January '09 Nevada Government—Governor Jim Gibbons Column

Nevada SAGE Commission’s Second 90-Day Report To Governor

Includes 8 Recommendations

The Nevada Spending and Government Efficiency (SAGE) Commission delivered its second set of recommendations to Governor Jim Gibbons today. If all of the eight recommendations in the report are acted on, the potential five-year savings to the state are estimated to be in excess of $600 million. First year of implementation savings or enhanced revenue potential for the state is an estimated $51 million.

SAGE Commission Chairman Bruce James met with Governor Gibbons this morning to present and review the eight separate SAGE recommendations on actions that can be taken immediately by the Governor or that can be put before the Legislature during its 2009 session. SAGE recommendations, approved by the Commission at its December 4, 2008 meeting in Las Vegas, and during a Conference Call Meeting on December 18, 2008, include proposals relating to the Public Employees Retirement Program (PERS), the Public Employee Benefits Program (PEBP), and creation of a Nevada Sunset Commission which would evaluate statutory state agencies and programs on a scheduled basis.

On receiving the Report, Governor Jim Gibbons stated “With Nevada’s economy in such distress, the SAGE Commission report is extremely valuable. The Commission works to find ways to make government more efficient and more effective. That fits perfectly with my efforts to streamline Nevada government to make it smaller and more responsive to the needs of our citizens.”

“We are very pleased that in its first two reports to the Governor the Commission has been able to identify ways the state can either accomplish savings or enhance its revenue flow by more than a billion dollars over a five-year period if all of the SAGE recommendations are enacted,” stated SAGE Commission Chairman Bruce James.

Four of the recommendations in the December 30, 2008 Report to the Governor address pension and benefit programs for state employees. James noted that while the SAGE staff and Commissioners generally agreed that salaries paid to Nevada state employees are similar to equivalent positions in the private sector, they are aware this is a generalization because not all positions have private sector equivalents. “However, in a broad overview, our state employees are fairly paid,” James said.

James reported that an examination of employee benefits offered to state employees revealed these benefits generally exceeded the Nevada private sector and most other states by a wide margin. “Therefore, four of our recommendations deal with bringing the State’s employee benefits programs more in line with the private sector so that both salaries and benefits are balanced. No one that testified on these issues before the Commission was able to offer a convincing reason why, save for our police, fire-fighters and university faculty, that state employees should have better and more expensive benefits than their private sector brethren. For the most part, this involves reducing benefits for new hires, existing employees and retired employees.

“All of our commissioners expressed concern about the impact our recommendations would have but agreed that the State could no longer afford to offer such generous benefits. Recommendations 13 and 15 involving the Public Employee Retirement System (PERS) were adopted unanimously by the Commission. More difficult were the Commission’s recommendations 12 and 14 regarding the Public Employee Benefits Program (PEBP) which received majority, but not unanimous, votes for adoption. Some commissioners were unwilling to support the increase in health insurance premiums for existing and retired employees. All commissioners concurred, however, that a method of indexing should be created in regard to existing and retired employees to minimize the impact of increases on lower paid employees and those with smaller pensions,” James explained.

Included in this second 90-day report to the Governor are the following recommendations:

· Adjusting health care subsidies provided to current state workers through the Public Employee Benefit Program (PEBP) to bring these subsidies more in line with levels provided in private industry and other states. This would be accomplished in two phases beginning July 1, 2009.

· Modifying retirement benefits for Public Employee Retirement System (PERS) members who are hired after July 1, 2009.

· Eliminating all Public Employee Benefit Program (PEBP) subsidies for anyone who retires after July 1, 2009; reducing subsidies for retired State employees by 50% over a two-year period; and eliminating all PEBP subsidies for Medicare-eligible retirees effective July 1, 2009.

· Transfer administration and funding of the Senior Citizens Property Tax Assistance Program to the counties within the State of Nevada. Property taxes are collected by the counties so the rebates should be funded at that level rather than from the General Fund.

· Create a statutory Evaluation and Sunset Commission, modeled after the successful Texas Sunset Commission, to review and make recommendations on continuation of all statutorily created state agencies, boards and commissions as well as tax exemptions, abatements and earmarks.

· Review fees charged by state agencies for services to ensure the fees cover the cost of providing the services.

· Conduct a detailed inventory of all state-owned real estate and buildings along with a portfolio optimization review of all leased facilities and appoint a task force to evaluate the uses of state-owned property and appurtenant water rights, including Nevada Department of Transportation (NDOT) and Nevada System of Higher Education (NSHE) holdings.

The full December 30, 2008 SAGE Commission Report to the Governor, including explanations and potential savings/enhanced revenue estimates is available on the SAGE Commission website (www.sagenevada.org) along with the September 30, 2008 Report which includes the first 11 Recommendations made to Governor Gibbons.

Charged by Governor Gibbons to objectively assess the structure of Nevada’s government operations and make recommendations formulated to improve citizen services and reduce costs, the Spending and Government Efficiency (SAGE) Commission is studying the structure and functions of most state departments. The SAGE Commission expects to make recommendations to the Governor every 90 days during its two-year lifespan. The SAGE Commission meets monthly, alternating meeting locations between Reno and Las Vegas. The next meeting is January 22, 2009 in Reno.

Governor Continues Efforts to Stop Foreclosures in Nevada

Comments from Governor Gibbons to the banking industry:

“I appreciate the recent conversations we have had with you and your staff as we try to work together to resolve many of the problems with mortgage loans in Nevada.”

“I am also pleased that you are working to ensure that mortgage foreclosure activity is kept to a minimum, and that you are committed to taking all possible steps to halt foreclosure activity and evictions during the holiday period. Specifically, I appreciate your commitment to end foreclosure sales on all fully bank-owned mortgages through the end of January.”

“In addition, your program to pause the foreclosure process while working with homeowners will greatly aid those who are trying to stay in their homes. We all agree that keeping people in their homes while working with them to resolve their issues benefits everyone and is in the best interests of the community and the individual homeowners.”

“I want to again thank you for working with me and other state government agencies in Nevada to ensure that homeowners are aware of the many resources available to them to avoid foreclosure. As you know, the best solutions can only be implemented when homeowners and lenders communicate before the loan is in default.”

“Again, thank you for taking steps to help stem foreclosures in Nevada, and I look forward to continuing working with you to reduce home foreclosures and work toward economic recovery in Nevada.”