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 218.53886, inclusive
April 27, 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 April 27, 2000, at 9:30 a.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)
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
Eileen O’Grady, Principal Deputy Legislative Counsel, Legal Division
Bonnie Borda Hoffecker, Secretary, Fiscal Analysis Division
Exhibit A is the Meeting Notice and Agenda.
Exhibit B is the Attendance Record.
Exhibit C is the report on Development of Pavement Network Optimization System, submitted by Russ Law, Nevada Department of Transportation (NDOT).
Exhibit D is a handout on the Gasoline Tax Distribution, submitted by Russ Law, Nevada Department of Transportation (NDOT).
Exhibit E is a handout on the Local Fuel Tax Distribution 6.35-Cent Mandatory Tax Projected for Fiscal Year 2002, 80% Population, 20% Road Miles, submitted by Russ Law, Nevada Department of Transportation (NDOT).
Exhibit F is a handout on the Local Fuel Tax Distribution 6.35-Cent Mandatory Tax Projected for Fiscal Year 2018, 80% Population, 20% Road Miles, submitted by Russ Law, Nevada Department of Transportation (NDOT).
Exhibit G is a handout on the Local Fuel Tax Distribution 3.60-Cent Mandatory Tax Projected for Fiscal Year 2002, 80% Population, 20% Road Miles, submitted by Russ Law, Nevada Department of Transportation (NDOT).
Exhibit H is a handout on the Local Fuel Tax Distribution 3.60-Cent Mandatory Tax Projected for Fiscal Year 2018, 80% Population, 20% Road Miles, submitted by Russ Law, Nevada Department of Transportation (NDOT).
Exhibit I is a Final Report submitted by NDOT titled Nevada Department of Transportation Field Audit in Support of the Jurisdictional Entity Street & Road Inventory.
Exhibit J is page 8 and 9 of the NDOT publication, “State of Nevada Facts and Figures” (January 1999).
Exhibit K is a memorandum from Bonnie Duke, Lander County Manager, and Rogene Hill, Finance Director.
There were approximately 35 persons in the audience.
Call to Order -- Opening Remarks
Chairman Marvin Leavitt called the meeting to order. He emphasized the counties should not fear the distribution being discussed.
Chairman Leavitt made reference to Exhibits C-H provided by Russ Law, NDOT. He noted a large variation between the current inventory submitted by the various entities and the past inventory. The variation caused some concern but was found to be justified.
Final Review and Possible Modification of Field Audit/Street and Road Inventory of Streets and Roads Maintained by Local Governments conducted
by the Nevada Department of Transportation (NDOT)
Russ Law, Nevada Department of Transportation, started by apologizing for John Whitaker who came down with the flu. Mr. Law stated for Mr. Whitaker that the inventory was complete except for 6 miles in Caliente that might be maintained by the county on behalf of the city of Caliente. He noted Mr. Whitaker’s confidence in the inventory increase.
Chairman Leavitt asked the public if anyone who felt there were discrepancies in the inventory to come forward. There was no testimony presented.
Mr. Law provided the Committee with a document titled FINAL REPORT, Nevada Department of Transportation Field Audit in Support of the Jurisdictional Entity Street & Road Inventory. (Exhibit D).
Ms. Gordon stated her concern with the issue of inventories that indicate small counties with no urban area have a larger amount of miles than larger counties that have major urban areas. She stated that Elko is losing 44 percent of their mileage in the latest inventory figures, a loss of over 900 miles. Ms. Gordon emphasized her concern that the use of centerline miles will not distribute the money by need.
Chairman Leavitt and Ms. Gordon engaged in a discussion pertaining to the use of population data versus lane miles.
Mr. Law remarked a fair way to distribute money would be to decipher the extent and use.
§ Urbanization indicates higher use.
§ Requires higher quality of pavement.
§ Maintenance and repairs of roads.
§ 50 percent or more of construction costs on roads is just for purchase the right of way.
§ 25 percent of money spent on traffic control.
§ Storm drain systems.
§ Extent of the system.
§ Miles of roadway throughout Nevada.
§ How far does one have to go to get cars somewhere?
He stated the percentage to both extent and use is still debatable and an area with higher population will have more lane miles. He continued by explaining the ratio between lane miles to road miles is 2.3, an average of 2.3 lanes on our system.
Bob Hadfield, Nevada Association of Counties, stated the redistribution on the first tier has caused tremendous concern about the impact on the second tier. He explained that in order for counties to get more money road miles must to be used and for cities to receive more money the population needs to be used.
Responding to a question by Chairman Leavitt, Mr. Hadfield remarked a simplified formula that is fair and can work for a long period of time is needed.
Mr. Law explained that the current formula (2.75˘ back to the county of origin) is related to the population in that county. This formula of distribution would be bad for Storey County because they do not have any gas pumps. He noted 100 percent of the 2.75˘ formula is distributed by population, 50 percent of the 3.6˘ formula is distributed by population, and 70 percent of the 6.35˘ formula is distributed by population. Continuing, Mr. Law clarified 15 percent of the 6.35˘ formula is distributed by road miles (including state maintained road miles) and the other 15 percent is by land area.
Mr. Leavitt stated the major issue with the formula is to minimize the possibility that counties are unable to provide basic services.
Ms. Gordon suggested using the previously discussed formula based on how much is out there to maintain. She also stated there is not enough money to go around and should be discussed more by the committee.
Mr. Leavitt expressed concern over devising a formula based on need due to the numerous factors that would need to be involved. Mr. Nunes and Ms. Gordon both supported his comments.
Regarding a trip with NDOT, Kevin Welsh explained the cost of maintaining roads consists of three things:
§ Degradation by traffic, topography, weather and geography.
§ The amount of money available to maintain the road.
There is no relationship between the amounts of money that it takes to maintain a paved road as to a dirt road. It depends on how much that road was used, what other kinds of degradation can take place, how important that roadway is to the county and how much money is available.
Mr. Law referenced Exhibit C, last page the equation in the top left hand corner, which generates the variability in the performance of the roadbed modification, 48 percent. He emphasized the extensive amount of data used to derive the equation seemed to be an exercise in futility. This is an example that formulas can be made complicated yet still produce a low percentage of accuracy. Mr. Law also directed the Committee’s attention to Exhibit D and Exhibit E.
Alan Kult, Churchill County, suggested to keep the following factors in mind when understanding the variances.
§ Procurement of gas outside of the county of origin.
§ Are counties on a major interstate.
Mr. Leavitt directed the Committee’s attention to Exhibit D as an example of the problems to be addressed, i.e. the huge differences when looking at the various counties. Mr. Law noted Storey County was a donor county, which was subsidizing other counties. His suggestion of handling the lack of money collected by Storey County was to buy supplies one year and the following year hire someone to perform the work.
Answering a question asked by Ms. Gordon, Mr. Law noted the reason for the decrease in road miles might be due to the significant General Improvement miles that would be dropped out of the inventory. Cash Minor, with Elko County, stated Elko County has 1,200 miles of road to be maintained which does not include state maintained miles. Mr. Law explained the existing formula does include the number of state maintained miles, however, the proposed formula does not include the state maintained miles, only locally maintained miles.
Chairman Leavitt explained he and Mr. Welsh had a meeting with John Whitaker from NDOT to discuss the concern about the rise and fall in the numbers. They where assured that the miles were legitimate and accurate. In the case of Elko and Nye Counties it is the area that impacts the formula.
Chairman Leavitt requested a recess to allow time to review Exhibit G and to formulate questions. He also stated enough time would be allotted for everyone to have his or her say in the matter.
Jim Bell, City of North Las Vegas, stated the use of the formula based on population is a reasonable choice. There is an 11 percent growth rate, which causes more use of the roads and in turn dictates maintenance that is costly. He feels that a reasonable percentage, 80 percent, goes back to the county of origin.
Charlie Krykowski, City of Las Vegas, echoed the comment of Jim Bell. He informed the Committee that population is an important factor, it tempers the lane miles, and it implies the quality, importance, complexity, and usage of the road. He concluded his statement by stating population implies the level of maintenance necessary for roads.
Chairman Leavitt explained that, since the inventory has changed significantly using the existing formula, it would still produce fairly sizable adjustments. Continuing, he noted that even for counties that show a loss to actually implement the formula with a “hold harmless” might be suitable.
Dan Holler, Douglas County Manager, noted his concern that the inventory numbers provided by the Department of Taxation are different from what the counties submit to NDOT and it is hard to reconcile the two numbers.
Chairman Leavitt explained the Committee would adopt and formalize a procedure for accruing those numbers.
In response to a question posed by Ms. Gordon, Mr. Law indicated that the difference in numbers could possibly be due to three different inventories being used:
§ Public road miles-submitted by the county to NDOT and certified to the Federal Government (may or may not qualify for gas tax distribution).
§ Roads that qualify for gas tax distribution (type B or higher – Type B means substantially drained, grated and aligned to permit easy passage by a passenger vehicle).
§ State maintained roads.
Continuing, Mr. Law stated the numbers the Department of Taxation use match the numbers given to them by NDOT.
Chairman Leavitt requested a formalized process that determines how to designate road types be presented at the next meeting.
A discussion ensued between Mr. Nunes and Mr. Law regarding the designation of road types. Mr. Law referenced the page 8 and 9 of the NDOT publication, “State of Nevada Facts and Figures” (January 1999) (Exhibit J). This publication can be found at www.nevadadot.com.
Tony Locke, Public Works Director, White Pine County, explained that White Pine County uses the Nevada Revised Statues to classify roads, into 3 categories:
He indicated that NDOT appeared to be using the classification General roads or better (i.e., Type B or better.) It may appear that White Pine County is tripling its mileage numbers however; the county has turned in the same numbers for 15 years. Mr. Locke suggested NDOT pass along the criteria to apply and allow the counties to re-classify the systems in the proper manner. Chairman Leavitt suggested the committee establish a procedure for the future that allows counties the knowledge of all the miles in the inventory that is used for formula and develop a formal process for counties to preview and edit the inventory when necessary. He explained this would help to inform all counties exactly what is used in the formula.
In response to a question by Chairman Leavitt, Mr. Locke remarked that with the formula based on two factors, population and road miles, the percentage that is reasonable for White Pine County is the fifty/fifty percentage. He remarked the percentage would not be reasonable for other counties throughout Nevada.
Mary Walker, Representing Carson City, Douglas County and Lyon County, informed the Committee of the following:
§ Support for the 3.6˘ gasoline tax distribution. Carson City has a 1˘ mandated fuel tax, if all monies where combined and distributed elsewhere it would be contrary to what the voters of Carson City had voted on, as suggested in other formulas.
§ Concern over the discrepancy between the numbers of road miles the counties and cities provide to NDOT, which in turn are provided to the Department of Taxation and then provided to the local government budget offices. In the past the totals were different. For example, the counties or cities will provide the information to NDOT. NDOT will then make it’s emaciations. However what was happening previously is their time schedule was in late spring from the local governments and then they were telling the Department of Taxation what the formula numbers (road numbers) should be for July 1. That was after the Department of Taxation notified everyone using year-old road numbers. Revenue projections were actually road numbers from the previous year.
§ Support for the proposal to create a formal process to provide information to the cities and counties, NDOT and the Department of Taxation and back to the local government budget offices. Ms. Walker suggested NDOT provide the numbers, in writing, of road miles and population.
§ Fifty/fifty is the most neutral; hold them harmless (as to amount) and let growth mandate where the money goes.
Chairman Leavitt offered to provide a schedule that stated what the effect would be if a certain tax had been implemented in the next fiscal year, using the current inventory.
Brent Hutchings, City of Ely, explained to the Committee his concerns:
§ Having an accurate inventory.
§ Small Counties would like less emphasis on population and more on road miles.
§ Inventory turned in earlier for original budget hearings.
Dick Carver, Chairman, Nye County Commission, trusted the Committee recognized Nye County as the largest county, with two separate courthouses 170 miles apart, and 3 separate road departments. His major concerns are the following:
§ Nye County does not maintain population, they maintain and construct miles of roads.
§ Some counties will gain and some counties will lose. Out of the 17 Counties in the State of Nevada not one is moving forward in the roads--they are all going backwards.
Continuing, Mr. Carver gave the following suggestions to the Committee:
§ Give the Counties the tools to generate more revenue to do a better job in our Counties. For example, allow gas tax on diesel fuel.
§ Leave the current formula (which has been used for 20 years) alone.
§ Leave state roads in the inventory, or execute a “hold harmless” and phase state roads out of the inventory over five years.
In response to a question posed by Mr. Bates, Mr. Carver indicated that a rise in gas tax in Nye County would cause a negative effect because approximately 4000 cars a day travel from Pahrump to Las Vegas. If the gas tax increased, pushing the gas price higher, those people traveling between Pahrump and Las Vegas would buy gas in Las Vegas, therefore lowering the amount of money collected from the gas tax. He noted that the same thing would happen in the northern part of the state. Concluding his remarks, Mr. Carver informed the Committee he is not against a sales tax increase as an alternative.
Bruce Brooks, Humboldt County, explained to the Committee the following:
§ Rural counties are looking to “hold harmless” to guarantee money to the counties, and the rural areas are experiencing a major decline in economic conditions.
§ Best thing for the rural counties is to not change the formula.
§ If the formula must change, an optimum way to allocate money is by using population and road miles, fifty/fifty.
Cash Minor, Elko County, echoed the remarks made by the previous speaker and acknowledged Elko County would take a substantial hit if the formula changes. He expressed concern over the loss of revenue since that would cause road construction to cease and road maintenance to decline. The answer to this problem, Mr. Minor conveyed, would be “hold harmless”, a guarantee that a set amount of money would be available to the counties. He stated that an increase in the RTC was on the ballot 6-8 years ago, and 87 percent of the people of Elko County voted against the raise in tax. Three years ago the RTC Board held public hearings and, of the people who attended the meetings, it was still a resounding “no”. Mr. Minor prefers the use of fifty/fifty percent.
In response to a question posed by Chairman Leavitt, Mr. Minor explained he would agree to use the two-factor method, population and road miles.
Alan Kalt, Churchill County, stated his support of the comments made by Bruce Brooks and Cash Minor. He noted that in comparing the old formula versus the new formula the only thing not being represented is area. Mr. Kalt suggested that vehicle miles traveled is a hybrid of road miles and population. As a rural county he suggested using 50/50 or 40 percent of population and 60 percent of road miles. Mr. Kalt explained “hold harmless” is of the utmost importance to the rural communities, plus use of a comprehensive approach on an accumulative basis, with Nevada as a whole state.
Pete Goicoechea, Eureka County Commissioner, expressed his support for the following:
§ 3.6˘ gas tax distribution.
§ 50 percent population and 50 percent roads, as long as “hold harmless” or a guarantee of money available to the counties.
§ Look into taxing diesel fuel.
Doug Bierman, Interteck Services Corporation, directed the Committee’s attention to Exhibit K and explained:
§ Lander County has a large amount of road miles and a relatively small population.
§ 50 percent population, 50 percent road miles scenario resulted in a favorable outcome for Lander County.
§ 80 percent population, 20 percent road miles scenario resulted in a detrimental outcome for Lander County.
§ Of the alternative formulas presented by NDOT: 70 percent population, 30 percent road miles scenario and the 67 percent population, 33 percent road miles scenario; Lander County can support either of these alternatives and would favor the 67 percent population, 33 percent road miles scenario.
Mr. Bierman informed the Committee that the prior comments where submitted to the initial projections that came from NDOT and are different from the ones from today’s meeting. He took the liberty to add if the Lander County people were able to look at the current information, they would probably agree with the other rural counties in support for the 50 percent population, 50 percent road miles scenario and the “hold harmless” clause.
Kevin Welsh advised the committee that a change in collection point for fuel tax from retail level to the terminal rack would occur on January 1. In 1966 when this was done to diesel fuel, the increase in revenue overnight was in the millions of dollars.
MR. NUNES MOVED TO TAKE THE 1 AND 1.75 OFF THE TABLE FOR FURTHER CONSIDERATION AND CONSIDER THE 3.6-CENT GASOLINE TAX. THE MOTION WAS SECONDED BY MR. MANNING AND PASSED UNANIMOUSLY.
MR. ROUNDTREE MOVED TO USE THE FORMULA FACTORS OF ROAD MILES AND POPULATION. THE MOTION WAS SECONDED BY MR. MANNING AND PASSED UNANIMOUSLY.
MR. NUNES MOVED TO DEVELOP A FORMAL PROCESS TO MAINTAIN THE INVENTORY IN THE FUTURE. THE MOTION WAS SECONDED BY MS. GORDON AND PASSED UNANIMOUSLY.
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
Chairman Leavitt explained several ways of applying “Hold Harmless”:
1. Have an amount of money guaranteed;
2. Participate in growth under the formula (when not entitled to it); and
3. Implement the formula gradually over time.
Mr. Nunes expressed his inability to support a “hold harmless” when one entity would get less. He also noted his lack of support to penalize any county that does not enforce the full Regional Transport Commission (RTC) tax.
Mr. Roundtree and Ms. Gordon stated their concern over providing “hold harmless” for counties that have not taken full advantage of the RTC tax.
In response to a question posed by Mr. Varela, Chairman Leavitt explained “hold harmless” would be a fixed amount, a guarantee of money in perpetuity. He continued that any money over and above that amount would be distributed by the new formula, only to those counties in which the new formula would give more money than the guarantee. This would remain static based on the year prior to implementation.
A discussion about the possible penalties for “hold harmless” ensued.
Ms. Gordon stated people have shown interest in raising taxes at the county level and there is a quarter cent sales tax on the books that can be implemented.
MR. BATES MOVED TO RECOMMEND A “HOLD HARMLESS” THAT KEEPS ALL COUNTIES AT THE SAME DOLLAR LEVEL. THE MOTION WAS SECONDED BY MR. WEST AND PASSED UNANIMOUSLY.
Ms. Gordon expressed support for the motion if there was a requirement to impose the full RTC tax in order to be “held harmless.”
Mr. Bates suggested since a consensus could not be reached, exercising the RTC option be added to the following meeting’s agenda.
Mr. Nunes requested a more accurate count of how many miles are in the state and use the actual numbers in the formula.
Mr. Varela requested to add information about the cost of maintenance in the north and how that affects things to the next meeting’s agenda.
Chairman Leavitt suggested approaching the S.B. 253 Committee to get authorization to develop the second tier formula.
Ms. Hollis requested for the next meeting a list of all of the counties that have implemented the quarter cent sales tax.
Ms. Gordon stated the issue of locals paying for the maintenance of signals on state roads required more discussion.
Mr. Law stated NDOT pays to build the systems and any damage that exceeds $1000 (not all of the agreements are the same). The minimum cost of each signal installation is approximately $100,000.00. In the urban areas there are signals that have cost up to $340,000.00. Those signals have been replaced by NDOT because of the growth, especially in Clark County, and signals last about 10 years. He continued by suggesting to the Committee if more information is required on this subject contact Mr. Tom Stephens, Director of NDOT. Mr. Law indicated his preference to continue discussion pertaining to mandatory county taxes.
Mr. Manning noted that Clark County has 367 signals, and 100 of those signals are state signals. The signals cost Clark County $82,000 a year to maintain. There is a substantial expense that local jurisdictions are incurring that feel exactly like an unsolicited mandate.
MR. ROUNDTREE MOVED TO APPROVE THE MINUTES FROM THE PREVIOUS MEETING. THE MOTION WAS SECONDED BY MS. HOLLIS AND PASSED UNANIMOUSLY.
Chairman Leavitt suggested having the next meeting the 2nd week in May. Following Committee discussion, May 19, 2000 at 9:30 a.m. in Carson City was decided upon for the next meeting.
There being no further business before the Advisory Committee, Mr. Leavitt adjourned the meeting at 3:15 p.m.
Bonnie Borda Hoffecker
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).