State, cities no longer can afford employee contracts

(Frank Partlow) – Transparentnevada.com shows one reason Nevada’s governments are going broke: Seven of Reno’s highest paid employees are fire battalion chiefs who cost more than $244,000 per year each. In Las Vegas, the top 10 also are fire personnel at around $300,000.

The average annual private sector Nevada salary is $41,132. Local government employees averaged $51,792, and state employees, $54,704. Extra pay for overtime and cost-of-living allowances are understood. For unionized firefighters, these are contract obligations that are automatically added to salaries and benefits and include leave pay, “sell backs,” call-back pay, step raises, uniform allowances, longevity pay, “premium pay” and “separation pay,” which are not found in most pay checks.

Nevada leads the nation with a 14 percent unemployment rate, with 180,000 out of work. These salaries and benefits are paid through their taxes by private sector employees, who make far less.

The internationally respected newsmagazine Economist concluded last year that “There is, in effect, a hidden transfer from private-sector workers to their public-sector peers … it may amount to as much as 30 percent of their pay.”

Where fire personnel are involved, this situation has resulted from years of mandatory contract negotiations between their unions and local governments, hamstrung by the provisions of state statutes. The effect of years of arbitration under NRS 288 has left Nevada’s local governments on a one-way street to insolvency. Unlike private companies, which have used bankruptcy courts to force their unions back to the negotiating table, until now few public-sector entities have done that.

The elephant in the room is the retirement pension effect of these salaries on future Nevada government budgets and their ability to pay. Currently, firefighters can retire after 20 years, many on more than 75 percent of their final three years of compensation, for the rest of their lives. At 50, with life expectancies in the 80s, the bill for such highly paid employees is astronomical. With Nevada’s pension fund currently underfunded by $6 billion to $8 billion, one wonders where state retirees expect these retirement checks to come from.

There are ways to fix this. However, nothing will happen until everyone understands that the current system is unsustainable because it is unaffordable. Nevada’s public sector fire, police, teachers and corrections unions must understand this and work with a Legislature and governor to take needed steps, beginning next year.

Gen. David Petraeus commands thousands of soldiers in the most hostile environment on Earth. They work under an unlimited liability contract, which directs them to go anywhere and obey any legal order of their leaders. They never make a dime of overtime. Petraeus makes less than all seven of Reno’s fire battalion chiefs, who work under a union contract, which allows them to game their overtime to raise their compensation, along with their retirement benefits. None of them ever “command” more than 100 firefighters.

Something is incredibly wrong with this picture. Before anyone can fix it, we must all see it for what it is.

(Frank Partlow was the executive director of the Nevada Spending and Government Efficiency Commission. This column originally appeared in the Reno Gazette-Journal)