(Michael Chamberlain/Nevada Business Coalition) – While the media and politicians were all smiles with the announcement of a budget deal Wednesday afternoon, there was little for conservatives to cheer about. Though Nevada’s taxpayers avoided the $1.2 billion monstrosity of a tax package offered by the Democrats, they are going to be forced to accept more than $600 million in tax increases with the extensions of the sunsets until 2013 – or beyond. And without strong reform in return.
Depending on whom you believe general fund spending is somewhere between $100 million and $600 million more than the governor had originally proposed. Democratic leadership celebrated spending amounts they had condemned as draconian a short time earlier. Whatever the level of government they’re always satisfied with more.
The largest positive is that the Modified Business Tax will no longer apply to companies with less than $250,000 annual payroll, although businesses with payrolls in excess of that amount will continue to pay at nearly double the rate that was supposed to have been in effect starting this July 1.
Republicans had demanded reforms in five areas – collective bargaining, public employee retirement and benefits (PERS/PEBS), education, prevailing wage and construction defect. Though statements indicated they achieved something in each of the five areas, the reforms included as part of the package barely scratched the surface of what is necessary. In addition, there is nothing enacting changes to prevailing wage.
Supervisors will no longer be able to be covered by collective bargaining agreements and local governments can force concessions during fiscal emergencies. Rather than the straight 5% pay cut for state workers, they will be given furlough days constituting a 4.6% pay decrease but accompanied by a 4.6% reduction in working time. So instead of cutting pay they cut service. In the private sector businesses try to reduce costs without negatively impacting service. In government, that’s not the case.
All newly-hired government workers will no longer be eligible to receive taxpayer-provided health care via PEBS upon retirement, though there will not be any change to benefits for current workers. Furthermore, the pension system will remain as is, unfunded liabilities and all.
The education reform consists mainly of the two bills passed earlier this week, AB225 and AB229. While these reforms may make it easier to rid the system of bad teachers they do nothing to address the myriad other problems with our public schools. They certainly won’t give parents any additional input into their children’s education.
The construction defect bill, AB401, was sponsored by Assembly Speaker John Oceguera (D-Las Vegas), whom many in the construction industry consider the biggest obstacle to reform of Chapter 40 in the Legislature. Talk about putting the fox in charge of the henhouse. No wonder some of those who had pushed hardest for changing construction defect litigation are not impressed with this attempt.
There is a danger in passing weak reforms. It may be difficult to revisit the subject and strengthen them in the future. The fact that they were enacted can enable those who resisted them in the first place to successfully argue against necessary improvements by claiming that the subject had already been addressed.
Worse yet, weak reforms may not correct problems and may even make problems worse. This can embolden big-government types to try to undo them and impose their own fixes, which invariably involve simply throwing more money at it.
In the battle between those who believe government should get bigger and those of us who believe government should be smaller, we smaller-government types are supposed to be satisfied when government grows just a little bit. Well, we’re not satisfied and we are not celebrating this bad deal.
(Michael Chamberlain is Executive Director of Nevada Business Coalition.)