Republicans seek employee benefit reform in exchange for tax hike

By David McGrath Schwartz

Thursday, May 7, 2009 | 2 a.m.

As the outlines of a state spending plan have grown clearer this week, so too have the demands Republican lawmakers are making in exchange for supporting a budget deal.

Republican legislators confirmed Wednesday that in exchange for supporting any tax increase needed to close the budget shortfall, they are asking for changes to state pensions, retiree health benefits and the bargaining agreements between unions and local governments.

“This is a huge opportunity to make reforms,” said Sen. Warren Hardy, R-Las Vegas. “They won’t help in the short term, but they will help in the long term.”

Hardy and Assembly Minority Leader Heidi Gansert, R-Reno, are members of the so-called “core group” of lawmakers from both parties and houses hammering out spending and tax plans behind closed doors.

Hardy denied that the Republicans’ demands are a quid pro quo for supporting a tax package.

“I understand we need more revenue, but we need reforms,” he said. “I look at it as a package.”

The Republicans’ demands echo those requested last month by the Las Vegas Chamber of Commerce in a letter to lawmakers.

Both Hardy and Gansert acknowledged that the Republicans have largely adopted the chamber’s agenda.

The reforms laid out in the Chamber of Commerce letter include:

• Changes to the state’s Public Employees Retirement System for new hires;

• Ending the Public Employees Benefit System for new hires;

• Changes to collective bargaining between local governments and unions.

Gansert said the list also includes changes to prevailing wage requirements on governments contracts. Other Republican sources said the list of demands has grown to include bills that lawmakers don’t want to pass.

The list of demands illustrates how much Republicans will test Democrats in the remaining days of the 2009 Legislature. While the Democrats have enough votes in the Assembly to override an expected veto from Gov. Jim Gibbons, they need two Republican senators to get a veto-proof tax plan passed.

Assembly Speaker Barbara Buckley, D-Las Vegas, said the Legislature is already addressing many of the Republicans’ areas of concern.

The Legislature is considering bills that would create a forced state savings account and create a rainy day fund for education, she said. And a key legislative committee voted this week to reduce retirement benefits for public employees.

On collective bargaining, she said she hasn’t heard local governments calling for changes.

The Chamber of Commerce’s letter provoked a strong reaction from public employee unions — a key Democratic ally — when it circulated last month.

“It’s outrageous that to come to the table, they make demands with regard to public employees,” said Lynn Warne, president of the Nevada State Education Association. “They need to pay their fair share.”

David Kallas, lobbyist with the Las Vegas Police Protective Association, called the list “pretty selfish and shortsighted.”

“They see an opportunity to do something that they philosophically believe in,” he said.

He said public employees had nothing to do with the state’s or country’s financial problems. “It was their (the Chamber of Commerce) members, in particular the banks and investment firms, that created the financial mess in this country,” he said.

The backing of the business community for spending and tax packages would give legislators significant political coverage. Republicans, in particular, are looking for the business community’s support.

Yet it is uncertain how far the chamber will go on a tax package, which some members of the core group estimate will be about $800 million.

Hill said the state’s budget hole “can’t fully be closed with cuts,” but he would not commit to how large a tax increase his members would support.

Hill said the changes to collective bargaining are meant to give counties and cities more leverage in negotiations in order to save money.

“The local public employees unions have a lot of clout,” he said. “I would guess, given the situation they’re in now, they would think it’s a good idea.”

Rory Reid, chairman of the Clark County Commission, said he’s been busy dealing with the county budget and wasn’t versed in the details of the debate over collective bargaining.

Even if Democrats agree to the Republicans’ demands that are unpopular with the public employee unions, some will still paint them along with Republicans voting for taxes as supporters of big government.

That was clear Wednesday as another business group, the Keystone Corporation, traveled to Carson City to tell legislators and the governor they could not pay more in taxes.

“There’s another voice,” said Monte Miller, treasurer of the political group and a close adviser to Gibbons. “I think we can get close” to balancing the budget without raising taxes.

Bob List, vice president of the group and a former governor, said he thinks the budget could be fully balanced without raising taxes.

“Raising taxes on business? That means layoffs, and that’s unacceptable,” he said.

Sun reporter Joe Schoenmann contributed to this story.