State worker 6% salary cut rejected by lawmakers

Lawmakers Monday rejected Gov. Jim Gibbons' proposed cuts to employee benefits as well as his 6 percent pay cut for state workers.

They instead adopted the much less draconian benefit reduction plan worked out by the Public Employee Benefits Program and replaced the pay cut with a mandatory 12-days a year furlough for state workers. The furlough works out to about a 4 percent salary cut and the PEBP reduction plan saves about $50 million. Speaker Barbara Buckley, D-Las Vegas, said the state will continue making the full retirement contribution for those workers so their retirement isn't hurt.

As for teachers, she said the state will reduce the amount of money it sends to public schools to match what it is doing to state employees but that it will be up to school districts to decide how to handle the reductions at that level.

The Gibbons administration estimated the pay reductions would save the state about $435.3 million over the biennium. The changes approved by the Senate Finance and Assembly Ways and Means committees will require about $98 million be added to public school budgets and another $23 million to the higher education budgets.

Since the plan approved for state workers was converted from a pay cut to a 12 day furlough each year, analysts were still working out the cost of that addition to the budget.

But the total added cost for public schools, education and state workers should come to about one third of the 6 percent number " $145 million.

It became obvious lawmakers couldn't cut salaries in education by 6 percent after analysts advised them that would prevent Nevada from being able to claim more than $300 million in education stimulus funding. Assembly Fiscal Analyst Mark Stevens told the joint committee Monday reducing it to 5 percent wouldn't meet the Maintenance of Effort requirements either, that the most they could cut pay was 4 percent.

Buckley, Senate Minority Leader Bill Raggio, R-Reno, and others all said on the record no one wants to cut state worker salaries but that, given the state's financial crisis, they have no choice.

Lawmakers agreed to adopt the governor's recommendations eliminating step increases, merit pay and longevity pay for the coming biennium. The action at this point only involves state workers. The committee will take up higher education professionals and school employees later this week.

Assemblywoman Sheila Leslie, D-Reno, said preserving employee health insurance took priority over that.

The joint committee rejected the recommendations proposed by the SAGE Commission to reduce employee health benefits. Those included reducing the percentage subsidy for state workers from 95 percent to 75 percent, reducing retiree subsidies from 67 percent to 34 percent over the biennium and cutting off subsidies to those eligible for Medicare.

Altogether, that decision will require another $158.5 million over the biennium.

Assembly Minority Leader Heidi Gansert, R-Reno, and Assemblyman Joe Hardy, R-Boulder City, voted against that add-back because of the amount it will cost.

But the rest of the bipartisan panel supported the proposal. Several members including Peter Goicoechea, R-Eureka, have said in the past they don't believe it's fair to change the rules on those who have already retired or on current state workers.

Senate Minority Leader Bill Raggio, R-Reno, said, however, that doesn't mean they can't discuss potential changes in how benefits are provided to new state hires in the future.

The plan was announced after several days of closed-door negotiations between the members of the so-called core group.

Employee representatives including Jim Richardson of the Nevada Faculty Alliance and Marty Bibb representing the Retired Public Employees of Nevada praised lawmakers for not endorsing what the both referred to as the most draconian cuts proposed by the governor.

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