced Doug Walther, Chief, Office of Business Finance and Planning and Deputy Director, and Bill Maier, Administrative Services Officer.  Ms. Wickliffe requested that the Subcommittee hear Consumer Affairs as the next budget account. 

 

Chairwoman Chowning agreed, and called for testimony on Budget Account 3811, Consumer Affairs Division.

 

Patricia Jarman-Manning, Commissioner, Consumer Affairs Division, introduced Lorraine Newlon, Chief Financial Officer, Consumer Affairs Division. 

 

Ms. Jarman-Manning stated the Division was requesting one enhancement, decision unit E-710, which included five personal computers, two network printers, and software over the biennium.  Ms. Jarman-Manning informed the Subcommittee that in FY2002 the Division had 20 full-time employees and presently had 18 full-time employees.  In FY2002 the Division handled over 7,000 cases statewide, handled over 100,000 telephone calls, and returned to consumers approximately $1.2 million in restitution and relief.  She stated the Division was constantly attempting to help consumers but it was difficult with outdated technology and fewer people.  Anything that happened anywhere else in the United States eventually arrived in Nevada.  The Division had been very successful in handling some of those issues.  In 1971, former Governor Mike O’Callaghan had created the Consumer Affairs Division to deal with consumer issues.  Ms. Jarman-Manning stated the Division had come full circle 3 or 4 times during that 32 years and they continued to try to stay abreast of events in the marketplace. 

Ms. Jarman-Manning commented that there were at least three bill draft requests that, if passed, would significantly impact the Division.  Those bill draft requests involved telemarketers, the sellers of travel, and supermarket sale of meat. 

 

Chairwoman Chowning noted that the Division handled 7,000 cases in the last biennium and asked how the Division proposed to handle an increased caseload with fewer personnel.

 

Ms. Jarman-Manning stated that she did not know as her staff was already severely taxed.  She stated that Consumer Affairs was the complaint center for the state of Nevada because any other agency, city, county, or state, that did not know how to help a consumer, sent them to the Consumer Affairs Division.  Many cases that the Division handled were technically not within their jurisdictional authority, but they tried to work closely with other agencies, such as the Nevada Attorney General, to help consumers.  Even with the increased caseload, the Division would be doing the best they could, but they would probably be appearing before the Interim Finance Committee (IFC) sometime next year. 

 

Chairwoman Chowning asked if the $1.2 million that had been reimbursed to consumers was more than had been reimbursed previously.

 

Ms. Jarman-Manning responded that everything the Division did was marketplace driven, therefore, if there was a lot of activity, their case level increased.  It was very difficult for the Division to predict case level, however, Ms. Jarman-Manning noted that the case level had not decreased.  Currently, telemarketers were a serious problem.  In the late ‘80s and early ‘90s Nevada was the illegal telemarketing haven of the nation.  Through the efforts of the Consumer Affairs Division, the Legislature, and the Nevada Attorney General’s Office, Nevada had become a model for other states, and had eliminated most illegal telemarketing.  When the telemarketers had been based in Nevada, they were not calling Nevadans, but when they were forced out of the state Nevadans again became victims of illegal telemarketing operating out of other states. 

 

Chairwoman Chowning asked how the practice could be curtailed.  Ms. Jarman-Manning stated that the Nevada Attorney General’s Office was handling the telemarketing enforcement.  The Attorney General’s Office worked with the National Association of Attorneys General (NAG) and other states’ enforcement units, but it was very difficult because many telemarketers had moved to Mexico and Canada.  The Consumer Affairs Division had tried to educate consumers about what to do when telemarketers called.  Ms. Jarman-Manning opined that the best weapon a consumer had when a telemarketer called was to simply hang up.  Her family had not had good results from a call blocking system installed by the telephone company. 

 

Senator Coffin commented that he had a call blocking system installed and was pleased with it and felt it had cut telemarketing calls 90 percent.

 

Chairwoman Chowning questioned the Division’s performance indicators and wondered if there had been a mistake because it showed the caseload remained flat.  Ms. Jarman-Manning reiterated that the Division’s statistics were marketplace driven and it would be impossible to predict how much the caseload would increase.  It remained flat because it was not anticipated to go below that figure.

Chairwoman Chowning asked if the caseload had ever decreased in the past five years.

 

Ms. Jarman-Manning replied that it had not, but the percentages of increased workload were different depending upon what was happening in the marketplace.  She mentioned that when consumers were having major issues with automotive repairs the caseload increased quite a bit, and currently that problem had subsided because the industry had started dealing with consumers instead of contacting the Division.

 

Chairwoman Chowning complimented everyone in the Division who had worked so hard to get legislation passed to alleviate the automobile repair problem. 

 

Chairwoman Chowning questioned overspending an appropriation in the Division’s budget in the amount of $9,238, which included Department of Information Technology (DoIT) charges.  

 

Ms. Jarman-Manning stated she would have Lorraine T. Newlon, Chief Financial Officer, respond to the question, but she wanted to state that the Division had been underfunded in FY2002 by approximately $12,000, and in FY2003 by $13,004.

 

Ms. Newlon explained that in FY2002 the Division had realized they would have a budget shortfall of approximately $12,000 and therefore paid as many of the bills as possible.  In June 2002 they realized they would not be able to make all the payments that were due, so a decision was reached to pay non-state outside vendors first.  The Division had a considerable amount of bills from DoIT that needed adjusting because of inaccuracies.  After adjusting those bills $9,238 remained which was owed to DoIT. 

 

Chairwoman Chowning requested comment from the Budget Analyst for the Division because she did not understand how this had happened, and wanted to know what would prevent it from happening again.   

 

Kathalee Koche, Budget Analyst IV, stated that she had not been the budget analyst in the prior biennium, but she would try to answer Chairwoman Chowning’s questions.  The Budget Director had asked the Division to find the savings within their budget.  Ms. Koche stated she had been unaware of the budget shortfall until September 2002.  The Commissioner had submitted a lease in April or May of 2002 to take over the space vacated by the Commission for Hospital Patients.  The Division had received a supplemental appropriation for computer equipment and software and a freeze had been placed on supplemental appropriations.  They had hoped to use some of the supplemental appropriation to cure the shortfall and that money had been spent.  When the budget was submitted a shortfall already existed and the Division submitted a request for a supplemental appropriation.  Ms. Koche stated that it was her understanding that if DoIT could perform services, the agencies were asked to use DoIT.  With that in mind, $15,000 had been reinstated to the Division’s budget to cover any potential charges for FY2004-05. 

 

Chairwoman Chowning requested that Ms. Koche and the Division work with staff to ensure that there were no problems that had occurred before that could occur again.  Chairwoman Chowning also asked Ms. Koche if the future budget, as far as she knew, was going to be whole, with no shortfalls.

 

Ms. Koche replied that she would hesitate to state unequivocally that the DoIT charges in the Division’s budget were correct.  Based upon information received from the DoIT utilization schedule and costs, funds had been reinstated to cover the Division’s needs, however, something unexpected might not be covered.

 

Ms. Jarman-Manning stated that when the Commission for Hospital Patients was removed from the Division in 2001, it had first been an Assembly bill that had failed.  It was then resurrected as a Senate bill.  The Division had informed the prior budget analyst that there would be a shortfall in their budget.  The Division had originally held the lease on the office space in question but their staffing had been down and the Commission for Hospital Patients had subleased the space from the Division.  When the Commission for Hospital Patients left and the Division was overcrowded, they moved back into the space.  Ms. Jarman-Manning emphasized that the Division had notified their budget analyst and the Department of Business and Industry of the potential problem.  Other factors contributing to the budget shortfall had been insurmountable computer problems and an antiquated telephone system.  Should either system break down the Division would have to use funds from the existing budget to effect repairs and that would probably cause another shortfall. 

 

Chairwoman Chowning inquired as to whether extra funds had been built into the base budget this time.  Ms. Jarman-Manning stated that the rent was covered.

 

Chairwoman Chowning asked about decision unit E-710, computer replacement, but noted that the Division was not addressing the antiquated telephone system.

 

Ms. Jarman-Manning stated that decision unit E-710 had been recommended in The Executive Budget and the Division accepted those recommendations, but felt that they were inadequate.  Both the computer system and the telephone system could malfunction at any time.

 

Ms. Koche commented that the Budget Division had been given a specific directive from the Governor regarding building General Fund budgets.  The Governor’s intent had been to present a budget that was lean and in the best interests of the state of Nevada and equitable for all.  Expenditure reductions were made across-the-board and no agency was singled out.  Ms. Koche stated those budget cuts had been difficult to make, but necessary in light of the economic climate.  The Division had submitted a request for a new telephone system but General Fund dollars were not available to provide everything that had been requested. 

 

Chairwoman Chowning stated that this budget would be reviewed again before it was closed and requested the Division work with staff to ensure that another shortfall would not occur and the needs of the consumers would be met. 

 

Senator Tiffany commented that when she saw budgets grow at 25 percent to 65 percent and then saw Consumer Affairs hobbled, it made no sense to her.  She asked if the Division received replacement computers would the present software be transferable to the new system. 

 

Ms. Jarman-Manning stated the Division had a Disc Operating System (DOS) database in a Windows environment and each time another Windows program was introduced, more stress was placed on the current system. 

 

Senator Tiffany asked what uses the Division had for the database.  Ms. Jarman-Manning responded that the Division had a myriad of uses for the database that included, a complaint system, business licenses, communication with other agencies, a mediation program, and generating approximately 25 different in-house reports.        

 

Senator Tiffany asked if the Division had technology people in-house or if they had to use DoIT for technological support.  Ms. Jarman-Manning stated that the Chief Financial Officer, Lorraine Newlon, was the in-house technology person. 

 

Ms. McClain asked what it would cost to replace the telephone system and what the Division was spending currently to keep it in repair.  Ms. Newlon responded that the Division had spent several thousand dollars on repairs for the telephone system and the computer system.  The repair costs increased every year, and unfortunately, the problems had grown in magnitude and severity every year as well. 

 

Chairwoman Chowning stated that in the budget the actual amount for Information Services was $28,000 and the Governor’s recommendation was $62,000.  The Subcommittee wanted to be sure that some of the $62,000 had not been earmarked for telephone system repairs, as there was a substantial difference in the figures.

 

Ms. Newlon responded that she believed that the funds in Information Services included some computer repair money, but not any telephone repair money. 

 

Chairwoman Chowning requested that the Division apprise staff regarding the difference in figures.

 

Ms. Koche stated that she would like to review her records and provide Joyce Garrett, Program Analyst, with information regarding this question.

 

Assemblyman Parks asked if volunteers were utilized and if the Division worked with various television stations to promote Consumer Affairs efforts.  Ms. Jarman-Manning replied that the Division did not use volunteers in their  office because of security constraints, as they had large amounts of cash coming into their office.  The Division worked with television stations and radio stations statewide to provide programming to inform consumers how to be better consumers. 

 

Mr. Parks commented that one of the most common complaints he received from his constituents dealt with the auto industry, and what they perceived as false advertising regarding loans and financing options.  Mr. Parks asked if the Division felt statutory requirements were needed to regulate the “worst of the worst,” auto dealers in the state. 

 

Ms. Jarman-Manning responded that automotive repair had been a problem forever and it had taken three legislative sessions to get to the present point.  She commented that she did not believe there would ever be a complaint-free auto repair industry.  However, consumers had a responsibility to read the contract before signing and ask questions before leaving the dealership.  Consumer Affairs was trying to educate consumers to that end.  The Division was also educating the businesses as to what statutory requirements and responsibilities they had, and what the Division would do to bring them into compliance.  The Division had also worked closely with the Attorney General’s Office and industry members to police offenders. 

Chairwoman Chowning stated she had no more questions and the Subcommittee would review this budget at a later time.

 

The meeting recessed at 9:56 a.m. and reconvened at 10:05 a.m.

 

B&I, NEVADA ATTORNEY FOR INJURED WORKERS – BUDGET ACCOUNT 1013,  BUDGET PAGE B&I-137

 

Chairwoman Chowning called the Joint Subcommittee on General Government back to order.

 

Ms. Wickliffe introduced Nancyann Leeder, Nevada Attorney for Injured Workers.

 

Chairwoman Chowning requested that in the budget presentation Ms. Leeder highlight the projected relocation of the Las Vegas office, budget reductions, additions to the staff, and the proposed new data management system.

 

Ms. Leeder introduced Vicki Nowling, Legal Office Manager.  Ms. Leeder stated that the Nevada Attorney for Injured Workers (NAIW) was one of the Workers’ Compensation agencies, entirely funded by the Workers’ Compensation and Safety Fund and they received no General Fund money.  NAIW’s statutory duty was to represent and advise workers regarding Workers’ Compensation procedure and claims.  Due to the budget crisis in FY2003 the Agency’s staff was reduced by 1 legal research assistant, which left 2 legal research assistants to support 13 full-time attorney positions.  The legal research assistants performed research, helped prepare cases and documents, advised people who contacted NAIW for information and performed miscellaneous duties.  Ms. Leeder pointed out that the Agency’s workload continued to rise and referred to Exhibit C, the Expanded Program Narrative.  She commented that each case took longer to handle and was more complicated.  In the past, the Agency had never done depositions and in FY2003 they did 13 and in FY2002 they did 18.  A deposition was much like a hearing and required a great deal of preliminary work.  In addition, the Agency rarely had pre-hearing motions before 2000, but in FY2000 they had 556; in FY2001 they had 977; and in FY2002 they had 1,002.  Ms. Leeder referred to page 4 of Exhibit C, which showed that the number of cases had increased each year, but the number of attorneys to handle those cases had not increased at the same rate. 

 

Chairwoman Chowning noted in the Agency’s performance indicators that the active caseload was projected to decrease, and Ms. Leeder said that the caseload was increasing. 

 

Ms. Leeder replied that she had said the workload was increasing, not the caseload; the workload per case had increased tremendously.

 

Chairwoman Chowning asked if that was expected to continue because the Agency showed an average monthly revolving caseload of 116 per attorney for FY2002, and had projected 111 for FY2003.

 

Ms. Leeder replied that 116 cases per attorney was an average, statewide, and the Las Vegas office was substantially higher than that with approximately 125 cases per attorney.  The Carson City caseload was commensurately lower in order to arrive at the average.  The Las Vegas office had an 86 percent attorney turnover in the last biennium.  It was a seven-attorney office, six attorneys resigned, and one of the replacement attorneys resigned as well.  Only one attorney remained in the office that had been there before the biennium.  Several attorneys from the Carson City office had to help handle cases.  Because of the higher salary level in Las Vegas, the Agency could not hire and retain experienced attorneys.  Ms. Leeder stated that complicated cases or difficult clients required experienced attorneys. 

 

Chairwoman Chowning asked why, if the average statewide caseload was projected to decrease, the number of appeals was projected to increase.  Ms. Leeder replied that she hoped the average caseload was going to decrease because the Agency had asked for three additional people in one of the enhancement units. 

 

Chairwoman Chowning asked if the projected decrease in caseload was based upon the addition of those three positions.

 

Ms. Leeder stated that she believed a lot of people who should appeal decisions by the hearing officers were not appealing and people who had been in the system before, and knew something about the system, were appealing.  The Agency did not control the cases to which they were appointed. 

 

Senator Tiffany asked if the three new positions that were proposed would be added to the Las Vegas office or the Carson City office.  Ms. Leeder replied that the positions would be for the Las Vegas office. 

 

Senator Tiffany inquired as to what would be done about employee retention in  the Las Vegas office.  Ms. Leeder responded that the seven attorney positions in the Las Vegas office were presently filled with six inexperienced attorneys and one experienced attorney.  Senator Tiffany asked if the seven positions in the Las Vegas office were filled.  Ms. Leeder replied that they were filled at the present time.

 

Senator Tiffany asked if the Agency wanted to add three more positions because of the lack of experience with the six attorneys presently employed in the Las Vegas office.  Ms. Leeder stated that it would be one attorney, one legal research assistant, and one secretary. 

 

Senator Tiffany asked if the turnover could be attributed 100 percent to salaries.  Ms. Leeder responded that the reason was primarily workload.  Senator Tiffany inquired as to whether it was workload and salaries.  Ms. Leeder stated that it was primarily workload, but the Agency had reverted about $200,000 in personnel costs in the past biennium.  The reason was that an inexperienced attorney was not a journeyman, which was what attorneys’ wages were based upon.

 

Senator Tiffany inquired as to what the starting salary was for an inexperienced attorney.  Ms. Leeder replied that she thought it was approximately $65,000.  Senator Tiffany commented that $65,000 was not a bad salary and asked if the Agency was doing any work with the Boyd School of Law, such as employing interns or recruiting through the law school.  Ms. Leeder stated that by statute attorneys hired by the Agency had to be admitted to the State Bar.  Senator Tiffany proposed that if the Agency recruited interns from the law school to work for a year or two, and they came back and were employed as attorneys, they would not be quite as inexperienced.  Ms. Leeder responded that they would still be inexperienced.  Senator Tiffany suggested that the Agency consider her suggestion because turnover was such a problem.  Ms. Leeder agreed that turnover was a big problem.

Senator Tiffany mentioned that the NAIW was comparable to the public defender.  Ms. Leeder responded that was correct.  Senator Tiffany inquired as to whether it had always been that way, or had it been created that way because Workers’ Compensation had been a state agency.  Now that Workers’ Compensation had been privatized, was there really a reason for its existence.  Ms. Leeder replied that she believed there was a reason.  Originally, there existed not only the state fund, but there were self-insured employers.  Additionally, there were the “grandfathered” employers, who had their own private insurers.  For example, J.C. Penney had Liberty Mutual from the very beginning.  The Nevada Attorney for Injured Workers was established in 1977 to make certain injured workers had legal representation with their claims.

 

Senator Tiffany asked if other states that had privatized Worker’s Comp were still providing free representation.  Ms. Leeder stated that this was Nevada’s system.  Senator Tiffany asked if other states had similar programs.  Ms. Leeder responded that periodically other states contacted NAIW to find out how the program worked, or they read the Web site to find out how it worked.  Several other states had attempted to have such an agency, but the trial bar in those states had lobbied against it and prevented the formation. 

 

Ms. Leeder continued that without the additional people requested, the Agency would be unable to perform the compliance efforts that, by statute, they were supposed to be doing.  The in-state travel budget had been very high in 2002 as a result of Carson City attorneys being required to travel to Las Vegas to handle cases.  NAIW reverted approximately $200,000 in salaries due to the fact that there were several entry-level attorneys.  

 

Chairwoman Chowning asked for clarification about the legal research assistant position that was being eliminated in decision unit E-605 and requested in decision unit E-277.  Ms. Leeder stated that essentially the agency was requesting two additional people and the reinstatement of the legal research assistant (LRA) position but it had seemed easier to eliminate one LRA position and request another LRA position.  Chairwoman Chowning questioned that overall it would still be three positions requested, not four, because it sounded like four positions to her.  Ms. Leeder responded that the LRA position in decision unit E-605 would be eliminated and three additional positions, which included one LRA, would be created in decision unit E-277. 

 

Chairwoman Chowning inquired as to whether the total full-time employee count of 28.53 included the one that was cut.  Ms. Leeder responded that it did include the position that had been cut and they used to have 29 full-time positions. 

 

Chairwoman Chowning requested that the NAIW clarify the employee count and inform staff.

 

Ms. Leeder continued and said that the Agency had requested three large enhancements in The Executive Budget: 1) three new staff positions, 2) a new database, and 3) moving the Las Vegas office.  Absent the three large enhancements, NAIW’s budget stayed relatively flat.  The computations used the FY2002 actual budget and FY2003 work program and compared that total against The Executive Budget for the new biennium.  Absent the three large enhancements, it resulted in an approximate 5 percent difference.  The 5 percent difference was attributable to rising costs and some minimum enhancements such as replacing chairs and file cabinets. 

 

Ms. Leeder discussed the second enhancement, the database.  The Attorney for Injured Workers’ database began around 1992.  It was DOS-based in a Windows environment.  It was not a relational database, but an indivisible database, which made it unmanageable and unwieldy.  In 1998, the Legislative Counsel Bureau (LCB) audit recommended correcting and upgrading the database and the NAIW had attempted to do that with available resources.  In 2002, DoIT had conducted a study and determined that it would not be advisable to try to work with the present database, when what was needed was a totally new database to comply with the audit. 

 

Chairwoman Chowning questioned why an expenditure of $145,000 was being requested when $38,000 had been approved last session for a system enhancement project.  She asked how the $38,000 had been spent.  Ms. Leeder responded that $38,000 had originally been needed to modify the system.  An agreement between DoIT and an outside consultant to modify the system had resulted in the consultant quitting in the middle of the job.  Chairwoman Chowning asked if the $38,000 had been spent with no results whatsoever.  Ms. Leeder responded that the money had been returned because the contractor had defaulted.  DoIT assigned a staff person to modify the database and after being unable to do that, DoIT recommended a study to determine the best database to purchase.  Approximately $20,000 of the $38,000 was used to pay DoIT to write the report that detailed for the Agency the amount of money to use in the enhancement unit.  Ms. Leeder continued that in August, when the original figures were submitted, it was an estimate, however, in November that figure changed because DoIT submitted the report.  Chairwoman Chowning asked if the $145,000 figure was the correct figure and if it had cost $20,000 for DoIT to do a study and submit the $145,000 figure.  Ms. Leeder replied that NAIW had paid DoIT $27,000 or $28,000 for the study.

 

Chairwoman Chowning asked if NAIW had approximately $11,000 remaining from the $38,000.  Ms. Leeder replied that they had approximately $11,000 left over and that had been spent on other things that were needed.

 

Senator Tiffany asked if she had gotten it correct that DoIT had determined the database needed replacing, researched the market, recommended a software vendor and when the software was chosen, decided what type hardware configuration was needed and charged NAIW $20,000.  Ms. Leeder replied that it had been $27,000 or $28,000.

 

Senator Tiffany asked how long it had taken DoIT to make an assessment.  Ms. Leeder replied she thought it had taken about five months.  There had been quite a few meetings with various people and DoIT compiled a large document, put it out to bid over the Internet, got bids and reviewed them, made a decision and did a final report.

 

Chairwoman Chowning inquired as to exactly how the new data management system that NAIW was contemplating purchasing was supposed to facilitate case management.  Ms. Leeder said she believed they would get more accurate figures without having to hand count, and it would eliminate the frustration of trying to get the system to perform functions it was not capable of doing.  A new system would allow them to input additional data that would be a management tool to view a larger, more accurate picture. 

Senator Tiffany questioned if a new document management system for caseload data was installed, would there be anything that could be done so the public could access information from a Web site.  Ms. Leeder informed the Subcommittee that NAIW had a Web page that had information for the public.  The Agency was attempting to reduce the number of advice calls they received by the public’s use of the Web site. 

 

Senator Tiffany asked if DoIT had been maintaining the Web site.  Ms. Leeder responded that sometimes someone on the NAIW staff was able to perform updates, but usually DoIT maintained the Web site.  Senator Tiffany inquired as to whether Web page maintenance and hosting were included in the contract the Agency had with DoIT.  Ms. Leeder responded that the contract included those items.

 

Chairwoman Chowning asked about decision unit E-710 that requested funding for Pentium processors, routers and Ethernet port switches, all of which were requested in the last session.  Also, the Agency had requested and received software upgrades for the same programs during the last session and it appeared they were requesting $25,000 in additional upgrades this session.

 

Ms. Leeder responded that since the Agency had no technology person, DoIT told the Agency what was needed and they requested it in the budget.

 

Chairwoman Chowning requested that the NAIW supply staff with a breakdown of what the Agency felt was needed from their perspective, not DoIT’s. 

 

Ms. Leeder informed the Subcommittee about the third main enhancement, which was moving the Las Vegas office.  The move was driven by the fact that the Division of Hearings and Appeals was moving from the Grant Sawyer Building because of space limitations.  The Hearings Division office had been so crowded that it had been cited by the Fire Marshal.  Every NAIW attorney appeared at the Hearings Division multiple times per day.  Ms. Leeder stated it would be grossly inefficient if the Agency had to pay for private or motor pool vehicles for attorneys and secretarial staff to travel to the Hearings Division at some remote location and then return to the NAIW office.  In addition to the potential driving hazard, there would be the excessive time involved.  Ms. Leeder emphasized that if the Hearings Division moved, the NAIW should move. 

 

Chairwoman Chowning asked whether the Hearings Division’s move had been approved and if the move was definite.  Ms. Leeder said that the Hearings Division had submitted a budget request for the move that would be decided this session.

 

Chairwoman Chowning observed that if the Hearings Division did not move, the NAIW would not have to move either.  She asked if Rancho and Sahara was the location that had been proposed.  Ms. Leeder responded that was correct, and believed there was an actual lease that was being written by the landlord.  The Agency had participated in a  planning session and had talked to the architect.  The Nevada Attorney for Injured Workers and the Division of Hearings and Appeals were both funded by Workers’ Compensation funds and the Grant Sawyer Building had lower rent than private space in Las Vegas.  If both of those agencies moved, General Fund agencies would then be able to obtain space in the Grant Sawyer Building at a lower rent. 

Chairwoman Chowning commented that if the Hearings Division moved and the NAIW stayed in the Sawyer Building, then staff would be traveling from the Sawyer Building to Rancho and Sahara.  Ms. Leeder said by the time they walked out of the suite, to the car, traveled, went back into the Hearings Division and set up, it would take between 20 minutes to half an hour.  When that happened multiple times a day it was a substantial period of time out of the workday.

 

Chairwoman Chowning acknowledged that those funds were not coming from the General Fund, but felt this was substantial when you looked at $200,000 and $128,000, doubling of the rent, plus $84,000 in shelves and walls.

 

Ms. Leeder stated that the modular furnishings in the present office belonged to the Grant Sawyer Building and would have to be replaced in the new quarters.  Chairwoman Chowning noted that purchasing new furniture would be a moot point if the Division of Hearings did not move. 

 

Assemblyman Parks inquired as to whether there would be an opportunity to expand space within the Grant Sawyer Building, should the Hearings Division not move.  Ms. Leeder responded that would not be an option. 

 

Assemblyman Parks stated that a number of years ago he had been given a tour of the NAIW facility and had been astounded at the lack of square footage.  He stated he thought the Geneva Convention gave people more square footage than the state was affording the NAIW’s Las Vegas office.  Assemblyman Parks had also toured the facility at Rancho and Sahara and thought it would be an outstanding opportunity and there was no way that they could move the Hearings Division and not move NAIW. 

 

Senator Tiffany commented that she had been looking at the salaries for NAIW attorneys and it looked like the lowest salary was $72,000.  Ms. Leeder stated the five inexperienced attorneys were receiving $65,000 yearly at the present time.  Senator Tiffany stated that she had looked up the Attorney General’s office salaries to see what those attorneys were making and their lowest salary was approximately $77,000.  She stated she did not believe $65,000 was a bad salary right out of law school.  Ms. Leeder stated that in the Carson City office there were more experienced attorneys that received large salaries.

 

B&I, EMPLOYEES MANAGEMENT RELATIONS BOARD – BUDGET ACCOUNT 1374,  BUDGET PAGE B&I-144

 

Ms. Wickliffe introduced James E. Wilkerson, Sr., Commissioner, Employees Management Relations Board (EMRB).  She stated Mr. Wilkerson had been a board member for several years and had an extensive background with labor union work and had been the Commissioner since August 2002.

 

Chairwoman Chowning requested that Mr. Wilkerson inform the Subcommittee about the Board’s goals and accomplishments because the budget was status quo.

 

Mr. Wilkerson introduced John E. Dicks, Chairman, Employees Management Relations Board.  Mr. Wilkerson stated that the Board was funded primarily through an appropriation from the state General Fund.  A small amount of revenue was derived from the sale of legal documentation, which garnered approximately $3,000 to $4,000 every year.  The Board had only two full-time employees.  Mr. Wilkerson stated that in reviewing the number of cases submitted by his predecessor he would anticipate the projected numbers to be somewhat lower.  He would project that the number of cases filed for FY2004 would be 26, and for FY2005 would be 28.  Mr. Wilkerson opined that FY2002 had been unusual in the amount of cases filed; he did not anticipate such a repetition for some time, due to programs instituted wherein mediation services and alternative dispute resolution were available to clients.  The Agency had successfully closed 18 complaints in FY2003, either through settlement by the parties, withdrawal by the parties, or decisions issued by the Board.  Mr. Wilkerson presented Exhibit D, a Memorandum, dated January 23, 2003, outlining the cost of each Board meeting.  Each meeting cost $638 per day, and this figure could be reduced by a process called “piggybacking,” which involved scheduling meetings for two or three consecutive days.  The savings in the consecutive meetings resulted from lower airline costs, as two board members must travel from the north to the south, or vice versa, for every meeting.  Mr. Wilkerson commented that the Board had recently settled ten cases in less than three days.  He further commented that John E. Dicks, the Chairman of the EMRB, had been serving the public for no remuneration.

 

Chairwoman Chowning thanked Mr. Wilkerson for his presentation and thanked Mr. Dicks for serving for free, and complimented the Agency for the reduction of their travel budget by 18 percent. 

 

Mr. Dicks commented on the significance of the Employee Management Relations Board.  The Board had been involved with workers in public safety, education, and health care to provide a neutral forum for the settlement of disputes with employers.  The staff and board members were dedicated to the service provided and attempted at all times to increase efficiency.  The board members were compensated only for the days they were in actual hearings.

 

Chairwoman Chowning noted that the board members picked each other up at the airports, used shuttle buses instead of taxis, and generally attempted to save funds wherever possible. 

 

B&I,  BUSINESS AND INDUSTRY ADMINISTRATION – BUDGET ACCOUNT 4681,  BUDGET PAGE B&I-1

 

Chairwoman Chowning stated that there were no major issues in this budget, but there would be some questions regarding travel and the performance indicators. 

 

Ms. Wickliffe thanked the Subcommittee for hearing the agencies in a unified fashion, so that the operational activities were together as opposed to the administrative activities.  The Director’s Office functioned as an administrative unit that provided leadership, direction and support, made agency policy, and developed uniform policies to assist the divisions in the efficient operation of the Department.  The first budget that was discussed was Budget Account 4681, the Director’s Office.  Ms. Wickliffe said the Division was requesting the base budget and increased funding for in-state and out-of-state travel.  The requested addition to out-of-state travel was divided into two parts; 1) funds for Director Sydney Wickliffe to travel and, 2) funds for Doug Walther, Chief of Business and Planning, to travel for out-of-state conferences.  Decision unit E-125 was based on a conference Ms. Wickliffe attended in March of 2002 for the Insurance Division.  She considered the Insurance Division the most complex agency within the Department and would like to be able to attend conferences on behalf of Financial Institutions and the Housing Division in the future.  Ms. Wickliffe stated it was important for her to not only understand the issues facing the various agencies, but also to be in a better position to assist the administrators in solving problems.  Decision unit E-125 also contained a request for the Chief of Business Finance and Planning to attend technical conferences on private activity bonds. 

 

Chairwoman Chowning asked if there were two people going to Washington, D.C. and one going to San Francisco, or vice versa.

 

Bill Maier, Administrative Services Officer, Department of Business and Industry, stated the decision unit represented one trip to Washington, D.C. by the Chief, and one trip to San Francisco by the Director, each year of the biennium.

 

Chairwoman Chowning requested that the Department submit a written statement containing information as to the benefit that would be gained from attendance at those conferences.  Chairwoman Chowning also requested additional information about the request for the director to make ten, five-day trips from Las Vegas to Carson City during the 2005 Legislative Session. 

 

Ms. Wickliffe stated that the mathematical calculation used was ten trips of five-days each, but that was not the way she actually traveled.  The trips to Carson City were dependant upon the bills that were before the various subcommittees for the various agencies.  She commented that during the last session she had been in Carson City one day per week in February, two days per week in March, three days per week in April, and five days per week in May. 

 

Chairwoman Chowning asked whether it had averaged out to 50 days in Carson City during the last session.  Mr. Maier stated that 50 days was an appropriate amount. 

 

Senator Tiffany inquired about performance indicators, whether Ms. Wickliffe had received training in that area, and if she reviewed the performance indicators of the agencies within her jurisdiction.  Ms. Wickliffe responded that senior staff within the Director’s Office had a very difficult time with performance indicators for an administrative agency as they had no tangible product to count.  The Director’s Office enabled agencies to function in a more efficient manner.  

 

Senator Tiffany stated she was not concerned with just the performance indicators for the Director’s Office, but with the performance indicators of all the agencies under the Department of Business and Industry.  

 

Chairwoman Chowning questioned performance indicator number three, which projected an outcome of 100 percent completion of the Department projects developed within the Director’s goals, and asked if 100 percent had been possible in the past.  Ms. Wickliffe stated that those projects were spread over time and the Department had realistic expectations of what could be done and how long it would take to accomplish, and they continued to work toward completion.

 

Ms. Wickliffe noted that within Budget Account 4681 the Department was requesting new computers for the Las Vegas office according to DoIT’s replacement schedule. 

 

B&I, INDUSTRIAL DEVELOPMENT BONDS – BUDGET ACCOUNT 4683,  BUDGET PAGE B&I-6

 

Mr. Maier presented Budget Account 4683, which he stated functioned as a trust account for the processing of the bonds.  There was another component to that account which was the Director’s responsibility under the administrative side to allocate the volume cap for the tax-exempt bonds, which represented revenue coming into the account.  When building the budget, an interrelationship between this budget and the administrative account was established in order to transfer all outside revenues into the administrative account to offset the assessment in the General Fund.  Mr. Maier said probably the biggest issue was the fact that projections indicated a certain amount of volume cap transfer fees as funds that were transferred.  The monorail project in Las Vegas provided some funds that could be used for administrative costs.  Those fees would be arriving in the form of cash payments and would be transferred over as well. 

 

Chairwoman Chowning asked why the issuance of bonds was anticipated to decrease to $16.5 million from $35 million.

 

Mr. Walther stated that it was difficult to project bonds because they were so tied to economic cycles.  The $35 million figure represented two solid waste projects that were not constrained by the volume cap limitations.  For manufacturing projects, the cap was $10 million.  Based upon historical information about the number of manufacturing projects, it was assumed, and hoped for, that two or three normal-sized manufacturing projects would materialize.  Other types of projects, such as nonprofit projects, were much more difficult to predict. 

 

Senator Tiffany asked if the Legislature passed the tax package, would there be any impact on the Division’s clients.

 

Mr. Walther responded that the tax package would be among many factors that a business would consider when relocating to Nevada or expanding business in Nevada.  Industrial Development Bonds took advantage of tax-exempt financing, so no matter what other factors were involved, businesses would get a substantial interest rate savings from using the program.  Although the past calendar year had been rather slow because of the economy, the Division had many inquiries.  As the economy recovered the Division expected to see those inquiries turn into applications and bonds in the future. 

 

Senator Tiffany asked if anyone had said they would wait to see what happened in the present session regarding taxes.  Mr. Walther stated he had not heard any comments regarding taxes in Nevada, but he had heard comments regarding President Bush’s dividend tax proposal having a negative impact on private activity bonds in general.  Mr. Walther stated he felt that there were still many other reasons to hold those investments and to pursue those types of projects. 

 

Chairwoman Chowning stated this program was put into place in the late ‘80s so it had seen many trends in the economy and had helped many businesses to diversify our business climate.

Chairwoman Chowning adjourned the meeting at 11:07 a.m.

 

RESPECTFULLY SUBMITTED:

 

 

                                                           

Anne Bowen

Committee Secretary

 

APPROVED BY:

 

 

                                                                                         

Assemblywoman Vonne Chowning, Chairwoman

 

DATE:                                                                             

 

 

APPROVED BY:

 

 

______________________________________________

Senator Sandra Tiffany, Chairwoman

 

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