Former governor denies delegating salary increases

CARSON CITY -- Former Gov. Kenny Guinn testified Thursday that he never delegated to Bob Loux, then administrator for the Agency for Nuclear Projects, the authority to increase his salary and the salaries of his five staff members.

"I never knew he was making more than what was in the budget during my terms," Guinn told the state Ethics Commission.

Guinn was governor from 1999 to 2007. He called Loux an "outstanding" administrator.

Loux served for more than 20 years as Nevada's chief official against the U.S. Department of Energy's effort to put a high-level nuclear waste repository in Yucca Mountain. He resigned in 2008 after he admitted taking the salary of an employee who retired from his office and converting it into 16 percent salary increases for himself and his staff.

Loux now faces an Ethics Commission complaint filed by Assembly Minority Leader Heidi Gansert, R-Reno. The hearing into the complaint is expected to conclude today. If the commission finds against Loux, he can be fined for a civil violation.

Loux also may face criminal charges. Attorney General Catherine Cortez Masto said in January that, at her request, the Washoe County Sheriff's Department is investigating whether a criminal indictment should be brought against Loux.

Audit findings released by Gov. Jim Gibbons showed that Loux and his staff for at least three years received as much as 33 percent more than their legislatively approved salaries. According to the administration, Loux's salary was $151,442 last year, when he was entitled to receive $114,088.

Loux and his attorneys dispute those figures.

Guinn said if Loux had come to him seeking a salary increase, he would have tried to secure it for him.

"I don't know what his salary was," Guinn said. "I didn't take the time to look at someone's salary. I trusted the system."

Guinn said he had "little contact" with Loux, even though a 1999 state law put the Nuclear Projects Agency within the governor's office. Under that law, the governor could give individuals in the Nuclear Projects Agency any salary as long as the total did not exceed legislatively approved limits.

The question of whether Loux had been given the authority to increase salaries became a crucial part of Thursday's testimony.

Pete Ernaut, Scott Scherer, Michael Hillerby and Marybel Batjer, all former chiefs of staff for Guinn, testified they never told Loux he had the authority to adjust his salary or the salaries of his staff.

Loux lawyer Judy Sheldrew contended a chief of staff for Guinn she did not identify told her client that he did not have to come to the governor's office for approval of future salary changes and was told he could make them on his own. That authority was not changed when Gibbons became governor in January 2007, according to Sheldrew.

Ethics Commission members were not happy that officials in the Guinn and Gibbons administrations seemed to pay little attention to the salaries earned by Loux and his staff.

"I am trying to find out who is watching the henhouse," Ethics Commissioner Robert Wiese said.

Hillerby said the Guinn administration had "a good personnel office and a good budget office."

Gibbons' former chief of operations, Dianne Cornwall, said there was no time to review salaries when the new governor took office. The legislative session started a few weeks later, and Gibbons picked up salaries that had been placed in the budget by Guinn.

Gansert told the commission she filed the ethics complaint against Loux last September after he told the Legislature's Interim Finance Committee of the salary switch. She contended Loux got caught only because he forgot to place the increased costs for benefits in his agency's budget after raising salaries. That caused total salary spending to exceed approved levels and triggered a budget office investigation.

Assembly Ways and Means Chairman Morse Arberry, D-Las Vegas, said Thursday he was more than shocked by Loux's actions.

"I told Mr. Loux that we should handcuff him now and take him to jail."

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