Editorial: Two reap financial windfall

Monday, Jan. 31, 2000 | 9:39 a.m.

When the 1989 Legislature overrode Gov. Bob Miller's veto of a 300 percent pension increase for current and former lawmakers, it unleashed a public outcry the likes of which hasn't been seen since. After getting an earful from their constituents, the legislators hurried back to Carson City just a few months later and, in a special session, repealed the pension increase. This salve didn't work, however, as many legislators who had distinguished records -- yet voted for the increase -- subsequently were defeated in 1990.

It didn't end there, though. Lawsuits by former legislators also were filed. The architect of the increase, Sen. Don Mello, D-Sparks, quickly retired after the 1989 Legislature ended and shamelessly tried to collect the increase. The state Supreme Court dismissed his plea, however, ruling that Mello wasn't entitled to the pension. Another challenge was made by two other former legislators, Robert Craddock of Las Vegas and David Nicholas of Reno, who tried to collect their pension increases. Unlike Mello, however, neither Craddock nor Nicholas were in office when the Legislature passed the pension increase (Craddock was defeated in his 1988 re-election bid and Nicholas retired in 1988).

Last week the state Supreme Court reversed decisions by lower courts and awarded the pension increases to Craddock and Nicholas. The court, in a 4-2 decision, ruled that since the two had completed their terms -- and filed for retirement -- prior to the repeal, they were eligible. "An employee's rights become absolutely vested when he retires and all conditions for his retirement benefits have been met," Justice Myron Leavitt wrote. "When those rights become absolutely vested, a contract exists between the employee and the state, which cannot be modified by unilateral action on the part of the Legislature."

While the majority understandably was concerned that to do otherwise could set a precedent allowing the Legislature to rescind retirement benefits from other public employees, its reasoning went too far. The dissenting opinion, authored by Justice Cliff Young, seemed to be the correct approach to a difficult case. Young noted that an employee doesn't have a vested right to extra benefits after his service already has ended, as was the case with Craddock and Nicholas. "The majority ignores the fundamental principle that retirement benefits must be earned, not scattered by legislative whim among the undeserving," Young wrote. "Nicholas and Craddock carefully timed the filing of their retirement papers in their request for an unwarranted windfall." Young estimated that Craddock will receive an extra $1,018 a month and Nicholas will get an extra $863 a month f or the rest of their lives.

More than a decade later it seems that the controversy over the 300 percent pension increase finally has met its official end. But if elected officials -- both state and local -- are wise, they will remember the folly of this foolish endeavor and the unfortunate backlash it created.