The 79th Legislative Session in Nevada convened on February 6th of this year and, as they do most sessions, adjourned 120 days later on June 5th. In the eyes of most it was a quiet session, especially after the volatile 2015 legislature, which saw the largest increase in taxes in state history. Many big issues were debated amongst legislators but no shocking bills made their way into law. Nearly 650 bills were approved by the Nevada Senate and Assembly and 608 of those bills were signed by Governor Sandoval to become law.
To give some insight into the 2017 Session, a panel of experts recently gathered at the Atlantis in Reno and weighed in on business-related legislative topics, from healthcare to minimum wage. The panel discussion was held in the middle of last month and moderated by Greg Ferraro of the Ferraro Group. Ferraro is a veteran lobbyist and political advisor.
The breakfast event was hosted by Nevada Business Magazine and sponsored by Fennemore Craig Attorneys. Panelists included majority floor leader for the Assembly, Assemblywoman Teresa Benitez-Thompson (D-Reno); interim president for the Nevada Taxpayers Association, Cheryl Blomstrom; assistant minority floor leader for the Senate, Senator Ben Kieckhefer (R-Reno) and Jim Wadhams, a director with Fennemore Craig with over 35 years of experience dealing with the Nevada legislature. The experts on the panel gave a well rounded view of the last legislative session with both elected officials and business representatives sharing their perspectives on the issues.
The 800-Pound Gorilla – Healthcare
While some may call the last legislative session quiet, in the words of Wadhams, “I think that depends on who you talk to. If you talk to my friends who run hospitals or who are physicians, they found this session to be extremely challenging.”
Healthcare is certainly a challenge, both in Nevada and across the nation. And, it’s one legislators haven’t yet found a solution for, especially with unknown changes looming at a Federal level.
“They couldn’t resolve [the healthcare issue] and I have great sympathy for that,” said Wadhams. “Unless we know what [Congress] is going to do, we can’t expect our legislators to position Nevada in response to anything.”
“We have a constitutional mandate to pass a balanced budget,” said Benitez-Thompson. “The only way we can pass a balanced budget is to work with known factors, known revenue and known expenses. We have no idea what Congress will do and so we wait and see.”
“If you can tell me now what Congress is going to do, I can create a state budget around it,” added Kieckhefer. “I can’t tell you what Congress is going to do and I think you probably can’t either. We had the discussion early in the session about how to deal with our Medicaid budget and our Department of Health and Human Services budget, based on the discussions going on in D.C. We decided early, because it was the only reasonable thing to do, to create our budget based on existing law.”
With uncertainty at the Federal level, legislators did what they could in regards to healthcare. “In other areas of healthcare, we did take steps forward,” said Kieckhefer. He added that, “renewed investment in continuing medical education, which is what brings doctors to our state, a focus on getting access into rural communities and creating a new FQHC (Federally Qualified Health Center) in Las Vegas,” all contributed to improving healthcare for Nevada.
“Those things benefit in the long term,” added Blomstrom. “Did it help today? No. But in a decade? Absolutely.”
Paying for Health
One of the biggest issues the legislators faced this session in regards to healthcare was what to do about Medicaid and reimbursements.
“There are about 630,000 people on Medicaid in the state of Nevada, half of those are the elderly and people with disabilities,” said Benitez-Thompson. “What do I do if the Federal government decides that they’re not going to reimburse Nevada anymore at the current Medicaid rate, already a substantially reduced rate, for caring for these people? In Nevada, we simply don’t have the budget to cover that expense, or even 50 or 60 percent of it. It would be another big, probably record-breaking tax, in order to cover those people.”
Added to that, physicians in Nevada are facing a potential ballot initiative that would cap reimbursements at a Medicare rate, regardless of how much service they provide. In fact, some have suggested that a cap on how much doctors can charge may be a solution to address healthcare costs.
“There was physician-based legislation for emergency situations, putting caps in terms of how much can be charged for people who are out of network,” said Kieckhefer. “Oftentimes, how much doctors make is determined by what they negotiate with an insurance company. As we move more people onto publicly funded programs, the cost for everybody else goes up. As we cost shift to public resources, those always pay less than the cost of actually providing care. Medicaid pays 50 cents on the dollar for providing care. We say Medicaid costs so much; the facilities and doctors pick up half the tab.”
“Artificially suppressing anything is like me asking you to set your price at ‘X’ because that’s what I want to pay when ‘Y’ is what it costs to deliver,” said Blomstom of a possible cap. “If you can’t make those match with a little left over that you can reinvest in your business, your employees and grow what you do, you’re not going to stay in business. It’s the same for hospitals. It’s the same for a doctor.”
“All of these issues, in many ways, tie back to a very common theme in a business community,” said Wadhams. “We have to compete to get customers, we have to compete for a workforce. Let us try to figure out what’s going to get us that workforce because, at the end of the day, we have to make a profit or we’re going to go out business.”
The Elephant in the Room – Minimum Wage
“This session it was the elephant in the room from day one,” said Ferraro of a minimum wage increase. An issue that has been looming for a few years, legislators made attempts to pass a minimum wage bill in the forms of AB175 and SB106. Both were vetoed by Governor Sandoval. Ultimately, the legislators passed SJR6, a resolution that would propose to amend the Nevada state constitution in regards to minimum wage and something that will be addressed next session for a vote of consideration.
“The reason we wanted to have a conversation on minimum wage this session is because we believe it’s coming,” said Benitez-Thompson. “We believe that if it didn’t come to the legislature it was going to come by ballot. I will tell you this, and I believe most people who are familiar with ballot process politics agree, you don’t necessarily get great laws by ballot process initiatives. They’re not always well written; they’re meant to appeal to the masses. A question on the ballot in the next cycle on minimum wage is probably going to be there. Who knows how it will be written, what it will mandate? And, it will be absolutely out of our control to effectuate that process.”
“I do not disagree,” said Blomstrom. “What happens on the ballot is not within our control; not within your control, quite frankly. We’ve got a fun case study going on right now in the city of Seattle. They did, essentially, what was proposed [by Nevada legislators] and they’re seeing decreases in part-time wages, they’re seeing decreases in wages to minimum wage employees.”
“If we were to have a real discussion about the comprehensive look at how businesses compensate their employees, it would have been much easier to reach a compromise on something like a minimum wage increase,” added Kieckhefer.
“I think there was a discussion, both publicly and privately, about reaching a compromise,” said Wadhams. “At the end of the day, it couldn’t quite be reached to find something that would work.” He went on to add that he also agrees, “the minimum wage issue is probably going to be on the ballot by outside forces, by the political process, by the legislative process as well. It’s an issue that the business community is going to have to prepare itself for.”
Boons for Business
While minimum wage and healthcare were issues that had to be tabled for a future session, legislators did pass several bills that were designed to give Nevada businesses a boost. Among those are AB280, which gives a 5 percent preference to qualified Nevada businesses bidding on state contracts.
Another was AB436 which would provide a resource, especially for small business, to learn about different public and private financing opportunities. Essentially, the bill would consolidate financing information for business to have a one-stop shop to find out which public and private programs are available to help them grow.
“One [bill that passed] that I thought was really cool was the extension of the Nevada Grow program,” said Benitez-Thompson. “The businesses who have been around for a few years but are looking to grow and expand, how do we address the barriers they have? With the Nevada Grow program, we are putting in $150,000 each year of the biennium to help with the concept of economic gardening. [The program is for] small businesses with revenues of $150,000 a year who are ready to expand, ready to grow, but don’t necessarily have the capital to invest in a lot of research and development.”
Education, which remains a challenge in Nevada, was also addressed this session. “As you know, an educated workforce is one of the most important components of your business,” said Blomstrom. “This session continued the efforts that started in the 2015 legislative session.”
She added that legislators, “created programs in 2015 that put Nevada on the leading edge of trying to change some of the [educational] problems we’ve experienced over decades. This year, both sides of the House, democrats and republicans, worked really hard to make sure those programs continue and the product that comes out of our schools will be ready, willing and able to be your employees.”
“Probably the most significant thing that determined the outcome of the legislative session was the election of Brian Sandoval,” said Kieckhefer. “The governor served as a backstop against a lot of anti-business legislation that was introduced and, either died because there was no chance the governor was going to sign it, or was pared back in the hopes of getting the governor’s signature.”
In fact, Governor Sandoval set a record this session for vetoes. The 41 bills he rejected in 2017 is the second-highest amount in Nevada history. (Governor Gibbon’s 48 bills in 2009 is first.) Those 41 bills, when added to the 52 over the course of Sandoval’s time in office, set a new record for most vetoes by any governor at 93 measures rejected in total.
“The number of vetoes represents the balancing between the branches of government,” explained Wadhams.
“One of the most important things that happened this legislative session was, the business community came together,” concluded Blomstrom. “The business community met regularly and worked together, even on issues where there wasn’t 100 percent agreement. The benefit of that showed at the end of the day, what came out and what the governor signed and, arguably, what the governor vetoed. The strength and constancy of the business community was as strong in this legislative session as I’ve ever seen it.”