DAILY MEMO: STATE BUDGET :

Business lobby digs in for budget battle

Vegas chamber arms itself with studies showing well-paid government employees, underfunded health plan

Thu, Oct 16, 2008 (2 a.m.)

CARSON CITY — In the run-up to the 2009 legislative session, someone, at some point, will propose a tax on Nevada’s businesses to soften the budget cuts that are coming.

The Las Vegas Chamber of Commerce knows this and has been preparing. Since June the business group has been releasing a series of studies looking at public sector compensation. They paint a picture of well-paid government employees with pensions and health benefits that exceed those offered in the private sector and threaten to consume the state’s dwindling resources.

When elected officials, advocacy groups and labor unions complain about the looming 14 percent budget cuts, the deepest since the Great Depression, it’s likely that the chamber’s studies will be waved as evidence of fat in the budget.

The reports were compiled by the respected companies Hobbs, Ong and Associates and Applied Analysis. The findings raise issues that might merit serious discussion. But experts say many practical solutions proposed in the studies would result in long-term savings, not a fix to the immediate budget crisis.

The first study, released in June as the Legislature was preparing for a special session to address the budget shortfall, found that public sector employees make, on average, $10,400 more than their private sector counterparts.

The second study, released the same day, concluded that government employees in Nevada were better paid than most public sector workers in other states. (Nevada teacher salaries, however, are below the national average.)

The most recent chamber-sponsored reports — arguably the most important for the state’s long-term fiscal health — looked at the state’s pension fund and retiree health benefits. The health plan, the Nevada Public Employees’ Benefits Program, is severely underfunded and failing to address the problem will push up costs, affecting “state government’s ability to provide core services,” according to the report.

Hugh Anderson, chairman of the chamber’s government affairs board, said the studies were intended to provide policymakers with a foundation of facts.

“The overarching message is that we have a budget pie that is very, very sharply being contracted in places for the most vulnerable, like education and health and human services,” he said. “We have an ever-growing consumption of resources (going) to employee salaries and obligations.”

Dennis Mallory, chief of staff of the Nevada American Federation of State, County and Municipal Employees, said the chamber’s agenda is clear: “They’re obviously trying to build momentum to take any discussion of taxes off the table.”

Cutting salaries and benefits is a possible long-term solution. (Republican former Gov. Kenny Guinn has said change in retiree health benefits, in particular, is one of the most important issues facing the state.)

Yet many of the sources of short-term savings come with significant downsides.

Existing pension benefits are legally protected, making them difficult if not impossible to cut. Only the sharpest of cuts in subsidized health benefits would generate significant savings in the short term.

Looking at salaries, local government workers make more, on average, than state workers. The Legislature has little say in setting local government pay.

Jeremy Aguero, a principal at Applied Analysis, said cuts can be made for immediate savings, but those savings would be modest.

Still, Anderson, of the Chamber of Commerce, thinks one reason the state is facing a short-term budget crisis is that leaders have failed to act to address the long-term problems.

“Our leaders have known about the problem for many years, but it has been very politically expedient to push it off,” Anderson said. “It’s no longer out there. It’s here.”

Discussion: 7 comments so far…

By Oh_Please

10/16/08 at 9:52 a.m.

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The Las Vegas Chamber of Contemptment will keep coming out with more and more studies and more excuses in an attempt not to contribute their fair share to vital state services such as education.

Hey chamber, what's the next strategy?
By KDR81

10/16/08 at 3:38 p.m.

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Corporate taxes or "their fair share" as you put it comes out of your wallet in less income, higher prices on goods, or less income from dividends.

In a downturned economy it will be lower pay and higher prices.

That isn't a way to build a strong economy.
By Oh_Please

10/16/08 at 4:55 p.m.

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Spare me Mr. NPRI rep. The Las Vegas Chamber of Contemptment has been dodging its responsibility for years. It's time the chamber step up and take a leadership role instead of its tax everyone else but us mentallity.

Maybe picketing infront of the Chamber's office might send them the right message.
By jfnance32

10/16/08 at 5:19 p.m.

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Democrats want to raise taxes on businesses that are just trying to stay alive.

Vote for a Democrat and you could end up losing your job.
By Get_Real_Chamber

10/16/08 at 8:14 p.m.

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No one wants to tax the marginal business.

It's just more scare mongering.

Using jfnance32's logic, vote for a republican and you might not have any streets to drive to work on.
By jfnance32

10/16/08 at 9:20 p.m.

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So what non-marignal businesses are left to tax.

I believe the Democrats are excluding casinos.

If you tax mining 100% (which of course would put them out of business) then that would not raise that much money.

Can the Get Real Camber list any business in Nevada other than mining that is making out like gang busters?

How would the Get Real Chamber determine which businesses are marginal or not marginal? Wow, is the Get Real Chamber now talking about a Business Income Tax?

I never heard a Democrat say that.

Democrats want to have a Business Income Tax!!!!!!!!!!

That sure will have businesses running to Nevada to start new ones.

Big government needs to be save....especially the union government workers with their Platinum benefits.
By Tourism_Expert

10/16/08 at 9:50 p.m.

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jfnance32, "I believe the Democrats are excluding casinos."

The casinos pay more than their fair share towards states services. It's time to get off the back of casinos so Nevada's tourism can continue flourish as a world-class destination.