NEVADA LEGISLATURE

Twentieth Special Session, 2003

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ASSEMBLY DAILY JOURNAL

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THE SECOND DAY

 

Carson City (Thursday), June 26, 2003

 

††† Assembly called to order at 10:25 a.m.

††† Mr. Speaker presiding.

††† Roll called.

††† All present.

††† Prayer by the Chaplain, Terry Sullivan.

††† Let us pray. Dear Lord, in past prayers Iíve asked you to furnish us all with good horses when we get home. I think now, we might all like to have those horses here, so that when we finish this important work we can make a quick get away.

Amen.

††† Pledge of allegiance to the Flag.

††† Assemblyman Oceguera moved that further reading of the Journal be dispensed with, and the Speaker and Chief Clerk be authorized to make the necessary corrections and additions.

††† Motion carried.

MESSAGES FROM THE Senate

Senate Chamber, Carson City, June 25, 2003

To the Honorable the Assembly:

††† I have the honor to inform your honorable body that the Senate on this day passed Senate Bills Nos. 2, 3, 4, 5.

Mary Jo Mongelli

Assistant Secretary of the Senate

INTRODUCTION, FIRST READING AND REFERENCE

††† Senate Bill No. 2.

††† Assemblywoman Buckley moved that the bill be referred to the Committee of the Whole.

††† Motion carried.

††† Senate Bill No. 3.

††† Assemblywoman Buckley moved that all rules be suspended, reading so far had considered second reading, rules further suspended, Senate Bill No. 3 considered engrossed, declared an emergency measure under the Constitution and placed on third reading and final passage.

††† Motion carried unanimously.

††† Senate Bill No. 4.

††† Assemblywoman Buckley moved that the bill be referred to the Committee of the Whole.

††† Motion carried.

††† Senate Bill No. 5.

††† Assemblywoman Buckley moved that the bill be referred to the Committee of the Whole.

††† Motion carried.

general file and third reading

††† Senate Bill No. 3.

††† Bill read third time.

††† Remarks by Assemblymen Anderson and Giunchigliani.

††† Roll call on Senate Bill No. 3:

††† Yeasó41.

††† NaysóAngle.

††† Senate Bill No. 3 having received a two-thirds majority, Mr. Speaker declared it passed.

††† Bill ordered transmitted to the Senate.

MOTIONS, RESOLUTIONS AND NOTICES

††† Assemblywoman Buckley moved that for the balance of session all rules be suspended and that all bills passed be immediately transmitted to the Senate.

††† Motion carried unanimously.

††† Assemblywoman Buckley moved that the Assembly recess until 1:00 p.m.

††† Motion carried.

††† Assembly in recess at 10:38 a.m.

ASSEMBLY IN SESSION

††† At 1:59 p.m.

††† Mr. Speaker presiding.

††† Quorum present.

MOTIONS, RESOLUTIONS AND NOTICES

††† Assemblywoman Buckley moved that the Assembly resolve itself into a Committee of the Whole for the purpose of considering Assembly Bill No. 1, with Assemblyman Perkins as Chairman of the Committee of the Whole.

††† Motion carried.


IN COMMITTEE OF THE WHOLE

††† Assemblyman Perkins presiding.

††† Quorum present.

††† Assembly Bill No. 1 considered.

††† Chairman Perkins:

††† Let me indicate to those of you who have an interest in providing additional information. Itís the Chairís intention not to take public testimony this evening. We have our staff here to provide us a side-by-side comparison of AB 1 and SB 6 for our evening session. Weíll have some discussion from the committee, as well. Depending on the pleasure of the committee, we can take some motions in terms of what we want to change or the direction we want to go. With that, weíll have our staff go through the comparison of the two bills.

††† Brenda Erdoes:

††† Thank you, Mr. Chairman. If you look at the chart you have in front of you, the left column is AB 1; the right column is SB 6. Going down from sections 1 to 24 in each of the bills, is the payroll tax paid by the employer. The differences between the two taxes are only the rate. The rate in AB 1 is .6 percent of base wages. The rate in SB 6 is 1 percent of base wages. Beyond that, the provisions are the same and the effective date is the same.

††† On the tax on live entertainment, which starts on page 25 in AB 1 and 24.10 in SB 6, the rate is the same. As you know, that is continued from the casino entertainment tax at 10 percent. The effective date is the same. The changes to the casino entertainment tax are also the same, so all the way through AB 1 and SB 6 match.

††† Chairman Perkins:

††† As we move through this, let me indicate to the committee that if you have questions or want to interrupt at any point, please chime in and weíll try to answer your questions as we get there.

††† Brenda Erdoes:

††† The next tax is the business franchise fee. It is only contained in AB 1. It is not contained in SB 6. Thatís the one that applies to all businesses. There is a chart in AB 1 that we went over yesterday that has the amounts. It is effective, imposed, as of October 1, 2003. Again, it is not in SB 6. The next tax is the franchise tax on financial institutions. And it is in both bills, at 3 percent of the Nevada taxable income. And the provisions are the same in both AB 1 and SB 6.

††† Page 2 starts the changes that are added to NRS 360 that we talked about yesterday. The changes are the same until you get to the increases in the tax on liquor. That is at the bottom of page 2 of this chart. The only difference is that the increases in AB 1 are 75 percent and the increases in SB 6 are 89 percent. The next tax is the increase on the tax on cigarettes and reducing the collection allowance. The collection allowance is reduced to the same amount, which is .5 percent in both bills. In AB 1, itís 45 cents a pack, beginning in the first year of the fiscal year and then it continues in SB 6, itís 55 cents per pack increase beginning the first fiscal year and continues. And that is the only difference between the two.

††† The permit fees are the same for the LSST (Local School Support Tax) and the Sales and Use Tax. The real property transfer tax provisions are the same. Both the provisions for the rate of the new state tax on real property transfer at $1.30 for each $500 of value and also the effective date. The only difference in the real property transfer tax is in NRS 375.090, which are the exemptions. It is the second parallel section in both of the bills, so itís section 139 of AB 1 and section 102 of SB 6. The Senate version removes the exemption for educational foundations and university foundations. In AB 1, those exemptions to the real property transfer tax are continued; they arenít taken out. Those educational institutions would be exempt from the real property transfer tax.

††† Both of the bills create the Legislative Committee on Taxation, Public Revenue, and Tax Policy. In AB 1, there is a difference in sections 162 to 168. On SB 6, itís 125 to 131. The difference is that in SB 6, there is an added declaration, explaining what the committee is supposed to do. Additionally, many of the duties are either removed or lessened in SB 6. The Assembly bill contains the initial package for that committee that the Senate Taxation Committee originated. They both contain the requirement for the Legislative Committee for Local Government, Taxes, and Finance to study exemptions. SB 6 contains a state room tax at 1 percent of the gross receipts of the rental of transient lodging effective August 1, 2003. No such tax is contained in AB 1.

††† There is a listing here for you of internal reference changes. Those changes match up to their corresponding section. Basically, they are all there if you look down the list of what is not in AB 1. On page 5, you will see that the provisions relating to the State Controller programs are in SB 6 but they are not in AB 1. Starting section 161 of SB 6. Those are the provisions regarding the $25 check charge as well as the continuation of the pilot program for collecting debt. Again, those are in SB 6 and are not in AB 1.

††† The next thing you see there at the bottom of page 5 is telling you that the class size reduction provisions are in AB 1 and not in SB 6. As you go further down, the DSA provisions are also in AB 1 and not in SB 6. On the last page, there are some further scatterings of the internal references that are necessary for the State Controller provisions. Thatís why you see in the column for AB 1 ďno.Ē Other than that, the rest of the bill matches up to be same.

††† Assemblyman Carpenter:

††† Concerning SB 6, on page 84, it refers to contractors complying with all laws and paying sales tax. Is that different than what the statute is at the present time?

††† Chairman Perkins:

††† Which line did you ask about?

††† Assemblyman Carpenter:

††† Itís page 84, section 144, on SB 6.

††† Brenda Erdoes:

††† This provision is in both bills. I would say there is an obligation on the part of all these contractors to follow these laws that are stated in here. What is different about this provision, that is not currently contained in the law, is that this requires a public body who is contracting, under chapter 338, with a contractor has to put in the contract itself that the contractor has agreed to all these laws. The ramification is that should the contractor not comply with one of those laws, it would be a breach of contract, and there is an additional remedy then over what the public body would have at this time.

††† Assemblyman Carpenter:

††† Yes, thank you, Mr. Chairman. Would this then raise the cost of projects that public bodies construct because they have to pay the sales tax on it?

††† Brenda Erdoes:

††† I will let Mark comment on this also. When the Legal Division is looking at things for fiscal impact we make the assumption that everyone is complying with the law. We donít make an assumption that somebody is not complying with it, so from our perspective there would not be an additional cost.

††† Assemblyman Carpenter:

††† I was just wondering. I always thought that when they had a contract for a public building, they didnít have to pay the sales tax on the materials that went into that building, but maybe I was wrong.

††† Brenda Erdoes:

††† This provision wouldnít change that. If there is a provision in the Sales Tax Law that says the contractor has to be a constituent part of the governmental unit before they are relieved of the duty to pay the sales tax. That would be determined based on the Sales and Use Tax Law, and this would not have an impact on that.

††† Assemblyman Mortenson:

††† Thank you, Mr. Chairman. On the tax on live entertainment, does the Senate version have the 5,000-seat exemption?

††† Brenda Erdoes:

††† Yes it does, but it does not have the permanent seat language.

††† Assemblyman Mortenson:

††† Iím sorry, the permanent what?

††† Brenda Erdoes:

††† The Senate version of live entertainment tax does have the 5,000-seat provision, whereby food and drink are not subject to the ten-percent fee in over 5,000 seats, but there is a difference between the Senate version and the Assembly version in that the Senate version does not contain the language about the permanent seating.

††† Assemblyman Mortenson:

††† Thank you, Mr. Chairman.

††† Chairman Perkins:

††† Mark, I know we all have the spreadsheet on Assembly Bill 1. Do we have a similar spreadsheet that describes Senate Bill 6? I think that would be helpful for the members.

††† Assemblywomen Chowning:

††† Thank you, Mr. Chairman. Perhaps you were asking my same question. When we looked at Assembly Bill 1, we had a chart given to us that tells us exactly how much revenue is expected to be generated. We do not have that in front of us for Senate Bill 6, and I think we need that so that we know the changes and the amount of dollars that are expected.

††† Chairman Perkins:

††† I just want to understand from the chair. Do the members not have that spreadsheet? Weíre having copies made and we will have them distributed to the committee.

††† Assemblyman Hardy:

††† Thank you, Mr. Chairman. In way of apology, I e-mailed everybody a definition of a non-profit organization, and in further reading of SB 6 and AB 1, that definition is carried over, AB 1, page 19 and 21. I suspect that our good legal, LCB people are going to make that definition go forth everywhere. With respect to AB 1, page 19, section 62, line 31, 33, and page 21, section 68, lines 3 through 5, and, if youíre really good at turning pages, SB 6 page 28, section 62, lines 38, 40 and page 39, section 75.3, lines 37 through 39, the concept would be to make sure that the language carries forward in all of those places. I see a head shaking but I didnít hear the answer.

††† Brenda Erdoes:

††† Yes, if this body would like to add that definition, we will definitely do that.

††† Assemblyman Hardy:

††† There is at least one body in here that would like that. Thank you, and may I ask another question, and maybe a conjecture with it?

††† Chairman Perkins:

††† Certainly.

††† Assemblyman Hardy:

††† My esteemed chairwoman of the Health and Human Services committee, I defer to your knowledge on Disproportionate Share Hospitals (DISH) payments made to hospitals that take care of indigent. We are in a position where we would like hospitals to take of the indigent, instead of cherry picking the Medicaid that pays well, and the insurance that pays well. If we exempt hospitals from the collection, if we exempt hospitals that take care or receive governmental payments, then one of the motivations for a hospital to accept the indigent, and therefore DISH payments, would be to get an exemption from a taxation. The reality would be that we would like the access to care that we need for the indigent who are not insured. I would love to have comments on this from some of my colleagues. Thank you Mr. Chairman.


††† Chairman Perkins:

††† Thank you, Mr. Hardy. Does someone wish to address Mr. Hardyís concern and question?

††† Assemblywoman Buckley:

††† Thank you, Mr. Speaker. Probably what would be most helpful is in Senate Bill 6. There is some sort of exclusion with regard to governmental reimbursements for providers of health care. Iíve read so many versions. Is that in the Senate Bill version?

††† Brenda Erdoes:

††† Yes, but I also thought it was in AB 1.

††† Assemblywoman Buckley:

††† I thought it was, too. I thought that our lists were identical, and if we are reviewing them side by side, perhaps we could start with a comment on that.

††† Perhaps while our staff is looking for an exact reference number so we could examine them, I believe what the discussion in the various committees and bodies was that the payments that were made by governmental bodies would not be included in the definition of revenues as subject to any sort of tax. The further issue of, just because you do indigent care, and you all know this better than I do, federal law requires that hospitals not turn away people just because of their indigent status. This body has, in its various sessions, worked very diligently, including our chair of the Health and Human Resources Committee, who served on the interim committee looking at an examinations to insure that hospitals were reimbursed their fair share for taking care of the indigent. The interim committee came up with a formula. I believe UMC was first, Lake Mead second. They ranked them and they came up with a formula. That plan was approved by this entire body, and so I think we felt very confident in the work of that committee, that we had justly examined and established a policy with regard to DISH, and that the provision in the bill which excluded the government payments to providers of health care, along with all of that work that had been done in DISH was a good and fair balance.

††† Brenda Erdoes:

††† We do have the citation. It is on page 25 of AB 1. It is on line 40, and it says, ďany revenue received by a hospital or a provider of health care from a governmental entity.Ē That is what would cover the DISH payments.

††† Chairman Perkins:

††† Thank you, Brenda. Does that answer your question, Mr. Hardy?

††† Assemblyman Hardy:

††† It answers the question, maybe not to the satisfaction of the hospital who is going to have to pay a licensing fee of $350,000 annually as well as $6.2 million in tax for indigent care. I think there is some information we probably need from the industry to look at how this, because they didnít have SB 6 and AB 1 at the time, is really going to figure out. I have a little wonder still in my head about what that is and would like maybe to have staff look at that particular thing, and see what the balance would be to the hospital, as we further massage this budget. Thank you Mr. Chairman.

††† Chairman Perkins:

††† Thank you, Mr. Hardy.

††† Iím not sure what youíre asking, but we will have some sort of analysis created.

††† Let me indicate to the committee as well that assuming that we end up with a bill that we can pass out of the Assembly, there is no question in my mind that there will have to be further discussion with the State Senate. They will have some different approach to this than we do. I very rarely advocate the passage of a bill that doesnít meet the requirements of the number of people that it needs to pass by, but in the situation we find ourselves in now, I think that it is prudent, much as we heard from our colleagues down the hall when they sent SB 6 to us, that there needed to be further discussion and further tweaking. We will do our best, but in the interest of time I think part of this will be accomplished not just in this committee but Iím sure in further discussions with the State Senate.

††† Assemblyman Mabey:

††† Thank you, Mr. Chairman. I just want a clarification on the franchise fee in AB 1. If a hospital took care of a patient, billed that patient and they were indigent and could not pay, would they still pay a tax according to their billed charges.

††† Brenda Erdoes:

††† No, this tax is only on revenue actually received. In fact, if there was a bad debt, or anything like that, where even if it was counterfeit currency, they can subtract that. So, truly only the money that they do receive would be taxable.

††† Assemblyman Mabey:

††† Would that be the same for a physician also?

††† Brenda Erdoes:

††† Yes, for any entity.

††† Assemblyman Mortenson:

††† Thank you, Mr. Chairman. There is an increase in the permit. You will see on page 3, ďincrease permit fee for issuance and renewal of permit for sales and use tax.Ē This is a permit that is given or sold to, or issued to a business for collecting tax and remitting it to the state. Is that the permit weíre talking about?

††† Brenda Erdoes:

††† Yes.

††† Assemblyman Mortenson:

††† In the past, there hasnít been an annual renewal fee. What is the renewal fee now?

††† Brenda Erdoes:

††† Itís a dollar right now. Instead of an annual renewal fee, Iím sorry the way that it works then is not changing; there is a fee if you let that lapse for some reason. The only thing that happens in this bill is that you change one dollar to five dollars. But there is currently a renewal for this particular fee and all weíre doing in the bill is changing the one-dollar to five-dollars.

††† Assemblyman Mortenson:

††† Is the renewal based on the amount of tax collected or is a flat fee for the tiny business and the big business?

††† Brenda Erdoes:

††† Itís a flat fee just for the permit itself, and it doesnít relate to how much of the tax you actually collect.

††† Assemblyman Mortenson:

††† The renewal fee is how much? Is this an annual renewal fee?

††† Brenda Erdoes:

††† There are actually several of these fees. In AB 1, on page 61, they are for both the sales and use tax, thatís the 372 reference and the LSST which are the 374, but it says that at the time of making an application the applicant must pay the department a permit fee, which was one dollar but has been changed to five dollars, for the permit. The next section says, a seller whose permit has been previously suspended or revoked must pay the departmental fee of five dollars, and it was also previously one dollar, for the renewal or issuance of the permit.

††† Assemblyman Mortenson:

††† OK, I understand.

††† Brenda Erdoes:

††† †Thatís the kind of renewal it is.

††† Assemblyman Mortenson:

††† †It is a renewal if it has been forfeit or if you have let it go. OK, thank you very much.

††† Chairman Perkins:

††† Thank you, Mr. Mortenson. As I look at the spreadsheet for Senate Bill 6, and compare that to Assembly Bill 1, it appears that the major revenue differences are the amount for cigarettes in the first year being 55 cents in Senate Bill 6 relative to 45 cents in Assembly Bill 1. The liquor increase is 89 percent in Senate Bill 6 and 75 percent in Assembly Bill 1. The room tax is in Senate Bill 6 and not in Assembly Bill 1. The employer tax is at 1-percent of capped wages in Senate Bill 6 and .6-percent in Assembly Bill 1. Assembly Bill 1 has a bracketed franchise fee, while Senate Bill 6 does not have such a fee. Let me ask Mark. Does that fairly encapsulate the differences between the two bills, in terms of the taxes that are generating these revenues?

††† Mark Stevens:

††† Yes, Mr. Chairman. There is also a difference in the Secretary of State fees. I believe the annual renewal in the Senate Bill is $125 and in the Assembly Bill is $110, so there is a difference for the Secretary of State fees, but it is not as large as some of the other differences that you had pointed out.

††† Chairman Perkins:

††† Are the Secretary of State fees in Senate Bill 6, or were they in Senate Bill 2?

††† Mark Stevens:

††† They were in Senate Bill 2. Currently that is the vehicle for the Secretary of State fees.

††† Chairman Perkins:

††† Thank you. Are there any further questions from the committee?

††† Assemblyman Griffin:

††† Thank you, Mr. Chairman. I have a clarifying question. In section 77 of Assembly Bill 1, page 25, subsection 4 it says, ďAny pass-through revenue of the business entityÖĒ Does that include someone who contracts with an agency? My mother is a realtor; she is an independent contractor for a real-estate company. The commission goes to the real-estate company and then gets distributed to the realtor. I know we have discussed this before, but I donít remember if it was now or if it was three months ago. Thank you.

††† Brenda Erdoes:

††† A normal pass-through for a real-estate broker is tied in, by the use of the term, pass-through revenue, to section 66, which is on page 20 of the bill, and if you look at lines 7 through 12, that is where it is covered. ďPass- through revenue means revenue received by a business entity solely on behalf of another in a disclosed agency capacity,Ē and it says specifically, ďincluding revenue received as a broker.Ē That is what would cover that situation.

††† Assemblyman Parks:

††† Thank you, Mr. Chairman. I have a question with regards to section 139 of AB 1. On page 67, is the provision dealing with the exemptions with regards to real property transfer tax. The first one was a question that had come up and had been discussed previously, and I was simply inquiring about the intent. I think we were going to go back and take a second look at it to make sure that we got it to say exactly what we want it to say.

††† Chairman Perkins:

††† Are you looking for a response on that, Mr. Parks?

††† Assemblyman Parks:

††† Yes, this would be a question for Ms. Erdoes.

††† Chairman Perkins:

††† Please restate your question.

††† Assemblyman Parks:

††† We made some changes regarding subsection 1 of section 139, and I know that we had some discussion a couple of days ago about whether or not this was doing exactly what were hoping it would do. I just wanted to follow up on that.

††† Chairman Perkins:

††† What is it that you were hoping to do?

††† Assemblyman Parks:

††† Well, we found that much of the wording in these exemptions was quite archaic, and sometimes they were even redundant. It had been initially intended to delete that first exemption and we determined that, no we did not want to delete it. However, we were concerned that the re-wording might not do exactly what we had intended it to.

††† Brenda Erdoes:

††† Maybe it would be helpful at this point if I tell you the way that we would interpret subsection 1 now, saying a mere change in the name of the owner of the property without a change in the ownership interest would apply solely in cases where the ownership interest didnít change at all, not even in a percentage. For example, when a business changed its name, but the ownership interest didnít change, this would cover a case for an individual whose name changed whether by marriage or in some other way, so that they could get the deed changed so that it reflected the correct name. This would only apply, clearly, where an ownership interest didnít change at all.

††† Assemblyman Parks:

††† Thank you. Perhaps I could draw an example. If somebody owned an eighty acre parcel and decided to split it up and develop it and transfer it to a subsidiary corporation. Would it exempt them from paying a transfer tax to one of its subsidiary corporations?

††† Brenda Erdoes:

††† I do not believe it would, because I believe that would be a change in the ownership interest, even though the companies are perhaps affiliated or one is a subsidiary of the other. It would still be a change in the ownership interest.

††† Assemblyman Parks:

††† Thank you.

††† Assemblywoman Giunchigliani:

††† Thank you, Mr. Chairman. I believe when we did the bank franchise tax that it applies only to banks and not mortgage and credit unions, but Iím having difficulty locating the actual language on that. Is it section 24? Iím currently looking at SB 6.

††† Brenda Erdoes:

††† I think that the definitions are the same. In AB 1, itís in section 93.18 for the definition of financial institution. I believe it includes everything thatís in Title 55 and Title 56, plus those in chapter 604, 645 B, 645 E or 649. I think that does include the mortgage companies, but I believe that credit unions are exempt.

††† Assemblywoman Giunchigliani:

††† This is under subsection 2 then. OK, Thank you.

††† Assemblyman Goldwater:

††† Thank you, Mr. Chairman. Brenda, Iím trying to get my mind around section 11 in both bills, which is the payroll tax, and I see this cite to NRS 612.545. So, with the payroll tax, we are using the base wage and capping it at 66. Whatís not included there is anything over the 66. That sort of caps it there.

††† Brenda Erdoes:

††† Thatís correct. You report two things; there is a line 3 and a line five. I believe itís line 5 that, if you are an employer, you report your base wage which is that capped wage, which is only up to the 66 and two-thirds. This provides that you pay .6 percent of all of the wages that you report under that line. Therefore, the total amount for each employee that you have, whatever you pay them under that for the base wage, would be subject to the .6 percent tax.


††† Assemblyman Goldwater:

††† How does this work, for example, for independent contractors or perhaps employment agencies and temporary agencies and leasing agencies? Will the state have the ability, like the federal government does, to have some sort of reporting mechanism that says we paid a person for a service, and are they making sure they claim that wage as independents or any other entity.

††† Brenda Erdoes:

††† The mechanism that is built into this tax is in both bills. It depends on how you report it for the purposes of NRS 612. There isnít anything additional that I know of for this tax. So if they are, for example, not paying unemployment compensation amounts for that person, then they also would not pay the payroll tax. If you are asking if there is anything else built into the tax that would let them catch that, I donít believe there is. We were relying upon the NRS 612 procedure to work.

††† Assemblyman Griffin:

††† Thank you, Mr. Chairman. I have two quick questions on the bank franchise tax, and Iím sorry because I know Ms. Giunchigliani just asked this. Are mortgage brokers not included in the bank franchise?

††† Brenda Erdoes:

††† I believe they are included. They are licensed under one of these chapters, I think itís 645.

††† Assemblyman Griffin:

††† Was Ms. Giunchiglianiís concern to exempt them? OK. It was, thank you. My question is, and Iím looking at AB 1, page 31, section 93.20, ďNevada taxable income means the amount of the federal taxable income of financial institution, as adjusted pursuant to section 93.42 of this act.Ē Iím assuming that is Nevada income only. Is that, again looking at section 93.42, apportionment of Nevada income. Iím just trying to make sure that were still exempting all of the revenue that would occur to a financial institution, which occurs outside the state of Nevada.

††† Brenda Erdoes:

††† Yes, that revenue is exempted. It is actually exempted in two ways. One is by the mechanism that you see here for the apportionment of it. There is an additional provision that says that they cannot tax anything that would be unconstitutional to tax, and there is a commerce clause issue, in most cases, with taxing out of state revenue. So, both of those would play together, but basically the apportionment factor here would allow only the in state revenue to be taxable.

††† Assemblyman Griffin:

††† Thank you, Mr. Chairman.

††† Chairman Perkins:

††† Thank you, Mr. Griffin. Are there further comments or questions from the committee?

††† Assemblywoman Giunchigliani:

††† Thank you, Mr. Chairman.† I would like to ask Mark to clarify, looking at the taxation revenue options on the spreadsheet, what is the total revenue?† Is it $359.3 and then $513.6 in the second year?

††† Mark Stevens:

††† Are you looking at the Senate sheet?†

††† Assemblywoman Giunchigliani:

††† Correct.

††† Mark Stevens:

††† The total revenue that is estimated to be generated on the Senate sheet is $359.3 million the first year and $513.6 the second year.†

††† Assemblywoman Giunchigliani:

††† So Senate Bill 6 raises $872.9 million over the biennium?

††† Mark Stevens:

††† $872.9 million is the projected estimate.

††† Assemblyman Grady:

††† Thank you, Mr. Chairman.† Regarding AB 1, page 62, subsection 4, where it talks about the county recorders may deduct and withhold .02 percent for the collection.† Then we compare that with SB 6, page 46.† It has the exact same language but the counties under $100,000 are allowed one percent.† I thought that was in both bills, but it has been changed in the Assembly bill.†

††† Brenda Erdoes:

††† That is correct.† AB 1 has a .2 percent collection allowance for all counties and SB 6 has a bifurcated system for the smaller counties to get one percent.†

††† Assemblywoman Leslie:

††† Thank you, Mr. Chairman.† This is a pretty simple question and I think I know the answer, but I wanted to make sure.† In regard to the cigarette tax, you have 45 cents in AB 1 the first year and then it says 55 cents further down with a different effective date.† But, we are only raising it 10 cents between the two years.† We are not raising it one dollar over the whole year.† It is 45 cents and 55 cents, right?†

††† Mark Stevens:

††† In AB 1 the cigarette tax would be increased by 45 cents in July of 2003 and an additional 10 cents in July of 2004.

††† Assemblywoman Leslie:

††† Thank you.

††† Assemblyman Hardy:

††† Thank you, Mr. Chairman.† My question is regarding the franchise tax for financial institutions.† I know there was some discussion on the other side, as we are talking about SB 6, about making the payroll tax the vehicle.† Taking a financial institution that allegedly would like to look more at a payroll of three times as much as the payroll tax of other businesses.† Could I hear some discussion on where that went and if we are entertaining that, because I still think that the payroll tax is easier to administer and probably have as much income without the franchise tax without having the other forty-five bodies and in the forty-five computers and the new improved infrastructure in the state.† Where was that in the discussion?††

††† Brenda Erdoes:

††† All I can tell you on that is last night the Senate Committee of the Whole had that suggestion made to them by one of the lobbyists, but that change was not included in the motion on which they voted.† I didnít hear any discussion of it past the suggestion being made by the lobbyist.†

††† Chairman Perkins:

††† As I recall, Mr. Hardy, in watching the hearing last evening, the representative for that industry asked to have three times the payroll tax drawn against those institutions instead of a separate franchise tax, which was not accepted by the Senate.†

††† Assemblywoman Giunchigliani:

††† Thank you.† If I might, Mr. Chairman, I was just going to point out, having watched the same thing.† During the discussion it sounded good to offer a three percent increase but these were not employee-heavy businesses.† Therefore, while it might sound better, they actually were not going to generate the revenue and down the road, as they had more and more ATMs and less and less employees.† They would be saving dollars and we still would be impacting negatively more of our community-based banks and actually impacting them negatively versus the larger banks.

††† Assemblyman Hardy:

††† So did they say it had to be a live employee?† Thank you, Mr. Chairman.

††† Chairman Perkins:

††† It sounds like asking if we had to have a live legislator.†

††† Assemblyman Mabey:

††† Thank you, Mr. Chairman.† Regarding the franchise tax for the banks, I have heard from some banks that it is going to hurt them tremendously.† I hear about Harley-Davidson and how they are going to lose a thousand jobs here in Carson City and Bank of America is going to lose jobs.† I would like to hear some thoughts about that.† Perhaps some want to raise this franchise tax on the banks but my concern is that if we lose all these jobs that they say we are going to lose, then it will be a tax that wonít be good.

††† Chairman Perkins:

††† I can offer you my understanding of this issue.† We can probably even refer to Chairman Parks of the Committee on Taxation who heard those discussions.† At three percent it is apparently significantly lower than any of the states around us.† I believe in California it is 10.8 percent and other states are five or six percent.† I think Mr. Parks had a chart, earlier today or yesterday, which he was referring to, so that he could bring that information to the committee.† I see him searching his desk for that and if I talk long enough perhaps he will find it in time to respond to your question.†

††† Assemblyman Parks:

††† Thank you, Mr. Chairman.† Yes, in the joining states, California currently has a tax of 10.84 percent, and I believe an additional two percent that is also calculated into it.† Arizona is 6.98 percent, Idaho is 7.6 percent, Oregon is 6.6 percent, and Utah is 5 percent.† Those are the adjoining states and the rates they currently have.†

††† Chairman Perkins:

††† I think part of the discussion we have had in the past, relative to that particular mystery, is their preference was to be put into the same tax with other industries.† It was difficult, if I am remembering the discussion over the four and a half months properly, to plug them into any of these proposals that generated what was believed to be their percentage of our economy, or the share that they would participate in to fund the stateís revenues.†

††† Assemblyman Mabey:

††† If it were true that they would pay the same amount if they paid three times the payroll tax instead of the franchise tax, are you saying that is not true?

††† Chairman Perkins:

††† I donít know if that is true, or not true.† I think it would probably start out that way.†† I think the point Ms. Giunchigliani made was it seems to be an industry that moves more and more toward automation then employee driven.† For that reason it becomes, perhaps over time, an issue that the payroll then doesnít exist if employees donít exist, if I am not mischaracterizing what you were saying, Ms. Giunchigliani.†

††† Assemblyman Mabey:

††† Thank you.

††† Assemblyman Geddes:

††† Thank you, Mr. Chairman.† Following up on that issue, as well as bringing in the franchise tax, when we are looking at a broad based business tax, the perspective I am looking from, is that what we are trying to do is get a broad-based business tax?† The purpose of it is to look at the services that we are providing the citizens of Nevada as far as education, healthcare, and mental health.† We are looking at the services that we need to provide an individual.† In the case of a bank, if it is going more and more toward ATMs, that is less and less people they will employ, making less services that they need from the state.† I am not sure that is a negative thing where we need to still be getting money out of them.† Similarly, with the franchise fee, if you have ten employees in the state and you are making $100 million, I am not sure where it needs to be a higher fee for you to pay versus someone who has one hundred employees or a thousand employees.† If we are looking at citizens and services provided to individuals, linking it to individuals makes a lot of sense.† I am not sure why that link needs to be made if we are linking it to the actual profit, or the amount of money there.† Maybe someone would address it from that perspective.† If there are more ATMs and less tellers, it doesnít drain state services or mental health, or put more people in the schools, so I am not sure of the relationship there.†

††† Chairman Perkins:

††† My only response would be, just because you have fewer employees doesnít necessarily mean there are fewer services provided to a particular business. For example, ATMs, from my own experience, are a prime spot for a law enforcement response.† Often that is where some sort of criminal activity may occur and someone may become a victim.† When we pave our roads, when firefighting services are required, or law enforcement services are provided, or even services that we provide here by the State are provided to those various businesses in various capacities, it is not necessarily people driven or employee driven.† There is some share of responsibility for those services, as well, if they have fewer employers than more.†

††† Assemblyman Goldwater:

††† Mr. Chairman, thank you.† This is in response to my colleague, Dr. Mabey, regarding one financial institution.† I was able to pull up their annual report.† Bank of America, for example, in the year 2002, earned before taxes, $12.9 billion.† In income tax alone they paid $3.7 billion to the federal and state governments.† They increased their annual dividend over the past twenty-five years at a rate of 12 percent.†† How that relates to employment in Nevada, if this franchise fee, clearly by those numbers, is a teardrop in the ocean relative to the overall financial picture and how it relates to more or less labor-intensive financial services is very difficult to say.†† Nothing about the franchise fee would be conclusive and we could probably argue ad nauseam on that particular issue.†

††† Chairman Perkins:

††† I guess if you look at the entire sheet, whether it is a $75 annual fee for a business license fee or some of the other issues in here, they are not necessarily people driven.† That is certainly and policy and philosophical discussion.†

††† Assemblyman Griffin:

††† Thank you, Mr. Speaker.† I think this was asked yesterday, but I canít find it.† Are the financial institutions exempt from the franchise fee if we implement the 3 percent?

††† Brenda Erdoes:

††† Yes, they are exempt from the franchise fee, not the payroll.

††† Assemblyman Griffin:

††† Thank you.

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman.† I want to add a little to the conversation about the franchise concept versus a payroll concept.† I think one of the issues that you look at in tax policy, and I am trying to remember what they told me a month ago, is fairness in equity and profitability.† If someone is earning at a profit level of 50 percent or higher, they are making millions and millions.† There is a concept that if you can afford to pay, you will pay your relative share.† That is what net profits is based on.† That is a concept that is adopted and embraced by forty-seven other states and it is one that I would vote for tonight, but I donít think that is going to pass this legislative session.† I believe the fairest way to go is to tax someone on their net profits.† What, at least, the franchise tax does is by having it be combined with the payroll you get at both types of businesses.† You get a tax with the franchise on businesses that donít hire a lot of employees but the employees they hire may still have a great demand for services.† We see that in some industries, without naming names, that instead of hiring full-time employees with good health care, they hire part-time employees and offer no health insurance that then take advantage of government health programs or having to go to UMC or Washoe Medical because they have no healthcare insurance.† Additionally, those same companies may have the highest possible profits but because they donít operate under the good business sense and practices that most companies do, they end up increasing their profits by not affording people healthcare insurance.† The only way to look at that issue is to have a franchise fee.† This franchise fee was reduced so that it is a very small amount, because it is coupled with a payroll tax, and the payroll tax reduces the BLT.†

††† What we are trying to do is achieve some balance and not let those companies who hire people without offering the same benefits that so many good companies do, get a competitive advantage over those Nevada businesses that want to offer healthcare insurance and provide better wages to their employees.††

††† Assemblyman Hettrick:

††† Thank you, Mr. Chairman.† With all due respect to the Majority Leader, I have to say, that I think if we start that direction and start talking about profits, and whether or not businesses should pay based on profit, then we are going to go to a lot of places where a whole bunch of people in this building donít want to go.† I think we need to be very careful there, and I think the same thing is true of talking about wages and benefits paid, and the like, for various employees in various businesses because, in my opinion, tax policies should be based on fairness and equity, and many of the things the Taskforce said, including transparency, and a lot more.† If we are going to start pulling in individual criteria based on specific businesses, then I think we are opening many businesses up to being subject to changing their level of taxation based on their profitability.† That has been turned down, thus far, by this legislature and I would suggest that we shouldnít be basing our decisions here on a companyís profitability.†

††† In some of the states that have franchise fees on banks the fee matches an income tax on businesses and that is why it is done at that level.† That is not what we are talking about doing here.† Here we are talking about putting a specific fee, at a much higher rate, on a specific industry.† I think the argument that is being proposed is, ďWhy is it fair to do perhaps payroll only on some businesses, but on others we are going to do payroll and a fee?Ē† I think that is the issue in question.† From the information that I have been given, the banks pay an average wage of about $44,000 compared to many employers in this state who hire a huge number of employees at minimum wage.† We can argue all day long if we want to get into specific industry criteria about which groups take the most services.† Again, I think if that is the direction we want to go, then we should go there, but if not, then I donít think we should use specific industry data on one group to justify additional taxation.† One of the things that needs to be done here is to look at fairness, equity, and ease of collection and not go to something that will take forty-five additional employees in the Department of Taxation to hit one industry.†

††† Assemblyman Goldwater:

††† Mr. Chairman, I am thrilled to hear the Minority Leader is finally embracing the work of the Taskforce.† It is thrilling to know that well thought out, well documented work, which did seek equity and fairness, is now something you are looking to embrace.† That is thrilling.† One way I would like to correct myself, Mr. Chairman, is that we are talking about taxing and taking, and taxing and taking, and I really think of taxation as more of an investment in this state.† Companies that pay taxes long term get a better trained workforce and get better social infrastructure.† I am going to start referring to taxes as an investment in the State of Nevada and we will move away from industry-specific citations and just say that certain industries invest in other states and donít invest in Nevada, yet prices for their goods and services seem to be the same.† My future citations to taxation will be investments in our state.†

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman.† I have just a couple of comments.† Under both versions of the bills, banks would not pay twice.† Every business would pay a small payroll tax and every business would pay a franchise fee.† It is just that some businesses will pay a regular franchise fee and some banks will pay the bank franchise because banks are different than most other businesses.† I think our Nevada banks are pretty profitable.† That is a good thing.† We have free market economy and we want businesses to make money, but when businesses have the ability to pay they should.†

††† Letís look at a couple of statistics on banks.† The average deposits per location nationwide are $53 million and in Nevada is $96 million.† The return on assets nationwide is 1.2 percent and in Nevada it is 5.2 percent.† The return on equity nationwide is 13.1 percent and in Nevada it is 33.4 percent.† The pre-taxed return on assets ratio in 2002 was 1.7 percent nationwide and 8.1 percent in Nevada.† The net interest margin nationwide was 3.9 percent and in Nevada was 6.3 percent.† The non-interest income to average earning assets in 2002 nationwide was 2.9 percent and in Nevada was 12.0 percent.† I could go on and on.† The source for this is FDIC, Division of Insurance and Research, Call Report and Thrift Financial Report, April 9, 2003.† Yet, even with this high profitability, again, we are not trying to do what California does.† We are not going for 10.8 percent.† What we are trying to do is have everybody pay their fair share.† Banks have made lots of money in Nevada.† They have not paid a tax when they have paid a tax in every other state.† All we are asking them to do is to finally pay their share in our state.† Right now, they get to deduct all taxes they pay to the federal government, but they donít get to deduct the taxes they pay to us, of course, because they donít have to pay any.† The other states get the benefit by us not just getting our fair share, and that is what we are trying to rectify in this session of the legislature.† We are trying to broaden the base so that when the economy goes down we are not so reliant on one industry that we are able to provide a minimal level of services, which makes us proud to live in this state and raise our families.†

††† Chairman Perkins:

††† At this point, having gone through the comparison of AB 1 and SB 6, and having the dialog we have had, it would be the Chairís intention to work off Senate bill 6, in the interest of time.† If we find the ability to pass a bill out of this house, if we pass a Senate bill and it goes back to the Senate it would cut our processing time down, because as we have said before, it most likely will end up in further discussions in a conference committee, or something of the sort.† As it relates to Senate Bill 6, the Chair would be interested in hearing your suggestions on changes so that we could continue to have some progress.†

††† Assemblyman Griffin:

††† Thank you, Mr. Chairman.† I want to make sure I understand what you just asked.† We are to make suggestions to Senate Bill 6, right?†

††† Chairman Perkins:

††† Yes, the Chair is interested in accepting amendments to Senate bill 6 so that we can make some progress this evening.†

††† Assemblyman Griffin:

††† If I may suggest, and I know I have made this suggestion repeatedly, but I will refer back to the able work of this bodyís taxation committee where we, in total detail, went through each line item of all these taxes.† When we discussed the alcohol tax I thought there was some compelling testimony for a 50 percent increase.† There was some discussion in some of the rural communities that there is an out-of-state market that exists in a pretty steady fashion of alcohol purchases due to the fact that we have a relatively lower tax rate.† I would like to amend SB 6 to include the alcohol rate at 50 percent.† Thank you, Mr. Chairman.

††† Chairman Perkins:

††† We have a motion from Mr. Griffin and a second by Mr. Conklin.† Is there discussion on the motion?

††† Assemblyman Hettrick:

††† May we have a one-minute recess please?

††† Chairman Perkins announced if there were no objections, the Committee of the Whole would recess subject to the call of the Chair.

††† Committee of the Whole in recess at 3:12 p.m.

IN COMMITTEE OF THE WHOLE

††† At 3:15 p.m.

††† Assemblyman Perkins presiding.

††† Quorum present.

††† On motion of Assemblywoman Buckley, the committee did rise and report back to the Assembly.

ASSEMBLY IN SESSION

††† At 3:16 p.m.

††† Mr. Speaker presiding.

††† Quorum present.

MESSAGES FROM THE Senate

Senate Chamber, Carson City, June 26, 2003

To the Honorable the Assembly:

††† I have the honor to inform your honorable body that the Senate on this day passed Senate Bill No. 6.

Mary Jo Mongelli

Assistant Secretary of the Senate

INTRODUCTION, FIRST READING AND REFERENCE

††† Senate Bill No. 6.

††† Assemblywoman Buckley moved that the bill be referred to the Committee of the Whole.

††† Motion carried.

††† Mr. Speaker announced if there were no objections, the Assembly would recess subject to the call of the Chair.

††† Assembly in recess at 3:20 p.m.

ASSEMBLY IN SESSION

††† At 7:54 p.m.

††† Mr. Speaker presiding.

††† Quorum present.

MOTIONS, RESOLUTIONS AND NOTICES

††† Assemblywoman Buckley moved that the Assembly resolve itself into a Committee of the Whole for the purpose of considering Assembly Bill No. 1 and Senate Bill No. 6, with Assemblyman Perkins as Chairman of the Committee of the Whole.

††† Motion carried.

IN COMMITTEE OF THE WHOLE

††† Assemblyman Perkins presiding.

††† Quorum present.

††† Assembly Bill No. 1 and Senate Bill No. 6 considered.

††† Chairman Perkins:†

††† The committee will come back to order. I am going to ask if itís agreeable to the maker of the motion and seconded if they would withdraw those at this point.† To be more organized, it is my intention to go down the list and take them in order.† It would be easier for our staff to keep track.

††† Assemblyman Griffin:

††† I withdraw my motion for the purpose of proceeding in order.

††† Assemblyman Conklin:

††† I withdraw my second.

††† Chairman Perkins:

††† Thank you.

††† Assemblyman Hettrick:

††† I appreciate you allowing me the one-minute recess. All I wanted to do, for the rest of the bodyís clarification, was confirm, which you and the Majority Leader did, that the vote is on the concept of what should be or not be included in a bill and does not necessarily mean anyone is going to support the ultimate bill. It would be on voice votes, as I understand it, using a simple majority. I just want all members to know the idea is to make the best possible bill. We are all working to get something out of here that we can support. If we make it a better bill, it will be easier to do. I would urge everybody to work on making the bill as good as possible.

††† Chairman Perkins:

††† What we will do is take a motion on each individual provision. Then, when we arrive at the final product, take an overall motion and vote.

††† Assemblywoman Giunchigliani:

††† Thank you, Mr. Chairman. Based on those lines, I would like to take up the first item on our sheet, which is taxes on wages paid by the employer, or better known as the payroll tax. I believe it is referenced throughout sections 1 to 24 including definitions and so forth. I would suggest that we amend the payroll tax from the 1 percent recommended in SB 6 back to the 0.6 percent recommended in AB 1.

††† Chairman Perkins:

††† Ms. Giunchigliani has moved to amend SB 6, sections 1 to 24, from 1 percent of base wages to .6 percent of base wages, seconded by Mr. Goldwater. Is there discussion on the motion?

††† Assemblywoman Giunchigliani:

††† Thank you, Mr. Chairman. The whole issue of the payroll tax gave many of us discomfort. With this opportunity to offer compromise, at least members in our caucus felt, we needed a reasonable payroll tax in lieu of the business license tax because we would be helping businesses by not having the additional business license tax would be more fair. However, it would not be the cornerstone, or the main tax contained within this legislation, because I believe we still need a broad-based business tax. So, that is why the motion I offer still does include a payroll tax, but at a lower amount.

††† Chairman Perkins:

††† Would it be your intention as we move through the bill that the business license tax, or the ďheadĒ tax as it has been referred to, continue to be repealed?

††† Assemblywoman Giunchigliani:

††† Correct. That would be my intent.

††† Chairman Perkins:

††† Further Comments on the motion?

††† Assemblyman Hardy:

††† Thank you Mr. Chairman. That would increase the number of heads working the number of computers, plus put more reliance on another tax that isnít as easy to administer, as I see it.† Is that right?

††† Assemblywoman Giunchigliani:

††† Could you repeat that, I apologize.

††† Assemblyman Hardy:

††† The amendment that you are proposing would put a greater burden on other taxes proposed. If we are looking at SB 6, you would have a relatively easy-to-implement payroll tax become a tax that is less easy to implement. Therefore, you would be increasing the number of state employees and the number of computer spots to be worked by those employees.

††† Assemblywoman Giunchigliani:

††† No, I donít believe we would be adding state employees.† That budget has already been closed, and we actually have already appropriated $20 million over the biennium to allow for the Department of Taxation to move into a more computerized system. In fact, that recommendation will actually come forward because we will have open bids on that part of it. It is my understanding there are several businesses that already have a tax program in place, and we may not even have to expend that dollar amount.† It has been reserved, if I recall from the first session. So there should not be any impact on both state employee hiring nor on technology because that has already been appropriated. In addition to that, the payroll taxes are already being collected. By recommending the lower amount, I believe there will be further amendments recommended to this body for consideration that would actually include a broader based tax which lessens the burden for all businesses, but more equitably spreads it out. So again, we have to remember, any time we make any shifts or adjustments in the dollar amount it could have an impact on the increase or decrease someplace else. For example, if we donít take a certain amount for a liquor tax, you may have to adjust upwards or downwards in other places. I believe that we need a broad-based tax, and I donít think the payroll tax should be the cornerstone of this piece of legislation. By reducing it, those of us which had a great deal of angst about going to, what I perceive, as a more regressive tax, are conceding that, but in addition I think there will be a recommendation for us to consider a broad-based tax as well.

††† Assemblyman Hardy:

††† Thank you, Ms. Giunchigliani. I probably have just a difference of opinion. Obviously, as I have stated, by creating a new franchise tax, a new department would be created. The key tax in SB 6 would be the payroll tax and the key tax in AB 1 would be a combination of payroll tax and franchise tax. If I had my druthers, I would like the franchise tax to be less, if not any, and the payroll tax to be tweaked so that everybody gets an opportunity to do it, and then a 3 percent tax, but that is just addressing the difference of philosophy. Thank you Mr. Chairman.

††† Assemblywoman Giunchigliani:

††† I appreciate that and it is exactly the discussion that we are having at this point. I would still argue that going to higher payroll tax in lieu of a broad-based tax really does allow big businesses to take a walk, and I donít think that it was our legislative intent or charge for this session.† Even more importantly, I do believe that we have heard this evening we do not wish to put further restrictions to prevent businesses from locating here or to prevent expansion for business growth. I think a payroll tax will eventually do that if weíre not careful with how high it goes. It will become a more regressive tax and actually limit businesses from expanding and hiring additional employees, and I donít think that is what we want to do. That is part of the reason why some of us have accepted the concept, but at a lower rate.

††† Assemblyman Hardy:

††† To respond, if youíre going to ďstill argueĒ then I will argue again. I look at the franchise tax as doing exactly that, and it is not as predictable as a salary or a payroll tax. So, I think if I were a business, I would be more interested in having something predictable instead of the franchise.† Itís a difference in philosophy.† Thank you.

††† Assemblyman Mabey:

††† Thank you, Mr. Chairman. For once Dr. Hardy and I agree. So, I would like to have the payroll tax to be the way it was in SB 6, for the same reason stated earlier. Thank you.


††† Chairman Perkins:

††† Are there further comments or questions to the motion? All those in favor of the motion please indicate by saying ďAye.Ē Any opposed? Motion carries. We are now on the tax on live entertainment, which is the same in both bills.

††† Assemblyman Geddes:

Thank you, Mr. Chairman. I want to state again that I do not support the exemption on those facilities with greater than 5,000 seats for their food, beverages, and merchandise contained in both bills. I know weíre looking into the intent and where things are going on this tax, but I have concerns with it. I also have concerns on how it would apply to non-profit entities that team up with for-profit entities and some of these definitions. Until that legislative intent is clear, I can not support this particular tax.

††† Assemblywoman Leslie:

††† Thank you, Mr. Chairman. As I have told Mr. Geddes, I share those concerns. Weíre waiting for more information from our staff, and we will work on it.† Hopefully by the conference, we will have an answer. Thank you.

††† Chairman Perkins:

††† We will move on to the business franchise tax, the third item on section 1. Are there comments or suggestions on that section?

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman. I move that we adopt the franchise tax as contained in AB 1.

††† Chairman Perkins:

††† I have a motion by Ms. Buckley, seconded by Ms. Giunchigliani, to include the business franchise fee from AB 1 into SB 6. Comments.

††† Assemblyman Geddes:

††† Thank you, Mr. Chairman. Sorry to continue to beat this horse. Would the maker of the motion and seconded, be willing to entertain it without the 5,000 limit, or would the chair be willing to accept an amendment to remove the 5,000 cap?

††† Chairman Perkins:

††† There is no 5,000 cap in the franchise tax. Is there further discussion on the motion? All those in favor of the motion, please indicate by saying ďaye.Ē Any opposed? Motion carries. We are on the franchise tax on financial institutions which is the same in both bills. If you turn to page two of your sheets, I am looking at some differences between the two bills. The next difference would be the liquor tax on the bottom of page two. That is the one that Mr. Griffin brought up earlier. Mr. Griffin did you want to speak to it again?

††† Assembly Griffin:

††† Thank you very much, Mr. Chairman. I donít need to restate the reasons why, but I would like to move that we adopt a rate of 50 percent on alcohol.

††† Chairman Perkins:

††† Mr. Griffin has moved that the increase in liquor tax in SB 6 be changed from 89 percent to 50 percent. Is there a second to the motion? Seconded by Mr. Geddes. Would you please restate your reasoning Mr. Griffin.

††† Assemblyman Griffin:

††† I would go back to the testimony that was received in the Assembly Taxation Committee. There are a lot of rural communities, and I think statewide at some level, where we are an exporter of alcohol and by raising the tax much beyond 50 percent we may see a reduction in sales due to pricing ourselves out of that advantage. Not that I am trying to sound like millions of dollars are small dollars, but in the scheme of this budget it probably is small dollars, 50 percent is probably the most responsible policy. That was my reason.


††† Assemblywoman Buckley:

††† I oppose the motion. I agree with my colleague that it should be lowered. The Senate went with 89 percent and I think that is too high. I would be comfortable with the 75 percent level as we have discussed all session. I think it helps and gives recognition to the concepts brought up my colleague. It does accomplish some reduction, but not so† much as to unbalance it and have us be too far from the Senate in that regard.

††† Assemblyman Geddes:

††† I just have to mention I only received three total responses from constituents, including letters, phone calls, and e-mail on this particular tax, which flat-out makes me nervous. I just wanted to add that.

††† Chairman Perkins:

††† Further comments on the motion? All those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion fails.

††† Assemblywoman Buckley:

††† I would move that we decrease the amount to 75 percent.

††† Chairman Perkins:

††† We have a motion by Ms. Buckley, seconded by Mr. Horne to decrease the 89 percent increase to 75 percent. All those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† The next item is the cigarette tax on page three at the top of your list. The difference is AB 1 increases by 45 cents per pack the first year and an additional 10 cents to 55 cents per pack the second year. The Senate bill has 55 cents per pack in both years.

††† Assemblyman Parks:

††† I move that we amend SB 6 to revise the rates to 45 cents additional to 80 cents per pack in the first year of the biennium and 55 cents per pack in the second year of the biennium, which would make it 90 cents per pack.

††† Chairman Perkins:

††† Mr. Parks has moved that SB 6 be amended to reduce the cigarette tax in the first year and similar in the second year to reflect the numbers in AB 1. Seconded by Ms. Leslie. Are there comments on the motion? Seeing no comments, all those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman. I just wanted to clarify the increase was not cumulative. It is 45 cents in the first year and then another 10 cents in the second year.† It is not adding together.

††† Chairman Perkins:

††† The next difference on your sheet is on the bottom of page 3 relative to the real property tax. AB 1 exempts the transfers of or to the educational university foundation in subsections 14 and 15 of section 139.† In SB 6 those exemptions do not exist. Is there appetite in the body to address that issue?

††† Assemblywoman Giunchigliani:

††† I would move that we accept the exemption that is currently in AB 1 and amend it into SB 6 to allow the university educational foundation exemption to remain.

††† Chairman Perkins:

††† Motion by Ms. Giunchigliani, seconded by Ms. Chowning. If I understand the exemption, it would mean properties that are sold, not gifted, to those particular educational institutions or foundations would then be exempt from the tax.† If that correct, Brenda?

††† Brenda Erdoes:

††† The gifted ones would also apply. I had a quick question. There are two exemptions. Are you moving that the educational foundation and the university foundation or just the one?

††† Assemblywoman Giunchigliani:

††† Both that are currently contained in AB 1.

††† Assemblyman Goicoechea:

††† Wouldnít it make more sense if we did that for any government entity be exempted from the transfer tax?

††† Brenda Erdoes:

††† Governmental entities are currently exempted. These are foundations that are treated as private because they are separate foundations and money separated from the governmental money, for example, the University.† It is private money that is paid in and not treated as public money in any other way.† That is why the exemption was included.

††† Chairman Perkins:

††† Further comments on the motion? All those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† The next difference is in the Legislative Committee on Taxation, Public Revenue and Tax Policy. Brenda, would you please describe that difference.

††† Brenda Erdoes:

††† There is yet another difference as Mr. Grady pointed out in the real property transfer tax.† It is not in the chart.† I missed it, but there is a difference between SB 6. There is a bifurcated system for paying the county recorders for collecting the real property transfer tax. It is 1 percent for the rural counties and .2 percent for the larger counties.† In AB 1 it is .2 percent for all of the counties.

††† Assemblywoman Buckley:

††† I move that we stay with the original version in AB 1, which is the same amount for everyone.

††† Chairman Perkins:

††† We have a motion by Ms. Buckley, seconded by Mr. Goldwater to include the provisions from AB 1 relative to the real property tax that would create a .2 percent allowance to local governments at all levels instead of the .2 and 1 percent in SB 6.

††† Assemblyman Hettrick:

††† I would have to oppose that motion. In the smaller counties the amount of money is insignificant except for the county that has to collect it. In the big picture of money collected statewide, it means almost nothing, but the little counties are going to have to go through the collection process, and .2 percent of the amount is almost nothing. I think to put that burden on them without the ability to have some way to pay for it is not right. I would oppose this motion.

††† Chairman Perkins:

††† I believe there is a clause in SB 6 that states, ďWhen requested, the department shall render assistance to the county recorder of a county whose population is less than 30,000 relating to the imposition and collection of the tax imposed by section 95 of this act.Ē Does that provide a vehicle by which those counties can seek some relief if the collection allowance does not cover their costs?

††† Brenda Erdoes:

††† It does provide that the Department of Taxation will render assistance to them and does not limit the type of assistance they would get.

††† Chairman Perkins:

††† Would that take care of some of your concerns, or not?

††† Assemblyman Hettrick:

††† I appreciate the fact that they can request assistance, but I donít think that will be ongoing. Once we put this in place and they must do it on a regular basis, this does not define what that assistance might be.† If it were ongoing cash assistance it might be one thing, but if it is to just go out one time and say, ďWeíll help you set up a way to do this,Ē and then they have ongoing costs, I donít think it covers it.† I think it is better than not, but I donít think it satisfies the issue I am concerned about.

††† Chairman Perkins:

††† Iím not sure it would preclude them, on an annual basis, petitioning the Department of Taxation for whatever relief they needed in terms of cost.† I donít think this was intended to be a windfall for local governments, but if they had some need they could certainly petition for it.

††† Assemblywoman Buckley:

††† Additionally, I think it is uncontested that the majority of money from the real property transfer tax is going to be raised in Clark County to fund the state. There are a lot of taxes where Clark County pays the lionís share and makes up for the fact that the rurals just canít.† We all acknowledge that is the way it is. So, the state is going to receive the lionís share of this money from Clark County, so it seems a little inconsistent to say that the rural counties keep a larger collection allowance than Clark County. Although I would happy to talk to any of my rural colleagues should they be willing to vote for a tax plan and to lower this.

††† Chairman Perkins:

††† Further comments on the motion? All those in favor of the motion please indicate by saying ďaye.Ē Any opposed? The chair is unable to decide. Would the ďayesĒ please raise their hands. Would the ďnosĒ please raise their hands. The motion passes. The next item, as I mentioned before, is the small difference in the Legislative Committee on Taxation, Public Revenue and Tax Policy.† Brenda would you please describe that difference, please.

††† Brenda Erdoes:

††† If you want to look at SB 6 on page 68 it basically states, ďthe Nevada Legislative hereby finds and declaresĒ and it talks about the 19th Special Session and the continuation.† That declaration is not contained in AB 1.† Also some of the duties are lessened and an extra section is added at the end of the bill, section 196.3 on page 133, and its separate duties added for the same committee which requires the committee to review and study the impact, if there is one, on imposition of the live entertainment tax on different venues and whether it causes a problem for those venues.

††† Assemblywoman Giunchigliani:

††† I move to go with the language in AB 1. I think this area gives additional accountability based on what is done in the 20th Special Session.

††† Chairman Perkins:

††† Ms. Giunchigliani has moved to include the language from AB 1, instead of language in SB 6, concerning the Legislative Committee on Taxation, Public Revenue and Tax Policy. Seconded by Ms. Leslie. Comments on the motion? Seeing none, all those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† The next difference between the two bills is the state room tax on page four.

††† Assemblywoman Gibbons:

††† As a representative in Washoe County, District 25, where Washoe County has the highest room taxes in the state, I am making a motion to delete the 1 percent gross receipts from the rental of transient lodging.

††† Chairman Perkins:

††† Ms. Gibbons has moved to delete the room tax from SB 6, seconded by Mr. Hardy. Comments on the motion? Seeing none, all those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† Brenda please point out the next difference.


††† Brenda Erdoes:

††† SB 6 has the controller provisions for the 25 check charge and continuation of the program with the Department of Wildlife and† Department of Motor Vehicles for the collection of debt. AB 1 does not have those provisions.† They are interspersed throughout the bill.

††† Assemblyman Arberry:

††† I move that we delete the personnel and administrative information from NRS 353.1465 down to 353.288 and any provisions related to the State Controllerís program.

††† Chairman Perkins:

††† The differences in the two bills are at 353.213 and sections 161 to 165 of SB 6. Apparently, the motion is to delete section 148 and sections 161 to 165 of SB 6, seconded by Ms. Giunchigliani. Please clarify that motion for the body.

††† Assemblyman Arberry:

††† The Ways and Means Committee decided during the hearings not to do this, and now at the end of the second special session, SB 6 is trying to backdoor the recommendation of the committee. The committee recommended not to do this, so we want to delete it.

††† Assemblywoman Giunchigliani:

††† Along the lines of section 148, the language mentioned in the Senate hearing that was very uncomfortable for the committee binds the hands of the legislature and so this language is recommended for deletion as well.

††† Chairman Perkins:

††† Are there further comments or questions on the motion? Seeing none, all those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† This point on the sheet is difficult to follow. If you have a recommendation, please indicate.

††† Brenda Erdoes:

††† Class-size reduction provisions starting at section 194.2 may be the next thing to look at.

††† Assemblyman Goldwater:

††† In an effort to bring SB 6 into line with what the Attorney General pointed out is our constitutional duty to pass a balanced budget as well as fund a budget, I would like to move that section 194.2 and 194.4 including class-size reduction, as well as, 194.6 which includes the distributive school accounts and all accompanying citations, be included in Senate Bill 6.

††† Chairman Perkins:

††† There is a motion by Mr. Goldwater, seconded by Mr. Williams, to include from AB 1, sections 194.2, 194.4, 194.6, 195.2 and 195.4. Comments on the motion? All those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† The next provision in conflict is on the top of page 6, the State Controller Provision in section 178 of SB 6.

††† Assemblywoman Giunchigliani:

††† This is one more area where State Controller language was added, so I would move that in any of the items on page 6 where there is a difference between AB 1 and SB 6 we go with the AB 1 language. The State Controller provision, section 178, 180, 184, 185, 186, and 229.7 to eliminate the original language that was added in those sections.

††† Chairman Perkins:

††† For clarification, the motion is to delete sections 178, 180, 184, 185, and 186 from SB 6, seconded by Ms. Leslie. Are there comments on the motion? All those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† The other differing sections in the two bills would be sections 227, 229, and 229.7, which are in AB 1 and not in SB 6.

††† Assemblywoman Giunchigliani:

††† I move to use the language in AB 1 and rectify the differences between the two bills.

††† Chairman Perkins:

††† Ms. Giunchigliani has moved to include sections 227, 229, and 229.7 from AB 1 into SB 6, seconded by Ms. Leslie. Are there comments on the motion? Seeing none, all those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† There are a number of areas in the bills that are fairly large. For structural and organizational sake, we will take those differences.† If there are other suggestions from the committee, please bring them up. Did the staff get those motions?

††† Brenda Erdoes:

††† Yes, we did. There is one additional thing. Because there is a problem with the DSA allocation, Mark can tell you the numbers. You may choose to make those changes as well.

††† Mark Stevens:

††† As I indicated yesterday, there was an amendment which needed to be made to authorized amounts in the Distributive School Account bill in AB 1, section 237.3 on page 153 of the bill. In subsection 1, the authorized amount needs to be changed from $208,890,478 to $203,448,548 and in subsection 2 the amount of $147,771,085 needs to be changed to $142,024,404 to reflect the change in the collection allowance.

††† Assemblywoman Giunchigliani:

††† So moved.

††† Chairman Perkins:

††† Ms. Giunchigliani moves to make the changes presented by Mr. Stevens, seconded by Mr. Goldwater. Are there comments on the motion? All those in favor of the motion please indicate by saying ďaye.Ē Any opposed? Motion carries.

††† Assemblywoman Gibbons:

††† I move to delete the provision, since the restricted slots are paying the 33 percent and previously agreed to pay, to eliminate them from having to pay the franchise fee. Since they previously agreed to the 33 percent increase, I think it is too punitive to expect them to pay the franchise fee, as well. They were upfront with us and agreed to pay.† I appreciate people coming to the table to make it work for us. I donít want to put them completely out of business.

††† Chairman Perkins:

††† There is a motion by Ms. Gibbons to exclude the restricted gaming licensees from the franchise tax, seconded by Mr. Hettrick. Are there comments on the motion?

††† Assemblywoman Buckley:

††† I would oppose the motion. While we certainly can look at this over the next couple of days, if we start giving everybody an exemption then there is no point in having a tax. While I appreciate they agreed to a lower amount, so did gaming, and we decided to increase that. I think we have decided to increase every tax a little bit more than anybody could say. I donít know if anybody ever says how much they really will pay. I will certainly agree to continue to work with my colleague to look at the language and the exact numbers and how much it would change. But, that means it would lower it if we are going to stay balanced, we have to raise another one, and I am not sure which one we would have to raise. It still needs more discussion, so I will not be supporting the motion.

††† Assemblyman Goldwater:

††† I have a question for the maker of the motion. I think I could support this motion if it is not a broad exclusion of the franchise tax. I certainly would say that the amount they pay, 33 percent of the gaming tax, would be okay as an exclusion, but certainly not an absolute broad exclusion. What was the motion? Was the intent to exclude only the amount that was paid or a broad exclusion of the franchise tax.

††† Assemblywoman Gibbons:

††† My intent was to delete it from the franchise tax.

††† Chairman Perkins:

††† Was it all the revenue in those industries or was it just the amount being taxed?

††† Assemblywoman Gibbons:

††† The revenue from the restricted slots.

††† Assemblyman Goldwater:

††† You are saying that people who pay the slot route operators tax would then be excluded entirely from paying the franchise tax or is your motion the amount of tax that they pay as a special licensee as a slot route operator be excluded from what they would pay in franchise, and anything above that would be subject to the franchise tax?

††† Assemblywoman Gibbons:

††† I would like them to be treated like other businesses being taxed and excluded from the tax previously collected from them, like gaming for instance.

††† Chairman Perkins:

††† Does that answer your question, Mr. Goldwater?

††† Assemblyman Goldwater:

††† It leaves a little ambiguity. I would support the motion if we excluded only the amount that they paid in lieu of franchise tax, but everything over that would be subject to the tax. I donít think I understand the motion well enough.

††† Assemblywoman Gibbons:

††† I think you do, and we are on the same page. They pay the 33 percent increase, so whatever they pay on their slot routes would be similar to what gaming receives as a credit.

††† Assemblyman Anderson:

††† I think my esteemed colleague from Reno is trying to say that there would be, on the gross receipts of the business entity from the operation of slot machines, it would be restricted to slot machines and slot machines only.† That, I think would probably garner some lever of support.† I am not real happy about the idea.† I agree with the Majority Leader that if we will begin carving out exemptions we will be carving them out forever.††† If that is what your intent is, Ms. Gibbons, rather than from the overall, I think we are okay.† I think that is what Mr. Goldwater was looking to, as to whether you are restricting it to the gross receipts from the operation of the slot machines only.†

††† Chairman Perkins announced if there were no objections, the Committee of the Whole would recess subject to the call of the Chair.

††† Committee of the Whole in recess at 8:58 p.m.

IN COMMITTEE OF THE WHOLE

††† At 9:07 p.m.

††† Assemblyman Perkins presiding.

††† Quorum present.

††† Chairman Perkins:

††† We are discussing the Gibbons/Hettrick motion to exclude the restricted gaming licensees from the franchise tax. Are there further comments on the motion?† All those in favor of the motion please indicate by saying aye. Are there any opposed?† The Chair is unable to decide. Would the ayes please raise your hands?† Would the nays raise your hands, please. The motion fails.

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman. Staff has agreed to look further at this issue to see what the cost differential was. I think some of the concern was that it would perhaps completely wipe away any obligation of the franchise, but I understand the authorís intent and would like to work with her to pursue examination of it to see if it is something that may be looked at in the final package. I want to thank her for bringing it.

††† Assemblywoman Gibbons:

††† Thank you, Mr. Chairman. I appreciate the comments from the Majority Leader and I will be happy to work with this body and help correct the inequities.

††† Chairman Perkins:

††† Thank you. I think it is pretty clear to all of us that we are far from final product.

††† Assemblyman Griffin:

††† Thank you, Mr. Chairman. Would this be an appropriate time to seek an amendment to reinstate the audit of the K-12 systems of the school districts?† I believe we passed out Assembly bill 162, it was amended in the Senate, but I believe ultimately killed. Would it be appropriate to insert that to this bill?

††† Chairman Perkins:

††† Let me ask counsel. Brenda, is it germane to the education portions of the bill?

††† Brenda Erdoes:

††† I apologize. I need some further detail on what is contained in that or what the provision is that you want to add.

††† Chairman Perkins:

††† I believe what he is asking about is we passed Assembly bill 162, which was the audit of the school districtsí K-12 system. The audit provision passed out of the Assembly and died in the Senate. Mr. Griffin is asking if we can amend that into this bill.

††† Assemblyman Griffin:

††† That is correct. That is the motion.

††† Brenda Erdoes:

††† Thank you. Now I do understand. I believe that would fit constitutionally within one of the subject titles of the state financial administration so I think you could appropriately amend it into this bill.

††† Assemblyman Griffin:

††† Should I clarify the motion or is it understood.

††† Chairman Perkins:

††† Restate it please.

††† Assemblyman Griffin:

††† I move that we amend Assembly bill 162 from the 72nd Legislative Session into Senate bill 6 of the 20th Special Session.

††† Assemblyman Goldwater:

††† I second the motion.

††† Chairman Perkins:

††† We have a motion by Mr. Griffin and a second by Mr. Goldwater. Are there any comments on the motion?†

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman. I obviously support the motion. I think accountability, along with the revenue, makes sense. I was wondering if, perhaps, we might want to vote on this tomorrow in order to have copies on everyoneís desks and distributed to the public.


††† Chairman Perkins:

††† I am not sure how long Assembly bill 162 was and what the provisions were. I think everyone is in support of an audit, but I think what the Majority Leader is asking is to first have that language and make sure the people are comfortable with it. Mr. Griffin, do you have a response to that?

††† Assemblyman Griffin:

††† Sure, if we want to wait until tomorrow, Mr. Chairman, I think that is fine.

††† Chairman Perkins:

††† There is no desire by the Chair to move this bill this evening so we have time.

††† Assemblyman Horne:

††† Thank you, Mr. Chairman. I support this amendment. I thank Mr. Griffin for bringing it. I canít tell you how many times I had to talk to constituents about this very issue. They have asked me why Assembly bill 162 had not passed and they were asking for it. I think it is a great idea.

††† Chairman Perkins:

††† Mr. Griffin, would you mind withdrawing your motion for this evening and bring it back tomorrow?†

††† Assemblyman Griffin:

††† I move to withdraw the motion.

††† Chairman Perkins:

††† Thank you.

††† Assemblyman Hardy:

††† Thank you, Mr. Chairman. I would make the motion to redefine the nonprofit definition in Senate bill 6 to the definition that everyone received via e-mail, and was approved by the Legislative staff.

††† Chairman Perkins:

††† Does counsel have that amendment?

††† Assemblyman Hardy:

††† Yes.

††† Brenda Erdoes:

††† Yes, I have that language.

††† Chairman Perkins:

††† Can you describe it to us, Brenda?

††† Brenda Erdoes:

††† Yes. Currently, with the payroll tax, the nonprofits that are exempted in the provisions of Section 612 are 501 C 3 only. This language would change that so that 501 C nonprofit corporations would also be exempt from the payroll tax. It would be an amendment to page 2, line 14; the definition of nonprofit would change. Instead of referring to NRS 121 it would actually provide for nonprofits that have a 501 C registration and they would all be exempt.

††† Chairman Perkins:

††† We have a motion from Mr. Hardy to bring that provision into conformity with the rest of the bill. Is there a second?† There is a second by Mr. Carpenter. Are there any comments on the motion?† All those in favor of the motion please indicate by saying aye. Are there any opposed?† Motion carries.

††† Assemblyman Hardy:

††† Thank you, Mr. Chairman. I have another motion to amend the hospitals, or safety net providers, who are required to provide care under the federal Emergency Medical Treatment and Active Labor Act, from the business franchise fee. In as much as the cost of health care is going up and hospitals and medical providers of every kind, including nursing homes, are under contracts with different organizations such as the Culinary Union. When they write a new contract for providing care, for instance in the Las Vegas area, the Culinary contract is going to come up, any increases in their franchise fee would likely have to be passed on making medical access more expensive and I donít think that is our intent. I would move that we exempt hospitals that are required as safety net providers, from that as well as recognizing that nursing homes are in a critical state now. I would recommend and move, likewise, that we exempt them from the business franchise tax.

††† Chairman Perkins:

††† We have a motion by Mr. Hardy and a second by Mr. Mabey. If I understand the motion, it is to basically exempt hospitals and nursing homes from the franchise tax.

††† Assemblyman Hardy:

††† Correct. Thank you.

††† Chairman Perkins:

††† Are there any comments on the motion?

††† Assemblyman Carpenter:

††† Thank you, Mr. Chairman. I would like to speak in favor of the motion. In Elko we have a for-profit hospital. This hospital put up $40 million to build a state-of-the-art medical facility and I know that any extra tax we put on them is going to be passed directly to those patients. Right now, it is very difficult to take care of the indigents because the County doesnít have enough funds to fully fund indigent care. I believe anyway we can aid these facilities would really help them.

††† Assemblyman Collins:

††† Thank you, Mr. Chairman. I have a question for the maker of the motion. Is that for the indigent care only, or for the full hospital?† I think Las Vegas has the worldís most profitable hospital in the United States. I just want clarification of the amendment.

††† Assemblyman Hardy:

††† To answer my colleagueís question, yes, this would allow the hospitals to continue to afford to be able to take care of the indigent. Yes, it would apply to the hospitals and nursing homes, recognizing that when you write a contract you are going to have to figure out how to cover those contracts in the financial world that is happening with medical access to care. This is a critical element. Thank you, Mr. Chairman.

††† Assemblyman Collins:

††† Thank you, Mr. Chairman. I donít believe that we could do it for the whole hospital but maybe we could narrow it down to the indigent care proportion, which is one to two percent of a hospitalís operation. Otherwise, I would like to be exempt because I have a disabled veteran working for me. Get me out of the franchise tax. I donít want to go that far.

††† Assemblyman Hardy:

††† Thank you, Mr. Chairman. We have to recognize that the hospital is also paying property tax and other fees. If we actually get something here that will pass, they will be paying a payroll tax that will increase and replace the BAT tax, but obviously be more than the Business Activity Tax. So, they will have a good share of taxes that they will be paying now and in the future. It will make it more costly for those contracts and for medical access to care. Thank you.

††† Assemblyman Goldwater:

††† Mr. Chairman, thank you. I appreciate Dr. Hardyís motion. There are so many worthy candidates for exemptions. I think this body is aware of my opposition to exemptions and incentives. I would have to oppose this motion, based on that. I imagine the people who are sitting in these spots in the future are going to propose so many exemptions to this that it wonít even be funny. All those nice people sitting in the back of the room are probably going to make a very nice living trying to get those exemptions in, over time. Right now I think we need to get as broad based a tax as we can get and let them come fight for the exemptions in years to come.

††† Assemblyman Hardy:

††† Thank you, Mr. Chairman. I am not proposing a license plate to go with this motion. Thank you.

††† Assemblywoman Mcclain:†

††† Thank you, Mr. Chairman. If you would look on page 25 of Assembly bill 1, revenues that are exempt from the franchise fee includes any revenue received by a hospital, or provider of healthcare, from a governmental entity. That would cover DiSH payments, Medicaid, etc., so they are already exempt for the money they get for indigent and Medicaid patients.

††† Chairman Perkins:

††† I think Dr. Hardy is suggesting exempting them from the other revenues, as well.

††† Assemblyman Mortensen:

††† Thank you, Mr. Chairman. I, also, agree with Mr. Goldwater. We have, I believe, in Nevada the highest ratio of for-profit hospitals versus nonprofit hospitals in the nation. I would like to see some incentive for getting some nonprofit hospitals into the state and this might be part of that. I would be against an exemption. There are too many other people who want exemptions.

††† Assemblyman Hardy:

††† Thank you, Mr. Chairman. I am kind of where you are, Harry, in that if, and this is a scenario, you motivate a for-profit hospital to be a provider for Medicaid indigent care, they may find themselves willing to become more involved with the access to care and be motivated to do that. Yes, there are advantages to increasing fees on everyone, but the reality is we are in a crisis with access to medical care. This is one of things that will make that more expensive and all of the costs will go up to everybody, including those who are under contract with trade unions and negotiations should that franchise fee go forth. Thank you.

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman. I oppose the motion. I was trying to look on the Internet quickly for profits for some of the hospitals in Las Vegas, which are astronomical. I recall, from the hospital cost containment debates, that Columbia Sunrise Hospital had the highest billed charges, I think, in the country. The profits in Las Vegas also were the highest in the country. Including states that required them to pay a tax. We can talk philosophy, and Dr. Hardy and I probably agree, that healthcare has become too much of a business instead of a profession. That has not helped healthcare. We have what we have and we have healthcare being a giant for-profit industry. When that industry is making large sums from Nevada and paying taxes in every other state, but not giving us the benefit of any lower costs, then it is time for those entities to pay their fair share.

††† Assemblyman Hardy:

††† Thank you, Mr. Chairman. I see where this is going so the maker of the motion is interested in, also, rural Nevada, and I am wondering if there is an appetite to have a population cap attached to this motion. I would be amenable to such.

††† Assemblywoman Leslie:

††† Thank you, Mr. Chairman. I wasnít going to address that issue. I wanted to ask Dr. Hardy if, when he said nursing homes, he meant all long-term care facilities, also?† Some of them arenít very good. Were you going to include that in your motion?

††† Assemblyman Hardy:

††† Yes, I would include nursing homes, it is hard to find a home that can take people and that is one of the major issues of access to care, even long-term care.

††† Assemblywoman Leslie:

††† Would you include the long-term facilities as well?

††† Assemblyman Hardy:

††† Yes, maíam.

††† Assemblywoman Leslie:

††† I would definitely be opposed to that. We have some long-term care facilities in this state that are doing an abominable job of serving our elderly. I definitely would not be in favor giving the whole industry a break.

††† Assemblyman Hardy:

††† I would be amenable to amending the motion to only the good ones.

††† Assemblywoman Leslie:

††† In my opinion, most of the really good ones are nonprofit ones and are already included in the exemption in the bill.

††† Assemblyman Hardy:

††† They are all nonprofit. Thank you.

††† Chairman Perkins:

††† All those in favor of the motion please indicate by saying aye. Any opposed?

††† Motion failed.

††† Assemblyman Beers:

††† I believe all the rest of the organizations that are taxed under this proposal are nothing but groups of hard working Nevada taxpayers. Each of those groups are subject to eight broad based business taxes: the Nevada Business Activity Tax, real property tax, personal property tax, unemployment taxes, sales and use taxes, insurance premium tax, federal Social Security tax which comes back to our state in the form of retirement benefits, and Federal Income Tax which comes back to our state in the form of distributions that we get make in state local government. Therefore, I would move that we exempt all the rest of the organizations from this tax.

††† Chairman Perkins:

††† The motion dies for lack of a second.

††† Assemblyman Hardy:

††† I would like to request a roll call on my previous motion, Mr. Chairman.

††† Chairman Perkins:

††† I would be happy to count the hands but a roll call vote isnít acceptable in a Committee of the Whole.

††† Assemblyman Hardy:

††† I will accept hands.

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman. I would move that we combine all of these votes into one amendment and we move to amend and do pass Senate bill 6.

††† Chairman Perkins:

††† We have a motion by Ms. Buckley to amend and do pass Senate bill 6, given the previous approved motions. We will still be addressing the K-12 audit tomorrow.

††† Assemblyman Hettrick:

††† Was there not other language that we were considering and waiting on?† It was my understanding that we were not going to process the bill tonight.

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman. The only language we were waiting on was Dr. Hardyís and because he sent the amendment in advance we had already cleared it with the Legal division and had it included.

††† Chairman Perkins:

††† For my edification, if we do this, amend and do pass, there is still at least the K-12 audit to take up tomorrow. I donít think we are asking to have the bill reprinted yet. Is that correct?† It is going to be a thick bill and it will have some other adjustments.

††† Assemblywoman Buckley:

††† Thank you, Mr. Chairman. We would have the K-12 amendment to look at tomorrow. Obviously, people may bring more. Additionally, somehow I think for the next couple of days we may consider a few more. This was just to get the process rolling. We are sitting here at taxpayersí expense and I think it appropriate for us to take a vote tonight.

††† Assemblyman Hettrick:

††† I thought, in the motions that were made, we amended DSA into the bill and we did class-size reduction as well. If they are both in here then the bill is complete, as amended. It took motions to amend in DSA and CSR.

††† Chairman Perkins:

††† I am not sure I understand your point, Mr. Hettrick.

††† Assemblyman Hettrick:

††† If the motion is to amend and do pass, as a complete motion, now, what is being held that we are going to discuss tomorrow?†

††† Chairman Perkins:

††† Perhaps the appropriate motion would be, amend and re-refer to committee.

††† Assemblywoman Buckley:

††† No. Mr. Chairman, my intent was, and if I am wrong I could amend my motion, since we are in a Committee of the Whole, it would just be an amend and do pass to report out to the floor and keep the process moving. Tomorrow we can have amendments on the K-12, which I think everyone in this body wanted passed during the regular session. Additionally, other members may bring amendments as we begin to get things resolved. There were a couple of issues, for example, at the slot route, where we have asked for numbers to be drawn. We canít slow down the process for every request for information. That doesnít mean it canít be considered or presented to a conference committee. If it is ready by tomorrow perhaps it could be considered tomorrow. I think what we wanted to do was take definite action this evening and actually move this process forward by passing out an actual amend and do pass motion.

††† Chairman Perkins announced if there were no objections, the Committee of the Whole would recess subject to the call of the Chair.

††† Committee of the Whole in recess at 9:50 p.m.

IN COMMITTEE OF THE WHOLE

††† At 10:07 p.m.

††† Assemblyman Perkins presiding.

††† Quorum present.

††† Chairman Perkins announced if there were no objections, the Committee of the Whole would recess subject to the call of the Chair.

††† Committee of the Whole in recess at 10:31 p.m.


IN COMMITTEE OF THE WHOLE

††† At 10:36 p.m.

††† Assemblyman Perkins presiding.

††† Quorum present.

††† Chairman Perkins:

††† Mr. Griffin, I think it would be appropriate to go ahead and take that motion from you tonight. The language can be considered tomorrow if there are concerns.

††† Assemblyman Griffin:

††† Thank you, Mr. Chairman. I would move that we amend Senate Bill 6 with the language of Assembly Bill 162 of the 72nd Legislative Session.

††† Chairman Perkins:

††† We have a motion by Mr. Griffin and a second by Mr. Horne. Seeing no further comments, all those in favor indicate by saying aye. Any opposed?† Motion carried.

††† Assemblywoman Buckley:

††† Thank you, Mr. Speaker. With that additional motion, I would move that we amend and do pass SB 6, with the amendments as previously voted on by the Committee of the Whole.

††† Chairman Perkins:

††† There is a motion by Ms. Buckley and a second by Ms. Leslie. Are there any comments or questions on that motion?† Seeing none, all those in favor please indicate by saying aye. Are there any opposed?† Motion carried.

††† Assemblyman Hardy:

††† Thank you, Mr. Speaker. I wanted to clarify with staff if the spending cap was, indeed, kept in SB 6.

††† Brenda Erdoes:

††† Yes, it is in Sections 190 and 191. That is the fund for tax accountability in 191 and the section before it is the 107 percent cap.

††† Assemblyman Hardy:

††† Thank you.

††† On motion of Assemblywoman Buckley, the committee did rise and report back to the Assembly.

ASSEMBLY IN SESSION

††† At 10:38 p.m.

††† Mr. Speaker presiding.

††† Quorum present.

UNFINISHED BUSINESS

Signing of Bills and Resolutions

††† There being no objections, the Speaker and Chief Clerk signed Assembly Concurrent Resolution No. 1; Assembly Resolutions Nos. 1, 2, and 3.


GUESTS EXTENDED PRIVILEGE OF ASSEMBLY FLOOR

††† On request of Assemblyman Atkinson, the privilege of the floor of the Assembly Chamber for this day was extended to Ellen Keating, Jerry Keating, and Brad Keating.

††† On request of Assemblywoman Buckley, the privilege of the floor of the Assembly Chamber for this day was extended to Katelyn Barney.

††† On request of Assemblywoman Gibbons, the privilege of the floor of the Assembly Chamber for this day was extended to Robert Canter.

††† Assemblywoman Buckley moved that the Assembly adjourn until Friday, June 27, 2003 at 11 a.m.

††† Motion carried.

††† Assembly adjourned at 10:39 p.m.†††††††††††††††

Approved:††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Richard D. Perkins

††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Speaker of the Assembly

Attest:††† Jacqueline Sneddon

††††††††††††††††††† Chief Clerk of the Assembly

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