Archive for February 2011

Senate Dems say Sandoval budget breaks faith with voters

February 25, 2011

Senate Democrats accused Governor Brian Sandoval on Thursday of plugging an “arbitrary and capricious” number into his budget. They further claimed the governor broke faith with voters when he proposed that school district bond reserve accounts be used for operational expenses, rather than building and improvements.

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Republican senate caucus pledges support for Sandoval budget plan

February 24, 2011

A letter bearing the signatures of Nevada’s ten Republican state senators was sent yesterday to Governor Sandoval, pledging unwavering support for his plan to “balance the budget while fighting job-killing taxes.” The caucus further gives its collective word to “stand together on our core beliefs.”

“We are committed to working with you and Lt. Governor Krolicki to generate new private sector jobs, promote small business growth and investment, and create public policy that makes Nevada the most business-friendly state in America,” the letter says.

The caucus also expresses philosophical solidarity with the governor.  “It is essential that those of us who share a common belief in limited government, personal responsibility, lower taxes and a better quality of life for Nevadans stand strong to protect families and businesses.”

Dennis Hoff uses the only weapon he brought — his mouth

February 23, 2011

As promised, the unedited response from the brothel industry to Harry Reid’s call to outlaw it (posted below). In this audio file, you will hear several voices, including those of brothel owner Dennis Hoff, who attended the Senator’s speech in the Assembly Chambers yesterday.

Hoff told the Reasonable Reporter he was frisked and searched by both the Secret Service and the legislature’s own police force. Hoff says these authorities — unclear which ones — asked him whether he’d brought a weapon. He pointed to his mouth, he said, and he told them yes.  He brought it and he intended to use it.

Other voices you’ll hear: industry lobbyist George Flint, Nevada Brothel Association president Jeff Arnold, professional prostitutes Bunny Love and Brooke Taylor, and various members of the Nevada press corps.

Highlights:  They discuss the unlicensed sex for sale in Las Vegas, and the legal precedent they say would allow them to fight any attempt to close brothels. (The brothel license is property, and shutting them down is a taking, they say.  Combined value of the licenses is in the hundreds of millions.)  The women describe life in the cathouse as better than life on the street, and express their outrage at the suggestion that children are looking out the school bus window at sexually untoward activity. (He wants sex offenders to have more rights than we do.)  The potential job loss and impact to the counties is also covered.

Hear the full half-hour response of legal prostitution to Senator Reid’s speech. This was an informal press conference in the hallway outside the Assembly Chambers.  Hear the file by clicking on the flash player below.

If you do not have a flash player you may download the file directly by clicking here. The file is about a half-hour long.

Harry Reid: Brothels keep business out of Nevada

February 22, 2011

Senate Majority Harry Leader Reid defended the effectiveness of the federal stimulus package today during a visit to the Nevada legislature. He also boosted GM,  Chrysler, and green energy, criticized term limits, and suggested that businesses are reluctant to relocate to Nevada because of legal prostitution.

“If we want to attract business to Nevada that puts people back to work, the time has come to outlaw prostitution,” the senator told a joint session of Nevada Legislators.

The industry launched an immediate and spirited counter-attack in the hallway outside the chambers.  Brothel owner Dennis Hoff and long-time industry lobbyist George Flint lashed out, saying hundreds of jobs would be lost in the brothel counties. Fifteen hundred women would be deprived of their small businesses they said, and in one county, the only doctor would have no reason to stay.

Flint said he found out from a friend who overheard someone close to Reid on Saturday night telling State Senator Sheila Leslie that the majority leader would call upon state lawmakers to end legal prostitution.

Hoff, who was accompanied by several of the potentially affected women, angrily accused Reid of using prostitution to distract from his own performance in the United States Senate.

More to follow, with audio.  Meanwhile, in the photo below George Flint holds the press and a small number of his clients rapt, as he rails against Reid (whom he said is a long-time and beloved friend), and Las Vegas, where he says AIDS and other problems are rampant because of street-walking prostitutes.

Clarification – AB 144 and the possibility of identity theft

February 16, 2011

Legislative Counsel Brenda Erdoes has offered clarification about the provisions of Assembly Bill 144 requiring the names, driver’s license numbers, and earnings of Nevada construction workers to be available for inspection by the public.

As discussed previously in this space, the purpose of the requirement is to provide proof that at least 50 percent of workers on a construction project are Nevadans. The chain of custody for this personally identifying information (PII)  is as follows:  The building contractor records driver’s license or state ID numbers of the workers, and turns the information over to the city or other agency with whom he has a project labor agreement building contract.  The city retains the information, and must make it available for public inspection upon request. (Correction subsequent to post.)

The plain language, as they say in legal circles,  suggests an identity theft bonanza.  It suggests that any person can walk in off the street and ask to see project records that include this personally identifying information.

Ms. Erdoes points to other Nevada statutes she believes will mitigate the likelihood of data breach.  NRS 239B.030 provides that nobody is required to provide personal  information to government, unless the administration of a government program requires it. In which case, the information must be “… maintained in a confidential manner,” and disclosed only for the purpose of the intended program.

Don’t assume government agencies know how to handle confidential data properly.  The Reasonable Reporter snapped this photo one morning while waiting to talk with a government official.   Based on the post-it note, the documents on the reception desk were  to be picked up by someone without an access card to the secure area.  They were positioned so that anyone in the lobby could reach under the glass and grab them.  The docs contained personally identifying information, and  it was clearly visible.

The construction businesses, too, must follow a Nevada statute regulating personally identifying information,  Ms. Erdoes told the Reasonable Reporter. NRS Chapter 603A contains PII rules for business.  These entities, like the government, are expected to know and follow the law as it relates to handling PII. The daily headlines suggest many businesses of the size that dominate this category aren’t aware of their obligations to protect PII, much less how to do it. Certainly, nobody representing these businesses raised concerns about AB 144’s red flags during this week’s hearings in Government Affairs. That begs the question.

The Reasonable Reporter continues to believe that everyone is at risk here.  Without specific direction on handling PII, the employers risk breaking other state laws, and perhaps federal laws, even as they follow the new law. The construction workers are subject to a regulatory scheme requiring them to risk their security in order to earn a living.  The government workers who receive and store the data are also required to hand it over to the public and the press.  Since it’s contained within a larger package that’s legally required to be available to the public, will they be aware of the sensitive contents?  These folks risk disciplinary measures just for doing their jobs, unless they have specific instructions about how to proceed upon initially receiving these packages. And, not to put too fine a point on it,  see photo above.

The question for Ms. Erdoes and the Legislative Counsel Bureau is, why does AB 144 fail to incorporate references to the above-named statutes that direct data handling procedures?  And is the mere existence of these other laws sufficient as constructive notice, when awareness of cybercrime and identity theft is still developing? Ms. Erdoes says it would be impractical to cite the many sections of relevant Nevada law for each new provision that deals with PII.

No man’s personal identity is safe while the legislature is in session.

February 14, 2011

Priority jobs bill is first this session to create threat of ID theft.

There’s an old saying.  No man’s  life, liberty, or property are safe while the legislature is in session.  Let’s add to that list his personal identity.

In the 2009 session, the Reasonable Reporter counted 39 bills containing some element that would create a possibility of identity theft, or would potentially compromise data confidentiality and privacy.  There may have been more than 39. Those were the ones that came to notice.

This could be another legislative session where ordinary Nevadans would toss and turn at night, if only they knew the extent to which their Personally Identifying Information serves as fodder for legislation.

The Reasonable Reporter is dismayed to announce the inaugural entry into her own 2011 Nevadans at Risk for Information Theft database.  It’s AB 144, the Nevada Jobs First initiative, which has been highlighted as an important bi-partisan effort.

In the interest of putting unemployed Nevadans back to work, the bill stiffens the requirements for building contractors who bid on projects involving public money.  The objective is laudable. The bill says Nevadans must comprise at least 50 percent of the workforce for such a project.

The method to carry out the objective is disconcerting.  The workers must have a Nevada driver’s license or ID Card. The contractor is required to record driver’s license numbers, along with names, per diem compensation, and benefits paid.  The contractor is further required to make this information available to the contracting city or other government agency in charge of the project. In turn, the city (or other agency) is required to make the information available for public inspection upon request.

Which means that the personally identifying information (PII is the term of art) belonging to Joe Sheet Metal Worker will be available to any member of the public upon request, along with the amount of money Joe is earning, and his employer’s name.

Questioned this morning about driver’s license numbers paired with names and other personal information, and packaged up as public information, the counsel to the Assembly Government Affairs Committee seemed unconcerned.  The sponsors of the bill were not immediately available to comment.

But serving up this combination of data points about an individual conjures disturbing possibilities for abuse.  There are, for instance, criminals who would manufacture a license featuring their own photo along with someone else’s name and driver’s license number for the purpose of boarding an airplane, or opening a bank account.  This brand of identity theft is not only rampant by the actual perpetrators of such crimes, but there’s a multi-billion dollar worldwide black market for such PII.

The state of Nevada has addressed PII in statute, defining it as it relates to identity theft, and outlining certain requirements for entities who handle such data in the course of their business. Does the existing statute have application to the provisions of AB 144?  Is Nevada placing building contractors in legal jeopardy under AB 144? Is Joe Sheet Metal Worker expected to trade the security of his personal identity in return for a chance to get back to work?

The Reasonable Reporter is no lawyer, but here is the definition of PII in NRS 205.4617

(a)    The current or former name, driver’s license number, identification card number, social security number, checking account number, savings account number, credit card number, debit card number, financial services account number, date of birth, place of employment and maiden name of the mother of a person.

Business entities that keep PII are required by various laws to protect it.  The businesses spend millions of dollars doing so, to avoid fines, lawsuits, dangers to their employees, and embarrassment to their companies.  The building contractors referenced in AB 144 must certainly be required, at some legal level, to protect PII.  And beyond the law, how about best practices for handling sensitive information?

It’s notable that protection of PII is not more central to the legislative process. The Reasonable Reporter had hoped that the increasing presence of Cybercrime in the headlines would heighten the awareness for state legislators this session. In fairness, lawmakers are generally very focused on policy objectives, and the money to accomplish their policy objectives.  When the policy is developed, and the money has been won, they’ve done their jobs.  Or so it used to be.

There is a constant legislative push, though, to digitize this and database that.  To capture data about the citizen and to store the information. There is also drive for transparency, which is seemingly the objective AB 144.  These goals raise PII concerns, and there should be a PII checklist for bill drafters.

Amazon to Texas: “Kiss my job-creatin’ ass.”

February 12, 2011

Online retailer Amazon announced this week that it will scrap its expansion plans in Texas, and close down its existing facility in the state. This, as Texas pursues the Seattle-based internet company for taxes on sales to Texans.  Its distribution center just outside Dallas is a legal sales tax target, says State Comptroller Susan Combs, and she’s demanding $269 million from Amazon.

Amazon has turned tail and told Texas to pucker up.

Here, we clearly see a single strand in a tax discussion with many threads. The outcome, sooner or later, will surely be an internet sales tax on residents of all states.  The dominant voices in the discussion are as follows:

The Main Street merchant without a web presence, to the extent that such retail entities still exist. When the “Main Street Fairness” battle began, there were no internet sales. It was a fight to level the playing field against direct mail merchants, who were flooding mailboxes with slick catalogs, using zip codes and neighborhood profiles to target likely customers with new precision. They were amateurs by the standards of today’s browser cookie hounds, but it was a blow to the gut of  Main Street, which launched a campaign to tax “remote transactions,” hoping to drive customers away from the mail box and back into the stores.

We all know what happened next.  Consumers embraced ecommerce, and most merchants decided, wisely, to join ‘em if you can’t beat ‘em.  Those who took the internet seriously have thrived in both their physical and their online locations. The glossy catalogs that jammed mailboxes a few short years ago are as rare today as phone booths, and the savvy Main Street merchant has adopted a synergistic approach. But the Save Main Street theme endures.

Big Silicon Valley software companies – ka-ching! – recognized Main Street’s pain.  Big Software applied its algorithmic expertise to smoothing out tax collection on, let’s say, a sweater, which would be subject to various tax rates in thousands of jurisdictions, depending on the location of the merchant or the shopper. There would be gold in them thar hills for Big Software if it could streamline sales tax collection across state lines.

COLUMN CONTINUES AFTER THESE AUDIO LINKS

You can hear Executive Director Dino DiCianno of the Nevada Department of Taxation discussing the current legal status of the Streamlined Sales Tax by clicking on the flash player below.  DiCianno attended the meeting of the Senate Revenue Committee on February 10, 2011. The other voice belongs to Committee Chair Sheila Leslie.

The audio file is 6 minutes and 40 seconds long.

If you don’ t have a flash player, you can hear it by clicking on the link below the player.

http://dataclonelabs.com/rr/DiCianno_Streamlined.mp3

State legislators across the land seized eagerly on the Streamlined Sales Tax concept, calculating the money that had slipped away as folks shopped across state lines.  Lawmakers in both parties jumped on board an interstate taxing compact. Thus,  all states could collect their share of the lost loot, and no single elected body or politician would feel the heat. But nobody forgot that the mouse is clicked by warm fingers attached to human voters. Nobody sent out a press release  bragging that they’d helped paved the way for an internet sales tax.

The other big advocates for the Streamlined Sales Tax are lobbyists. They represent almost every tax-dependent constituency in the state, and almost every tax-paying business in the state.  No matter their politics, these folks promote the Streamlined Sales Tax every chance they get, for two reasons.

First, a sales tax is not a new tax. An internet sales tax would  feed the hungry beast while offering political cover. Second, internet commerce is conveniently nebulous.  An internet sales tax hits the proverbial “guy behind the tree.”

In Nevada, the enabling legislation was passed years ago,  in the frenzied, final hours of a now-distant legislative session. It got scant attention from the press or the mouse-clicking consumer. The law  inhabits dozens of pages in the Nevada Revised Statutes, and does not once spell out the phrase “internet sales tax.”

The wheels of progress have turned slowly for Streamlined Sales Tax advocates.  The mechanism is in place, and could start filling state coffers immediately but for a U.S. Supreme Court decision that says sales tax can be collected only from businesses with a physical “nexus”  in the state, generally construed as a brick-and-mortar store. Texas construes this more liberally.  Amazon does not.

With or without the Streamlined Sales Tax, Nevada law requires everyone who makes any purchase from an out-of-state vendor to pay a use tax. Nevada Taxpayers Association President Carole Vilardo routinely takes a poll in any room where she’s the featured speaker. Who, in this room, she asks, has bought merchandise from a website? And how many of you then surfed over to the Department of Taxation website to pay the use tax? By a show of hands, virtually everyone is a tax scofflaw.

The Reasonable Reporter must disclose having worked for the Nevada Taxpayers Association for a year, and further discloses an abiding affection and respect for Carole Vilardo. But the Streamlined Sales Tax was and is a subject on which we disagree. It’s a disagreement rather resembling one Helen Keller might have had with Anne Sullivan. Yours truly plays the role of Keller in any technical discussion of taxation, including this one.

The Reasonable Reporter has long believed, though, that the Streamlined Sales Tax would produce the Texas-Amazon phenomenon writ large – pushing ecommerce distributors out of the United States, and costing many jobs, on top of the lost sales taxes. Texas will lose 119 existing jobs, in addition to the jobs that might have been, had Amazon gone forward with its expansion.

Internet sales tax evasion is a compliance issue, not a taxation issue, as Carole Vilardo herself said this week to a legislative committee. On this, we do agree.  

No matter the law, every company will seek to lessen its tax burden. So will consumers, if they can get away with it. The law says you’re supposed to pay on out-of-state purchases.  The law also forbids you to exceed 70 miles-per-hour on U.S. Route 95 between Hawthorne and Las Vegas.  By a show of hands….