Commission urges cuts in benefits to state workers

By Cy Ryan

Tuesday, Dec. 30, 2008 | 6:53 p.m.

CARSON CITY – A state efficiency commission is recommending major cutbacks in the insurance and retirement programs for state workers and retirees that could save more than $50 million next fiscal year and $614 million over five years.

The Nevada Spending and Government Efficiency Commission said in a new report that the salaries paid to state workers are similar to equivalent positions in the private sector. Commission Chairman Bruce James said, however, that the insurance and retirement benefits offered to state employees “exceeded the Nevada private sector and most other states by a wide margin.”

The report was the second presented to Gov. Jim Gibbons, who is looking for ways to balance the state’s budget with sinking revenues.

“All of our commissioners expressed concern about the impact our recommendations would have but agreed that the state could not longer afford to offer such generous benefits,” said James in his letter to the governor.

Dennis Mallory, chief of staff for the American Federation of State, County and Municipal Employees Local 4041, said many of the recommendations were the same as those proposed earlier this year by the Las Vegas Chamber of Commerce. He said he did not see any appetite in the Legislature to adopt these “drastic” proposals.

Mallory said the benefits of state workers in Nevada were comparable with those in other states and lower than the benefits enjoyed by workers in the cities of Las Vegas and Reno.

This commission and the Las Vegas chamber are doing everything possible to avoid a tax increase, Mallory said. And the commission itself was inefficient, flying around the state and coming up with the “same old recommendations” that have been advanced for 15 years.

One major recommendation is to reduce the subsidies for health insurance the state provides its 26,000 active state workers and their dependents. It found that the average monthly premium for health insurance paid by workers runs between zero and $28 and between $62 and $194 for dependent coverage for a family of four.

The commission said a private sector Las Vegas employee will pay between $104 and $323 for approximately the same insurance. The subsidies to state employees should be reduced 5 percent in each of the next two years to soften the impact.

This recommendation is estimated to save $20.2 million in the first year and $322.7 million over five years.

The commission is recommending the state eliminate all health insurance subsidies for anyone who retires after next July 1. And it also wants to cut back on the existing subsidies for an estimated 8,700 current retired state workers by 25 percent next July and by another 25 percent in 2010. The panel recommends eliminating all subsidies for workers who are eligible for Medicare coverage.

This would save $23.6 million in one year and $156.8 million over five years for the state.

The commission suggests that $100 million could be saved over the next five years by cutting back on retirement benefits. For instance, it recommends eliminating the option to retire at any age with a prescribed number of years of service. It says a minimum retirement age should be 60. And there would be a reduced benefit paid to a person who retires at any age after 35 years of service.

There’s a suggestions that a moratorium be imposed in increasing benefits yearly in the retirement system until it is fully funded for three consecutive years. The cost of fully funding the system is estimated at $6.3 billion.

The commission said the retirement benefits given police and firemen should be studied separately. The Public Employees Retirement System covers all government workers in Nevada.

The commission is recommending that state agencies charge more for some services they supply to the public. That would produce $1 million in the first year and $5 million in five years.

For instance the state’s Consumer Health Protection Unit provides such services as X-ray machines, restaurant inspections and oversight of solid waste disposal. This agency is now getting $1 million in state general fund and is collecting $1.6 million for its services. SAGE said, “Therefore the general public is funding over a third of the cost of services provided to a specific segment of the community.”

It also suggests shifting the Senior Citizens Property Tax Assistance Program to the counties that collect the property tax that finances this program. That would save $30 million over five years. And county representatives have already said they oppose this plan.

And the commission is suggesting a “Sunset Commission to periodically review the programs and state agencies to see if they are serving the purpose for which they were created.

Mallory sees a major battle in the Legislature with people lining the halls to push and oppose these programs.

Cy Ryan may be reached at (775) 687 5032 or [email protected].