MINUTES OF THE
SENATE Committee on Finance
Seventy-second Session
April 2, 2003
The Senate Committee on Finance was called to order by Chairman William J. Raggio at 9:30 a.m. on Wednesday, April 2, 2003, in Room 2134 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Senator William J. Raggio, Chairman
Senator Raymond D. Rawson, Vice Chairman
Senator Dean A. Rhoads
Senator Barbara K. Cegavske
Senator Sandra J. Tiffany
Senator Bob Coffin
Senator Bernice Mathews
STAFF MEMBERS PRESENT:
Gary Ghiggeri, Senate Fiscal Analyst
Bob Guernsey, Principal Deputy Fiscal Analyst
Judy Coolbaugh, Committee Secretary
OTHERS PRESENT:
John P. Comeaux, Director, Department of Administration
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada
James Richardson, Lobbyist, Nevada Faculty Alliance
D. Vernon Dalton, Lobbyist, Wells Rural Electric Company
Sheri Eklund-Brown, Chairman, Board of Commissioners, Elko County
Kerry T. Robinson, Vice Mayor, City Council, City of Wells
Thad S. Ballard, Vice President, Wells Chamber of Commerce
Doug Bierman, Lobbyist, Humboldt River Basin Water Authority
Hugh Ricci, P.E., State Engineer, Division of Water Resources, State Department of Conservation and Natural Resources
Rick Bennett, Lobbyist, University of Nevada, Las Vegas
Senator Raggio:
I am in receipt of a letter (Exhibit C) from the Senate Committee on Judiciary to alert this committee and the Assembly Committee on Ways and Means to potential concerns about a budget shortfall facing Nevada’s Department of Public Safety. In particular, the Investigation Division is anticipating a loss of 40 positions, which will seriously impact rural Nevada and the statewide fight against the narcotics epidemic. Further, the budget shortfalls may further affect the Department of Corrections, and in turn, the Division of Parole and Probation. The letter continues “while our concern rests with policy considerations, we would like to encourage your committees to strongly consider the implications for maintaining the balance and confidence in our system of public safety.”
SENATOR RAWSON MOVED TO REFER THE LETTER TO THE SENATE COMMITTEE ON TAXATION.
SENATOR MATHEWS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Senator Raggio:
We will open the hearing on Senate Bill (S.B.) 415.
SENATE BILL 415: Removes certain restrictions on use of money in Estate Tax Account in Endowment Fund of University and Community College System of Nevada. (BDR 32-1264)
John P. Comeaux, Director, Department of Administration:
This bill proposes to eliminate, from the Nevada Revised Statutes (NRS) 375A.705, the requirement for the establishment and maintenance of the estate tax endowment fund of the University and Community College System of Nevada (UCCSN). When the estate “pick-up” tax was approved, the proceeds were going to be divided equally between K-12 education system and the UCCSN. The UCCSN was required to establish and maintain an endowment fund sufficient to yield income of $2.5 million per year. Recent changes in federal law have begun to slow the trickle of estate tax “pick-up” dollars into the State, and this funding source will be completely eliminated in a few years. This bill is necessary and will make implementation of the budget possible as submitted by the Governor. The balance in the endowment fund must be spent down below the specified level. Removing the passage from line 12 on page 1 through line 12 on page 2 eliminates the requirement for the endowment fund to generate $2.5 million income per year.
Daniel G. Miles, Vice Chancellor, Finance and Administration, System Administration Office, University and Community College System of Nevada:
The initial proposal of the UCCSN was to leave the funds endowed and reduce expenditures from this fund, as the account is moved over to State appropriation. If the committee believes it has to follow the Governor’s recommendation, it is essential that this bill pass. The expenditure of State tax money requires both Legislative and Board of Regents approval.
I have one suggestion to make. The wording in Section 2 of the bill should be changed to read the act becomes effective on passage and approval of the bill, rather than having the act become effective on July 1, 2003. The reason for my request is at the end of this fiscal year the account will be very close to going below the threshold the endowment fund is required to maintain.
James Richardson, Lobbyist, Nevada Faculty Alliance:
I am testifying in favor of this bill with considerable regret. For the record, I wish to state the Nevada Faculty Alliance recommends that the programs currently being funded by the estate tax also be moved to the General Fund.
Senator Raggio:
Would it be acceptable to refer your recommendation to the Senate Committee on Taxation?
Mr. Richardson:
I think that would be appropriate. For the record, there are about 275 employees in various programs who are being funded by the estate tax. We request that these programs continue to be funded in some way.
Senator Raggio:
The hearing is closed on S.B. 415. We will open the hearing on S.B. 488.
SENATE BILL 488: Makes appropriation to Legislative Committee on Public Lands for study to determine feasibility of rehabilitating Bishop Creek Dam in Elko County. (BDR S-1133)
Senator Rhoads:
A “Proposed Amendment for Senate Bill 488” (Exhibit D) has been distributed to you. The Bishop Creek dam, built many years ago, provided a lot of recreational opportunities and irrigation facilities for the area. A water district was recently formed that attempted, but failed, to restructure the existing dam. Because of old age, structural faults, and water disputes, funding is required to complete a feasibility study on renovating or constructing a new dam on the site. The amendment is for $150,000 to contract with a qualified engineering firm to conduct an engineering and geotechnical study.
Senator Tiffany:
Who owns the dam right now?
Senator Rhoads:
The ownership is questionable. Most of the site is on public lands but there may be some private lands bordering on the reservoir behind the dam.
Senator Tiffany:
Then it is mostly public lands.
Senator Rhoads:
Yes, that is correct. The ownership question will be considered in the feasibility study.
Senator Tiffany:
Is the dam a historic landmark?
Senator Rhoads:
I think it would qualify for that designation.
Senator Tiffany:
Why does the dam need to be rebuilt?
Senator Rhoads:
Rebuilding the dam will provide more recreational activities in the area. Additionally, local agriculture will also benefit. The water currently runs straight through the dam, so there is no reservoir behind it.
Senator Raggio:
Where is the dam located?
Senator Rhoads:
The site is north of Wells. A brochure (Exhibit E) contains a map of the area.
D. Vernon Dalton, Lobbyist, Wells Rural Electric Company:
I am testifying in support of the bill. I would like to provide a brief background on the history of the dam, which was constructed in 1912. The dam, presently owned and operated by the Pacific Reclamation Water Company, was used to store water for irrigation. Originally, it was built as a speculative venture by New York real estate interests to stimulate land sales. The development did not occur and the dam venture dwindled to an irrigation project with limited use.
In 1943, the State engineer imposed a water gauge height limitation on the structure of 55 feet. The Corps of Engineers prepared a dam safety inspection in 1979. The dam was classified as intermediate in size, 80 feet high, with a hazard classification of one, which means high hazard. The dam was described as an “unsafe structure.” Because of lack of water storage, the dam ceased to be a viable irrigation project. The dam continued to function as a flood control structure for peak runoff during storms. The outlet gate became bound and inoperable in 1984 because of limited use and deterioration. As a result, the dam developed a leak through the embankment at the 42-foot level. Except for routine inspection of the structure, there has been no work on the Bishop Creek dam since 1984.
The funds requested in S.B. 488 will be used to complete the necessary studies to apply for grants to refurbish the facility to impound water. Money will have to be spent on the dam to make it safe, either to breach it or reconstruct it for a usable storage facility. The reconstruction would provide many other benefits such as recreation, fishing, and improved agricultural production. Tax revenues would be increased by the expanded activities. The complete “Testimony of Vernon Dalton SB 488” is provided in (Exhibit F).
Senator Raggio:
Whom does the Pacific Reclamation Water Company represent?
Mr. Dalton:
The water company is composed of seven area ranchers owning land below the dam. They have the water storage rights to the dam and to the irrigation water below it.
Sheri Eklund-Brown, Chairman, Board of Commissioners, Elko County:
We are in support of this bill. We are aggressively pursuing economic diversification by developing Elko County into a recreation and adventure travel destination. This dam project would bring people in from Utah and Idaho. A letter from the Board of County Commissioners, County of Elko has been distributed as (Exhibit G).
Senator Raggio:
How was the amount of $150,000 for the feasibility study determined?
Mr. Dalton:
The amount is the best estimate we can give you according to the information provided by engineers who have visited and inspected the dam. The dam has a very steep face, and over the years the dam has settled causing sections of the dam to slump off.
Senator Raggio:
Have the engineers provided you with this estimate in written form?
Mr. Dalton:
Yes, that is correct.
Senator Raggio:
We would like a copy of the information.
Mr. Dalton:
We will provide it.
Senator Raggio:
I need to explain that this bill, like many others being heard this session, will not be processed unless the State raises taxes. Does your delegation support the State’s effort to raise taxes? What tax increases would you support?
Mr. Dalton:
Personally, I support an increase in the sales tax, and eliminating exclusions from the sales tax.
Senator Raggio:
Everyone who comes here with requests to fund projects has to realize the money is not available from the State unless taxes are raised.
Kerry T. Robinson, Vice Mayor, City Council, City of Wells:
I am here to lend my support to this project. I have distributed a handout entitled “Bishop Creek Reservoir Benefits” (Exhibit H) listing nine economic benefits from the restoration project. In the last 4 years, the City of Wells has lost six businesses. The city council has been forced to layoff 25 percent of the city’s staff. This project could help the City of Wells get back on its feet.
Thad S. Ballard, Vice President, Wells Chamber of Commerce:
The Wells Chamber of Commerce supports this legislation and believes it will provide the critical mass necessary to spur economic development in Wells. The Chamber of Commerce’s Economic Development Committee has worked long and hard to recruit new businesses to our area. Many business owners have been sold on the area’s strategic location and affordable utilities, but their interest in establishing new businesses wanes when they visit our community only to find limited recreation and support services.
Several years ago, a historic walking tour of the old town of Wells along Seventh Street was initiated. At that time, 16 of the 18 structures were boarded up and slated for demolition. Since the tour was started, three of the buildings have been renovated and reoccupied by small businesses, and four other buildings are presently under renovation. My complete testimony is included in the handout entitled “Testimony presented by Thad S. Ballard, Vice President, Wells Chamber of Commerce” (Exhibit I). Further testimony is included in a letter entitled “Support for Development of the Bishop Creek Recreational Area” from the Board of County Commissioners, Elko County Economic Diversification Authority, and the City of Wells (Exhibit J).
Senator Raggio:
Has anyone considered how funds for the feasibility study could be raised other than through a State appropriation?
Mr. Dalton:
At the present time, additional sources of revenue have not been investigated. If we can complete the feasibility study, funds for the dam project construction will be made available through the Division of Water Resources.
Senator Raggio:
Is there any local effort to find funds from cities, counties, or private sources to assist in financing the feasibility study?
Mr. Dalton:
We have not asked other entities for funding.
Doug Bierman, Lobbyist, Humboldt River Basin Water Authority:
The Bishop Creek does ultimately flow into the Humboldt River basin and any extra storage capacity in the area would benefit all five counties within the basin. We are in favor of this bill. My complete testimony has been distributed in a handout entitled “Talking Points SB 488 Senate Finance Committee, Doug Bierman, Humboldt River Basin Water Authority” (Exhibit K).
Ms. Eklund-Brown:
A Question 1 workshop is coming up in Elko County to target projects for the bond funding. The Bishop Creek dam is a potential project.
Senator Raggio:
We will not process bills requesting additional funds until the end of the session, so keep the committee informed if funding from other sources becomes available.
Ms. Eklund-Brown:
There is also a potential grant from the Bureau of Land Management for the Bishop Creek dam project.
Hugh Ricci, P.E., State Engineer, Division of Water Resources, Department of Conservation and Natural Resources:
We cannot support this bill because of the current financial crisis of the State. I have four photographs of the reservoir showing its present condition, and will submit them as part of the record (Exhibit L). The feasibility study will present two possibilities. One would be the existing dam can be repaired. The other is the dam would have to be torn down and reconstructed.
Senator Raggio:
In your opinion, which proposal will the feasibility study recommend?
Mr. Ricci:
My opinion is the dam will need to be torn down and reconstructed.
Senator Raggio:
The hearing is closed on S.B. 488. We will open the hearing on S.B. 418.
SENATE BILL 418: Allows University and Community College System of Nevada to carry forward 50 percent of unexpended appropriations from one fiscal year to following fiscal year. (BDR 31-1035)
Mr. Miles:
The Board of Regents of UCCSN has requested this legislation. Fifty percent of unexpended General Fund appropriations are to be carried forward each fiscal year. The remaining 50 percent will revert to the General Fund. Currently, 100 percent of the unspent funds revert to the General Fund. The purpose of the request is to provide a mechanism whereby the different campuses can better plan expenditures throughout the year.
Senator Raggio:
The fiscal note shows reduced General Fund reversions of approximately $246,000 yearly. Is that correct?
Mr. Miles:
I prepared a list of the actual reversion amounts from our operating accounts for the last several years. I would like to note that in the General Appropriations Act there is a provision, which allows the Governor to go back to State agencies, including higher education, and request the reversion of funds. The Governor did exercise the option this year along with 3 percent across the board budget reductions UCCSN complied with the requests. This bill will not affect the Governor’s ability to exercise this option. In fiscal year (FY) 2002, the UCCSN reverted $1 million. In FY 2001, the amount was $341,000. The amounts of $502,000 and $427,000 were reverted in FY 2000 and FY 1999, respectively.
Senator Raggio:
I believe the fiscal division took an average of these amounts when it prepared the fiscal note, and assumed half of that amount would be the loss in revenue. What taxes are you in favor of raising?
Mr. Miles:
The UCCSN position would be this Legislature will do the best job it can for the citizens of the State. Whatever tax proposals are presented, they will be fair and equitable and, hopefully, provide a stable tax base.
Senator Raggio:
The hearing is closed on S.B. 418. We will open the hearing on S.B. 454.
SENATE BILL 454: Makes appropriation for development of master’s degree program for public health nurses and dental hygienists at University of Nevada, Las Vegas. (BDR S-1065)
Senator Rawson:
This bill has been generated by the health manpower crisis in the State. There are a number of proposals that will try to deal with the nursing shortage, but the State also needs nursing faculty. Potential areas for faculty recruitment are public health nurses who have masters’ degrees. The authority to develop a master’s degree program for public health nurses and dental hygienists at the University of Nevada, Las Vegas (UNLV) was approved in the 71st Legislative Session, but no appropriations were made for the program. The University of Nevada, Reno has a master’s degree program in public health nursing. The funding requested in this bill, in the amount of $150,000 in each fiscal year of the biennium, is to start the program at UNLV.
Senator Raggio:
Is $45,000 of the requested amount in each fiscal year of the biennium to be made available for scholarships? How would the remaining funds be used?
Senator Rawson:
Yes, $45,000 would be made available in scholarships, and the rest of the amount is for faculty positions to put the curriculum together and begin the program.
Senator Raggio:
Once the program is started at UNLV, is the university going to take over the future funding? Will it be part of the university budget?
Senator Rawson:
I believe after start-up the program would have to be absorbed into the university’s funding formula.
Rick Bennett, Lobbyist, University of Nevada, Las Vegas:
I have some brief comments in support of S.B. 454. UNLV has identified health sciences as an emerging area of emphasis for academic and research programs. This new program will build on existing strengths in health sciences at UNLV, and the graduate degree in public health will enhance the movement towards more multidisciplinary efforts across campus. No accredited School of Public Health is located in the Mountain West states. Clearly, a graduate program in public health would benefit the citizens of Nevada, as well as the entire region. My complete testimony has been distributed in a handout entitled “Comments Regarding Senate Bill 454 Appropriation for Development of Master’s Degree Program for Public Health Nurses and Dental Hygienists at the University of Nevada, Las Vegas” (Exhibit M).
Mr. Richardson:
The Nevada Faculty Alliance strongly supports this bill. For many years, Nevada has been absorbing graduate degree people from other states and depending on them as the State has built its system of higher education.
Senator Tiffany:
How many people have requested master’s degree programs for public health nurses and dental hygienists? What size of class do you anticipate?
Mr. Bennett:
I do not have specific answers for you, but I will provide the information.
Senator Mathews:
I was speaking to a group from Truckee Meadows Community College (TMCC). Eighty percent of the faculty at TMCC is within 3 years of retirement. A program like this would help provide some faculty replacements.
Senator Cegavske:
There is a bill coming from the Assembly for a 4-year community college nursing program. Would this bill impact that one?
Senator Rawson:
This bill is not related to that one. This bill funds the UCCSN, but it specifies the funding is to go to UNLV for the master’s degree program for public health nurses and dental hygienists. Even if the community colleges were able to go to 4-year degree programs, this is a master’s degree level program. I believe it is beyond the scope of community colleges to offer master’s degree programs.
Senator Raggio:
Tomorrow at 4 p.m. is the final hearing on S.B. 191. The departments and the superintendents are to present their analysis of the fiscal requirements.
The meeting is adjourned at 10:20 a.m.
RESPECTFULLY SUBMITTED:
Judy Coolbaugh,
Committee Secretary
APPROVED BY:
Senator William J. Raggio, Chairman
DATE: