State Sen. Bob Coffin has blown the worst-kept secret in Carson City.
The Legislature’s Democratic leaders can stick to their disingenuous claims that the majority is undecided on whether to raise taxes. They installed Sen. Coffin, D-Las Vegas, as chairman of the Taxation Committee, and he made their agenda perfectly clear Tuesday during the panel’s first meeting of the 2009 session.
“Any tax that can be raised to balance this budget will be raised or considered. … All industries are vulnerable to the necessities, the urgencies of balancing this budget. … We don’t hold back on this committee.”
Sen. Coffin’s candor is refreshing. His perspective is frightening.
For starters, the 2009-11 general fund budget is currently balanced, with projected revenues and expenditures of about $6.2 billion. The chairman meant to say that he thinks the state should be spending between $8 billion and $9 billion over the next two years, and that there won’t be near that much revenue available without raising taxes to the moon and back.
Like the rest of his Democratic colleagues, Sen. Coffin is focused exclusively on the tax-consuming interests of government. When it comes to the hemorrhaging of businesses and the sacrifices being asked of Nevada’s work force, he has blinders on.
The 2009 Legislature will be almost exclusively focused on protecting, restoring and expanding funding for public schools, higher education, welfare programs and public safety. But lawmakers should be equally focused on eliminating overly generous public employee retirement benefits and prevailing wage laws that were grossly unfair to taxpayers during flush times and are totally indefensible amid the worst recession in generations.
The most urgent place to start is the health care subsidy given to retired state workers through the Public Employee Benefits Program. Because state employees can retire with maximum pension benefits a decade or more before Medicare eligibility, the state pays retirees a premium on top of the pension to cover health care and health insurance costs. Where private-sector workers must account for health care costs in their retirement savings, state retirees do not — they don’t even have to touch their pension income to cover one of their biggest retirement expenses.
The state has promised more than $4 billion in retirement health care benefits that aren’t funded, and the long-term liability increases every year. Gov. Jim Gibbons’ Spending and Government Efficiency Commission has proposed eliminating the benefit for all state workers who retire after July 1. The Legislature should make it so.
Then there are the unfunded liabilities of the state’s pension, which top $11 billion. As a Sunday Review-Journal report pointed out, the defined-benefit program makes it possible for public employees to collect significantly more income from the state in retirement than they do during their actual working years.
The Legislature should move all future hires onto a defined-contribution, 401(k)-style retirement plan to shield taxpayers from future risk. Absent that, the SAGE Commission has recommended establishing a minimum retirement age of 60 for non-public-safety workers, requiring more years of service for full benefits and taking steps to reduce benefits for future hires.
SAGE Commission Chairman Bruce James said a survey of public and private employers found salaries comparable, but public-sector benefits worth “substantially more than 50 percent greater” than those offered in the private sector.
“If the salaries are about right and the benefits are substantially higher, this needs to be brought in line. … This should have been done years ago,” Mr. James said.
The Legislature also should scrap Nevada’s prevailing wage law, which inflates the wages paid on government contracting jobs to levels based on incomplete and inaccurate surveys of private-sector companies. The law adds millions of dollars to the construction costs of schools, college buildings and other public structures.
Many lawmakers — most of them Democrats — will avoid these issues entirely, using the demands of tax and budget debates as an expedient excuse.
But there is no better and no more appropriate time to end these programs than the present. When the economy was strong, legislators had political cover to ignore long-term, unfunded liabilities as issues to be tackled later (preferably by someone else). The weak economy has moved up the due date for most of these bills. Exposed taxpayers need to realize savings on these looming disasters right now.