MINUTES OF THE
SENATE Committee on Taxation
Seventy-second Session
May 26, 2003
The Senate Committee on Taxation was called to order by Chairman Mike McGinness, at 5:32 p.m., on Monday, May 26, 2003, in Room 2135 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 Mike McGinness, Chairman
Senator Dean A. Rhoads, Vice Chairman
Senator Randolph J. Townsend
Senator Ann O'Connell
Senator Sandra J. Tiffany
Senator Joseph Neal
Senator Bob Coffin
STAFF MEMBERS PRESENT:
Rick Combs, Fiscal Analyst
Ted Zuend, Deputy Fiscal Analyst
Mavis Scarff, Committee Manager
Gale Maynard, Committee Secretary
OTHERS PRESENT:
Birgit K. Baker, Administrator, Employment Security Division, Department of Employment, Training and Rehabilitation
Charles Chinnock, Executive Director, Department of Taxation
Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association
Teresa Moiola, Assistant State Controller, Office of the State Controller
Chairman McGinness:
We will open the meeting and consider Assembly amendments to four Senate bills.
SENATE BILL 370 (3rd Reprint): Reduces rate of basic governmental services tax and authorizes counties to impose additional tax on transfer of real property. (BDR 32-39)
SENATE BILL 470 (1st Reprint): Makes various changes concerning imposition, distribution and use of certain taxes on aviation fuel and fuel for jet or turbine-powered aircraft. (BDR 32-628)
SENATE BILL 475 (1st Reprint): Revises manner of assessing value of certain electric light and power companies. (BDR 32-1242)
SENATE BILL 489 (2nd Reprint): Makes various changes to provisions governing exemption from local school support tax for systems that use renewable energy to generate electricity. (BDR 32-1135)
SENATOR RHOADS MOVED TO CONCUR WITH AMENDMENT NO. 641 TO S.B. 470.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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SENATOR RHOADS MOVED TO CONCUR WITH AMENDMENT NO. 642 TO S.B. 475.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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SENATOR RHOADS MOVED TO CONCUR WITH AMENDMENT NO. 757 TO S.B. 489.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
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SENATOR O’CONNELL MOVED TO NOT CONCUR WITH AMENDMENT NOS. 755 AND 901 TO S.B. 370.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
****
Chairman McGinness:
The work document before you today (Exhibit C) presents the committee tax revenue plan. The shaded boxes indicate previous committee recommendations. In order to focus the direction of the committee we shall review the additional proposals. The property tax piece, which we previously considered, has been moved to July 1, 2005. The first item is to reduce the cigarette stamp fee allowance from 1.5 percent to 0.5 percent.
Senator Townsend:
There is an actual cost associated with the stamp fee, and that is why instead of eliminating the fee, I recommend it be further reduced.
Chairman McGinness:
Is there a motion to reduce the cigarette stamp fee to 0.5 percent?
SENATOR TIFFANY MOVED TO APPROVE THE PROPOSAL TO LOWER THE CIGARETTE STAMP FEE TO 0.5 PERCENT.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RHOADS VOTED NO.)
*****
Chairman McGinness:
The next proposal is to reduce the liquor tax allowance to zero.
Senator Coffin:
The reduction seems to be associated with the liquor tax increase, and I wonder if the two proposals are coupled.
Senator Townsend:
These are just options I have put on the table. There is nothing coupled. I am looking at individual policies. You should look at each proposal as not being tied to one another.
SENATOR TOWNSEND MOVED TO APPROVE THE PROPOSAL TO REDUCE THE LIQUOR TAX ALLOWANCE TO ZERO.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR RHOADS VOTED NO.)
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Chairman McGinness:
The next proposal is to reduce the liquor tax increase from 100 percent to 50 percent. The committee had doubled the tax on liquor, and Senator Townsend is proposing a decrease to 50 percent. It would be a loss of $10.1 million.
SENATOR TOWNSEND MOVED TO APPROVE THE PROPOSAL TO REDUCE THE LIQUOR TAX INCREASE FROM 100 PERCENT TO 50 PERCENT.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION FAILED. (SENATORS MCGINNESS, TIFFANY, NEAL, AND O’CONNELL VOTED NO.)
*****
Rick Combs, Fiscal Analyst:
The next proposal before the committee is the live entertainment tax. We took the number Senator Townsend generated when he first presented the proposal, and backed into the rate needed in order to generate $18.1 million the first year and $23.1 million the second year. The reason the number is not higher is because revenue currently being received by the casino entertainment tax must be backed out.
Senator O’Connell:
May I have clarification of what is in the live entertainment tax proposal?
Senator townsend:
We looked at the existing casino entertainment tax to see what was included. We found it was easier to describe what had been excluded, including drinks, food, and merchandise inside a defined arena. The result is to get rid of the exemptions, broaden the definition to all live entertainment, no matter where it takes place in the state, and to exclude movies and video rentals.
Senator O’Connell:
Will this capture tax on the gentlemen’s clubs?
Senator townsend:
Yes, if an admission is charged. Then, the easy out might be to not charge admission. Speaker Perkins attempted to address this by suggesting the tax be applied to any liquor, food, or merchandise inside a club not charging admission and providing live entertainment. That idea has some appeal because it keeps people from ducking a tax we are trying to make broad-based.
Senator O’Connell:
I am asking the question because it seems like such a low amount.
Mr. Combs:
The Governor’s proposal was to leave the casino entertainment tax as is at 10 percent. When the admissions and amusement tax was proposed, which is broader than a live entertainment tax, there was no offset to the amount of revenue brought in for the reduction in the casino entertainment tax collections.
Chairman McGinness:
By using 8 percent you are lowering the casino entertainment tax by 2 percent, so there is a loss of revenue.
Senator O’Connell:
What is the current amount of tax the 10 percent is generating?
Ted Zuend, Deputy Fiscal Analyst:
I believe the amount is a little over $70 million a year.
SENATOR O’CONNELL MOVED TO INDEFINITELY POSTPONE THE LIVE ENTERTAINMENT TAX PROPOSAL.
Senator Neal:
Would the live entertainment tax be a substitute for the other tax we had relating to entertainment?
Chairman McGinness:
I believe you are referring to an amusement tax to capture activities such as bowling and golf. This proposal would capture venues where there is live entertainment.
Senator Neal:
I saw a televised show emanating from Las Vegas. How might this tax relate to that type of entertainment?
Senator townsend:
If the show occurs anywhere in the state, on or off a gaming property, and admission is charged, a tax would be applied to the admission. If there is no admission charged and it is by invitation only, there would be no tax.
Senator Neal:
The adjective used to define entertainment in the work document (Exhibit C) is “live.” How many entities that are not live would not be taxed?
Mr. Combs:
Currently there is no admission tax proposed on activities outside of a casino. Inside there are a number of exemptions not subject to the tax. An electronic or recorded music show would not be subject to the tax.
Senator Neal:
Does a show with a mix of recorded music and a live singer qualify as live entertainment? In addition, would the tax be applied if a show originates outside the casino and is piped in through electronic means?
Mr. Combs:
It is my understanding that once there is a live entertainer in the performance, the entertainment tax is implemented. A show which originates outside the casino would not be subject to the casino entertainment tax.
Senator Rhoads:
As I understand it, the $18.1 million is in addition to the current 10 percent tax. Is that correct?
Mr. Combs:
Yes, that is the net of the proposals. You must back out the current estimated casino entertainment tax for the next biennium, and the net of that reduction is a gain of $18.1 million. This is the additional amount of revenue that will be received.
SENATOR O’CONNELL MOVED TO RESCIND HER PREVIOUS MOTION AND TO ADOPT THE PROPOSED LIVE ENTERTAINMENT TAX OF 8 PERCENT.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
The next proposal is the business surcharge.
Mr. Combs:
If the Employment Security Division (ESD) collects the proposed tax of 1 percent of taxable unemployment insurance wages, their system is already in place. If ESD collects the proposed tax, it would begin on October 1, 2003. If the committee prefers the Department of Taxation collect the proposed tax, it would begin January 1, 2004. It is difficult for the Department of Taxation to tell you when they can begin collecting a tax, because they need to have all of new taxes as a group to consider before they tell us when they can get those taxes onboard.
Senator Tiffany:
If ESD collects the tax, is there an administrative fee? Also, who will audit the collections?
Mr. Combs:
The Employment Security Division does not have an appeals process. There are auditors on the staff, but there would be problems in having them administer audits.
Senator tiffany:
I am not in favor of this tax, but I would like to know if we do this and we use ESD to do the collection, is it possible for them to do it for the first year until the Department of Taxation is ready?
Birgit K. Baker, Administrator, Employment Security Division, Department of Employment, Training and Rehabilitation:
The U.S. Department of Labor will require a fee for the use of the system. The estimated fee for the first year is $1.6 million for the development of a subsystem to collect the tax and $1.2 million for staff. These fees are what we believe the U.S. Department of Labor will require in return for utilizing the system. The development of a separate program to administer the tax is required.
Senator Neal:
Tell me how the 1 percent business surcharge on unemployment insurance will work.
Ms. Baker:
There is a line on the required quarterly report when the unemployment insurance contributions are paid showing the collective taxable wages reported for each individual. The tax would be 1 percent of that line and the employer would pay it.
Senator Coffin:
We have discussed employment-based proposals in the past. If we go to another employment-based tax, I believe we need to be careful. In my opinion I think we should consider one proposal only, because of the tendency to dissuade people from hiring. At some point a loss of employment may occur. Do we want to consider both proposals, one proposal, or none?
Chairman McGinness:
It is also my concern if we recommend this proposal, we do not recommend the Business Activity Tax.
SENATOR RHOADS MOVED TO INDEFINITELY POSTPONE THE PROPOSED BUSINESS SURCHARGE TO BE ADMINISTERED BY EMPLOYMENT SECURITY DIVISION.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR NEAL VOTED NO.)
*****
Chairman McGinness:
The next proposal is for the business surcharge to be administered by the Department of Taxation.
SENATOR RHOADS MOVED TO INDEFINITELY POSTPONE THE PROPOSED BUSINESS SURCHARGE TO BE ADMINISTERED BY THE DEPARTMENT OF TAXATION.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR NEAL VOTED NO.)
*****
Chairman McGinness:
The next item is the additional increase in restricted slot taxes. The committee approved a 33 percent increase which will generate $2.3 million the first year and $2.4 million the second year. This will generate an additional $7.7 million each year of the biennium.
SENATOR NEAL MOVED TO INDEFINITELY POSTPONE THE PROPOSAL FOR AN ADDITIONAL INCREASE FOR RESTRICTED SLOTS.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR TOWNSEND VOTED NO.)
*****
Chairman McGinness:
A proposed 5 percent tax on satellite television providers is estimated to generate $3.7 million the first year and $3.7 million the second year.
SENATOR RHOADS MOVED TO INDEFINITELY POSTPONE THE PROPOSED TAX ON SATELLITE TELEVISION PROVIDERS.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR TOWNSEND VOTED NO.)
*****
Chairman McGinness:
The Universal Business Tax (UBT) is estimated to generate $64.3 million the first year and $146.5 million the second year. I will read a description of the tax, which is on page 5 of the work document (Exhibit C).
SENATOR TIFFANY MOVED TO INDEFINITELY POSTPONE THE PROPOSED UNIVERSAL BUSINESS TAX.
SENATOR O’CONNELL SECONDED THE MOTION.
Senator Coffin:
I worry we are not giving these proposals a proper hearing. I received an interesting letter from a Reno businessman. He cannot figure out what the UBT might cost on his $750,000 gross revenue. He is asking for clarification, and the decimal point is confusing most business people. How many taxpayers really understand this tax?
Senator townsend:
Thank you for giving the example. A taxpayer with gross income of $750,000 would pay nothing the first year. There is a $1 million exclusion the first year, and $500,000 the second year.
THE MOTION CARRIED. (SENATORS TOWNSEND AND COFFIN VOTED NO. SENATOR NEAL ABSTAINED FROM THE VOTE.)
*****
Senator Neal:
I am looking for an increase in the gaming tax before any of these other taxes are implemented.
Chairman McGinness:
Senator Schneider has submitted a memorandum (Exhibit D) showing estimated revenue for S.B. 238.
SENATE BILL 238: Provides revenue in support of state budget. (BDR 32-1208)
Chairman McGinness:
Page 6 of the work document (Exhibit C) describes the gross receipts excise tax proposal from the sale of personal property.
SENATOR O’CONNELL MOVED TO INDEFINITELY POSTPONE THE PROPOSED EXCISE TAX BASED ON SALES OF PERSONAL PROPERTY.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
The next item is the real property transfer tax proposal. This shows a net loss.
Mr. Combs:
The action the committee had taken previously was to have a $200,000 exemption and this proposal would raise the exemption to $500,000.
SENATOR RHOADS MOVED TO INDEFINITELY POSTPONE THE PROPOSAL TO INCREASE THE PROPERTY TAX EXEMPTION FROM $200,000 TO $500,000.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
The last item on the chart is the financial institution tax. Senator Schneider’s memorandum (Exhibit D) shows the projection of the tax at $14.7 million for the first year, and $29.4 million for the second year.
SENATOR RHOADS MOVED TO INDEFINITELY POSTPONE THE FINANCIAL INSTITUTION TAX.
SENATOR TIFFANY SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Senator townsend:
Today we have discussed everything on the work document (Exhibit C) shown as additional proposals presented to the committee. The votes taken were for, against, or indefinitely postpone. It is my understanding these are for the purpose of inclusion in an amendment to S.B. 238. Therefore we reserve the right to bring these items to the floor for purposes of floor discussion.
Chairman McGinness:
Everyone is freelance once we get to the floor. There is one additional item we need to consider. The third item on the right side of the work document chart on page 1 (Exhibit C) is the proposal to transfer a share of the property tax growth to the State.
SENATOR RHOADS MOVED TO INDEFINITELY POSTPONE THE PROPOSAL TO TRANSFER A SHARE OF THE PROPERTY TAX GROWTH TO THE STATE.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR TOWNSEND VOTED NO.)
*****
Chairman McGinness:
Let us look at some of the items included in the Governor’s proposal, on page 8 of the work document Exhibit C. The first item requires various departments to adopt regulations for the electronic submission of returns and payments.
SENATOR TOWNSEND MOVED TO ADOPT THE PROPOSAL TO REQUIRE VARIOUS DEPARTMENTS TO ADOPT REGULATIONS FOR THE ELECTRONIC SUBMISSION OF RETURNS AND PAYMENTS.
SENATOR TIFFANY SECONDED THE MOTION.
Senator Tiffany:
Assuming this passes, I would like to send a letter of clarification about the electronic use of credit cards. I suggest there be one centralized state credit card processing unit in order to permit the smaller agencies to take advantage of electronic submission.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
The next proposal is to increase the fee for sales and use tax permits.
SENATOR TOWNSEND MOVED TO ADOPT THE PROPOSAL TO INCREASE THE FEE FOR SALES AND USE TAX PERMITS FROM $1 TO $5.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
The next proposal requires a public body to include provisions in bids that a contractor be registered for all applicable licenses.
SENATOR TOWNSEND MOVED TO ADOPT THE PROPOSAL TO REQUIRE A PUBLIC BODY TO INCLUDE PROVISIONS IN BIDS THAT A CONTRACTOR IS REGISTERED FOR ALL APPLICABLE LICENSES.
SENATOR RHOADS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
The next item appropriates funds for the Department of Taxation to carry out its duties. Mr. Chinnock, is the Senate Committee on Finance discussing the appropriation for your duties?
Charles Chinnock, Executive Director, Department of Taxation:
We only had the Governor’s recommended budget passed. I have a cost estimate, which I have submitted to the chairman of the Senate Committee on Finance.
Senator tiffany:
Have you done anything about looking at a debt collection system? I would like to make sure this moves forward as much as anything else.
Chairman McGinness:
There is an item on page 9 of the work session document (Exhibit C) regarding the state controller acting as the collection agent for an agency owed a debt.
Senator Tiffany:
This is different than that item. We had discussed an entirely different approach for debt collection.
Mr. Chinook:
I believe what Senator Tiffany is talking about is outsourcing of collections for taxes.
Senator O’Connell:
We discussed an outside entity contracting to do collection. Mr. Chinook, you did say you had been looking at such programs.
Mr. Chinook:
We have had conversations with some companies who do collections. I do not have hard numbers because they tell us they can do what we need, but until we have final numbers there is no way to get an actual cost. As far as the billing collection, we do most through the Department of Information Technology in the mailroom. We do not have staff to do the actual mailing and billing.
Senator Tiffany:
Did you say you do not have a third party who goes after debt collection? I was under the impression you used the same company that the controller uses.
Mr. Chinnock:
We do use a company for debt collection.
Senator Tiffany:
Are you aware of what Senator O’Connell is speaking about?
Mr. Chinnock:
I understand we are discussing two issues. One is for debt collection of accounts receivable and one is for outsourcing of our normal billing.
Chairman McGinness:
Is there anything to prevent you from outsourcing at the present time? Do you have the authority in statute?
Mr. Chinnock:
There is nothing other than to account for the confidentiality, and to look at the business process for the service that would be provided.
Senator townsend
Do you require something in statute to enable you to allow providers to bid on these services?
Mr. Chinnock:
I am not sure how to answer. In conversations I have had with subcontractors, I could not get to the specificity of what their per-transaction costs would be and what time frame they require. Until I can get down to specific negotiations and contracts, I am not sure it is cost beneficial even though it is claimed to be. The difficulty is the role we are required to play in order to provide the information. There is no doubt if we could hand the contractor a new tax and say it is a turnkey operation, it would work. I am not sure that is what was envisioned here.
Senator townsend:
I am not asking if you need us to tell you to do this; I am asking if you need us to remove a prohibition from going out to bid, looking at it, analyzing it, putting together a technical committee. Moreover, if you decide to go ahead because it is beneficial to the taxpayer, can you do that?
Mr. Chinnock
I do not believe there is a prohibition to that suggestion.
Senator tiffany:
I am assuming you are going to issue a request for proposal (RFP) or a request for information (RFI).
Mr. Chinnock:
We would look for an appropriation and then seek a RFP.
Senator Tiffany:
In the RFP, are you going to look for a company that can design the system, look at the credit card processing, and do the debt collecting?
Mr. Chinnock:
We would design the RFP to account for all of those.
Chairman McGinness:
I believe the Senate Committee on Finance is addressing the appropriation to the Department of Taxation.
We will refer to what is titled “The Amodei/Care Proposal” on page 8 of the work document (Exhibit C). First we will discuss the proposal to revise the manner in which funds are transferred to the Fund to Stabilize the Operation of State Government, the “Rainy Day Fund.”
Carole A. Vilardo, Lobbyist, Nevada Taxpayers Association:
The purpose of the proposal is to not restrict the amount of funds going into the fund. It is to increase the percentage allowed to go into the fund. Effectively you would have an increase to represent approximately 15 percent.
Mr. Combs:
I wanted to get the intent of the committee to make sure the goal is to increase the calculation of the amount allowed to go into the Rainy Day Fund. If the intent is otherwise, I will review this with the Legal Division of the Legislative Counsel Bureau to make sure we are not reading it wrong.
Chairman McGinness:
Does this make it easier for money to flow into the Rainy Day Fund once the budget reaches a certain increase?
Ms. Vilardo:
Actually when you reconcile the accounts if you have a surplus at the end of the fiscal year, it is the amount of money that can be transferred into the Rainy Day Fund. What you are doing is increasing the amount from what has been 10 percent to 15 percent. The specific intent was to increase the amount of revenue permissible to go into the Rainy Day Fund in good times.
Mr. Zuend:
Perhaps I can put this into perspective. There was $136 million in the Rainy Day Fund when the Legislative Session began. That has been appropriated. The interesting thing is in the 12 years since the inception of the fund, the total amount actually triggered into the fund is about $30 million. The other $106 million was by direct legislative appropriation. In effect, the current trigger is not effective.
Senator Tiffany:
If there is a certain amount of surplus at the end of the fiscal year, is the surplus automatically transferred into the Rainy Day Fund?
Ms. Vilardo:
If memory serves me, when the Rainy Day Fund was implemented, the wording was the controller “may.”
Mr. Zuend:
I believe the controller “must” do it now. The chances of building a big surplus are less in the first year of a biennium than in the second year. Current law requires any amount over 10 percent of the amount appropriated, and once that level is met, two-fifths goes into the Rainy Day Fund. As I have indicated, over 12 years there has only been $30 million triggered into the fund because of the high threshold now in effect. The other $105 million was put in by direct legislative appropriation.
SENATOR TOWNSEND MOVED TO ADOPT THE PROPOSAL TO REVISE THE AMOUNT TO BE TRANSFERRED TO THE RAINY DAY FUND TO 5 PERCENT OF THE AGGREGATE BALANCE.
SENATOR O’CONNELL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Ms. Vilardo:
The next proposal changes the Disaster Relief Fund from a special revenue fund to a special account to stabilize the operation of state government. The recommendation changes the Disaster Relief Fund to a special account of the Rainy Day Fund. You are using the interest from the Rainy Day Fund, up to $500,000, to fund the disaster relief account. Since the Rainy Day Fund has not been able to accumulate enough money when we had better times, the Disaster Relief Fund has not accumulated enough money to be used for all the purposes identified.
SENATOR TIFFANY MOVED TO ADOPT THE PROPOSAL TO REVISE THE DISASTER RELIEF FUND.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Ms. Vilardo:
The next proposal, to revise the expenditure limit formula, is described on page 9 of the work document (Exhibit C).
SENATOR O’CONNELL MOVED TO ADOPT THE PROPOSAL TO REVISE THE EXPENDITURE LIMIT FORMULA.
SENATOR TOWNSEND SECONDED THE MOTION.
Senator Neal:
Is this saying the present calculation does not work?
Ms. Vilardo:
The present calculation has no meaning at all. You would be better deleting it from statute, if you do not correct it.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
Under other work document provisions on page 9 (Exhibit C) is the requirement a business that purchases tangible personal property for storage, use, or other consumption to register with the Department of Taxation.
Ms. Vilardo:
Many service–based businesses will be required to register for the use tax under this proposal.
SENATOR TOWNSEND MOVED TO ADOPT THE PROPOSAL TO REQUIRE A BUSINESS TO REGISTER WITH THE DEPARTMENT OF TAXATION.
SENATOR O’CONNELL SECONDED THE MOTION.
Senator Neal:
Does the Department of Taxation approve of this proposal?
Ms. Vilardo:
I do not wish to speak for them, but we have had discussions in prior sessions. Mr. Chinnock is agreeing.
Senator tiffany:
How would a business be triggered to know they have to register with the Department of Taxation?
Ms. Vilardo
If a company is doing business in a county or a city that has a local business license, current statute asks if the business has registered with the Department of Taxation. Companies currently in business will be sent a notice by the Department of Taxation.
Senator O’Connell:
Do we still have three counties that do not require business licenses? Is there a mechanism to capture the tax from the companies not required to have business licenses?
Ms. Vilardo:
I believe Nye and Douglas Counties do not require a business license. I do not know how those companies will be registered.
Senator Neal:
Is there a cost by the Department of Taxation to implement this provision?
Mr. Chinnock:
This section of the statute could be added as a passive revenue generator. If there is an annual business tax, the use tax could be a part of the filing for companies that do not file on a monthly basis.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman McGinness:
The next proposal requires state agencies to submit to the Budget Division the number of positions vacant for at least 12 months.
Senator townsend:
Why is 12 months used?
Ms. Vilardo:
That is what Senators Amodei and Care put in their proposal. The assumption is, if there is a vacant position for that amount of time, an explanation must be provided to identify each position so an evaluation can be made whether the position is needed. My understanding of the way personnel rules work, when there is a vacant position, personnel in other agencies have the opportunity to apply. There may be a test required, and it can take up to 6 months for the process before a position can be filled.
SENATOR O’CONNELL MOVED TO ADOPT THE PROPOSAL TO REQUIRE STATE AGENCIES SUBMIT TO THE BUDGET DIVISION THE NUMBER OF POSITIONS THAT HAVE BEEN VACANT FOR 12 MONTHS.
SENATOR TOWNSEND SECONDED THE MOTION.
Senator Tiffany:
In the meetings of the Interim Finance Committee, we are always looking at vacant positions. What I would like to see happen in the interim, is to do something about these vacancies. We get reports, and we question the agencies all the time about vacant positions. This proposal does not do anything. If there were a mandate to do something about the vacancies, then this might have some teeth.
Senator O’Connell:
I would like to amend my motion.
Senator Tiffany:
Would you like us to remove the vacant positions and revert the money to the General Fund?
SENATOR O’CONNELL MOVED TO AMEND HER PRIOR MOTION TO INCLUDE ELIMINATING POSITIONS THAT HAVE BEEN VACANT FOR 12 MONTHS, AND REVERT THE MONEY TO THE GENERAL FUND.
Senator Townsend:
I do not disagree with Senator O’Connell’s motion at all. Maybe because some of us are not on the money committees we do not understand. It seems these positions are either needed or not. If they cannot be filled within 12 months, it seems obvious they are not needed. The frustration for many of us is we do not understand why a position cannot be filled in 12 months.
Ms. Vilardo:
My personal response would be to get rid of the positions, once we see after approximately 6 months they cannot be filled. At least 1000 positions have been vacant since 1999.
Senator Townsend:
Senator O’Connell, would you agree to amend the motion to 6 months instead of 12 months?
Senator tiffany:
The private sector can move quickly, the government cannot. Posting the job opening may be slow, going through the interview process may be slow, and the testing process may be slow. This is government, and I believe, in some cases, 6 months is not enough time.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION FAILED. (SENATORS MCGINNESS, RHOADS, AND SENATOR NEAL VOTED NO. SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
*****
SENATOR RHOADS MOVED TO ADOPT THE PROPOSAL TO REQUIRE STATE AGENCIES SUBMIT TO THE BUDGET DIVISION THE NUMBER OF POSITIONS THAT HAVE BEEN VACANT FOR 12 MONTHS.
SENATOR NEAL SECONDED THE MOTION.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
*****
Chairman McGinness:
We will consider the proposal on page 9 of the work document titled Section 161 (Exhibit C).
Teresa Moiola, Assistant State Controller, Office of the State Controller:
There is a pilot program to suspend licenses at the Department of Motor Vehicles for those people who owe a debt to the State. We would like to remove the current sunset, which is October 1, 2003. The Division of Wildlife also uses the program.
Chairman McGinness:
I think we should remove the sunset provision and standardize the $25 bad check fee.
SENATOR TOWNSEND MOVED TO ADOPT THE PROPOSAL TO REMOVE THE SUNSET PROVISION AND STANDARDIZE THE $25 BAD CHECK FEE FOR THE OFFICE OF THE STATE CONTROLLER.
SENATOR RHOADS SECONDED THE MOTION.
Senator Neal:
What does a bounced check have to do with a license to drive an automobile?
Ms. Moiola:
In the past, people have written checks to the State for their vehicle registration or driver’s license renewal and the checks have bounced. This program suspended the registration or license until restitution of the money was made.
Senator Neal:
I do not understand what the Division of Wildlife has to do with driving a car.
Ms. Moiola:
It gives us leverage in order to collect debts owed to the State. In order to receive their license, people must make restitution to any agency to whom they owe money.
Senator Neal:
I do not understand the association between a driver’s license and the Division of Wildlife.
Ms. Moiola:
In that case, the hunting or fishing license is revoked until restitution is made.
Senator Neal:
I can understand that. My question is, would you revoke a person’s driver’s license for writing a bad check to the Division of Wildlife?
Ms. Moiola;
Yes, under this statute that would be allowed. It gives us the additional leverage in order to collect debts owed to the State. The pilot program has been extremely successful. For example, we have collected nearly $1.5 million through the program with the Department of Motor Vehicles.
Senator Tiffany:
Currently, if you renew your license or registration and you have an outstanding debt for a driving violation, you cannot renew until it is paid. This would add another item on to the list.
THE MOTION FAILED. (SENATORS O’CONNELL, RHOADS, AND NEAL VOTED NO. SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
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Ms. Vilardo:
Page 9 of the work document (Exhibit C) proposes a recommendation to take several budget accounts and create a single program budget within the substance abuse programs. The hope is to create a pilot program with the seven to nine agencies that administer programs for coordinating alcohol and drug abuse programs.
SENATOR RHOADS MOVED TO ADOPT THE PROPOSAL TO DEVELOP A PROGRAM TO COORDINATE ALCOHOL AND DRUG ABUSE PROGRAMS.
Senator O’Connell:
Did we not pass a similar bill in the Senate Committee on Commerce and Labor?
Chairman McGinness:
We will hold this until we find out if the Senate Committee on Commerce and Labor passed a similar bill.
THE MOTION DIED FOR LACK OF A SECOND.
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Senator Coffin has forwarded an e-mail from Mr. Spencer of the Clark County recorder’s office. He is imploring the committee to change the effective date of the real property transfer tax to January 1, 2004, in order to avoid a $500,000 additional cost to the contract by the vendor.
SENATOR NEAL MOVED TO CHANGE THE EFFECTIVE DATE OF THE REAL PROPERTY TRANSFER TAX TO JANUARY 1, 2004.
SENATOR O’CONNELL SECONDED THE MOTION.
Senator Tiffany:
If we change the date, is there a guarantee the vendor will not increase the cost?
Chairman McGinness:
The information came from the Clark County recorder. We will need to check with him.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
*****
Senator Neal:
After the meeting concerning an exemption for the taxing of newspapers, I was met by members of the media who claimed we are taxing information. At the time of the earlier action, I was not considering the small newspapers across the state that must report to their constituents.
SENATOR NEAL MOVED TO REPEAL THE TAXATION OF NEWSPAPERS.
SENATOR RHOADS SECONDED THE MOTION.
Senator O’Connell:
Is this repealing all newspapers, or are there some areas that can be captured?
Senator Townsend:
I believe the motion includes papers of general circulation recording information for public consumption, and news of community interest.
Chairman McGinness:
I have been told people who print tabloid-type of publications are already being taxed on the ink and the paper.
THE MOTION CARRIED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
*****
Chairman McGinness:
There being no further business at this time, I will adjourn this meeting at 7:21 p.m.
RESPECTFULLY SUBMITTED:
Cynthia Cook,
Committee Secretary
APPROVED BY:
Senator Mike McGinness, Chairman
DATE: