53°F
weather icon Windy

Pension plan

State government’s fiscal woes run much deeper than recession-driven revenue declines. Nevadans are also on the hook for at least $10 billion in unfunded pension benefits promised to public employees.

Currently, the plan to address this massive liability calls for gradually milking taxpayers for more and more subsidies over the next 25 years, then hoping the Public Employees Retirement System gets a big enough return on its investment portfolio to fully fund the guaranteed payments to government retirees.

That’s not viable — nor is it fair.

Struggling taxpayers, increasingly unable to provide for their families and save for their own retirements, can’t be expected to pay even more so public employees can continue retiring 15 years before everyone else is eligible for Social Security and Medicare benefits.

The only just solution — one that protects the benefits promised to current public employees and retirees while eventually freeing taxpayers from the burden of providing benefits that have vanished from the private sector — is to move future government hires out of PERS and into a defined-contribution, 401(k)-style retirement plan.

For too long, PERS has been a sacred cow in Carson City. No one has had the will to champion such a dramatic change in the way unionized public employees are compensated.

But Gov.-elect Brian Sandoval campaigned on just such a reform, and on Thursday, new state Senate Minority Leader Mike McGinness, R-Fallon, declared his support for offering future state hires less lucrative benefits and making them manage their own retirement accounts. Doing so would save the state and local governments — taxpayers — billions of dollars over the long term.

“Future legislatures would have an easier time,” Sen. McGinness said. “Nearly every state and municipality, everybody is having the same problem.”

Indeed, nationwide, states and local governments have an estimated $1 trillion in unfunded pension liabilities. There simply isn’t enough tax money to maintain even reduced services and provide the generous benefits vote-buying politicians have handed out like candy over the years.

Nevada is late to the debate on serious pension reform. Minor tweaks to PERS in the 2009 legislative session did very little to lessen Nevada’s long-term liabilities. According to the Pew Center on the States, 19 states have made major changes to their pensions just this year, including Democratic Party and union strongholds Illinois and New Jersey.

Pension reform should be a bipartisan issue. Nevada’s retirement liabilities are a direct threat to governments’ ability to provide good public schools and assist the poorest residents. They also harm the state’s ability to recover from the recession and attract new businesses.

Gov.-elect Sandoval and Sen. McGinness must keep pushing this issue. It’s encouraging that they’re willing to take up the cause more than two months before the 2011 Legislature convenes. But that won’t be enough. They need to pressure majority Democrats to bring the legislation to a vote.

Don't miss the big stories. Like us on Facebook.
THE LATEST
EDITORIAL: Economies roar in red states

Anyone who thinks policy doesn’t matter should consider that red states are outperforming blue states economically.

EDITORIAL: ‘Highly credible’ FBI source now a serial liar

We’ll see how the Smirnov saga plays out. In the meantime, it would behoove the FBI and Mr. Weiss to be as transparent as possible regarding the government’s case, lest the stink continue to worsen.