Lawmakers debate cutbacks in retirement benefits

By Cy Ryan

Thursday, May 21, 2009 | 2:58 p.m.

CARSON CITY – Lawmakers and business and union interests on Thursday debated proposed cutbacks to public employee retirement and benefits.

During the six-hour hearing before the Senate Finance Committee, both sides stood their ground. Republicans want more reductions in the benefit for employees hired after January of next year. Democrats say they do not want to lower the benefits further than called for in SB427.

It’s still unclear whether either side will make enough concessions to pass a budget by today’s self-imposed deadline of Democratic leadership to pass the budget and the tax package.

Sen. Bill Raggio, R-Reno, said the major reductions in the retirement system are a “condition precedent” to approving the proposed $780 million tax package.

The Senate is controlled 12-9 by Democrats and 14 votes are needed for passage of any tax bill.

Dana Bilyeu, executive director of the Public Employees’ Retirement System, said the proposed reductions in Senate Bill 427 would save $86 million over the next 20-30 years in the regular pension system. And they would save $56 million in the police-firemen’s retirement system.

And it saves more than proposed by Gov. Jim Gibbons in his bill to cut retirement benefits.

SB427 calls for future employees in both systems to work longer before being eligible for retirement benefits and also get a reduced pension check.

Steve Hill, president of the Las Vegas Chamber of Commerce, said he supports the bill but it doesn’t go far enough in making cuts. He said the present benefit allowing retirement at any age with 30 years of service should be eliminated.

Hill also argued the retirement checks should be reduced for future workers. This system is saddled with a $7 billion unfunded liability. And he said the system will have to pay $600 million over the next biennium to keep up with the debt.

His position was backed by business people and the Reno Chamber of Commerce.

But a parade of witnesses representing government units opposed the legislation.

David Kallas, representing the Las Vegas Police Protective Association, said there is already a plan in place to fix the retirement system that covers all government workers.

Those going into public service, such as police work, are now looking at the retirement benefits before they decide on their life’s employment. He said “good qualified public employees” will be harder to recruit if more impediments are placed in the law.

Other public employees told the finance committee that workers who put in their 30 years should be allowed to retire at any age with full benefits. They argued the workers are entering government work at earlier ages and can complete the 30 years by the time they reach 50 or 55 years old.

And they should be able to draw their benefits.

But Raggio, R-Reno, said people on Social Security can’t retire until they are 62 and then take a reduced benefit.

The committee did not take action on the bill.

Correction: This story has been changed to reflect that the system for retirement checks is saddled with $7 billion in unfunded liability.