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.
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.
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.
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: