Tuesday, May 6, 2003 | 8:48 a.m.
CARSON CITY -- The Senate Finance Committee on Monday voted to correct a $5.3 million error in Gov. Kenny Guinn's budget, much to the relief of the estimated 5,000 retired employees covered by state health insurance.
Martin Bibb, executive director of the Retired Public Employees of Nevada, said the action by the committee was "the right decision and we applaud the committee."
The state pays an average subsidy of $263 a month to cover part of the cost of health insurance for retired state workers. Guinn proposed raising that subsidy to $280 next year and $316 per month the following fiscal year. But he failed to include the money in his budget to handle the increases.
Jim Richardson, lobbyist for the Nevada Faculty Alliance of the University and Community System, told the Finance Committee "this was a calculation error made by the executive office."
He said it would mean retirees would have to pay anywhere from $32 to $52 a month more out of their own pocket at a time when the state's health insurance benefits are being reduced.
"You should consider some option that doesn't soak the retirees," Richardson said.
The money for the subsidy comes from assessments against each agency in the state. Guinn's budget office made a wrong calculation in computing the amount, leaving the program short.
Senate Majority Leader Bill Raggio, R-Reno, asked Deputy State Budget Director Andrew Clinger what the administration wanted to do. Clinger said the governor and state Budget Director Perry Comeaux decided to wait two years to catch up with funding the $5.3 million.
Raggio called that a "smoke and mirrors" approach. He said the committee is going to have to find the $5.3 million, of which $3.3 million is from the state's general fund and the rest comes from agencies that are supported from fees and federal funds.
Clinger said the administration would like to put the $5.3 million back in the budget but "we don't know where to get it."
The committee decided to raise the assessment each agency must pay to fully fund the retirees' subsidy.
Bibb said to follow the recommendation of Guinn "would be a big step backwards" in the health insurance plan that has been plagued with money problems in the last five years.
Assemblywoman Chris Giunchigliani, D-Las Vegas, vice chairwoman of the Assembly Ways and Means Committee, said her committee would also restore the money for the state retired workers.
The Senate committee approved Guinn's recommendation to boost the amount the state pays for active employees for their health insurance for the next two years. The state contribution of $465 per month for each employee to cover the full premium will rise to $495 next fiscal year and to $558 the following year. Employees pay the premiums for their dependents.
The health insurance plan has been operating at a loss, despite a cash infusion of about $18 million last year. The cash balance will have dwindled to $3.9 million by June 30, officials have said.
The premiums recommended by Guinn and adopted by the budget committees will help rebuild the reserve to $15.4 million by June 30, 2005.
Sen. Bob Coffin, D-Las Vegas, who is in the insurance business, complained that adopting the Guinn recommendation would mean the system will still be short of money.
"They have screwed this down too tight and we will be short of funds," he said. He predicted the system may have to be bailed out in the interim before the 2005 Legislature meets.
But Clinger said the predicted reserves of $15.4 million will be adequate to get the system through the next biennium.
The total appropriation for the health insurance system over the next two years will be $458 million.
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