‘Expectations can be different’

More than a decade ago, officials with the city of Las Vegas met with the Review-Journal's editorial board to discuss the health and direction of the municipal government. Of particular concern were the city's rapidly expanding personnel costs; the salaries and benefits of its unionized work force were growing faster than the budget itself.

The consensus among the group held that if the city didn't get a handle on these costs, they would ultimately bury City Hall and the taxpayers who fund it.

Well, here we are, more than 10 years hence, and the City Council is trying to dig Las Vegas government out of a budget shortfall that is expected to extend into the next fiscal year.

These are tough times for governments and businesses alike. But unlike businesses, the city of Las Vegas is still handing out double-digit annual pay raises to its work force, paying 100 percent of employees' health insurance premiums and sending senior workers into worry-free retirement with fully funded pensions and lifetime medical care.

The economic downturn isn't to blame for the city's budget woes -- it merely moved up the council's fiscal judgment day. The city's preposterously generous contracts with its employee unions are the primary reason services are being cut and projects have been delayed.

So the council and administration are echoing the concerns voiced years back. But this time, we're told, they really mean it. At a budget hearing this month, council members called for a comprehensive review of expenses. Within the next month or so, the city will decide whether to conduct its first employee salary survey since the mid-1990s, which could be the first step toward reining in worker compensation -- at least for future hires.

"When we hire employees in two years or five years, perhaps their expectations can be different than the expectations of our current employees," said Councilman Steve Wolfson.

There was a time when public employment entailed a measure of sacrifice. Citizens joined the government payroll with no expectation of riches, gladly accepting superior benefits and job security.

Today, the give and take between public employees and the taxpayers who provide their salaries is gone. In Nevada, public employee unions have leveraged pay that's higher than any other sector of the work force, with more time off and better health and retirement benefits.

Median wages haven't climbed more than 3 percent in any year since 2001; over the past two years, wage growth has been almost nonexistent. Yet over that same period most municipal employees received annual "step" raises of between 4 and 5 percent, handed out simply for picking up a year of experience, in addition to "cost-of-living" adjustments of between 3 and 4 percent that have no relation to the cost of living.

"No private-sector company could provide those benefits," said John Restrepo, an economic consultant to the city.

Added UNLV economics professor William Robinson: "If a government bureaucracy does not take advantage of the budget shortfall opportunity to retool itself, it will never retool itself."

Indeed. This is no time for minor tinkering. If the city is serious about reforming public employee compensation, it must blow up the current system and start anew. All pay raises should be based on merit. City workers must pay for a share of their health insurance premiums.

And future hires should be moved to a separate retirement plan that replaces a pension with a contribution-based savings plan -- and no taxpayer funded health care for early retirement.