Gov's plan to privatize worker compensation system not recommended

CARSON CITY - Gov. Kenny Guinn's plan to privatize a state-run workers' compensation system has limped out of a Senate committee minus a recommendation for approval.

A motion to pass SB37 failed 3-4 Friday in the Commerce and Labor Committee after several lawmakers questioned making the state Employers Insurance Company of Nevada into a private company.

The committee later voted 6-1 to move the bill to the full Senate with no recommendation - putting it in a status that has amounted to a parliamentary kiss of death for other measures.

Sen. Mark Amodei, R-Carson City, the only Republican to vote against Guinn's plan, said one concern is that the committee had only two weeks to consider a major state policy change.

Amodei also questioned whether the state would completely be relieved of EICON's $1 billion liability.

Despite the no-recommendation vote, Guinn chief-of-staff Pete Ernaut said he's optimistic the bill will pass the full Senate.

"We are firmly committed to getting the $1 billion liability off the state's balance sheets. This is clearly the most intelligent way to do that," Ernaut said. "This is our one and only chance to have that done."

As of July 1, the state will open up the workers' compensation market to competition from private companies.

At stake is premium income totaling $440 million a year. The state's share has amounted to $385 million in premiums from 46,000 employers. The rest goes to self-insured programs.

Because EICON will be competing with other firms for the first time in its 86-year history, the company is expected to lose 50 percent to 65 percent of its business. Up to 600 employees could be laid off. And those who remain with the company would lose civil service protections.

Scott Scherer, Guinn's legal counsel, said SB37 is better for the current state employees of the system because it provides severance benefits far greater than the state would.

SB37 proposes to buy out workers who want to retire early, set aside $2 million for retraining, give priority to laid-off EICON employees seeking other state jobs and allow agencies under a hiring freeze to employ the former EICON workers. The bill also gives employees the right to be placed on a priority list for other state positions for three years.

AFL-CIO representative Danny Thompson told the committee there were too many questions left unanswered in the governor's plan, especially about what would happen if the private company fails.

"I guarantee you, it will be an obligation of the state," Thompson said.

Senate Commerce and Labor Chairman Randolph Townsend, R-Reno, said he's confident the doubts will be resolved before the full Senate votes.

"It's a very big issue and the governor was very innovative," he added.

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