A few weeks ago, Nevada Governor Jim Gibbons—who heretofore has opposed even a whiff of a tax increase, even when facing a tsunami of financial turmoil—floated the idea of taking a pay cut to help the state weather a $300 million deficit. It was awfully big of him, but since Gibbons makes $141,000 a year, other salaries, he also suggested, might have to be cut.
As it turns out, a study released earlier this fall takes up just that issue, by looking at public-employee compensation levels in Nevada compared to other states. The study, prepared by Applied Analysis and Hobbs, Ong & Associates and commissioned by the Las Vegas Chamber of Commerce, finds that Nevada’s state and local government workers earned average wages of $50,600 per year, which is 12.1 percent higher than their counterparts in other states. Nevada’s level of compensation ranks 8th highest in the nation.
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While teachers were, not surprisingly, the one exception (wages there “were 6.5 percent lower than the national average”), 61 percent of public employees made a higher salary than the national average. Take teachers out of that equation and the figure jumps to 90 percent.
“Essentially the chamber has been on record for many years that the problem has been evolving and getting worse for many years and eventually was going to get to the point of intractability,” says Hugh Anderson, chairman of the chamber’s Government Affairs Committee. It is, he says, not only a problem of salaries but one of retirement benefits; Nevada has unfunded retirement liabilities greater than $6 billion.
“In a state where every dollar of taxpayer money is really important right now, is it the right thing to do?” says Cara Roberts, spokesperson for the chamber. “Maybe we should look at reforming those areas. And long-term, what’s this going to mean in 10 or 20 years? Our ability to pay and our ability to reform gets harder.” The chamber commissioned other studies looking at public-employee retirement levels and compensation when compared with equivalent private-sector employees.
But keep in mind, Nevada has a relatively small number of state and local employees, which helps account for the higher numbers. “We do have less public employees per thousand,” says Guy Hobbs, one of the authors of the study. This creates an expectation of a higher degree of performance and workload. The low number is “a trend we certainly don’t want to change.”
“Taxpayers certainly get some bang for their buck,” says Dennis Mallory, chief of staff of the American Federation of State, County, Municipal Employees, Local 4041. “There’s a misconception that state workers sit around and get these big salaries and don’t do anything.” Mallory contends that Nevada has some of the country’s most productive public employees.
But what to do? About 30 percent of the state’s 103,000 public employees are elementary or secondary teachers; their income, however, is only about 25 percent of the total. Teacher salaries are locked in by contract, and since they’re already underpaid, both the union and the chamber agree that they should not be penalized. Salaries for upper management, on the other hand, could be revisited, although it’s unclear how much of a dent renegotiating those salaries would make.
“We’re certainly willing to take a look at the top administrators,” says Mallory. “Those are the ones, most of them, who are probably gonna be able to sustain that cut, whereas a lower-paid employee is not going to be able to sustain that cut.” Still, he estimates cutting top salaries would net only a few million in savings.
Anderson says he expects a serious discussion on public-employee compensation—salaries and benefits—in next year’s legislative session. “You’re going down the road of, ‘Let’s revisit our employment contracts.’ We have to have everyone at the table for those discussions. Those are very hard decisions to make.”