Commentary - December 2005

Hold the Line on Spending

For Public Employee Salaries

by Lyle Brennan

In November 2004, Clark County voters passed Question 9, a measure to increase the sales tax a quarter of a percent to pay for hiring more police officers. The sales tax was raised to 7.75 percent effective October 1st of this year, and it will be raised another quarter percent in 2009. When this ballot question was being debated, it was estimated the money raised by increasing the tax would pay for approximately 1,278 cops in the first 10 years.

Voters realized we need more police officers to keep up with population growth, and they were willing to pay for them. But the police union wasn’t content with the situation and is demanding more money for salaries and benefits – more than 25 percent over the next four years. It doesn’t take an accountant to figure out that the voters’ money won’t stretch to cover 1,278 cops on the street if each cop is getting paid 25 percent more.

The police officers’ union (Las Vegas Police Protective Association) proposed a $52 million, four-year contract that included a 3.5 percent cost-of-living (COL) increase in the first year of the contract, 4.5 percent COL raises in the second and third years, and a 4.25 percent raise in the fourth year. This was on top of the "merit" or "step" raises that about 60 percent of officers are already entitled to receive. When the COL adjustments are added to the step increases, more than half the police officers would get raises of about 10 percent annually, or 40 percent cumulatively over the four-year contract.

Although this figure would make anybody do a double-take, the police union expressed surprise when the Metropolitan Police Department’s Fiscal Affairs Committee refused to approve the contract. The committee is composed of two county commissioners (Chip Maxfield and Rory Reid), two members of the Las Vegas City Council (Larry Brown and Gary Reese) and one member of the public, Peter Thomas. Reid, Maxfield and Thomas voted against the proposal.

A poll by the Las Vegas Review Journal released in late October showed 54 percent of Clark County voters opposed the contract, 35 percent supported it and 11 percent were undecided.

The Las Vegas Chamber of Commerce led the fight to oppose the contract, citing a number of very logical arguments. Obviously, the Chamber wants safe streets and less crime in the community, but raised the valid point that a salary increase for police officers totaling more than 25 percent may set a precedent for future contract negotiations with public sector employees. "Often, public sector salaries are compared to one another during the contract negotiation process," pointed out a Chamber letter. "Public sector salary increases have historically been in the 12 percent to 17 percent range. Our concern is that by driving up police salaries at unprecedented rates, other public sector workers will seek higher salaries through the comparison process."

The Chamber was also concerned about the effect the salary increases would have on the long-term funding of the Nevada Public Employee Retirement System (PERS). The proposed contract included a 1.75 percent increase in the employer contribution for officers’ pensions – the employers in this case being the taxpayers. As wages increase, the retirement pay will increase as well, making taxpayers responsible for an ever-growing liability for future payouts. The last thing we need is to be saddled with a huge burden of debt to pay retirement obligations. Look at what General Motors and the major airlines are facing because of unfounded liabilities in their retirement and healthcare programs, set up through union contracts.

Now that the committee has turned down the original contract, the proposal will move to a fact-finding process beginning in January. An objective third party will review the positions of the union, the city and the county and will make a non-binding recommendation to the committee. If the parties still can’t agree on a settlement, the talks could move to binding arbitration.

Meanwhile, the police union has filed a lawsuit against five of the six Clark County Commissioners, County Manager Thom Reilly and the police department, saying they didn’t need the committee’s approval and want their money.

It remains to be seen where this will all end. We are presently at the mercy of arbitrators and negotiators, who will most likely be the ones to decide what voters’ financial obligations for this contract will total.

The lesson to be learned from all this is one the Chamber has been pushing for several years in its lobbying efforts: it’s time to change the Nevada statutes that govern contracts for public sector workers. Cost of living adjustments should be reined in, the retirement system should be shored up and citizens should have more of a voice to counterbalance the unions’ influence on public officials. This issue will come up again in the 2006 Legislature; let’s make sure we support taxpayers’ interests in holding down the costs associated with public sector salaries.

Lyle Brennan Publisher
COMMENTS? email: lyle@nbj.com