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October 22, 2014

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THE LEGISLATURE:

Democrats have edge, but GOP holds key to budget deal

As minority presses demands, outlines of an agreement begin to take shape

Image

Sam Morris

State Senate Majority Leader Steven Horsford, D-Las Vegas, confers with Sen. Warren Hardy, R-Las Vegas, at the Legislative Building in Carson City. Budget negotiations are ongoing in the legislative session.

Even in the early days of this legislative session, the contours of a deal to confront the state’s budget crisis are taking shape.

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The dynamics in play as of now, according to a wide swath of legislators and lobbyists interviewed by the Sun:

Nevada faces a $2.3 billion hole that Gov. Jim Gibbons wants to close by cutting the pay of teachers and state workers by 6 percent and cutting the higher education budget nearly 36 percent.

Democrats and most influential Republicans in the Legislature refuse to countenance those cuts, which means a tax increase is likely coming.

Gibbons, the first-term Republican, has promised to veto any tax increase aside from a small voter-approved hotel room increase, meaning new taxes will need broad, bipartisan support in the Democratic-controlled Legislature to reach constitutionally required two-thirds majority votes.

Though Assembly Speaker Barbara Buckley and her Democratic caucus have two-thirds of the lower chamber, the need for a broadly popular final agreement is especially important in the Senate, which Democrats control 12-9. If every Senate Democrat supports a tax increase, Majority Leader Steven Horsford will need to find two Republican votes.

That gives Senate Republicans, several of whom are prevented from running again by term limits, considerable leverage. It appears they will get their half loaf, and maybe even a toaster oven and some jam.

Though it’s not clear what the final tax plan will look like because all parties are being silent about it, some consensus is emerging about what Republicans will try to extract.

In exchange for supporting a budget deal and tax increases, Republicans want changes in education in the form of accountability measures and possibly merit pay; future spending restraint, especially on public employee salaries, benefits and pension benefits; as well some compromise that tilts slightly toward Republicans on issues such as prevailing wages on public works projects and workers’ compensation law.

Some items are clearly for posturing, especially those that will affect labor unions, a favored Democratic constituency.

When he was asked about a potential grand bargain, a quid pro quo, Senate Minority Leader Bill Raggio, who’s a stickler for legislative process and protocol, sidestepped the premise: “There’s not going to be any agreement until we go through the process,” he said.

But his comments were also a subtle road map to an eventual deal.

First, he set up the inevitability of a tax increase:

“We need to determine what gets cut and what revenue is needed. This will be a no-frills budget, but the federal courts can tell us we’re not providing essential services” and must come up with new revenue, he said.

He made reference to the Supreme Court’s Olmstead decision, which decreed states must provide certain community-based health services to the disabled to be in compliance with the Americans with Disabilities Act.

Translation: It’s out of our hands.

Many Senate Republicans are calling for changes to the public employee benefits and retirement system, as well as the law that governs collective bargaining for local government employees, because they think without reform, the state will face an ongoing fiscal crisis from runaway salaries, benefits and pension guarantees.

The shorthand around the Legislative Building for these changes: “PEBP, PERS, 288,” which stands for Public Employees’ Benefits Program, Public Employees’ Retirement System and Nevada Revised Statute 288, referring to the law governing collective bargaining for local government unions. (State workers don’t have collective bargaining rights.)

On 288, the talk is of giving local government more leverage in dealing with unions in salary negotiations; lower salaries for local government employees would also mean savings in the state-managed pension program.

Asked about these issues, Raggio was clear: “It’s absolutely essential. Those are issues we need to look at.”

Sen. Warren Hardy, R-Las Vegas, agreed and said local government and its employees need to make sacrifices.

“I’m not sure local governments have done the same soul-wrenching, heart-wrenching cuts that we’ve had to do,” he said. “Part of that is revisiting 288. Collective bargaining is out of control.”

Sen. John Lee, D-North Las Vegas, has scheduled a hearing on 288.

An increasingly public media battle will likely complicate negotiations over these issues. The Las Vegas Chamber of Commerce has said it could support some tax increase, but only with the cuts in retirement and health benefits for public employees and a drive to reduce local government salaries.

Now, labor has struck back, with the police and fire unions running a full-page newspaper advertisement recently, listing the salaries of top chamber executives.

The unions will shadow all negotiations, especially as Buckley and Clark County Commission Chairman Rory Reid consider running for the Democratic nomination for governor and begin courting labor.

Republicans also want changes in prevailing wage policy. Currently, contractors must pay what’s known as a “prevailing wage” to their workers on most public works projects, but they complain that prevailing wages, which are set by the state labor commissioner, are too high and skewed toward more expensive union labor.

“That’s a priority for many of our members,” Raggio said.

Raggio is also ready to play tough defense.

Many here expect Democrats to listen to the pleas of some of their biggest supporters — labor unions and trial lawyers, who want changes in workers comp law that would tilt in favor of injured workers.

Raggio’s response: “The budget and providing essential services need bipartisan approval. We can’t have a circus with these collateral issues.”

Republicans will also look to influence what programs get spared from the harshest cuts. This means help for northern and rural Nevada, home of six Republican senators who will want to preserve rural mental health clinics and prison labor camps called “conservation camps” that would close under Gibbons’ budget, for instance. These senators are sensitive to the rapid flow of power and money south, especially after the 2010 census and remapping of legislative districts.

Raggio, the old lion with nearly four decades of experience in the upper chamber, has long supported higher education.

Las Vegas Republican Sen. Dennis Nolan’s baby is transportation, especially the traffic-choked roads of the south.

And so on.

Buckley, not surprisingly, chafed at any grand bargain: “We’ve never done that, and I’m not going to participate in it,” Buckley said, meaning she would deal with each issue individually and won’t be bullied by a list of demands.

She and Horsford said Democrats have their own agenda to bring more transparency, accountability and effectiveness to state government.

Though Buckley’s words indicate plenty of negotiation to come: “Should the Legislature come out with a balanced approach? Yes.”

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