2009 Legislative Reform Agenda

The Las Vegas Chamber of Commerce is committed to the long-term fiscal stability of our state. With the following reform priorities touching on public employee compensation, benefits and state budgeting practices, the Chamber looks forward to working with lawmakers and other community partners to ensure our state is on a sustainable fiscal path.

The reform priorities follow a series of fiscal analysis reports performed by Jeremy Aguero of Applied Analysis and Guy Hobbs of Hobbs, Ong & Associates. The purpose of these reports was to help determine where taxpayer dollars are currently being spent and to provide a factual foundation from which the Chamber can make informed public policy recommendations.

Reform Priority #1

Support legislation that aims to reform the Public Employees' Retirement System (PERS) for new public employees.

Background: Nevada pays retirement benefits of 75 percent of a retiring employee's three highest consecutive years' salary. This, plus the combination of an aggressive annual retirement benefit factor (one of the highest in the nation), favorable policies regarding when employees can retire (there is no minimum age for retirement with 30 years service) and the relatively low amount (if any) employees are required to directly contribute toward their own retirement, all applied to higher than-average salaries, makes Nevada PERS one of the most generous public employees' retirement systems in the nation.

In order to address the $6.3 billion (and growing) unfunded liability of PERS and to protect the future generations of Nevada from fiscal instability, the Chamber recommends the following legislative action be taken during the 2009 Legislative Session:

1. Redefine "compensation" for the purposes of benefit calculations.
2. Increase the number of years used to calculate final average salary for the purposes of benefit calculation.
3. Cap annual increases, for purposes of benefit calculation.
4. Lower the benefit factor, increasing the number of years an employee must work to receive the full benefit.
5. Establish a minimum age for retirement benefit collection.
6. Restrict benefit enhancements until plan has no unfunded liability.

Reform Priority #2

Support legislation that aims to reform the Public Employees' Benefits Program (PEBP).

Background: Unless action is taken to significantly redesign, reduce or eliminate the state's health insurance subsidy program, or to devise a viable pre-funding mechanism, the estimated $4.0 billion unfunded liability is expected to grow as the state's workforce increases, retired workers live longer and medical costs rise over time.

In order to address the $4.0 billion unfunded liability of PEBP and to protect the future generations of Nevada from fiscal instability, the Chamber recommends the following legislative action be taken during the 2009 Legislative Session:

1. Eliminate the PEBP retiree health care subsidy for all new employees.
2. Reduce the PEBP retiree health care cost for all current employees.
3. Eliminate PEBP retiree health care subsidy for all current employees when they become eligible for Medicare.

Reform Priority #3

Support legislation that aims to bring local and state government employees' wages more in line with those of the private-sector.

Background: Nevada's average local government employee pay ranks 8th highest among public sector pay in the 50 states and the District of Columbia. On average, a Nevada public sector employee is paid roughly 28 percent more than a private sector employee in a similar job classification. Nevada's average state public employee earns 102.4 percent of the national average paid to public sector employees, while local government employees in Nevada, excluding teachers, make 131 percent of the national average.

In order to bring local government employees' wages more in line with state government employees and those of the private sector, the Chamber recommends the following actions be taken in the 2009 Legislative Session:

1. Bring transparency to the collective bargaining process.
2. Provide balance to the provisions contained in NRS 288 governing the arbitration process.

Reform Priority #4

Support legislation that creates a "rainy day" fund for K-12 education funded by reversions that now go to the State's General Fund.

During the last 30 years, more than $680 million have been reverted to the State's General Fund. During that same time frame approximately $180 million of additional State General Fund money has been needed to fund K-12 education at legislatively approved levels. The difference of approximately $500 million has been spent in various ways by the Legislature. Reversion dollars would be best used to buffer K-12 education from inevitable economic downturns.

Reform Priority #5

Support legislation that modifies the existing Budget Stabilization Fund to make the fund a more viable tool to mitigate any impact the economy may have on the General Fund and the operation of state government.

Background: Although the Legislature has passed budgets with some reserves, the amounts have been significantly less than the reserve amounts that are allowed. Current budget practices put essential programs at unnecessary risk by adding new programs and services during surplus years without sufficient resources to fund these additions into perpetuity. State law includes a "largely illusory" expenditure cap. In fact, only the Governor's General Fund Budget is affected and even the Governor has the discretion to recommend placing revenues and expenditures in non-general fund areas of the budget and outside the reach of the statutory cap. The Legislature can spend any amount it deems necessary, as long as funds are available.