The 2009 Nevada Legislature is treading slowly toward addressing the defining issue of this session " what combination of budget reductions and "revenue enhancements" will be developed to address the state's deepening budget deficit, now estimated at more than $2.8 billion.
The challenge is severe, but the crisis presents an opportunity to examine spending priorities and reform wasteful practices the state has allowed to flourish. In addition, it allows critics of the current tax structure, which many feel is unbalanced with its dependence on sales taxes and gaming, a chance to restructure that system.
The SAGE Commission made some bold proposals to halt the surge in compensation government employees have enjoyed, especially at the local level. Under the leadership of Bruce James, the Commission suggested: 1. Eliminating the generous health care subsidy (the average state worker pays nothing now); 2. Prohibiting a retiree from continuing on the government health care plan once they are eligible for Medicare; 3. Bringing retirement contributions by government in line with the private sector and; 4. shifting to a contributory retirement plan.
An even more serious problem is the rapid increase in overtime and total compensation enjoyed by municipal employees, who are, on average, paid 28 percent more than their private sector counterparts. We need to revise NRS 288 and eliminate collective bargaining.
I also support the formation of an independent task force to assist Higher Education in identifying the aspects of college life that must be maintained, while eliminating any outmoded and inefficient practices. Higher Ed cannot sustain the magnitude of reductions proposed by Gov. Gibbons, but it will be cut and we must insure that the reductions don't gut the system. With respect to K-12 education, we need to streamline that system, by implementing merit pay for teachers, reducing administrative overhead, and encouraging innovative and entrepreneurial techniques.
I am disappointed that critics of the current "unbalanced" tax structure haven't proposed yet a revision of that system. Instead, when the Legislature passed the "room tax" assessment that will enhance teacher pay, they approved the third largest tax increase in the state's history. That did what? Placed even more of a burden on gaming and tourism!
In the end, the Legislature will likely pass a combination of reductions and new taxes, offset by the roughly $600 million in federal stimulus money. The governor will veto that budget, but it easily will be overridden. Most likely it will consist of across-the-board reductions and new revenues that primarily come from raising existing taxes.
That means no significant reforms of the spending or revenue structure " and that will be a disappointment.
- Tyrus W. Cobb served as special assistant to President Ronald Reagan for national security affairs.