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
May 19, 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 May 19, 2000, at 9:30 a.m. in Room 2134 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
Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division
Kim M. Guinasso, Principal Deputy Legislative Counsel, Legal Division
Jo Rasey, Secretary
Exhibit A is the meeting notice and agenda.
Exhibit B is the attendance record.
Exhibit C are a number of tables titled “3.6 cents Fuel-Tax Distribution by Population and Road Miles, and with Hold Harmless Provision, distributed by Russ Law, NDOT.
Exhibit D is a chart distributed by NDOT, titled “Hold Harmless.”
Exhibit E are photographs of the various road types submitted by NDOT.
Exhibit F are a number of tables titled “3.6 cents Fuel-Tax Distribution by Population and Road Miles, and with Hold Harmless Provision, distributed by Russ Law, NDOT.
Chairman Leavitt called the meeting to order and said that he hoped to make some decisions today regarding the agenda items. As discussed at the last meeting, a number of new schedules have been prepared by the Department of Transportation (Exhibit C). He said he would like to resolve whether or not the counties who do not levy the full 9 cents gasoline tax should be penalized.
Discussion Regarding Alternative Fuel Tax Revenue Distribution Formulas and Possible Action Regarding the Adoption of an Alternative Fuel Tax Revenue Distribution Formula for Recommendation to the Full Legislative Committee
Mr. Law, Nevada Department of Transportation (NDOT), said he would review the different scenarios prepared for the 3.6-cent fuel tax distribution (Exhibit C). He noted that a “hold harmless” provision was added to the calculations of the formula, which also include various percentages for population and road miles. Numbers were run for Fiscal Years 2002 and 2011. The scenarios distributed at the last meeting were for Fiscal Years 2002 and 2018. The State Demography provided NDOT with population statistics up to year 2011. Since they differed from the old report that NDOT was using, it recalculated the numbers using the new population figures.
Referring to Fiscal Year 2011, Mr. Law noted that Carson City’s population is estimated to be at 63,515, whereas the old calculations had Carson City’s population projected at 57,000 for 2018. He explained that also listed in Exhibit C are the:
§ Fuel tax distribution under the existing formula for Fiscal Years 2000 and 2001.
§ Overall distribution of county mandatory taxes when only the 3.6-cent formula is modified.
§ County optional gasoline tax increases available. This table lists the current rate being used by each county, and how much additional money would be available if the full 9 cents was charged.
§ Local option sales and use tax (a Ľ cent sales tax is available for roadway projects).
§ Local option sales and use tax distribution.
Mr. Nunes asked if there were any penalties that are not enumerated in this chart calculating the 3.6-cent fuel tax with a hold harmless provision.
Responding, Mr. Law said that NDOT took the total amount of money that the donor counties (see Exhibit D) received above and beyond what they received in Fiscal Year 2001. Then the counties that required additional funding were provided the amount needed to “hold them harmless.” He also informed Mr. Nunes that no penalty was included in the calculations for those counties who are not charging the full 9-cent optional fuel tax.
MR. NUNES MOVED TO RECOMMEND THAT NO PENALTY BE CHARGED TO THOSE ENTITIES THAT DO NOT FULLY UTILIZE THE 9‑CENT OPTIONAL FUEL TAX. MR. BATES SECONDED THE MOTION.
In reply to Mr. Roundtree regarding why he was making this recommendation, Mr. Nunes said that in certain cases some of the counties elected officials do not have the ability to raise the tax. In Douglas County, this issue was specifically taken out by an initiative of the voters.
In Mr. Roundtree’s opinion, many of the counties could help themselves significantly if they implemented the full 9-cents.
Ms. Gordon indicated that Washoe County has imposed the full 9-cent tax and some of the officials were not reelected because of implementing that tax. In her opinion, it is not fair for one county who is imposing the tax to donate funds to a county whose residents are refusing to impose the full tax.
Mr. Bates suggested that when the possibility of placing a penalty on the rural counties is examined, it must be kept in mind that with the new formula being based upon population and road miles, the rural counties could be financially impacted. These counties have become accustomed to a revenue stream that allows them to take care of the responsibilities of their community. In his opinion, there should be no further penalties for the rural counties and that is why he supports the motion.
The Chairman said if the relationship is made between the “hold harmless” and levying of the other tax, the “hold harmless” would be included in the tax levy. However, if the tax were not levied, the guarantee would not be included in either one.
Ms. Gordon pointed out that there is a tie between the first 4 cents of the 9-cent optional tax and the 3.6 cents fuel tax distribution and that is why all the entities are collecting at least 4 cents.
Mr. Calhoun said he did not support the motion because it will become difficult for the counties that have the maximum tax to constantly provide funding to the entities that refuse to tax themselves. He agreed that a “hold harmless” should be included in the distribution formula; however, it should be over a two to five-year period.
Mr. West said that although he is from a county that utilizes the full 9-cent tax, he disagrees that a penalty should be imposed on those counties that do not tax the full 9 cents.
Ms. Gordon added that prior legislation, which required that the entities impose at least 4 cents of the 9-cent optional tax, offered an incentive for the county commissioners to offer to the voters. In her opinion, if an incentive is offered to the voters for enforcing additional taxes, it makes it more attractive and makes it easier for the elected officials to justify.
Mr. Nunes added that some of the county commissioners do not have the choice of imposing the because of political impacts, while other counties have a choice.
Mr. Varela said he has a problem with recommending to the Legislature that certain counties be penalized for not imposing a tax. He suggested working with the “hold harmless” to encourage certain counties to deal with this issue.
Mr. Roundhouse agreed with Mr. Varela that there may be a way to structure the “hold harmless” to provide an incentive to the counties to impose the full 9 cent optional tax.
Further commenting, Mr. Varela said that the state needs to be looked at as a whole and does not agree that penalizing the counties that are not imposing the full 9 cent tax is an option. He agreed that the “hold harmless” option in the formula could be structured in a way to resolve this problem.
Ms. Gordon also noted that she was not in favor of imposing a penalty and suggested that maybe 1-cent each year could be phased in for a 5-year period for those counties that are only imposing 4 of the 9‑cent tax.
Mr. Manning also noted that he did not believe in implementing a penalty, but thought it would be appropriate to phase in the additional 5 cents for those counties that are not presently utilizing the full amount. He supported phasing in the tax over a 5-year period.
Ms. Walker, representing Carson City, Douglas and Lyon Counties, pointed out that not all of the counties that are not imposing the full 9-cent tax are receiving funds from other counties to offset their funds needed. She indicated that Douglas County is one of those counties who is only imposing 4-cents of the 9-cent tax, but is also donating funds to deficient counties. She added that Storey County is also in this situation, and those counties that are not being subsidized should definitely not be penalized for not imposing the full 9-cent tax.
Commissioner Carver, Chairman of the Board, Nye County Board of Commissioners, said that Nye County is only imposing 4 cents of the 9-cent tax. Increasing this tax has been before the Board on three different occasions and only one member has supported the increase. The reason for this is because gasoline can already be purchased outside of Nye County much cheaper. He noted that yesterday gasoline in Tonopah was $1.93 and in Reno it was $1.54. He explained that if the gasoline tax is increased even further, the county will actually take a decrease in revenue generated because the county’s citizens will go elsewhere to purchase gasoline.
Continuing, Commissioner Carver said that $2 million of Nye County’s revenue has been used to pay for new roads in Pahrump because of the tremendous growth in this community. He explained that 12 years ago, Pahrump had a population of 4,000 and presently it is approximately 35,000. He urged the committee not to penalize the counties who are not paying the full 9-cent tax because they cannot afford additional taxes.
Mr. McKnight of Nye County said that the $2 million dollars that paid for roads in Pahrump was non-gasoline tax money. He brought up the point that the counties such as Carson City, Clark, and Washoe Counties are earning gasoline tax revenues from their surrounding communities whose prices are so much higher. In his opinion, the committee is not researching where the customer who is purchasing the fuel resides and where the revenue was generated from. In his opinion, square mileage is a factor in the cost of maintaining roads, but to try to penalize the smaller counties when the larger entities are already importing the sales would be grossly unfair. He also expressed his opposition to the additional funds being given to the rural counties as a “donation to deficient counties.”
In closing, Mr. McKnight suggested that the elements that are driving the price of gasoline upward in the rural communities (approximately 40 cents per gallon higher than the urban areas) should be further researched.
Ms. Gordon said she would also like an answer to that and questioned if it was because “delivery to the rural communities is so much higher or is the fuel station owner taking advantage of the fact that they do not have to pay those additional taxes, but will still pass it on to the consumer and take the profit.”
In reply, Mr. McKnight said he believed the markup is occurring before the fuel is delivered to the gasoline station. The cost of transportation is about an additional 3 to 4 cents per gallon for shipment to Tonopah.
Offering his opinion, Mr. Bates said that according to his calculation, a 400-mile round trip from Las Vegas to Tonopah, would cost an additional 5 to 6 cents per gallon.
Mr. Locke, White Pine County, indicated that purchasing in volume would also decrease the price. He commended Mr. Law and NDOT for preparing the numerous variations to the formula. Referring to Exhibit C, he questioned if the road miles for White Pine County on the 3.6 cents fuel tax distribution under existing formula for FY 2000 included state roads.
In reply, Mr. Law said that was correct, except the statute that governs how the funds are distributed by road miles states “non-federal aide primary routes.” He indicated that non-federal aide primary routes do not exist; however, NDOT is using an old definition that is in compliance with the intent of the statute. Therefore, all the routes in White Pine County that are “non‑federal aide primary routes” (i.e., U.S. 50) would not be included.
Mr. Locke referred to Exhibit C and noted that the projections done by NDOT for FY 2001 are showing a net gain of approximately 916 road miles in White Pine County. He said that the County’s road mileage has not changed since 1986. Its road system has been certified and includes about 22,036 in lane miles. He noted that the roads that are included by NDOT, as county roads must be clarified so the counties know what they are being compensated for and can reevaluate where the funds are distributed.
Chairman Leavitt informed the members and persons in attendance that the reason the study is being done is because of the huge inconsistencies throughout the state in the way roads have been reported. He hoped that through this inventory process conducted by NDOT, the state would be able to develop a consistent process by which all the entities are reporting their roads.
Mr. Locke questioned why the amount of road mileage in Elko County decreased.
In reply, Mr. Law said that the inventory gathered by NDOT for FY 2001 is probably more accurate then it has been in the past.
Mr. Bacus, Public Works Director, Storey County, commented that Storey County has only one gasoline station located in Virginia City. Presently, most of the residents of the county purchase their gasoline elsewhere and in his opinion by increasing the county optional gasoline tax another 5 cents would not raise additional revenue and, but probably would put the station out of business.
Mr. Capurro, Managing Director, Nevada Motor Transport Association, provided the Subcommittee with some background information. During the 1993 Legislative Session, when the last statewide gasoline tax increase took place, which would have been affected by the distribution formula and was tied to the counties that were not imposing the full 9 cents at that time.
According to Mr. Capurro, the high gasoline prices in the State of Nevada are not caused by transportation, but could be caused by the fuel providers. He said there is an ongoing investigation in California with respect to fuel prices. Nevada’s Attorney General has examined the retail area of fuel distribution on two separate occasions and did not find any inconsistencies that would warrant further investigation. Unfortunately, commented Mr. Capurro, the persons setting the price of fuel are not in attendance at this meeting today to reveal what factors are included in calibrating those prices.
Mr. Frehner, Lincoln County, Board of County Commissioners, said that located in the county are five state parks, which are full from Memorial Day to Labor Day with residents from the Las Vegas area. However, very few of those visitors purchase gasoline in Lincoln County and they also transport most of the items they need for their visit. Also, since the county is so close the Utah, when gasoline is $1.50 in Pioche, it is usually about .95 cents to $1 in St. George, Utah, which is only one-hour away.
The Chairman requested that the Subcommittee propose a motion on this issue.
Mr. Roundtree requested that the Subcommittee defer action on that motion until testimony is heard on the “hold harmless” issue.
Ms. Gordon apologized to Ms. Walker for not realizing that Douglas County is a donor county. She questioned if a county is donating funds should it be penalized for not imposing the full 9‑cent tax. She indicated that on the various scenarios prepared by NDOT, Douglas County would be adversely affected by a “hold harmless” agreement.
Mr. Nunes said he did not support deferring the vote on the fuel tax distribution formula and the penalty issue until the “hold harmless” is discussed because they are two separate issues.
MR. ROUNDTREE MOVED TO TABLE THE ACTION ON THE PENALTY ISSUE UNTIL TESTIMONY IS HEARD ON THE “HOLD HARMLESS” ISSUE. MS. GORDON SECONDED THE MOTION.
Ms. Guinasso (identified earlier) said that before additional motion’s can be voted on, the first motion must be dealt with and completed.
Mr. Kajkowski, City Engineer/Deputy Director of Public Works, City of Las Vegas said that according to Roberts Rules of Conduct, a table motion take precedence over an action motion.
The Chairman said he would like to take a roll call vote on the original motion.
Ms. Gordon said at the last meeting she noted that she was in favor a “hold harmless” contingent upon utilizing some type of incentive or penalty tied to the 9-cent county optional tax.
Mr. Roundtree asked for the definition of the penalty being used in the motion.
Responding, Mr. Nunes said the intent of the motion was not to penalize any entity that has not imposed the full 9-cent optional county tax. He added that phasing in over time of the additional 5 cents that certain entities are not imposing would not be considered a penalty.
MR. NUNES MOVED THAT A PENALTY IS NOT PURPOSELY OR MATHEMATICALLY CALCULATED AGAINST THOSE ENTITIES THAT ARE NOT IMPOSING THE FULL 9‑CENT OPTIONAL COUNTY TAX WHEN DESIGNING A NEW FUEL TAX DISTRIBUTION FORMULA.
THE CHAIRMAN REQUESTED A ROLL CALL VOTE. MESSRS. BATES, NUNES, VARELA, WEST LEAVITT, AND MS. NEUHAUSER VOTED YES. MESSRS. CALHOUN, MANNING, ROUNDTREE AND MS. GORDON VOTED NO. THE MOTION PASSES 6 TO 4.
Discussion and Possible Action Regarding Requesting the Nevada Department of Transportation to Apply the Alternative Fuel Tax Distribution Formula to the Street and Road Inventory and Alternative “Hold Harmless” Formula to the Historical and Current Distribution of the 3.6 Cents Vehicle Fuel Tax
The Chairman said he would like to come to some resolution today on the:
§ “Hold Harmless” Formula.
§ Fuel Tax Distribution Formula.
§ Inventory of Roads.
He noted that the Legislative Committee accepted the inventory as prepared by NDOT, but it will be further discussed today to ensure there are no additional problems.
He suggested that the formula be discussed first and then the “hold harmless” as a component of the formula.
Mr. Nunes questioned if the variation of percentages that will be considered for the new formula range from 50 percent to 80 percent using both road miles and population.
In reply, the Chairman said that any reasonable suggestion would be considered. He said that he did not believe there was any one perfect way to divide the percentages, but the “hold harmless” will be used as a modifier. In his opinion, there is more logic to weighing population higher than road miles and because road miles were measured in the new inventory by center lane, the population could further be used as a determination of road usage. He suggested either using 2/3 population and 1/3-road miles, or 60 percent population and 40 percent road miles. Weighing population higher also recognizes fuel sales in the counties.
MR. NUNES MOVED THAT THE SUBCOMMITTEE RECOMMEND A FORMULA FOR THE 3.6 CENT GASOLINE TAX BASED ON 50 PERCENT ROAD MILES AND 50 PERCENT POPULATION. MR. BATES SECONDED THE MOTION.
The Chairman asked for further discussion.
Ms. Gordon noted that four years ago one of the goals was to count lane miles instead of centerline miles. This was included as part of the study that the University of Nevada, Las Vegas (UNLV) was conducting, but never completed. When NDOT was asked to continue the study, the inventory count was changed to centerline miles. During previous discussions, it was noted that by weighing population more heavily, it would make up for the difference in road miles in the urban counties.
There being no further discussion, the Chairman requested a roll call vote on the motion.
MESSRS. BATES, NUNES, WEST AND MS. NEUHAUSER VOTED YES. MESSRS. CALHOUN, MANNING, ROUNDTREE, VARELA, LEAVITT AND MS. GORDON VOTED NO. THE MOTION FAILED 4 TO 6.
MS. GORDON MOVED THAT THE SUBCOMMITTEE RECOMMEND A FORMULA FOR THE 3.6-CENT GASOLINE TAX BASED ON 1/3 ROAD MILES AND 2/3 POPULATION. MR. MANNING SECONDED THE MOTION.
The Chairman requested a roll call vote.
MESSRS. CALHOUN, MANNING, ROUNDTREE, VARELA, LEAVITT AND MS. GORDON VOTED YES. MESSRS. BATES, NUNES, WEST, AND MS. NEUHAUSER VOTED NO. THE MOTION PASSED 6TO 4.
The Chairman said that several ways of implementing the “hold harmless” were discussed previously and included
§ Determining the amount of money that everyone received in the year prior to implementing the new formula. If the amount received under the new formula were greater, then the entity would be guaranteed that amount of money. The remaining money would be allocated to the counties based on their relative position in the new formula. Over time, the guaranteed amount would be less significant because it would not grow as gasoline taxes gradually increase.
§ Implementing the formula gradually over a 5-to 10-year period using part of the new formula and part of the old formula.
He explained that for some counties, the way the “hold harmless” is implemented is more important than the way the total formula is calculated. He asked for any other suggestions from the Subcommittee or members of the audience.
Based on the 2/3 – 1/3 split of population vs. road miles and providing that no penalty is enforced on those counties that are not imposing the full 9-cent county optional tax that was voted on by the Subcommittee, Mr. Bates suggested that no formula should be instituted that changes what is meant to be “hold harmless.”
Mr. Nunes said he would be in favor of a mechanism that would provide a “hold harmless” provision forever. He explained if an instrument is used that will only be effective for a 5 or 10‑year period, it will be difficult for the entities to predict their future budgets.
Ms. Gordon said it might be a good idea if some calculations were run for the Subcommittee to review before making any recommendations.
In reply, Mr. Law said that NDOT could prepare the calculations in about one-half hour.
The Chairman said that was a good suggestion and since the basis for the formula was chosen, it would be good to run calculations with different scenarios of the “hold harmless.”
In reply to Ms. Gordon, Mr. Law said that NDOT already has calculated the anticipated growth rate up to the year 2011.
Mr. Bates suggested that the numbers would be more useful if the current 3.6-cent distribution includes state miles that are located in the counties. Under the new formula, the road miles will be based only upon the new inventory (excluding state road miles).
MR. BATES MOVED THAT UNDER THE NEW FORMULA, THE ROAD MILES WOULD BE BASED UPON THE INFORMATION GATHERED BY NDOT IN THE RECENT INVENTORY APPROVED BY THE LEGISLATIVE COMMITTEE AND WOULD NOT INCLUDE ANY STATE MILES. MR. VARELA SECONDED THE MOTION, WHICH CARRIED UNANIMOUSLY.
Mr. Arnold, Road Superintendent for Pershing County, asked if there would be a baseline established for the “hold harmless” in the formula. He recommended that an average of several years be used when deciding on a baseline.
Chairman Leavitt said that the plan is to implement a formula that is fair to everyone. If the result of the formula results in a revenue loss to certain counties to the extent that an entity would not be able to continue its current operations, the “hold harmless” would correct the situation. In his opinion, the base should be established by the amount of money received under the existing formula in the year prior to implementation of the new formula.
In reply to Mr. Nunes who asked if he was talking about a base year or a base amount, the Chairman said a base amount.
The Chairman said the Subcommittee would hear comments on the “hold harmless” until 12 Noon, at which time it would take a lunch break while the NDOT is preparing the new calculations.
Mr. Law said there are many ways NDOT could calculate the “hold harmless,” but suggested:
§ Reviewing the overall gross amount that each county receives and based on the amount that the donor counties would get, a distribution could be made to those entities that need to be held harmless; or
§ A donation to those that need to be held harmless based on how much the entities revenue increases over the base year.
Responding to the Chairman, Mr. Law said it would not be related to the amount actually collected in the county. He said that the example of the “hold harmless” (Exhibit D) was based on the net amount of increase that each county received.
The Chairman said if the new formula was run for all the counties and the money that is leftover would be distributed to the guarantee counties based upon where they stand proportionately under the new formula.
Ms. Gordon questioned if the figures provided by NDOT for the FY 1999 gas tax distribution would be used to determine the new formula.
In reply, Mr. Law said that he assumed FY 2001 would be used as the base year because none of the statutory changes would be implemented until at least FY 2002 unless a special legislative session were held for this purpose, which is unlikely. He also noted that the growth rate he anticipated is the same used by the State Demographer.
Further responding to Ms. Gordon, Mr. Law said that he is basing the gasoline tax revenue on change in population. He said it has been found through studies that there is a strong relationship between population and change in fuel gallons.
Referring to Exhibit C, Mr. Bates asked how the change in road miles for White Pine County was determined under the 3.6 cents fuel tax distribution for FY 2000 (1,506 road miles), and FY 2001 (2,422 road miles).
The Chairman recommended that NDOT run the figures with the “hold harmless” included before continuing with additional questions.
Mr. Law said that he would stay at the meeting to continue to answer questions, and his associate, Rick Oxoby would have the figures to the formula calculated with the “hold harmless” added.
Continuing, Mr. Law said that four years ago it was found that a solid road inventory was needed to continue preparing for a new formula. A 10 percent audit was conducted by NDOT of the recent road inventory received by the entities; and NDOT concurred with the majority of the information that was submitted. He also noted that there are three separate inventories, one is submitted to the Federal Highway Administration and is completed in accordance with federal regulations, which requires the amount of “certified public road miles.” He explained that certified public road miles are different than the road miles that qualify for the local gasoline tax distribution. Type “B” road are certified for public road miles (Exhibit E), Type “A” road are not, and neither A or B qualify for the local gasoline tax distribution. Further, there are state miles that are also included in the gasoline tax distribution for certain routes. The third part of the inventory includes locally maintained routes, some of which are included in the gasoline tax distribution and some are not. He clarified that the three areas are: (1) Certified Public Road Miles, (2) State Maintained System, and (3) a mixture of two different inventories that qualify for gas tax.
Referring to Exhibit E, Mr. Epley of NDOT, said that Type “B” is certified as public road miles, but does not qualify under Nevada Revised Statutes (NRS) to be included in the fuel tax formula. Basically, when the counties are queried, they are asked for certified road miles that are under the jurisdiction of the county or the incorporated city. He explained that NDOT reviews the information submitted by the entities to determine if they have identified each road by its proper type.
The Chairman indicated that according to the photographs in Exhibit F, Road Types C, D, E, and G would be included in the local gasoline tax distribution.
Mr. Epley added that in some instances, Road Types I and J might also be partly included.
Subcommittee discussion took place regarding the various road types and which roads, according to NRS, should be included in the local fuel tax distribution formula.
Responding to Mr. Manning, Mr. Eply said that Interstate 215 in Las Vegas would be excluded from the local gasoline tax distribution. He explained that as it is built, if NDOT assumes the maintenance on it, it would be considered an addition to the interstate system; however, if NDOT does not assume the maintenance, it would be included in the local gasoline tax distribution.
After some dialogue, Mr. Manning pointed out that it might be helpful if NDOT informed the counties of the amount of mileages in each category. Mr. Epley concurred.
Following discussion, Mr. Locke said that in his opinion, the difference between road types A and B is that Type B has had more traffic over it; and the difference between road types B and C is that Type C has had more maintenance done to it.
Subsequent to discussion, the Chairman said that thus far no attempt has been made to reconcile the old road inventory to the new inventory and what the state was trying to do was to develop an accurate, up-to-date road inventory. He said that if this was a concern of the Subcommittee members and representatives from the entities, another meeting could be scheduled to discuss the issue. He indicated that he wanted everyone to be satisfied with the inventory that is used to determine the new formula because it will be used in future years.
Mr. McKnight (identified earlier) asked if the number that is listed in the inventory for FY 2001 (Exhibit C) is the accepted figure that will be used or will NDOT be extracting certain roads from that number.
According to Chairman Leavitt, the 10 percent audit has been completed and the Legislative Committee accepted the final road inventory.
Mr. Epley said that he believed the final inventory did not include any Type “B” roads.
In response to some of the Subcommittee members, the Chairman said that they should try to reconcile the figures distributed at the last meeting to the figures received today while taking a lunch break.
The Chairman invited Mr. Carver back to testify first since he had to leave the meeting shortly.
Mr. Carver (identified earlier) indicated that the Type “A” road in Exhibit E is a road built by usage. The difference between road Types A and B is that “A” is on a ridge and the “B” road is down in a drainage area. He suggested combining the A and B roads and change the definition to “unimproved road – a road wholly or with minor exceptions of the natural ground of the regional transverse built by usage.” It should be made clear that the Type “C” roads are graded and have drainage ditches. Mr. Carver indicated that Nye County has spent over $300,000 in a lawsuit over an issue concerning Type A and B roads. In 1993, Nye County passed a resolution following state law and defined what a road was. It was based on court cases where it was determined that a road is a way, trail, or pathway that ties two points together. Mr. Carver recommended providing a definition for Type “A” roads. He said that Ms. Neuhauser could provide the necessary information to the Subcommittee.
Mr. Law presented the new calculations to the Subcommittee regarding the fuel tax distribution (Exhibit F). These tables were calculated by 2/3 population and 1/3 road miles; and included NDOT’s version of “hold harmless.” The tables were only calculated for FY 2002 and FY 2011. He explained that the most interesting feature about the scenarios presented is because the formula was weighted heavily for population, there are not many counties between the years 2002 and 2011 that break away from “hold harmless” and have net increases compared to FY 2001. During the time period calculated, the only county that goes from a “hold harmless” county to a donor county is Churchill.
Responding to Mr. Nunes regarding how the donated amount was distributed to the deficit counties, Mr. Law said that the difference is what the formula calculated compared to what the county received in FY 2001. The amount donated to deficient counties is determined by calculating the amount available from the donor county, total amount available and the total amount needed (i.e., donor county amount divided by the total amount available and multiplied by the total amount needed).
Responding to Mr. Bates, Mr. Law said that the projected road miles were determined by using FY 2001 inventory that is provided to the Department of Taxation, but the state miles were removed. The amount was increased by a small amount to account for growth in road miles. He explained that a regression analysis was done on each county to determine how the road miles have grown over time.
Referring to Exhibit F, the Chairman pointed out the gradual movement in the formula from FY 2002 to 2011.
Mr. Nunes said that the 1/3 road miles and 2/3 population formula shows one county moving away from the “hold harmless,” which proves that this must be included as part of the formula permanently.
Mr. Bates commented that one thing that has been proven by all the discussions that have taken place at these Subcommittee meetings and the data collected is that it would be extremely difficult for the rural counties 10 years from now if no changes were made to the formula.
Mr. McKnight asked if the existing formula were continued, what damage the rural counties would incur 10 years from now. Although the “hold harmless” may be implemented today, it does not take into consideration the fact that 10 years from now there will be a significant impact on the rural counties as far as their ability to maintain roads and provide services.
The Chairman explained that the area of an entity would not change much over time. The population will change and the miles that are traveled will benefit the larger counties.
Mr. McKnight thanked the Subcommittee for its time and said that he hopes that a formula can be developed that will allow the state as a whole to continue to function.
In reply, the Chairman said that the mission of the Subcommittee was to restructure the formula so that it will fairly represent the relative need for money to maintain roads and streets. The “hold harmless” was recommended to eliminate any adverse affect to the rural counties. He indicated that the Legislative Committee over the next biennium would most likely review the financial structure of the rural counties. The first step would be to gather all the financial data possible to review the situation before deciding on a solution that would work for the long term.
Mr. Epley corrected his previous statement that Type “B” miles were included in the inventory. He indicated that these miles were not included.
Mr. Kalt, Comptroller, Churchill County, indicated that Churchill County was listed as having: 920 miles with a projected revenue of $991,000 for FY 2000; and in FY 2001 has 706 miles of road with $868,000 of projected revenue. He said that several of the counties took cuts in revenue because of the addition of the “hold harmless.”
In response, Mr. Eply said that he did not have the paperwork to see what the county submitted last year and what was accepted on this year’s inventory.
The Chairman asked if anyone had a motion on the “hold harmless” provision.
MR. BATES MOVED THAT “HOLD HARMLESS” MEANS WHEN THE NEW FORMULA IS PUT INTO EFFECT, THE MONEY THAT IS RECEIVED BY THE VARIOUS ENTITIES FROM THE PREVIOUS FISCAL YEAR WILL BE THE MONIES THAT THEY ARE GUARANTEED INTO THE FUTURE.
The Chairman added that this motion would be contingent upon the total amount available statewide and would be at least equal to that amount.
Ms. Guinasso requested clarification of whether or not the preceding fiscal year carries forward or remains the same as the FY 2001 amount.
Mr. Bates said that the 2001 amount would be the guarantee amount.
MR. NUNES SECONDED THE MOTION. ALL WERE IN FAVOR EXCEPT MS. GORDON WHO VOTED NAY.
Discussion and Possible Action Regarding Requesting the Nevada Department of Transportation to Apply the Alternative Fuel Tax Distribution Formula to the Street and Road Inventory and Alternative “Hold Harmless” Formula to the Historical and Current Distribution of the 3.6 Cents Vehicle Fuel Tax
The Chairman indicated there was some concern expressed about the difference in the inventory numbers and noted that the detail is presently not available for the Subcommittee to review. He asked if the concern was great enough to warrant scheduling of another meeting.
Ms. Gordon indicated that she voted no on the last motion because in her opinion, the Subcommittee is making some arbitrary decisions based on not having a clear picture of the numbers presented by NDOT. She requested that a separate meeting be held to discuss the numbers in more detail.
Mr. Law indicated that just before the Subcommittee broke for lunch, Mr. DiCianno, Deputy Executive Director of the Department of Taxation, informed him that he had new numbers from the state demographer. He said that the population figures should be replaced with the new figures. Mr. Law said he elected not to do that because of a discussion NDOT had with the demographer. Mr. Law said that as long as he is working on this project for the Subcommittee, he would provide them with the best available data. He also indicated that he was open to any comments and suggestions on how to improve the data. He insisted that the Legislative Counsel Bureau’s auditors, or the Fiscal Analysis Division audits the numbers prepared by the NDOT, to ensure they are correct.
Following some discussion about the confusion with the numerous sets of numbers that have been distributed, Mr. Bates clarified that the figures provided to the Subcommittee this afternoon does not include state miles.
More discussion ensued about the difference in the numbers.
Mr. Nunes recommended scheduling another meeting in order to reconcile the numbers provided by NDOT.
Ms. Gordon suggested that NDOT prepare a spreadsheet defining what is included in each column.
In reply, Mr. Law indicated that information is already included in the spreadsheets provided. He said that he spoke of three separate inventories this morning and would be speaking of about three more, including FYs 2000, 2001 and 2002. He explained that FY 2000 is what the state is presently operating under. In FY 2001 the new inventory will be used, which is much different than the one used in FY 2000. He said that the inventories for FYs 2000 and 2001 both include state miles because that is how the existing formula was done. He explained that this legislation to change the formula cannot be done until the 2001 Legislature and in FY 2002 NDOT will remove the state maintained miles.
Mr. Nunes asked for clarification that FY 2001 includes state miles and the calculations listed in Exhibit F has the state miles removed.
Mr. Law said that was correct.
In reply, Mr. Nunes said that according to his calculations, the reduction in state miles for Douglas County does not include the total amount of state miles.
Mr. Locke questioned what portion of the figures submitted by White Pine County would be included in the formula.
The Chairman said that he wanted this matter resolved so that all the entities would understand the formula. He said it might require holding another meeting to resolve this problem. He requested that Mr. Law prepare a schedule outlining the various numbers and provide copies to all the entities for their review before the next meeting.
Mr. Law said that he would have his staff work on preparing these schedules.
Discussion ensued regarding how NDOT originally gathered the information and how they should prepare new schedules for the Subcommittee and the entities to review.
It was suggested to send this information to everyone who has been involved in the Subcommittee meetings.
Mr. Welsh said that the new schedules could be mailed to the entire mailing list along with the next agenda.
The Chairman asked if anyone had objections. There were none.
According to Mr. Locke, the largely populated counties will always have to provide assistance to the smaller counties. In his opinion, when looking at the state as a whole, the existing formula was working well. He did not believe the “hold harmless” was the answer to the problems that exist in the rural communities.
The Chairman indicated that it was noted at previous meetings that consideration would be given to Tier 2 of the formula at a later date. That part of the formula would be left as it is until new alternatives are discussed during future meetings of this Subcommittee.
Mr. Kalt of Churchill County said he appreciated the process of the Subcommittee. In his opinion, he thought the Subcommittee was moving in the right direction by obtaining an accurate road mile count. As long as the counties are held harmless in the new formula, they should not be adversely affected to a big extent. He noted that Churchill County is looking forward to becoming self-sufficient and to eventually develop into a donor county.
Mr. Law requested that before adjournment, he be advised as to the type of scenarios the Subcommittee would like calculated on the “hold harmless.”
Responding, the Chairman said the way it was done by NDOT is how he would have done the calculations. He noted that the Subcommittee would work with Ms. Guinasso, the Subcommittee Legal Counsel to develop the actual language to adequately describe what is being done to the formula.
Responding to Ms. Gordon, the Chairman said another meeting date would be scheduled after the new calculations are prepared by NDOT and reviewed by all interested parties.
There being no further business before the Advisory Committee, Mr. Leavitt adjourned the meeting at 2:30 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).