Minutes of the Meeting of the Subcommittee to Study the Cost of Maintaining Highways, Roads and Streets to the Legislative Committee to Study the Distribution among Local Governments of Revenue from State and Local Taxes, NRS 218.5388 to 21853886, inclusive
March 28, 2000
Las Vegas, Nevada
The meeting of the Subcommittee to Study the Cost of Maintaining Highways, Roads and Streets to the Legislative Committee to Study the Distribution among Local Governments of Revenue from State and Local Taxes was called to order by Marvin Leavitt, Coordinator, on March 28, 2000, at 1:30 p.m. in Room 4412 of the Grant Sawyer State Office Building, Las Vegas, Nevada.
COMMITTEE MEMBERS PRESENT:
Marvin Leavitt, Chairman, City of Las Vegas
Steven Bates, Tri-Mac Transportation
Mark Calhoun, City of Henderson
Michelle Gordon, Washoe County Regional Transportation Commission (RTC)
Bob Nunes, Douglas County
Geneva Neuhauser, Nye County
Dave Roundtree, Washoe County Public Works
COMMITTEE MEMBERS ABSENT:
Martin Manning, Clark County
Steve Varela, City of Reno
Steve West, City of Winnemucca
LEGISLATIVE COUNSEL BUREAU STAFF PRESENT:
Kevin Welsh, Deputy Fiscal Analyst, Fiscal Analysis Division
Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division
Kim M. Guinasso, Principal Deputy Legislative Counsel, Legal Division
Jeanne Peyton, Secretary, Fiscal Analysis Division
Exhibit A is the Meeting Notice and Agenda.
Exhibit B is the Attendance Record.
Exhibit C is a number of photographs of various types of roadways.
Exhibit D is a Draft Report submitted by NDOT titled Nevada Department of Transportation Field Audit in Support of the Jurisdictional Entity Street & Road Inventory.
Exhibit E is the Final Report submitted by NDOT titled Nevada Department of Transportation Field Audit in Support of the Jurisdictional Entity Street & Road Inventory.
There were approximately 20 persons in the audience.
Call to Order -- Opening Remarks
Marvin Leavitt called the meeting to order. He noted that the Subcommittee has begun the next part of the process of the study that has been ongoing for the last several years. At the Chairman’s request, each of the subcommittee members and staff introduced themselves and noted the county or agency that they represented (listed above).
Chairman Leavitt noted that process of gathering a road inventory throughout the state began prior to the 1997 Legislative Session. At that time a review of the statutes related to the distribution of fuel taxes took place. Upon the review it was discovered that:
§ The definitions of roads and streets were either old or inadequate for today’s standards, which resulted in a considerable amount of inconsistency in the way each entity defined their roads and streets.
§ A number of entities throughout the state were including roads that were being maintained by the Nevada Department of Transportation (NDOT) in their inventories.
§ Many of the road and street inventories throughout the state had not been updated for many years.
One of the first issues the Subcommittee addressed was to prepare information to provide more consistency in the definitions, which were subsequently agreed to and passed by the 1997 Session.
Prior to the 1997 Session, the University of Nevada, Las Vegas entered into a contract with the State of Nevada to perform work defining the cost of maintaining different types of roads and streets. That contract was eventually terminated and it was decided that the work would be completed by the NDOT.
He noted that it was decided by the Subcommittee that the existing formula for the distribution of fuel tax, which was comprised of road miles, population, travel on the roads and area of the county, did not adequately represent the cost of maintaining the roads and streets. Numerous discussions have taken place regarding the cost of maintaining paved vs. unpaved roads and streets and the varieties of each of these road types (dirt, gravel, asphalt). The Subcommittee has recognized that there is a large difference between an unpaved road in a rural county vs. a paved highway in an urban area.
The Chairman noted that it was decided to try to do an inventory based upon miles of each type of road and to use the population of each city or county as part of the formula. This part of the study involves the distribution of funds at the county level. The study includes:
§ The assistance of the NDOT in obtaining the inventory of highways, roads and streets and conducting an audit of the inventory collected.
§ A formula will be developed from the inventory collected by using two factors: (a) population; and (b) miles of highways, roads and streets.
Chairman Leavitt explained that several formulas would be tested before one is actually chosen. He noted that the entities would be protected through the proper legislation, so that they would not lose money from the use of a new formula.
Since the end of the 1999 Session, various governments throughout the state have been compiling an inventory of their highways, roads and streets; and have submitted the inventories to NDOT. The NDOT has since conducted a 10 percent audit of the inventory received by each entity. Based on the 10 percent audit, NDOT is of the opinion that the Subcommittee will be presented with an accurate inventory.
The Chairman noted that during today’s meeting the Subcommittee should:
§ Review the report compiled by the NDOT and make a request to the Legislative Committee on March 30, 2000, to accept the inventory compiled by the various cities and counties and the audit conducted by the NDOT.
§ Begin the process of discussing alterations to the formula for the distribution of fuel taxes.
§ Decide how to include the “hold harmless” clause into the legislation prepared for implementation of the recommended new formula.
Chairman Leavitt referred to (Exhibit C), a number of photographs which were taken of various types of roadways.
Mr. Nunes asked if someone would explain the variations of roadways in the photographs.
Responding, Chairman Leavitt said that John Whitaker from NDOT was scheduled to be here today (Item II of the Agenda) to present this information. He further explained that each photograph represents a type of roadway listed in the inventory, except for the last photograph, which is a dirt trail.
Ms. Gordon requested that photographs also be taken of a 4 or 6 lane highway or some of the roads that are actually included in the formula. She said it was her understanding that the multi‑lane highways were calculated as centerline miles, and there have been no calculations done on lane miles.
Responding, the Chairman said that was correct.
Mr. Welsh said that he just talked to John Whitaker. Mr. Whitaker is on today’s agenda and the agenda for the Advisory Committee on March 29, 2000. Mr. Welsh noted that Mr. Whitaker misunderstood and thought he was only scheduled to make a presentation on March 29th. Therefore, he will fax some information to the Subcommittee to review. Mr. Whitaker informed Mr. Welsh that the only difference in the draft report (see Exhibit D) and the final report is that the final report is more detailed.
Responding to Ms. Gordon, Chairman Leavitt said that when comparing a county with a population of 500,000 to a county with a population of 2,000, the population factor would weigh strongly in favor of the larger county. The question is, if it would be enough to offset the effect of a multi-lane highway. He noted that population will have to be able to offset the use of multiple-lane highway, which has heavier usage, causing the road to deteriorate more rapidly. One the other hand, he noted that roads in areas that have considerable change in weather may also more maintenance.
He further explained that until variations of the formula are tested, it will not be known which way will be most effective.
Discussion Regarding the Field Audit and Inventory Conducted by NDOT
and Alteration of the Formula for the Distribution of Fuel Taxes
and Possible Action Regarding Recommendations to the
Advisory Committee to the Legislative Committee to Study the
Distribution Among Local Governments of Revenue from State and Local Taxes and to the Legislative Committee to Study the Distribution Among Local Governments of Revenue from State and Local Taxes
Chairman Leavitt noted that the NDOT should be given the obligation to run numbers for the distribution formula. He requested that the Subcommittee discuss the instructions that should be given to NDOT when they begin to run variations to the formula.
Mr. Nunes said that the draft report does not include actual total mileage for each city and county that NDOT will use in the formula they create.
Mr. Calhoun said that based on the information submitted by the entities, was a final list of the total miles separated by each city and county also compiled.
Mr. Leavitt said that was a good suggestion and should be requested. What the Subcommittee should try to decide today is how the population and road miles should be weighed in the formula.
Ms. Gordon indicated that the UNLV consultants were trying to apply some weight to the type of road surface.
Mr. Roundtree added that it depends on the level of service that will be provided. He explained that if the same level of service is provided for gravel and paved roads, the gravel road will actually cost more to maintain in a smooth, travelable condition over a 20-year period. He also informed the Subcommittee that NDOT’s report lists dozens of roads listed under the City of Reno that are actually Washoe County roads.
Mr. Nunes also noted that Douglas County has also been credited with 13.25 miles of roads that belong to Elko County.
Since there appears to be a problem with the report from NDOT (Exhibit D), Mr. Leavitt said that he would like to make the entire list available to the Subcommittee for its review before making any recommendations to go forward with this inventory.
Mr. Roundtree suggested requesting the NDOT staff to contact each entity to confirm the road they have selected.
Mr. Welsh suggested that as the Subcommittee goes through the report to make a list of questions for presentation to NDOT at tomorrow’s Advisory Committee meeting.
Mr. Leavitt said he would like to move forward with this process as expeditiously as possible. He suggested having a Subcommittee meeting every other week for the next two months if it is necessary.
Responding to Mr. Bates, Mr. Leavitt said the meetings would alternative between Carson City and Las Vegas.
Referring to the final report from NDOT (Exhibit E), which was faxed, Mr. Welsh said that the total inventory for each entity was listed.
Following a brief review of the final report, Mr. Leavitt suggested that NDOT conduct a verification process to ensure the information submitted by the entities is correct.
Mr. Calhoun said that the line separating the counties of Henderson and Clark goes right down the middle of a road. Therefore, half the road is in the city and half is in the county.
Discussion took place on how to resolve this type of problem and Mr. Leavitt recommended that a consistent method be decided upon. He asked for suggestions.
Mr. Roundtree said that in the case of Washoe County, an informal arrangement with the surrounding entities exists.
Responding to Mr. Leavitt, Mr. Roundtree said that one road could be broken up into various segments and maintained by different entities.
Mr. Calhoun said that the City of Henderson and Clark County have a mutual understanding to take care of any existing road problems, regardless of which side it may be on. He also noted that there are very few situations of this type, where a street is parallel with the dividing line and is probably be less than ½ percent of the total mileage.
Responding to the Chairman, Mr. Calhoun said that when Henderson did its road inventory, there were so few streets that are shared and they have an agreement for each entity to report half of the street.
Chairman Leavitt said that he would discuss this issue with the NDOT staff at tomorrow’s meeting. He suggested presenting to the committee that an inventory has been completed, but a few remaining questions exist. Possibly the Legislative Committee could approve the inventory contingent upon the resolution of those particular questions, so that this Subcommittee could move forward with the study.
Mr. Welsh said that it could be requested that the Legislative Committee accept the final report from the NDOT contingent upon the resolution of the technical and minor typographical errors, and could then direct the Subcommittee to begin working on an alternative formula.
Chairman Leavitt agreed and said that possibly at its next meeting the NDOT could provide a corrected final report for the Subcommittee’s approval.
Ms. Gordon asked if there was a reason why the Subcommittee has discontinued considering vehicle miles traveled (VMT) because in her opinion, VMT is a better indicator of not only the fixed population, but also of tourism and visitors to the community, and the amount of driving done on the roads.
According to Mr. Leavitt, numerous discussions have taken place regarding the difficulty of obtaining accurate numbers for VMT. The NDOT has indicated that population would be the most effective way to produce a formula to work for all entities.
Mr. Roundtree said it was his understanding that reliable information about VMT is not available and that NDOT had developed some type of a correlation between population and VMT. In essence, the population element was being double counted. He added that the NDOT performs counts around the state on a regularly basis, but for the most part these counts are not current or comprehensive and certainly was not adequate enough to put into the formula. However, the correlation between population and VMT was developed for use in the formula.
Ms. Gordon said that it does not make sense to continue to use inaccurate numbers.
Discussion took place among the Subcommittee members and several suggestions were made for comparisons in developing an alternative formula. These included:
§ Mr. Nunes – Make comparisons of the formula with: (1) 50 percent weight on the population and 50 percent weight on the mileage; (2) 40 percent weight on the population and 60 percent weight on the mileage; and (3) 60 percent weight on the population and 40 percent weight on the mileage.
§ Mr. Bates – Check to see how the money was distributed during the most recent period available.
§ Mr. Leavitt – Calculate numbers also using a 70/30 percent comparison for both population and mileage.
§ Mr. Roundtree – Mentioned that it had been considered in the past to include a weather factor in the formula.
Mr. Leavitt said that anything could be considered to be included in the formula. He noted that a formula should be developed that the entire Subcommittee considers fair.
Mr. Bates questioned how weather would be measured and actually assigned an input value. He asked if it would it be measured by annual rainfall.
Responding, Mr. Roundtree said that weather has a significant impact on the cost of maintenance and the fact that many areas have a large snow removal obligation, but the significant temperature swings in the northern part of the state also damage the asphalt more than the constant high temperatures in southern Nevada.
Mr. Calhoun suggested that the NDOT review their statistic since they maintain the entire state.
Chairman Leavitt said that the NDOT would be directed to:
§ Create alternative formulas using the different scenarios previous mentioned.
§ Check to ensure there is no duplication on the inventory of road maintenance by two counties.
§ Verify if weather should be used as a factor in the formula.
Linda Ritter, City Manager, City of Elko and Robert Hadfield, Executive Director, Nevada Association of Counties, were speaking from the audience and were inaudible on the tape.
Mr. Leavitt suggested including all the cities and counties in a future meeting of this Subcommittee. He further directed persons from the public to speak at the witness table microphone or they would not be part of the minutes.
Responding, Mr. Hadfield said that if an invitation were extended from himself and Tom Grady, Nevada League of Cities, he thought many of the entities would attend. He noted that there has always been a great interest in the Legislative Committee in the past and now that recommendations may be made and new formulas developed, in his opinion, the interest will be reactivated. He said he doubted that many incorporated cities have roads maintained by the county.
Mr. Nunes asked if questions should still be faxed tomorrow for discussion with the NDOT, who will be making a presentation at the Advisory Committee meeting.
Mr. Leavitt said he did not think that was necessary since enough information was being gathered today and he could present it to the NDOT.
Ms. Gordon also suggested obtaining the number of miles in each county for each type of road (i.e., paved, gravel, dirt).
In reply, Mr. Welsh said that when he went on the NDOT road tour, he was told there are seven different types of roads, which that they are responsible to report to the Federal Government. Referring to Exhibit C, Mr. Welsh noted that the photographs were taken on only two different roads, yet each road consists of different types of pavement. One of the roads began as paved and later changed to gravel, maintained sand, and non‑maintained sand, all within a one-mile capacity.
Mr. Welsh further informed the Subcommittee to request the most recent fuel tax distribution from NDOT and how the problem of split or segmented roads between cities and counties is handled.
Mr. Leavitt requested to place on the next agenda, how the “hold harmless” should be handled when implementing a new formula. Also, if there were $500 more in the base for the subsequent year, would that $500 be distributed by the new formula?
Mr. Bates asked if the concept of if an entity was “held harmless” indefinitely or would given a time limit.
Chairman Leavitt concurred saying that it was a good point and should be further discussed. He clarified that the “hold harmless” would be used for a certain period of time and then the straight formula would be used.
The Chairman also said that it must be discussed what would happen if a new entity was added with the “hold harmless” wording placed in statute.
Ms. Gordon brought up the issue of the level of effort – for example: if there are counties who are artificially continuing to get what they had in the past under a new formula that would not naturally have given them that amount; however, if they have not imposed the full 9 cents of the RTC tax, in her opinion it is not reasonable for these counties to be “held harmless.”
The Chairman explained that this was an extremely complex issue and there are some counties that do not have enough collections within the county to make a difference and then there are other counties where the voters have turned down imposing the full 9 cent optional tax.
Mr. Welsh reviewed what the Chairman requested to have placed on the next agenda and what should be asked of NDOT at tomorrow’s meeting. For tomorrow’s meeting, the following issues should be discussed with NDOT: (1) county maintained roads in cities, (2) the type of roads on the report; (3) consideration of weather; and (4) shared roads. Items for the next agenda include: (1) the “hold harmless” issue; and (2) effort on behalf of the cities and counties to raise additional funds.
Chairman Leavitt suggested having the next meeting the 2nd week in April. Following Subcommittee discussion, April 12, 2000 at 2 p.m. in Carson City was decided upon for one meeting and the second meeting was scheduled for April 27, 2000, at 9:30 a.m. in Las Vegas.
Responding to Mr. Bates, the Chairman said that the cities and counties would be invited to the April 27th meeting.
Mr. Welsh said that he would send the Subcommittee the final report from NDOT and a copy of the minutes of the testimony of John Whitaker from the March 29, 2000, Advisory Committee meeting. He further suggested that the Subcommittee prepare a list of questions and perhaps a conference call could be arranged with Mr. Whitaker to get as many questions answered as possible before the next meeting. He also requested to be informed of any additional agenda items for the next meeting.
Mr. Zuend asked if the Subcommittee is dealing with the 3.6 cents per gallon or the full 6.35 cents per gallon tax for local governments. He noted that depending on which part of the gasoline tax that a new formula will be imposed upon could change the dynamics of how the formula works. Counties that have many fuel stations benefit more from that portion of the tax that is not currently distributed by formula.
Chairman Leavitt mentioned a letter he received from Tom Grady of the Nevada League of Cities where he mentioned that when the original formula was done under Senate Bill 253, included in the distribution formula from the consolidated revenue were taxes that were previously received by the cities. By the formula these taxes were distributed to all entities. Mr. Grady questions where the county road tax should be included. The Chairman explained that before the county road tax could be included, both tiers of the formula would have to be completed.
On behalf of the counties, Bob Hadfield added that the counties are spending all the funds they have available and are still are running short. Unlike those other revenues that were placed in the formula, placing the county road tax in the formula would cause a great loss to the counties.
The Chairman mentioned that compiling the second tier of the formula would be a difficult task.
Mr. Hadfield added that the area of a county has a large impact financially because they are responsible for maintaining all the roads within the entity. He added that cities are compact and should be more efficient.
Ms. Neuhauser requested that when the distribution is sent out, that it be broken down as to the type of tax and the distribution to counties and cities.
The Chairman said that all the taxes would be listed.
Ms. Ritter, City of Elko, brought up the RTC apportionment. She said that this tax is apportioned by assessed value for those counties that do not have a regional plan. She recommended that removal of the net proceeds of mines value from that tax be considered during the 2001 Legislative Session. She noted that having this as part of the RTC apportionment has caused financial difficulties to some of the incorporated cities in Elko.
Chairman Leavitt said that it is not a good idea to include net proceeds in any formula because the amounts can change so drastically.
Responding to the Chairman, Ms. Ritter said that Elko County is greatly affected by this tax and Humboldt County is also slightly affected.
The Chairman explained using net proceeds from mines in formulas for distribution or the computation of allowed levies for ad valorem taxes can really raise havoc because such drastic changes occur and because personal property depreciates so rapidly that it completely changes the tax effect in a county.
The Chairman directed Mr. Welsh to add discussion of this item to the next agenda.
Regarding general improvement districts that become part of the formula, Mr. Welsh asked if this should also be addressed at the next meeting.
The Chairman said that when a law is revised, it must be able to fit all types of situations.
Mr. Welsh suggested applying the regulations used for a new incorporated city within a county with regard to the general distribution fund.
There being no further business before the Advisory Committee, Mr. Leavitt adjourned the meeting at 3:15 p.m.
Marvin Leavitt, Chairman
Copies of the exhibits mentioned in these minutes are on file in the Research Library of the Legislative Counsel Bureau, Carson City, Nevada. You may contact the library at (775‑684‑6827).