Pay raise could be repealed

CARSON CITY -- Gov. Jim Gibbons is considering calling a special session of the Legislature to repeal at least a portion of a pending 4 percent cost-of-living raise for state workers, university employees and teachers.

Soon-to-be-released tax revenue numbers for March will likely determine if such a move is necessary.

"We're waiting for those quarterly numbers to come in," said Ben Kieckhefer, Gibbons' press secretary. "But we're not ruling anything out, including a special session."

The report is expected early next week. Taxable sales have been weak in Nevada for the past several months.

The 4 percent cost-of-living pay increase is set to take effect July 1. But one state government source has indicated that Gibbons is interested in cutting the cost-of-living raise to 2 percent, saving about $65 million to help balance the upcoming fiscal year budget.

Repealing the entire raise for all employees would save the state nearly $130 million, according to figures from the state Budget Office. Nearly $91 million of the total is for teacher pay increases. The remainder would go to state and university employee pay increases.

If the taxable sales numbers and other revenues in the much anticipated report are on target with revised estimates, then the pressure to call lawmakers in to repeal the raises would lessen at least for the near term.

A one-day session, which Legislative Counsel Bureau Director Lorne Malkiewich said could be accomplished with relative ease in late June, could potentially generate much-needed revenue to keep the state budget flush with cash.

Only the governor can call a special session. And the governor can also limit the topics of the session.

Even with the $900 million-plus in cuts and savings already made in the current two-year budget, the state is short another $31 million already, primarily due to bleak March gaming numbers that came out earlier this month.

A bad March taxable sales report, which will also include revenues from other quarterly taxes, has the potential to make that number significantly worse.

Of special interest in the report will be the quarterly real estate transfer taxes and the payroll tax numbers.

Assemblywoman Sheila Leslie, D-Reno, said lawmakers are eagerly awaiting the report as well. She said one number circulating is that the report could push the state's newest shortfall to $40 million, even higher if the news is worse than expected.

"No legislator wants a special session," she said. "But we are definitely waiting for the March numbers."

About the only easily obtainable large source of revenue -- minus further cuts in state and education operating budgets -- is the 4 percent raise that lawmakers approved in June, well before the state's economic condition deteriorated.

The cost-of-living adjustment, which was 2 percent this year, is not the only pay increase state employees receive. There are annual "step" increases of 5 percent awarded to employees for continuing to work for the state. And long-time employees who no longer get the step increases instead get longevity pay based on their years of service.

Malkiewich estimated that a one-day special session, if it dealt with only a couple of simple topics, would cost about $80,000. Most of that would be the expense of lawmaker pay, per diem and travel. Each additional day would cost about $40,000.

A session could be put together before the start of the 2008-2009 fiscal year which begins July 1, when the raises would otherwise take effect, he said.

Lawmakers could take the opportunity during a special session to quickly approve the use of the state's $267 million rainy day fund to keep state government running, a decision already agreed to by Gibbons and lawmakers. Otherwise the fund cannot be tapped until the Legislature is scheduled to convene in its regular session in February.

Lawmakers likely would want to act quickly if a special session was called. A ban on accepting campaign contributions would be in place from when a proclamation calling for a special session was issued to 15 days after the session ended.

Lawmakers are in the middle of election season with a primary scheduled for Aug. 12.

But there is a risk. If lawmakers are not in agreement to rescind the pay increase, or if some other political dispute erupts, a simple and successful special session could be jeopardized.

University of Nevada, Reno, political scientist Eric Herzik said he wasn't surprised to learn lawmakers would like to avoid a special session.

"Politically there are no good choices," he said. Either lawmakers reject cutting state employee and teacher pay while private sector workers suffer from layoffs and job slowdowns, or they agree to cut the pay of a "large and active group of voters," Herzik said.

It is also easier to sit back and criticize Gibbons, who is required to make cuts and balance the budget, than weigh in and take responsibility for cutting pay or programs, he said.

Contact Review-Journal Capital Bureau reporter Sean Whaley at swhaley@review journal.com or 775- 687-3900.