Nevada § 354.685 - Severe financial emergency: Conditions; notification of local government by Department of Taxation; plan of corrective action; review of plan by Committee on Local Government Finance; order of Nevada Tax Commission requiring Department to take over management of local government

§ 354.685. Severe financial emergency: Conditions; notification of local government by Department of Taxation; plan of corrective action; review of plan by Committee on Local Government Finance; order of Nevada Tax Commission requiring Department to take over management of local government

1. The Committee may, upon the recommendation of the Executive Director pursuant to

subsection 2 or at the request of a local government pursuant to subsection 3, conduct

one or more hearings to determine whether a severe financial emergency exists in a

local government. 2. The Executive Director may, after giving consideration to the severity of each

condition identified in paragraphs (a) to (aa), inclusive, which is found to exist

in a local government, recommend that the Committee conduct one or more hearings to

determine whether a severe financial emergency exists in a local government if the

Department finds that one or more of the following conditions exist in the local government: (a) Required financial reports have not been filed or are consistently late. (b) The audit report reflects the unlawful expenditure of money in excess of the amount

appropriated in violation of the provisions of NRS 354.626 . (c) The audit report shows funds with deficit fund balances. (d) The local government has incurred debt beyond its ability to repay. (e) The local government has not corrected violations of statutes or regulations adopted

pursuant thereto as noted in the audit report. (f) The local government has serious internal control problems noted in the audit

report which have not been corrected. (g) The local government has a record of being late in its payments for services and

supplies. (h) The local government has had insufficient cash to meet required payroll payments

in a timely manner. (i) The local government has borrowed money or entered into long-term lease arrangements

without following the provisions of NRS or regulations adopted pursuant thereto. (j) The governing body of the local government has failed to correct problems after

it has been notified of such problems by the Department. (k) The local government has not separately accounted for its individual funds as

required by chapter 354 of NRS . (l) The local government has invested its money in financial instruments in violation

of the provisions of chapter 355 of NRS . (m) The local government is in violation of any covenant in connection with any debt

issued by the local government. (n) The local government has not made bond and lease payments in accordance with the

approved payment schedule. (o) The local government has failed to control its assets such that large defalcations

have occurred which have impaired the financial condition of the local government. (p) The local government has recognized sizeable losses as a result of the imprudent

investment of money. (q) The local government has allowed its accounting system and recording of transactions

to deteriorate to such an extent that it is not possible to measure accurately the

results of operations or to ascertain the financial position of the local government

without a reconstruction of transactions. (r) The local government has consistently issued checks not covered by adequate deposits. (s) The local government has loaned and borrowed money between funds without following

the proper procedures. (t) The local government has expended money in violation of the provisions governing

the expenditure of that money. (u) Money restricted for any specific use has been expended in violation of the terms

and provisions relating to the receipt and expenditure of that money. (v) Money has been withheld in accordance with the provisions of NRS 354.665 . (w) If the local government is a school district, a loan has been made from the State

Permanent School Fund to the school district pursuant to NRS 387.526 . (x) An employer in the county that accounts for more than 15 percent of the employment

in the county has closed or significantly reduced operations. (y) The local government has experienced a cumulative decline of 10 percent in population

or assessed valuation for the past 2 years. (z) The ending balance in the general fund of the local government has declined for

the past 2 years or is less than 4 percent of the actual expenditures from the general

fund of the local government for the immediately preceding fiscal year. (aa) The local government has failed to pay, in a timely manner, contributions to

the Public Employees' Retirement System, workers' compensation or payroll taxes or

fails to pay, at any time, a payment required pursuant to the Federal Insurance Contributions

Act, 26 U.S.C. §§ 3101 et seq., or the Federal Unemployment Tax Act, 26 U.S.C. §§ 3301 et seq. 3. If the governing body of a local government determines by the affirmative vote

of a majority of its members that, because the local government is involved in litigation

or threatened litigation, a severe financial emergency will exist in the local government,

the governing body may submit a request to the Committee to conduct a hearing to determine

whether a severe financial emergency exists in the local government. 4. If the Committee conducts a hearing pursuant to subsection 2 or 3 and determines

that a severe financial emergency exists, the Department, on behalf of the Committee,

shall: (a) Notify the local government about the determination; (b) Request from the local government any information that the Department deems to

be appropriate to determine the extent of the condition; and (c) Require the local government to formulate a plan of corrective action to mitigate

the possible financial emergency. 5. Not later than 45 days after receiving notification pursuant to subsection 4, a

local government shall submit to the Committee any information requested by the Department

and a plan of corrective action. 6. If the Committee determines that a severe financial emergency exists pursuant to

subsection 4, the Committee shall: (a) Review the plan of corrective action submitted by a local government pursuant

to subsection 5; (b) Provide observations and recommendations for the local government; and (c) If the Committee deems necessary, periodically review the status of and conduct

additional hearings to review the financial operations of the local government. 7. In addition to any notice otherwise required, the Department shall give notice

of any hearing held pursuant to this section to the governing body of each local government

whose jurisdiction overlaps with, or in the case of a city, whose jurisdiction is

contiguous to, the jurisdiction of the local government whose financial condition

will be considered at least 10 days before the date on which the hearing will be held. 8. If the Committee, following a hearing conducted pursuant to this section, determines

that a severe financial emergency exists in a local government, the Committee shall,

as soon as practicable, provide notice of its findings, including any recommendations

of the Committee, to the Commission. 9. The Commission shall, upon receiving a notice and any recommendations from the

Committee pursuant to subsection 8, hold a hearing at which the Department and the

Committee must recommend a course of action to mitigate the financial conditions that

are the cause of the severe financial emergency which exists in the local government. The Commission shall afford the local government whose financial condition will

be considered and each local government whose jurisdiction overlaps with, or in the

case of a city, whose jurisdiction is contiguous to, the jurisdiction of the local

government whose financial condition will be considered an opportunity to be heard. If, after the hearing, the Nevada Tax Commission determines that a severe financial

emergency exists, the Commission shall issue an order requiring the local government

to follow a remedial course of action and requiring the Department to take over the

management of the local government as soon as practicable.