Editorial: Local government unions create huge pay gap

It is good to be a public servant in Nevada, downright lucrative in fact.

The folks at the Nevada Policy Research Institute have crunched the Census data for 2017 and found the median earnings for local government workers in Nevada were 46 percent higher than for those in the private sector — $58,644 for local government workers per year, compared to $40,259 in the private sector. That 46 percent gap is the highest of any state in the nation.

Hawaii and California had the second and third highest gaps.

Nevada local government workers had the fifth highest wages in the country, while private-sector workers came in at a distant 47th.

NPRI is quick to point out that much of the pay disparity is due to differences in experience, education and other factors, but that does not negate the fact the Nevada gap is the highest in the nation. Also, NPRI notes that when Nevada’s local government workers health and retirement benefits and more generous paid leave are factored in the gap with the private sector widens to 57 percent.

For example, both state and local public workers contribute to the Nevada Public Employees’ Retirement System. Currently 28 percent of a worker’s salary is contributed to cover the cost of pensions — half from the taxpayers and half from the employee. The figure for police and fire employees is 40 percent to account for often shorter working careers. But many local government unions have collectively bargained to have the taxpayers pick up all of the PERS contributions, effectively adding a hidden cost not seen in salaries alone.

“On a statewide basis, government pay and benefits cost taxpayers roughly $10 billion last year — which was equal to 80 percent of all tax revenue collected by every state and local government agency in Nevada,” notes NPRI policy director Robert Fellner. “Thus, in the event Nevada’s government pay gap continues its upward growth, the resulting tax hikes necessary to sustain such excess may become too great to bear.”

Fellner argues, “Because such outsized pay packages come at the expense of taxpayers who earn much less themselves, elected officials should consider the fairness and sustainability of continually caving in to government unions’ endless demands for even more.”

Unlike state government employees, local government workers in Nevada are largely covered by union contracts. State government workers generally are paid more than those in the private sector, but less than local government employees.

In past legislative sessions, lawmakers have attempted to allow state government workers to unionize, though they should instead take away the right of local government workers to unionize. The unions hold too strong a sway over local elected officials who must bargain with the unions over wages.

None other than the icon of progressivism, Franklin D. Roosevelt, said in a 1937 letter:  “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.”

He went on to add, “The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people …”

Who is the servant and who is the boss?

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

No fingerprints on the late, unlamented bill to reform public employee pensions

A year ago I wrote about how actuarially unsound the Nevada public employees pension system is and rhetorically asked whether anyone would have the courage to file a bill draft and weather the firestorm of the public unions.

Randy Kirner

Well, Republican Reno Assemblyman Randy Kirner introduced just such a bill, but there was no firestorm, not even a discussion and certainly not a vote. Assembly Bill 342 died without a whimper in the Assembly Ways and Means Committee.

Though the Review-Journal account of the demise of the bill failed to offer the Clue-like dénouement: “It was Ms. Carlton in the Ways and Means Committee room with an axe,” all the circumstantial evidence points this way.

In the Nevada Legislature all lawmakers are equal, except some are more equal than others, namely committee chairs such as Maggie Carlton, D-Unions, chair of Ways and Means, who can send a bill to Fiddler’s Green without having to answer to anyone.

You see:

But you gotta play by Nevada rules
Forget about da tings you learned in school
We use a different box of tools
And you gotta play by Nevada rules

And the No. 1 Rule is The House always wins, and in this case The House is a wholly-owned subsidiary of the public employee unions.

Maggie Carlton

Kirner’s bill would have created a hybrid retirement program for new employees hired after July 1, 2014. It would be a half defined-benefit and half defined-contribution plan. It included a cap on annual benefits and a prohibition against workers buying years of service credit. This little scam allows some public employees to work for 25 years, purchase five years of service credits, and retire at the age of 45 with 75 percent of their top pay adjusted for inflation for life.

The unfunded liability for the Public Employees’ Retirement System (PERS), for which the taxpayers are eventually on the hook, is officially $11.2 billion.

A study a year ago by Andrew Biggs, an American Enterprise Institute resident scholar, found that by using economist-preferred fair-market evaluations the number is closer to $41 billion. Annual contributions to cover costs and amortization, Biggs says, would be $5.8 billion. The state’s annual general fund is only $3 billion.

Though this unfunded liability has grown by $1.2 billion over the past two years, and that’s the “official” figure, Gov. Brian Sandoval has said he would not seek to fix the problem this year but support still another independent study, which, of course, will not be completed by the end of the session.

Here is how Clark County’s former county manager, Thom Reilly, explains the problem: