Twentieth Special Session, 2003
ASSEMBLY DAILY JOURNAL
THE FIRST DAY
Carson City (Wednesday), June 25, 2003
Pursuant to the provisions of the Constitution and Statutes, the Assembly was called to order by Speaker of the Assembly Richard D. Perkins at 9:53 a.m.
Prayer by the Chaplain, Terry Sullivan.
Let us pray. Dear Lord, thank You for the safe passage home that You gave all of us. And thank you for bringing us all back safely. Oh, and thank You for all the help you’ve given us in these past months, but right now we really need Your help. These good legislators have some important decisions to make and we all ask that You give them the strength and courage to vote their innermost convictions on these serious matters.
Pledge of allegiance to the Flag.
MOTIONS, RESOLUTIONS AND NOTICES
Mr. Speaker appointed Assemblymen Anderson, Leslie, and Hardy as a committee to inform the Senate that the Assembly was organized and ready for business.
Mr. Speaker appointed Assemblymen Buckley, Oceguera, and Hettrick as a committee to inform the Governor that the Assembly was organized and ready for business.
A committee from the Senate composed of Senators Townsend, Care, and Mathews appeared before the bar of the Assembly and announced that the Senate was organized and ready for business.
Assemblyman Anderson reported that his committee had informed the Senate that the Assembly was organized and ready for business.
Assemblywoman Buckley reported that her committee had informed the Governor that the Assembly was organized and ready for business.
MESSAGES FROM THE GOVERNOR
STATE OF NEVADA
OFFICE OF THE GOVERNOR
A PROCLAMATION BY THE GOVERNOR:
Whereas, Section 9 of Article V of the Constitution of the State of Nevada provides that, “The Governor may on extraordinary occasions, convene the Legislature by Proclamation and shall state to both houses when organized, the purpose for which they have been convened, and the Legislature shall transact no legislative business, except that for which they were specially convened, or such other legislative business as the Governor may call to the attention of the Legislature while in Session;” and
Whereas, believing that an extraordinary occasion now exists which requires action by the Legislature;
Now, Therefore, I, Kenny C. Guinn, Governor of the State Of Nevada, By virtue of the authority vested in me by the Constitution of the State of Nevada, do hereby convene the Legislature into a Special Session to begin at 8:00 a.m., on June 25, 2003.
During the extraordinary session, the Legislature may consider a tax plan sufficient to meet all of the appropriations and other spending measures that were passed during the 72nd Session of the Nevada Legislature and which may be passed during this Special Session. The Legislature may further consider during this session the matters contained within Assembly Bill 536, Senate Bill 432, Senate Bill 508, and Senate Bill 509 of the 72nd Session of the Nevada Legislature.
The Legislature may also consider an appropriation to pay for the cost of the session and any other matters brought to the attention of the Legislature by the Governor during the Special Session.
In Witness Whereof, I have hereunto set my hand and caused the Great Seal of the State of Nevada to be affixed at the State Capitol in Carson City this 12th day of June, in the year two thousand three.
Kenny C. Guinn
Secretary Of State
MOTIONS, RESOLUTIONS AND NOTICES
Mr. Speaker announced the following select committee, the first-named member being the chairman, the second-named being the vice-chairman:
Select Committee On State Revenue And Education Funding—Arberry, Parks, Anderson, Chowning, Giunchigliani, Goldwater, Leslie, McClain, McCleary, Mortenson, Pierce, Andonov, Angle, Brown, Gibbons, Grady, Griffin, Hettrick, Marvel.
Assemblywoman Buckley moved that persons as set forth on the Nevada Legislature’s Press Accreditation List of June 25, 2003 be accepted as accredited press representatives, that they be assigned space at the press table in the Assembly chambers, that they be allowed use of appropriate broadcasting facilities, and the list be included in this day’s journal:
ASSOCIATED PRESS, Benjamin Kieckhefer; Ryan Pearson; BUREAU OF NATIONAL AFFAIRS, William Carlile; DAILY SPARKS TRIBUNE/KAME/KRXI-TV, Andrew Barbano; ELKO DAILY FREE PRESS, Jerry Blair; FOX 5 NEWS, Garrett Breit; John Huck; KLAS - TV, Matthew Adams; Richard Czarny; George Knapp; Victor Woodall; KLVX - TV, Tom Axtell; KNPB -TV, Erin Breen; Ali Herndon-Ortega; Jack Kelly; Bonnie Maclean; Dennis Myers; Ethan Salter; Dave Santina; Douglas Walters; KOLO - TV CHANNEL 8, Brent Boynton; Jean Casarez; Mark Cronon; Jeff Deitch; Tim Ill; Justin Kanno; Josh Little; Vicky Nguyen; Ed Pearce; Terri Russell; James Steiner; KPTL - RADIO, Cheri D. Flynn; Scott Gahagen; Ron Harrison; Jarvis Kaler; Terrie Q. Sayre; KTNV - TV NEWS 13, Mark Sayre; KVBC - NEWS 3, Alyssa Anderson; Justin Rush; Kendall Tenney; KWNA - RADIO, Torrey Sheen; LAS VEGAS CITYLIFE, Matt O'Brien; LAS VEGAS SUN, Michael Campbell; David Clayton; Dana Gentry; Jeff German; Matt Hufman; Steve Kanigher; Jennifer Knight; Ed Koch; Aaron Mayes; Erin Neff; Judy Odierna; Angla Pilmer; Launce Rake; Jon Ralston; Emily Richmond; Cy Ryan; Susan Snyder; NEVADA APPEAL, Cathleen Allison; Brian Corley; Rhonda Costa-Landers; Kelli Du Fresne; Ray Estrada; Rick Gunn; Brad Horan; Karl Horeis; Jill Keller; Francine Norton; Barry Smith; Teri Vance; Susan Vasquez; NEVADA BROADCASTER'S ASSOCIATION, Robert David Fisher; NKPR NEVADA PUBLIC RADIO, Kyril Pluskon; NORTH LAKE TAHOE BONANZA, Rick Adair; NORTH LAKE TAHOE BONANZA, Kirk Caraway; NORTHERN NEVADA BUSINESS WEEKLY, Anne Knowles; Anne Knowles; SAM SHAD PRODUCTIONS, Sam Breen; Ande Engleman; Samuel Shad; THE MEDIA CENTER, Don Alexander; Kim Anhalt; John Bankhead; Jeremy Baumann; Nancy Burgess; Carol Cizauskas; Kaye Crawford; Charles M. Evans; Fred Fichman; Mitch Fox; Henry King; TDavid Kizler; John Ponzo; Earl Spriggs; THE UNLV REBEL YELL, Erik Ball; Nick Christensen; Angela Flores; UNIVISION - LAS VEGAS NEWS, Jorge Avila; Sol Binkier; Ricardo Fernandez; Janette Luviano; Joel Romo; Xochitl Sandoval; Johanna Suarez; Brenda Torres; Roger Velado; VARTEK, Marcia Cohen; Michael Vargas; VIRGINIA CITY REGISTER, Gary M. G. Deacon; Scott Phillips; Bill Sjovaugen; Sharon Truehill; Douglas Truehill; Ernst Wipple; WE THE PEOPLE, Shayne Del Cohen.
Assembly Concurrent Resolution No. 1— Adopting the Joint Rules of the Senate and Assembly for the 20th Special Session of the Legislature.
APPLICABILITY OF JOINT RULES
Rule No. 1. Generally.
The Joint Rules for the 20th Special Session of the Legislature are applicable only during the 20th Special Session of the Legislature.
Rule No. 2. Procedure Concerning.
1. In every case of an amendment of a bill, or joint or concurrent resolution, agreed to in one House, dissented from in the other, and not receded from by the one making the amendment, each House shall appoint a committee to confer with a like committee to be appointed by the other; and the committee so appointed shall meet publicly at a convenient hour to be agreed upon by their respective chairmen and announced publicly, and shall confer upon the differences between the two Houses as indicated by the amendments made in one and rejected in the other and report as early as convenient the result of their conference to their respective Houses. The report shall be made available to all members of both Houses. The whole subject matter embraced in the bill or resolution shall be considered by the committee, and it may recommend recession by either House, new amendments, new bills or resolutions, or other changes as it sees fit. New bills or resolutions so reported shall be treated as amendments unless the bills or resolutions are composed entirely of original matter, in which case they shall receive the treatment required in the respective Houses for original bills, or resolutions, as the case may be.
2. The report of a conference committee may be adopted by acclamation, and such action may be considered equivalent to the adoption of amendments embodied therein. The report is not subject to amendment. If either House refuses to adopt the report, or if the first conference committee has so recommended, a second conference committee may be appointed. No member who served on the first committee may be appointed to the second.
3. There shall be but two conference committees on any bill or resolution. A majority of the members of a conference committee from each House must be members who voted for the passage of the bill or resolution.
Rule No. 3. Procedure Concerning.
1. Proclamations by the Governor convening the Legislature in extra session shall, by direction of the presiding officer of each House, be read immediately after the convening thereof, filed and entered in full in the Journal of proceedings.
2. Whenever a message from the Governor is received, the Sergeant at Arms will announce: “Mr. President, or Mr. Speaker, the Secretary of the Governor is at the bar.” The Secretary will, upon being recognized by the presiding officer, announce: “Mr. President, or Mr. Speaker, a message from His Excellency, the Governor of Nevada, to the Honorable, the Senate or Assembly,” and hand same to the Sergeant at Arms for delivery to the Secretary of the Senate or Chief Clerk of the Assembly. The presiding officer will direct any message from the Governor to be received, read and entered in full in the Journal of proceedings.
3. Messages from the Senate to the Assembly shall be delivered by the Secretary or Assistant Secretary, and messages from the Assembly to the Senate shall be delivered by the Chief Clerk or Assistant Chief Clerk.
NOTICE OF FINAL ACTION
Rule No. 4. Communications.
Each House shall communicate its final action on any bill or resolution, or matter in which the other may be interested, by written notice. Each such notice sent by the Senate must be signed by the Secretary of the Senate, or a person designated by the Secretary. Each such notice sent by the Assembly must be signed by the Chief Clerk of the Assembly, or a person designated by the Chief Clerk.
BILLS AND JOINT RESOLUTIONS
Rule No. 5. Signature.
Each enrolled bill or joint resolution shall be presented to the presiding officers of both Houses for signature. They shall, after an announcement of their intention to do so is made in open session, sign the bill or joint resolution and their signatures shall be followed by those of the Secretary of the Senate and Chief Clerk of the Assembly.
Rule No. 6. Joint Sponsorship.
1. A bill or resolution introduced by a committee of the Senate or Assembly may, at the direction of the chairman of the committee, set forth the name of a committee of the other House as a joint sponsor, if a majority of all members appointed to the committee of the other House votes in favor of becoming a joint sponsor of the bill or resolution. The name of the committee joint sponsor must be set forth on the face of the bill or resolution immediately below the date on which the bill or resolution is introduced.
2. The Legislative Counsel shall not cause to be printed the name of a committee as a joint sponsor on the face of a bill or resolution unless the chairman of the committee has signed his name next to the name of the committee on the colored back of the introductory copy of the bill or resolution that was submitted to the front desk of the House of origin or the statement required by subsection 4.
3. Upon introduction, any bill or resolution that sets forth the names of primary joint sponsors must be numbered in the same numerical sequence as other bills and resolutions of the same House of origin are numbered.
4. Once a bill or resolution has been introduced, a primary joint sponsor or nonprimary joint sponsor may only be added or removed by amendment of the bill or resolution. An amendment which proposes to add or remove a primary joint sponsor must not be considered by the House of origin of the amendment unless a statement requesting the addition or removal is attached to the copy of the amendment submitted to the front desk of the House of origin of the amendment. If the amendment proposes to add or remove a committee as a primary joint sponsor, the statement must be signed by the chairman of the committee. A copy of the statement must be transmitted to the Legislative Counsel if the amendment is adopted.
5. An amendment that proposes to add or remove a primary joint sponsor may include additional proposals to change the substantive provisions of the bill or resolution or may be limited only to the proposal to add or remove a primary joint sponsor.
Rule No. 7. Ordering and Distribution.
Each House may order the printing of bills introduced, reports of its own committees, and other matter pertaining to that House only; but no other printing may be ordered except by a concurrent resolution passed by both Houses. Each Senator is entitled to the free distribution of four copies of each bill introduced in each House, and each Assemblyman to such a distribution of two copies. Additional copies of such bills may be distributed at a charge to the person to whom they are addressed. The amount charged for distribution of the additional copies must be determined by the Director of the Legislative Counsel Bureau to approximate the cost of handling and postage for the entire session.
Rule No. 8. Types, Usage and Approval.
1. A joint resolution must be used to:
(a) Propose an amendment to the Nevada Constitution.
(b) Ratify a proposed amendment to the United States Constitution.
(c) Address the President of the United States, Congress, either House or any committee or member of Congress, any department or agency of the Federal Government, or any other state of the Union.
2. A concurrent resolution must be used to:
(a) Amend these joint rules.
(b) Request the return from the Governor of an enrolled bill for further consideration.
(c) Resolve that the return of a bill from one House to the other House is necessary and appropriate.
(d) Express facts, principles, opinion and purposes of the Senate and Assembly.
(e) Establish a joint committee of the two Houses.
(f) Direct the Legislative Commission to conduct an interim study.
3. A concurrent resolution or a resolution of one House may be used to:
(a) Memorialize a former member of the Legislature or other notable or distinguished person upon his death.
(b) Congratulate or commend any person or organization for a significant and meritorious accomplishment.
Rule No. 9. Special Order.
Bills which have passed a previous Legislature, and which are transmitted to the Legislature next sitting, accompanied by a message or statement of the Governor’s disapproval, or veto of the same, shall become the subject of a special order; and when the special order for their consideration is reached and called, the said message or statement shall be read, together with the bill or bills so disposed or vetoed; and the message and bill shall be read in the Senate by the Secretary of the Senate and in the Assembly by the Chief Clerk of the Assembly, without interruption, consecutively, one following the other, and not upon separate occasions; and no such bill or message shall be referred to any committee, or otherwise acted upon, save as provided by law and custom; that is to say, that immediately following such reading the only question (except as hereinafter stated) which shall be put by the Chair is, “Shall the bill pass, notwithstanding the objections of the Governor?” It shall not be in order, at any time, to vote upon such vetoed bill without the same shall have first been read, from the first word of its title to and including the last word of its final section; and no motion shall be entertained after the Chair has stated the question save a motion for “The previous question,” but the merits of the bill itself may be debated.
Rule No. 10. Limitations and Calculation of Duration.
1. In calculating the permissible duration of an adjournment for 3 days or less, the day of adjournment must not be counted but the day of the next meeting must be counted, and Sunday must not be counted.
2. The Legislature may adjourn for more than 3 days by motion based on mutual consent of the houses or by concurrent resolution. One or more such adjournments may be taken to permit a committee or the Legislative Counsel Bureau to prepare the matters respectively entrusted to them for the consideration of the Legislature as a whole.
EXPENDITURES FROM THE LEGISLATIVE FUND
Rule No. 11. Manner of authorization.
Except for routine salary, travel, equipment and operating expenses, no expenditures shall be made from the Legislative Fund without the authority of a concurrent resolution regularly adopted by the Senate and Assembly.
RECORDS OF COMMITTEE PROCEEDINGS
Rule No. 12. Duties of Secretary of Committees and Director.
1. Each committee shall cause a record to be made of the proceedings of its meetings.
2. The secretary of a committee shall:
(a) Label each record with the date, time and place of the meeting and also indicate on the label the numerical sequence in which the record was made;
(b) Keep the records in chronological order; and
(c) Deposit the records immediately following the final adjournment of the Special Session of the Legislature with the Director of the Legislative Counsel Bureau.
3. The Director of the Legislative Counsel Bureau shall:
(a) Index the records;
(b) Make the records available for accessing by any person during office hours under such reasonable conditions as he may deem necessary;
(c) Maintain a log as a public record containing the date, time, name and address of any person accessing any of the records and identifying the records accessed; and
(d) Retain the records for two bienniums and at the end of that period keep some form or copy of the record in any manner he deems reasonable to ensure access to the record in the foreseeable future.
LIMITATIONS ON REQUESTS FOR
DRAFTING OF LEGISLATIVE MEASURES
Rule No. 13. Germaneness Required for Amendments.
1. The Legislative Counsel shall not honor a request for the drafting of an amendment to a bill or resolution if the subject matter of the amendment is independent of, and not specifically related and properly connected to, the subject that is expressed in the title of the bill or resolution.
2. For the purposes of this Rule, an amendment is independent of, and not specifically related and properly connected to, the subject that is expressed in the title of a bill or resolution if the amendment relates only to the general, single subject that is expressed in that title and not to the specific whole subject matter embraced in the bill or resolution.
CONTINUATION OF LEADERSHIP OF THE SENATE
AND ASSEMBLY DURING THE INTERIM
Rule No. 14. Tenure and Performance of Statutory Duties.
1. Except as otherwise provided in subsections 2 and 3, the tenure of the President Pro Tem, Majority Leader and Minority Leader of the Senate and the Speaker, Speaker Pro Tem, Majority Floor Leader and Minority Floor Leader of the Assembly extends during the interim between regular sessions of the Legislature.
2. The Senators designated to be the President Pro Tem, Majority Leader and Minority Leader for the next succeeding regular session shall perform any statutory duty required in the period between the time of their designation after the general election and the organization of the next succeeding regular session of the Legislature if the Senator formerly holding the respective position is no longer a Legislator.
3. The Assemblymen designated to be the Speaker, Speaker Pro Tem, Majority Floor Leader and Minority Floor Leader for the next succeeding regular session shall perform any statutory duty required in the period between the time of their designation after the general election and the organization of the next succeeding regular session.
POLICY AND PROCEDURES REGARDING
Rule No. 15. Maintenance of Working Environment; Procedure for Filing, Investigating and Taking Remedial Action on Complaints.
1. The Legislature hereby declares its intention to maintain a working environment which is free from sexual harassment. This policy applies to all Legislators and lobbyists. Each member and lobbyist is responsible to conduct himself or herself in a manner which will ensure that others are able to work in such an environment.
2. In accordance with Title VII of the Civil Rights Act, for the purposes of this rule, “sexual harassment” means unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when:
(a) Submission to such conduct is made either explicitly or implicitly a term or condition of a person’s employment;
(b) Submission to or rejection of such conduct by a person is used as the basis for employment decisions affecting the person; or
(c) Such conduct has the purpose or effect of unreasonably interfering with a person’s work performance or creating an intimidating, hostile or offensive working environment.
3. Each person subject to these rules must exercise his own good judgment to avoid engaging in conduct that may be perceived by others as sexual harassment. The following noninclusive list provides illustrations of conduct that the Legislature deems to be inappropriate:
(a) Verbal conduct such as epithets, derogatory comments, slurs or unwanted sexual advances, invitations or comments;
(b) Visual conduct such as derogatory posters, photography, cartoons, drawings or gestures;
(c) Physical conduct such as unwanted touching, blocking normal movement or interfering with the work directed at a person because of his sex;
(d) Threats and demands to submit to sexual requests to keep a person’s job or avoid some other loss, and offers of employment benefits in return for sexual favors; and
(e) Retaliation for opposing, reporting or threatening to report sexual harassment, or for participating in an investigation, proceeding or hearing conducted by the Legislature or the Nevada Equal Rights Commission or the federal Equal Employment Opportunity Commission,
when submission to such conduct is made either explicitly or implicitly a term or condition of a person’s employment or submission to or rejection of such conduct by a person is used as the basis for employment decisions affecting the person or such conduct has the purpose or effect of unreasonably interfering with a person’s work performance or creating an intimidating, hostile or offensive working environment.
4. A person may have a claim of sexual harassment even if he has not lost a job or some other economic benefit. Conduct that impairs a person’s ability to work or his emotional well-being at work constitutes sexual harassment.
5. If a Legislator believes he is being sexually harassed on the job, he may file a written complaint with:
(a) The Speaker of the Assembly;
(b) The Majority Leader of the Senate; or
(c) The Director of the Legislative Counsel Bureau, if the complaint involves the conduct of the Speaker of the Assembly or the Majority Leader of the Senate.
The complaint must include the details of the incident or incidents, the names of the persons involved and the names of any witnesses.
6. Except as otherwise provided in subsection 7, the Speaker of the Assembly or the Majority Leader of the Senate, as appropriate, shall refer a complaint received pursuant to subsection 5 to a committee consisting of Legislators of the same House. A complaint against a lobbyist may be referred to a committee in either House.
7. If the complaint involves the conduct of the Speaker of the Assembly or the Majority Leader of the Senate, the Director of the Legislative Counsel Bureau shall refer the complaint to the Committee on Elections, Procedures and Ethics of the Assembly or the Committee of the Whole of the Senate, as appropriate. If the Speaker of the Assembly or the Majority Leader of the Senate is a member of one of these committees, the Speaker or the Majority Leader, as the case may be, shall not participate in the investigation and resolution of the complaint.
8. The committee to which the complaint is referred shall immediately conduct a confidential and discreet investigation of the complaint. As a part of the investigation, the committee shall notify the accused of the allegations. The committee shall facilitate a meeting between the complainant and the accused to allow a discussion of the matter, if both agree. If the parties do not agree to such a meeting, the committee shall request statements regarding the complaint from each of the parties. Either party may request a hearing before the committee. The committee shall make its determination and inform the complainant and the accused of its determination as soon as practicable after it has completed its investigation.
9. If the investigation reveals that sexual harassment has occurred, the Legislature will take appropriate disciplinary or remedial action, or both. The committee shall inform the complainant of any action taken. The Legislature will also take any action necessary to deter any future harassment.
10. The Legislature will not retaliate against a person who files a complaint and will not knowingly permit any retaliation by the person’s supervisors or coworkers.
11. The Legislature encourages a person to report any incident of sexual harassment immediately so that the complaint can be quickly and fairly resolved.
12. Action taken by a complainant pursuant to this rule does not prohibit the complainant from also filing a complaint of sexual harassment with the Nevada Equal Rights Commission or the federal Equal Employment Opportunity Commission.
13. All Legislators and lobbyists are responsible for adhering to the provisions of this policy. The prohibitions against engaging in sexual harassment and the protections against becoming a victim of sexual harassment set forth in this policy apply to employees, Legislators, lobbyists, vendors, contractors, customers and visitors to the Legislature.
14. This policy does not create any enforceable legal rights in any person.
Assemblywoman Buckley moved the adoption of the resolution.
Remarks by Assemblywoman Buckley.
Assemblywoman Buckley moved that all rules be suspended and that Assembly Concurrent Resolution No. 1 be immediately transmitted to the Senate.
Motion carried unanimously.
By Assemblymen Perkins, Buckley, and Hettrick:
Assembly Resolution No. 1— Providing for the appointment of attaches.
Resolved by the Assembly of the State of Nevada, That the following persons are elected as attaches of the Assembly for the 20th Special Session of the Nevada Legislature: Diane Keetch, Lucinda Benjamin, Matthew Baker, Kathryn Fosnaugh, Harle Glover, Jason Hataway, Terry Sullivan, Robin Bates, Heidi Hansen, Beverly Mobley, Kyle T. Wentz, Lona Domenici, Julie Whitacre, Barbara Houger, Mary Garcia, Eddie Cordisco, Jr. and Mary Carel.
Assemblywoman Buckley moved the adoption of the resolution.
By Assemblymen Perkins, Buckley, and Hettrick:
Assembly Resolution No. 2—Providing that no allowances will be paid for the 20th Special Session of the Nevada Legislature for periodicals, stamps, stationery or communications.
Assemblywoman Buckley moved the adoption of the resolution.
By Assemblymen Perkins, Buckley and Hettrick:
Assembly Resolution No. 3— Adopting the Rules of the Assembly for the 20th Special Session of the Nevada Legislature.
Resolved by the Assembly of the State of Nevada, That the following Rules of the Assembly for the 20th Special Session of the Legislature are hereby adopted:
Rule No. 1. Generally.
The Rules of the Assembly for the 20th Special Session of the Legislature are applicable only during the 20th Special Session of the Legislature.
II. OFFICERS AND EMPLOYEES
Rule No. 2. Speaker of the Assembly.
1. All officers of the Assembly are subordinate to the Speaker in all that relates to the prompt, efficient and correct discharge of their official duties under the Speaker’s supervision.
2. Possessing the powers and performing the duties described in this rule, the Speaker shall:
(a) Take the chair at the hour to which the Assembly will be meeting, call the members to order and, upon the appearance of a quorum, proceed to business.
(b) Preserve order and decorum and have general direction of the Chamber of the Assembly and the approaches thereto. In the event of any disturbance or disorderly conduct therein, order the same to be cleared.
(c) Decide all questions of order, subject to a member’s right to appeal to the Assembly. On appeal from such decisions, the Speaker has the right, in the Speaker’s place, to assign the reason for the decision.
(d) Have the right to name any member to perform the duties of the chair, but such substitution must not extend beyond one legislative day.
(e) If the Assembly resolves itself into a Committee of the Whole, preside as Chairman of the Committee or name a Chairman to preside thereover and call him to the chair.
(f) Have the power to accredit the persons who act as representatives of the news media and assign them seats.
(g) Sign all bills and resolutions passed by the Legislature as provided by law.
(h) Sign all subpoenas issued by the Assembly.
(i) Receive all messages and communications from other departments of the government and announce them to the Assembly.
(j) Represent the Assembly, declare its will and in all things obey its commands.
(k) Vote on final passage of a bill or resolution, but the Speaker shall not be required to vote in ordinary legislative proceedings except where the Speaker’s vote would be decisive. In all yea and nay votes, the Speaker’s name must be called last.
3. If a vacancy occurs in the office of Speaker, through death, resignation or disability of the Speaker, the Speaker Pro Tempore shall temporarily and for the period of vacancy or disability conduct the necessary business of the Assembly.
4. If a permanent vacancy occurs in the office of Speaker, the Assembly shall select a new Speaker.
Rule No. 3. Reserved.
Rule No. 4. Reserved.
Rule No. 5. Reserved.
Rule No. 6. Reserved.
The next rule is 10.
Rule No. 10. Reserved.
Rule No. 11. Open Meetings.
All meetings of the Assembly and its committees must be open to the public.
Rule No. 12. Motion to Rise Committee of the Whole.
A motion that the Committee of the Whole rise is always in order, and must be decided without debate.
The next rule is 20.
IV. DECORUM AND DEBATE
Rule No. 20. Points of Order.
If any member, in speaking or otherwise, transgresses the rules of the Assembly, the Speaker shall, or any member may, call to order, in which case the member so called to order shall immediately sit down, unless permitted to explain; and if called to order by a member, such member shall immediately state the point of order. If the point of order be sustained by the presiding officer, the member shall not be allowed to proceed; but if it be not sustained, then he shall be permitted to go on. Every such decision from the presiding officer shall be subject to an appeal to the House; but no discussion of the question of order shall be allowed unless an appeal be taken from the decision of the presiding officer.
Rule No. 21. Portable electronic communication devices.
1. A person who is within the Assembly Chambers shall not engage in a telephone conversation via the use of a portable telephone.
2. Before entering the Assembly Chambers, any person who possesses a portable electronic communication device, such as a pager or telephone, that emits an audible alert, such as a ringing or beeping sound, to signal an incoming message or call shall turn the audible alert off. A device that contains a nonaudible alert, such as a silent vibration, may be operated in a nonaudible manner within the Assembly Chambers.
Rule No. 22. Reserved.
Rule No. 23. Reserved.
The next rule is 30.
V. QUORUM, VOTING, ELECTIONS
Rule No. 30. Manner of Voting.
1. The presiding officer shall declare all votes, but the yeas and nays must be taken when called for by three members present, and the names of those calling for the yeas and nays must be entered in the Journal by the Chief Clerk.
2. The presiding officer shall call for yeas and nays by a division or by a roll call, either electronic or oral.
3. When taking the yeas and nays on any question, the electronic roll call system may be used, and when so used shall have the force and effect of any roll call under these rules.
4. When taking the yeas and nays by oral roll call, the Chief Clerk shall take the names of members alphabetically, except that the Speaker’s name must be called last.
5. The electronic roll call system may be used to determine the presence of a quorum.
6. The yeas and nays must not be taken with the electronic roll call system until all members present are at their desks. The presiding officer may vote at the rostrum.
7. Only a member who is physically present within the Assembly Chambers may cast a vote in the Assembly.
8. A member shall not vote for another member on any roll call, either electronic or oral. Any member who votes for another member may be punished in any manner deemed appropriate by the Assembly.
Rule No. 31. Reserved.
Rule No. 32. Announcement of the Vote.
1. A member may change his vote at any time before the announcement of the vote if the voting is by voice, or at any time before the votes are electronically recorded if the voting is conducted electronically.
2. The announcement of the result of any vote shall not be postponed.
Rule No. 33. Voting by Division.
Upon a division and count of the Assembly on any question, no person without the bar shall be counted.
The next rule is 39.
VI. LEGISLATIVE BODIES
Rule No. 39. Committee of the Whole.
1. All bills and resolutions may be referred to the Committee of the Whole.
2. All amendments proposed by the Committee:
(a) Must first be approved by the Committee.
(b) Must be reported by the Chairman to the Assembly.
3. The minutes of the Committee’s meeting must be entered in the final Journal.
Rule No. 40. Standing Committee.
The standing committee of the Assembly is the Select Committee on State Revenue and Education Funding.
Rule No. 41. Appointment of Committees.
All committees must be appointed by the Speaker, unless otherwise directed by the Assembly. The Speaker shall determine the appropriate number of members for each committee and shall designate the chairman and vice chairman of each committee.
Rule No. 42. Committee Action.
1. The committee shall have meetings in accordance with the direction of the Assembly leadership. A quorum of the committee is a majority of its appointed members and may transact business except as limited by this rule.
2. Except as limited by this rule, a simple majority of those present may move, second and pass a motion by voice vote.
3. Definite action on a bill or resolution will require a majority of the entire committee.
4. A two-thirds majority of the entire committee is required to reconsider action on a bill or resolution.
5. The chairman shall vote on all final action regarding bills or resolutions.
6. No member of the committee may vote by proxy under any circumstances.
7. A committee shall not take a vote on the question of whether to exercise its statutory authority to issue a legislative subpoena unless the chairman has informed the Speaker of the intention of the committee to consider such a question.
Rule No. 43. Subcommittees.
Subcommittees made up of committee members may be appointed by the chairman to consider and report back on specific subjects or bills.
Rule No. 44. Reserved.
Rule No. 45. Request for Drafting of Bill, Resolution or Amendment.
Except as otherwise provided in this rule, the Legislative Counsel shall not honor a request for the drafting of a bill, resolution or amendment to be introduced in the Assembly, unless it is submitted by the Select Committee on State Revenue and Education Funding, the Committee of the Whole, a conference committee or the Governor. The Speaker may request the drafting of one bill for the 20th Special Session of the Legislature without seeking additional approval.
Rule No. 46. Committee Action on Reports.
Committee reports must be adopted at a committee session actually assembled and meeting as a committee with a quorum present. Every committee vote on a matter pertaining to a bill or resolution must be recorded. The vote may be taken by roll call at the discretion of the chairman.
Rule No. 47. Committee Records.
The chairman of each committee shall keep, or cause to be kept, a complete record of the committee proceedings in which there must be entered:
1. The time and place of each meeting;
2. The attendance and absence of members;
3. The names of all persons appearing before the committee, with the names of persons, firms, corporations or associations in whose behalf such appearance is made; and
4. The subjects or measures considered and action taken.
Rule No. 48. Disposition of Committee Records.
All minutes, records and documents in the possession of committees and their chairmen must be filed in the offices of the Legislative Counsel Bureau upon adjournment sine die.
Rule No. 49. Committee Hearings.
1. The presence of a quorum of the committee is desirable but not required to conduct a public hearing. At the discretion of the chairman, members of the committee may attend, participate in and, if applicable, vote during the hearing via simultaneous telephone or video conference.
2. Public hearings are opened by the chairman, who announces the subject under consideration and provides for those wishing to address the committee to be heard. These persons shall rise in an order determined by the chairman, address the chair and furnish their names, addresses and firms or other organizations represented. Committee members may address the chairman for permission to question the witness.
Rule No. 50. Reserved.
Rule No. 51. Reserved.
Rule No. 52. Reserved.
The next rule is 60.
VII. RULES GOVERNING MOTIONS
Rule No. 60. Entertaining.
No motion may be debated until it is distinctly announced by the presiding officer. If desired by the presiding officer or any member, the motion must be reduced to writing and be read by the Chief Clerk before the motion is debated. A motion may be withdrawn by the maker at any time before amendment or before the motion is put to vote.
Rule No. 61. Reserved.
Rule No. 62. Reserved.
B. Particular Motions
Rule No. 63. Reserved.
Rule No. 64. Reserved.
Rule No. 65. Indefinite Postponement.
When a question is postponed indefinitely, the same question must not be considered again during the 20th Special Session of the Legislature and the question is not subject to a motion for reconsideration.
Rule No. 66. To Strike Enacting Clause.
A motion to strike out the enacting clause of a bill or resolution does not take precedence over any other subsidiary motion. If the motion is carried, it shall be considered equivalent to the rejection of such bill or resolution.
Rule No. 67. Division of Question.
Any member may call for a division of the question, which shall be divided, if it comprehends propositions in substance so distinct that, one being taken away, a substantive proposition shall remain for the decision of the Assembly. A motion to strike out being lost shall preclude neither amendment nor a motion to strike out and insert. A motion to strike out and insert shall be deemed indivisible.
Rule No. 68. To Reconsider.
No motion to reconsider a vote is in order.
The next rule is 80.
Rule No. 80. Speaking on Question.
No member shall speak more than twice during the consideration of any one question, on the same day, and at the same stage of proceedings, without leave. Members who have once spoken shall not again be entitled to the floor (except for explanation) to the exclusion of others who have not spoken.
Rule No. 81. Previous Question.
The previous question shall be put only when demanded by three members. The previous question shall not be moved by the member last speaking on the question.
Rule No. 82. Privilege of Closing Debate.
The author of a bill, a resolution or a main question shall have the privilege of closing the debate, unless the previous question has been sustained.
The next rule is 90.
IX. CONDUCT OF BUSINESS
A. Rules and Procedure
Rule No. 90. Mason’s Manual.
The rules of parliamentary practice contained in Mason’s Manual of Legislative Procedure shall govern the Assembly and its committees in all cases in which they are applicable and in which they are not inconsistent with the Rules and orders of the Assembly for the 20th Special Session of the Legislature, and the Joint Rules of the Senate and Assembly for the 20th Special Session of the Legislature.
Rule No. 91. Rescission, Change or Suspension of Rule.
No rule or order of the Assembly for the 20th Special Session of the Legislature may be rescinded or changed without a vote of two-thirds of the members elected, and one day’s notice being given of the motion therefor; but a rule or order may be suspended temporarily by a vote of two-thirds of the members present.
Rule No. 92. Notices of Bills, Topics and Public Hearings.
1. Except as otherwise provided in subsection 3, all committees shall provide adequate notice of public hearings on bills, resolutions or other topics which are to come before the committees. The notice must include the date, time, place and agenda to be covered. To the extent practicable, the notice must be posted conspicuously in the legislative building, appear in the daily history and be made available to the news media. The daily history must include the most current version of the notice that is available at the time the daily history is created and an informational statement informing the public where more current information, if any, regarding such notices may be found.
2. The noticing requirements of this rule may be suspended for emergency situations but only after approval by a two-thirds vote of a committee.
3. Subsection 1 does not apply to:
(a) Committee meetings held on the floor of the Assembly during a recess; or
(b) Conference committee meetings.
Rule No. 93. Reserved.
Rule No. 94. Privilege of the Floor and Lobbying.
No person, except Senators, former Assemblymen and state officers, may be admitted at the bar of the Assembly, except by special invitation on the part of some member; but a majority may authorize the Speaker to have the Assembly cleared of all such persons. No person may do any lobbying upon the floor of the Assembly at any time, and it is the duty of the Sergeant at Arms to remove any person violating any of the provisions of this rule.
Rule No. 95. Material Placed on Legislators’ Desks.
All papers, letters, notes, pamphlets and other written material placed upon an Assemblyman’s desk shall contain the signature of the Legislator requesting the placement of such material on the desk or shall contain a designation of the origin of such material. This rule does not apply to books containing the legislative bills and resolutions, the legislative daily histories, the legislative daily journals or Legislative Counsel Bureau material.
Rule No. 96. Peddling, Begging and Soliciting.
1. Peddling, begging and soliciting are strictly forbidden in the Assembly Chamber, and in the lobby, gallery and halls adjacent thereto.
2. No part of the Assembly Chamber may be used for, or occupied by signs or other devices for any kind of advertising.
3. No part of the hallways adjacent to the Assembly Chambers may be used for or occupied by signs or other devices for any kind of advertising for commercial or personal gain. Notices for nonprofit, nonpartisan, civic or special legislative events may be posted in a designated area of the hallways adjacent to the Assembly Chambers with the approval of the Chief Clerk.
Rule No. 97. Petitions and Memorials.
Petitions, memorials and other papers addressed to the Assembly shall be presented by the Speaker, or by a member in the Speaker’s place. A brief statement of the contents thereof shall be made by the introducer. They shall not be debated on the day of their being presented, but shall be on the table, or be referred, as the Assembly shall determine.
Rule No. 98. Request of Purpose.
A member may request the purpose of a bill or joint resolution upon its introduction.
Rule No. 99. Remarks.
It shall be in order for members to make remarks and to have such remarks entered in the Journal.
Rule No. 100. Precedence of Parliamentary Authority.
The precedence of parliamentary authority in the Assembly is:
1. The Constitution of the State of Nevada.
2. The Statutes of the State of Nevada.
3. The Rules of the Assembly for the 20th Special Session of the Legislature and the Joint Rules of the Senate and Assembly for the 20th Special Session of the Legislature.
4. Mason’s Manual of Legislative Procedure.
Rule No. 101. Reserved.
Rule No. 102. Privileged Questions.
Privileged questions have precedence of all others in the following order:
1. Motions to fix the time to which the Assembly shall adjourn.
2. Motions to adjourn.
3. Questions relating to the rights and privileges of the Assembly or any of its members.
4. A call of the House.
5. Motions for special orders.
Rule No. 103. Reserved.
Rule No. 104. Reserved.
Rule No. 105. Substitute Bills.
A substitute bill shall be deemed and held to be an amendment, and treated in all respects as such. However, a substitute bill may be amended after its adoption, in the same manner as if it were an original bill.
Rule No. 106. Skeleton Bills.
The introduction of skeleton bills is not authorized.
Rule No. 107. Reserved.
Rule No. 108. Reserved.
Rule No. 109. Reading of Bills.
The presiding officer shall announce at each reading of a bill whether it be the first, second or third reading. The first reading of a bill shall be for information. If there is objection, the question shall be, “Shall the bill be rejected?” If the question to reject fails to receive a majority vote by the members present, or if there is no objection, the bill shall take the proper course. No bill shall be referred to a committee until after the first reading, nor amended until after the second reading.
Rule No. 110. Second Reading and Amendment of Bills.
1. All bills must be read the second time after which they are reported by committee. Upon second reading, Assembly bills reported without amendments shall be placed on the General File and Senate bills reported without amendments shall be placed on the General File. Committee amendments reported with bills shall be considered upon their second reading, and such amendments may be adopted by a majority vote of the members present. Any amendment which is numbered, copied and made available to all members must be moved and voted upon by number unless any member moves that it be read in full. Assembly bills so amended must be reprinted, engrossed and placed on the General File. Senate bills so amended must be reprinted, then engrossed or reengrossed, as applicable, and placed on the General File.
2. Only amendments proposed by the Select Committee, the Committee of the Whole or a conference committee may be considered on the floor of the Assembly. Such a motion to amend may be adopted on the floor of the Assembly by a majority vote of the members present. Bills so amended on second reading must be treated the same as bills with amendments proposed by a committee. Any bill so amended upon the General File must be reprinted and then engrossed or reengrossed, as applicable.
3. The reprinting of amended bills may be dispensed with only in accordance with the provisions of law.
Rule No. 111. Consent Calendar.
1. A committee may by unanimous vote of the members present report a bill with the recommendation that it be placed on the consent calendar. The question of recommending a bill for the consent calendar may be voted upon in committee only after the bill has been recommended for passage and only if no amendment is recommended.
2. The Chief Clerk shall maintain a list of bills recommended for the consent calendar. The list must be printed in the daily history and must include the summary of each bill and the date the bill is scheduled for consideration on final passage.
3. At any time before the presiding officer calls for a vote on the passage of the consent calendar, a member may give written notice to the Chief Clerk or state orally from the floor of the Assembly in session that he requests the removal of a particular bill from the consent calendar. If a member so requests, the Chief Clerk shall remove the bill from the consent calendar and transfer it to the second reading file. A bill removed from the consent calendar may not be restored to that calendar.
4. During floor consideration of the consent calendar, members may ask questions and offer explanations relating to the respective bills.
5. When the consent calendar is brought to a vote, the bills remaining on the consent calendar must be read by number and summary and the vote must be taken on their final passage as a group.
Rule No. 112. Reserved.
Rule No. 113. General File.
All bills reported to the Assembly, after receiving their second readings must be placed upon a General File, to be kept by the Chief Clerk. Bills must be taken from the General File and acted upon in the order in which they were reported, unless otherwise specially ordered by the Assembly. But engrossed bills shall be placed at the head of the file, in the order in which they are received. The Chief Clerk shall post a daily statement of the bills on the General File, setting forth the order in which they are filed and specifying the alterations arising from the disposal of business each day. The Chief Clerk shall likewise post notices of special orders as made.
Rule No. 114. Reserved.
Rule No. 115. Reserved.
Rule No. 116. Reserved.
Rule No. 117. Reserved.
Rule No. 118. Treated as Bills—Joint Resolutions.
The procedure of enacting joint resolutions must be identical to that of enacting bills. However, joint resolutions proposing amendments to the Constitution must be entered in the Journal in their entirety.
Rule No. 119. Reserved.
D. Order of Business
Rule No. 120. Order of Business.
The Order of Business must be as follows:
1. Call to Order.
2. Reading and Approval of Journal.
3. Presentation of Petitions.
4. Reports of the Standing Committees.
5. Reports of the Committee of the Whole.
7. Messages from the Senate.
8. Motions, Resolutions and Notices.
9. Introduction, First Reading and Reference.
10. Consent Calendar.
11. Second Reading and Amendment.
12. General File and Third Reading.
13. Unfinished Business of Preceding Day.
14. Special Orders of the Day.
15. Remarks from the Floor, limited to 10 minutes.
Rule No. 121. Reserved.
Rule No. 122. Reserved.
Rule No. 123. Reserved.
Rule No. 124. Reserved.
Rule No. 125. Reserved.
Rule No. 126. Reserved.
Rule No. 127. Reserved.
Rule No. 128. Reserved.
The next rule is 140.
Rule No. 140. Reserved.
Rule No. 141. Use of the Assembly Chamber.
The Assembly Chamber shall not be used for any public or private business other than legislative, except by permission of the Assembly.
Assemblywoman Buckley moved the adoption of the resolution.
Mr. Speaker requested the privilege of the Chair for the purpose of making remarks.
Mr. Speaker announced if there were no objections, the Assembly would recess subject to the call of the Chair.
Assembly in recess at 10:22 a.m.
ASSEMBLY IN SESSION
At 10:32 a.m.
Mr. Speaker presiding.
Assemblywoman Buckley moved that the Assembly recess until 1:00 p.m.
Assembly in recess at 10:35 a.m.
ASSEMBLY IN SESSION
At 1:22 p.m.
Mr. Speaker presiding.
MESSAGES FROM THE GOVERNOR
Office Of The Governor
June 25, 2003
The Honorable Richard D. Perkins, Speaker of the Assembly, Nevada State Assembly, Legislative Building, 401 S. Carson Street, Carson City, Nevada 89701
To The Honorable Members Of The Nevada State Assembly:
The Nevada State Constitution, in Article V, Section 9, provides that the Governor may on extraordinary occasions convene a special session of the Legislature by proclamation. On June 12, 2003, I issued a proclamation convening the 20th Special Session of the Nevada Legislature. Within my proclamation, I defined and limited the scope of your legislative endeavors for the special session. Consider only the matters set forth in this proclamation.
I feel compelled to mention that the end of the fiscal year is a mere five days from today. Because of this, there are consequences being realized by the school districts of Nevada as each day passes without K-12 education being funded for the upcoming biennium. Therefore, I wish you well in completing the legislative business before you; I urge you on behalf of the citizens of Nevada to complete their business in an expeditious and effective manner.
Kenny C. Guinn
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 adopted Assembly Concurrent Resolution No. 1.
Also, I have the honor to inform your honorable body that the Senate on this day passed Senate Bill No. 1.
INTRODUCTION, FIRST READING AND REFERENCE
By the Select Committee on State Revenue and Education Funding:
Assembly Bill No. 1—AN ACT relating to state financial administration; providing for the imposition and administration of an excise tax on employers based on wages paid to their employees; imposing a franchise fee on business entities for the privilege of doing business in this state; providing for the imposition and administration of a tax on financial institutions for the privilege of doing business in this state; replacing the casino entertainment tax with a tax on all live entertainment; eliminating the business activity tax; revising the provisions governing the taxes on liquor and cigarettes; imposing a state tax on the transfer of real property and revising the provisions governing the existing tax; revising the fees charged for certain gaming licenses; establishing the Legislative Committee on Taxation, Public Revenue and Tax Policy; requiring the Department of Education to prescribe a minimum amount of money that each school district must expend each year for textbooks, instructional supplies and instructional hardware; revising provisions governing the purchase of retirement credit for certain educational personnel; apportioning the State Distributive School Account in the State General Fund for the 2003-2005 biennium; making appropriations to the State Distributive School Account for purposes relating to class-size reduction; making various other changes relating to state financial administration; authorizing certain expenditures; making an additional appropriation; providing penalties; and providing other matters properly relating thereto.
Assemblywoman Buckley moved that the bill be referred to the Committee of the Whole.
Senate Bill No. 1.
Assemblywoman Buckley moved that all rules be suspended, reading so far had considered second reading, rules further suspended, Senate Bill No. 1 considered engrossed, declared an emergency measure under the Constitution and placed on third reading and final passage.
Remarks by Assemblywoman Buckley.
Motion carried unanimously.
general file and third reading
Senate Bill No. 1.
Bill read third time.
Remarks by Assemblywoman Buckley.
Roll call on Senate Bill No. 1:
Senate Bill No. 1 having received a constitutional majority, Mr. Speaker declared it passed.
Bill ordered transmitted to the Senate.
Mr. Speaker announced if there were no objections, the Assembly would recess subject to the call of the Chair.
Assembly in recess at 1:29 p.m.
ASSEMBLY IN SESSION
At 1:44 p.m.
Mr. Speaker presiding.
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.
IN COMMITTEE OF THE WHOLE
Assemblyman Perkins presiding.
Assembly Bill No. 1 considered.
Brenda Erdoes, Legislative Counsel:
Sections 1 to 24, inclusive, provide for the imposition and administration of a tax on employers based upon wages paid to employees. Note that this tax would replace the business tax set forth in chapter 364A of NRS, which is repealed by section 232, and that pursuant to section 241, this tax and the complete repeal of chapter 364A of NRS become effective on January 1, 2004. For the purposes of this tax Section 4 defines an employer” as one who is required to make contributions for the purposes of unemployment compensation, and excludes Indian tribes, nonprofit organizations and political subdivisions. Section 11 requires payment of the tax each calendar quarter at the rate of 0.6 percent of the wages paid, as determined pursuant to NRS 612.545, which excludes the amount of any wages in excess of 66 and two-third percent of the average annual wage.
Mark Stevens, Assembly Fiscal Analyst:
The revenue projection that has been developed by the Fiscal Analyst Division for this particular tax is $76.8 million in revenue in the first year of the biennium and $119,760,000 million in the second year of the biennium.
It would be of value for the members who did not sit on the committee for the last special session to know that AB 1 is, in essence, the compromise plan we had discussed with some Senators before we left. There are very few minor changes in here, some of which you will recognize. Please feel free to ask any questions. It is my belief that this is a starting point. If there are suggestions or objections as we move through this please don’t hesitate to bring them to the body and they will be considered at that point.
Sections 25 to 58, inclusive, provide for the imposition and administration of a tax on the amounts paid for live entertainment. Note that this tax would replace the casino entertainment tax set forth in NRS 463.4001 to 463.406, inclusive, which is repealed by section 232, and that pursuant to section 241, this tax and the complete repeal of the casino entertainment tax are made to become effective on January 1, 2004 For the purposes of this tax, Section 27 provides for the definition of the term “amount paid for live entertainment,” which depends upon where the entertainment is provided.
Sections 32 and 35 provide for the definition of the term “live entertainment,” requiring the physical presence of both the entertainer and the audience, and the adoption of regulations by the Department of Taxation. Section 36 provides for the imposition of the tax at the rate of 10 percent of the amount paid for live entertainment, and sets forth a variety of exemptions from the tax. Section 38 requires the administration of the tax imposed on: 1. Licensed gaming establishments by the State Gaming Control Board; and 2. Other taxpayers by the Department of Taxation. Section 39 requires the reporting and payment of the tax on a monthly basis.
The revenue projection that has been developed by the Fiscal Analyst Division for the live entertainment tax is $46.5 million in the first year of the biennium and $78.7 million in the second year of the biennium. That would be implemented in January of 2004, based on the revenue sheets that have been provided to the members of the Assembly.
Sections 59 to 93, inclusive, provide for the imposition and administration of a franchise fee on the total revenue of business entities in this state. Note that pursuant to section 241, this fee is made to become effective on October 1, 2003. For the purposes of this fee, Section 68 defines “total revenue” as the gross revenue of a business entity minus the amounts specifically excluded by that section, such as: 1. Any revenue received by a natural person from the rental of not more than four residential units. 2. Any revenue from the sale of agricultural products at wholesale. 3. The gross revenue of an insurer from direct premiums written. 4. The gross revenue of a non-restricted gaming licensee from which its licensing fee is calculated. 5. The gross yield of a mine from which the tax on the net proceeds of minerals is calculated. 6. The operating revenue of certain public utilities. 7. Any revenue of a nonprofit organization, which is exempt from federal income taxation.
Section 75 requires payment of the fee each calendar quarter based upon the estimated amount of the annual total revenue of the business entity, and requires reconciliation of the amount due upon the determination of the actual annual total revenue of the business entity for each fiscal year. Section 77 sets forth the amounts, which may be deducted by a business entity from its total revenue in calculating the fee it is required to pay. Section 78 provides for the adoption of regulations by the Department of Taxation for the allocation or apportionment of the liability for the fee of a business entity that conducts business both within and outside of this state.
The franchise fee would be implemented in October of 2003 based on AB 1 and the revenue projection by the Fiscal Analyst Division is approximately $88.5 million in fiscal year 2004 and approximately $118 million in fiscal year 2005.
Sections 93.10 to 93.72, inclusive, provide for the imposition and administration of a franchise tax on the net income of financial institutions in this state. Note that pursuant to section 241, this tax is made to become effective on January 1, 2004. For the purposes of this tax, Section 93.18 defines the term “financial institution.” Section 93.36 imposes the tax at the rate of 3 percent of the Nevada taxable income of the financial institution as calculated pursuant to section 93.42 each taxable year which is the same taxable year as that used for federal income tax purposes, and requires the filing of a tax return and payment of the tax when the federal income tax return is due. Section 93.42 provides for the calculation of the Nevada taxable income of a financial institution through the adjustment of the amount of taxable income reported by the financial institution for federal income tax purposes. Section 93.44 provides for the adoption of regulations by the Department of Taxation for the allocation or apportionment to this state of the tax liability of a financial institution.
The bank franchise fee would be implemented in January 2004, however, taxes would not be due until January of 2005 and revenue would only be received in the second fiscal year of the biennium. The Fiscal Analyst Division’s revenue projection is $13.2 million in fiscal year 2005.
Section 94 provides for the addition of sections 95 to 101, inclusive, to chapter 360 of NRS “General Provisions” relating to revenue and taxation. Section 95 requires the Nevada Tax Commission to adopt regulations for the electronic submission of tax returns and the payment of taxes by credit card, debit card and electronic transfers of money. Sections 96 to 101, inclusive, provide for the replacement of certain provisions of chapter 364A of NRS, regarding the requirements for a state business license, upon the repeal of that chapter by section 232 on January 1, 2004. Section 102 amends NRS 360.095 to require the Department of Taxation to consider a weighting of indicators of noncompliance in determining which taxpayers to audit. Pursuant to section 241, this section becomes effective on July 1, 2003. Section 103 amends NRS 360.225 to account for the repeal of chapter 364A of NRS by section 232.
Sections 104 to 109, inclusive, amend NRS 360.2935, 360.300, 360.417, 360.419, 360.510 and 360.750 to provide for the administration of sections 2 to 24, inclusive employer tax, 60 to 93, inclusive business franchise fee, and 93.12 to 93.72, inclusive financial institution franchise tax as soon as those sections begin to become effective, and to account for the repeal of chapter 364A of NRS by section 232 on January 1, 2004. Section 110 amends NRS 360A.020 to require the Department of Motor Vehicles to adopt regulations for the electronic submission of tax returns and the payment of certain taxes by credit card, debit card and electronic transfers of money. Sections 111, 112 and 113, respectively, amend NRS 364A.020, 364A.120 and 364A.130 to revise the entities to which chapter 364A of NRS apply, to increase the state business license fee to $75 and to require the submission of that fee on an annual basis. Pursuant to section 241, these provisions become effective on July 1, 2003. What happens is that these sections in 364A are amended as of July 1, 2003 and then are repealed as of January 1, 2004, at which time the other provisions take effect and the $75 fee continues after that.
The revenue projection for the business license fee of $75, which would be implemented in July of 2003, is $17.6 million in fiscal year 2004 and approximately $18.4 million in fiscal year 2005.
Sections 114, 115 and 116, respectively, amend NRS 369.174, 369.330 and 369.370 to increase the state liquor tax by approximately 75 percent and to reduce the collection allowance for that tax from 3 percent to 0.5 percent. Pursuant to section 241, these provisions become effective on July 1, 2003.
The 75 percent increase in liquor taxes is estimated to generate approximately $15.2 million in fiscal year 2004 and approximately $15.5 million in fiscal year 2005. Reducing the liquor allowance to .5 percent would also generate approximately $800,000 each year of the biennium.
Sections 117 to 120.5, inclusive, amend NRS 370.165, 370.220, 370.260 and 370.350 to increase the state cigarette tax by 45 cents on July 1, 2003, and by an additional 10 cents on July 1, 2004, and to reduce the collection allowance for that tax from 3 percent to 0.5 percent on July 1, 2003.
Increasing the cigarette tax by 45 cents, effective July 1, 2003, is estimated to generate approximately $67 million in fiscal year 2004 and the additional 10-cent increase in July of 2004 is estimated to generate about $5.1 million in fiscal year 2005. In addition, reducing the cigarette stamp fee to .5 percent would generate between $3 million and $3.1 million in each year of the biennium.
Sections 121 and 122, respectively, amend NRS 370.450 and 370.490 to reduce the collection allowance for the state tax on other tobacco products from 2 percent to 0.5 percent. Pursuant to section 241, these provisions become effective on July 1, 2003. Sections 123 and 124, respectively, amend NRS 372.130 and 372.140 to increase from $1 to $5 the fees for the issuance of a seller’s permit for the administration of the sales and use tax and for the renewal or issuance of such a permit, which has been previously suspended or revoked. Pursuant to section 241, these provisions become effective on July 1, 2003. Sections 125 and 126 amend NRS 372.220 to provide for the registration of certain businesses with the Department of Taxation for purposes of the sales and use tax when the business obtains a state business license. Note that pursuant to section 241, section 125 becomes effective on July 1, 2003, and that section 126, which becomes effective on January 1, 2004, accounts for the replacement of certain repealed provisions of chapter 364A of NRS by sections 96 to 101, inclusive. Section 127 amends NRS 372.370 to reduce the collection allowance for the sales and use tax from 1.25 percent to 0.5 percent. Pursuant to section 241, this section becomes effective on July 1, 2003.
Section 127, in combination with Section 130, the local school support tax, will generate an estimated $11.4 million in the first year of the biennium and $12.1 million in the second biennium. I have the information that breaks that out between the 2 percent sales tax and the LSST. If anyone is interested I can get that information out of my file for you.
Sections 128 and 129, respectively, amend NRS 374.135 and 374.145 to increase from $1 to $5 the fees for the issuance of a seller’s permit for the administration of the local school support tax and for the renewal or issuance of such a permit, which has been previously suspended or revoked. Pursuant to section 241, these provisions become effective on July 1, 2003. Section 130 amends NRS 374. 375 to reduce the collection allowance for the local school support tax from 1.25 percent to 0.5 percent. Pursuant to section 241, this section becomes effective on July 1, 2003. Section 131 provides for the addition of sections 132 and 133 to chapter 375 of NRS “Tax on Transfers of Real Property.” Section 132 provides for the imposition of a state tax on transfers of real property at the rate of $1.30 on each $500 of value of the property transferred, and specifies a collection allowance of 0.2 percent for the county recorders required to collect the tax. Pursuant to section 241, this tax becomes effective on July 1, 2004.
This revenue source, which would become effective July 1, 2004, is estimated to generate $57 million in the fiscal year 2005.
Section 133 requires the Department of Taxation to coordinate the collection and administration of the tax imposed by section 132, and to provide related assistance to the county recorders of certain rural counties upon request. Sections 134 to 154, inclusive, amend NRS 375.018, 375.030, 375.070, 375.090, 375.120, 375.130, 375.160, 375.170, 375.250, 375.270, 375.290, 375.300, 375.330, 376A.040, 376A.050 and 376A.070 to account for the tax imposed by section 132 and the repeal of NRS 375.025 and 375.075 regarding the imposition and disposition in certain counties of an optional tax on the transfer of real property by section 232. Additionally, Section 139 revises the provisions governing the exemptions from the taxes on transfers of real property. Pursuant to section 241, the provisions relating to the repeal of NRS 375.025 and 375.075 become effective on July 1, 2003, and the remainder of these provisions become effective on July 1, 2004, except that the second parallel amendments of NRS 376A.040, 376A.050 and 376A.070 become effective when those second parallel sections of NRS become effective on October 1, 2029.
Sections 155 to 161, inclusive, amend NRS 78.150, 80.110, 86.263, 87.510, 88.395, 88A.600 and 89.250 to account for the replacement of certain repealed provisions of chapter 364A of NRS by sections 96 to 101, inclusive. Section 162 provides for the addition of sections 163 to 168, inclusive, to chapter 218 of NRS “State Legislature”. Sections 163 to 168, inclusive, provide for the establishment, membership, administration, powers and duties of a Legislative Committee on Taxation, Public Revenue and Tax Policy. Pursuant to section 241, these provisions become effective on July 1, 2003, and expire by limitation on June 30, 2005. Section 169 amends NRS 218.53883 to require the Legislative Committee for Local Government Taxes and Finance to review exemptions from certain state and local taxes to ascertain whether any of those exemptions are obsolete and should be repealed. Pursuant to section 241, these provisions become effective on July 1, 2003. Section 170 amends NRS 233B.039 in conformity with the provisions of section 38, which requires the State Gaming Control Board to adopt certain regulations for the administration of the proposed tax on live entertainment. Sections 171 and 172, respectively, amend NRS 244.335 and 268.095 to account for the replacement of certain repealed provisions of chapter 364A of NRS by sections 96 to 101, inclusive. Section 173 adds a new section to chapter 338 of NRS “Public Works Projects,” which requires a public body to include in its public works contracts a clause requiring contractors and others involved in such a project to comply with all applicable state and local laws, including those requiring licenses and the payment of sales and use taxes. Note that pursuant to section 241, these provisions become effective on July 1, 2003, but that pursuant to section 238, do not apply to any contracts made before that date.
Section 174 adds a new section to chapter 353 of NRS “State Financial Administration” to define a term used in sections 178 to 188, inclusive.
Section 175 amends NRS 353.1465 to require the Department of Administration to adopt regulations for the submission of payments to state agencies by credit card, debit card and electronic transfers of money. Section 176 amends NRS 353.210 to require a state agency to submit annually to the Chief of the Budget Division of the Department of Administration certain information regarding positions within the agency that have been vacant for 12 or more months. Pursuant to section 241, this section becomes effective on July 1, 2003.
Section 177 has been deleted. Sections 178 to 189, inclusive, respectively, amend NRS 353.2705, 353.2735, 353.274, 353.2745, 353.2751, 353.2753, 353.2754, 353.2755, 353.276, 353.2765, 353.2771 and 353.288 to cause the Disaster Relief Fund to become the Disaster Relief Account in the Fund to Stabilize the Operation of the State Government, and to provide for the quarterly transfer to the Disaster Relief Account of not more than 10 percent of the aggregate balance in the Fund to Stabilize the Operation of the State Government. Additionally, Section 189 revises the provisions governing the transfer of money into, and the maximum balance of, the Fund to Stabilize the Operation of the State Government. Pursuant to section 241, these provisions become effective on July 1, 2003. Currently, the ending fund balance must reach 10 percent of General Fund appropriations before an amount can be triggered into the Rainy Day Fund. Section 189 would change that to 5 percent. If the ending fund balance was at least 5 percent of total General Fund appropriations the Director of the Department of Administration could approach the Board of Examiners and recommend an amount that would be transferred from the State General Fund to the Rainy Day Fund. The Board of Examiners would then consider that and make a recommendation to the Interim Finance Committee and then the Interim Finance Committee would make a decision on the amount of money that could be transferred from the State General Fund to the Rainy Day Fund.
Sections 190, 191, 192, 193 and 194 have been deleted. Sections 194.2 through 194.6 and sections 195.2 and 195.4 will be summarized later. Sections 195 and 196, respectively, amend NRS 388.750 and 396.405 in conformity with the amendatory provisions of section 139 renumbering of exemptions from the taxes on transfers of real property. Section 197 amends NRS 414.135 in conformity with the amendatory provisions of sections 178 to 189, inclusive. Section 198 amends NRS 459.3824 to account for the replacement of certain repealed provisions of chapter 364A of NRS by sections 96 to 101, inclusive. Sections 199 and 200, respectively, amend NRS 463.0136 and 463.270 to account for the replacement of the casino entertainment tax by sections 25 to 58, inclusive. Section 201 amends NRS 463.370 to increase each tier of the state nonrestricted gaming license fee by 0.5 percent. Pursuant to section 241, these provisions become effective on July 1, 2003.
Section 202 amends NRS 463.373 to increase the state licensing fees for a restricted gaming license, authorizing the operation of not more than 15 slot machines by 33 percent. Pursuant to section 241, these provisions become effective on July 1, 2003.
This is estimated to generate an additional $2.3 million in fiscal year 2004 and $2.4 million in fiscal year 2005. Sections 203 and 204 respectively, amend NRS 463.401 and 463.4055. In conjunction with the repeal of NRS 463.4001, 463.4002, 463.4004, 463.4006, 463.4008, 463.4009 and 463.4015 by subsection 1 of section 232, these sections revise the scope of the casino entertainment tax. Note that pursuant to section 241, these provisions become effective on July 1, 2003, which precedes the effective date of the live entertainment tax set forth in sections 25 to 58, inclusive. Section 205 amends NRS 463.408 to account for the replacement of the casino entertainment tax by sections 25 to 58, inclusive. Section 206 amends NRS 463.770 in conformity with the increase in the highest tier of the state nonrestricted gaming license fee pursuant to section 201.
Section 207 has been deleted. Section 208 amends NRS 612.265 to account for the repeal of chapter 364A of NRS. Section 209 has been deleted. Sections 210, 211 and 212, respectively, amend NRS 616B.012, 616B.679 and 616B.691 to account for the repeal of chapter 364A of NRS. Sections 213 and 214 have been deleted. Sections 215 to 225, inclusive, respectively, amend NRS 645B.060, 645B.670, 645E.300, 645E.670, 649.395, 658.151, 665.133, 673.484, 675.440, 676.290 and 677.510 to carry out the provisions of sections 93.10 to 93.72, inclusive financial institutions franchise tax. Section 226 has been deleted. Sections 227 to 229.3, inclusive, amend NRS 680B.037, 687A.130 and 694C.450 to carry out the provisions of sections 59 to 93, inclusive business franchise fee, effective on October 1, 2003, and sections 93.10 to 93.72, inclusive financial institutions franchise tax, effective on January 1, 2004.
Section 229.7 amends section 62 to exempt from the business franchise fee a financial institution that pays the financial institutions franchise tax. Note that pursuant to section 241, this exemption becomes effective when the financial institutions franchise tax becomes effective. Section 230 amends section 101 to impose a penalty of $75 on a person who fails to pay the state business license fee on time. Note that pursuant to section 241, this penalty becomes effective on July 1, 2004. Section 231 is a technical amendment to account for the repeal of NRS 375.025 by section 232. Note that NRS 375.025 was amended by section 1 of chapter 458, Statutes of Nevada 1999. Section 232 repeals: 1. NRS 353.272, which refers to the Disaster Relief Fund, in conformity with the provisions of sections 178 to 189, inclusive effective on July 1, 2003; 2. NRS 364A.160, which exempts a natural person who does not employ any employees from the provisions of chapter 364A of NRS effective on July 1, 2003; 3. NRS 375.025 and 375.075, which provide for the imposition and disposition in certain counties of an optional tax on the transfer of real property effective on July 1, 2003; 4. NRS 463.4001, 463.4002, 463.4004, 463.4006, 463.4008, 463.4009 and 463.4015 in conjunction with the provisions of sections 203 and 204, effective on July 1, 2003; 5. Chapter 364A of NRS regarding the business tax, effective on January 1, 2004; and 6. The remaining provisions of NRS 463.4001 to 463.406, inclusive regarding the casino entertainment tax, effective on January 1, 2004. Sections 233 and 234 provide for the creation of the Fund for Tax Accountability and the transfer to the Fund of the amount of certain unappropriated state revenue which exceeds the amount that can be transferred into the Fund to Stabilize the Operation of the State Government, and limit the use of the money in the new Fund to supplementing future state revenue to allow the reduction of the rate or amount of a tax or fee.
Section 235 authorizes public utilities and local government franchisees that must obtain approval of their rates by a governmental entity to increase their previously approved rates by the amount of any increased tax liability they incur before January 1, 2005, as a result of this BDR. Section 236 provides for the expenditure of an appropriation authorized by the 72nd Session of the Nevada Legislature for the collections of state revenue approved by the 20th Special Session of the Nevada Legislature. For those who are on the Committee on Ways and Means, this involves the $12.5 million and $20 million that has been appropriated to the Interim Finance Committee for use by the Department of Taxation, if the Interim Finance Committee concurs, for any data processing requirements or staff that would be required by the Department of Taxation to implement a new tax package. Section 237 makes an appropriation from the State General Fund to the Interim Finance Committee for allocation to the Legislative Committee on Taxation, Public Revenue and Tax Policy (established by section 164). This is at $125,000 per year. Sections 237.10 through 237.20 make appropriations to the State Distributive School Account (DSA) for class size reduction. Specifically: Sections 237.10 and 237.12 of the bill appropriate $108,937,389 and $117,142,553 in fiscal years 2003-04 and 2004-05, respectively, for continued support of the Class-size Reduction Program. This money will pay for the salaries and benefits of at least 1,887 teachers hired to reduce pupil‑teacher ratios in the first year and for 1,953 teachers in the second year. The bill continues the Class-size Reduction Program in the Distributive School Account, and maintains the separate expenditure category to highlight the program. Funds still will be allocated based upon the number of teachers needed in each district to reach the ratios of 16 to 1 in first and second grades and 19 to 1 in third grade, as in the current year. To ensure that the school districts with the greatest needs for class-size reduction teachers receive adequate funding, money will be distributed by the same method utilized in the past.
Section 237.14 of the bill continues the flexibility allowed in the use of the third-grade funding to the money for first and second grades. In the last seven years, school districts have been allowed to carry out alternative programs for reducing the ratio of pupils per teacher or to implement remedial programs that have been found to be effective in improving pupil achievement. To use the funds in this manner, school districts are required to receive approval of their written plan from the Superintendent of Public Instruction, evaluate the effectiveness of their program and ensure that the combined ratio of pupils per teacher in the aggregate of grades K through 3 does not exceed the combined ratio in those grades in school year 2000-01. For school districts located in counties whose population is less than 100,000, the bill authorizes a program of alternative pupil-teacher ratios in grades 1 through 5, or grades 1 through 6 if grade 6 is included in the elementary school. These alternative programs would require prior approval from the Superintendent of Public Instruction and would require pupil teacher ratios not exceeding 22 to 1 in grades 1, 2 and 3; and 25 to 1 in grades 4, 5 and 6. The districts that choose to carry out alternative programs are required to complete an evaluation of the effectiveness of these projects and report to the Superintendent of Public Instruction who will report to the 2005 Legislature.
Section 237.16 requires that a school district located in a county whose population is 100,000 or more must study the current class-sizes in the school district for grades 1 through 5 to determine whether alternative pupil-teacher ratios may (1) improve the academic achievement of pupils, (2) decrease pupil discipline; or (3) decrease or eliminate team teaching in grades 1 and 2. These districts are required to report their findings to the Legislature. Section 237.18 allows priority in expenditure to assist at-risk pupils first. The section also restricts the use of the money appropriated in this bill from use for collective bargaining and for adjustment of salaries. The section prohibits distribution of class-size reduction money to school districts unless the district has filed a plan for achieving the required ratio and demonstrated that a sufficient number of teachers have been employed. Section 237.20 prohibits the continuation after June 30, 2005, of the alternative pupil-teacher ratios unless the continuation is approved by the 2005 Legislature.
Sections 237.22 through 237.66, as well as sections 194.2 through 194.6 and 194.2 and 195.4, appropriate money from the State General Fund to the DSA and authorize the expenditure of that money. Specifically, Section 194.2 of this bill adds a new section to chapter 387 of NRS that requires the Department of Education, in consultation with the Budget Division of the Department of Administration and the Fiscal Analysis Division of the Legislative Counsel Bureau, to develop or revise as applicable, a formula for determining the minimum amount of money that each school district is required to expend each fiscal year for textbooks, instructional supplies and instructional hardware. Section 194.4 is a housekeeping section that adds appropriate internal references to reflect the addition of the new section in section 194.2. Section 194.6 amends NRS 387.207. Currently, NRS 387.207 provides a formula to be used by each school district to determine the amount it must spend for textbooks, library books and supplies, and materials relating to instruction, including software for computers. The amendments to this section reflect that the new section 194.2 of this bill moves to the Department of Education the determinations for spending regarding textbooks, instructional supplies and instructional hardware. Sections 195.2 and 195.4 incrementally amend NRS 391.165 regarding the purchase of retirement credits for certain educational personnel. Beginning with the upcoming school year, section 195.2 requires the boards of trustees of certain school districts to purchase retirement credits for teachers with at least 2 years’ experience working at an at-risk school. Starting in FY 2004-05, section 195.4 also requires the boards of trustees of certain school districts to purchase retirement credits for teachers in mathematics, science, English as a second language, special education and for school psychologists. Sections 237.52 and 237.54 of this bill contain the funding for these purchases of retirement credits. Sections 237.22 and 237.24 establish the statewide average basic support per pupil and show an increase over the upcoming biennium from $3,987 in the current year to $4,295 in FY 2004 and $4,424 in FY 2005. Section 237.26 allocates State funding for special education programs. Such funding continues to be allocated on the basis of special education units. Total funding for the units amounts to $83,185,765 for 2,615 units at a cost of $31,811 each in FY 2004 and $87,866,476 for 2,708 units at a cost of $32,447 each in FY 2005. As in the past, 40 of those units will be reserved for the State Board of Education to assign to districts or charter schools that have unexpected needs. In addition to the 40 “discretionary” units, the bill includes 5.69 units and 5.88 units for FY 2004 and FY 2005, respectively, for gifted and talented pupils to participate in instructional programs incorporating educational technology.
Section 237.28 appropriates from the State General Fund to the DSA, $637.8 million in the first year of the 2003-05 biennium and $767.1 million in the second year of the 2003-05 biennium. These appropriations have been reduced from the figures in the bill from the previous special session to account for the increased tax revenue produced by the reduction in the collection allowances for the LSST. Section 237.30 authorizes the expenditure of $208.9 million and $147.8 million of other revenues authorized to be received and expended for the state support of public education over the biennium. Similar to section 237.28, these authorized expenditures have been correspondingly increased from the figures in the bill from the previous session to account for the increased tax revenue produced by the reduction in the collection allowances for the LSST. It should be noted that these numbers are overstated and will need to be amended downward slightly if this bill is processed. Section 237.32 authorizes the State Controller to make certain temporary advances of money from the State General Fund to the DSA. Section 237.34 authorizes the expenditure of money from the DSA to fund adult high school diploma programs. The sums of $16.9 million and $17.8 million are budgeted for the first and second years of the 2003-05 biennium, respectively, for the support of courses approved by the Department of Education as meeting the course of study for an adult standard high school diploma as approved by the State Board of Education.
Section 237.36 authorizes the expenditure of $50,000 each year, per district, from the DSA to support special counseling services for elementary school pupils who are at risk of failure. Section 237.38 authorizes a reduction in the amounts guaranteed in sections 237.22 and 237.24 if deemed necessary by the Governor pursuant to NRS 353.225 to effectuate an emergency reserve in the DSA. Section 237.40 provides for the transfer from the DSA of $8.8 million for FY 2004 and $8.9 million for FY 2005 from the DSA for the maintenance and continued operation of the Regional Professional Development Program and the Nevada Early Literacy Intervention Program. Section 237.42 authorizes the Legislative Bureau of Educational Accountability and Program Evaluation to receive $100,000 for each year of the 2003-05 biennium from the DSA for the evaluation of the regional training programs for the professional development of teachers and administrators established pursuant to NRS 391.512. Section 237.44 provides for the transfer from the DSA of $80,000 for each year of the 2003-05 biennium for additional training opportunities for educational administrators in Nevada by the Statewide Council for the Coordination of the Regional Training Programs created by NRS 391.516 and to support the goals of Nevada Project Leadership in Educational Administration Development.
Section 237.46 provides for the transfer from the DSA of $5.18 million for FY 2004 and $5.01 million for FY 2005 from the DSA to provide remedial education programs that have been approved by the Department of Education for certain schools which are designated as demonstrating a need for improvement, failing to meet adequate yearly progress, or in which 40 percent of the enrolled pupils score below the 26th percentile on certain examinations. Section 237.48 provides for the transfer from the DSA of $1 million for FY 2004 and $1.5 million for FY 2005 for supplemental services or tutoring for pupils in non-Title I schools that failed to meet adequate yearly progress on certain examinations administered pursuant to NRS 389.550. Section 237.50 provides for the transfer from the DSA of $2,896,583 for each year of the 2003-05 biennium for the Nevada Early Childhood Program for grants to school districts and community-based organizations for early childhood education programs and places restrictions on the use of that money. Of this amount, $301,000 in each year of the 2003-2005 biennium must be used for the Classroom on Wheels Program.
Sections 237.52 and 237.54 provide for the transfer from the DSA of $2.7 million for FY 2004 and $12.8 million for FY 2005 for the purchase of retirement credits in accordance with sections 195.2 and 195.4 of the bill. Section 237.56 requires that of the amounts enumerated in sections 237.22 and 237.24 of this bill, $64.4 million for FY 2004 and $66.7 million for FY 2005 must be expended for the purchase of textbooks, instructional supplies and instructional hardware as prescribed in section 194.2 of this bill. Section 237.58 authorizes any remainder in the Fund for School Improvement (Estate Tax) at the close of the 2002-03 fiscal year to be transferred to the DSA.
Section 237.60 limits the use of the money appropriated or authorized by sections 237.40 to 237.54 of this bill to the stated purposes only. Section 237.62 provides for the transfer from the DSA of $47,715 for each year of the 2003-05 biennium to reimburse school districts for the additional costs of transportation for any pupil to a school outside the school district in which his residence is located. Section 237.64 makes a supplemental appropriation from the State General Fund to the DSA of $3,152,559 for an unanticipated shortfall in money for FY 2002-2003. Section 237.66 requires each school district to spend all money it receives in a manner that is consistent with NRS 288.150 regarding collective bargaining and in a manner that is designed to achieve educational reform. The section also provides that materials and supplies for classrooms are subject to negotiation by employers with recognized employee organizations. Section 238 consists of transitory provisions regarding the initial applicability of various provisions of this BDR. Section 239 provides that the repeal of chapter 364A of NRS by this BDR does not affect the collection of any taxes, which became due pursuant to that chapter before the chapter was repealed. Section 239.3 consists of a transitory provision to exempt financial institutions from the business franchise fee. Note that pursuant to section 241, this provision becomes effective when the business franchise fee becomes effective, and that pursuant to section 229.7, a statutory exemption will become effective when the financial institutions franchise tax becomes effective. Section 239.5 consists of transitory provisions regarding the initial applicability and payment of the financial institutions franchise tax. Section 240 requires the Budget Division of the Department of Administration and the Fiscal Analysis Division of the Legislative Counsel Bureau jointly to identify and develop a proposal for coordinating state programs regarding the treatment of alcohol and drug abuse or the provision of funding to local governments for such programs. Section 241 sets forth the effective dates for the provisions of this BDR.
The issues housed in AB 1 were 75 to 80 percent of what was listed on the Proclamation by the Governor, in terms of our responsibility for this Special Session. It is the goal of the Chair to try and find some accommodations, some ability to find two-thirds support in this body so that we might be able to accomplish our work. As I mentioned before, this is a starting point. If there are suggestions, please feel free to make them. We will handle them just like any other committee hearing and have a free discussion. Certainly, amendments come through the Committee of the Whole just as they would in any other committee. If the pleasure of the body is to make changes then we can accomplish that as well. I might start with a couple of questions. Mark, as I look at the revenue sheet that you provided for the members, on the comment side there are a number of comments that say, “matches last Senate revenue option.” Is that indicative of what the Senate bills had in them?
Yes, Mr. Chairman. It matches the last Senate revenue option that was available before the end of the 19th Special Session. There were a number of revenue options that were being discussed. That is the last one that was worked on by the Senate before the end of the 19th Special Session.
The restricted slots, at 33 percent, I believe that came as a recommendation of the taskforce. If memory serves me, wasn’t the 33 percent an inflationary increase? Did they go back and look at what inflation had been since the last increase in that area and apply that percentage?
That is correct, Mr. Chairman.
In the area of cigarette and liquor taxes, how do those specifically compare to some of the surrounding states?
In regard to cigarettes, Arizona is $1.18, California is 87 cents per pack, Utah is 69.5 cents per pack, Oregon is $1.28, and Idaho is 57 cents per pack. The liquor tax is a little more difficult because it is applied differently in each state. It is not applied consistently like the cigarette taxes are, but we can develop some information and provide that for you.
Thank you. I would appreciate that. In Section 93.36, in the 3 percent profits tax on financial institutions, is that based on only Nevada revenue or is it for the interstate banks, or other revenues?
Mr. Chairman, it would only affect the state revenue that is generated in the state.
Thank you, Mr. Chairman. Would you please repeat the section where the Secretary of State’s fees are located?
The Secretary of State fees are not in this bill and will be handled in a separate bill.
Thank you. Please address Section 27 and explain why we are exempting out the refreshments and merchandising of food on facilities above 5,000 seats. Why would we want that specific exemption and not apply that to all facilities or none of the facilities?
I believe whether you want to exempt those facilities or not is a policy choice that the body gets to make. That was what staff was requested to draft, so I think it is a policy choice whether that provision is wise or not.
I may be able to help, Mr. Geddes. The live entertainment tax is evolving out of the casino entertainment tax and currently the casino entertainment tax does tax food and beverage and exempts those facilities above 2,700 seats. We are able to broaden things by getting rid of those exemptions and capturing a show such as the Celine Dion show in Las Vegas. At the same time we must recognize that the large sporting events, either at Lawlor Events Center, UNLV, or other places, already pay a sales tax on much of their food and beverage, so it was intended to corner this to the casinos. We also tried to capture the adult entertainment type of establishments that really do not have an entry fee or admissions charge. Instead they make most of their revenues based upon some sort of food or beverage.
Thank you, Chairman Perkins. First, I would like to offer a compliment, in that I asked the Fiscal Analyst Department to prepare a form so that the gross receipts tax could be estimated by a business so that they could plug their numbers into a form and discover what they would pay. Could we have an online version of such a form, in this iteration, so a business today could plug in their numbers and find out where they would be and then e-mail us and tell us where they would be?
Second, in Section 237.66, as I understand that section, in regard to the collective bargaining for books, the concept is for teachers who are teaching the class and want to be able to use the books. If a school district says, “This is the book you have,” there is an organization that can collectively get together and say they want a say in the kind of book, material, and software they feel comfortable teaching from. My understanding is that it is not to do away with books or do away with the money that has been fenced off already in other section, but to allow the teacher to have the kind of books they want to teach from.
Third, how does this plan match up with our sister house down the hall and are they hearing what we are hearing? Do you have inside information that would address the differences that we are hearing?
Fourth, I happily did not see a room tax.
The last Senate plan I was privy to, a week or ten days ago, did include a room tax. The franchise fee revenues that were generated were less than in the Assembly version. In the payroll tax portion, the rate was higher and so more money was generated in the particular fee. In regard to the Secretary of State fees, the assumptions included in the revenue sheets in the Assembly have resident agents at $110 and the Senate at $125. Those were the major differences in the revenues in the last plan I saw. I am not sure if there are changes in what is being discussed today.
On the question of Section 237.66, my understanding is the way you described it is accurate.
I don’t know if it is possible for a business to go on line to find out how they would be impacted. I can find that out for you.
They should be able to look up not only the franchise part, but also the payroll part. They should be able to refer to what they pay currently and find out how the two portions would be affected because that is really what a business is looking at, as well as the RPTT and how that would play into their roll, depending on what kind of business they own.
Thank you, Mr. Hardy. We will ask the Information Systems Unit to see if there is something that can be done.
I would like to indicate to the members of the audience that if you want to address the committee there is a sign in sheet in the back. You can sign in and when we complete our committee dialog we will ask for public testimony. If there is a specific chapter, or chapters, that you would like to address we will take that testimony at that time.
Thank you, Mr. Chairman. I would like to clarify the LST reduction in Section 130. By removing or lowing the collection per pack, is the dollar amount being made up so that the districts are being made whole?
Yes, as you reduce the allowance that is able to be retained, that produces more sales tax revenue, which then reduces the amount of General Fund that is necessary to finance the Distributive School Account. The total funding between authorize and appropriated funds is the same.
Is it still correct that on page 149, for the 2003-2004 fiscal year, the average expenditure, per pupil, amount is $4,295 and $4,424 in the second year?
Section 237.14 contains the language regarding the study regarding the class size. We changed this to allow flexibility to allow rural counties under 100,000 to be able to do the report. I think the report is to make sure all districts take a look at the idea of the goal of class size reduction, which is to eliminate team teaching. I see that contained in the study that is supposed to reported back, on page 148, but it seems to me that it may only be for those that did the alternative program, or is that for all districts to look at, coming back to report how they could eliminate team teaching for next time?
It looks to me like it would be for any district that chose an alternative class size reduction program.
So we still would not hear, but we could ask the other two large urban areas to report to us, if we wanted, separate from this legislation?
The urban districts, contained in Section 237.16, Subsection 3, do have to report.
Good, because I wanted to make sure the intent was there. We debated the whole class size issue toward the end of the regular session, wanting to get to the point where we eliminated team teaching throughout all seventeen school districts. I wanted to make sure, for the record, that we were looking at that.
I have a couple of questions. My first question is regarding Section 75, which is the franchise fee. We have talked often about apportionment in terms of Nevada vs. non-Nevada revenue. I know there have been two key ways that it has been determined. You can currently measure apportionment on a current sales tax system, but I don’t think this works. I was wondering if there has been consideration as to how to do apportionment in terms of the source of the revenue. Do we know if this will allow a business to have a federal tax deduction from their federal income tax?
In Section 74, we talk about the gross of a business being determined from the Schedule C, Form 1040, Profit and Loss Business Form. Are those the only ways that are listed in Section 74 to determine gross? There had been some discussion of the State of Nevada doing audits independent of forms already being filled out. Is it our intention, under this section, that the only way we will be able to determine the gross of a business, and consequently determining their franchise fee, is based on the forms that they are already filing with the federal government?
My next question is regarding the notion of the range. Obviously if you are a business making $20 million a year and you pay $28,000 for the year, that is .0014 and if you are making $29 million you would have the same fee which is .0096. I wasn’t sure if it was an ease of implementation why it went with ranges, or if it made sense.
My final question is on a completely different section of the bill, Section 233, which is the spending cap. Have we done that in this state before? I personally appreciate, and think it is important component of this bill, that we will cap, at some level, future spending. I am curious what the impact on operations this will incur.
I can answer a couple of those questions. The ranges that are in Section 75 are necessary because the current data processing system that is employed by the Department of Taxation can’t use a flat rate. They have to use ranges. If the Interim Finance Committee approves the dollars necessary to implement a new data processing system for the department, once it is up and running then the ranges could be converted to a straight percentage.
The other question I can answer is in Section 233. I have not seen a provision like this utilized by the legislature in the past in this fashion. There is a capping mechanism within IRS that is employed but I have not seen it employed in the fashion before.
I will address your other questions. The first question was about apportionment. The apportionment provided for this tax is in Section 78, on page 26. It requires the Department of Taxation to adopt regulations providing for the allocation or apportionment of the liability of franchise fees pursuant to the chapter. It goes through methods of dividing income. These are the Uniform Division of Income For Tax Purpose Act and the formula recommend by the Formula For Apportionment and Allocation of Net Income of Financial Institutions if there is any financial institution as a part of that. This would all be taken care of by regulation by the Department of Taxation.
As to your other question, Section 74 doesn’t have to do with determining gross revenue or total revenue for the purposes of this tax. We are really concerned about not taxing individuals in a way that is unconstitutional and Section 74 provides that a natural person, if they file one of these forms, is deemed to be a business for the purposes of the tax. The actual determination of how much you would pay would be determined based on the method you use to determine your federal taxation requirements.
I do not know the answer to your question regarding federal tax deductibility. We can find out for you.
Thank you, Mr. Chairman. I have two questions. The first is on Section 27, live entertainment tax. We have a maximum seating capacity of not more than 5,000 seats. How many facilities do we have that have more than 5,000 seats? If we are going to implement a tax it should be provided for facilities. If we knew how many facilities have more than 5,000 seats then we could derive additional revenue and I would like to know how much that would be.
My second question is on page 10, Section 36, regarding boxing contests. On June 6, 2003, we had discussed in the Select Committee to raise the boxing to 10 percent if indeed the live entertainment tax was going to be 10 percent. It was felt they should be taxed the same amount. I do not see in here that they would be taxed the same amount. Why was it excluded? If it was excluded, how much additional revenue would be derived by having boxing taxed the same as any other live entertainment? Thank you.
Thank you, Ms. Chowning. The 5,000-seat threshold is only on the food and beverage. There are probably about a dozen of them, including UNLV and Lawlor Events Center. There is the Mandalay Event Center, the MGM Grand Garden, the Motor Speedway, etc. We were trying to encapsulate the casino entertainment tax philosophy for those types of lounge shows, the adult entertainment clubs, and that type of thing. They don’t have much of an admissions charge and make their money on the food and beverage. That is why the capping mechanism on the seating requirement. They, as well as other venues, will pay a sales tax on their food and beverage, and the thought was all the large venues would have an admissions fee that would be affected by the live entertainment tax and the revenues would be generated on that fee rather than the food and beverages.
In regard to your second question, it is my belief that part of it was the boxing arrangement already pays in excess of seven percent to the Athletic Commission for the regulation of that sport. They also had some concerns because they are selected, promoted events and very high on promoters shopping venues all over the country and we might lose those events from coming to the State of Nevada that have a larger impact to the over all economy. The other reasoning for it not to be in this bill is that we are trying to reconcile as much as we could with the house down the hall, in order to forge a consensus support for any of these concepts.
Thank you, Mr. Chairman. I have a couple of questions. In Section 11, the reference to the 66 and two-thirds percentage of the average annual wages, is that the statutory reference to the $21,500? The second question relates to Section 68, Subsection 1. The exclusion for revenues received by a natural person from the rental of not more than four residential units. I don’t think I have seen this previously. I would like to hear the reasoning behind this. I know there were some discussions about subcontractor amounts to be excluded for contractors or developers and I do not see that here. Was there a reason that was not included?
Lastly, as it is related to Mr. Griffin’s question and the response, relative to Section 75 with the franchise tiered rates. I thought that the question and response was related to a stepped bases versus a flat percentage rate and I thought the answer was there might be some technological limitations that require, at this point, a stepped rate versus a percentage rate?
I will answer the first question in regard to the statutory wage. You are correct, that is the statutory wage from Chapter 612, and it is called the base wage. We picked up that because they are reporting it anyway.
Looking at Section 68, Subsection 2, in regard to rentals, I think we picked that up from the Senate Bill when we were requested to.
Finally, if you look at page 26, line 8, “the cost of all payments made to contractors and subcontractors by a business entity…” I believe that is the cascading portion.
On implementation of the franchise fee, there is a problem, as I understand it, with the current Department of Taxation’s computer system implementing a percentage tax versus a tiered tax. If you will recall, in the Governor’s budget, the recommendation for a gross receipts tax would not have begun until after the biennium. That would have given the department time to get their processing system up and running. Until that new data processing system is up and running a flat percentage tax is not possible.
I might add, Mr. Brown, on the not more than four residential units, I think it fell into the philosophical approach that we have tried to have to protect the average taxpayer and small business. This is more on the lines of those folks who might just have rental properties to supplement their income rather than doing it as a business.
Thank you, Mr. Chairman. That brought a question to my mind as well and the response made it more so. It appears to me that by doing the “any revenue received by a natural person from the rental of not more than four” would mean we are now defining any more than four as business income to a natural person, which is personal income tax. I think that by statute we are now changing the constitutional provision that we cannot have personal income tax. I am wondering if we can do that because what we have done here, by the definition is, that if you have more than four you are a business but if you have less than four you are not. I am not sure that is legal. I would question that.
Section 234, Subsection 2, the Fund for Tax Accountability and the seven percent spending cap pushes any surplus over seven percent to the Rainy Day Fund. After that any money is pushed to the Tax Accountability Fund. The problem I have is the language in Subsection 2, “Money from the fund may be appropriated only for the purpose of supplementing future revenue of this state to allow the reduction of the rate or mount of a tax or fee.” It would appear to me that would say the only way you could ever get that money out of there would be to reduce a tax and this may or may not be ongoing revenue. So, you would have to reduce a tax or reduce a fee and then the next time you came back to this body you would have to raise the tax or fee again because that is not ongoing revenue. I think this is a problematic section, as well, and that we should clean up the language to make sure it is clear because otherwise, the money would be trapped in there unless you reduce taxes with non-ongoing revenue.
I would like to address your first question and Mark will address your second question. We have looked into the constitutionality of this and I believe that it is constitutional for the legislature to draw a line. Specifically, this line, I think, is very defensible because if you recall, in the past, for many years in Nevada the landlord-tenant law in Section 118 provided a differentiation if you had 4 or more units. If you had 5 or more units you had much stricter commercial law requirements. It is definitely a judgment call on the part of the Legislature, but in my opinion, this is one that is defensible. At some point the Legislature will have to determine a boundary around what is personal income and what is a business. There are several other provisions in the bill, which try to make that determination as well.
I believe in the Committee on Commerce and Labor this year we changed the law regarding the four residential units to zero and now it applies to all so I believe the two statutes would be in conflict with each other. If we are going to use that as criteria, saying that four units is personal income and anything over four units is not, I think this is a statutory change to a constitutional provision. I appreciate your opinion, but it appears to me that by statute we are changing what the law says and we are taxing personal income.
Thank you, Mr. Chairman. I will check the citation right now, but as a point of clarification, that bill did not pass in the Senate.
In regard to the issue in Section 234, I think it is possible that you would be using one-time revenue for an on-going expense. I think it is a possibility that it may not happen either. The way that the language is included in the bill, after 107 percent of the General Fund Revenue projection we would start filling the Rainy Day Fund. The Rainy Day Fund would fill and once it was completely full then we would put money in this account. At that level we are generating revenue at a much higher rate that what we projected. You could probably bring that revenue down a little bit and still not be using for a one-time purpose. You could reduce those on-going revenues at that point in time and still be able to maintain an increase in your General Fund revenues to support the budget in the next biennium.
I think we are trying to find some measure of tax accountability in case some of these projections were under projected. We are breaking new ground here, in essence we are trying to make sure we didn’t get out of control and try to show again that sense of responsibility.
Thank you, Mr. Chairman. Mark, at the bottom of page two of the handout with the numbers that each tax would generate, there is a franchise tax yield with numbers that are pulled back out. Would you explain that in more detail?
Those negative numbers at the bottom of the second page involve exemptions that would be provided for those particular groups and is included in the total franchise fee amount of $113.5 million in the first year and $151.3 million in the second. That would be the total universe and then there are exemptions that are included to get to the net of $88.5 million and $118 million.
Those are the areas that have industry specific taxes already so they are already being taxed in a separate arena. We felt it would be unfair to have a double taxation with this franchise fee and that revenue has been extracted out.
Thank you, Mr. Chairman, I agree with that. What, specifically, in construction and in financial institutions, what fees are being pulled out? It looks like, in the financial institutions, there are two separate ones, the new financial fee and one for current existing fees.
The financial institutions’ income taxes are being pulled out because they are taxed under that and they are also exempt from the franchise tax. The section regarding the construction was answered by Mr. Brown’s question.
In AB 1 there are industry specific taxes so it does not fall under the franchise fee bracketing situation so that is why it is pulled out there.
That would be the income tax portion of the financial institution?
So the numbers are coming out from the franchise and going back in from the income?
Thank you, Mr. Chairman. I would just like to make a comment on the rental properties that are five or more units. I believe that they are licensed already as a business in the counties. I think we have already set a precedent that it is a business. Also, I have a question on the industry-specific taxes and insurance. Doesn’t the policyholder pay the insurance premium tax, and not the company?
The actual person in the statute who is required to pay the taxes is the insurance company. They pay a tax on their premiums. If you are suggesting that they passed it on, I am not sure I should comment on that. It is like other businesses that would pass it on.
Thank you, Mr. Chairman. I have questions on Section 237.58, having to do with a fund for school improvement. You said that this was the estate tax and this would go into the General Fund for the Distributive School Account (DSA). There is $5 million now left in that account, so I am assuming that will go into the DSA. Why couldn’t that be used for the shortfall? My second question is if this is the estate tax, does all the estate tax go into this fund for school improvement, and if not, what portion? My third question is I am assuming the estate tax is going to go away, so when does it go away, after the 2003-2005 biennium or before then? My last question has to do with the Permanent School Account 754. Can that money be brought into this as well? There is some Ascheated Estates money there and all of this amounts to about $17 million.
The estate tax is split 50 percent between K-12 education and higher education. The entire 50 percent portion for K-12 is deposited to the Fund for School Improvement. What we have done in our projections of those funds is we projected it through the end of this fiscal year and then we needed, in addition, $3.1 million from the state General Fund based on those projections, in order to completely fund the Distributive School Account in fiscal year 2003. We need to sweep that account, based on our projections of a few weeks ago, and bring of the estate tax money that we can into the Distributive School Account and in addition, the $3.1 million in supplemental appropriations from the state General Fund.
As far as the Permanent School Fund the interest that is earned is a revenue source within the Distributive School Account and it is used to offset General Fund appropriations. I believe if you are suggesting that we take some of the principle that is included in the Permanent School Fund, there would be constitutional prohibitions against doing that. The Legislative Counsel could probably go into that in further detail.
When does the Estate Tax go away?
The Estate Tax is phased out over the next few years so we are anticipating Estate Tax revenues will be received that we have budgeted to reduce the General Fund obligation in the upcoming biennium in the DSA budget. I don’t have the exact amount but I can get it for you. We have budgeted about $16 million in Estate Tax funds to come in each year of the next biennium. We do not anticipate that much Estate Tax revenues will be available for the 2005-2007 biennium and even these amounts might be at risk. We may not be able to generate that much money in the upcoming biennium but we feel that we probably will get that.
Thank you, Mr. Chairman. I have a question on the Employer Tax where it says .6 percent of capped wages. Is that capped wages what we were looking at before at $21,000?
Yes, that is the base wage that you were looking at before.
Do you have any idea what we are taking in now in what I call the “head tax” versus what this employer tax would raise.
The business license tax is estimated to generate around $82-83 million in each year of the upcoming biennium. It may generate $84 million.
Thank you, Mr. Chairman. I have three questions. Did I understand when you said business license tax, I am thinking of that as the BAT tax that my colleague from Elko alluded to. I wanted to know if we are losing revenue in this change in regard to the BAT tax? Are the slot route operators exempted under the Nevada Franchise Tax as gaming and banking and construction? My final question is would you explain the mechanism for raising funds. Is it a system where we file for the Business Franchise Tax once a year, for example July, and what kind of powers are we giving government. Is there a mini IRS and what is the jurisdiction. That is the biggest complaint I am hearing from my constituents. I need to feel comfortable that they are not going to be faced with snoopers in their lives.
In regard to your first question on the BAT tax or the business license tax, that revenue is estimated to generate between $80-85 million in each year of the upcoming biennium.
What was the BAT in comparison to the business license tax, the business activity tax, the head tax, versus the payroll tax?
The payroll tax, if I understand the question, at least in AB 1 would generate $76.8 million in the first year and $118 million in the second year. The head tax, or business license tax is estimated to generate $82, $83, or $84 million each year of the upcoming biennium.
Would you tell me the difference in how much, because we are deleting one bureaucracy and adding another bureaucracy, and what type of additional money it would cost, or would it be easier to raise the BAT tax to $107.50 as opposed to $107 per year?
As I recall, Mr. Chinnock from the Department of Taxation, testified that the staff from the repealed Business Activity Tax (BAT) would be transferred over to collect the payroll taxes, which would be a fairly even trade. The franchise tax is collected quarterly. Slot operators are not currently exempt in this bill, only unrestricted licensees for the gross revenue tax.
Thank you, Mr. Chairman. Would you address my question about the mini IRS, collection, and how much power and jurisdiction the bureaucracy is going to have an impact on our taxpayers and business owners?
I guess the best thing I can say in answer to that question is we have not increased the powers of the Department of Taxation in any way over and above what they currently have for the taxes they currently collect. That means if you believe that currently they are invasive or a mini IRS then that is continued. Beyond that we have not put anything in here that would take them further than that.
Thank you, Mr. Chairman. In regard to Section 74 of the proposed bill, on page 23, I was wondering why it includes Internal Revenue Service information that is filed on Schedule C, Schedule E, and Schedule F. Prior legislation involving this did not include the Schedule E information. Is that to include different type of information coming in and if so what and why?
We actually had the chance to send our tax to a federal income tax expert at the University of Las Vegas and we also received some help from a professor at UNR who both recommended that we add the Schedule E to this. As you said, this section is used to determine when a natural person becomes a business. The way that works is if you have a choice. For example, if you had a home business and you decided that you wanted to take off your home office or your vehicle, in order to get the deduction on your federal income tax, you would have to file one of these forms. That is the manner in which it is intended to work. I am sorry that I don’t have additional federal income tax experience to tell you that but you might refer to the man sitting on your left. He may have that answer for you.
I am not sure I fully understand what you said this far, much less going any higher up and getting other information. If this determines whether someone running a business out of his home office is a business entity is there additional filing that needs to be done to be legally considered a business entity, instead of just a self-employed businessman? Is there something different that you are getting out of this?
I think the manner in which this is crafted is to distinguish between someone who is receiving revenue and someone who is receiving revenue and has chosen to be able to deduct for federal income tax a portion of that revenue by declaring themselves a business. We are attempting to sort of piggyback onto the federal law. In other words, if you just received that revenue and you don’t declare yourself a business for the purposes of federal income taxation, then you would not be filing under this tax and paying this tax. However, if you did choose to declare yourself a business under federal income tax purposes, in order to deduct things like a car or an office, then you would be considered a business and would need to file under these provisions.
Mr. Chairman, to you and through you. Again, this question is entirely mine, no one else’s. Was the purpose of including this extra section to make more income potentially taxable or to make more income potentially exempt?
I don’t believe that the intent, at least as it was explained to me, for including this section had to do with more or less revenue. There was simply a problem of where to draw that line between personal income and business income and this was a method that was recommended to us. This type of provision is also currently being used in the business activity tax and we thought it might work with this as well.
You are saying you are transferring this from a business activity tax that you are already using and it was recommended as a better way of defining the income that would be business income. Thank you I think I understand now. Thank you for your courtesy.
Thank you, Mr. Chairman. Just to further muddy the waters, as an employee I am allowed to deduct certain expenses related to my employment to the extent that they exceed two percent of my adjusted gross income. You do have people out there who fall into both camps, personal and business income, where they are getting W2 wages yet they are deducting expenses of getting that W2 wage. They don’t file a Schedule C. How do they fit into the plan?
Under the provisions of this bill if you didn’t file a Schedule C then you would not be considered to be a business and that would all be personal income, for the purposes of this tax.
Thank you, Mr. Gibbons. I have three questions. How have we dealt with direct sellers? If we exempted slot route operators how would that effect the revenue that we are currently projecting? If we included boxing in the ten percent as live entertainment as everything else is, how much more would that increase our revenue?
We do not have the information at our fingertips the revenue offset, if we exempt slot route operators, nor the revenue generated. We can probably come up with something on boxing. Some of the boxing revenue that is generated is due to broadcast rights on the larger fights. We have to go in and take a look and estimate what the boxing would do and we can try to do that, but we don’t have any information readily at hand.
As to your direct sellers’ question, the closest thing in this bill, and what we thought would help with that issue, is page 19, section 62, line 34, (c), the term business entity does not include “a person who operates a business from his home and earns from that business not more than 66 and two-thirds percent average annual wage….” Again, that is a computation of base wage that is already made under Chapter 612 of NRS. That provision would make you not a business entity for the purposes of this tax.
At this point there are no other questions on the board. I am sure there are additional questions that you are pondering. I would now ask the Attorney General to provide his testimony, and then we will come back to questions for Brenda and Mark.
Let me also indicate to those who are going to sign in. What we are going to do is ask you to address a specific section, or sections, of the bill. If there are constructive suggestions you can make that is very helpful to us. If you are just here to say, I am supportive of taxes or I am not supportive of taxes, that is not the testimony we are looking for. If there is a provision of the bill that you think affects someone inordinately or needs to be corrected, those are the type of things we really need to have presented to us.
Welcome back to our chambers, Mr. Attorney General. We are glad to have you here. Let me indicate the Attorney General is not the legal counsel for the Legislature. He is the legal counsel for the Executive Branch of government, however, over the course of the last little while we have all been dealing with some issues relative to constitutionality and I have invited the Attorney General and his staff here today so that we can clarify what our beliefs are in terms of the ability to pass a balanced budget, how it might occur, and we are asking Mr. Sandoval if he might offer us that information. Thank you.
Brian Sandoval, Attorney General:
Thank you, Mr. Chairman. It is indeed an honor to be back before this illustrious group, in a place where I truly have fond memories. Here with me today is Assistant Attorney General, Ann Wilkinson and the Special Assistant Attorney General, John Andrews. I am here this afternoon to discuss the constitutional requirements relating to the funding of the Distributive School Account. As you are all aware, the Office of the Attorney General serves as legal counsel to the Executive Branch of State Government, and the Legislative Counsel is legal counsel to this body. Just as the Legislative Counsel has been researching the various legal options available to resolve the issues before you, the Office of the Attorney General has also been reviewing the constitutional provisions related to this situation. Based on our research, the Office of the Attorney General has concluded as follows: As legislators, you have mandatory constitutional duty under Article 11, Section VI of the Nevada Constitution to provide for the support and maintenance of the common schools of this state. Additionally, Article 9, Subsection 1 of the Nevada Constitution provides that the fiscal year shall commence on the first day of July of each year. Further more, Article 9, Subsection 2 of the Nevada Constitution provides that the Legislature shall balance the budget by enacting sufficient taxes to defray estimated expenses of the State for each fiscal year. That means this body has to approve the Distributive School Account and balance the budget by July 1, 2003. Moreover, Article 4, Subsection 19 of the Nevada Constitution prohibits the Governor from funding K-12 education in the absence of a specific appropriation by the Legislature for that purpose. Without the passage of the Distributive School Account there would be no General Fund money available for K-12 education.
Guy Rocha, the State Archivist, has advised me that since 1867 the Nevada Legislature has never failed in its constitutional duty to pass a balanced budget. As a former member of this body, I appreciate the complexity and difficulty of the decisions before you and respect your commitment to the people of the State of Nevada. I appreciate your time and attention. Thank you, Mr. Chairman.
Thank you, Mr. Chairman. I know we previously had sessions that were not limited by 120 days. I am not sure if the Archivist made mention of any budgets being passed after that date. I know some sessions have gone well into July. Are you aware of any facts that have pushed the funding mechanism and the balanced budget past the date of July?
Attorney General Sandoval:
Thank you, Chairman. To you and through you, to Assemblyman Brown. We are aware of the facts and circumstances of that of which you have described. We have not researched the legal consequences associated with that.
Thank you, Mr. Chairman.
Thank you, Mr. Chairman. Just a clarification on that point, having served in those sessions before we were limited to 120 days. Never in the history of the Nevada Legislature, even before there was a time limit, did we not have the budget passed before midnight on June 30. Never. Even when we went past June 30th to consider other measures, that was always done by the required date.
Thank you, Mr. Chairman, and to our esteemed Attorney General. The last and final day of the session, this body passed a budget about 30 minutes or so after what should have been sine die. I know it was extended to 1:00 a.m. Of course, I did not vote for the budget because of we did not have a tax bill and, of course, there had not even been a tax bill passed out of the Senate. There were fourteen senators holding amendments. So, I did not think it would be responsible. Under the circumstances, now that the appropriation budget has been signed by the Governor, had we passed the Distributive School Account first, and sent that over to the Governor, and kept the appropriation budget, would then the schools be fully funded?
Attorney General Sandoval:
Thank you, Mr. Chairman. To you and through you to Assemblywoman Gibbons. Again, we are aware of that situation and as I outlined in my introductory comments, we are not the counsel to this body, we are the counsel to the Executive Branch. We have not been asked to opine on this particular issue, at this time. I don’t believe it would be appropriate to be providing you with a legal opinion on this issue.
Thank you, Mr. Chairman. Also, to you and through you, to my colleague from Reno. Yes, that would have been the circumstance if we had passed the DSA and “class size.” However, we were still negotiating with the other house and had not settled that legislation in time we had, unfortunately. And that is part of the reason we have that budget here. I do think it’s an oxymoron to use the words “fully-funded education” because it’s not, no matter what happens.
Thank you, Mr. Chairman. Thank you for recognizing me a second time. I guess, perhaps to the table as well as any experienced member here, I understand, from comments then that we have had, that we have not had a situation where the budget was not approved under all circumstances. It was approved by no later than June 30th. I guess the question would be then, was funding always in place. Or did that come at a later date? The second part of that question, would be, could the school funding be passed prior to that date? But yet we have a 20-day window in which to work out the funding and, or possibly, maybe, some line-item reductions if that was a possibility at all. Any opinions on that I would appreciate hearing.
Let me ask the Majority Leader to answer your first question. And I think the Attorney General would have an opinion on the second.
Thank you, Mr. Speaker. With the able assistance of the chair of Ways and Means, as well as our fiscal staff, we have always passed the revenue to support the budget by the June 30th deadline. With regard to the second answer, it was an emphatic “no.” The requirement is that the budget be balanced. That is our Constitutional duty. And that is one every legislature has abided by.
Further questions? If you have a comment to care to make on any of this, Mr. Sandoval, please don’t hesitate.
Attorney General Sandoval:
I’m going to stay out of it, Mr. Chairman.
This is an awkward place to have a hearing, so I can’t see you and read your body language and that sort of thing; I can’t tell ready to jump in here. So, if you care to, please interrupt me and we’ll make sure that happens.
Thank you, Mr. Chairman. To you and through you, to the Attorney General. First, welcome back to the people’s House. It’s good to have you here. Secondly, I would like your answer to this question, in terms of the opinion you have just rendered. If we were to do as the Senate has done, pass the DSA, pass the rest of the K-12 education funding, and then, before adjourning this special session, pass additional revenue measures and make additional budgetary adjustments, that is after passing the DSA by June 30th, would that be an outcome consistent with your opinion with what is constitutional?
Attorney General Sandoval:
Thank you, Mr. Chairman. To you and through you to Assemblyman Knecht. Again, I’ll repeat what I stated previously. This office is not going to opine on how you accomplish balancing the budget, only that you must balance the budget by July 1, 2003. How you get there is the business of this body.
Thank you, Mr. Chairman. Attorney General Sandoval, in your research, would it violate the Constitution to pass the DSA without the revenue to support it.
Attorney General Sandoval:
Mr. Chairman, to you and through you to Majority Leader Buckley. Again, it is the constitutional mandate that this body balance the budget and therefore, anything that is passed must be fully funded in order to accomplish that.
By July 1?
Attorney General Sandoval:
Mr. Chairman, to you and through you to Mr. Brown. Again, yes, by July 1.
June 30th at midnight? Thank you, Mr. Attorney General and your staff for coming to our hearing and providing the information. We do appreciate it.
Attorney General Sandoval:
Thank you, Mr. Speaker, and thank you to the members of this body.
We do appreciate your time.
Let me now ask Mark and Brenda to come back to see if there are any further questions on the bill as it has been presented.
I appreciated the indulgence of the members, as well. As I have stated a couple of times, this is not the optimal way to hold a committee hearing but I think it has been fruitful for a number of the members and hopefully it has been educational for the entire body.
Moving back to our discussion of Assembly Bill 1, it looks like we have a question from Mr. Geddes.
Thank you, Mr. Chairman. I still have a real problem with the 5,000 seat limit and I understand your explanation and why it is in there, but if it is something that we are concerned about addressing, I don’t see any reason whatsoever to cap it at 5,000. If we are going to apply it, I think we should apply it to all. If we are not going to apply it we shouldn’t apply it to any. I would like to see that changed. In looking at the exemptions that we are pulling out from some of the other taxes so that we are not taxing a business twice there is one thing that occurs to me. If we have a payroll tax and a franchise fee it would seem to make sense to deduct out that payroll tax from the franchise fee prior to paying the tax. I am thinking of the industry that has quite a few employees and does a lot of revenue that would be paying a lot of payroll tax, then being able to deduct that out of their gross before paying the franchise fee. If we don’t do that it seems we are doing a double tax in that aspect. I am wondering if that is an option that has been considered or if it is one we can consider. Also, in trying to calculate this franchise fee, what would .6 percent come out to be right now in the $21,500 average wage? Would that be $107.50 per employee and would that replace the $100 business activity tax?
Thank you, Mr. Chairman. The .6 percent on $21,500 equates to $129 per employee.
If I might speak to one of your other questions, the purpose for going basically half on the employer tax and half on the franchise fee was to recognize the different types of business we have in the state. Some are labor intensive and some are not. As well, it creates more of a broadened business tax if you are capturing both areas. We certainly could exempt out, or use as a deduction, the payroll tax, the employer tax, against the franchise fee. It would just mean that the franchise fee would have to be a significantly higher rate to in order for us to balance out. It is balancing one against the other.
Thank you, Mr. Chairman. Just for edification. I believe seats over 5,000 would be the Aladdin Theater, the Performing Arts, The Prim Resorts, Desert Arena, MGM-Grand Garden, The Mandalay Events Center, The Las Vegas Motor Speedway, Orleans Arena, Thomas and Mack Center, Sam Boyd Stadium, and Lawlor Events Center. Normally we shouldn’t be exempting as much as what we are talking about here, but if you really go back most of those are also used by our residents. Since they are already doing a tax on the food and beverage in the one case we didn’t want to go back after that. If you think of, at least, Sam Boyd Stadium, Thomas and Mack Center, and Lawlor Events Center, I see more of our residential people dealing with that, but if you want to get rid of the exemption I don’t have a problem with it. My only question is, it says in Section 27, the seats are permanently mounted and cannot or are not intended to be removed temporarily for any single performance. We do currently have some casinos that will set up events because they don’t have an actual center built. Would this make sure that they still have to pay based on that?
I don’t believe that they would be included if they are temporary. This language was put in here attempt to stop someone from changing his or her behavior based on the tax. In other words, if you had 4,000 or 4,500 seats, it was an attempt to make sure you didn’t set up another 1,000 or 500 seats to evade the tax. It sort of which one you want to do, we can describe either situation but I am not sure that you can catch both.
So we would have some that could evade because they have never bothered to build a center and set up in parking lots. There is one in my district that does concerts on a regular basis but it is not permanent seating.
It is not that you would evade, it would be that you would have to pay.
You would pay the 10 percent, but not the food and beverage? Or would you pay?
You would. The exemption is for 5,000 or more permanent seats. We thought that was a pretty static thing. You would want that to get the advantage of the exemption.
Okay, thank you.
Thank you, Mr. Chairman. To you and through you to the witnesses. I am looking at page 143 and 144, Sections 233 and 234, which I understand to be intended to be something in lieu of a budget cap provision. Let me make sure that I have the correct understanding. Is this intended to be something in lieu of a budget cap and is there any other kind of budget cap in this bill that I haven’t heard about?
There is no budget cap in the bill that I am aware of. Regarding this particular provision, if General Fund revenues reached 107 percent of the General Fund revenue projection that would then trigger monies into the Rainy Day Fund and then potentially into the fund for tax accountability.
If I may continue, Mr. Chairman, thank you. Again, to you and through you to the witnesses. How was the seven percent margin chosen and why? Why are the reversions excluded in Section 233.
I am not sure why the 107 percent provision was chosen.
This provision came from the Senate. I believe it was something we brought over in the request to make the two bills as similar as possible. We were asked for the 107 percent, so I do not have the information as to how it was chosen.
As to why reversions were not included I would recommend that they would not be. Reversions tend to be one-time in nature. They can occur this year and may not occur next year. It is my own personal opinion that it is appropriate to base it on General Fund revenue and not on reversions.
Mr. Hardy also had some part in the discussions and the creation of this and he may have some additional answers for you.
Thank you, Mr. Chairman. To my colleague from Carson City. To answer your question, the seven percent came about when I recognized the State of Colorado was looking at their “TABOR Amendment,” which you are probably well familiar with. Their spending and taxation then was limited to a population and inflation growth, without a little bit of wiggle room. They got into an interesting situation. Look at AJR 18 and try put in some way to look at the economic growth plus inflation and population. I was trying to do some of that kind of thing myself and the seven percent came through some understanding of what Colorado was doing and the reality of what we were trying to do, and get something in place that would feel good. That felt good, therefore that is what I suggested and that is why it is there. Thank you, Mr. Speaker.
Thank you, Mr. Chairman. To you and through you to the one-half of the “pair-a-docs,” thank you for that explanation. It is helpful. Just for your information, normally the per person economic growth is more on the order of two percent than seven percent. I think with the explanation, Mr. Chairman, that I have received from the staff and the good doctor, I will be able to pursue a further feel-good discussion with him off line. I thank you.
I would like to complement Mr. Hardy, as well, for your pursuit of this in terms of trying to provide some accountability in the bill and I think it has been real helpful for a number of the members.
Thank you, Mr. Chairman. In looking back at the work that the ACR 1 Taskforce performed by their calculations, gaming represented approximately 15 percent of Nevada’s economy and it paid approximately 51 percent of the State’s General Fund. Has there been any projection as to how much of the additional tax gaming will pay if AB 1 were enacted?
I have not attempted to go in and calculate the percentage of the revenues that would be increased that the gaming industry would be responsible for. I don’t believe anyone else in our office has done that either.
Thank you. I guess I am just looking at it and doing some quick numbers and it would appear that their participation would increase at least from the 15 percent to probably approximately 20 percent. Thank you.
One of the items that came to my attention yesterday that may be helpful to the body was an article that appeared in “USA Today.” As you might know there are a number of states in fiscal crisis. Nevada is not unique in that situation. There were three of the states listed in “USA Today” whose spending growth actually lagged behind their population and inflation growth. Nevada was one of those three states. We had a population and inflation growth of 43 percent and our spending growth was on the order of 36 or 37 percent. It has been a tribute to legislatures past, and this Governor and his predecessor, in terms of that 1997-2002 period.
Thank you, Mr. Chairman. In looking at these revenues I know that our intent was to try to implement a broad based tax as well as to fairly impact all segments of our economy. The issue that draws my attention deals with the percentage of revenue that would be generated from a bank franchise fee. Nevada’s franchise fee would be at 3 percent, In comparison to our joining states, Arizona has a rate of 6.98 percent, California has a base rate of 10.84 percent, Idaho has 7.6 percent, Oregon is at 6.6 percent, and I believe Utah is at 5 percent. Financial institutions, according to the ACR 1 Taskforce make up about 7 percent of the economy and I would certainly say that at a rate of $13 million they probably only generate about one and one-half percent of the revenue that is generated. I think perhaps we might want to closely reexamine that revenue source. Thank you.
Thank you, Mr. Chairman. Several times before, in committee, I have brought the issue up regarding the liquor tax. That number has floated around between 50 percent, 75 percent, 89 percent, and I think sometimes it was 100 percent. The 50 percent rate seemed like it made sense because, obviously, we are an exporter of alcohol to some of our border states, specifically Oregon, and some of the smaller communities that are close to some of those borders have an industry of alcohol purchases. I thought it made sense from a business standpoint to keep it at 50 percent. I would like to put that back to the body. Also, to my colleague from District 24, who has been talking about the exemption at 5,000 seats, I think we have talked about some of the local residents and our constituents that use these facilities. The Las Vegas Motor Speedway is considering a second major race and we know that the kind of economic impact that can have on southern Nevada is pretty substantial. I think that was one of the reasons we were trying to keep in consideration. It was a good compromise and I would certainly support keeping that exemption in there. Thank you, Mr. Chairman.
Thank you, Mr. Griffin, and I would like to give notice to the members that we are having a pretty flowing discussion. Please feel free to bring up your comments or questions. As I noted before, it is my goal to try to find areas where we can find agreement rather than disagreement. We can begin there and certainly work on the disagreement so that we might be able to build consensus through using this vehicle and accomplish our constitutional mandate to complete our work here.
Just a note, if I might. I happened to save an article from Governing, February 2003, and in my sick mind I went upstairs and pulled it out. They did an analysis on taxes in all fifty states. They did a ranking on adequacy of revenue, fairness to taxpayers, and management of systems, and Nevada got one star in all three categories. The one star is defined as, “the area under review needs some kind of dramatic reform. Alterations at the margins will not be enough to fix the problems that were identified.” They then go on to do a little synopsis, if I might share some of that. It says, “Nevada has long been aware that there is something out of whack with its tax system. ‘If you look in the Duck Dictionary under structural deficit,’ the state’s Director of Administration mused a couple of years ago, ‘I guess the State Seal of Nevada ought to be right there by the definition.’ One reason is that the State is dependent on tax revenue from its casinos and slot machines and these receipts have been declining since the 1990s. Most of that money does not come from gaming but comes from other sales and use taxes and these have been hard hit, not only by recession but by limitations on taxing internet sales. Meanwhile, Nevada’s fastest growing population requires higher expenditures for schools and social services that the existing structure did not support. The Nevada Constitution forbids a personal income tax and the only business tax currently levied is $100 per person annual head tax on employees. Most jurisdictions are up against a low property tax cap that was placed in 1981. Cigarette and liquor taxes haven’t been increased in nearly two decades. The sales tax base is so narrowly drawn and riddled with exemptions that covering virtually no service in the State where the economy is almost entirely service-based. All of this combines to create a regressive and dysfunctional tax system.”
Today, before we leave, I hope we recall that the whole gist of what we have been trying to deal with since the beginning of the session was to fix this dysfunctional system while making sure that we properly funded what we needed in a fair and equitable manner. There may be tweaking that needs to be done with this bill. I think the questions have given some ideas that were there. At this point, we have an obligation and responsibility to act and it is time that we consider broadening the base, making big businesses currently not paying, pay, and making sure that we have an administration of the tax system that doesn’t create the mini IRS that my colleague was referring to. There is language in here, and hopefully funding that will come about to make the taxation collections much more equitable and much more appropriate for the individuals that are being tax. I would be happy to give a copy of the article to anyone interested. I think it is quite telling, especially in this time.
Thank you, Mr. Chairman. To you and through you to Ms. Erdoes. I am still a little confused. Getting back to Section 74, on page 23. Would you say that the purpose of including that Schedule E would be to determine, if you read that in conjunction with page 20, Section 68, Subsection 2, that any income from 5 or more rental units, or from any other type of rental units would be included as income of a business entity? I guess I am concerned that we haven’t defined it tightly enough. Could this be the base of lawsuits in the future?
On page 20, in regard to the flat exclusion of that rental, I believe that would be read to take that out completely, and then yes, if you had a fifth unit you would be a business under the provision if you filed a Schedule E for the profit and loss. You could also become a business in another way, such as having an office and declaring a business and filing a different form, not just a Schedule E. That is the best answer I can come up with.
To you and through you, Mr. Chairman, to Ms. Erdoes. Then would you say that these two sections mandate that you become a business entity if you rent, say, 5 or more rental properties, or some other type of property?
If I understand your question, I think the best answer I can give you is that I do not believe in every case where you had five rental units that you would necessarily have to be deemed a business. It would depend on how you conducted your affairs and whether you conducted them as a business. Certainly if you had a real estate office or a property management office then I believe you would be a business. I can’t think of a situation under which with that fifth unit you would not be a business but I don’t want to preclude that possibility simply because I cannot think of the facts to match it.
To you and through you, Mr. Chairman, to Ms. Erdoes: Is that something that perhaps your office might study a bit to see if the wording might need a little tightening, without unduly delaying anything?
I would be happy to.
Thank you, Mr. Chairman. First of all, let me say thank you for letting us have this dialog and the entire body being included. I think this is wonderful and a great opportunity for people to hear our questions and the answers given, on the record.
Since we are getting our feelings out there on this bill, I wanted to let this body know that, like Mr. Geddes, I had a little heartburn with the 5,000-seat exemption. I felt like the boxing industry should be treated like everyone else. We have not included a hotel-motel occupancy tax. The slot operators had already agreed to pay the thirty-three percent so I feel that should not be included in the franchise business tax. Those are my concerns and I wanted to share them with you. Thank you, Mr. Chairman.
Thank you, Mr. Chairman. I guess I am reminded of two things. One is that most of this stuff is not new. We have been going over this stuff for four plus months. The second is that we are in this special session at a cost of $50,000 a day to the Nevada State taxpayer. So I am thinking that through this wonderful forum alluded to by Ms. Gibbons, can we find a way to craft some sort of compromise? We can pepper our wonderful staff with questions all day long about any particular thing. This bill has lots of stuff in it that I don’t like but that is the nature of compromise, but if we can come up with a bill that we don’t like equally, that is what we are trying to do. I would be happy to sit down with Ms. Gibbons and Mr. Geddes and if I can have their commitment, right here, to say if we can fix those couple of issues, if we can tweak the slot route operators business tax, or if we could tweak the payroll and franchise balance, can we have your commitment that we will get your yes vote on this tax bill? If not, we are wasting your time. You want to open the budget? I brought the whole thing right here. I will open it up to any page that you ask me to and let’s work on what ever cuts you want, but let’s do it in the spirit of making a compromise and saving the taxpayers the $50,000 a day that we’re costing them. I am ready to go. I will do it right now.
Thank you, Mr. Chairman. I am ready to rock and roll and get the work done. Work with me and I will work with you.
Thank you, Mr. Chairman. I have a couple of comments. First, in regard to Ms. Giunchigliani commenting on the Governing article. I saw that article as well, so I did some research after that article and indeed, if you compare tax stability of the State of Nevada, whether you break out the fractions of our tax base or take it as a whole, we are actually more stable than the states around us. The people at Governing judged stability based income tax and since we don’t have an income tax they think we have a structural deficit as well, even though they didn’t use that terminology. They felt income tax was a positive way to judge a state’s stability in terms of tax revenue. I would put out to this body that income tax is killing California right now because as the economy is recovered from 9/11 indeed sales tax expenditures have come back, people traveling has pretty much come back, and the occupancy rates in Las Vegas, etc. is rising. However, California is experiences a lack of revenue to this day and it will probably go on for another year or two because of lost carried forward provisions in income tax. They are still in a world of hurt over the issues that are created by tax stability.
I don’t want it to appear that we haven’t made some attempt, when this is over, as comments have been made that no one has suggested any cuts or changes. I fully support the DSA and the CSR that are included in this bill. I have no problem with them whatsoever. I can’t support the GRT portion of this bill, as the franchise fee is simply a gross receipts tax. For me to be able to support this bill it would have to be eliminated. I have made that statement clear, publicly, multiple times. The tax package is $1 billion when you implement all of it. I can’t support $1 billion. If you want suggestions I think we have to cut huge money out of this. Mr. Chairman, I am not going to stand here and waste this body’s time or play games by offering amendment after amendment, trying to make everyone vote no or everybody disagree and go through a huge litany of those things. The fact is, however, for me to support this bill it would take a significant cut in revenue and it would take elimination of the GRT, which means we would have to implement a different tax.
In addition, this bill, as it exists, has a $200 million hole built into it, coming into the next biennium because of the estate tax and $68 million of one-shot money from the federal government. That would have to be eliminated in some fashion to make this bill acceptable. Again, I can offer all the amendments that I feel the majority will vote down. I can’t see wasting the body’s time doing that but I don’t want it said that we didn’t tell anyone what we disagreed with, or what I disagreed with and what I think needs to be changed to make it acceptable. With that I have voiced that opinion and I want to make it clear that those are the concerns I have with the bill, as it exists.
Thank you, Mr. Chairman. I have a couple of comments. Nevada is no California. If you want to look at a wrong way to create a tax structure, let’s look at California, but we don’t want to be a California. That is not what this bill does. California has a 10.8 bank franchise fee. This bill has a three percent fee. I think it would be the lowest in the entire western United States. The average on franchise taxes is five percent. We don’t want to change the character of Nevada where we are one of the lowest taxed states in the Nation. We want to have a tax. That is the difference. A $2 million hole in the budget? No, I don’t think it does that. What we are trying to do is to raise enough money so that we don’t have to raise taxes again in the next decade. Who in here ever wants to raise taxes again in your legislative career, raise your hand? We are in a committee—raise your hand. No, this is not something we ever want to do again. That, I think, is why we wanted to make sure that the number was enough to fill any potential holes, and to fund K-12 growth. What is going to happen in two to four years? Is Las Vegas going to stop growing? Are the schools going to continue to need money or just once when we give them this $200-300 million for growth? They are not done. They are going to keep growing and we are going to need that additional revenue. That is why I believe that this is a reasonable plan. What does it do? It taxes business, big businesses who pay taxes in every other state, but not here. It taxes banks who are making record levels of profit. It taxes gaming. What is wrong with taxing big business, banks, and gaming? I don’t think there is anything wrong with it. I am like Mr. Goldwater.
If you have a problem with a certain issue let’s fix it. The issue Mr. Geddes raised, for example, was a legitimate one. What we are trying to do is get revenue from folks who are already known to play games, like the strip clubs down south. What they do is get out of paying tax on an admission fee by charging $100 for a soft drink. Do an Internet search, they are very clever. We want to make sure the small folks who are making lots of money pay their fair share, not sock-it-to-them, just pay their share. That is why we constructed it that way. If there is some way we can fix it to make sure we are not hitting any small venue, let’s do it. I am willing to work all night to fix any legitimate concern, but I am afraid you may not be the issue at all because I think you have already said you support funding for schools. The question is, who else is going to break this logjam? We need to. We need to fund schools. We need to do it by June 30th at midnight and we need to go home. It is not going to be done by cutting $300 million out of this budget. The Governor has said he won’t put the budget on the Proclamation so let’s sit down and try to figure it out. There are some additional accountability measures. What is missing? Let’s work on it like we did all session, on lots of bills, where we fixed them together, because that is the only way we are going to go home. The public is fed up. They don’t care whether we are Republicans or Democrats. They think we are wasting time and money. Let’s prove them wrong. Let’s get these suggestions out right now and let’s fix them. Let’s fund schools so that we can stop this crisis and let’s go home.
Thank you, Mr. Chairman. I will be brief and low-key. I have three points. The first point I would like to make is that this bill would be the first step that would turn Nevada into East California and that is why I will oppose it. My second point is that I think the joining of education funding and the tax measure, which is unprecedented, is an unproductive political game. We have already been down that road once. Everyone knows where we stand. We voted against it. I don’t think it is useful. I think a productive thing would be to bring the DSA, which has already passed in the Senate, and that will get us on. My third point is a question, Mr. Chairman. I thought I heard the gentleman from District 10 suggest that we could have discussions at this point on opening the budget and cutting it. If that is the case then indeed we can move forward, but I think that suggestion is also a game because I didn’t understand that to be the case. My question to you is, can we in fact, seriously entertain adjustments to the budget at this point, or not? Thank you.
I think there are a number of questions in that dialog. First let me start with this being the first step to becoming California. I vehemently disagree. Some of the arguments I have heard about any tax that we have talked about, whether it was a gross receipts tax, a net profit tax, or anything in between, whether three percent, five percent, or a quarter of one percent, or this schedule, or that it is just a foot in the door and the issue will be raised every session after that. Look around you. This is the most difficult thing we have had to get our arms around in my memory. I have heard the characterization that this is just a foot in the door. This is the most difficult thing to do. It is not going to happen on an every session basis.
Your other suggestion that combining the DSA education-funding bill with a tax bill as unprecedented is absolutely incorrect. It has been done twice in our state’s modern history, in 1967 and in 1955, for a whole host of reasons. We just heard from our Attorney General and we have heard from our own legal counsel. The prudence in passing the DSA, if we were to do that, due to some recent Supreme Court decisions, it is our understanding that we have no flexibility in terms of sending that bill to the Governor. If we were to have passed it and sent it on to the Governor, and we don’t resolve our budget issues, our revenue issues, by June 30th at midnight, we have then not fulfilled our constitutional obligation, that obligation that we all stood here on the first day of session and raised our right hands and swore to uphold. That is why these are together. I will uncouple them in a heartbeat if you want to vote the revenue plan out first so that we are assured the revenues are there. It is prudent, in my mind, and responsible, so that we don’t find ourselves on July 1st having passed education and not having the revenues and we finding ourselves in a situation where we have not fulfilled our constitutional obligation, and we are being sued by the Executive Branch, or the school districts, or somebody like that. That would be the worst-case scenario.
Is it okay for us to discuss the budget? Yes, we can discuss the budget, no question about it. We can discuss anything we care to discuss in our legislative deliberations. It is not on the Proclamation by the Governor. Certainly the Governor would have to be convinced if there was some agreement made, but I can tell you, we have gone back through the votes in the money committees as well. Many of the suggestions that have come up either through the news or in personal conversations over the past weeks and the past month, for that matter, were voted on by many of the folks that have offered the suggestions to cut; voted for, in those committees, either in subcommittee or full committee. It makes a very difficult debate to go back and accept those as legitimate suggestions for cuts. There are a lot of folks in this body who don’t believe there is a full funding of our budget as it is at the level we are talking about. Whether you want to look at university enrollments, or Welfare rolls, or whatever, there is that debate. Can these discussions happen? Absolutely they can happen.
Going back to Mr. Hettrick’s comments from earlier. I truly appreciate him not wanting to waste the body’s time and just throw out amendment after amendment to be voted on, but I think it is the dialog we need to have. If there is something out there that we have missed we should have that dialog. That is my concern. We are here and we have only a handful of days to fulfill our constitutional obligation. We do need to find compromise. It is not my way or the highway or your way or the highway. We have to find a way to get this done. The people of Nevada deserve no less and it is my encouragement to all of you, either in this setting, or in a personal setting, to have those conversations to find that middle ground. We need to be able to count to two-thirds in this body and have the two-thirds stand in the state Senate as well. We have the requirement of having it go through both houses with the same number. I will step back off of my soapbox for a moment and recognize other members.
Thank you, Mr. Chairman. To answer my colleague from Carson City, Mr. Knecht, this document that is three volumes, did not just show up the other day. It has been available to this body for its perusal, suggestions, everything, since the last week in January. It is June. My friend from Gardnerville, Mr. Hettrick, suggests he will absolutely not accept a GRT. He will absolutely not do something else. That is not compromise. That is not the spirit of compromise. We are wasting $50,000 a day. I just got a commitment from Ms. Gibbons who said if we can fix her issues she will vote to let this budget pass. We heard from the Attorney General. There is no choice. This is terrible and there is no choice. We have to pass a balanced budget. If you want to reopen it I will reopen it. I will open it to any page you want if that can get this fixed. I want to go home. I want to save the taxpayers money. I need to go back and provide for my own family. It is wrong if you can’t tell me what it will take. “No, I absolutely will not do this,” is not “this is what it will take to get there.” Those are the questions that need to be answered in this forum. Those are the statements that need to be made. This is what it is going to take to get me there. I have one person, Ms. Gibbons. We need a couple of more to say, “This is what it is going to take.” That is reasonable legislating in my opinion, Mr. Chairman.
Thank you, Mr. Chairman. By popular demand, or un-demand, I am going to say it anyway. I was hungry about two months ago and went home and realized there was nothing to eat so I opened a can of pork and beans. The can is a new flip-top version. As I was inspecting the can I saw that it said, in a big blue banner with white lettering, “Now with more beans.” Now, how do you get more beans in a can with pork and beans? You take out the pork. I looked on the back of the can and it has a cute jogger lady who is all healthy. It says there are seven grams of fiber, 85 percent less fat than eight ounces of yogurt, tasty, wonderful, healthy, now with more beans. We are in a position where we need more beans. I looked at the ingredients of the can and I said, “Oh my, there is less pork now in a can of pork and beans than there is salt.” That means you can taste the pork but you can’t see it. I look at what we are trying to do and that is what generated my comments about more beans. We need more beans. We have a need in this state for more beans. What do we call people who count money? We call them bean counters. We have those people and now we need more beans for them to count. This is reality. This is what we are doing. We have to get more beans. Bless your hearts, you have been patient with me and worked with me. I have some things in this bill that I like. I didn’t anticipate seeing such a good bill come before me, but I like this. I understand the comments. If you want to ask me, David, I will say wouldn’t it be nice if we delayed the Rainy Day Account, wouldn’t it be nice if we postponed the implementation of the PERS Account? It would be down to almost $800 million in new dollars. You could tweak it with a few little things and we could look at the tax part of that and you would then have something that would still have more beans, still be looking at the hole that we have, and the hole that we are going to have in two years when we don’t have the estate tax. This bill allows some of that to happen. I made a statement some time ago that I would not vote for an Assembly bill. This bill tempts me to vote for it. There are some advantages in this bill. I think we need to work with Mr. Goldwater and make him happy that he brought all that stuff and put it on his desk. We need to figure it out and maybe it is time that we put the Senate in a difficult position. Thank you, Mr. Chairman, for you indulgence.
Thank you, Mr. Chairman. Unfortunately, I have not sat in on any money committees. Back in November I told someone that I had asked to sit on a money committee and they said somebody was looking out for you. I want to say being off the committee has been a disadvantage because you get things through a filter. The one thing I did know back in November of last year was that these taxes were going to be necessary. I believe, for the most part, most of this body is there, but it is painful. One of my Republican colleagues, who will remain nameless, told me “the problem is you are asking Republicans to vote for this $800 million in taxes, do you realize how difficult that will be? It will go against the grain.” This person understood that while we understand it is necessary they still wanted me to understand how difficult it was to get there. That is legitimate. But I want you to know that it is difficult for all of us. I sit down and look at the figures and I rub my head every time I do that. Nevada is changing. I grew up in this state and now we are over 2 million people. There is no sign of that trend stopping. It is kind of like an adolescent. Some of you have a one in your homes, or who have just left. They have to make the transition into adulthood. I have a sixteen year old and I am watching her make the transition. I have to teach her that it is not all about her anymore. She thinks that it is, especially being sixteen years old, but it isn’t. It is painful to watch. I am sure it was painful for my mother to watch me. I am sure she wanted a morphine drip watching me move into adulthood, but she had to allow me to do that. I had to move into adulthood and make the tough decision that have to be made to move into adulthood. You cannot say that we are moving toward being like the next California. That is an option. You can move into adulthood and become a bad adult because you have seen examples of it, but you have also seen examples of good adults. We can see examples of good states.
Nevada is poised to be a leader in this nation. We are poised to be a leader, but to be a leader you have to make tough decisions. It hurts, but you know that it is going to pay off in the long run. We have all made tough decisions in our lifetimes, in everything from school to family. Sometimes the tough decisions paid off, but most times it was great, it didn’t just pay off. You said, “Wow! I am glad I made that decision. It really worked out for me.” That is what this is. We are talking about the future of our state. We are talking about the future of our children. Things like a good higher education. For example, when we are talking about adding law schools and dental schools to our university systems. Hey, that is what leadership states do. They have those things. They are preparing new leaders for our state and for our nation. We are moving into that realm. K-12 is so important. We all espouse on how important our teachers are to our children, but talk is cheap. We need to start showing by our actions how important our schools are, how important our teachers are, and how important our children are. We need to provide them with the tools to do a good job so that they can move on to become those awkward adolescents and to become those productive adults in our society. While it may be painful at times to move through this process, this is a necessary process. I believe once we make these compromises, as Mr. Goldwater said, we will be able to swallow a little bitter pill so that we can have a bit of a sweet taste as well. As soon as we do that we are going to look back one day and we are going to say we did the right thing and we are all going to be better for it and our state is going to be better for it. Thank you.
Thank you. I wanted to follow up on something the Majority Leader and the chairman of Commerce and Labor said. I did tell the Minority Leader that I would be very interested in serving on the money committees and he happily said yes. I think there was some punishment in that, Mr. Hettrick that we can talk about later. I have obviously been very supportive of this budget and, of course, the necessary taxes to pay for it. I would like to follow up on the comments some of the people have talked about but I don’t want this comment to be construed as something that would make anyone else support it. It is a concern that I have heard and maybe it would encourage this discussion to move forward. It is on the issue of Medicaid enrollments. I would throw out as a suggestion, and I don’t know if it is possible or not, that we consider an option that if the Medicaid enrollments don’t come into the levels that they have been predicted in this budget, that perhaps the difference, rather than going back into the base budget of Medicaid, maybe it can go into the Rainy Day Fund. I don’t know how that would, or could work. I don’t mean to imply in any way that it would get anyone else’s support but it is a complaint that I have heard. I would like to compliment our colleague from Assembly District 20, in Boulder City. I have always wanted to see what the Senate did and vote for a Senate bill and while I don’t love this bill I think there are some suggestions and some tuning that we need to do to change it. I don’t know that I have as many problems with it either. Those are some suggestions, and again, the Rainy Day Fund may be coming down and if that is possible, that is possible. If the issue comes to the discussion table to lower this amount to be sensitive to the growth and Medicaid based on enrollments, that money can go to the Rainy Day Fund so that it doesn’t continue to add into the base budget as we go on. I would like to encourage that discussion to be on the table as we move forward tonight. Thank you, Mr. Chairman.
Thank you, Mr. Griffin. We spent four months training everyone not to call our colleagues by name and now we resolve ourselves into a Committee of the Whole, and nobody will.
Thank you, Mr. Chairman. I tell you this is like a nightmare and I just woke up. This is to this body. This took place almost two years ago when the Governor created the tax committee, special group, to decide the taxes that this body would be looking at this session. I know a lot of you ran your elections saying that you would not raise taxes or support taxes. If you were running for the position that you have been elected to, you would have known that the Governor had created a taskforce and known that we were going to have this problem before you got here and before you were sworn in. So now, to sit back and say you are not going to vote for taxes because of this reason and that reason, you should have been following the Taskforce at that time if you were interested in being an elected official. Now, we come to the part where you are elected, and you were appointed to the Committee on Ways and Means, and you sit there from two weeks into January, starting two weeks early; I took the Speaker to breakfast and begged him not to start two weeks early; because I didn’t want to come here two weeks early because I felt that two weeks early was not going to make that big of a difference; and here we are almost to July. I love all of you, but I am sick of looking at you.
You should have taken me to dinner.
I am trying to tell you, on a lighter side, that we had the budgets open every day. Ways and Means met some mornings from 7:00 a.m. to after floor session started. We tried not to meet in the evenings because we wanted to give you time with your families so you could rejuvenate your mind. Now you wait until the end of the session. You had opportunities to come before Ways and Means as a constituent. As a member of this body you could have sent in anybody you wanted to come in to voice their concerns. We had an open door policy, but no, you waited until now. At the end of the session we were going to close most of the budgets, and the train left a long time ago. It is gone, it is wrecked and put back together, and we need to make a decision here.
I said I wasn’t going to get up and make a speech, but I am trying to tell you, as the Chairman, we gave you an opportunity as members of that committee. You had an opportunity to voice your concerns and now it is sort of like sitting in the grass and waiting until the end and saying now I am going to jump out of the bushes and let you guys know that I don’t like this budget. The Governor brought that budget. I might not agree with everything with that budget, but I have to commend this Governor. He is a Republican and I have been sitting in this house for twenty years and I have served under some Democratic governors, with due respect to them, and we kept putting Band-Aids on to save them, and now this Governor comes along and he says we are no longer going to run this state on Band-Aids, glue, and everything else. This body knew this and some of you senior-ranking members know that we have been putting Band-Aids on this budget and you never came forth over all these years, you are sitting here saying, all of a sudden, that you don’t want to raise taxes? You knew every time you went home and had said you didn’t want to raise taxes, you were able to say, “I didn’t raise your taxes, Constituent.” You knew this was coming someday. As long as you sit in this seat you knew that someday you were going to have to vote for taxes. We don’t produce the streets out there that they ride on. We don’t produce the highways that they ride on. We give them the money so that the people can sit out there and drive and go from point A to point B. Now, you are here and you have to take the responsibility and vote for some taxes. You have to get off your duff. I know you are going to tell me, “Moose, you are going to get re-elected no matter what.” No, I face the same constituency that you do. I just go back to my constituency and say, “You know, I bit the bullet and I took it.” If they don’t want to vote for me then let someone else sit here. You don’t own these seats and I keep telling you that. I don’t know what basketball game you go to when you think that you bought these seats. I know you walk, you study, you do everything, but you don’t own these seats. When will you guys realize that the people in office in 1972 are no longer here, the people in the 1980 s are no longer here. All of you are all new bodies. I don’t know if you think you are going to be here in the next fifteen or twenty years. You have to understand the state is growing and you have to get off your duff and vote for some taxes.
The state cannot function on the little money that you are trying to get. We get $130 a day and all of you are complaining, but say, “I am not going to vote for a raise.” You get $130 a day because of the people in the past voted for you to get it. If you are so concerned why don’t you go back to 1972 and take that salary. I don’t see any of you jumping up and recommending that. I am sick and tired of this. I want to go home. I am tired. I want you to understand that you had an opportunity, you had four months plus two weeks and now we are almost into July. You need to understand that you might not be here and bite the bullet. So what. Let someone else come up here and bite the bullet and if they get voted out, someone else will get voted in. Thank you, Mr. Chairman, and I am sick of it.
Thank you, Mr. Chairman, to you and through you to the body, and especially my alumni from Western High School. Brother, that was great, I love you, man. I have been here a long time, too, and it has been fun this afternoon watching some folks vent some emotions, beliefs, feelings, and differences. It is interesting. Some people have their face stuck in their computer and some people are listening. Some people are doing their own thing and some have already made up their minds. I have been in politics, or around it at least, a long time. I watched an uncle on a city counsel some 28 years ago and I went to a lot of planning commission meetings, and counsel meetings and commission meetings, and a lot of times they had already made up their mind. One time I watched five and a half hours of testimony in opposition to an issue but that counsel had already made up its mind before they ever let the first person speak. I know some of you have already made up your mind, but I hope you all haven’t. I hope some of you still realize you represent Nevada, and as my colleague said, “this isn’t your chair.” This isn’t my chair. The chair belongs to my constituents and the State of Nevada. I agree wholeheartedly that with that.
I want to share a few things. We are like California. Let me tell you something funny. I did a little research on this thing and I want to share several things with you. The Senate has already passed a three percent sales and use tax based on the California law with major exemptions including food, fuel for heating, and agriculture implements. We did that after California. We looked at that tax proposal just like California and Utah had. The Senate choose the exemptions Utah had. We were actually the thirty-fourth state out of the United States, when there were only forty-eight states, to pass a sales tax, and it was necessary. I want to read something a former state senator said to us, speaking at a policy meeting attended by all members of the upper house. The Finance Committee chairman said, “It would be wonderful if we could finance the state from the gaming industry but I don’t think we can. A broadened approach to physical policies would be required by growing school demands and increasing government costs.” Some of these things I am quoting were said before some of you were born. That was stated in 1955 by Senator Johnson of Ormsby County.
A former Speaker of the House declared flatly, “The Assembly will not vote on a state school support program until a tax is passed.” In 1955 Cyril Bastian was the Speaker of the House. The same article said he was one of the most respected members of the lower house in the State Legislature. He said the tax issue was closely tied with another major problem, the need for added state support for schools, because it is the only revenue measure introduced in the session that would raise the added funds required for a greatly augmented state education. Folks who lived here back then, or were going to school like me, had a disruptive school system with a bunch of districts. They combined them and tried to make things better.
In 1955, a long time ago, it was said, “One of the saddest spectacles of the current legislative shenanigans is the lengths to which some members of the Legislature will go to preserve a good deal that exists in their own constituencies. The welfare of the state, its institutions, its agencies, and its children are not nearly so important in the minds of some lawmakers as is the preservation of assessment standards and tax rates that benefit the legislator or his powerful friends. Of course a situation of that nature is not unique to Nevada, but in this state it assumes major importance because of the magnitude of the problems compared with population and resources that are supposed to be faced by this session. When a low tax rate and an even lower assessment in a particular county becomes more important than the welfare of thousands of Nevada children, lawmaking has indeed reached a new low and the 1955 session of the Nevada Legislature fits in this political cesspool when measured by either standard.” Forty-eight years ago Nevada had to fight like this. Calling each other names, criticizing, and grieving over what kind of tax to pass. Some Republican senators opposed a personal income tax, which never happened. Clear back in 1955 a real estate transfer tax was proposed. How many years later before we step up and pay the piper?
I told you about the old car that was broken down. We still have to fix that old car. I want to share some of these things because I can show you different years, different statements, and different policies that this state has put off as long as it could. A former Speaker said, “We have a sinking ship in Nevada. A ship, which has been sinking at the rate of $2 million a year.” Wouldn’t that be nice to only find $2 million? Realize back then the population of Nevada was only 220,000. They needed to come up with a $27 million increase in their budget and they went beyond their regular session just like we have. That is what is so unique about this parallel as well. They went six days into overtime. Six extra legislative days to pass a compromise bill that increased gaming taxes and the sales tax was created at two cents. The doom and gloom forecast from some people was that people would stop coming to Nevada. Well, look around you. They didn’t stop coming. Our schools are a little bit better but we are still not taking care of our business right. We did the minimum; we didn’t do enough.
Today, it is real simple. The budget is closed. I get a bunch of e-mail that says open the budget. Well, hell no. The budget is closed, and enough of you voted to pass it. The issue right now, so some of our colleagues that want to go home can go home and I can go back and see my grandkids and go make living too, is real simple. We pass this budget.
A couple more of these articles talk about a broader tax. The Senator that wanted to have a personal income tax compromised with a couple of colleagues that went with the combined gaming and sales tax because it broadened the tax base. Today we are faced with the same dilemma, to broaden the tax base. I don’t care if you call it a gross receipts tax, a UBT, a ABC, or XYZ. I have been in Nevada a long time. My kid, when he was in the GATE program in the 1980s had to stop taking P.E. due to a budget crunch, because the legislature in the 1980s wouldn’t fund it.
I shouldn’t get so emotional. I told you about going to a high school that opened with 2,100 kids that had been built for 900. Maude Frazier, a legislator in 1955 when this school dilemma was being faced by our legislature, said that 90 percent of the growth problem and the deficiency for funding in schools was in Clark County because of its zooming growth. Think of Clark County in 1955. There were probably 1,000 people a year moving in there and they called it “zooming growth.” Well now we have some real zooming growth. We have to hire about 2,000 teachers in Clark County. Further, Clark County will pay most of your taxes. There are twenty-nine Assembly representatives out of forty-two from Clark County. I, for one, really feel hurt when I bring up this issue. The fact is, Clark County subsidizes a lot of the rural counties. I love rural Nevada. I love the whole state. I love going to the fair in Panaca. I love going to White Pine County and riding the train. Winnemucca has a great new indoor facility for equestrian events. We have some real good places in Nevada. Go up to Lake Tahoe and see the clean water. Go down to Genoa and enjoy the prettiness and greenness of Douglas County.
Folks, this tax bill is not onerous, irresponsible, or unacceptable. It is a fact. It is minimal. Folks need to know that. Just think about it, I have been in session five times, how many times have we forgiven the debt to White Pine County for its educational bills? How many times have we taken state dollars that should have been distributed equally to the state budget for the kids in Clark County and Washoe County, so the kids in Lincoln County could have a new school? A school that was condemned before anyone got around to saying they needed help? Go down to Schurz, Nevada, and think about that elementary school that was condemned that had been built in 1936. Is it embarrassing that your kids, or your grandkids, could go to a school building that is condemned? The walls are falling down before we step up to the plate and spend a few dollars to fix it. It is really hard to see people that are not caring about the future of Nevada. I get a lot of e-mails from businesses. I own a business with six or eight employees. We will gladly pay another $1,000 a year, or $1,500, or whatever this gross receipts tax, or franchise tax is. We will gladly pay it because I know it is going to buy books for schools. I know it is going to put a desk there and a roof over those kids heads and give them a better education.
It will help Welfare. I am going to ask you this question, too. I thought about it several times when I heard the debate about Welfare cuts. Since we are a Committee of the Whole, I will ask you to raise your hands. How many of you have been to Bonanza and Rancho. There is a state office there people go to for Welfare benefits, for temporary needs. I have been there when they were lined outside the door to the parking lot and our state employees were working forced overtime, eleven hours a day, with two fifteen minute breaks and a lunch break. Forced overtime to see that those people, who were laid off because of 9/11, or some other issue that hits our booming and bust economy in Southern Nevada, are taken care of. Most folks didn’t give a damn because they aren’t registered voters; probably not as high a percentage as some of your other neighborhoods. I have been down there helping people. I was there helping a man who had lived in Nevada for thirty-seven years and was placed in a home because he could no longer be taken care of outside of that nursing facility. They were going to kick him out of that nursing facility because of a problem with an issue over his home being in a trust. They couldn’t do a reverse mortgage to transfer the value of that home, which was about sixty years old, to pay for his care. It took me, as a legislator, to intervene so that man could stay in a care facility, after working in Nevada and retiring here after thirty-seven years, to get a few months more decent treatment before he passed away.
We are here to help Nevadans. Anyone who ran for office so that they could sit in this $700 chair, or speak in this microphone, or have a computer, you ran for the wrong reason. You are here to help Nevadans. Little kids, old folks, folks your own age, we are here to help each other.
This tax bill is cut back. Like some have said it will probably have to be addressed and increased and changed later, and it is not perfect. You know what? We are not perfect. We could probably tweak something here or there, but we are not here to tweak it. You have had four months to tweak it. Let’s pass it. Thank you, Mr. Chairman.
Thank you, Mr. Collins. Let me indicate to our visitors here. We welcome your participation. We enjoy having as many of our constituents as we can in the peoples’ House. If you are in the upper gallery and you are on the rail we will ask you to sit down. It is disconcerting to the members and not safe. As well, if you would please keep your comments, groans, cheers, or otherwise, to yourself to help us conduct our business. We appreciate your respectfulness in these chambers and look forward to having continued discussion with you.
Thank you, Mr. Chairman. Thank you for the observation about the need to keep our voices down. I will try to do that. There are a couple of points that have been raised, suggestions, questions, and even virtual accusations. One is the question of whether members of the minority have put forth their position on where they stand and whether we have all just said no to everything. The other point is what is really needed here and what is not. For myself, personally, I would like to address those two issues if you will indulge me.
During the campaign, and thereafter, I did my homework. From doing that homework I determined that for many years now Nevada has been doing the right thing. Our tax and spending levels at the state and local level have been roughly optimal. It maximizes economic growth and human well-being. I think that is great. It is one of the reasons I came to Nevada. I wanted to preserve that policy so I have turned my efforts to continuing that policy. In particular, in the primary campaign, as some of the local folks will tell you, when the expected short fall was small I said no new taxes and no increased taxes. As the expected short fall grew I could see the trend. I could see the fact as it was then estimated, and before the election, in order to let people vote for me based on what I felt in my heart, I changed my position expressly. One newspaper in particular reported it at some length. I said increasing taxes is a last resort. We should hold the line and look for cuts. But, I have said since before the election that I was good for certain tax increases because I recognize our structural deficit problems.
Let me tell you about the particulars of the homework in terms of what is needed and what is not. My position throughout has been that since we have long been on the optimal path and since we have had the right level of spending and revenues throughout the 1990s we should continue that trajectory and that to the extent we spend only on the long-term trajectory and to the extent that revenues come up short we would have to increase them. I was good for that and I said that throughout. I might point out that some members of the majority and some members of the press have misrepresented me on that. They have said that I was still “no new taxes.” That is not true and I don’t know how many times one has to say it, but I am saying here, on the floor today, that has not been my position at any time in this session.
Specifically, I have previously said, since we spent $3.75 billion this biennium a liberal estimate of what we need the next biennium would be over $4.3 billion. That would include population growth, inflation, and real economic growth. It would include a modest four percent increase in service levels if you estimate real economic growth at two percent a year. That would require a $400 million tax increase and I have said I was good for that if there were no “bad taxes” in the mix. In fact, on day fifty-four of this session, Assemblyman Hettrick, flanked by the Republicans, almost all of us, and the only ones not there had other commitments I believe, presented a tax-and-spending program with details of cuts and details of tax measures that would have totaled $511 million in increased taxes to go along with new revenues so that we could spend what he thought was needed. I stood with him that day and I did so expressly, saying that if we had some procedural and structural reform, like AJR 18, then I would be good for the $511 million, not just the $400 million. I think that would be a good policy. Subsequently, today, I have had the benefit of talking further with the Governor’s Office and they have suggested the $3.75 billion, which we spent this biennium, if adjusted to current levels as of July 1, would be a base of $3.9 billion. In order not to quibble about the technical details and to give every benefit of the doubt to those who want more spending and more taxes, I said let’s concede that and all other minor points. Now let’s ask what would be a budget and a tax package that would not only continue current spending levels, adjust them for inflation, adjust them for caseload growth, adjust them for student enrollment, adjust them for population growth, and adjust them for the real growth of our economy. The answer to that is, again, if you increase that $3.9 billion by 15.3 percent, as a liberal estimate of what would do all that, you would get $4.5 billion. When you compare that to the adjusted revenue figures of $3.967 that means that the highest increase that anyone could justify who is talking about something that is needed something that is reasonable, something that is not excessive, something that continues all current service levels for everybody new, and throws in a little on top of that. The most you can justify is $533 million. That is the most. I might add, Mr. Hettrick’s tax revenues roster that he introduced on day fifty-four covered $636 million, without going into a gross receipts tax, a UBT, a franchise fee, a bank tax, or any of those unnecessary and unwise ideas. In short, Mr. Chairman, when you get the spending down to a reasonable level it becomes easy to find reasonable tax packages that will cover it.
The Republicans have been on record, and I have been on record, since day fifty-four and before, with these facts and we have continuously updated them as I am doing today. It is not fair and it is false to suggest that we really haven’t said what is needed and what is excess and that we haven’t proposed reasonable cuts. We will be coming out with an updated version of the cuts list this week. It is not fair to say that we haven’t done those things. It is not fair to say we just said no. That is not true. We don’t need $870 million, we don’t need $940 million, and we don’t need a bi-annualized $1 billion. It is damaging to our economy, diminishes human well-being, and we don’t need it.
One other thing, along the way I didn’t wait, I introduced AJR 18, which is a budget cap. It is the other half of our tax cap. It is a soft cap that would require two-thirds vote. If AJR 18 had been in place it would have prevented the train wreck that has happened here this session. We would have been done by June 2 if we had AJR 18 in place or, equivalently, if we had done the right thing. I guess that begs the question, “What is the right thing?” When the people passed the Gibbons bill that constitutionally required a two-thirds vote on a tax bill, what they meant was for the Legislature to consider the constraining factor first, namely taxes, because that is where you need the two-thirds vote. They meant for us to have that debate early and get it on. Well, Mr. Chairman, as you know, the minority party doesn’t control the agenda and therefore we couldn’t bring the tax bills early. Only the majority can do that, but the majority didn’t do that. The problem that we have is that the majority essentially put the spending first. They wrote the checks knowing that there was no money in the account and they figured that by so doing we could come to the eleventh hour, or the fifty-ninth minute and the minority would be presented with a bill for the checks written, and told you have to make these good. That is not the way any business operates, not the way families operate, and not the way any public body should ever operate. It is completely backwards. That is why we are here today, Mr. Chairman, and that is what needs to be corrected. I have stood up, the Republicans have stood up throughout and we have presented reasonable alternatives, presented cuts, and presented tax ideas. We don’t manage the process. They didn’t get a fair hearing. AJR 18 was promised a hearing in Ways and Means and never got one at all. A number of other bills didn’t either. We don’t manage the process. The reason we are here today is because the process has been mismanaged. Thank you, Mr. Chairman.
Before I move on to the next member who wishes to speak I would like to take a couple of issues that you brought up, Mr. Knecht, and take issue with them. First, this has not been a partisan process. The budget we arrived at with the State Senate, which has a Republican majority, was a process of compromise between the parties and between the houses. As well, I think there was some discussion, or an accusation as you characterized it, that there were no offers for cuts or presentations of such. Certainly that was done in a press conference on day fifty-four. None of that, in my memory, sitting on the Committee on Ways and Means, occurred in front of the committee for the committee’s benefit, or were any of those votes taken differently by any of the folks participating in that press conference. It is not only the members of the Committee on Ways and Means that had that opportunity. Any member of this body is afforded that. Lastly, to suggest that only the majority can bring a tax bill is probably the craziest thing I have heard yet today. Each member of this house has the ability to ask for a bill draft. Each member of the house is afforded that opportunity in multiple numbers. Even after the deadline for bill drafts for the members we have offered that courtesy for virtually ever member through the committee introduction process. If that wasn’t good enough the Speaker’s office has five emergency requests and I believe the Minority Leader’s office has two emergency requests. Those bills could have been offered at any given time and they were not. I probably have a different remembrance of the history of the last 130 or so days.
Let me, as well, admonish the gallery again. We are trying to have a respectful dialog amongst the members here. The interruptions will make that very difficult.
Thank you, Mr. Chairman. We are in a committee and as such I am making my remarks and questions regarding the bill that is before us, Assembly Bill 1. Mr. Chairman, I would like to address some questions and concerns that I have heard from my home district. In my home district what I have heard in our break and long before is the cry to fund our schools. Every day that we are here we could have purchased 1,000 textbooks that our kids so desperately need. They have asked to please don’t cut Medicaid because they may be out on the street from the care center where they need to reside. That is not in Assembly Bill 1. They have asked for no property tax increase. That is not in Assembly Bill 1. They have asked for no sales tax increase. That is not in Assembly Bill 1. They have asked for no increase in registering their vehicle. I would like to point out, in our neighboring states, for a car that is valued at $15,000, in Arizona it costs $153 tax, in California it is $302 tax, which will be effective in October. In our state it is $137. They have asked that I please, please, keep the classes low. Our students deserve every single break that they can get. My kids, when they went through school, were in classes of 30 to 40 students in first grade. What is in Assembly Bill 1 is keeping the class size in first grade at 16 to 1. I am proud to support that. Our kids deserve that. What is in this bill is an increase in my cost, as a small business owner, to do business. For my husband and I it will cost us $10 more a month, $120 a year. I am proud to pay that and my husband is proud to pay that, because we realize that our kids need their classes to be smaller. I have talked to a lot of business owners in my district as well.
According to a recent “USA Today” our growth is 43 percent, and yet our spending growth is 37 percent. Our neighboring state of California has a growth of 22 percent and their spending growth is 55 percent. Our other neighboring state, Arizona, has a growth rate of 33 percent and their spending growth is 48 percent. I would say we are not doing so darn bad.
To address the growth receipts tax, I have business owners that said their margin of profit is so low that if we had stayed with the gross receipts tax as originally presented, their increase costs would have been $50,000 a year. With the franchise tax, which they said they were willing to pay, would be $10,000 a year. Again, they said that they are willing to pay.
I am keeping my remarks, Mr. Chairman, to Assembly Bill 1. I am proud to support Assembly Bill 1. This is my seventh term in the legislature. I have served with Republicans and Democrats that every single session have funded a balanced budget and that means that they have voted for taxes. They voted for funding and they voted for the method whereby the funding needed to be accomplished. I am proud of my predecessors and I will be proud again of my fellow colleagues to vote to fund our schools. Mr. Chairman, since we are in a committee and have been in this meeting for approximately four hours now, and I would like to know when the Chair would accept a motion of Do Pass for Assembly Bill 1. Whenever the Chair is ready to accept a motion I will be glad to make it. Thank you.
Thank you, Ms. Chowning. I think from the dialog we have had in the last four hours there is a bit of work left to do.
Thank you, Mr. Chairman. I am not going to speak to the bill, I guess.
I think the Chair has granted quite a bit of latitude today, so please feel free.
I am always concerned, however, listening to the dialog that has preceded, particularly the statements of growth and of what has happened in the State. I guess the historian, history, and civics teacher in me sees misunderstanding in what the committee process is all about. I sit on the Committee on Judiciary, a fifteen-member committee this time. It is larger by far, thanks to you Mr. Chairman. The Committee on Ways and Means has fourteen members. The Committee on Government Affairs has thirteen members. We are all tied up in the mornings. I count on the people in Ways and Means to do their job just as you count on the fifteen members of Judiciary to do theirs. If there is a criticism of what is happening in this bill, if it rests with the budget that has come out, then that means the Committee on Ways and Means and the Senate Finance Committee, which meets together and starts two weeks before the rest of us, that works hard, did not do its job. I didn’t hear that kind of rumble. I did not hear that kind of dialog and our two committee rooms are next door to each other. When people would come out of that committee room that I euphemistically like to call cul de sac No. 1 where good bills go to die, because you won’t give them money for prisons or programs in prison, or for other kinds of important programs that we may think need to be done; we know that you did the best job that you could with the dollars that you had. We put our confidence in you doing your job. Here we come to the end of the ride and it is all over, you tell us to open the budget again, to go over it again on a line-to-line basis. The Committee on Ways and Means has already done this for the entire session every day.
I have confidence in my colleague, Mr. Arberry. I have confidence in that fourteen-member committee. I know that they may not have come out with the perfect budget that I wanted but they did the very best they could with the dollars that were there. They scrutinized each program. I appreciate the euphemism relative to the less pork size can of beans. It is a great story. It still may have the smell of pork in there somewhere and there may be something in there that we haven’t found, but I will be darned if I can figure it out because I believe in the committee process. So when I vote to support the budget, I am voting in support of those fourteen people having done their job. If I didn’t have confidence in them then it is incumbent upon me, as a representative of my constituents, to sit there and look over their should every day. I believe in the work of the committee. That is the reason I can look at this tax bill and have confidence.
I worked on the Committee on Taxation and I heard the justifications behind these spending questions and where the dollars were going to come from. I have been here for fourteen years; long enough to listen to the promises made, the cuts that have been made, time and time again, told that we would come back and not just limp out the door. I heard a very resounding statement two years ago that we would be back, looking at real dollars and a change in tax behavior. That was the single greatest challenge facing this legislative body from day one. Here we stand in a special session making believe that those people didn’t do their job. I won’t accept it. I believe in the budget committee. I believe the budget committee did their job and did scrutinize the legislation. I believe the Committee on Taxation did their job. I think we have a bill here that has been worked out and talked of. There is nothing in here that we have not seen in one form or another. I commend Ms. Chowning. In fact, I too am ready to vote, Mr. Chairman.
Thank you, Mr. Anderson. I would also indicate that with the budget, particularly, it ends up being a twenty-one-person committee since we have to reconcile our budget with the State Senate and the State Senate has a similar makeup in a different proportion than we do in this house.
Thank you, Mr. Chairman. The Governmental Accounting Standards Board is the entity that publishes the rules under which governments must publish and prepare their financial statements. For those from the private sector, FASBE is the companion organization for private groups. Today they released a study showing that Nevada is thirteenth highest in the country in tax burden. I am no historian, but I look at this 33 percent increase in the scope of state spending and it just has to be the biggest conversion of private sector to public since the Bolshevik Revolution. I do find encouragement in Mr. Goldwater’s promise to look at some revisions to the spending plan. I look forward to helping in that effort.
Thank you, Mr. Chairman. I would like to get back to the Goldwater compromise plan, too, because I think we have an obligation to do our work here. I was interested in what Mr. Griffin had to say about Medicaid. I am assuming you are also talking about Welfare because what I am hearing out there is that people want to cut the Welfare and Medicaid budget. Since I was the chairman of the subcommittee that worked on that in Ways and Means, I want to let the body know that those caseloads were re-projected and we, indeed, have already cut over 25 percent of the caseload in Welfare and Medicaid, saving millions of dollars over the Governor’s projections. We cut over 130 positions as well. We went through it detail by detail. The caseloads spiked in May and if the caseload projections keep going down I personally have no objection to putting that money in the Rainy Day Fund. I think there is definitely room where we can work on that. I think we have an obligation to make sure we don’t cut any more because these are entitlement programs. If people are poor and lose their jobs like they did after 9/11 in Las Vegas, I think it is our job to help them. If there is room to work on that you certainly have my support to do that.
I do, Mr. Chairman, want to address some misinformation about Welfare that has been put out there by Mr. Knecht on TALK Radio. It keeps coming back, over and over, that Nevada’s Welfare benefits are far superior to California’s. So, just as part of his education and for the record, Nevada’s average Welfare cash benefit to families is $202. California’s is $623. Nevada ranks forty-fourth in the Nation in terms of our cash welfare benefits and California ranks third. To compare Nevada to California is impossible. To say that we are going to be attracting, like one of our members said in the paper today, people from California who move here for Welfare benefits is absurd. We have to correct that misinformation that is out there.
Finally, I want the members to understand this budget does not increase that case Welfare benefit for anyone in Nevada. I wish it did. I wish we didn’t have a mother with a child trying to live on $202 a month. The maximum benefit in Nevada is $348 a month; the average is $202 a month. I think we need to raise that, but it is not in the budget. That is not in the budget. The growth in the Welfare budget is caseload growth, not cash benefit. I look forward to working with Mr. Griffin. I would be happy to sit down with any other member of this house, I have offered that to several of you, and go through the Medicaid budget and the Welfare budget line by line and show you what we did. No one came forward with a plan that said, “Let’s cut one hundred more Welfare positions.” If you want to come forward with a plan now let’s see it. Let’s look at the caseload projections. Let’s make sure we do it in a fiscally responsible way. I am certainly open to talk about it. Thank you, Mr. Chairman.
Thank you, Ms. Leslie. Let me indicate that we have five people that are on the board to speak, Ms. Angle, Ms. Giunchigliani, Mr. Knecht, Mr. Grady, and Ms. Buckley. It is my intention to not have additional discussion today after we get to those members. We have some public testimony that we are going to take and I am hopeful that we can wrap up by about 6:00 p.m. We will undoubtedly be back in these chambers tomorrow to have additional discussion and if you have questions that come to mind I would appreciate it if you would hold them until tomorrow. Let me go to Ms. Angle.
Thank you, Mr. Chairman. I would like to go back to discussing AB 1. First of all I would like to say that I have always been consistent in my votes. In fact, in sessions previous to this there were members of this body that used to take wagers on how I would vote. I am not on Ways and Means so I was not able to vote on any of the previous budget items. I would also like to say that 95 percent of my constituents have been e-mailing and calling me, saying this is too much. It is too much tax and it is too much to spend. They want us to let the economy recover and not injure it with new taxes. I was sent here to represent them.
I voted against the first AB 1 in the 19th Special Session because the DSA was attached. I don’t think we should allow our children to be caught in the crossfire in these bills. This is an issue of taxation and spending and I think that is where we should keep it. I would like to see the Distributive School Account taken out of that. I voted for the DSA on June 7th and I intend to keep voting for that. As far as the class-size reduction piece of this bill, in the 1990s I sat before this body as a school board member and I asked you not to do that for our school boards or any school boards in the state because it is a non-funded mandate. Even though we pay for teachers’ salaries we don’t pay for the added cost of classrooms, etc. It also micromanages local elected officials. Those who are on local boards are most able to decide which classes can be larger, which need to be smaller, which classroom teachers are able to handle a larger class size, and which ones aren’t. To insult them by saying that we know their job better is what class size reduction has done. Also, it is a nightmare for the chief financial officers for each one of those school districts. There is absolutely no scientific evidence that it works so I would say that if we would just take that piece out we would save ourselves about $226 million.
Finally, just to reiterate, I have been consistent in my vote. I have voted no on each one of the seventy-one fee increases that we have passed this legislative session. I will continue to be consistent in my vote. Thank you, Mr. Chairman.
Thank you, Mr. Chairman. Just to kind of reiterate a few things. My colleague from Carson City mentioned that we are on an optimal path here in Nevada regarding our tax situation. Because you didn’t live here at that time, in 1988 we had a Price-Waterhouse study that was conducted and we have had several studies since then that said our tax structure is not optimal. It is not on a good path and we have an obligation and responsibility to do something about it. The piece of legislation from the Committee on Taxation and was referred to by the chairman of the Committee on Ways and Means last session was actually written by me for the Governor’s taskforce. The reason was because I did not want us to come back here again and sit on our duffs and then delay again, not trying to look at the structural deficits that we have, and how to improperly broaden the tax base. We tend to defer to committee and defer to committee and defer to committee and never act on it. We have a history of studies that we have never bothered to implement or act on and I think this is one of our opportunities to do that. I welcome the pork and beans analogy because it is absolute correct, but finally, this is one session where I can say that, serving on Ways and Means, we didn’t have the pork and I felt much better about that because several of us were usually uncomfortable with those type of actions that were taken. We did, I think, an excellent job in bipartisan manner, to slash the budget wherever we possibly could without harming the people that we represent.
Not everybody has an affluent neighborhood. Not everybody has a poor neighborhood. We all have a blend. Part of our job is to come up here and make the tough decisions, so part of what we are still trying to accomplish today is how do we close the DSA, the class-size reduction, and finish funding the rest of that government process? Regardless, I guess it is not being heard, the Proclamation does not allow us to go in, cut, or reopen the budget. That is not part of the debate today, nor should it be, because that is already come and gone over two weeks ago. I understand not wanting to have the DSA and CSR contained within this, however, you heard from your own Republican Attorney General that the ruling is we must supply a balanced budget, therefore we have to pass the taxes to fund the program that we have all heard here on the floor to day that you are planning to support.
I am somewhat frustrated though, and I commend my colleague from the Gardnerville/Minden area because he did at least come up with a plan on the fifty-fourth day that was referred to by the gentleman from Carson City. However, that was done in a press conference. That tax plan was never presented to the Assembly Committee on Taxation. Never. It was presented to the Senate Republican controlled Taxation Committee and they chose not to act on it. It never was even brought back here for us to consider discussion-wise although I do think we took components of Mr. Hettrick’s plan and included it in this bill that we are considering today, such as the real estate transfer tax.
You can say what you want but the only Assemblymen that I remember coming before Ways and Means that is not a part of the committee, although the members of the committee could have done that, were Mr. McCleary, who came in to talk to us about the SMART computer program, Mr. Hardy, and Mr. Goicoechea. Some of you came in and asked for money, and I could go through now and start pulling up the bills that came out for items that had nothing to do with the budget, but I will choose not to do that. They were quite a few individuals who did that. You can’t have a little bit of both and come say, “Give me, give me, give me,” and then not support the funding for the regular budget, let alone any of the side deals that anyone wants to have. Where when you wanted to present these cuts? Where were you when you wanted to come in and criticize the Medicaid budgets? Mr. Beers, you voted for them. It is like last session; you voted for the Dental School, but then went on a show and said, “Oh, that is one area we could cut.” That is somewhat hypocritical. If you are going to vote for it, then at least be honest and say you are going to vote for it. I started going through committee votes and found no “no” votes, no “no” votes, no “no” votes, and then on June 2nd you are going to, now, not vote for the appropriations. That is hypocritical. We need to get back to the business of doing what we were elected to do. It is hard. Why do you think twenty-three Democrats should be the ones bailing out the rest of your constituents? Because that is what you are asking us to do when we vote for a tax package. Like I said, two weeks ago, it is real easy to come here and say no. Anybody can vote no. It takes a lot of courage and leadership to stand up and vote yes. Sometimes we lose. Do you think I like everything in this budget? No, I don’t.
Let’s go back to some of the discussion that we had here. In modifying section 27, let’s see if we can get some people together to see if you still have some concerns on the 5,000-seat cap, Mr. Geddes, and see if we can come up with some language that needs to be dealt with. We had discussions on Section 74. Okay, if that Schedule C structure isn’t enough let’s take a look at it. But every time you change $1 amount you know you are going to have to increase it somewhere else in order to fund the budget. That is what we have to recognize. If we can make it more equitable, that is what we are here today to try to do. The problem is this, where is that vote going to come from? We know we have twenty-three people and hopefully three or four others, but because we are hamstrung by the two-thirds vote, where is that courage going to come from? We funded the appropriations act and whether we like it or not, we did not fund the schools. Your choice now is this, or you let them go away with nothing come July 1 and then we will be back here again under another crisis. All we are saying is, if we are going to work until 6:00 p.m. let’s get a group together after that to see who really wants to actually try to pass a bill. For those of you that came here intending to vote no, and you are going to vote no, no matter what, go home, because at some point that does not do a service to the people that we were elected to represent.
If the people choose to rehire those of us who choose to run for office again, great. If they choose to fire us when we run for office again, great. Life goes on beyond the Legislature, but right now you were elected to do a job. I invite you, and anyone else, Mr. Goldwater, or whomever, let’s sit down when we take our recess or adjournment and figure out how we can go ahead and actually tax big businesses, gaming, and banks, and not small businesses and every day people. There is no property tax in this. There is no sales tax increase in here. Let’s be honest about who pays the taxes. Is there a fair tax? No. And to minimize the IRS there is actually language in here to finally allow for electronic transfers. We might actually move into the 21st Century in Nevada. Those are things that will actually save money and save processing time, especially for the small business people. That is what we have been trying to be aware of throughout this entire session. How do we broaden the base, make it equitable, and make sure that individuals are not overly burdened?
In conclusion, I will refer to Oliver Wendell Holmes, who asserted taxes are what we pay for a civilized society. I would prefer to go home to a civilized society rather than a group of naysayers. Thank you.
Thank you, Mr. Chairman: I rise to respond to two things that have been said about me and about my remarks. I think it is unfortunate that we fall too much into improper ad hominem attacks instead of sticking to the issues, but since they have been made I would like to clarify the record.
First of all, as far as Ms. Giunchigliani’s remarks, I didn’t have to be here in 1988 to know about the Price-Waterhouse report. I do know about it and have discussed it since the election. In particular, my observations on what is optimal has been our spending path. Contrary to the Price-Waterhouse report, our taxes did keep up for about fifteen years after it was issued, so the Price-Waterhouse report isn’t a very sound source to be citing here and it certainly doesn’t, in any way, rebut my point about our spending path throughout the 1990s having been optimal. I might add that I voted against the spending measures that have been brought in this session when they were finally brought to me here on the floor. I might further say that I see no courage in voting for destructively high taxes. People can say self-serving things like that but it isn’t courageous, it is destructive.
As far as Ms. Leslie’s remarks about what I said on the radio, let me read to you part of an e-mail I sent to Rusty Humphries. “Rusty, yesterday on your show I mentioned one of the bash-Nevada misrepresentations made by the tax-and-spend crowd. One of the chief Nevada-bashers took issue with my comments and yours today in an e-mail. In case I made any error, I want to reiterate my comments in writing to be clear. My point was that Nevada spends much more per recipient on Medicaid, that is healthcare for Welfare recipients, than any other far west state. In particular, 37 percent more than California.” Then I quoted the following figures, “Nevada $5,647 per recipient per year, Idaho $5,357, Oregon $5,315, Arizona $5,069, Washington $4,941, and California $4,171. These figures fully support my point and they show that the Nevada-bashers are wrong. The gentleman who wrote the e-mail is going after me for quoting these figures because he was previously caught by Mr. Beers misleading the Legislature saying that Nevada ranks last in per capita Medicaid spending. His tactics are representative of the Nevada-bashers and the tax-and-spend crowd that wants to turn our state into East California.” I concluded, “Your listeners need to know that the Nevada-bashers and the rest of the tax-and-spend crowd play rough. They play hardball with vicious attacks, ad hominem attacks, and misrepresentations as their stock in trade.”
Mr. Chairman, I hope we can move beyond this annoying habit and stick to the subject. I have now corrected, on the record here, the misrepresentation of what I said. I suggest that is the real issue is what I said, not what someone misrepresented what I said. I would like to invite all the members, in the spirit of your suggestions, to join in a more constructive approach in the future than improper and unwarranted ad hominem attacks. Thank you.
Thank you, Mr. Chairman. I will try to be very brief. I happen to come from one of the rural areas that is losing a major employer. When I say a major employer we are losing a company that employs between 80-100 people. That does not sound like much to Clark County or Washoe County, but it is devastating to a city of 3,500. We are talking with one of our other major employers from the northern part of Lyon County and they have explained, not only to some of the freshmen legislators that visited their plant in Fernley, but also to the Committee on Taxation, why they left the State of Washington. This is one of the reasons why I have not supported the gross receipts tax, just listening to their stories. We have heard of the problems in Mineral County and other small counties. Lincoln County is roughly 98 percent federal land where there is no tax base. In our area we are fortunate enough that when things are needed we try to fund some of the things locally with non-tax dollars. As I have discussed with Ms. Giunchigliani a number of times, we in rural Nevada know that Clark County is sending tax money into the rural areas. We would be lost without it and we appreciate it. We are a very conservative area, in the four counties I represent. $860 million or $1.2 billion is a lot of money and my folks are saying we can’t go there. Do we need new taxes? Yes, we do. What is the amount? Mr. Goldwater, I compliment him in saying, “Let’s work together.” We all want to go home. We are all tired. Mr. Chairman, I compliment you because I think this is the best dialog that I have seen in this house this year and, wearing a previous hat in a previous life, probably in the five sessions where I was on the other side of many of these issues. I look forward to working with Mr. Goldwater and the rest. I think our Minority Leader has some good ideas. We need to talk about them. We need to see where we were going. I don’t think this body for a minute can stand here and try to say we are going to point the finger and we are going to embarrass somebody. That is not going to accomplish anything for anyone. We need to get together and work together and pass something and let’s go home. Thank you.
Thank you, Mr. Chairman. I am not sure where we go from here. To me, the issues are pretty clear. Nevada does not have a broad based business tax and we need to enact one. It should be lower than all of our western neighborhood states. We should not go down the road of lots of states that are increasing taxes too high. I believe that has been done in this bill. A three percent bank franchise. I think it would be foolish for us to tax the people who have been paying all along. I think it would be foolish to increase sales or property taxes. I think we need a big business tax.
There has been a lot of discussion about realistic cuts. To anyone who wants to work on getting a bill so that we can fund our schools so that we can leave, my door is open, along with Mr. Goldwater’s and the Speaker’s, and anyone else who wants to roll up their sleeves. It probably would make sense for only those folks who are really interested in getting something done to take us up on that offer. I have heard a suggestion that here is a good idea on reducing the amount of money in the bill, let’s increase class size. Let’s save money out of the budget by adding kids to the classroom. Well, I am not going to do that. I am not going to support making classes, especially in Clark County where I represent, any bigger than they already are. They are already out of control with two teachers trying to control thirty-five kids. They are not even complying with our current class size reduction, much less giving them more flexibility to put more kids in our classrooms. I am not going to go there and I don’t think, since this has been brought up many times, that there would be a majority in this body or in the Senate willing to do that, so if your idea for a cut is increasing class size I would say you are not realistic because it has already been tried and has failed and there are too many people who don’t want to increase class size for kids. It is true on some other ideas. It may sound good to save $26 million by not funding PERS. Did anyone hear from the firefighters about what that really means? People in this employment plan do not have Social Security. They depend on us to fund it and we are required to fund it. If we don’t fund it we are ignoring our constitutional duty. Some of these ideas sound good in a sound bite but if you are not willing to make sure the idea makes sense, passes constitutional muster, and gets us home, then that is not really realistic. If anybody willing to work on that my door is open.
The other part of it, in addition to spending, is what should be the taxing side. There are still some in this body, both houses that say the way to go is to raise sales taxes or every time a home is sold, that is the way to raise taxes. I heard it said in this chamber today that we don’t need a gross receipts tax, a UBT, a net profit, a franchise, we don’t need anything. Well that just means big business doesn’t pay. My constituents don’t want to pay one dime more in property tax. They don’t want to pay one dime more if they go out to dinner or to a movie. They think big business and gaming should pay and that is what they have elected me to do up here, along with all of us. Let’s fix the structural problem before June 30. Let’s fund our schools. Let’s go home.
Thank you, Ms. Buckley. I have a list of names of members of the public that want to testify. Let me first indicate that what we want to do is take your testimony relative to Assembly Bill 1. If there are provisions in the bill, either on the tax side, the education side, any clean up language, or financial administration issue we are happy to take your testimony. If your testimony is solely that you do, or do not, want taxes—that is not what we are here to hear. If you have some suggestions on how we can construct this bill better, that is what we need to hear from you.
You will have to testify from this table and come down the center isle. I am not sure all the people signed in are still here since we have been in a four and three-quarters of an hour meeting.
My name is Richard Bushnell. I am just a citizen. I will try to do this relatively quickly. I am tired and hungry and I need a cigarette. Speaking of cigarettes, I know somewhere it deals with the taxes on cigarettes. That is fine, I can live with that. What I have trouble with is someone out in the parking lot saying they have a tax free cigarette because they imported it from Switzerland. I will give to Caesar what is Caesar’s, if Nevada is my Caesar. I truly support and love this State. Assemblyman Arberry, Assemblywoman Buckley, and Assemblyman Goldwater, you hit the nail right on the head. We need to get this done. $50,000 a day is unacceptable. I live on $621 a month and I will give the State of Nevada $21 a month if it will give my kids, or my grandkids, the education that they need. Thank you for your time.
Hello my name is Cliff Nellis. I am a very small businessman in the Reno area. Actually, I am a very small businessman. I just wanted to comment on some of the particulars of this bill and maybe ask some questions. First of all, on the sales tax allowance being reduced from 2 percent to .5 percent, I wasn’t aware that the businesses were actually collecting and retaining 2 percent. I would like to suggest reducing the sales tax instead by 2 percent to 5.25 percent; at least that is what it would be in Washoe County. I don’t really see the necessity of the business license fee. It does raise $17 million but do we really need to start licensing businesses on the state level? I am already licensed by the cities. I went to the Reno City Counsel about six or seven years ago and asked for a refund because they weren’t, and still aren’t, maintaining the roads. That damages my vehicles and costs me more money. They were nice but they got around that and never refunded my business license fee.
I have really enjoyed visiting here. This is my second visit. I discovered my representative, Sharron Angle, is a wonderful person. I really wasn’t involved much in politics before, but I realize that as a citizen in a democracy it is my responsibility to know what is going on and to become educated and this has been quite an education. Thank you very much.
The cigarette and liquor taxes are actually taxes on the poor. Do you think the people who have a problem with drinking and smoking cigarettes are going to smoke or drink less? I don’t think so. It is going to mean they are going to have less money to feed their children. But on the other hand maybe it is good to tax things that are “sin” or immoral, if the State determines that it is immoral to smoke cigarettes or drink liquor. I am not sure if the State should try to determine whether things are moral or immoral. In some cases, yes, that is good, like I think killing is not moral. I actually think stealing is not moral and I am going to address that issue in a few minutes.
On these fees, $18 million, that is quite an increase, but oh well, let’s go past that one. I agree with eliminating the BLT tax or BAT tax. I think that is a great idea. I have just a few employees and pay about $8,000 a year in wages. The problem is adding this .6 percent wage tax. What that does, in my opinion, is penalize high wage employers because they are now paying more tax. The guy that is actually willing to fork out more money for his employee to pay them better wages is now being penalized because he is paying a percentage instead of a flat rate of $25 per employee. I see the low paying tourism or gaming industry getting off on that one.
I am against the 3 percent bank franchise fee because I know that is just another pass along tax.
The so-called franchise fee, which is a gross receipts tax, I am totally against. Even though I am a small businessman and I probably won’t be affected much by it, it may cost me $300 a year. I am not selfish and I see all these politicians and these advertisements playing on selfishness. Oh, it is not going to cost me much money, it is going to cost Wal-Mart money. I heard these people out here chanting and saying, “Wal-Mart, take the burden off our back. Make Wal-Mart pay.” I don’t know where they got their education because, in fact, it is putting the burden on our back because Wal-Mart doesn’t pay anything and business doesn’t pay anything; it is passed along to the consumer. That is a fact and I hope you folks know that too. We are paying that tax.
I have been educating myself on what is going on here and I found out that there is a 9 percent projected revenue increase this coming year. I can’t figure out why we have to have more money. We have been running this state for years and it has been just fine. Why do we need more? Well, okay, we have a population growth. I have heard Mr. Knecht, who seems to be a very nice man, say, “We are willing to compromise. We are willing to do something.” I don’t know how things work in committees. I was on a little platform committee for Washoe County and I know you have to have a majority to get things done. The Republicans don’t have a majority. You guys can’t fool me on that. It is you Democrat folks who have the majority so it is you who is blocking things from getting things done if anyone is doing that.
I voted for Mr. Guinn the first time around. The second time around I refrained because I was afraid that he was going to turn back on his principles. I have heard this word principles being talked about negatively by certain persons in the Senate but I admire those people who have principles and stick to them. Mr. Horne I would advise you to hold to your principles as a Republican.
Mr. Nellis, first, he is a Democrat, and second I am going to ask you to speak to the bill.
I am sorry, Mr. Horne, I apologize. Mr. Beers, thanks for educating me that Nevada is thirteenth highest in tax burdens including the total tax. I remember reading one time “Don’t let them fool you with the General Fund thing because the casinos pay 51 percent but that is not the whole fund. They don’t pay that much.”
A couple of other things I would like to suggest to you. I know there has never been an audit on UNLV and I think maybe UNR. Perhaps you should audit these guys and make them accountable.
We already passed that bill.
Good job. What about the Clark County School District?
Assemblyman Goldwater: We passed that one, too.
In the State of Colorado they have a 3 percent income tax and a 3 percent sales tax. Why can’t we strive to lower the tax burden on the people, the people who work and produce. Just holding the line would be good, but I can’t morally accept increasing it. There are a few things I can go along with and if you guys need more money, maybe the entertainment tax and maybe the cigarette and liquor tax and maybe these gaming fees, but please don’t increase these other taxes, especially the so-called franchise fee. You were elected by us and I don’t represent any special interests. I am a small business guy and I represent myself but I really do believe I represent common folk like my neighbors and the folks across the street. You guys have those people living around you too, common people who work hard for their money and they have bills to pay. I heard the calculations on this and if you divide this $1.3 billion tax increase it comes around to $450 a person. The people who pay it are the people who work and produce in our economy. I like my neighbor and he has a nicer car than me but I don’t go and take it from him. I would consider that immoral and I admonish you, my dear friends, ladies and gentlemen of the legislature, not to do the same to us. Thank you very much.
Let me address a few things as you walk back to Ms. Angle’s seat. The payroll tax was actually promoted by some of the members of the Republican Party in the State Senate. It however does have a cap. It is based on capped wages and capped at $21,500. Anyone who is paying $40,000, $50,000, or $60,000 in wages a year to an employee is only paying at the lower rate, so there is no disincentive above that to continue raises. As it relates to people like banks and particularly those that do interstate banking, the Wal-Marts, the national retail chains, they will certainly have their profit margin. They will certainly have the amount that they pass through. What we found out during this legislative session in doing pricing comparisons is that they charge the same price in Nevada that they do in California even though they have 10.8 percent tax. They use regional pricing so, in essence, Nevadans are helping to pay California’s taxes. There are other states where they do pay the taxes. It is America, people should be coming here and live the American dream and make money with the least amount of government intervention possible. We just thought since they are doing business and making money here and consuming our services, that it would also be prudent for them to contribute to the funding of those services. I am not sure about the 9 percent increase. Often times it is an increase over the past year. If you think about 2002, the year 2001 and 9/11 created a significant decrease for us and we are really trying to get back pre-9/11.
Yes, the Republicans are a minority in this house, however, they have a great deal of input. The budget that we arrive at had to be reconciled between the two houses and the House down the hall has a Republican majority that supported this level of funding. So, it was a compromise effort between the parties and between the houses. It wasn’t, as has been characterized, some sort of a steamroll job. It was done out in the open. We do appreciate your testimony. Thank you very much.
Good evening. My name is Warren Wish and though I am a member of the PERS board, I have come before you speaking as an individual. As you can see by my dress, I did not anticipate being able to have this opportunity. I was outside with one of the signs saying, “Save our schools.” Before this legislative session the PERS board reviewed, with our actuarial, the report about the state of the PERS system. At the time, the report indicated that we needed a one and one-half percent increase in the PERS contribution in order to maintain the current standing of the system. As you know, the PERS system is approximately 83 percent funded. It is on course to be fully funded by the year 2024. One of the concerns of the PERS board at the time, knowing the State of Nevada’s budget, we asked the actuarial what would be the implications to the system if we did not make the increase at this time. What would happen if we stretched out the number of years until full funding? What would happen if Nevada became fully funded in PERS in 2032 or 2040? They expert testimony given to the PERS board, and I wish George Pyne were here right now giving you more details, was that it would be irresponsible for us as a board to make that kind of recommendation. Irresponsible because by adding extra years it would cost millions of dollars. The prudent thing to do, as soon as possible, was for the fund to continue its course, because once it is fully funded then there is integrity in the system. We know that the earning power of those investments will honor the commitment that Nevada has made to all of its public employees, whether police officers, firemen, or teachers, or state workers. Part of their commitment to state service is that if you work those years we will have a retirement that you have earned. I believe it would be very irresponsible for this legislature to delay that increase because it only then adds the burden to the generations and to the legislatures of the future. We need you to step up and maintain the integrity of the system. Thank you.
Before I take a motion from the Majority Leader to rise from the Committee of the Whole to our floor session so that we can adjourn for the day, let me take the prerogative of the Chair to address a couple of issues.
First, I appreciate your point of view Mr. Knecht. It certainly contributes to our discussion. One of the things I would disagree with you on, though, is perhaps when the Price-Waterhouse study was done in 1988 we did fine for fifteen years. Actually in 1991 we had a major tax increase in this State that still didn’t get last us very long. We didn’t follow the Price-Waterhouse study or a couple of other studies in the past and I think our State has suffered for it.
I don’t think I will address the PERS issue. It is something we can discuss either tomorrow or in private amongst each other.
As Chair, let me suggest that we continue to be respectful of each other. I think a couple of times we came dangerously close to not being that way, on both sides. I would just admonish the members to have a constructive dialog. It is okay to disagree but we will do out best to be respectful. In fact, I will demand that we be respectful while we are in this discussion in these chambers.
Lastly, let me implore you please, as Mr. Goldwater and others have suggested, if there is something in here that you want to change, something to have happen to get it done, or something that you need to voice your opinion on, my office is open, the Majority Leader’s office is open, other offices are open. We can have this dialog and get this done. In fact it is our duty to get this done. Please take the time and make the effort if there is something that needs to be corrected for you to come to an affirmative support for this bill or another bill. Please make that effort. We owe it to the citizens of the State to get it done and not be in session longer than we have to be. We have had as many as twenty-seven vote to support a revenue measure in this house. That is one short of twenty-eight. It is my belief that next person, and I am sure there will be disagreement in this, actually becomes, assuming that we get an appropriate bill done, a hero for this session. That is the person that will have the focus on them. That is the person who will have broken the logjam. That is the person who will have funded education. That is the person who will have sent us home so that we are not spending $50,000 a day of the taxpayers’ money to be here.
On motion of Assemblywoman Buckley, the committee did rise and report back to the Assembly.
ASSEMBLY IN SESSION
At 6:05 p.m.
Mr. Speaker presiding.
GUESTS EXTENDED PRIVILEGE OF ASSEMBLY FLOOR
On request of Assemblywoman Angle, the privilege of the floor of the Assembly Chamber for this day was extended to Cliff Nellis and Kevin L. Child.
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 Assemblyman Sherer, the privilege of the floor of the Assembly Chamber for this day was extended to Cody Sherer.
Assemblywoman Buckley moved that the Assembly adjourn until Thursday, June 26, 2003 at 9 a.m.
Assembly adjourned at 6:09 p.m.
Approved: Richard D. Perkins
Attest: Jacqueline Sneddon