Accountant says Loux ordered pay raises for nuclear agency

CARSON CITY -- Former state government accountants and legislative analysts testified Friday that the Budget Office failed for years to catch salary changes made by the former nuclear projects administrator without direct authorization from the governor.

Robert Guernsey, a retired state legislative fiscal analyst and budget officer, told the state Ethics Commission that he "should have picked up" that the salary paid to Bob Loux, former administrator for the Agency for Nuclear Projects, was more than what was listed in the agency's budgets.

"My gut feeling is this should have been cleaned up by the budget office," Guernsey said. "It should have been fixed a long time ago."

Loux is appearing before the Ethics Commission to respond to a complaint by Assembly Minority Leader Heidi Gansert, R-Reno, that he broke ethics laws last year when he took the salary of a woman who retired from his agency and converted it into 16 percent salary increases for himself and five members of his staff.

Trudy Stanford, a retired accountant for the agency, said she was directed twice by Loux to divide up the salaries of employees who quit among the remaining employees in the office. She said salaries of remaining employees were augmented first in 1999 and then in 2007 when other employees quit or retired.

Salaries of employees also were increased by 3.75 percent and then by 5 percent when the agency received grants from the Western Governors Association, she said.

The first salary division was made with the approval of Vicki Soberinsky, a former deputy chief of staff to former Gov. Kenny Guinn, according to Stanford. The second was made without the expressed approval of Gov. Jim Gibbons because Loux acted under the assumption that the new governor had not changed any policy that would allow him to increase his own salary, according to Stanford.

Loux also stands excused of giving himself salaries for three consecutive years that exceeded authorized limits.

Gibbons demanded that Loux resign following a Sept. 9 meeting of the Legislature's Interim Finance Committee when he admitted the salary changes. He later was replaced by Bruce Breslow as administrator of the agency that fights federal attempts to put nuclear waste in Yucca Mountain.

Commissioners ran out of time Friday to complete hearing from all scheduled witnesses. They agreed to recess the hearing until March 25 or 26.

If they rule he broke ethics laws, then Loux would be fined for a civil violation. The Washoe County Sheriff's Department, however, is conducting an investigation to determine whether criminal charges should be brought against Loux.

During testimony Thursday, Guinn and five former chiefs of staff, including one employed by Gibbons, said they never delegated to Loux the authority to increase his own salary and those of his staff.

But Loux lawyer Judy Sheldrew and Stanford both have said that Soberinsky told Loux about 10 years ago that he could make salary changes for his office without direct approval by the governor.

Sheldrew, a former state budget director, said Soberinsky delegated to Loux that authority after the Guinn administration gave him a 29 percent salary increase.

Ethics Commission Chairman Mark Hutchison asked Sheldrew and lawyer Tom Perkins to have Soberinsky ready to testify when the hearing resumes. Perkins said he would, but added that in his telephone conversations with Soberinsky she said she did not remember such conversations with Loux.

Ethics Commission member Robert Weise questioned why Loux never told legislators in budget hearings that figures did not reflect the actual salaries of his office. Loux regularly testifies before legislators.

"The head of the agency would not know the budgets were not enough to make salary?" Weise asked.

Stanford testified she never tried to conceal any of the salary changes. She said she was aware state budgets did not show actual salary figures and tried unsuccessfully to induce the budget officers to make changes.

Contact Las Vegas Review-Journal Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901