Gibbons changes proposed pay raises

Two days into his term, Gov. Jim Gibbons on Wednesday made his second significant change to the budget left by Kenny Guinn.

Where Guinn used some extra revenue to propose 3 percent raises for state workers and teachers each of the next two years, Gibbons changed it to 2 percent the first year and 4 percent the second - which was the original pay package announced by Guinn two months ago.

While the total increase over the biennium still comes out to 6 percent, holding back that extra percent the first year saves the state about $31 million.

"With the savings that come out of that, we're going to be looking at funding some of the unfunded liability in the PEBP (the Public Employee Benefits Program)," he said after meeting with his budget team.

Dennis Mallory, of the State of Nevada Employees Association, said his members would rather have 3 percent each year even though it comes to the same total increase by the end of the biennium, but he wasn't about to complain too loudly.

"It's money out of their pockets, but it is a raise and we're certainly not going to complain about that," he said.

Gibbons said the decision is "fiscally responsible" because the unfunded liability could hurt the state's double-A bond rating, potentially adding millions in interest costs to future bond sales.

Government accounting rules were changed last year and, in the future, will require that obligation to be reported on the state's books as a liability. PEBP officials estimate the state's future obligation to current and retiring employees for health benefits at more than $3 billion.

Guinn tried in 2005 to get lawmakers to put some money toward that obligation but was unsuccessful.

The decision came just one day after Gibbons announced his first major change in the Guinn budget - cutting back the plan to fund all-day kindergarten statewide. He will, however, continue the program created in 2005, which provides all-day kindergarten in at-risk schools.

The change reduced that budget from $126 million to just over $50 million, saving about $75 million.

"The transition team on education is looking at how we should allocate that," he said, indicating he plans to keep most, if not all, that money in the public education budget.

Assembly Speaker Barbara Buckley, D-Las Vegas, made clear she intends to try restore the funding for all-day kindergarten statewide, saying it is a proven success in improving student achievement.

Senate Minority Leader Dina Titus, D-Las Vegas, is also a strong supporter of all-day kindergarten.

The Gibbons proposal is the same raise state workers and teachers received in the 2005 Legislature.

But Mallory said it was not too long ago that employees didn't get raises, "and fell so far behind local governments that we had trouble keeping people."

"We're glad Gov. Gibbons at least realizes the importance of keeping state workers status quo," he said.

Because the budget has to be pretty much ready for the printers by the end of the week, Gibbons said, it will be very difficult to make very many changes to the overall $7 billion general fund spending plan prepared by Guinn and state agencies.

"All we can look at is some of the new enhancement programs," he said. "The hardest part in all this is not knowing what the thought process was when the staff and directors decided how much money to put in these programs."

Director of Administration Andrew Clinger said the budget needs to be finished by Friday, so they can get it to the state printer.

Gibbons will spell out his plans for the state and the budget at his State of the State Address on Jan. 22. Budget briefings for the legislative money committees will begin the following day with the 2007 Legislature scheduled to convene Feb. 5.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.