In case you missed it...

Education:

Governor Brian Sandoval has announced his agenda for the 2017 legislative session, and it includes funding for the state’s Education Savings Account program. While the proposed $60 million is a step in the right direction, it remains far short of what is needed. In fact, Sandoval’s proposed funding would not even be enough to cover the more than 8,000 students that have already applied. (Read more)

 

Labor and unions:

Employee freedom might very well be reaching New England. The right-to-work bill, which passed New Hampshire’s state Senate this week, would ensure that no worker is forced to pay union dues or fees in order to keep his or his job. If the bill becomes law, New Hampshire would become the 28th state to adopt right-to-work legislation, and the first to do so in New England. (Read more)

 

Free markets:

A graduate student from Russia, Konstantin Zhukov, said he was blown away the first time he walked into a Walmart and saw the massive amount of choice available to American consumers. Socialism and cronyism, he explains, doesn’t allow for such prosperity in Russia. “People want to come to the United States, because of higher standards of living — because of opportunity,” Zhukov says, crediting capitalism for America’s prosperity. (Watch Zhukov’s video)

 

Taxpayer ‘contributions’:

“Raiders Stadium” is one step closer to becoming a reality. This week Raiders’ owner Mark Davis officially filed the relocation paperwork with the NFL, in hopes of moving the team to Las Vegas. The NFL owners will likely wait until late March before making a decision. Davis and Las Vegas Sands. Chairman and CEO Sheldon Adelson — who has promised to contribute $650 million toward the stadium — are still working out some “sticking points,” ahead of the meeting. The Raiders are expected to contribute $500 million toward the proposed stadium, with the remaining $750 million coming from a room-tax increase passed by the Nevada legislature in 2016. (Read more)

 

Inauguration:

President Donald Trump’s inauguration, so far, has triggered a great deal of drama — record histrionics on among some, and relief and celebration among others. Some colleges have offered “safe spaces” for upset millennials, other schools have refused to broadcast the ceremony to their students and the communist government in China has gone so far as to ban any reporting of the event. But for all the hullabaloo, it’s important to realize that, compared to some past inaugurations, it’s all pretty tame. When a political outsider and national celebrity became president in the early 19th Century, celebrations got so out of hand that the newly inaugurated president had to escape out a side window of the White House to avoid a mob of over-zealous (and drunken) supporters. (Read more)

 

 

 

PERS Contribution Rates and Investment Returns Chart

Two years ago, NPRI noted that costs for the Public Employees' Retirement System of Nevada (PERS) have increased fourfold since inception. 
 
The below chart is an update of that post, which includes data through the fiscal year ending June 30, 2016:
 
 
Obviously, the alarming trend has continued unabated. As a result of continued growth in the System's unfunded liabiltiy — now at an all-time high of $13.5 billion — contribution rates for regular employees have risen to 28 percent of payroll, leaving new members "net losers" while also contributing to Nevada's teacher shortage.
 
It's important to note that, for actuarial purposes, the investment returns displayed above reflects a smoothing of gains and losses to mute the impact of any indvidual year. So while PERS actual investment gain for the 2016 fiscal year was only 2.3 percent, the System reported an actuarial return of 7.7 percent, due to previously unrecognized investment gains.
 
This leaves PERS with nearly $900 million in unrecognized losses going forward, which will be incrementally absorbed by the System over the next four years. Unless the System outperforms its 8 percent assumed annual rate of return over that timeperiod, debt will rise faster than anticipated, resulting in even higher contribution rates. 
 
To learn more about PERS, please visit http://www.npri.org/issues/detail/pers.

 

In case you missed it…

Overregulation:

A popular New York City restaurant has had enough of big government and, after 25 years in business, is closing its doors. According to a letter posted on the front door by the owners, “The climate for small businesses like ours in New York have become such that it’s difficult to justify taking risks and running — never mind starting — a legitimate mom-and-pop business.” (Read more)

 

Fiscal and taxes:

Politicians never run out of ways to circumvent the protections afforded to taxpayers. Despite a requirement put in place to protect taxpayers from tax-hiking politicians, the legislature has determined that it can avoid requiring a two-thirds vote by the legislature on local tax issues, by simply using a majority vote to grant local government the authority to tax. By skirting the constitution in such a way, lawmakers have been saddling taxpayers with higher local taxes for more than 20 years. (Read more)

 

Government bureaucracy:

Believing the Bureau of Alcohol Tobacco Firearms and Explosives is both redundant and ineffective, Congressman Jim Sensenbrenner (R-WI) has introduced legislation to eliminate the agency. “The ATF is a scandal-ridden, largely duplicative agency that has been branded by failure,” said Sensenbrenner. Other agencies, including the Federal Bureau of Investigation and the Drug Enforcement Agency, would assume various duties currently assigned to the BATFE under the proposed bill. (Read more)

 

Harry Reid retirement:

Former Senate minority leader Harry Reid officially unveiled a portrait of himself to be displayed in the United States Capitol. The Democrat senator apparently used campaign funds to pay a former staffer $7,000 to paint the portrait. The $7,000 price tag is actually somewhat modest compared to some of his former colleagues. In 2007, Democrat Rep. Charlie Rangel used money from his leadership PAC to pay for a portrait of himself that cost $64,500. (Read more)

 

Government waste and abuse:

The Nevada Piggy Book 2016 is here! Despite the fiscally conservative rhetoric thrown around by Nevada politicians during election years, Carson City consistently caves to the political special interests peddling big-government schemes — knowing that taxpayers will ultimately be compelled to bail out the overspending. So, what better way to deal with government’s uncanny ability to burn through tax dollars than by alerting citizens to some of the latest, specific examples of government’s penchant for wasting all that hard-earned tax money? (Read more)

 

 

The 2016 Piggy Book is now available!

 

At every turn, Nevadans are now faced with threats of higher taxes, from members of both major political parties. It can be called “bipartisanship,” but increasingly it’s become a kind of bi-partisan predation on taxpayers.

Despite the fiscally conservative rhetoric thrown around by Nevada politicians during election years, Carson City consistently caves to the political special interests peddling big-government schemes — knowing that taxpayers will ultimately be compelled to bail out the overspending.

So, what better way to deal with government’s uncanny ability to burn through tax dollars than by alerting citizens to some of the latest, specific examples of government’s penchant for wasting all that hard-earned tax money?

Therefore, the Nevada Policy Research Institute now presents the 2016 edition of The Nevada Piggy Book — an anthology of public-sector waste and abuse, illustrating the overspending and disregard for accountability that plagues governments of all levels in the Silver State.

While these stories are presented with a light touch, the reader should bear in mind that they document substantial waste, fraud and abuse —using money that would otherwise remain in the pockets of private Nevadans.

The true expense here is not the money lost from government coffers. It's the money — and thus the possibilities — taken from the economy, from small businesses and from citizens just like you.

Enjoy 2016’s Nevada Piggy Book.

 

 

Nevada’s unemployment rate normalizes to pre-recession levels

Underlying deficiencies signal labor market still less healthy than in 2007

By Daniel Honchariw

Rarely does reliance on any particular statistic tell the whole story.

Thus, the fact that Nevada’s unemployment rate has returned to pre-recession levels does not necessarily indicate the state’s labor markets are as healthy as they were in December 2007, when the Great Recession hit.

Nonetheless, the news from Nevada’s Department of Employment, Training and Rehabilitation — that the unemployment rate has fallen to 5.2 percent — is encouraging, given it was nearly 14 percent as recently as 2010.

Accordingly, to achieve pre-recession levels of unemployment marks a milestone for state politicians and policy-makers who have spent the better part of the last decade trying to reverse the horrors of the worst financial crisis since the 1940’s.

Governor Sandoval, speaking to the recent employment gains, boasted:

As 2016 nears an end, I’m encouraged by the significant progress our state has made as a result of our combined efforts these past six years. . . Looking forward, I’m excited about the direction that Nevada is heading and I remain committed to working with our business community to build a stronger and more resilient economy.

Despite the indicated progress, however, all is not rosy. Other important statistics show that Nevada’s labor markets remain weaker than they were in 2007.

First, of those employed, a greater proportion are now working part-time — “part-time for economic reasons,” according to the definition used by the federal Bureau of Labor Statistics. These are workers who, despite their best efforts, have been unable to find full-time employment.

Second, continuing a decades-long trend, the relative size of the labor force as a proportion of the state’s 16-and-over population has fallen for the last 10 years — which reduces the unemployment rate as a mathematic calculation.

Together, these problematic trends suggest that — notwithstanding considerable improvement from the darkest days of the recession — the overall health of Nevada’s labor markets still lags compared to the pre-recession era.

Part-Time Employment

Today a greater proportion of employed Nevadans are part-time workers than in 2007.

Despite those workers’ inability to acquire full-time work, they are considered “employed” for purposes of measuring unemployment.

For a broader look at overall employment, the graph below tracks the “official” unemployment rate (“U-3”) as well as two alternative measures of labor underutilization: marginally-attached workers (“U-5”) and part-time workers (“U-6”).

Here the difference between the U-5 and the U-6 lines constitutes the proportion of part-time Nevadans in the labor force who, by definition, and for the purposes of the “official” unemployment rate are nonetheless considered to be employed.

From 2007 forth, the difference (U-6 minus U-5) tends to increase over time before beginning to normalize in 2011, indicating that the proportion of part-time workers has been increasing over time.

In 2007, for example, the difference between U-5 and U-6 was 2.3 percent, which indicates 2.3 percent of the labor force, or 2.4 percent of the employed labor force[1], was employed on a part-time basis.

By contrast, in 2016 the difference between U-5 and U-6 had increased to 5.1 percent (and was as high as 7.7 percent in 2011). This indicates that 5.1 percent of the labor force, or 5.4 percent of the employed labor force[2], was comprised of part-time workers.

Thus, between 2007 and 2016 part-time workers as a proportion of the employed labor force increased from about 2.4 percent to 5.4 percent. This amounts to a proportional increase of 225 percent over that period.

Given the size of Nevada’s labor force is greater than 1.4 million, approximately 70,000 people in 2016 were employed part-time because they were unable to acquire full-time employment.

In other words, if Nevada’s part-time workers were considered to be unemployed for reporting purposes, the state’s unemployment rate would be 10.3 percent — nearly doubling the “official” rate of 5.2 percent.

Labor Force Migration

Furthering this documented trend, Nevada’s labor force participation rate (“LFPR”) has decreased considerably since 2007[3].

Because unemployment measures do not account for those who are neither employed nor actively searching for work — meaning those who are not labor-force participants — by definition the employment rate increases as the LFPR decreases.

Thus, a reduction in the relative size of the labor force typically coincides with an increase in employment (or, conversely, a decrease in unemployment4). 

This pattern is evident here, most notably from 2011 forward — based on improvement to the employment rate, the economy showed signs of rebounding from its lows, but such coincided with continued migration from the labor force.

Thus, the significant gains in employment since 2011 have been at least partially attributable to continued labor force migration, which has the effect of overstating progress made against unemployment.

What does this all mean?

While progress against unemployment since its 2010 highs has been encouraging, a more comprehensive analysis of Nevada’s labor markets suggests that much work is still to be done.

More specifically, it means that lawmakers should prioritize reforms which aim to increase private-sector job growth and remove employer-disincentives for hiring full-time workers.

At the federal level, all signs point to Obamacare — a law that actually encourages the hiring of part-time workers — as being first on the chopping-block for 2017.

Here’s to hoping that Nevada’s upcoming legislative session also produces similar job-creating reforms at the state level.


[1] 95.4 (employment rate in 2007) / 2.3 = 2.4% of employed labor force
[2] 93.8 (employment rate in 2016) / 5.1 = 5.4% of employed labor force
[3] 2016 data not yet available from the U.S. Bureau of Labor Statistics
[4] Employment Rate = 1 – Unemployment Rate
 

In case you missed it...

Minimum wage:

The founder of a small fashion-design house and clothing manufacturer in San Fernando is getting ready to pack up and move to Las Vegas. Houman Salem explained that he loves his current location in the heart of California’s fashion district — but simply cannot tolerate the looming increase in the state’s minimum wage. “We need more stable, blue-collar jobs in places like the San Fernando Valley — the kind I thought I was helping create,” he writes. “California, however, has put up a giant ‘Go Away’ sign.” (Read more)

 

Health care:

Senate Republicans passed a budget resolution this week repealing portions of Obamacare. The resolution was passed using the reconciliation process, in hopes that repeal can be fast-tracked to President-elect Donald Trump’s desk once he is sworn in. The budget resolution would require $1 billion in deficit reduction over the next decade and sets aside funds for an Obamacare replacement reform. (Read more)

 

Federal lands:

Last week, widespread attention was given to the more than 1 million acres of western land — covering portions of Nevada and Utah — that the Obama administration unilaterally declared a national monument. Comparatively unnoticed, however, is that the administration is about to restrict a staggering 10 million acres of western land from future mining operations, claiming such steps are necessary to protect the Greater Sage-Grouse population. (Read more)

 

Job creation:

The most recent jobs numbers show a disturbing trend: the number of Americans not in the labor force has grown 18 percent in the last eight years — reaching a record setting number of 95 million Americans out of work in 2016. But there was another disturbing trend exposed in the most recent data: While many blue-collar industries — such as manufacturing — have been on the decline, government jobs continue to increase. State, local and federal government jobs currently outnumber manufacturing jobs by nearly 10 million. (Read more)

 

Nevada PERS:

Unsurprisingly, Nevada’s Public Employee Retirement System experienced another shortfall in 2016. Indeed, at nearly $13.5 billion, the shortfall was the largest ever set by PERS — adding dramatically to the system’s overall unfunded liability. Disturbingly, this massive shortfall occurred despite a record high number of contributions in the last year. As a result of these record-high costs, and ballooning debt, both taxpayers and PERS members will be net losers unless substantial changes are made to the overall system. (Read more)

 

PERS unfunded liability hits all-time high $13.5 billion

The Public Employees’ Retirement System of Nevada (PERS) reported a record-breaking shortfall of $13.457 billion last month, according to data published in the System’s comprehensive annual financial report for the fiscal year ending June 30, 2016.

Annual contributions likewise hit a record-high, coming in at around $1.7 billion. As a result of these record-high costs, most new members are now projected to be “net losers” under PERS — meaning the value of their future retirement benefit will be worth less than its total cost.

The report also confirms PERS continues to excel at keeping both administrative and investment fees low, with investment fees remaining flat since the previous year at around $39 million — or about 0.1% of total fund size.

While investing exclusively in index funds keeps fees low, there is a tremendous risk of future shortfalls given the System’s assumed 8 percent annual investment return — which far exceeds the projections of PERS investment consultants, other pension funds, Warren Buffett and many others.

2017 brought a significant personnel change to PERS. Longtime investment consultant Ken Lambert has chosen to move on, to be replaced by former president of Wilshire Consulting Julia Bonafede — who authored the second opinion review commissioned by PERS in 2015, which found that PERS was unlikely to hit its investment target over the next decade.

To read more about PERS, be sure to visit http://www.npri.org/issues/detail/pers

 

In case you missed it...

Happy New Year!

Can you believe 2016 is almost behind us?

It’s a great time of year to be optimistic. On New Year’s Day, we celebrate not just our success over the last twelve months, but the new opportunities that lie before of us in the months ahead. In this spirit, we look forward to forging another year of meaningful success.

And on behalf of everyone at the Nevada Policy Research Institute, we want to extend our best wishes to all of our supporters. Your generosity, engagement and dedication to our shared ideals is what will make our work in the coming year possible. And, for this we are extremely grateful.  We have a lot to do in 2017, and your involvement is crucial to keeping Nevada free and prosperous.

Your support has helped us defend educational choice, fight for government transparency and expose the cronyism and corruption in Nevada government. As much as we were able to accomplish in 2016, I’m sure that, together, we can accomplish even more in 2017.

On a more personal note, everyone at the Nevada Policy Research Institute would like to wish our former Executive Vice President, Victor Joecks, good luck in his new adventures.

As many of you know, Victor was deployed with the Nevada National Guard for most of last year — and upon returning home he has seized an opportunity to be an opinion columnist with the Las Vegas Review Journal.

Although his presence will be missed at the Institute, we’re thrilled to have such a powerful voice for free markets and individual liberty on a soapbox at such a well-established media outlet.

Victor, we wish you well.

And to all of the Institute’s supporters, we wish you a great New Year’s weekend. I look forward to standing beside all of you as we fight for our shared ideals in the year ahead.

Happy New Year!

Warm regards,

Sharon J. Rossie
NPRI President

 


 

Second Amendment:

A new state law requiring background checks on private gun transfers will not be taking effect in 2017, according to Attorney General Adam Laxalt. The law, passed by voters with a narrow margin in November, would have required the Federal Bureau of Investigation to run background checks on any individual that purchases, borrows or otherwise receives a firearm from another private citizen. According to Laxalt’s office, the FBI has refused to allocate resources to conducting the checks, and the state of Nevada lacks the authority to do so on its own. As a result, the law has been deemed “unenforceable,” and will not move forward at this time. (Read more)

 

Executive overreach:

President Barack Obama has once again used his executive authority to designate a large swath of western lands off-limits to future development or public use. The Obama administration has been taking criticism after its decision to create the Bears Ears and Gold Butte national monuments — monuments that cover portions of Utah and Nevada. The administration’s self-congratulatory Tweet turned the criticism into mockery after it was learned that the picture they shared was of an entirely different national park. As Senator Orin Hatch (R-UT) pointed out on his Twitter account, “If you're going to take 1.3M acres of Utah land, at least use the right photo.” (Read more)

 

Education:

According to a Clark County Education Association poll, parents believe public schools need more money. But, unsurprisingly, the CCEA never actually informed parents how much the schools already receive in funding. In fact, less than one in 10 respondents to another poll — conducted by EdChoice — could even guess the correct range of tax dollars being spent per year on public schools. When given the current amount of per-student funding, people began to change their mind about whether or not public schools actually “need” more money. (Read more)

 

Federal lands:

When Nevada first became a state, a clause was added into its constitution giving the federal government control over most of its lands, with the understanding that the feds would quickly put the land up for auction. Clearly, that never happened. Since Oct. 31, 1864 — that's right, more than 152 years — Nevada has tried to hold the federal government to its word and regain control of its own backyard. Apparently, trusting Washington D.C. to do anything in a timely manner is far too much to ask. (Read more)

 

Excessive regulations:

If you want to be a hairdresser in Chicago, Illinois, you will first need to take a class on how to identify potential victims of domestic abuse. And you will have to repeat that class every two years, otherwise the city will revoke your hairdressing license, and put you out of business. It’s just one more example of the ridiculous licensing requirements that plague local governments throughout the nation. In 1950, only one in 20 workers required any sort of government license for their occupation. Today, that number is one in three. Increasingly, Americans have to literally ask their government for permission before earning a living. (Read more)

 

 

 

In case you missed it...

Merry Christmas!

It’s hard to believe that the end of the year is almost here. Hanukkah begins on Saturday, Christmas day is Sunday and the New Year is just around the corner. 

It’s a time of year when many of us try to step back from our day-to-day lives and spend a little time with family and friends. After all, this last year has been extraordinarily busy for most of us — and things aren’t about to slow down in 2017. But for now, we can rest.

The holidays present an opportunity to refocus on the people that are most important to us, and let them know how grateful we are for their love and support.

Which is why, on behalf of the entire staff at the Nevada Policy Research Institute, I would like to thank the Institute’s family of supporters and friends. Your generosity, dedication and enthusiasm for our shared ideals has helped to both preserve and expand liberty and individual freedom during a time of increasingly intrusive government.

I hope that as you celebrate the holidays you will consider renewing your support for the Institute, by making a tax-deductible donation before the end of the year. Such a gift will help ensure that there remains a strong and independent voice for liberty in the Silver State. Please visit NPRI.org to make a donation.   

Once again, thank you for helping us keep Nevada prosperous and free.

Merry Christmas and happy holidays!

Warm regards,

Sharon J. Rossie
NPRI President


 

Education:

Educational choice — such as Nevada’s Education Savings Accounts — really should not be a partisan issue. Kevin Chavous, a Democrat and former councilman in Washington D.C., understands this more than most politicians after seeing the success of school choice in in his own city. According to Chavous, the people who are generally against school choice, are the ones that already have it. Among parents who have children trapped in underperforming schools, however, the possibility of a better education is overwhelmingly popular. (Read more)

 

Healthcare:

Yet another healthcare provider has decided to leave the Obamacare exchange at the end of the year. Evergreen Health Cooperative’s announcement earlier this month means only five out of the original 23 co-ops will continue to operate in exchanges created by the Affordable Care Act. The massive losses incurred by Evergreen forced the company to abandon the exchanges — despite a $65.5 million taxpayer-funded loan in 2012. (Read more)

 

Green energy:

Government officials in Colorado, Utah and Nevada have agreed to fully subsidize a series of electric vehicle charging stations — creating a network that would make it possible for electric vehicles to travel the 2,000 miles of highway between Denver, Salt Lake City and Las Vegas. (Read more)

 

First Amendment:

Families of three individuals killed in the Orlando nightclub massacre are suing Facebook, Google and Twitter, claiming that the social media giants did not do enough to censor material that may have contributed to the radicalization of the gunman. The lawsuit even goes so far as to allege that the social media companies provide “material support” and “an infrastructure” to terrorist organizations by not censoring enough content. The lawyer for the case argues that social media companies should essentially be held responsible for the content published by its users.  (Read more)

 

Political favoritism:

Bald and Golden eagles are among the numerous protected birds that are slaughtered in large numbers by industrial-scale wind energy. While other industries must cope with fines, penalties and even criminal charges for exceeding a permitted number of “acceptable” eagle deaths, renewable energy companies have been virtually licensed to kill the majestic birds. In fact, the U.S. Fish and Wildlife Service has decided to quadruple the number of eagles wind farms will be allowed to kill per year, and has even said it will waive fines and criminal charges for firms that exceed their permitted number of kills. (Read more)

 

CalPERS cuts discount rate to 7 percent

The nation’s largest public pension plan, CalPERS, just adopted a plan to reduce their 7.5 percent assumed rate of return to 7 percent over the next three years.

One board member described the rate reduction as “giving us a chance to be a leader in the nation in responsible pension funding.”

It is a move that the Public Employees’ Retirement System of Nevada (NVPERS) should seek to emulate.

At 8 percent, NVPERS assumed average annual investment return is one of the highest in the nation.

The use of inappropriate investment rates increases the likelihood that future generations will be burdened with the cost of past debt — much like what has already happened to current NVPERS members — while also exposing the fund to potential insolvency.

This is why over 100 countries require pension plans to use discount rates based on bond yields — similar to the approach required for U.S. private pension plans — which results in rates ranging from approximately 3.5 percent to 6 percent.

Even the pension plan at Warren Buffett’s Berkshire Hathaway only forecasts a 6.5 percent assumed rate of return on its investments. 

In other words, NVPERS investments must outperform Warren Buffett in order to generate sufficient funds to make good on the promises made to retirees.

That’s one risky bet. 

Robert Fellner is the director of transparency research at the Nevada Policy Research Institute.


 

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