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October 9, 2013 / jimnv

The Budget Crunch

Sandoval bemoans the fact that the Federal shut down will put extreme pressure on many state programs such as WIC, unemployment and the National Guard. What most Nevadans do not understand is the Federal government pays for about half of Nevada’s budget. I discussed this about 25 years ago in a letter-to-the-editor called “The Duck Billed Platypus and Frankenstein’s Monster“. We are a state which thinks we are independent and free, but the Federal purse strings are still there and necessary as ever. Nevada is like someone on unemployment thinking their benefits are a job and the money they get is “earned income”. I guess if one thinks hard enough this becomes real… to them.

Here is a little of what I wrote in that letter:

Nevada’s reliance on federal money is very disturbing in both practicality and fiscal morality. For a state that takes pride in its independence, it is at the federal entitlement trough more and more.

Let’s not brag that taxes paid by Nevadans is (are) very low, afterall, we have transferred much of our tax burden to the Federal government. Taxes created by Nevada are within our control, but Federal monies are unreliable, with strings attached and at the political whims of Washington. Reliance on them is stupid.

Then, to make matters worse, half of the remaining budget (non-federal money) comes from tourists in the form of gaming, entertainment and extra sales taxes. The remaining amount is what Nevadans really pay. It is not much, though many right-wing “research” groups think so. Since they lie about Nevada’s budget all the time they are now deluded and think what they say is true.

Sandoval should know about Nevada’s budget weaknesses. However, based on his actions it appears he doesn’t have a clue. For him, his sound bites just need to have some facts and ring true for a short while for the local news. The fact is this… Nevada is in deep trouble if the shut down continues past a month. Programs totally funded by the Feds will feel the effects first, and there are no rainy day funds to make up the difference. Then what of the other agencies such as the state’s Environmental Protection division and the Transportation department which are totally dependent on Federal dollars? Would agreements and laws which keep their money flowing still be reliable? Probably not!

The state budget problem has been festering for many decades, and the Big Crunch is here Sandoval. Are you listening? Do you know where our money is and where it comes from? Are you aware of our budget weaknesses and are you listening better advisers than your department heads and “yes men” dependent on you for their jobs?

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9 Comments

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  1. Michael Jackson / Oct 11 2013 1:55 pm

    1) PERS is funded by managing the monies via stocks and bonds. It is to their credit that they have been successful. But the stock market is a “bubble” that is going to pop. It’s nothing more than a casino when you have stagnant economy, low-wages prevailing, negative household incomes, all with a less than 2 percent GDP growth. The next market slide is going to wipe PERS out.

    2) The State matches that 13.25 so that its 26.50. Taxpayers don’t even get this kind of benefit but state employee thinks they have a right to demand it from them. You can’t get blood from a rock. People have had loss of job, income, and are underwater because of it. They will outright resist any more tax burdens placed on them because of it. Mining and Gambling will refuse to be taxed. so with less revenues coming in, the state will have no choice but to freeze all state contributions, which will leave PERS short of a lot of monies.

    3) Your statement “state employees pay 13.25 percent of their income into their retirement system” is incorrect. After 5 years, you are vested and you can choose “employer-only” instead of “employer-employee” and ALL of your retirement is paid by the State, i.e. taxpayers. PERS gets no monies from these employees and the State pays the FULL 26.50 percent. The state worker has contributed NOTHING to PERS and puts all the burden on the taxpayer.

    4) You get your retirement on the three top consecutive years that you’ve worked. So if you get a higher salary for 3 years then get bumped down, you get your retirement at the higher pay. BUT you didn’t pay out at that higher pay for all the years you worked (if you’re on employer-employee). This takes monies out of PERS more than the state worker has put into it.

    Police, Firefights, and Emergency crews should be an exception but then everybody makes excuses to why they should be included and we’re back to square one. But the next special session is going to have to address the PERS problem because it is not sustainable.

    • jimnv / Oct 11 2013 5:05 pm

      The employer paid option does not mean state employees do not pay their half. I understand local government employees under a contract pay nothing.

      • Michael Jackson / Oct 12 2013 12:15 pm

        I used to be a state worker and I knew a few that were employer-only. They were regular state workers and they said, under the employer-only plan, they pay ZERO into it. It’s all paid by the state (if you choose to after being vested). The only problem is you don’t get that money if you get laid off (except what you put in for the first 5 years). These workers were not on contracts. I could have done this and i wasn’t under a contract but I felt that paying my share was only fair.

      • jimnv / Oct 12 2013 1:47 pm

        People in the “employer paid” retirement option still pay their share. I was a state employee in “employer paid”, I converted to it from employee/employer paid. My retirement amount came right off the top of my salary. My annual salary was lower so PERS could be paid. The term “employer paid” makes it easy to confused people. If a person is hired by the state under the “employer paid” scheme, it is true the the state pays PERS but that employee gets a lower salary for that position. I heard all new employees (since aout 5 years ago) are “employer paid” so it would be easy for them to think the state pays their way entirely but it’s not true.

        Now, regarding county empoyees, they might not pay into retirement at all, it depend on their contracts. State employees do not have that benefit. The employee/employer paid scheme came about in the mid 1980s at the request of counties which negotiate salaries and whether the their employees pay PERS. Teachers, for example do not pay into PERS at all. The counties pay their PERS contribution.

      • Michael Jackson / Oct 13 2013 11:46 pm

        Then I apologize as I got that information from state workers who got the information from their union.

      • jimnv / Oct 14 2013 8:33 am

        No problem. No need to apologize. As the job classifications evolve and salaries change it gets confusing. Most people hired now don’t understand that their salaies are lower because of PERS. This is okay since PERS must be funded properly. Now, no new employee will remember the way it was.

        State employees in general get paid 25 to 30 percent less than county employees because of unions/county agreements through collective bargaining. When I worked for the state, my counterparts in Las Vegas and Reno made 50 % more than me and I was telling them what to do! Life isn’t fair!

  2. Michael jackson / Oct 9 2013 12:57 pm

    “Nevada is like someone on unemployment thinking their benefits are a job and the money they get is “earned income”.

    That’s how many state workers perceives their “entitlement’ called pension. It’s 50 percent funded by taxpayers and some are 100 percent funded. Raising taxes would be the worst thing to do. Jobs have come back but at minimum wages. Walmart told suppliers that they are cutting orders from them from July to December due to lack of consumer spending and over-inventory. The Gaming numbers are in for July and the State is over -8 percent and Las Vegas is over -14 percent. With less disposable income, we may well hit 2007 levels of over -25 percent. Homes are still underwater and all “good news’ about the market is hype about a mini-bubble that could pop at any time. Gold is down and the mining companies are starting to have lay-offs. The WHOLE State of Nevada will have declare default just to get its books balanced.

    Here’s what State of Nevada Workers and Retireers have to look forward to:
    http://articles.latimes.com/2013/aug/03/nation/la-na-adv-central-falls-20130804

    When there was massive “buy-outs” in 2010-2011, PERS reported that they were badly strained. The system was not created to withstand a large demand of funds for it. Those workers who were bought out weren’t planning to retire and now no longer contribute to the plan. Other workers were laid off and not rehired back on and they no longer contribute to the plan. You can’t have 1 dollar coming in and 20 going out while playing that 1 dollar at the casino called the “stock market bubble” and expect to come out ahead. Eventually it will pop and pensions do not have exit plans as investors do – they are tied to the stock market by an umbilical cord that cannot be severed. To do so kills the baby.

    It all comes down to Jobs and the creation of none-to-low-pay jobs is creating this crisis. For State Workers, it will come in the form of cut benefits, cut hours, higher premiums to pay (retirement, health benefits) , and more layoffs. Don’t blame taxpayers; blame your union. You can march all you want in carson city but the union is in bed with state officials. They only give a damn about taking your 1 percent base pay and I knew alot of workers that left them because of it. State workers are going to get screwed real bad on this next “Big Crunch” and it’s called “CUT,CUT,CUT”. This is what Sandoval is going to do and will be forced to do. The only problem is that this includes all the free services to the illegal immigrant communities as they ain’t any monies to continue these programs yet he needs these people votes, The cuts will have to be across-the-board but that’s easier said than done. 2014 will be interesting.

    • jimnv / Oct 9 2013 2:42 pm

      State employees do not have collective bargaining rights like local public employees. Also, state employees pay 13.25 percent of their income into their retirement system. PERS is properly funded and well run.

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