Posts Tagged ‘Vilardo’

Gov. Sandoval Seeks Justification For Continued Existence Of 183 State Boards

By Sean Whaley | 4:20 pm January 31st, 2011

CARSON CITY – They have names like the Landscape Architecture Board, the Nevada Arts Council and the Commission on Mineral Resources, and there are more than 180 of them functioning within Nevada state government.

Gov. Brian Sandoval says it’s time to take a look at these dozens of boards and commissions to determine if they are still needed or if some can be consolidated or eliminated in the name of government efficiency.

In his State of the State address Jan. 24, Sandoval said: “I will work with legislative leadership to introduce a bill that ‘sunsets’ every licensing and advisory board now on the books. More than 180 of these entities require gubernatorial appointments. Under our proposal, boards and commissions will sunset at the end of June 2013, giving us plenty of time to eliminate, consolidate, or improve functions among those that must remain.”

Dale Erquiaga, senior adviser to Sandoval, said in an interview last week that the first objective of the review is to improve state government efficiency. But cost savings could also result if some board operations can be combined, using one staff to provide clerical, legal and other administrative support to multiple panels, he said.

Many of the boards are small organizations that meet infrequently at best. Others serve major functions for the state, from the Gaming Commission to the Board of Medical Examiners.

“First and foremost it is about efficiency and responsive government,” Erquiaga said. “If we have that many boards and commissions, are we really serving constituents well?

“We have 183 of them just on our side,” he said. “There are other commissions we don’t appoint. It’s harder and harder for the attorney general to staff. It’s harder and harder for the administrative assistants and the departments to staff them. So really first it’s about efficiency and responsiveness. The cost savings will follow on.”

Erquiaga said some in the medical community have advocated for the consolidation of the services provided to the many different medical boards, from the State Board of Nursing to the Board of Medical Examiners to the Nevada State Board of Oriental Medicine.

“They each have an executive director and they each have a lawyer and they each have a secretary,” he said. “Couldn’t there be some ‘back of house’ consolidation there if you can’t consolidate the boards?”

Many of the state’s major and important boards, from the Gaming Commission to the Public Utilities Commission to the Colorado River Commission clearly will continue to operate, Erquiaga said.

“There are some others that perhaps might not,” he said.

Appointees to many of the boards are paid a modest stipend for attending a meeting, typically $80, plus travel and expenses.

Sandoval isn’t the first to make such a recommendation. The Nevada SAGE Commission, created by former Gov. Jim Gibbons to recommend efficiencies in state government, suggested a similar review.

One of the recommendations from the Savings and Government Efficiency Commission was to create a statutory panel of lawmakers and administrative staff in part to periodically review if there are duplication of efforts, efficiencies to be achieved and potential elimination of functions for the many state boards.

The commission said in its final report: “The state needs a formal process and structure to review on a rotating basis every 10 years the requirement for, as well as the policies and programs of, those state agencies and commissions not created by the constitution; . . .”

Carole Vilardo, president of the Nevada Taxpayers Association and a member of the SAGE Commission, said the consolidation of some boards could lead to savings in personnel costs with the better use of deputies in the attorney general’s office or with hearing officers.

One example offered up in discussions was consolidating the staffing of the barber and cosmetology-related boards, she said.

“We get so caught up in what the current issues are we don’t take a look at what may have outlived its usefulness,” Vilardo said.

Vilardo said it took a long time for the state to eliminate its selective service panel after there was no longer a draft.

The Legislature has taken note of the issue as well.

The Legislative Commission in May agreed to draft a bill to repeal an old statute creating the state’s Advisory Council on the Metric System.

The seven-member council was created in 1981 when the federal government was moving forward with a program of getting the states to convert to the metric system. Congress in 1975 passed the Metric Conversion Act to plan for the conversion.

That effort was derailed in 1982 when President Ronald Reagan eliminated funding for the conversion effort. The state advisory council, placed under the authority of the Department of Agriculture, has not met since the mid-1980s.

Audio clips:

Sandoval Senior Adviser Dale Erquiaga says too many boards may be creating inefficiencies:

013111Erquiaga1 :07 serving constituents well.”

Erquiaga says there is likely room for some consolidation:

013111Erquiaga3 :06 need 183 boards.”

Report Says Change To Nevada Public Retirement System Would Mean Big Upfront Costs

By Sean Whaley | 2:27 pm December 15th, 2010

(Updated at 4:31 p.m. on Dec. 15, 2010, to include comments from NSEA)

CARSON CITY – The panel that oversees Nevada’s public employee retirement system was told today it would cost about $1.2 billion over the next two years to change from the current defined benefit plan to a defined contribution plan for new state and local government workers.

The increased costs would come about as the Public Employees’ Retirement System moved to fully fund the existing plan for current state workers and retirees who would remain in the defined benefit plan.

The increased funding would have to continue over the next several years, adding costs to state and local government budgets. While the cost of the current retirement plan is shared between workers and their government employers, Dana Bilyeu, executive officer of PERS, said employers might end up having to bear the entire increased cost.

“Probably the entire cost would be borne by the employer because the employees are going to say, ‘hey, wait a minute, you’ve unilaterally made a decision to change the financing here and I’m now penalized because of that’,” she said.

The report by the Segal Group Inc., the PERS actuary, was prepared for the retirement board at no additional charge. It was accepted by the board and will be forwarded to the Legislature and Gov.-elect Brian Sandoval for their consideration at the 2011 legislative session. The board took no position on the report or the suggestion to switch to a defined contribution plan.

Sandoval and some lawmakers have advocated a change to a defined contribution plan for new hires as a way of containing a long-term unfunded liability for the current defined benefit plan, which hit $10 billion as of June 30.

A change from a “defined benefit” plan where retirement payments are guaranteed based on salary and years worked, to a “defined contribution plan” where public employers contribute to employee retirement without any guarantees of pension amounts upon retirement, is being pushed for public employee retirement plans nationwide.

Such a change would eliminate the unfunded liability for future hires. There is a current legal prohibition for changing the plan for workers currently in the system.

Advocates for the current system say Nevada’s plan is well managed, is being funded appropriately and will be fully funded over time.

The unfunded liability number won’t be recalculated until next year, but Bilyeu said today the PERS investment portfolio is up 13.6 percent since July 1, and assets total about $23.7 billion.

Members of the PERS board heard today that making the switch would result in significant upfront costs to the state and local governments as the current plan would be closed to new members and it would have to be fully funded over a shorter period of time.

Bilyeu said the change could be compared to switching from a 30-year mortgage on a home to a 15-year payoff, resulting in higher payments. In the case of PERS, the amortization schedule would shrink from the current 25.5 years to an average of about 10 years, she said.

The Segal Group report cites a number of advantages and disadvantages of defined contribution plans. Defined contribution plans would likely require employees to manage their own investments, and they are frequently drawn down by workers before retirement. They do not include cost-of-living increases to maintain purchasing power.

For government entities and taxpayers, however, eliminating any potential future unfunded liability is a major plus of such plans.

But there is a cost to making such a change. Contribution rates, which now are shared by employers and employees, are set to increase over the next two fiscal years to keep the current defined benefit plan financially healthy. Rates will go up to 23.75 percent from 21.5 percent now for regular employees.

But to fund the plan more quickly, the rate would have to increase to 34 percent instead, according to the Segal report.

For police and firefighters, who are analyzed separately, the increase would go from the proposed 40 percent contribution rate over the next two years to 52 percent.

The cost of these increases would total $1.2 billion for the coming two years, and would continue until the closed defined benefit plan was fully funded.

Gary Peck, incoming executive director of the Nevada State Education Association, said a preliminary review of the Segal report suggests any transition to a defined contribution plan for Nevada public employees in the upcoming legislative session has the potential to become a “train wreck.”

“Based on what we have read so far, it is plainly a red light, not a yellow light, that we hope the governor will pay attention to,” he said.

Craig Stevens, director of government relations for the NSEA, said the costs associated with such a transition make the idea fiscally imprudent right now.

“The price tag is too large at the moment,” he said. “There are philosophical reasons why we advocate for a defined benefit plan for our members, but from a fiscal point of view it makes no sense (to change). We can discuss the merits, but now is not the time.”

Carole Vilardo, president of the Nevada Taxpayer’s Association, has questioned whether state and local governments can afford to make the changeover in the next legislative session because of the costs and the current financial problems facing the state. While advocating for the switch, Vilardo said in an interview on Nevada NewsMakers last week it might have to wait four years.

Audio clips:

PERS Executive Officer Dana Bilyeu says changing to a defined contribution plan would require the current plan to be fully funded more quickly:

121510Bilyeu1 :12 about 10 years.”

Bilyeu says government employers might end up having to pay all of the increased costs of funding the current plan:

121510Bilyeu2 :12 because of that.”

Nevada Tax Expert Questions If Public Pension Plan Reform Can Move Forward In Short Term

By Sean Whaley | 12:36 pm December 10th, 2010

CARSON CITY – Long-time Nevada tax expert Carole Vilardo said says she does not see how the state can move Nevada’s public employee retirement system to a defined contribution plan in the upcoming legislative session.

The change, which would eliminate any future unfunded liability for new state and local government hires, is favored by Gov.-elect Brian Sandoval and some lawmakers.

Others argue changes made by the Legislature in 2009 need time to work, and that a radical change to the public retirement plan is unnecessary.

Vilardo, president of the Nevada Taxpayers Association, said in order to create a defined contribution plan for newly hired public employees, the existing defined benefit plan has to be fully funded at an accelerated rate. When she looked at the idea a few years ago, Vilardo said the time frame was seven years.

“The first thing that has to be determined is whether we can afford, at this point in time, to go to defined contribution,” she said during an interview on the Nevada NewsMakers television program that aired Thursday. “Given the current economy, if that has not changed, if those requirements have not changed of government, then I don’t see how we look at that for at least another four years or so.”

Vilardo said she does not believe the change can be made now because of the costs to the state and local governments associated with fully funding the current plan over the much shorter time span. The state’s current budget problems make such a transition unfeasible right now, she said.

“Sooner or later we’re going to have to go there,” Vilardo said of a switch to a defined contribution plan.

Nevada’s Public Employees Retirement System covers 103,000 active public employees, including state workers, teachers and local government employees.

The plan had a long-term unfunded liability at $10 billion as of the end of the 2010 fiscal year on June 30.

The plan was 70.5 percent fully funded as of June 30, 2010, down from 72.5 percent in the previous year. At its high point in 2000 the plan was 85 percent funded. Public employees and government agencies contribute to the plan based on rates recommended by an independent consulting actuary with a goal of having the plan fully funded over the next 30 years.

An increase in contribution rates is being submitted to the 2011 Legislature to ensure the long-term financial health of the retirement plan. The hit to the state general fund will be just under $9 million a year in the next two years. State employees will have to make a similar contribution.

But the long-term unfunded liabilities of the PERS plan and for public employee pension plans nationwide are generating concern from policy makers.

Sandoval favors a change from a “defined benefit” plan where retirement payments are guaranteed based on salary and years worked, to a “defined contribution plan” where public employers contribute to employee retirement without any guarantees of pension amounts upon retirement.

The PERS board next week will review information on the financial cost of making such a change so that the information is available to the 2011 Legislature.

A change to a defined contribution plan would eliminate the unfunded liability for future hires. There is a legal prohibition for changing the plan for workers currently in the system.

Audio clips:

Taxpayers Association President Carole Vilardo says Nevada may not be able to afford to change the public pension plan in the 2011 legislative session:

120910Vilardo1 :25 within seven years.”

Vilardo says the plan needs to be changed, but that it probably can’t happen for at least four years:

120910Vilardo2 :14 years or so.”

Support, Questions, Rejections Follow Call To Broaden Nevada Tax Base Using Expanded Sales Levy

By Sean Whaley | 1:15 pm June 3rd, 2010

CARSON CITY – A proposal to simplify, broaden and stabilize Nevada’s tax base by expanding and reducing the sales tax to include services from haircuts to legal advice is generating some support and plenty of questions from lawmakers and interest groups.

The proposal, presented Tuesday by Geoffrey Lawrence of the Nevada Policy Research Institute, would be revenue neutral and would lower the 6.85 percent state sales tax rate to 3.5 percent. As part of the proposal, the insurance premium tax and the payroll tax paid by businesses would be eliminated as well.

The NPRI proposal would even include food purchases as taxable items, but would also provide tax relief to residents up to the federal poverty line.

One potential challenge to the proposal is that voter approval might be required depending on how such a plan was drafted.

Lawrence, a fiscal policy analyst for NPRI, said his plan is intended to counter what is expected to be a call for a broad-based business tax by at least some members of the Legislature in 2011.

Lawmakers are facing a $3 billion shortfall and are awaiting a study of their own on how to respond to the anticipated revenue shortfall. The study by Moody’s Analytics funded by the Legislature’s Interim Finance Committee is due to lawmakers later this year.

Lawrence said his plan would stabilize and broaden Nevada’s tax base without further burdening Nevada’s taxpayers, and would also “strengthen our economy by eliminating the job-killing modified business tax.”

The NPRI study found that a corporate income tax is actually one of the least stable tax instruments available to state governments, and is significantly less stable than any tax instrument currently employed in Nevada. Adding a corporate income tax would therefore make the state’s tax structure more, not less, volatile, Lawrence says in his  report titled, “One Sound State, Once Again: Comprehensive fiscal reforms to again make Nevada strong, prosperous and free.”

The study also calls for spending reforms, including a priority-based approach to budgeting and limits on spending increases tied to inflation and population growth.

Several lawmakers commenting on the report have questioned its usefulness given that it is revenue neutral at a time when the Legislature is anticipating a $3 billion hole in the next budget.

But the proposal is a long-term approach to resolving the state’s revenue and spending issues and is not meant to be a quick fix, said Lawrence. A broader sales tax would bring in increasing revenues at the 3.5 percent rate as the Nevada economy recovers.

Assemblyman Ed Goedhart, R-Amargosa Valley, said he likes the approach, which follows a flat tax model that he and many voters would support.

“I think most Americans are tired of all these loopholes and exceptions,” he said. “The twisting of tax regulations to benefit a powerful constituency or lobby.”

A straight 3.5 percent tax on consumption would be a stable form of revenue, Goedhart said. There should be no exceptions, he said.

His one objection to the proposal is the provision to provide tax relief to low income residents.

“The cost of government applies to everyone,” said Goedhart, a member of the Assembly Taxation Committee.

Goedhart said such a plan in Nevada could serve as a role model nationally and help generate support for a similar change to the federal income tax.

The Legislature also needs to impose spending controls and look at other reforms, from prevailing wage laws to meaningful changes to the state health insurance and public employee retirement plans, he said.

Assemblyman Tom Grady, R-Yerington, said the study contains valuable information the Legislature can use as it tries to resolve its budget problems next session. But details would have to be spelled out in legislation before any such proposal could win his support, he said.

There are a number of sales tax exemptions currently, such as the one for farm equipment purchases, said Grady, a member of the Assembly Taxation Committee. Surrounding states have exemptions for farm equipment and not offering the same here would put Nevada companies at a disadvantage, he said.

The NPRI research is solid and gives lawmakers a starting point for a tax discussion next session, Grady said.

Sen. Mike Schneider, D-Las Vegas, said the proposal as presented wouldn’t bring in more money even though the state is facing a major revenue shortfall. He also questioned whether such a major change to Nevada’s tax structure could be accomplished in the 120-day session when so many other pressing issues are also on the table.

Add in redistricting and all the new lawmakers in the Senate and Assembly and the task would be challenging, he said.

“It would be a major undertaking,” said Schneider, a member of the Senate Taxation Committee. “I just don’t think, with the way our session is designed, that we can get that work done.”

A special session would probably be the best way to tackle such an issue, but whoever is governor in 2011 probably won’t want to call lawmakers back in for such a task, Schneider said.

Assemblyman Paul Aizley, D-Las Vegas, questioned how a revenue neutral tax proposal would help solve the state’s budget problems. The budget for the next two years would typically be in the $6.5 billion range, but is expected to be about $3 billion short, he said.

In talking to voters, Aizley said he is asking what services they want protected and what cuts they are willing to accept. Most people wanted education protected, he said.

Aizley, a member of the Assembly Taxation Committee, said he would also need details of what services would be included in an expansion of the sales tax.

“People don’t know the implications,” he said. “I would not say yes to a services tax until it was spelled out what those services would include.”

Aizley also rejected the NPRI call for what he described as a “zero based” budgeting process for state agencies to use. It is time consuming and labor intensive to review every single program every two years when it is clear many programs will have to be continued, he said.

Assemblywoman Sheila Leslie, D-Reno, said it is encouraging that even a fiscally conservative group like NPRI is in agreement that the state needs to consider revising its tax structure. But any tax plan that is revenue neutral is not realistic given the $3 billion budget hole facing lawmakers next year, she said.

Leslie also suggested the proposal is not really broadening the tax base, since it is just expanding an existing levy to services such as haircuts or tax preparation.

“I don’t think it is broadening the tax base so much as it is taking out the volatility by taxing more things,” said Leslie, a member of the Assembly Taxation Committee.

By eliminating the payroll tax as part of the plan, it could be argued the tax base would actually be narrowed under the NPRI plan, she said.

“It would reduce the burden on business and increase the burden on the rest of us,” Leslie said. “I think the middle class already pays its fair share.”

The idea of taxing services has been discussed before, both in 2003 and 2009, she said. Such proposals always run into roadblocks when the groups to be included in the tax object, Leslie said.

Assemblywoman Peggy Pierce, D-Las Vegas, said she welcomes NPRI to the tax discussion, noting that for a long time the conservative voices in Nevada have suggested that no changes are needed.

But Pierce, who also serves on the Taxation Committee, said sales taxes are regressive and the state already has one of the most regressive tax systems in the nation.

“Making our tax system more regressive is not an improvement,” she said. “I’m not entirely opposed to looking at a sales tax on some services, but not as a substitute for a broad-based business tax.”

Nevada needs to look at how other states that adequately fund their programs and services raise tax revenue and then model itself after those states, Pierce said.

Carole Vilardo, president of the Nevada Taxpayer’s Association, said the proposal needs a great deal of fleshing out so that policymakers can know the implications of what such a change would mean to the state’s tax structure.

Any change to one portion of the sales tax rate, the 2 percent that goes to the state general fund, would need voter approval, she said. Vilardo also questioned whether such a proposal could have an effect on those portions of sales taxes pledged to pay off bonds.

“When you talk taxes, the devil is in the details,” she said.

State Government Pension Costs Could Be on 2011 Legislative Session Agenda

By Sean Whaley | 10:59 am March 19th, 2010

CARSON CITY – The need for the state of Nevada to continue and possibly even increase funding to the public employee retirement system could make the budget problems facing the Legislature next year even worse.

A recent study by the Pew Center on the States identified Nevada’s public pension plan as one of 19 where “serious concerns” about the long-term health of the plan have been identified. The plan has a long-term unfunded liability of $9.1 billion as of June 30, 2009. If this liability had to be paid off today, it would cost every private sector worker in Nevada about $9,500 each.

Questions have been raised by some in Nevada and nationally as to whether these public pension plans are sustainable.

Carole Vilardo, president of the Nevada Taxpayers Association, said the drain on the state general fund from the pension expenses could be even more costly if, as expected, the contribution rate to keep the fund actuarially sound must be increased. It is currently at 21.5 percent, with half paid by the state and half by the employee.

Vilardo, who calls Nevada’s public pension plan “generous,” said putting additional scarce revenues into the plan will make it even tougher on the 2011 Legislature to balance the budget.

“When you’ve got a severe fiscal emergency, it may be time to move it down the road a bit and not put scarce funds into a benefit that does nothing to offer programs and services the state wants to provide,” she said.

Lynn Hettrick, deputy chief of staff to Governor Jim Gibbons, agrees that an increase in the funding of the Public Employees Retirement System (PERS) contributions could make an already bad budget situation even tougher to deal with. But any suggestion of withholding contribution increases would be risky, he said.

Dana Bilyeu, executive officer of PERS, acknowledged interim assessments suggest the contribution rate will have to be increased by 1 percentage point in the upcoming biennium. But she added that the actual cost of providing the defined benefit retirement plan is not as significant a part of the state budget as some may believe.

Of the $1.3 billion that flows into the plan each year from all participating state and local governments and employees, less than $200 million comes from the state and half of that amount is paid by the state employees. This does not count the cost of the contributions to public school teachers, however. About 37 percent of the state general fund budget is spent each year on public education.

Bilyeu said a 1 percentage point increase in the contribution rate would cost all participating employers and employees about $45 million. State employees would see their paychecks reduced by half a percentage point to pay their share of the increase. So while every hit on the budget next session will be difficult to accommodate, the actual cost of the 1 point increase would be modest, she said.

There has been discussion in recent years of changing the plan to a “defined contribution” system, where employees would take on the responsibility of investing their retirement contributions, thereby eliminating the long-term liability to the state and local governments.

Bilyeu does not support the concept, saying employees typically are not as willing to ride out the short-term fluctuations in the stock market to ensure a reasonable pension upon retirement.

The current defined benefit plan provides security to public employees at a minimal and reasonable cost, she said.

Assemblywoman Sheila Leslie, D-Reno, said Nevada’s public pension plan is very well managed and that significant changes – such as a switch to a defined contribution plan – are not needed. Leslie, who serves as the specialty courts coordinator for the 2nd Judicial District Court, is herself a member of PERS.

“Of course we have concerns about the long-term liability,” she said. “I think the stability of PERS is always on everyone’s mind. We have to look long-term to ensure it remains solvent. But this is not the time to make any radical changes.”

Vilardo agreed that switching to a defined contribution plan is not realistic right now. But the plan should be changed so that retirement ages for public employees conform to those used by the Social Security Administration, which start at age 62, along with some other reforms, she said.

The plan provides benefits to nearly 42,000 retired state and local government workers and sets aside funds for another 105,417 active employees as of June 30, 2009. Those in the plan do not participate in Social Security as part of their retirement in Nevada.

Because of growing concerns over the long-term unfunded liability and the cost of providing retirement benefits, the Nevada Legislature in 2009 passed some reforms to the program, but only for new hires beginning Jan. 1, 2010.

The retirement age for a regular state or local government employee with 10 years of service was changed to 62 from 60, and the amount of retirement credit per year of service was reduced from 2.67 percent for current employees to 2.5 percent of salary for each year worked.

Prior to this change, the Las Vegas Chamber of Commerce noted in its fall 2008 report that Nevada PERS had one of the highest “service credits,” otherwise known as a “formula multiplier,” in the nation at 2.67 per year of service. A high service credit effectively increases benefits and/or decreases the service time required to receive full benefits, the chamber report said. This higher multiplier is still in place for most public employees.

The chamber report, prepared by the Las Vegas firm Applied Analysis, also found that the system was intended to be a shared responsibility between government agencies and employees, but instead has morphed into a plan where most contributions are entirely paid by government.

Nevada state employees contribute a share to the plan, equal to the same amount paid by the state on their behalf. But the chamber report found that approximately 82 percent of regular employees and 85 percent of police and fire personnel have all contributions paid on their behalf by the employer.

State employees do not have the right to collective bargaining, while most local employee groups do use the process to negotiate wages and benefits.

The chamber analysis said the intent of the Legislature in creating the plan in the 1970s was that the contribution costs be shared.

Bilyeu disagrees with this assessment, saying local government employees gave up cost-of -living increases in exchange for their employers paying the full retirement contribution. They are sharing equally in the plan, she said.

Bilyeu would also oppose any delay in funding the pension plan, saying the Legislature has over the years followed the recommendations made by the PERS board, based on actuarial review by professional firms, in setting the rates.

The SAGE Commission has recommended several changes to reduce the costs of the plan, including setting a minimum retirement age of 60 before benefits can be paid out. Regular employees in the plan can now retire at any age with 30 years of service.

Other recommendations include calculating the retirement benefit over five years of pay, not the current three highest pay years; reducing the multiplier even further than the 2.5 percent per year approved by the Legislature in 2009, recommending a 2.15 multiplier instead; and imposing a moratorium on any benefit enhancements until the plan is fully funded.

The SAGE Commission said the change to the multiplier and retirement age should be examined separately for police and fire fighters, employee groups that have a different benefit plan within the PERS system.

Bilyeu said most state employees retire with 20 years of service, not 30, so the legislative change to the minimum retirement age to 62 after 10 years of service has had the effect sought by the SAGE Commission and others of equating retirement age to that used by the Social Security Administration.

Critics of the current retirement plan also question the use of an estimate of an 8 percent return to the fund, suggesting a lower return would be more realistic.

Bilyeu said the state’s plan has an annualized return of 9 percent over the past 25 years. While there has been some discussion of lowering estimates of returns in this new era of investing, it is not likely something she will recommend. The return rate will be monitored closely, however, Bilyeu said.

There is no doubt the recent major downturn in the market had a huge impact on the retirement fund. For fiscal year 2009, net assets to the plan decreased by $3.4 billion, or 15.4 percent, to $18.8 billion.

At the low point, the plan has a value of $15.8 billion, Bilyeu said. It is now at $22 billion, just below the high point of nearly $23 billion when the market turned. So far this fiscal year to date, the rate of return on the plan is 16 percent.

While the Pew study and others highlight the challenges states face in addressing their long-term public pension challenges, there is some reason for optimism, the study says.

“While the economic downturn has exposed serious vulnerabilities in states’ retirement systems, it also appears to be spurring policy makers across the country to consider reforms.”

Vilardo agrees, saying: “It could be an opportunity to correct past problems.”

This is the second of a series of stories on the Public Employees Retirement System.  In our next story, candidates for governor will weigh in on the need for PERS reform.

Audio files from this story:

[Audio 1] Hettrick – Contribution increase would make 2011 budget problems worse.

[Audio 2] Hettrick – Delaying contributions to plan not a good idea.

[Audio 3] Bilyeu – PERS plan provides good retirement at reasonable cost.

Gibbons Defends Budget Plan, Challenges Nevadans to Provide Alternatives if they Disagree

By Sean Whaley | 4:43 pm February 17th, 2010

CARSON CITY – Gov. Jim Gibbons today defended his plan to balance the state budget and challenged critics to come forward with workable alternatives if they object to any parts of his proposal.

In formally calling the Legislature into special session on Tuesday to deal with a massive funding shortfall, Gibbons yesterday released his list of proposals to balance the budget. It contains 40 different items, from 10 percent budget cuts to state agencies and education to taking $12.6 million from a scholarship fund.

The proposals cut spending in the current two-year budget by $895 million.

“If anyone else has any ideas on how to fix it, I am listening,” Gibbons said. “This criticism does not recognize that this problem is fixable, and I have presented a plan to fix it.”

The Legislature’s Interim Finance Committee will meet tomorrow and Monday to review Gibbons’ budget balancing proposals and review other options available to them.

Gibbons’ call for critics to produce their own solutions received some support today.

Mary Lau, president and CEO of the Retail Association of Nevada, said: “Work together people. If you don’t like this $20 million idea, then come up with a different $20 million idea. Instead we get the immediate response that the governor is mean-spirited. Where is the policy in that?”

Senate Majority Leader Steven Horsford, D-Las Vegas, was quoted in the Reno Gazette-Journal as saying: “This governor is mean-spirited and continues to put education last instead of first.”

Horsford said Gibbons has rejected some legislative proposals to reduce spending and instead proposed what he views as unacceptably large cuts to education.

Lau said the state needs productive discussions to get out of the budget crisis, not posturing.

While Gibbons said today his proposal to eliminate some deductions provided to the mining industry to generate $50 million in new revenue to the state is not a tax, Lau disagreed. Bringing more revenue into the state, particularly without the cooperation of the industry, is clearly a tax increase, she said. But she added it may be an effort to bring the industry to the table to forge an agreement on some type of revenue enhancement.

In contrast, Lau said the proposal to ensure sales taxes from purchases made over the Internet are appropriately levied and collected by the state is a legitimate endeavor and not a new tax.

Carole Vilardo, president of the Nevada Taxpayers Association, said Gibbons’ plan is a starting point that at least is on the table for public discussion and comment.

“It has been said by (Gibbons) and the Legislature there are no easy solutions to this,” she said. “I’m sure there are other elements that will surface. If some cuts are considered to be too steep there may be compromise, and cuts may be minimized in one area with greater cuts elsewhere.

“But in an economy like this there is nothing anyone can do that is going to be totally embraced as wonderful,” Vilardo said.

Vilardo agreed that the mining industry proposal is clearly a tax increase. But until details emerge on what “loopholes” Gibbons is proposing to eliminate to generate the new revenue, she had no further comment on the proposal.

Sen. Mike Schneider, D-Las Vegas, acknowledged that Gibbons at least has released a plan to balance the budget.

But he criticized the proposal to sweep the reserve fund that pays for the homeowner association Ombudsman’s Office, a position in the state Real Estate Division that resolves association disputes that Schneider worked to establish in 1997.

The fund is generated by a $3 fee per home per year and is only paid by residents of associations, he said. Taking the fund is the equivalent of levying a tax increase on one segment of the state.

“You can’t sweep that fund,” Schneider said. “It’s not general fund. It is specially set aside to run the ombudsman’s office. That is going to irritate a lot of people.”

The state Budget Office said today that only $500,000 of the $2.7 million in the ombudsman account is being proposed to be used as part of Gibbons’ budget balancing plan, not the entire amount.

Asked for an alternative to the proposal, Schneider said a better way to raise taxes would be to close loopholes in existing law that allow some businesses operating in Nevada to not pay their fair share of taxes to the state.

Assemblyman Don Gustavson, R-Sparks, said Gibbons has put forward a well reasoned plan and deserves credit for doing so.

“I think it is a workable plan if we can get it passed, although the leadership on the other side is not happy with it,” he said. “I think there are quite a few items that they will agree to because we are in trouble.”

Gustavson said he does not support one element: the proposal to use traffic cameras to capture revenue from uninsured motorists. But he acknowledged that he and other lawmakers must now find a way to make up for the $30 million that is proposed to be generated by the program.

Assemblyman James Settelmeyer, R-Gardnerville, said Gibbons does deserve credit for presenting a plan to balance the budget. But the lawmaker said he still has doubts about some of the components, particularly the proposal to close the Nevada State Prison with the accompanying layoff of 136 employees.

“I don’t know if shutting down NSP is going to save us any money,” he said.

Settelmeyer said he also has questions about whether the Department of Corrections has the space elsewhere in the system to accommodate the NSP inmate population.

“A lot of these proposals are extremely painful cuts,” he said. “The question is can we come up with better alternatives, and if so, will the governor alter the proclamation to include our concepts?”

One point is clear, Settelmeyer said: “Don’t bet on a one-day session.”