Nevada lawmakers need to tackle public employee pension costs

When the Nevada Legislature meets in the spring it’s going to have to sharpen a lot of pencils to figure out how to balance the coming biennial budget.

Lawmakers must contend with growing public school enrollment, growing Medicaid enrollments, growing personnel costs and still relatively stagnant tax revenue.

The Carson City newspaper recently calculated that even if the $1 billion in temporary tax hikes — scheduled to be sunset on June 30 — are extended once again, the revenue will fall $120 million short.

But that’s not even the half of it, according to a recent report by a think tank called Truth in Accounting. You see, Nevada like most states manages to balance its current spending and current revenue by ignoring billions of dollars in obligations.

Truth in Accounting says the biggest culprit is public employee pensions. “Pension benefits are a part of employees’ compensation. Employees earn the benefits by providing services to current taxpayers. The elected officials gain political favor by promising these benefits,” the report says. “But they do not put money aside to pay them. They argue, ‘Hey if I don’t write a check for current costs. I don’t have to include it in the budget calculations.’ This is the reason many states have huge unfunded pension liabilities.”

Nevada has the 33rd worse budget shortfall among the states, failing to cover $2.7 billion of its $2.9 billion in pension liability. That amounts to financial burden of $3,100 per taxpayer.

“Nevada statutes require the legislature to pass a balanced budget. One of the reasons Nevada is in this precarious financial position is state officials use antiquated budgeting and accounting rules to report Nevada’s financial condition. Since employee retirement benefits are not immediately payable in cash, the related compensation costs have been ignored when calculating balanced budgets,” Truth in Accounting explains.

One way for lawmakers to begin to whittle down is huge unfunded obligation is to change its pension system from a defined-benefit plan, in which retirees get a percentage of their final salaries, to a defined-contribution plan, in which the state and the employees contribute money into a 401(k)-style fund.

In the 2013 Legislature, Republican Reno Assemblyman Randy Kirner introduced a bill to begin the transition to such a pension system. Assembly Bill 342 died without a whimper in the Assembly Ways and Means Committee, axed by the Democratic committee chairwoman.

Kirner’s bill would have created a hybrid retirement program for new employees hired after July 1, 2014. It would have been 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.

According to a study for the American Enterprise Institute by resident scholar Andrew Biggs, Nevada’s public pensions are the richest in the nation — $64,000 a year or more than $1.3 million in lifetime benefits. That doesn’t include public-safety workers, such firefighters and police, who can retire earlier and generally have higher salaries.

In fact Biggs has calculated a debt even higher that Truth in Accounting. He says that by using economist-preferred fair-market evaluations the annual contributions to cover costs and amortization of pensions would be $5.8 billion. The state’s annual general fund budget is only $3.3 billion.

Such a plan as Kirner put forward would only slow the financial bleeding, not stop it, but it would be better than nothing.

The state’s lawmakers need to get serious about balancing the state’s finances instead of cowing to public employee unions.

Land task force could provide a jackpot compared to paltry PILT

One new law that potentially could have the greatest economic impact on Nevada’s future got little coverage.

The Legislature passed and Gov. Brian Sandoval unceremoniously signed Assembly Bill 227, which creates a Nevada Land Management Task Force to study the transfer of certain federal public lands to the state of Nevada, as reported in this week’s newspaper column, available online at The Ely Times, the Elko Daily Free Press and the Lincoln County Record.

The 17-member Task Force is supposed to report its findings and recommendations by Sept. 1, 2014, to the Legislative Committee on Public Lands “in contemplation of Congress turning over the management and control of those public lands to the State of Nevada on or before June 30, 2015.”

As if on cue, Harry Reid, Nevada’s senior senator and the powerful majority leader of the Senate, this past week announced Nevada will be getting $23 million in Payment in Lieu of Taxes (PILT), which is intended to compensate counties for non-taxable federal land in their jurisdictions.

Reid helpfully noted, “The Interior Department collects about $14 billion in revenue annually from commercial activities on federal lands, such as oil and gas leasing, livestock grazing and timber harvesting.” What he did not say is that the grand total of PILT dollars doled out nationwide is $400 million. That’s $35 sent to Washington for every $1 sent back as PILT.

What the most powerful man in the Senate also did not say is that Nevada, as in the past, gets a paltry 41 cents per acre while neighboring states get double and triple that amount. Nor did he point out that PILT amounts to only $8.50 per Nevadan, less than Montana’s $26.37, less than Idaho’s $16.50 or Utah’s $12.40.

Instead of sending all those grazing fees and royalties to Washington, Nevada could collect $805 million directly — assuming that 35-to-1 ratio — plus untold property taxes, instead of accepting a meager $23 million trickling down from Washington.

Read the entire column at the newspaper websites of ElyElko, and Lincoln.


Newspaper column: Your property rights taken by a federal agency? It could happen to you

In 1957, Frank Sinatra warned in song, “Keep an eye on spring/ Run when church bells ring/ It could happen to you.”

Since one federal agency or another controls at least 85 percent of Nevada, one day it could happen to you. You find yourself downstream — literally or figuratively — of one of those agencies, with your property and livelihood in jeopardy, only to discover your property and livelihood are less important than some minnow, bug or weed.

It happened to Victor Fuentes, as reported in this week’s newspaper column, available online at The Ely Times and Elko Daily Free Press.

In December 2010 Fuentes’ land, 40 acres in the middle of the Ash Meadows National Wildlife Refuge, was heavily damaged by flooding. The U.S. Fish and Wildlife Service had rerouted a stream but it overflowed its banks during heavy rain.

Annette and Victor Fuentes pose next to a channel running through their church camp in the Ash Meadows National Wildlife Refuge in 2009. (Pahrump Valley Times photo)

The property is a retreat for the Ministero Roco Solida Church (Solid Rock) and the stream had been one of the major attractions for visitors to what they called Patch of Heaven. Fuentes is the pastor of the church and operator of the camp.

A year later the Center for Justice and Constitutional Litigation (CJCL) — a division of the Nevada Policy Research Institute — filed a claim with USF&W for actual damages in the amount of $86,000, claiming “negligent and lawless actions” by the agency caused the flooding.

The agency never even acknowledged receipt of the damages claim. CJCL has since filed lawsuits in two federal courts.

In January, USF&W published an environmental assessment that proposes restoring natural and historic hydrology to the area by removing a dam.

Fuentes replied to the assessment that this “would inevitably result in a permanent or regular flooding of our private property resulting in a permanent ‘taking.’” The Fifth Amendment prohibits taking private property without just compensation. (Fuente’s reply to environmental assessment: Fuentes comments)

Though the USF&W claims it wishes to return the water flow to its “original” stream beds, Fuentes notes it is using 1948 data to determine “original,” when maps dating back to 1881 and an 1891 biological inventory show settlers in the area using the water to grow crops on private land granted at the time of statehood in 1864.

It could happen to you.

(Read the entire column at the Ely or Elko websites. For more accounts of government waste, fraud and abuse in Nevada go to Watchdog Wire-Nevada.)

Newspaper column: Horsford will now represent a swath of rural Nevada

Counties once represented in Congress by Republican Mark Amodei now fall into the newly created 4th Congressional District and the representation of Democratic Rep.-elect Steven Horsford.

Horsford and Amodei have already begun to talk about pending legislation and issues facing the people in the transitional areas, which is reported in this week’s newspaper column, available online at The Ely Times and the Elko Daily Free Press.

Steven Horsford on election night (Review-Journal photo)

Steven Horsford on election night (Review-Journal photo)

“I sat down in his office and we talked about the Yerington land bill and some issues around sage grouse and a couple of other projects he’d been working on,” Horsford explained in a recent interview.

The 4th District includes the counties of White Pine, Nye, Mineral, Esmeralda, and Lincoln, as well as parts of southern Lyon County and northern Clark County.

Horsford is already pushing to help Amodei get through Congress a bill that would allow Yerington to purchase at market price 10,000 acres of Bureau of Land Management land to help develop the privately held Pumpkin Hollow copper mine.

But Senate Majority Leader Harry Reid, who was a vocal supporter of Horsford during the election, wants to tie the bill a requirement that a wilderness area be set aside somewhere in the Lyon County area. Horsford is on the record supporting the bill as submitted by Amodei, without any wilderness requirement. This could prove to be an interesting bit of political maneuvering between the Washington novice and the man who controls the Senate’s agenda.

“I submitted a letter as (state) Senate majority leader prior to being elected to Congress as part of the official record as to why that project is important. So as a standalone bill I support Congressman Amodei’s measure,” he said, adding that he realizes there has been a push for wilderness protection for the South Pine Grove Hills area. “I believe both are important, but they are not mutually exclusive.”

Horsford is to be sworn in Jan. 3.

Read the full column at either the Ely paper or the Elko paper.