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
April 12, 2000
Carson City, 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, Chairman, on April 12, 2000, at 2:30 p.m. in Room 3142 of the Legislative Building, Carson City, 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)
Martin Manning, Clark County
Bob Nunes, Douglas County
Geneva Neuhauser, Nye County
Dave Roundtree, Washoe County Public Works
Steve Varela, City of Reno
Steve West, City of Winnemucca
LEGISLATIVE COUNSEL BUREAU STAFF PRESENT:
Kevin Welsh, 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 document from the Nevada Department of Transportation explaining the Gasoline Tax (Per Gallon).
Exhibit D is titled “Nevada Department of Transportation Field Audit in Support of the Jurisdictional Entity Street and Road Inventory.
Exhibit E is a listing of Miles of Road by County as Shown by the Department of Taxation for Fiscal Year 2000-2001, submitted by Geneva Neuhauser of Nye County.
Exhibit F is a listing of the Local Fuel Tax Distribution, submitted by Russ Law of NDOT.
Exhibit G are hold harmless examples submitted by Marvin Leavitt.
NOTE: Many parts of the discussion were not included in the minutes because they were inaudible on the tape.
There were approximately 30 persons in the audience.
Call to Order -- Opening Remarks
Marvin Leavitt called the meeting to order. He noted that the Subcommittee has another meeting scheduled for April 27, 2000, in Las Vegas, with hopes that it can decide on the road inventory and discuss implementation of a formula including the hold harmless clause. He indicated that the counties and cities have been invited to the meeting on April 27, 2000, to provide input and no action will be taken until that information has been received. If additional meetings are needed, they will be scheduled shortly after the April 27th meeting so that the Subcommittee can come to some conclusions.
Chairman Leavitt called attention to Exhibit C, a document explaining the gasoline tax that presently exists and asked if Mr. Welsh would provide copies to the Subcommittee.
final review and possible modifications of Field Audit/Street and
road Inventory of Streets and Roads Maintained by
Local Governments Conducted by NDOT
Mr. Whitaker, Roadway Systems Division Chief, Nevada’s Department of Transportation (NDOT), apologized for missing the last meeting of this Subcommittee on March 28, 2000. Referring to the “Nevada Department of Transportation Field Audit in Support of the Jurisdictional Entity Street & Road Inventory,” (Exhibit D) Mr. Whitaker said the report frames four conditions of the study, including:
§ Obtaining the source data to run the validation checks.
§ Clarifies the scope of work performed by NDOT and includes a 10 percent assessment of mileage reported.
§ NDOT found no fault with any of the county or city submittals. However, there were two entities that did not submit their inventories.
§ NDOT recommends continuing this process on a regular basis (i.e., every 5 or 10 years), in order to keep better track of the road inventories.
Regarding the error found in the inventories of Douglas, Elko and Washoe Counties and the City of Reno, corrections have been entered into the database and will be reflected in the final report, which will be forwarded to the Subcommittee as soon as it has been reported by NDOT’s director.
He advised the Subcommittee that he had a copy of the entire inventory with him for their viewing. Since the report was quite large, he urged not to request copies unless it was absolutely necessary.
Chairman Leavitt suggested making the report available at the April 27th meeting for people to review.
Responding, Mr. Whitaker said that NDOT did not receive the inventories in electronic form; therefore, it would have to be typed into a computer to actually be put in a concise comprehensive manner covering all entities, which would take a tremendous amount of time. He explained that it would be more efficient if each entity submitted an electronic disk to NDOT, which could be compiled into one database.
Responding to Chairman Leavitt, Mr. Whitaker said that a number of entities used the actual form that was issued by the University of Nevada, Las Vegas, while some created their own form, and others have sent in what they submit to NDOT for their gasoline tax. He further replied that the cities that did not respond are Gabbs and North Las Vegas. He explained that the City of Gabbs has about 12-miles of road, and NDOT used the 1999 gasoline tax submittal for the City of North Las Vegas.
The Chairman asked Mr. Grady, Nevada League of Cities, if he would be available for a conference call tomorrow morning with the City of North Las Vegas.
Mr. Whitaker volunteered to be included in the call if it was necessary. He also said that NDOT would be scheduling meetings with all the entities based on the differences in miles that must be corrected.
Discussion ensued between the Chairman and Mr. Whitaker regarding having NDOT prepare a complete road inventory every 10 years throughout the state. Mr. Whitaker suggested that NDOT could use some of its federal funding to cover expenses.
The Chairman said if the inventory were to be updated every 10 years, possibly all the entities could meet on a yearly basis to discuss the road types and how the inventory should be done, so that any new staff would have a full understanding of how the process works.
Mr. Whitaker said that the University of Nevada, Reno (UNR), has a roads training program that could also be utilized if this is the direction the Subcommittee wishes to precede.
The Chairman questioned if a requirement could be placed in legislation for a verification of the road inventory every 10 years and also provide for an annual meeting of all the entities throughout the state. He asked if the Subcommittee had any objections.
Mr. Whitaker agreed that this was a good suggestion.
The Subcommittee had no objections; therefore, the Chairman said that this could be added as a recommendation to the full Legislative Committee.
Mr. Whitaker said he would try to have the final report for the Subcommittee before its next meeting on April 27th.
In response to Mr. Bates’ suggestion to upload the inventory to NDOT’s website, Mr. Whitaker thought it was a good idea, but was not sure about doing that because of the size of the document.
Mr. Jackson, an NDOT employee who works with the website, said that it was a good idea; however, since all the material was received manually, all the information would have to be entered into a database. He noted that because of the enormous amount of information, the chance for error must be considered.
Discussion took place about either receiving the files from the entities in electronic form or the possibility of scanning the documents into the computer. Mr. Whitaker said that scanning the document would increase its size in the computer.
Mr. Jackson said that each page could be over a megabyte in size and the total file has well over a 1,000 pages.
Mr. Whitaker said if the information was received electronically and compressed, it would be feasible to put the information on the website. Mr. Whitaker said that he would request the information from the entities.
Mr. Grady, Nevada League of Cities, asked if alleys should be counted as road miles. He explained that a number of cities are maintaining alleys where there is an infrastructure and in some cases an alley is marked with a street sign and is being used as a road.
In reply, Mr. Whitaker said those miles were included in the report. He explained that the only item NDOT removed from the information received was parking lots.
Mr. Grady also asked if the General Improvement Districts (GIDs) and Special Districts would receive credit for their road mileage if it was not included as part of their county.
Responding, Mr. Whitaker said if GID roads were included in the reports submitted by the counties, then they were included in NDOT’s report, but if the information was not submitted to NDOT, the roads were not included.
Mr. Nunes explained that the information submitted by Douglas County does not include GIDs because they do not receive gas tax funds because they maintain their own roads from the ad valorem property taxes. Any road that the county maintains within the GID was included in the report.
Responding to Ms. Neuhauser, Mr. Whitaker said that NDOT updates the Department of Taxation on an annual basis regarding the road miles throughout the state.
Ms. Neuhauser referred to the listing of miles of road by county as shown by the Department of Taxation for fiscal year 2000-2001 (Exhibit E). She explained that this was the revenue numbers for the budgets this year.
Mr. Whitaker said that these numbers would not match NDOT’s numbers because the Department of Taxation includes roads for NDOT, Bureau of Land Management (BLM), and forest service, which the entities receive credit for from the gasoline tax.
Responding to Ms. Neuhauser, Mr. Whitaker said that the Department of Taxation’s listing would show less road mileage because it would not include all the new information that was recently gathered by NDOT.
Discussion took place regarding the differences in the report provided by Ms. Neuhauser and NDOT’s report. The Chairman said that the purpose of the road study, which was completed by NDOT, was because of the inconsistency throughout the state in the inventory of road mileage; and NDOT’s recent study would show an increase in the number of roads because it was just completed.
Discussion Regarding Alternative Fuel Tax Revenue Distribution Formulas and Possible Action Regarding Requesting the NDOT to Apply One or More of the Formulas to the Street and Road Inventory for Comparison Purposes
Mr. Law of NDOT said that the department has been working on the road inventory for over 5 years now. Research was done to determine what made the cost of road maintenance increase or decrease. When the study began, it was discussed to distribute the local fuel tax based on need; and need would be determined by the extent and use of the system. He explained that since that time, the Federal Government has done what the Federal Highway Administration had wanted Congress to do for many years, which is to distribute money based on the extent and use of the Federal Highway System. He explained that under this system each state is guaranteed a minimum amount of 90.5 percent of the money they have contributed. In Mr. Law’s opinion, this is the direction the state should go for distribution of the local fuel tax. He indicated that under the existing distribution formula, Clark and Storey Counties are not being treated fairly.
According to Mr. Law, the distribution formula must be modified to work better for the high population growth areas. He presented several different formulas that were worked up for the year 2002 (Exhibit F), which would be the first practical year that any of the changes could become effective.
He explained that miles of roadway could show extent in the use of the system and population could be used to determine use.
The Chairman requested that the Subcommittee review the formulas presented in Exhibit F before the April 27, 2000, meeting. He informed the members if they had any other ideas that were not presented in Exhibit F, to contact him so that he could forward the recommendation to NDOT to be calculated.
Referring to Exhibit F, Mr. Law explained that the first scenario for Fiscal Year 2002, is calculated by using 80 percent population, 20 percent road miles and the 6.35-cent mandatory tax. The 2.75-cent portion of the mandatory tax that is returned to the county of origin is unfairly distributed. He indicated that Storey County has minimal fuel sales; and would receive almost nothing back. If there were equal distribution of fuel sales and population, the 2.75 cents would be distributed purely by population; however there is not an equal distribution of fuel sales. Exhibit F includes comparison of population and road miles using different percentages, so that they can be compared to see which calculation will work best for all the entities. He explained that using the 80 percent population and 20 percent road miles:
§ Storey County had the most significant gain, whereas under the current formula the county is losing money.
§ If the ratio of proposed formula to the county’s contribution were less than 100 percent the county would be considered a donor.
Responding to Mr. Nunes, Mr. Law said that the updated road mileage provided by Mr. Whitaker was used to perform the calculations in Exhibit F for the proposed formula and these computations do not include state miles.
In reply to Mr. Bates, Mr. Law said that the distribution under the existing formula includes state miles.
Mr. Varela said that some of the cities throughout the state are maintaining traffic signals on state highways at their own cost, which is another issue that should be discussed.
In reply, Mr. Law said that every entity has local traffic signals that they are maintaining on behalf of NDOT. As far as redistributing the local mandatory fuel tax, it would not make a difference if state miles were included in the formula because all the entities have traffic signals that they are maintaining.
Continuing, Mr. Law said that a 10-20 percent lower longevity factor of pavement in northern Nevada compared to southern Nevada is an issue that can be accounted for simply by changing the distribution by population and road miles. He explained that if a county has a large area of pavement that is subject to environmental deterioration as opposed to deterioration caused by use, the extent factor should be weighted more heavily to account for this problem.
Referring to Exhibit F, the Chairman commented on how a 5 percent change to population or road miles in the formula could result in a substantial change.
Mr. Law noted that most of the funding is being distributed by population and road miles and 100 percent of the 2.75 cent tax is returned to the county of origin with the exception of Storey County. A county with low population will be adversely affected by the current distribution formula. He explained that the 3.6 cents balance of the distribution formula is distributed 25 percent by area, 25 percent by population, 25 percent by road miles and 25 percent by vehicle miles of travel. In his opinion, it does not make sense to provide a 25 percent distribution based on land area.
Referring to Clark County, the Chairman said that just by decreasing the population factor from 80 percent to 75 percent, the county would lose about $2 million.
Mr. Law disagreed that one factor alone should be reviewed without considering all the factors. He noted that it was not easy to consider all factors together. He mentioned a pavement research project NDOT performed with UNR to determine through a regression analysis what affects pavement longevity and how the pavement quality decreases. He indicated that a few of the many issues that had to be considered included temperature, travel, and freeze/thaw cycles.
He noted that NDOT’s biggest costs are in the urbanized areas. When building a freeway, 50 percent of the money is used to acquire the right-of-way to build. In his opinion, urbanization is the greatest single factor to consider.
The Chairman recommended that each of the Subcommittee members review the information submitted by Mr. Law to try to determine which formula would be most fair to use for all entities throughout the state. He urged the members to make their determinations based on the state as a whole and based on the needs of each entity.
Ms. Gordon said that one of the mandates of the original study was to collect lane miles. She expressed her concern that two and four-lane roads are being counted the same as a dirt road in the rural areas.
In reply, Mr. Law said that the populated areas would be where the larger highways exist. Therefore, the population side of the formula would account for the differences in the counties with the larger highways. He indicated if population were weighted too heavily, the southern portion of the state would benefit the most.
Responding to Mr. Roundtree, Mr. Law said that NDOT had statistics on weather related factors for the state maintained roads. He pointed out that snow plowing is extremely expensive; and at one time the maintenance costs for some of the northern counties was as high as 28 percent of their total allocation. However, southern Nevada also experiences issues such as severe thunderstorms and mud slides that greatly increases their maintenance costs.
Mr. Whitaker said that over the past two years, the floods in the south have equaled the cost of snow removal in the north.
The Chairman noted that if a formula cannot be developed that would work for the entire state, additional factors would have to be reviewed.
Responding to Mr. Bates about the contribution column of Exhibit F, Mr. Law noted that because of the consistent growth throughout the state, fuel sales are easily estimated for future years by using the 6.35-cent mandatory tax.
In reply to Mr. Varela, Mr. Law said that the growth in road miles is less than the growth in population (i.e., the state maintained system had 5,400 miles in 1970 and presently has 5,492. He indicated that many of the roads have been widened, but the length remains the same.
In response to Mr. Roundtree, Mr. Law said he would provide the Subcommittee with statistics that were gathered by NDOT showing regression equations used to determine the relationship between climate, use, etc., on the state maintained system. He explained that the comparisons are complicated, but may be worthwhile reviewing.
Mr. Varela said that he was under the impression that the discussion was covering maintenance and not new construction, because the developer pays for most new construction.
Mr. Law said that he believed that some of the funding returned to the county of origin was used for bond projects.
Mr. Varela said that maybe if the rural counties should implement the additional 5-cent fuel tax, Clark County should implement an impact fee system. In his opinion, the funding for maintenance versus new development should be better defined.
Mr. Manning said that Clark County uses maintenance funds only for maintenance and has a number of different funding sources that are available to support a number of services in the county including transit and highway construction.
Mr. Roundtree reminded the Subcommittee that the purpose of the Subcommittee is to study the cost of maintaining highways and it should not be concerned with the cost of building highways. He further noted that any local government has the option to use gasoline tax to construct highways or roads if they so choose.
Mr. Law clarified that the 1-cent tax of the 6.35-cent mandatory tax, is to be used to repair or restore existing roads. The balance of the funding can be used for bond service, road construction, maintenance and repair.
Mr. Leavitt said he hoped revisions of the distribution formula would not turn into an argument between northern and southern Nevada at the next meeting on April 27th. He hoped that a logical solution could be decided upon that will work for the entire state over time.
Ms. Gordon said that the cost of right-of-way is very high in northern Nevada because of the high price of land. She said that the total funding available is inadequate and it can be divided differently; but in the long term, other issues will have to be reviewed to produce more revenue.
Discussion Regarding Alternative “Hold Harmless” Formulas
and Possible Action Requesting the Department of Taxation to Apply
One or More of the Formulas to the Historical and Current Distribution of the 5.35 Cents Vehicle Fuel Tax for Comparison Purposes
Mr. Leavitt referred to the listing of “Hold Harmless” examples he created (Exhibit G) which explains the effect on three hypothetical counties. He explained that: Example 1 illustrates that one way to begin the “hold harmless” formula is to fund each county the same amount that was provided by the old formula in year one and then allocate any excess by the proportion decided upon in the new formula. Using Example 2, counties showing a lesser amount under the new formula receive the amount guaranteed under the new formula, but would not receive any additional money. The remaining money would be distributed to counties showing a greater amount of money under the new formula. Example 3 would implement the new formula over a period of time. Therefore, in the first year 20 percent of the funding would be distributed by the new formula and 80 percent by the old formula. This would be done for a period of five years until all the funding is distributed under the new formula.
He explained that the advantage of Example 3 is that the new system would be implemented over a period of time. The disadvantage is that there would be no guarantee of the amount of funding that each county would receive.
He suggested that the Subcommittee members review the three examples before the next meeting. He further noted if anyone had additional suggestions to present them to the Subcommittee.
Mr. Roundtree said that each example seems to be a reasonable approach to the situation, but said that he would like to hear from the entities that would be affected before a serious problem could arise.
The Chairman said that the main purpose of the meeting scheduled on April 27th is to obtain the input from the entities before any decisions are made. Therefore, he urged each entity to have a representative present at that meeting, because if someone does not come forward now with recommendations, and later goes before the Legislature with concerns that were not voiced during the interim, the issue could become political.
In response to a question posed by Mr. Nunes, the Chairman requested that Mr. Grady of the Nevada League of Cities provide the information received at today’s meeting to his entities before the April 27th meeting. He said he would also contact the Nevada Association of Counties to request that they provide this information to the counties.
Mr. Bates requested an outline of the distribution amounts for the past five years so that the Subcommittee could review the progression in each county using the current formula. He asked if that information was readily available.
Replying, Mr. Law said the information was available and he thought he would be a good idea to review the trend for some of the entities. He suggested outlining 1995 to 1999.
Responding to Mr. Varela, the Chairman said the April 27th meeting would be held at the Grant Sawyer State Office Building in Las Vegas and would begin at 9:30 a.m.
Ms. Gordon pointed out that some of the counties are only collecting 4-cents of the available 9-cents RTC (Regional Transportation Commission) tax and are receiving 10 times of what they are actually contributing, which should be considered a factor in the “hold harmless” formula. In her opinion, there are things some of the counties could be doing to increase their revenue.
The Chairman asked if she was requesting that the “hold harmless” formula should not apply to those entities until they are collecting the full 9-cents RTC tax.
In reply, Ms. Gordon said the entities should receive due consideration for their level of effort.
Responding to the Chairman, Mr. Law said that the Department of Taxation could provide numbers on the collections of this tax for each entity. He also noted that if there is a consistent tax rate, there is better compliance by the fuel suppliers. In his opinion, there should be one federal level tax that would be distributed to all the states because it would then be a requirement for the tax to be equal for everyone.
There was no additional public comment.
There being no further business before the Advisory Committee, Mr. Leavitt adjourned the meeting at 4:30 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).