THE FOURTH DAY
Carson City (Friday), June 6, 2003
Senate called to order at 8:05 a.m.
President pro Tempore Amodei presiding.
Roll called.
All present.
Prayer by the Chaplain, Pastor Albert Tilstra.
O Lord, our God, as we seek Your guidance, today, we do not ask
to see everything in the future, knowing that we can take only one step at a
time. Make that first step plain to the members of this body, that they may see
where their duty lies, but give them a push, that they may start in the right
direction and finish the task before them. We pray in Your mighty name.
Amen.
Pledge of allegiance to the Flag.
Senator Raggio moved that further reading of the Journal be dispensed with, and the President and Secretary be authorized to make the necessary corrections and additions.
Motion carried.
MESSAGES FROM THE GOVERNOR
State
of Nevada
Executive
Chamber
Carson
City, Nevada 89701
June 5, 2003
The Honorable Senator
William J. Raggio, Majority Leader, Nevada State Senate
Legislative
Building, Carson City, Nevada 89701-4747
To the Members of the Nevada State Senate:
Section 9 of Article V of the Nevada Constitution
provides that the Governor may request the Legislature, when convened in
Special Session, to consider matters other than those set forth in the call.
With
this letter, I am exercising my constitutional authority to bring additional
legislative business to your attention for consideration. I would request that
you consider the matters contained within S. B. No. 191 of the 72nd Session of
the Nevada Legislature.
Best
wishes in your deliberations.
Sincerely,
Kenny
C. Guinn
Governor
of Nevada
MOTIONS, RESOLUTIONS AND NOTICES
Senator Raggio moved that the Senate resolve itself into a Committee of the Whole for the purpose of considering various revenue plans and the unresolved issues of the 72nd Legislative Session, with Senator Raggio as Chairman and Senator McGinness as Vice Chairman of the Committee of the Whole.
Motion carried.
IN COMMITTEE OF THE WHOLE
At 11:40 a.m.
Senator Raggio presiding.
Various revenue plans and the unresolved issues of the 72nd Legislative Session considered.
The Committee of the Whole was addressed by Senator Raggio; Mindy Braun, Fiscal Education Program Analyst; H. Pepper Sturm, Chief Principal Research Analyst; Senator Coffin; Senator O'Connell; Senator Cegavske and Senator Neal.
Senator Raggio:
As everyone is aware, various Senators have been involved in
discussions to try to accommodate a revenue plan, this being the last
designated day the Governor has indicated for this special session. We now have
agreement on the three bills dealing with education funding and other matters
related thereto. I am going to ask Pepper Sturm and Mindy Braun to speak. I
believe by now we are familiar with all the issues. We have before us BDRs
(bill draft requests) which will be introduced when we return to the Senate.
The No Child Left Behind Act is bill draft request (BDR) 34‑0008. The
Distributive School Account (DSA) issues are in BDR 34-9, and the State
Distributive School Account for class-size reduction is BDR S-0010. It is the
Chair’s understanding there are no significant differences in BDR 34-9, the
DSA, and BDR S‑0010, the class-size reduction appropriation, other
than that upon which the Senate has previously acted. Is that correct?
Mindy Braun (Fiscal Education Program Analyst):
I believe you are correct.
Senator Raggio:
There is now a change that has been agreed to, apparently, on BDR
S-0008.I would ask you to indicate the changes in the bill, which was S.B. No.
191 of the 72nd Legislative Session, that have occurred. I believe one
change is necessitated because of concern about the failure of a large number
of students to pass the math portion of the high school proficiency examination
and a situation that has occurred, primarily, in the Clark County School
District. I believe there are minor adjustments in the area of corrective
plans with respect to schools needing improvement. If there are others, call
them to our attention because the bill now before us has 192 pages, and Senator
Neal, among others, prides himself on reading every page of these bills. We
need to have an explanation for the record.
H. Pepper Sturm (Chief Principal Research
Analyst):
The BDR before you now is, essentially, what the Senate passed as
S.B. No. 191 of the 72nd Legislative Session. As you will recall, that
measure completely revises our State’s accountability system to comply with the
federal No Child Left Behind Act. I will not repeat the summary of BDR S-0008,
but several amendments need to be noted for the record.
First, BDR S-0008 is amended to address a serious problem within
the school districts with regard to the mathematics portion of the high school
proficiency examination. Since this appears to be an implementation issue on
the part of the school districts, this bill will require the Department of
Education to reset the passing score in accordance with the original
recommendation by the Department’s staff. This will make the passing rate for
students similar to that of the reading portion of the test, which no one is
challenging. The score will be lowered for this graduating class and will then
be incrementally increased over the next several years until, for the 2007
graduating class, it is at least the same as the current passing score. The BDR
directs the districts to review curriculum and the amount and type of
mathematics credits required for high school graduation and report back to the
Legislature in 2005.
Second, we have revised the list of corrective actions for non‑Title
I schools. The list has been simplified and limited to instituting a new
curriculum, decreasing management authority or extending the school year or
school day. I believe that is for schools in the fourth year of not meeting
adequate yearly progress, or non-Title I.
Third, the sections of BDR S-0010 requiring a state
accountability data system requiring the system to have the capacity for
longitudinal analysis of student scores is clarified to provide the information
will not be used for teachers’ or paraprofessionals’ evaluations.
Finally, there are several minor technical amendments to align
reporting periods for reports missed in the original. These would add
institutions like Child Haven to accountability requirements, requiring a
request for proposal process for appropriation in the bill to the Interim
Finance Committee (IFC) for student testing brochures. Additionally, they would
restore the statute for the one-fifth retirement offset for experienced
teachers in low‑performing schools.
Senator Raggio:
I know this is something we dislike doing, and I do not want to
enlarge this situation too much, but something needs to be said. It is
distressing to know this large number of students in the State, particularly in
Clark County School District, were unable to pass the math portion of the exam.
We adopted these elevated standards eight years ago, and everyone, we assumed,
was following the law in adjusting curriculum to these standards. The
Legislative Commission surveyed the standards in 2000 and 2001, and in those
surveys, the Legislature was assured by all school districts, the curriculum
had been adapted to the required standards. There has been ample time for these
subjects and the curriculum to include these requirements.
It is distressing to hear that, in response to the concerns
raised by parents whose children did not pass, the superintendent was quoted as
saying, the students who failed had not been taught these courses. This is
remarkable to hear. As one person, I fail to understand how that can be when we
had such assurances. It does not do any good to continue to remonstrate about
it, but we need to send a strong message this accommodation is being made at
this time. As you heard under the proposal, the test scores will be ratcheted
up again. I cannot stress enough that something is wrong when they have assured
us it is in the curriculum and then later say, publicly, “Well, we did not
teach these students those issues.” Currently, we have a 60 percent passing
average. A student could fail those parts of the test, it would seem to the
Chair, and still pass the exam.
Mr. Sturm:
I should point out a couple of key sections. There is a statement
about what the Chair just mentioned in section 101. Section 101 talks about the
purpose of doing this, and I should point out section 103 of BDR S-0008 says
this does apply to seniors graduating this school year. It requires school
districts, in which pupils are enrolled, to allow pupils to participate in the
graduation ceremony for the graduating class of 2003 under the presumption the
pupil passed the mathematics portion of the high school proficiency exam. Test
scores will have to be recalculated based on this new pass rate, but for the
purposes of this graduating class, at least, there is going to be a presumption
they may pass.
Senator Raggio:
To get a diploma, they will still have to pass.
Mr. Sturm:
They still need to pass for the diploma, yes.
Senator Coffin:
When we closed S.B. No. 191 of the 72nd Legislative
Session and passed it out of committee, the chair directed me to offer staff
language for a letter of intent to help spell out to the districts and
superintendents that parents and students need to be notified they would be
tested on materials they may not be taught. I gave suggested language to staff,
which of course, they will not have time to finish drafting until, probably,
next month. It essentially called for a letter of intent, which would require
informing students not just once or twice but throughout their high school
careers, they may be tested on specific subjects they had not been taught. It
seems to me, the districts have to do that. I personally feel they ought to be
taught geometry as a requirement, but that is one of the subjects heavy weight
is given to and you use in real life, probably, even more than algebra.
Geometry was one of the subjects the students were failing. I want to ensure we
reiterate for the public we are sending out a letter of intent. It should be in
more than one language. It should be in the other predominant languages, which
are perhaps understood by the parents. The students probably understand
English, but some of the parents, godparents or whoever the responsible parents
are do not. The people who do not speak English well will pressure their
children about this. I suppose I have added a little more to the letter of
intent, but I hope it is going out.
Senator O'Connell:
Mr. Sturm, do we have any information from other states as to how
they are handling this, and will this affect, in any way, the funding expected
from the federal government for the No Child Left Behind Act?
Mr. Sturm:
The No Child Left Behind Act does not require a high school exit
exam. This is required in approximately 28 other states. I would have to
double-check the statistics, but federal law does not require a high school
exit exam. However, we are using the first administration of the high school
proficiency exam to comply with the requirement of one test, in the high school
period, for adequate yearly progress purposes under No Child Left Behind. There
is no requirement the child take an exam to receive a diploma.
Senator Raggio:
It is a requirement under the Nevada Education Reform Act.
Mr. Sturm:
Correct, and I believe that requirement has been in place since
the 1977 or 1979 Legislature.
Senator O'Connell:
Do we have information from any other states that have
experienced similar circumstances?
Mr. Sturm:
Many states proposing high school exit exams, since the
standards-based reform movement has been implemented, have been running into
similar problems. In a number of those states, like Nevada, the tests were
minimum competency tests. Once academic standards were adopted, the test had to
be realigned with what every child is expected to know according to their
academic standards. The exit tests, like Nevada’s, now reflect those rigorous
academic standards. So, yes, they are running into this. Many of them are
lowering the test score or saying this is not going to count for a diploma or
delaying it for a few years. It runs the gamut, but it is an issue with other
states.
Senator Cegavske:
As one who started in this Legislature when this was being discussed
and remembering some of the concerns expressed at that time, I must say,
unfortunately, it seems those concerns have come to be.
One of the concerns I have, Mr. Chair, and want to ensure is
passed along to the school districts, is to make certain in this exemption the
things we are doing are not being done for everything, overall. If a student’s
attendance was not there, if behavior was poor, if there are any other areas in
which criteria must be met in order to graduate, those are all adhered to. I believe
those are all things that need to be looked at and ensure they are not also
given exemptions.
Mr. Sturm:
I should point out the BDR specifies this just applies to
students who have otherwise met all requirements for graduation other than
passing the math part of the exam.
Senator Neal:
Have there been any studies, among the states you mentioned, to
determine the benefit of a law requiring an exit exam upon finishing high
school?
Mr. Sturm:
I do not recall any. I know there have been recent studies about
having accountability and a testing program, and they both yielded opposite
results. It depended upon who ran the study. That study may have looked at exit
exams. I would have to check.
Senator Neal:
We have no guidelines as to what direction we are going by
requiring this. Would that be the case?
Mr. Sturm:
I am not sure how to answer that.
Senator Neal moved to introduce and do pass BDR 34-008.
Senator Mathews seconded the motion.
Motion carried.
Senators Titus, Schneider and Nolan were absent for the vote.
Senator Raggio:
As soon as we leave here, we will return to the Senate Floor; we
will introduce the BDRs, and we will file a committee report as a whole
indicating a do pass recommendation. Is there any additional question or comment
on BDR 34-9, which is the DSA? I should indicate, depending on the ultimate tax
package or revenue bill, the appropriations in approving this may require an
adjustment in the General Fund appropriation in the tax bill that pertains to
commissions, sales tax apportionment and so forth. With that understanding, I
will accept a motion to do pass.
Senator Townsend moved to introduce and do pass BDR 34-9.
Senator Wiener seconded the motion.
Motion carried.
Senators Titus, Schneider and Nolan were absent for the vote.
Senator Raggio:
The next one is BDR S-0010, the class-size reduction bill. Are
there any questions on BDR S‑0010?
Senator Townsend moved to introduce and do pass BDR S-0010.
Senator Mathews seconded the motion.
Motion carried.
Senators Titus, Schneider and Nolan were absent for the vote.
On the motion of Senator Townsend, the Committee of the Whole did rise and report back to the Senate.
SENATE IN SESSION
At 12:10 p.m.
President Hunt presiding.
Quorum present.
MOTIONS, RESOLUTIONS AND NOTICES
Senator Raggio moved that all rules be suspended, that for the remainder of the Nineteenth Special Session, reading so far had considered second reading, rules further suspended, and that all bills and joint resolutions reported out of the Committee of the Whole for floor consideration be declared emergency measures under the Constitution and be immediately placed on third reading and final passage, time permitting.
Remarks by Senator Raggio.
Motion carried unanimously.
Senator Raggio moved that all rules be suspended, that for the
remainder of the 19th Special Session, all bills and joint resolutions returned
from reprint be declared emergency measures under the Constitution and
immediately placed on third reading and final passage, and that concurrent
resolutions returned from reprint be placed on the resolution file, time
permitting.
Remarks by Senator Raggio.
Motion carried unanimously.
Senator Raggio moved that all rules be suspended, that for the remainder of the 19th Special Session, all bills and resolutions be immediately transmitted to the Assembly time permitting.
Motion carried unanimously.
Senator Raggio moved that all rules be suspended, that for the remainder of the 19th Special Session, the Secretary of the Senate dispense with reading the histories and titles of all bills and resolutions.
Motion carried.
INTRODUCTION, FIRST READING AND REFERENCE
By the Committee of the Whole:
Senate Bill No. 1—AN ACT relating to education; requiring the State Board of Education to define the measurement for determining whether this state, each school district and each public school has made adequate yearly progress in accordance with the federal No Child Left Behind Act of 2001; requiring the State Board to prepare an annual report of accountability; requiring the State Board, each school district and each public school to develop a plan to improve the achievement of pupils; revising provisions governing the designations of public schools; requiring the Department of Education to designate school districts based upon the achievement of pupils enrolled in the school district; prescribing the consequences for public schools and school districts that are designated as demonstrating need for improvement; revising provisions governing accountability and reporting; revising provisions governing the examinations that are administered to pupils in public schools; revising provisions governing the qualifications required of certain teachers and paraprofessionals to comply with the federal No Child Left Behind Act of 2001; revising provisions governing the regional training programs for the professional development of teachers and administrators and the Statewide Council for the Coordination of the Regional Training Programs; making appropriations; revising various other provisions governing education to comply with the federal No Child Left Behind Act of 2001; and providing other matters properly relating thereto.
Senator Raggio moved that the bill be referred to the Committee of the Whole.
Motion carried.
By the Committee of the Whole:
Senate Bill No. 2—AN ACT relating to public schools; 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; requiring that a certain amount of money must be withheld from the basic support allocation to a school district if the school district does not expend the required amount; revising provisions governing the purchase of retirement credit for certain teachers; requiring the boards of trustees of school districts to purchase retirement credit for certain school psychologists under certain circumstances; apportioning the State Distributive School Account in the State General Fund for the 2003‑2005 biennium; authorizing certain expenditures; providing for a final adjustment following the close of a fiscal year; making various other changes concerning the administration of money for public schools; making an appropriation; and providing other matters properly relating thereto.
Senator Raggio moved that the bill be referred to the Committee of the Whole.
Motion carried.
By the Committee of the Whole:
Senate Bill No. 3—AN ACT relating to education; making appropriations to the State Distributive School Account for purposes relating to class-size reduction; authorizing certain school districts to adopt a program of alternative pupil-teacher ratios for the 2003–2005 biennium; requiring larger school districts to study current class sizes in certain grades; and providing other matters properly relating thereto.
Senator Raggio moved that the bill be referred to the Committee of the Whole.
Motion carried.
REPORTS
OF COMMITTEES
Madam
President:
Your
Committee of the Whole, to which were referred Senate Bills Nos. 1, 2, 3, has
had the same under consideration, and begs leave to report the same back with
the recommendation: Do pass.
William J. Raggio, Chairman
GENERAL FILE AND THIRD READING
Senate Bill No. 1.
Bill read third time.
Roll call on Senate Bill No. 1:
Yeas—20.
Nays—None.
Excused—Schneider.
Senate Bill No. 1 having received a constitutional majority, Madam President declared it passed.
Bill ordered transmitted to the Assembly.
Senate Bill No. 2.
Bill read third time.
Roll call on Senate Bill No. 2:
Yeas—20.
Nays—None.
Excused—Schneider.
Senate Bill No. 2 having received a constitutional majority, Madam President declared it passed.
Bill ordered transmitted to the Assembly.
Senate Bill No. 3.
Bill read third time.
Roll call on Senate Bill No. 3:
Yeas—20.
Nays—None.
Excused—Schneider.
Senate Bill No. 3 having received a constitutional majority, Madam President declared it passed.
Bill ordered transmitted to the Assembly.
Senator Raggio moved that the Senate recess subject to the call of the Chair.
Motion carried.
Senate in recess at 12:17 p.m.
SENATE IN SESSION
At 3:01 p.m.
President Hunt presiding.
Quorum present.
MESSAGES FROM THE ASSEMBLY
Assembly
Chamber, Carson
City, June 6, 2003
To the
Honorable the Senate:
I
have the honor to inform your honorable body that the Assembly on this day
passed Senate Bill No. 1.
MOTIONS, RESOLUTIONS AND NOTICES
Senator Raggio moved that the Senate resolve itself into a Committee of the Whole for the purpose of considering various revenue plans and the unresolved issues of the 72nd Legislative Session, with Senator Raggio as Chairman and Senator McGinness as Vice Chairman of the Committee of the Whole.
Motion carried.
IN COMMITTEE OF THE WHOLE
At 9:21 p.m.
Senator Raggio presiding.
Various revenue plans and the unresolved issues of the 72nd Legislative Session considered.
The Committee of the Whole was addressed by Senator Raggio; Senator Neal; Senator Carlton; Senator Cegavske; Senator O'Connell; Gary L. Ghiggeri, Senate Fiscal Analyst; Senator Care; Senator Coffin; Brenda J. Erdoes, Legislative Counsel; Senator Nolan; Senator Shaffer; Richard S. Combs, Deputy Fiscal Analyst; Senator Tiffany; Senator Washington; Senator Amodei; Senator McGinness; Senator Titus; Mark Diego, President and CEO, Colonial Bank; Mindy Elliot, Wells Fargo Bank; Senator Townsend; Samuel P. McMullen; Senator Mathews; Russell J. Guindon, Deputy Fiscal Analyst; Jim J. Avance, Restricted Slot Representative; Sean T. Higgins, Herbst Gaming Inc. and the Nevada Retail Gaming Association.
Senator Raggio:
Following the meeting this morning of the Committee
of the Whole, each of the caucuses discussed a potential revenue plan. Each of
the caucuses started with a proposed revenue plan, which hopefully would garner
the required support, ultimately, to get a two-thirds vote in the Senate.
During this time, we have had continued discussions between the two caucuses.
I want to, first of all, commend the fiscal staff, which has been working
since early this morning until this hour, trying to crunch numbers and
determine the impact of each and every change that was discussed or
accommodated. The final version, which is before the Committee of the Whole, has
had many revisions throughout the day. The fiscal staff has been up and down,
crunching numbers, and we really appreciate their effort as well as the effort
of all who have participated in trying to reach an accord that might receive
sufficient support to constitute a revenue plan, at least acceptable to the
Senate.
In addition, we have been mindful of the efforts of the lower
House to also develop a revenue plan. We understand any plan that will survive
needs to be one in which two-thirds of each House will agree. It has been a
long process, and throughout the process, there has been agitation and stress.
There have been distractions, and we are mindful of the concerns that have come
forth from the various sectors of this State. Those are concerns we have tried
to address. We have made every effort to try to accommodate the concerns and
still meet the obligation of the members of this Legislature. This is what is
best for the paramount interest of the State as a whole. Rather than go through
all the details and how they were derived, the Chair is going to review the
components of, what I would term, the compromise plan, which has at least been
reached by a sufficient number in each caucus, hopefully, sufficient for
passage. As we review those items, and if there is sufficient agreement, we
then need to look at some proposed amendments.
Some of these amendments were contained in S.B. No. 509 of the
72nd Legislative Session to be considered by the Senate. Others are amendments
that have been suggested for other reasons by the Senate Committee on Taxation.
Most of the amendments, do not change, in material form or substance, the
components of the taxation revenue plan now before us. We will take those at
the end of the presentation. I would like to go through this so you will have a
picture of it, and then, we will take any questions.
First, as you understand, we were looking at the need to have a
General Fund revenue increase of approximately $350 million in the first year,
fiscal year 2004, and approximately $509 million in the second year, fiscal
year 2005. This plan almost hits that on target. There is not a lot of wiggle
room as a result of the plan. I might indicate one of the concerns that
continued throughout these discussions and negotiations was to keep it within
those parameters.
Obviously, no one wants to have to increase taxes more than
necessary. On the other hand, we want to make certain any plan, ultimately,
adopted by the Legislature not only funds the budget requirements but also
constitutes revenues which will be long-term and broad-based. I do not believe
the next Legislature or any other Legislature, barring some extreme
circumstances, wants to go through this process or ordeal in the future.
Hopefully, what we do here will be sufficient.
Under the plan, the components are the revenue projected in each
year of the biennium. Also, the effective date is mandated either by the fact
they are already existing revenue sources or they may require some time before
implementation. Most of these, if not all, were on the approved list this
Committee indicated would be potential components of a revenue plan. The first
ones are the reduction of the cigarette stamp fee, the reduction of the other
tobacco allowance, the reduction of the liquor tax allowance and the reduction
of the State and local school support tax retailer allowance. In each of those
cases, the allowance is reduced to 0.5 percent, which produces the revenue
indicated. The business license fee is increased to $100 annually from the
existing $50 annual fee. That produces $23.5 million and $24.4 million,
respectively.
The live entertainment tax is 10 percent on casino and non-casino
events. The 10-percent tax on admissions to live entertainment events includes
food and beverages. This is effective for gaming properties and not until
January 1, 2004, does it apply to non-gaming establishments. The additional
revenue projected from this source is $47.9 million in fiscal year 2004, and
$81.1 million in fiscal year 2005. The cigarette tax is a 50-cent increase
in fiscal year 2004, with an additional 15-cent increase in fiscal year 2005.
That produces $74.3 million in the first fiscal year and $99 in the second. The
liquor tax is an increase of 89 percent, which, I believe, was the Consumer
Price Index (CPI) increase since the last tax increase. That produces $18
million and $18.4 million, respectively, in each year.
The gaming tax would reflect an increase of 0.25 percent in
fiscal year 2004, with an additional 0.25 percent in fiscal year 2005. This is
on all present tiers. There was discussion at some point about an additional
tier. As a result of discussions, that was removed, and it is now in this form.
The increased gaming tax produces $22.5 million in 2004 and $48.8 in 2005. The
restricted slot tax, this is the fee on each of the machines in the restricted
slot establishments, is a 33.33 percent increase across the 2 years, resulting
in $2.3 million and $2.4 million, respectively in each year. Secretary of State
fees and the security fees are indicated at $14.8 million and $17.3 million
with the effective dates for the respective fees being July 1, 2003, and
October 1, 2003.
The BAT tax, what we now call the business license tax, is $170
annually. That generates $56.8 million and $58.7 million, respectively. There
is a room tax component of 1 percent across the State, and that generates
$24.8 million and $34.4 million, respectively. The room tax increase would be
implemented August 1, 2003. The real estate transfer tax is computed at $1.55 per
$500 of value which generates $50.9 million in fiscal year 2004 and $67.9
million in fiscal year 2005. The net profits tax component would not be
implemented during the first fiscal year because of the reasons stated by the
Department of Taxation. Implementation on January 1, 2004, represents a
half-year collection, that would be collected in the second year at
$41.7 million. That is computed on the basis of every business having a
$50,000 exemption against net profits. Each business would pay no tax unless they
had profits in excess of $50,000. Anything above $50,000 is computed at a
3-percent rate.
Total revenue from those sources is projected to be $351.3
million in fiscal year 2004 and $511.2 million in fiscal year 2005. The total
revenue to be raised by a revenue plan, based on the budgets we have now
approved and that have been signed by the Governor, is $862.5 million for the
biennium. The General Fund need for 2005 is $509.1 million. The total General
Fund need is slightly under what is generated from this revenue package. It is
$858.6 million, which is the amount in the budget. It is a close computation.
If the revenue is projected as indicated, there is a difference in the first
year of $1.8 million over the need, and for the second year $2.1 million over
the need, for a total of $3.9 million. I believe, that covers the extent of the
tax package.
Senator Neal:
I do have some questions and a statement I would
like to make relative to the gaming tax’s increased rates. As I understand
this, there would be a 0.25 percent increase and another 0.25 percent
added during the second fiscal year on the three present tiers. The bottom two
tiers, currently assessed at 3 percent and 4 percent, would be raised 0.5
percent for the first time in 16 years. The third tier assessed at 6.25
percent would be raised to a less than a 1-percent increase in the last 16
years. I wanted to point this out because I have had some proposals that were
in the tax committee’s possession. We had a hearing, but we did not vote. The
chair indicated to me we would have an opportunity to vote on these particular
proposals. Before that happened, we went into the Committee of the Whole to
look at these increases. The proposal, as far as the gaming tax is concerned,
was discussed in caucus, but we were not allowed in the caucus to keep a record
of what actually was being discussed. We bantered back and forth, and what we
are now winding up with, I believe, is a tax insufficient to take care of the
needs and problems generated by gaming. I have discussed the problems caused by
gaming over the last eight years. As I see this, gaming is clearly the winner.
This suggests to me, if we are going to get a fair hearing in terms of a proper
increase in this particular area, we are going to have to go to the people. I
do not see any means by which we can do this in this particular Legislature.
Even you, Mr. Chairman, when you were setting up this process to
consider this tax, came to me and said, “You will get an opportunity to offer
your proposals relative to these increases.” I have not been able to do that,
as of yet, unless you make available some time tonight for such proposals to be
made. I feel somewhat marginalized by this whole process as to not being heard
in the regular committee in terms of what I had brought forth in a legal manner
and presented to the committee according to the rules of this House. Over the
years, when I do something, I try to follow the rules. If I am out voted, I
leave it at that, and I move forward. In this particular case, I have not even
had the opportunity to have a vote in committee on the proposals presented to
the taxation committee. I have to be suspicious of this particular process and
have to say the gamers were clearly in control of what was going to be presented
in terms of their own particular increases as far as the gross gaming taxes
were concerned. I find that somewhat appalling, and the people of the State of
Nevada should know and understand gaming has asserted itself once again. Even
though they have made billions of dollars, and the tax proposal I made was
based on the billions of dollars they have brought in so far, we were only able
to get about $658 million out of the $9.2 billion they made last year. That is
aside from the other billions they made in the other four categories associated
with casino gaming, such as food, beverages, rooms and merchandise shops.
What we have done here is a disservice to the people of the
State, and in years to come, we are going to be right here again. Even when I
look at the proposed increase of $48.8 million, this does not go into effect
until fiscal year 2005, which I presume is in July, 2005. That means the gamers
have an opportunity to come back and take this off the books before we even
leave the Legislature next session.
Senator Raggio:
That becomes effective 2004.
Senator Neal:
It says 2005.
Senator Raggio:
It says fiscal year 2005, but it becomes effective July, 2004.
The second rate goes into effect on July 1, 2004.
Senator Neal:
If that is the case, it still is not sufficient when we look at
other states going after the gaming tax to address problems generated socially
and otherwise. I have made the statement here. The University report done in
the early part of the year was speaking to gaming addiction and said the
addiction rate in Las Vegas alone would cost something like $300 million to
$459 million per year. The $22.5 million or $48.8 million of additional revenue
does not come close to addressing those particular problems. Next legislative
session, we will be back here raising money, trying to take care of these
particular problems. It is regrettable this Legislature cannot act on its own
in terms of raising these taxes and that gaming has to say what it will pay or
not pay. I find that somewhat appalling, and I hope the people of the State of
Nevada will take note of this and do some type of petition drive to get what is
deserved from that particular industry in proportion to the problems it has
caused this particular State. I will not be voting for this particular proposal
because when you look at it, you are talking about hitting the average person,
those who smoke cigarettes, who drink liquor; businesses who have to pay the
increased fees, and secretary fees and business licenses. The only thing we get
here is $24 million extra as opposed to gaming would be the room tax, the $24
million in fiscal year 2004 and $34.4 million in fiscal year 2005. That is a
pass through. Gaming does not mind doing that because it is not money coming
out of the drop box.
In closing, when we were talking about gaming, we were talking
about $9.2 billion made last year aside from the other $9 billion in the other
four income categories. When we looked at that we found $6.3 billion of the
$9.2 billion came from coin-operated machines. When you get a breakdown of
that, we were talking about the quarters and nickels put into those machines by
a lot of our people. Now, we are saying we cannot get some of that money back
to take care of some of the problems generated from the gaming industry. As I
say, I find this somewhat appalling, and I will not be voting for this
particular measure.
Senator Carlton:
Mr. Chairman, when you were explaining the list, you
said the net profits tax, after a $50,000 exemption and 3 percent of any
amount over that, would bring in $41.7 million. Was the $41.7 million a
full-year’s revenue or was that a half-year’s revenue?
Senator Raggio:
That is a half-year of revenue. It is implemented on
January 1, 2005.
Senator Cegavske:
Is the BAT being phased out?
Senator Raggio:
That is the business license tax at $170? That is the cost both
years?
Senator Cegavske:
Correct, there was talk about phasing it out because of the net
profits tax.
Senator Raggio:
There is no phase out under this plan at this time. I think
discussions were that it could be phased out in the future, but I would defer
to others in the negotiation group on that.
Senator O'Connell:
Do we have any idea, yet, on the cost for
implementing the net profits tax?
Senator Raggio:
I believe the budgets approved some augmented amounts for the
Department of Taxation, but I will defer to Fiscal staff, if they have that
information.
Gary L. Ghiggeri (Senate
Fiscal Analyst):
Chuck Chinnock testified to the Committee yesterday, and he has
not provided us a written cost estimate to implement collection of this tax.
However, I do believe during his testimony he indicated it would equate to the
estimated cost of the service tax. The cost for the service tax, based on the
estimate he provided to us, with an effective date of January 1, 2005, was
approximately $1.8 million in fiscal year 2004 and approximately $4.5 million
in fiscal year 2005. There are also additional support costs he has itemized,
and I believe he has indicated for the service tax approximately $116,000 for
additional personnel and operating costs in fiscal year 2004 and $103,000 in
fiscal year 2005. Additionally, he has itemized some information technology
costs of approximately $498,000 in fiscal year 2004 and $465,000 in fiscal year
2005.
In the appropriations act, as approved by the Legislature, I
believe it was $12.5 million provided in fiscal year 2004 and $20 million in
fiscal year 2005 for costs associated with implementation with the provision
that the Department of Taxation comes to the IFC (Interim Finance Committee)
before expending any of those funds. There is approximately $32.5 million, over
the biennium, approved by the Legislature, for implementation of whatever tax
package is approved.
Senator O'Connell:
How many personnel did Mr. Chinnock talk about?
Mr. Ghiggeri:
On the service tax, he indicated there were 35
personnel in 2004, and 81 in 2005 for the direct implementation. In the support
package, it looks like it is 18 total personnel.
Senator Care:
I gather it is the Chair’s intent to vote on the concepts.
Senator Raggio:
In order for the bill draft to be started or completed, we need
to have something recommended. In addition to the revenue components, there are
other components that do not affect the revenues or the nature of the tax
components that we will vote on after we do this part of it. The Legislative
Counsel wants to know in which direction to go because Legal Division is
looking at working all night on something.
Senator Care:
That is fine, Mr. Chairman. Of course, it is difficult to vote on
a bill without reading the bill; although, we have seen so many drafts, many of
us anyway, that we could probably take a good stab at this as written. Some of
us still have questions on what constitutes, for example, live entertainment;
and when you get into net profits, issues like does every business have to
file, how do the exemptions work and that sort of thing. If that discussion can
take place at a later time, so staff can get started, that is fine with me.
Senator Raggio:
There was a lot of discussion on the live entertainment tax in
the tax committee itself and, otherwise, in the Committee of the Whole. Does
anyone want to offer anything in addition at this time?
Senator Coffin:
Yes, Mr. Chairman, because this is more than just a concept vote
here tonight, we probably ought to give some direction, at least of our intent,
to the drafters so they can begin to think about what it is we have discussed
either here or in the taxation committee. I do not know whether they take the
form of amendments or whether they take the form of particular segments of the
bill. They must keep in mind the things that came up. For example, we did
discuss a live entertainment tax. I believe we had an affirmative feeling in
this Committee of the Whole we were going to exempt 501(c)-type organizations.
I do not want to say 501(c)(3) or any of the subletters because then you might
exclude some you mean to include. I hope that is one of the features.
Senator Raggio:
The Chair’s recollection was the discussion seemed to indicate it
would apply to all forms of live entertainment, but would not apply to
non-profit organizations or events. We had discussions about whether boxing,
racecar events or rodeos would be included. There was some discussion about
brothels and things of that nature. It was the Chair’s understanding all of
those would be included but not non-profit organization events. There is some
concern about competitiveness, and the Committee’s implication was they would
look at that during the interim to determine whether or not those could be
problems. S.B. No. 509 of the 72nd Legislative Session did include the creation
of an interim committee on taxation, a Legislative Committee on Taxation,
Public Revenue and Tax Policy. It would have broad powers during the interim,
and it is a continuing committee that could certainly look at all of these
things during the interval between now and when the Legislature next convenes.
Probably, those things could be best discussed in that committee.
Senator Coffin:
Before that committee even meets, I would like to make certain of
our intent on tickets sold. Many tickets have been sold for various events in
advance, and we do not intend to levy a tax retroactively on tickets that might
have been sold in blocks, whether to individuals or to brokers.
Senator Raggio:
That could be understood and made a part of the record. I do not
believe anyone intended that to occur.
Senator Coffin:
This is only for the purpose of giving intent to our drafters,
Mr. Chairman.
Senator Raggio:
I think it would be prospective.
Senator Coffin:
On the net profits tax, we have a tax to be levied on many
businesses. Many businesses have contracts which were previously executed,
perhaps with governments or some other entity, such as garbage companies. I
received a letter from one of them asking that we keep in mind they had a
signed contract basing their costs upon these kinds of things.
Senator Raggio:
I believe there was some discussion, and I will defer to our
Legislative Counsel, it might not have been that type of company, but some
companies that cannot pass on a tax that would apply to them. They might have a
franchise or be a utility company, and there should be some language that would
indicate in those situations the tax could be imposed by that body. That is
understood by Legislative Counsel.
Senator Coffin:
Other thoughts would be to make sure, for example, in the health
field, the tax does not apply to federal programs such as Medicare, Medicaid,
the federal health programs because those programs were exempted under federal
law.
Senator Raggio:
Unless there is objection, that could be included. Legal Counsel
has that language.
Senator Coffin:
Regarding intercompany transfers and so on, I want to make sure
we do not have double taxation. In other words, payments from one group of
related enterprises to another group should not be taxed.
Senator Raggio:
If that language has not been made available to the Legislative
Counsel, I believe that was the understanding.
Senator Coffin:
I do not know who has received them, which is why I thought we
would enter them into the record so we do not end up in lawsuits quickly after
the Session. Healthcare payments to providers would be another one.
Senator Raggio:
Legislative Counsel is here. If any of those are not appropriate,
we will let her indicate that. Ms. Erdoes, are those appropriate?
Brenda J. Erdoes (Legislative Counsel):
Mr. Chairman, I am not certain I am comfortable with the term
“appropriate.” We can certainly do it. I did not have direction before to take
out health care providers. If that is your wish, we can certainly do it.
Senator Raggio:
I do not believe they are taking out health care providers. What
was the request?
Senator Coffin:
Mr. Chairman, if we did not exempt health care payments to
providers, obviously there are contracts between providers and insurance
companies and other third parties, we would end up taxing health care. I
believe we intended not to tax insurance premiums because we already tax that
industry. However, that does not take care of the problem of taxes charged on
health care. We have never discussed taxing health care; but again, for the
record, I would suggest language to the effect any revenue received by an
entity or health care provider for the payment of health care services should
not be taxed. I will be happy to give a list of my suggestions to Mrs. Erdoes
if you wish, Mr. Chairman.
Senator Raggio:
Does staff have a thought on that? I am not sure how far that
goes.
Senator Coffin:
I will give it to you, Mr. Chairman, and you can pass it on at
your leisure. Those are the things I had seen because I believe we are trying
to establish intent here.
Senator Raggio:
Let staff see whether that seriously impacts the projections.
Senator Nolan:
I would like to pass along information given to me
with respect to a conversation we had earlier on the slot route operators. I
would like to give this to Mrs. Erdoes, if I could. Their concern, which I told
them I would address, was answered by your remark with respect to it possibly
being double taxation. However, giving them a level of comfort with a legal
opinion might head off possible legal action down the road.
Senator Raggio:
What was the question?
Senator Nolan:
I was looking to pass some information along to our Legislative
Counsel with respect to the possibility of the double taxation issue for slot
route operators and looking for an opinion from Legal Division based upon the
information I was provided. My concern is an assurance that we are not double
taxing and that we provide a legal opinion to that effect.
Senator Care:
I believe I have the same question.
Senator Raggio:
Is the question whether it is constitutional or legally challengeable?
Senator Care:
I believe the question, Mr. Chairman, is regarding the mechanism
of net profits. My understanding is, if a business in Nevada has an
industry-specific tax, the testimony from Mr. Aguero was, for example,
mining insurance, when you file your federal return, you take that deduction,
and after you have done that, you have your taxable income on your federal
return. The State would then figure your net profits from that number. That
would avoid double taxation. You have gotten the deduction when you filed with
the federal government. You paid the tax in Nevada, you have taken the
deduction off the federal form, and then your computation of net profits is
after the taxation in Nevada has been removed. Is that correct?
Mrs. Erdoes:
I believe all of that is correct but part of the slot route tax
is not based on income. It is a static fee per machine, so we have not been
directed to take that out of the formula, to date. We are definitely taking out
the gross revenue, the other gaming part, but we have not yet been directed to
take out any of the slot route part that was not based on income.
Senator Raggio:
Staff, did you have a comment on the other proposal?
Mr. Ghiggeri:
Yes, I am reading the portion Senator Coffin
provided concerning payments to health care providers. I would need
clarification. Would this mean any payments made to physicians would be
exempted?
Senator Coffin:
We are looking at payments made under contract. It follows the
same philosophy of the discussion we had earlier on organizations, which might
be bound by a contractual price for their services, that they be allowed
sufficient time for the contract to be renegotiated, including the fee.
Mr. Ghiggeri:
The effective date of this tax would be July 1, 2005.
Senator Coffin:
Some of the contracts extend beyond that, which is why I believe
we should at least express our intent.
Senator Shaffer:
I am wondering if we have any documentation on what effect the
room tax will have on our tourism industry?
Mr. Combs:
I do not have any documentation, as such, to indicate the impact
the additional $1 fee on the room tax would have. I imagine it is a number that
would be speculative. The industry came in and argued it would have an impact
if the room tax were raised. Clearly, it is a policy decision. If you raise
taxes, it does have an impact, and this is one of the things it would impact.
Senator Tiffany:
What is a business entity? If you have a family limited
partnership, say a retired person is involved with a family limited
partnership, would he or she be responsible for a net proceeds tax? In other
words, is a partnership considered a business entity?
Mr. Combs:
It is my understanding, if you are part of a business entity, the
business entity you are a part of is responsible for payment of that tax. This
tax would cover all forms of business.
Senator Tiffany:
So if a retired person gets income from a family trust, the
retired person would not, individually, be responsible for the net proceeds?
Mrs. Erdoes:
The way the tax works is it has an overall exemption that applies
to everything the State cannot tax constitutionally under either the State tax
or the federal tax. In some cases, those limited partnerships, because they are
conducting actual business, will be taxable. Those that are simply dormant, not
conducting business, will not be taxable because the Constitution, as you know,
does not allow any taxation of individual income. It is something that will be
worked out. It is clear you cannot tax things that are unconstitutional to tax.
We tried to craft something, but everyone’s circumstances are so different in
this area, specifically, that we have left it to the Department of Taxation to
come up with regulations to make this work.
Senator Tiffany:
My next question is regarding a partnership. For example, a
friend of mine is a partner in a business with other women in which they invest
in stocks. They receive income from the stocks. Would that partnership be
taxed, or would the individuals in the partnership be taxed?
Mrs. Erdoes:
It is the same answer because it depends on how much business
activity there is. There are a number of treatises and rules under which the
Department of Taxation can decide these things, just as the federal government
does. The information is out there. It is voluminous depending on the facts of
the particular case.
Senator Tiffany:
Will these gray areas be determined by the Department of Taxation
or the Taxation Commission?
Mrs. Erdoes:
My understanding is it would work as it does now with other tax
matters, where you would go to the Department first. The Department would do
the auditing function or work out the first scenario, and you could then appeal
the decision with the Tax Commission if you did not agree with the Department
of Taxation’s ruling.
Senator Tiffany:
Did we add auditing positions for this?
Mr. Combs:
There were no extra audit positions added to the Department of
Taxation’s budget because when that budget was closed, we had no idea what tax
package would come out of this Legislature. However, there was $32.5 million
provided for the biennium for the Department to implement whatever tax package
is approved by the Legislature. We have not seen a concrete plan from the
Department other than estimates. That is why in the appropriations act there is
a requirement to go before the IFC with a plan indicating how they would
implement the approved package.
Senator Care:
My inclination is to think a business that has no tax liability
should not even have to file. That question would be determined by whether it
had a federal taxable income of $50,000 or above. That is somewhat of an honor
system. If you take that approach, the Commission would have to have some
authority to look at the books of businesses where there is a reasonable belief
the business would have an obligation and either did not report it or did not
file with the federal government in the first place. As I recall, two years
ago, one of the problems with the teachers’ initiative was that every business
had to file even if its net profits were $10,000, $15,000 or $20,000. I am
inclined to believe, if you do not reach that threshold, you should not have to
file.
Senator Raggio:
I would believe that is the reason for the $50,000 exemption. Is
that correct, Mrs. Erdoes?
Mrs. Erdoes:
Yes, that is correct.
Senator Washington:
I received a note regarding the utility companies.
They had concern about the net profits tax and our inability to actually
collect the tax.
Senator Raggio:
I believe that was included in the response. Mrs. Erdoes
understands it will relate in the bill if they are required to pay the tax,
they would have the authority to pass it on. I will take a motion for approval
of this portion of the proposed revenue plan, and then we will look at the
other amendments.
Senator Amodei:
With respect to the comments by my colleague from
District No. 4, is it the intent of the process to not accept amendments from
any members of the Senate on the floor regarding any components?
Senator Raggio:
Under the rules, the amendments must be made to this Committee,
and this Committee is the only one that can recommend amendments.
Senator Amodei:
I do not know whether Senator Neal was told he could or could not
offer an amendment about any aspect of the tax plan, but I believe our process
contemplates the ability to offer amendments.
Senator Raggio:
In this process, absolutely.
Senator Amodei:
I would request the amendment process for a colleague be left
open until such time as he returns so he can exercise the right of any member
of the 21 of us with respect to offering whatever he planned to offer. I would
hate to leave here tonight and have anybody in this room have the impression a
State Senator was prohibited in any way, shape or form from offering what he or
she thought was a relevant amendment regarding an $860-million tax package.
Senator Raggio:
I believe it was made clear in the rules, amendments can be
offered if offered to this Committee. The problem we have is mechanical,
because if we do not tell the Legislative Counsel soon to start drafting the
bill, we will be here much longer than we anticipated.
Senator Raggio:
We will go on to the amendments that have been proposed as
components, not of the tax revenue plan but as additions to a proposed bill.
Senator McGinness:
If the Committee would look at the two-page document
titled “Other Provisions of S.B. No. 238 of the 72nd Session as
Amended by Senate Taxation Committee,” these provisions came from the
Governor’s recommendation of S.B. No. 238 of the 72nd Session and
S.B. No. 382 of the 72nd Session, the Care-Amodei bill and, finally,
“Issues of Concern to the State Controller Regarding Debt Collection.”
Senator Raggio:
Let me first ask if there are any questions on these proposed
amendments? I assume they were considered and approved in the taxation
committee. These are provisions from S.B. No. 238 of the 72nd Legislative
Session, as amended by the Senate Committee on Taxation, and issues of concern
to the State Controller regarding debt collection.
Senator McGinness:
My recommendation would be to make permanent the pilot project
approved by the 2001 Legislature and include standardizing the returned
check fee provisions included in A.B. No. 41 of the 72nd Legislative
Session, but not approved.
Senator Raggio:
I will accept a motion as an amendment to any bill draft. Senator
Townsend moved to accept the proposed amendments discussed as an amendment to
any proposed bill draft. Senator McGinness seconded the motion. The motion
carried. Senators Neal and Schneider were absent for the vote. Senator
Schneider is excused.
There were two provisions in S.B. No. 509 of the 72nd Legislative
Session that addressed concerns brought to the attention of the committee. The
first provision is the creation of the Legislative Committee on Taxation,
Public Revenue and Tax Policy. Legal Counsel will briefly tell us what this
provision does.
Mrs. Erdoes:
This provision consists of eight sections. The first seven
sections add to chapter 218 of the NRS a standard study committee for the study
of taxation, public revenue and tax policy. The membership is a little
different than most committees. This committee contains four members consisting
of the leadership of both Houses and both parties or their designee and two
members from each of the taxation committees from the previous session, for a
total of eight members. As you move through section 3, the provisions are
fairly standard with the Committee on Public Lands, the Committee on Education
and the other statutory committees. This was modeled after those. It provides
for meetings, payments and such. Section 5, specifies the duties of the
committee. Section 5, subsection 1, paragraph (a) would be modified to match
the taxes you choose to pass in this bill. Currently, it references some of the
taxes you have already looked at. The rest of the sections are about
implementation.
Senator Raggio:
Senator Coffin would be particularly interested in
section 5, subsection 1, paragraph (c) because that is the broad authority to
study the impact of changes to taxes or fees that result from actions of the
Legislature and the fiscal effects of taxes and fees. It gives the continuing,
permanent committee broad authority to do so. I believe there is an
appropriation for the purposes of that committee.
Mrs. Erdoes:
Yes. The rest of the document is the subpoena power and the
witness fees. Section 8 provides an appropriation for the committee of $125,000
for each of the two years of the biennium.
Senator Raggio:
That appropriation ensures the committee can contract with
appropriate consultants. I have a motion by Senator Townsend to include the
provisions just discussed in the amendment to the bill. Senator Rhoads seconded
the motion. The motion carried. Senators Neal and Schneider were absent for the
vote.
Senator Coffin:
I want to make certain this Committee is in harmony
with the legislatively authorized Tax Commission to ensure we do not step on
each other’s toes and do not assume authority that properly belongs to the Commission.
Mrs. Erdoes:
I can assure you, Senator, they are done in a proper fashion so
the committee would be studying and, ultimately, making recommendations to the
next session of the Legislature. There would be no interference with the Tax
Commission’s duties.
Senator Coffin:
Is it possible the Commission and the committee could work with
each other in the event either one finds difficulty so that they may make
recommendations to each other for the next 18 months?
Mrs. Erdoes:
I believe the powers, certainly of this committee, are broad
enough to encourage that, and the powers of the Tax Commission are very broad
as well. I do not believe that would present a problem.
Senator Raggio:
We have another proposed amendment that was in S.B.
No. 509 of the 72nd Legislative Session and dealt with accountability on the
various tax components.
Mr. Ghiggeri:
This section provides for a trigger to provide for
the transfer of revenues generated to the General Fund excluding reversions
exceeding 7 percent above the projected level for General Fund revenues. The
funds in excess of 7 percent would go to the Fund to Stabilize the Operation of
State Government. Once that fund is filled to the appropriate level, the
remaining funds would go to the Fund to Reduce Taxes, which is also created by
this legislation.
Senator Raggio:
This was in response to many people who believed there should be
accountability for additional revenue over and above that projected. With some
reasonable allowance, the funds would be used, first, to go to the rainy-day
fund, up to the amount authorized. If that were not appropriate, it would be
used to supplant the General Fund, in effect, reducing the General Fund
requirements.
Senator Titus:
What is the appropriate amount for the rainy-day fund? What is
the current amount?
Senator Raggio:
In the next biennium, it would be up to $50 million. The budget
funded it at $30 million, with a trigger to fund an additional $20 million if
the trigger were reached.
Senator Titus:
In other words, if you receive the additional $20 million, any
money that comes in over what is projected would go into an additional fund,
called the Fund to Reduce Taxes. Is that correct?
Mr. Ghiggeri:
I believe, and Legal Counsel can correct me if I am wrong, in statute,
the rainy-day fund is set at 10 percent of the General Fund appropriations. For
example, let us say the General Fund appropriations are $2 billion. The maximum
that could be placed in the rainy-day fund would be in the neighborhood of $200
million.
Senator Titus:
Would the Fund to Reduce Taxes be controlled by the IFC, or how
would that operate?
Senator Raggio:
It is obviously something that would be reviewed by
the IFC, but I believe it is self‑enacting.
Mr. Ghiggeri:
I would have to get clarification from Legal Counsel, but I
believe this fund would be used to supplant future revenue increases by the
State required to fund General Fund expenditures.
Mrs. Erdoes:
That is correct. As proposed, there is no mechanism to touch this
money between sessions of the Legislature. It would build up, and the next
session of the Legislature would decide what to do with it. The purpose, as set
forth, would be to reduce other taxes.
Senator Titus:
I am opposed to that. It is not because I do not believe we
should try to reduce taxes, but we are already putting a lot of money aside in
a General Fund, and to try to bind the hands of future generations to say they
have to use any extra money to reduce taxes when we might be facing another
crisis or other needs in the State for which they might want to use the money,
I believe would be a mistake. Furthermore, if, indeed, the IFC has some
authority over that, I believe it gives them too much power to control tax
dollars. It is a handful of people not the entire Legislature.
Senator Raggio:
The provision was provided because it is probably something that
would be advisable. It is accountability as to the usage of taxes, and it also
gives the public assurance that taxes are not going to be collected in addition
to what is reasonable and necessary. As a practical matter, it is an essential
element in this tax plan to get the support needed to pass the bill out of both
Houses. I believe there is a twofold reason for it.
Senator Titus:
I appreciate that, and I support putting the money in the
rainy-day fund, but I cannot quite understand why this additional part is
needed. We are not raising excessive taxes. If we are, we need to go back and
look at the chart. We are raising just enough taxes to fund the budget. We said
we only had a little play of $2 or $3 million.
Senator Raggio:
Are there any other comments? Is there a motion to include this
in the bill? Senator McGinness moved to include the provision just
discussed in the tax plan bill. Senator Rhoads seconded the motion. The
motion carried. Senators Titus, Wiener and Carlton voted no. Senators Neal and
Schneider were absent for the vote.
Senator McGinness:
There is an amendment proposed on behalf of the resident agents
that says the provisions of this chapter shall not apply to businesses that are
not subject to the provisions of Nevada Revised Statutes (NRS) 372.125
and 364A.140.
Senator Raggio:
Mrs. Erdoes, do you have a copy of this proposed amendment? Is
this going to affect the projections we have for the net profits tax?
Mrs. Erdoes:
I would defer to Mr. Combs or Mr. Ghiggeri, but it
is my understanding this was not considered in the revenue, anyway, because it
is not Nevada income that is being considered. These are the S-corporations. Is
that correct?
Senator Raggio:
They would still be required to pay the license fee. Is that
correct?
Mrs. Erdoes:
That is correct. They are required to register with the Secretary
of State, as they do now, and they pay the fees there. They would also pay the
business license fee, and that would be it.
Senator Raggio:
What purpose does this serve? I am not clear. If they do not have
business here, then they do not have any net profits in this State. I do not
know the purpose.
Senator O'Connell:
Mr. Chairman, I believe they just wanted to be certain that was
the current law so they would not be subjected to a net profits tax.
Senator Raggio:
With that understanding, is there any further discussion? Senator
Rawson moved to include the amendment just discussed in the tax plan bill.
Senator McGinness seconded the motion. The motion carried. This amendment will
be included as part of the bill.
I believe we already had a discussion, Mrs. Erdoes, on the
language for those who operate under franchises that would give them authority
to otherwise pass through any tax. Is that understood?
Mrs. Erdoes:
Yes, it is.
Senator Raggio:
Are there any other amendments? Senator Neal, did you have an
amendment?
Senator Neal:
Yes. My proposed amendment, Mr. Chairman, is over and above what
has already been recommended to add 0.5 percent to the third gaming tier,
making it 1 percent, effective in fiscal year 2005, and an additional 2-percent
increase be submitted to the voters for their approval on the same tier.
Senator Raggio:
I believe the rule requires amendments in writing, but we will
accept that as a proposed amendment. The motion is to increase the third tier
over and above what has been proposed by 0.5 percent and bringing it up to 1
percent. What is the threshold of the third tier so we understand the motion?
Senator Neal:
It is $134,000 monthly.
Senator Raggio:
The motion is to add an additional 0.5 percent, bringing the
total increase to 1 percent on the third tier of 6.25 percent, raising it to
7.25 percent. In addition, 2 percent would be submitted to the voters for their
approval. Do you want to bifurcate those motions, or do you want them together?
Senator Neal:
I can bifurcate them, yes.
Senator Raggio:
We will take your first motion. Senator Neal moved to raise the
third tier, over $134,000 monthly, by an additional 0.5 percent. Senator
O'Connell seconded the motion. Senators Mathews, Wiener, O'Connell, Cegavske,
Neal and Care voted yes. The motion failed.
Your other motion was to present to the voters a 2-percent
increase.
Senator Neal:
Yes, a 2-percent increase over the third tier.
Senator Raggio:
Would that be appropriate in this bill draft?
Mrs. Erdoes:
Yes, constitutionally, I believe you could do that.
Senator Raggio:
What kind of ballot issue would it be?
Mrs. Erdoes:
The Legislature would have an act to raise the tax, and the act
would only become effective if the question put to the voters was approved by a
majority vote.
Senator Raggio:
The motion, by Senator Neal, is to present to the voters a
proposed question on the ballot to raise the tax on the third tier by 2
percent. The motion failed for lack of a second. Are there any additional
proposed amendments?
Senator Amodei:
I have a motion in the same subject area. I move to take the
existing proposal, which is 0.25 percent on all three tiers in the first
year, add a fourth tier with a threshold at $250,000 a month and increase the
rate at the new fourth tier to 7 percent.
Senator Raggio:
Let us understand the motion. It would be in addition to what is
on the plan, to have a fourth tier. Is that correct?
Senator Amodei:
That is correct, but it would do away with the 0.25 percent
increase on all tiers in the second year. All tiers in the first year would go
to 0.25 and the addition of a fourth tier in the first year, with the threshold
being $250,000 a month, and the tax rate for the new fourth tier established at
7 percent.
Senator Raggio:
The motion was seconded by Senator O'Connell. Is there any
discussion?
Senator Amodei:
As I look down this sheet, we started this venture 120 days ago
by asking businesses in the State, in a non-gaming sense, to do more. I believe
when you look at the numbers being imposed here, you have no doubt business
will do more. Look at the addition of what some refer to as a broad-based
business tax, which generates a significant amount of money a year. Look at the
retention of the business license tax, that is increased by nearly $70. Look at
what we are asking the most important industry in our State to do. When I
testified on a tax bill earlier this year with a colleague of mine, I said,
“Gaming is not the answer,” and it is not. However, when we look at what we did
to the restricted slot route people, that tax was last increased in 1989. The
CPI has increased approximately 33 percent since we last visited this tax area.
Our proposal is to increase the tax rate on the gaming industry
by less than 10 percent. In comparison with the other proposed taxes, it is not
appropriate. The motion as stated would result in an increase of about 12
percent. I believe it gives credence to a dynamic where, if this is the
pleasure of the members of this House, that is a decision made here and
validates our process as a public one and one where the majority rules.
Senator Coffin:
I have participated in this to the extent of taxing myself
several times so I believe I am qualified to speak as a person who is going to
pay more and will help pay for the burdens which I have laid upon the State,
too, just by being here. We all are in the same situation. Everyone contributes
to the problems and the solutions of the State. Senator Neal indicated
something in the neighborhood of $9 billion is handled by the gaming industry.
I am not going to quarrel with those numbers. On the other hand, we have heard
the Senate Committee on Taxation wrestled with this problem. The gaming
industry also handles another $9 billion in non-gaming activities, which will
be taxed fully under these new tax increases. Everything is listed without cap on
the net profits, as I see it. I am thinking there is a broadening of the tax
structure which includes the revenue from gaming and not just all other
businesses.
Senator Raggio:
While I think everyone believes there is public support for an
increased gaming tax, there is also the necessity to finalize a tax plan in
this session of the Legislature. Any proposal we put forth is going to require
a two-thirds vote in each House. We all recognize, through the work we have
done in the last 123 days, if we start doing something in addition to what we
are trying here, we may lose any support for a tax plan at all. I might concur
in some of the comments, but I also want to know that we can get a tax plan
through that funds the budget we passed and does not result in an impasse that
closes down State government. I do not believe that is our objective.
How many favor the motion to add a fourth tier and raise the tax
to 7 percent for anything over and above $250,000 each month? The motion
failed.
Senator Care:
Regarding the gross gaming revenue tax, currently, we are looking
at 0.25 percent on three existing tiers the first year, and an additional 0.25
percent on the three existing tiers the second year. My amendment would be to
an increase of 0.5 percent for the three existing tiers beginning the first
fiscal year.
Senator Raggio:
The amendment is an increase of 0.5 percent on all tiers.
Senator Care:
Yes, Mr. Chairman, a one-time increase of 0.5 percent on all
three tiers as opposed to a 0.25 percent increase this year and an
additional 0.25 percent the following fiscal year. My understanding is the
difference would be approximately $24 million coming in the first year and
approximately $4 million the second year.
Senator Raggio:
Senator Care moved to increase the tax by 0.5 percent on the
three existing tiers. Senator O'Connell seconded the motion.
Senator McGinness:
Senator Care, with the additional revenue, did you propose to
lower another one of the revenue categories?
Senator Care:
Yes, the other part of my amendment would be, assuming the
appetite is there to go with 0.5 percent on each gaming tier, to decrease
in the second fiscal year, the corresponding, anticipated incoming revenue from
the cigarette tax.
Senator Raggio:
Let us make sure staff understands the effect of that. What would
that do?
Mr. Ghigerri:
If I understood what you are proposing, you are
increasing the percentage fees on gaming revenue during the first year by an
additional 0.25 percent, which would generate an additional $24 million in the
first year. Any adjustments you may want to make would be in the first fiscal
year.
Senator Care:
Whichever year would be appropriate, yes.
Senator Raggio:
You would have to fill the hole in the first year.
Senator Care:
Yes, Mr. Chairman, that would be it then.
Senator Raggio:
The motion is to increase the 0.25 percent in the first year on
the gaming tax and to adjust the rate on cigarette tax to accommodate the
increase. In other words, reduce the amount necessary in the cigarette tax to
accommodate the increase in the gaming tax. Senator O'Connell seconded the
motion. The motion carried.
We will change the plan we discussed according to the motion just
passed. It will increase the gaming rate by 0.5 percent in both years of the biennium,
and the cigarette tax will be reduced to an appropriate amount to accommodate
that.
Mr. Ghigerri:
That would be a reduction in the first year in the cigarette tax,
and in the second year, in order to stay in balance, we would have to increase
it to 65 cents from whatever it is reduced to in the first year.
Senator Washington:
Mr. Chairman, Mark Diego is sitting in the audience.
I know we have not taken any testimony, but Senator Tiffany had asked a
question regarding investments, securities and money markets and how this tax
might affect them. Mr. Diego has indicated he is able to answer that question,
if the Chair permits.
Senator Raggio:
We will give you an opportunity to indicate what this does and
the effect of it.
Mark Diego (President
and CEO, Colonial Bank):
Included in the language of the document I just distributed is an
issue addressing an exemption for intangible asset holding companies, as an
example, the stock or investment club brought up earlier. Those are asset
holding companies residing in the State of Nevada to hold assets, but other
than that, they are not conducting material activity. Those are the assets
discussed, periodically, with respect to taxes on them generating no revenue
because they are portable. The language addresses those intangible asset
holding companies being exempted from a net profits tax.
Mindy Elliot (Wells
Fargo Bank):
A few years back, we invited to Nevada two financial
institutions, City Bank and Household Bank. Part of the operations of those
financial institutions has bundled national assets into the State of Nevada.
For example, City Bank has approximately 2 percent of their asset base
from Nevadans, and the remaining 98 percent is from outside the State. Those
assets are portable. What we were requesting is that the assets outside the
boundaries of Nevada are exempt from a net profits tax. Those assets belonging
to Nevadans, held by Nevadans, of which Wells Fargo is one of the largest
holders of Nevadan’s assets, are taxed within the net profits parameters, and
we want to pay this tax. We want to be a participant; however, we were hoping
you would consider the exemptions that would help us remain competitive in this
State and provide employment. At Wells Fargo, we have 400 positions based on
investments of the holding company located in the southern part of the State.
Mr. Diego:
Regarding the entities Ms. Elliot is discussing, I would like to
give an order of magnitude example. I will use my company for the example. The
business revenue tax you have proposed, according to the discussion, in the
first, semi-annual period would generate $41.7 million. Certainly,
Colonial is proud of the size it has achieved in this market, but it is one of
the smaller players within the financial institutions market. This exemption
would have nothing to do with our core-banking operations within the State.
However, to understand that an implication of a 3‑percent net profits tax
that includes those intangible asset holding companies, Colonial Bank, which
has a royalty company incorporated in Nevada and an asset holding company that
holds the investable assets of the parent company, would represent a tax in the
magnitude of $6 million just on Colonial Bank’s portion. I do not believe the
intent of this group would be to tax one of the smaller institutions in the
State at a rate of 12 percent of the entire tax you are looking to raise in a
net profits tax. That is why, to understand the magnitude, without excluding
those intangible asset holding companies as well as the much smaller ones
brought up earlier, you create a scenario that dramatically changes the
magnitude of the numbers you are looking at.
This issue is similar to one addressed with respect to resident
agents because many of the intangible asset holding companies are housed by
resident agents. One existing benefit with respect to those assets is they are
housed and managed here by, in our case, an independent management company. We
pay significant management fees for maintaining and investing those assets which
would still be taxed under a net profits tax through the organization that is
managing those assets. There is a tangible benefit to the State of Nevada in
retaining those assets in the State.
Senator Raggio:
Where did the language you propose come from?
Ms. Elliot:
The language was created by a technical committee
comprised of our tax attorneys and tax certified public accountants.
Senator Raggio:
To what do the citations refer?
Mr. Diego:
The citations refer to apportionment language for
income of banks in terms of how you would apportion income from an
inter-company standpoint within banking. The references you are seeing are IRS
(Internal Revenue Service) statutes.
Senator Raggio:
This is all new and at the last hour. It is difficult to understand.
For example, under apportionment it says, “A financial institution is not
required to have a physical presence in any other state or be subject to
another state’s taxing jurisdiction in order to apportion receipts within and
without the state pursuant to this section.” Where does this exist?
Senator Townsend:
One of the representatives of the banking institution submitted
language a week ago. Is this different from that language?
Mrs. Erdoes:
Yes, this language is different from the language about which you
asked me.
Senator Coffin:
I will try to help without complicating things and offer a little
reassurance to the lady and gentleman who are here for their respective
financial institutions. In yesterday’s discussion on the concept of a franchise
tax on banks, I brought up the point of how complex that is. It is not
something we can take lightly, and I was using a PriceWaterhouse report
commissioned 13 years ago and the Urban Institute. They cautioned about taxing
financial institutions. You can do it; you can have a franchise tax. The same
cautions would apply to a net profits tax on these institutions. We can do it;
we just have to be careful. There are a number of methods we could use, many of
them unconstitutional, many of them unworkable, but some that are workable.
Therefore, when I say reassure you, I do not mean to say “trust us,” but that,
in effect, this tax does not take effect until January 1, 2005. That gives you
and other financial institutions the opportunity over the next 1.5 years to
work with the committee that was enacted here, and the Tax Commission to see if
there is an inequity. I believe all we can say to you, and this will happen to
all taxpayers in all of these taxes, especially the new ones, we are plowing
new ground. There will be situations in which you believe you are being
mistreated, and we will need to look at the resources at hand. We cannot hear
an appeal at the last minute to not do something.
Samuel P. McMullen:
I just want to clarify what is being requested. One is the major
language on the first 13 pages, which I believe will already be covered with
some definitions; not all will be included. Your Legal Counsel will be able to
mold those into a bill. Those are clarifications of definitions for purposes of
defining income for banks. Second, on the last page, in relation to investment
companies or intangible holding companies, the request is they be exempted from
the income for the reasons you have heard. However, we have discussed and
believe the appropriate way to handle it is to charge them a flat fee of
$10,000 per month per corporation or affiliated corporation. That will be a
representative cost without losing the business. We have discussed this with
others making sure that was covered that way and that there was a significant
contribution for each one of those companies or affiliated groups.
The third important issue is, in the untried and untested waters
of a net profits tax, we have an opportunity to shake this out. The 3-percent
tax, while we are sure it will raise the amount of money we are talking about,
we are not sure it will not raise a lot more for everyone, not just for the
banks we are participating in. It might be prudent to put a cap on it, and I
would defer to your staff’s decisions on what would be the right level. Our
thought process was a cap on gross payroll, of at least 0.15 percent.
I believe this would raise over $50 million on a $40.9 billion gross
payroll in the State of Nevada times 0.15 percent. If that is too little and
staff believes we have not appropriately guessed at that correctly, we would be
happy at whatever level you believe. There ought to be some reasonable
relationship. Again, it is not a total exemption for the investment companies
or intangible holding companies. We want to make sure for clarity, in that
exemption of the income, there is a significant contribution from each of those
companies or affiliated groups.
Ms. Elliot:
If I can add, 0.15 percent is only representative of six months
of your $41.7 million, so I would recommend 0.3 percent would be the cap, and I
see your Counsel saying, “Yes, that is correct.” That is a recommendation for a
capping mechanism if you are interested. I want to impress that we are not
trying to evade any taxes. It is just that, as Senator Coffin alluded to, the
industry itself is extremely delicate, and we want to be sure that we can
continue to invite these types of businesses.
Senator Townsend:
Note, for the record, I sit on the board of Mr.
Diego’s bank, and I am a shareholder in that bank so I will abstain from
voting.
Senator O'Connell:
I will also be abstaining from the vote on this issue.
Senator Raggio:
We are faced with a 13-page amendment. What can be
gleaned from this? Can Counsel help us? Is there anything essential that should
be addressed by the Committee out of the presentation?
Mrs. Erdoes:
I am not sure. We have not gone through it.
Senator Raggio:
What is the Committee’s suggestion? I believe we should go ahead
with a bill draft. They will have time to look at it before it is enacted, and
if there is a glaring problem that can be brought to our attention, at this
point, I believe we should leave it at that.
Senator Mathews:
I would like to disclose that I sit on a bank board
and will not be voting on this issue.
Senator McGinness:
The restricted slot representatives wanted to ensure the taxes
they pay for gaming would be treated the same as other gaming, and they would
not be paying double taxes.
Senator Raggio:
Mrs. Erdoes, do you understand what we are doing on
the restricted slot taxes?
Mrs. Erdoes:
I need to defer to the Fiscal staff on this to make sure what the
estimates were. I believe, if I understand correctly, the gaming portion of
that is taken as an offset, but the non-gaming portion of the revenue would not
be.
Russell J. Guindon (Deputy
Fiscal Analyst):
It is my understanding, the estimate we put
together, with regard to the numbers you are seeing, was for the deduction
against the liability for the gaming side of a non‑restricted location. Therefore,
the restricted locations would not be offset because they are paying the fee
based on the number of restricted slots.
Senator Raggio:
This would not be consistent then. Is that what you are saying?
Mrs. Erdoes:
Yes, this would not be consistent because what we are doing is
taking just the non‑restricted licensees that pay on gross gaming, the
tiers that you talked about earlier, that is subtracted but nothing for the
restricted licensees at this point, in both the draft and in the estimates of
revenue, as I understand.
Senator Carlton:
With all these amendments, I just wanted to make
certain I have all of the correct information so could we do a quick review to
make sure?
Senator Raggio:
Is that consistent, Mr. Guindon, with what we are doing otherwise
or not?
Mr. Combs:
I believe, as Legal Counsel indicated earlier, the reason she had
been given to exclude non‑restricted gaming revenue was because that is
already a tax on a form of income. Additionally, the non-restricted slot fees
are based on the number of machines and not based on any type or form of
income.
Senator Raggio:
The issue is, since it is a fixed fee and not a tax on income,
this would be inconsistent with that policy.
Mr. Combs:
It would, and that is a policy decision.
Senator Raggio:
Would we be doing this for any other component in the tax plan?
Mr. Combs:
No.
Senator Raggio:
I guess the question is do we want to do this for the slot route
tax?
Senator Titus:
When they calculate their net, they can deduct the amount they
pay in this fee from the amount on which they owe the net tax. Is that correct?
Mr. Combs:
Currently, based on exclusion of gaming revenue for
non-restricted licensees, the bill would be put together in that manner. These
are restricted licensees because it does not have anything to do with their
revenues. It is their per-machine charge and was not something that was
anticipated, at the current time, to be credited. Currently, the answer would
be no, but that is a policy decision for the Committee to make.
Senator Titus:
I thought they did not want to pay any tax because they were
already paying a tax, not that they just wanted to deduct the amount they pay
in the fee from the amount on which they owe tax.
Senator Townsend:
I believe the question is whether the proposal would
exempt them from the net altogether, because they pay a fee, or is the proposal
to allow them to use the fee against the net paid?
Mr. Combs:
My understanding is, since they are not a non-restricted licensee
already paying on income, they would currently not be able to receive any type
of credit. This presentation that is being made is asking you whether or not
you want to allow them to not pay on income resulting from their operation of
gaming devices.
Senator Townsend:
Since this is a fee and not a tax on their income like
non-restricted licensees, they should get a credit against their net, using the
fee as the basis, but not escape the net.
Jim J. Avance (Restricted Slot Representative):
I am representing the slot machine people. What is being
presented to you as a fee is actually a tax. It was created by this Legislature
in conjunction with the Gaming Control Board. I am a former chairman of the
Board. It was created to avoid all of the problems of going out and calculating
the tax on all of these mom-and-pop operations, of which there are over 2,000
throughout the State. The Gaming Control Board would have to hire agents and go
all over the State to do this. This fee, and it has been testified to time and
time again in taxation committees, has been adjusted so that it was appropriate
and comparable to the amount of the percentage fee. It was done to help gaming
control and to help the mom-and-pop with the calculation of the percentage tax.
The other thing that occurs when you are on a percentage tax is,
anytime you open a machine, you must have contact with the Gaming Control Board
so they can be there. That means you have to do it at a certain time every day,
and it becomes horrendous. This was set up in 1981. It has been adjusted from
time to time to keep us consistent with what the various tax committees of this
Legislature believes makes us even with the 6.25 percent the gaming machines
are making in the non-restricted locations. It is a tax. It was created that
way. But for ease of collection and to help the people who run it, it was set
up as a flat fee. That is why, for example, in this Legislature, we are
proposing a 33 percent increase again on this to bring it up and keep it with
what you are doing to everyone else.
Senator Raggio:
Are there not differences? Some of the small mom-and-pop-stores
just lease space. They do not pay a fee on the machines. Is that correct?
Sean T. Higgins (Herbst
Gaming Inc. and the Nevada Retail Gaming Association):
The fact is, everyone calls it a slot route operator fee.
However, it is a restricted location fee. If a person owns his own bar and
holds the gaming license to that bar, he is responsible for this tax. If it is
a space lease location and the slot route operator owns the machines and holds
the license to that location, he is responsible for the tax. Over 95 percent of
the taverns in the State of Nevada and the vast majority of convenience stores
hold their own licenses. There are certain locations that do not. Most of those
are publicly traded companies that are not domiciled in the State of Nevada,
such as grocery stores. Almost all owners of convenience stores, taverns and
restaurants hold their own gaming licenses and are taxed. It is not the slot
route operators. It is a restricted location tax, and as Mr. Avance alluded to,
the fact it is a flat fee rather than a percentage does not mean it is not a
tax. You, by you own admission, are proposing to increase our flat-fee tax this
legislative session. Just because it is taxed differently than non‑restricted
gaming, is not a reason the gaming component of restricted licensees should be
subject to a tax.
Senator Raggio:
Hearing that, what is the Committee’s desire? If we have a
motion, please restate it.
Senator McGinness:
The motion is to allow them the credit.
Senator Raggio:
Senator McGinness moved in determining net profits, the amount of
the fee paid on restricted slots be considered a deduction from net profits.
Senator Cegavske seconded the motion.
Senator Carlton:
Mr. Chairman, I am still confused because that is not what I
heard and not where I thought we were trying to go. My understanding is that
they are being taxed now the way we are taxing other gaming components. Why are
they, as a gaming entity, being included in net profits at all? When we look at
the casino portion and how we divide the pie, net profits applies only to non‑gaming.
So, what would be the non-gaming component of this entity since they are all
machines? I do not understand what other portion we would be taxing.
Mr. Combs:
I believe the way the motion was phrased; this would be treated a
little differently than non‑restricted locations. The way the motion was
phrased, they would only receive a deduction for the fees they did pay from
their normal liability, whether it was from gaming operations or non‑gaming
operations. Obviously, the other way to look at it would be that they would not
pay on income received as a result of gaming operations. If they are, for
instance, a convenience store or a tavern and they hold a license, they
obviously have other income that comes in from sources other than the operation
of the slot machines.
Senator Raggio:
As the Chair understands it, a slot route operator would be
allowed, under the motion, to deduct from any net profits of his business the
amount paid for slot machine fees.
That is the motion, and there is a second to the motion by
Senator Cegavske.
The motion carried. Senator Carlton voted no.
Senator Titus:
Senator Schneider asked me to present this amendment
in his absence. It has to do with moving a license. I do not know much about
it. I know he discussed it with Senator Amodei and Senator Care. Perhaps, one
of them would like to present it.
Senator Care:
Mr. Chairman, this is not the amendment
contemplated. I am familiar with the amendment Senator Schneider had. It was to
S.B. No. 432 of the 72nd Legislative Session, but this is not it.
Senator Raggio:
I am going to call a halt here, because it is about 11:30 p.m.
Senator Carlton asked for clarification of the amendments we have adopted. The
amendments we did adopt are as follows: one contained provisions from S.B. No.
238 of the 72nd Legislative Session and other items including A.B. No. 314 of
the 72nd Legislative Session. We also adopted the amendment to the revenue plan
which changed the rate on gaming tax and reduced the rate on cigarette tax. I
believe those were the only actual amendments to the revenue plan.
Additionally, we adopted an amendment that the revenue provisions would not
apply to businesses that are not subject to the provisions of those cited
sections. One was they did not have a sales tax permit requirement or a
requirement to pay BLT because they had no employees. This would apply to
companies whose presence in Nevada was simply for the purpose of incorporation
status; although, they would pay the business license fee. It was not an
amendment but was assumed to be part of the bill. Entities that have franchise
operations would have authority to pass on the tax that would be imposed
otherwise. We also adopted the amendment with the provisions included under tax
accountability, and we adopted the amendment, in addition to the former,
contained in S.B. No. 509 of the 72nd Legislative Session. It creates the Legislative
Committee on Taxation, Public Revenue and Tax Policy. We deferred action on, at
this time, the definition of net profits or net income in investment companies
and financial institutions. The others were, to the Chair’s understanding, all
the amendments that were accepted.
Senator Townsend moved to recommend to introduce and do pass the revenue plan.
Senator Nolan seconded the motion.
Motion carried.
Senators Schneider and Neal
were absent for the vote.
Senator Mathews:
I did not vote against accepting this, but once I
see all of the amendments and the bill together, I reserve the right to change
my vote.
On the motion of Senator Townsend, the committee did rise and return to the Senate Chambers.
SENATE IN SESSION
At 11:33 p.m.
President Hunt presiding.
Quorum present.
MESSAGES FROM THE GOVERNOR
State
of Nevada
Office
of the Governor
Executive
Order
A PROCLAMATION BY THE
GOVERNOR:
On June 3, 2003, I, Kenny C. Guinn, Governor of the State of
Nevada, through my proclamation, convened a Special Session of the Nevada
Legislature. The Senate Majority Leader and the Speaker of the Assembly have
requested that I extend the 19th Special Session of the Nevada Legislature for
two days. Therefore, by virtue of the authority vested in me by the Constitution
of the State of Nevada, I hereby amend my proclamation of June 3, 2003, and
extend the 19th Special Session of the Nevada Legislature until 5:00 p.m. on
June 8, 2003.
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 6th day
of June, in the year two thousand three.
Kenny C. Guinn
Governor
Dean Heller
Secretary of State
Renee Parker
Chief Deputy Secretary of State
GUESTS EXTENDED PRIVILEGE OF SENATE FLOOR
On request of Senator McGinness, the privilege of the floor of the Senate Chamber for this day was extended to Shannon McGinness.
Senator Raggio moved that the Senate adjourn until Saturday, June 7, 2003, at 12 m.
Motion carried.
Senate adjourned at 11:35 p.m.
Approved: Lorraine
T. Hunt
President of the Senate
Attest: Claire J. Clift
Secretary of the Senate