Legislature approves bill cutting benefits to public employees

CARSON CITY -- A bill that saves the state millions of dollars by cutting public employee retirement and health care benefits won approval Thursday night on votes of 19-2 in the Senate and 41-0 in the Assembly.

Both houses moved quickly to pass amended Senate Bill 427. Republican leaders insisted it pass before any members of their party vote to override Gov. Jim Gibbons' vetoes of bills increasing taxes by $781 million, which were issued earlier Thursday.

During hearings on SB427, both Republican and Democrats said benefit reductions were necessary to guarantee the continued solvency of the Public Employees Retirement System and the Public Employees Benefits Program.

The spending reforms will not affect benefits to existing public employees, only those hired after Jan. 1.

Gov. Jim Gibbons is expected to sign the bill, which contains reforms similar to those advocated by his Spending and Government Efficiency Commission.

While backing the bill, Senate Majority Leader Steven Horsford, D-Las Vegas, expressed concern that the benefit reductions will cause younger people to avoid choosing careers in public service.

"The processes in this bill are a major shift for new employees going forward," Horsford said.

But Sen. Warren Hardy, R-Las Vegas, said the reductions are necessary to ensure the solvency of the programs.

"We are helping to ensure these program will be here for a long time," added Hardy.

Dana Bilyeu, the Public Employees Retirement System executive officer, said she has no figures on the savings her agency will receive from the change.

The bill varies only slightly from one discussed last week in a Senate committee.

Bilyeu estimated then that the bill would save PERS about $142 million a year in coming years.

The biggest changes to the retirement system affects police officers and firefighters. Under the terms of the reform, they would have to work 30 years, the same as other public employees, before they could retire at any age and receive full benefits. Under the current law, they could retire at any age and receive full benefits after working 25 years.

Future public employees who retire early also will be docked 6 percent of their retirement pay for each year they retire early. Current employees are cut only 4 percent a year.

The reform plan reduces health care and retirement benefits for future public employees. It also requires local governments to approve or reject any collective bargaining agreements during public meetings.

The chief executive officer of the local government also must report on the fiscal impact of the agreements.

Senate Minority Leader Bill Raggio, R-Reno, insisted on the reforms to collective bargaining, PERS and health care benefits before his party would vote to override Gibbons' vetoes.

Last week he also demanded that no public employee should receive any retirement benefits before age 62, the same as in private industry. But that demand was not found in the passed reform bill.

Raggio called the reforms in SB427 "a good step forward" that won't penalize existing employees.

Without the benefit changes, he said, the state of Nevada and its PERS system would be in the same position as the federal government is with Social Security: facing insolvency.

Sen. Bob Coffin, D-Las Vegas, voted against the bill. He said he was concerned that the higher education system of Nevada won't be able to hire star professors because of changes in health care benefits.

Under the reforms, professors and all state employees and teachers would have to work a minimum of 15 years with the state to acquire a monthly subsidy when they retire. That subsidy, from $396 a month to $696 a month, can be used by retirees to purchase health care insurance.

Previously, the law allowed partial subsidies when employees work as little as five years, a feature that Coffin said universities used to attract quality professors.

Sen. Maggie Carlton, D-Las Vegas, also voted against the bill.

"I was brought up to raise up the next generation," said Carlton, explaining she did not want to cut benefits to future employees.

Hardy said Nevada is the only state in the union to offer any subsides to help retirees buy health care polices.

Even with the changes, he said, Nevada still offers the most generous retirement package in the nation.

"I feel what we did was in the best interest of the state of Nevada," Hardy added.

Coffin still refused to support the bill.

"We have cut everybody's pay," he said. "We have cut everybody's benefits. There is nothing to be proud of."

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