Judgment could force special session

The $10.3 million judgment against the state over the Southern Nevada Veterans Home may be the final straw forcing a special session of the Nevada Legislature.

All the contingency and emergency accounts the state maintains to pay for unanticipated expenses were just about emptied after last week's Interim Finance Committee meeting. Director of Administration Andrew Clinger said only about $66,000 remains in the main IFC Contingency Fund.

"We have no way to pay for it because there's just no place to go for this type of money in the interim," he said.

Gov. Kenny Guinn admitted Friday the state is in a tough position because of the arbitration ruling but said he will exhaust every other possibility before calling a special session. He said that includes determining whether it can be paid with funds transferred from other construction projects.

The problem, he said, is the state pays interest at a rate of 9.25 percent until it pays the judgment. If the state waits until the 2007 Legislature can act - probably April - that would add an estimated $794,000 in interest to the bill.

"I don't like the idea of that," said Guinn.

And he said appealing to district court probably isn't a viable option because the only thing a court can review is whether arbitrators followed the law in making their decision, not the substance of the arguments. He said staff is reviewing the judgment, but he doesn't expect they'll find that kind of error by the arbitrators.

Legislative Counsel Bureau Director Lorne Malkiewich estimated the cost of a one-day special session to appropriate the money at $40,000 to $80,000 - far less than the estimated interest.

And both he and Guinn say the state has more than enough - a general fund surplus estimated at more than $500 million - to pay the judgment. It just can't write the check without legislative action.

The state Public Works Board and Addison Inc. have been battling over who was to blame for construction problems in the Southern Nevada Veterans Home since work began in 1999. The board fired Addison and hired another contractor to finish the job in August 2001. Both sides went to court and the Supreme Court ruled the issue should be settled in binding arbitration.

A panel of three arbitrators this week placed the blame 100 percent on the Public Works Board and architects Harry Campbell & Associates for the delays, cost overruns and other problems. They said the plans weren't complete when the project went to bid, there were hundreds of plan changes during construction and that those were the fault of the board and the architects, not Addison and his subcontractors.

After reviewing the arbitrator's judgment, Guinn asked for Public Works Board Manager Dan O'Brien's resignation. O'Brien resigned his post immediately.

While less than appealing politically, calling a special session would have another benefit for the state. Guinn could ask lawmakers to also replenish the IFC Contingency Fund, which may be needed to cover a bad fire season this summer or other unexpected expenses.

During a special session, the governor has complete control over which issues lawmakers can act upon. If he doesn't put other things on the agenda, they cannot be considered.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.