Week in Review: Retirement

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


Do you ever have one of those days that are so hectic you find your mind wandering off, dreaming of the day you get to retire and spend the rest of your life on some distant, tropical island?

For most of us, such thoughts are nothing more than dreams we use to get through the grind.

But for government retirees in Nevada, such thoughts may be more realistic than not. As revealed in our new analysis of Nevada Public Employees’ Retirement System data now available on TransparentNevada.com, many public employees get a pay raise upon retirement.

That’s right. Many full-career government retirees in Nevada are receiving more than their final year’s base pay once they retire. Considering most of the taxpayers who fund those rich retirements receive far less after they quit working, and that NVPERS has an unfunded liability around $40 billion based on a realistic rate of return, the findings are something that should give everyone in Nevada, especially policymakers, pause.

Fortunately, the study received some great media attention. In addition to being discussed on multiple radio shows across the state, Nevada’s largest paper, the Las Vegas Review-Journal, featured the study as its lead story on the front page of Thursday’s edition, and as its top story online. The headline called the data “shocking,” and it truly is.

According to the report, authored by our own Victor Joecks and Robert Fellner, people retiring after at least 30 years of employment with Clark County, Washoe County, Las Vegas, North Las Vegas, Las Vegas Metro, Henderson or Reno are doing so with 100.59 percent of their highest year’s base pay. Police and fire retirees receive even more, getting a 14 percent pay increase upon retirement.

In conjunction with the release, we’ve updated TransparentNevada.com to include more detailed pension information. Now, users can see retiree names, pension payments, years of employment and last employer, meaning legislators, reporters, activists and ordinary citizens now have all the information that’s necessary to make the case for pension reform in Nevada.

Last night, I spoke at a meeting of the Sun City Summerlin Conservatives about reforms made to the retirement system in Utah, which now works for both taxpayers and retirees. During the Great Recession, Utah’s public pension system saw its assets crash, right along with the stock market. Rather than require taxpayers to make significant increases in payments to the system, as we’ve experienced in Nevada, Utah legislators chose to make the system sustainable and viable for generations to come.

The State of Utah contributes 10 to 12 percent of each worker’s salary toward his or her retirement, but beginning in 2011, new employees were given a choice in what to do with that money: invest it in a 401(k), or enroll in a defined-benefit plan knowing that taxpayer contributions would be capped at 10-12 percent. The move has lessened the risk to taxpayers and eventually will cut the state’s pension liabilities. And it’s also beneficial to retirees, as the new system means they can take their retirement with them if they switch jobs, can pass the asset on to their children upon their death, and no longer have to worry that politicians will raid the fund to pay for other government expenses.

And the move was apparently popular with voters. Not one Republican who supported the plan lost in the following election. In fact, Utah Republicans picked up seats.

Fortunately, NPRI has created the framework for a similar reform in Nevada. In addition to Thursday’s PERS analysis, we’ve published multiple studies and commentaries on the subject. Most importantly, PERS reform was a key focus in our most recent Solutions book, our sourcebook for policymakers that was sent to every Nevada legislator and Gov. Brian Sandoval. And our executive vice president, Victor Joecks, has relocated to Carson City so NPRI can have a full-time voice in the capital during this important time.

It’s undeniable that PERS reform needs to be a top priority this Legislative Session. Policymakers owe it to taxpayers and public employees alike to take action.

Until next time,

Andy Matthews
NPRI President


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Nevada will collect more in taxes next biennium without sunsets than it did in this biennium with sunsets

In FY 2014-15, Nevada will collect $6.27 billion in taxes for its general fund, which includes around $600 million in sunset taxes.  For FY 2016-17, Nevada will collect $6.33 billion in taxes without the sunset taxes.

 

General Fund taxes

Biennium spending

2014

$3,066,946,360

 

2015

$3,205,289,294

$6,272,235,654

2016

$3,069,593,035

 

2017

$3,260,982,435

$6,330,575,470

So does Nevada have a spending problem or a tax-collection problem? You be the judge.

 

Why Nevada’s tax base is more diversified than you think it is

With Gov. Sandoval proposing the largest tax increase in Nevada’s history, including a modified version of the margin tax voters just rejected by a 4-to-1 ratio, you’ll be hearing a lot about how Nevada doesn’t have a diversified tax base.

Liberals love to claim that Nevada’s tax base is a “two-legged stool,” and that’s why Nevada needs a business tax.

That type of rhetoric makes you wonder how many people have actually seen the composition of the taxes funding Nevada’s general fund. There are a lot of legs on that stool.

Does Nevada needed revenue-neutral tax reform, like the plan proposed by NPRI? Absolutely.

But the number and types of taxes funding Nevada’s General Fund are much more diverse than most people realize. Nevada doesn’t need a third leg for its tax stool. It already has a third, fourth, fifth, sixth, seventh and eighth leg.

 

Week in Review: Sound the alarm

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


Do you remember President Bill Clinton’s 1996 State of the Union address when he declared, “The era of big government is over”?

Watching Gov. Brian Sandoval’s State of the State last night made me wonder when Sandoval would declare “The era of big government is here.”

While Sandoval never spoke those words, that was the theme of his speech, which included the following:

  • The largest tax increase in Nevada’s history — $1.15 billion. That would include the creation of a new type of tax: a graduated business license fee. That’s a modified version of the margin tax, which voters just rejected 4 to 1.
  • The governor announced that he wants to make the sunset taxes permanent, even though lawmakers promised voters they would expire in 2011, and then 2013 and then 2015. As a candidate for governor, Sandoval himself promised to let them expire in 2011.
  • Sandoval proposed allowing school districts to raise property taxes to pay for school buildings without voter approval. Sandoval wants to bypass the will of Clark County voters who rejected a related property-tax increase in 2012 by a 2-to-1 margin. Citizens of Washoe County also spoke out in force and caused the Washoe County Commission to reject a similar tax hike in 2013.
  • He gave a laundry list of new education spending, including tens of millions of dollars for failed programs like full-day kindergarten and pre-K.
  • Overall, Sandoval proposed an expansion of general fund spending by 10.6 percent, from $6.6 billion to $7.3 billion.

The speech did include a couple of positive specifics: school choice in the form of opportunity scholarships and what sounded like a recovery school district for failing schools.

While Sandoval did mention things like reforms for collective bargaining, PERS and construction defects, the details he gave paled in comparison to the energy and attention he gave to his proposals to expand government. That set off alarm bells for me, and it should for you as well.

Especially worrisome is Sandoval’s claim that spending will be paired with accountability. While it sounds nice, consider what happens in practice. The Legislature passes a new spending measure. It immediately gains advocates who benefit from the government largesse.

Those advocates turn into a special-interest group dedicated to preserving the program, even when it doesn’t perform as promised. By the time we get to two, four or six years later, when there is ample evidence that the program is obviously not working as promised, a new crop of lawmakers and a new governor are faced with “cutting” a vital program “for the children” that has a special-interest group dedicated to protecting it.
Exhibit A is class-size reduction, a waste of money that only a few brave lawmakers will point out is a waste of money.

Exhibit B is the set of “temporary” sunset taxes, which elected officials promised would expire in 2011. Four years later, Sandoval wants to make them permanent.

That’s why it’s so important for lawmakers to demand and obtain accountability for the money Nevada is already spending. Without doing that, you just end up spending more and more for the same or even declining results.

The true tragedy is that all this new spending won’t help Nevada’s children learn more. We know full-day K and pre-K only produce small and temporary gains. We know that giving more money to school districts without changes to NRS 288 only leads to paying more for the status quo. We know that nearly tripling inflation-adjusted, per-pupil education spending doesn’t increase spending achievement and quadrupling it won’t help, either.

And we know that the largest tax increase in Nevada would cause many parents to lose their jobs, causing untold upheaval for their children and harming their ability to learn.

Sandoval and other politicians know that ushering in the “era of big government” isn’t politically popular. Which candidate ran on growing government and passing the largest tax hike in Nevada’s history?

The good news is that — despite President Obama’s desires — a chief executive is not a dictator. Sandoval’s proposals now go to the Legislature, where they will be challenged and debated.
Sandoval’s speech sounded the alarm. It’s time to answer the call, or more importantly, to make a call. I encourage you to call your legislators and let them know what you think.

Contact information for Assembly members is here and contact information for senators is here.  You can find out who your legislators are here.

Until next time,

Andy Matthews
NPRI President


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Week in Review: Shared priority

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


I was overjoyed this week to read that Gov. Brian Sandoval has dedicated his second term to helping Nevada’s children succeed. It just so happens that providing solutions to make that happen is NPRI’s top priority for 2015, too.

And, with Republicans in full control of Carson City for the first time in 85 years, the opportunity to bring school choice to Nevada has never been greater. In case you missed last week’s column amid the hustle and bustle of the holidays, Geoff Lawrence, who had served as NPRI’s director of research and legislative affairs, has left the Institute to counsel the Nevada Republican Assembly caucus as its new policy director. While Geoff’s departure from NPRI is certainly a loss, the majority party, if it wants to bring school choice to Nevada, couldn’t have a better individual directing its policy efforts.

I trust that Gov. Sandoval has already read Geoff’s last two NPRI publications — 33 ways to improve Nevada education without spending more and Solutions 2015 — in which he details what it means to truly make Nevada children our top priority. It means taking steps to improve educational opportunities, and equipping students with the tools they need to create a brighter future for themselves. Contrary to what liberals repeatedly claim, it doesn’t mean throwing more money at an education system that is plagued not by insufficient funding, but by inefficiency. It means enacting genuine reforms to that system.

I’ve disagreed with Gov. Sandoval on multiple issues, but I know he’s sincere in his desire to improve educational quality in our state. The policy ideas contained in those recent NPRI publications — such as Education Savings Accounts (ESAs), charter school reforms and alternative routes to teacher licensure — would be a great place for him to start.

Education Savings Accounts were first implemented in Arizona to bring hope to students by giving families more choices in education. Through the program, the state puts money it would already spend on a student’s education into an account designated for that student, to be used for educational purposes. Parents can spend the money on private-school tuition, homeschooling or tutoring, among other options, to ensure their child gets the education that fits best. 

Improving existing charter schools and removing roadblocks to opening others is another proven way that Gov. Sandoval can make kids his top priority in the coming year. Because they operate outside district-level policies, charter schools are free to innovate and find better ways to educate. Traditionally, they have existed to serve more at-risk students, and the evidence shows that students who win lotteries to participate in charters do significantly better than those who do not. Charter school reforms that policymakers should pursue include implementing a parent trigger law and establishing an incubator system for charter school startups.

And reforming the teacher-certification process would remove a chief obstacle that currently keeps many qualified educators out of the classroom. The research has shown that traditional licensure has no impact on student achievement, whereas allowing for alternative paths to licensure has indeed produced educational gains. The reason should be obvious: Under the current system, many highly skilled professionals dismiss the idea of pursuing teaching as a profession because they find the process of getting credentialed far too onerous.

For too long, the interests of Nevada’s children have been put on the back burner, as state policymakers have allowed the teacher unions and other special interests to dominate the education agenda. Whether you consider yourself a Republican or a Democrat, a conservative or a liberal, or something else, it’s time for us all to acknowledge that the status quo has failed our kids.

The voters spoke loudly and clearly in November. They’re tired of business as usual. They want real change and proven solutions. And there’s no better proof of that than their overwhelming rejection of the margin-tax initiative, the goal of which was to address Nevada’s education problems by simply throwing more money at them. Nevadans want, and deserve, better.

In the coming weeks, NPRI Executive Vice President Victor Joecks will relocate to Carson City so that he can share with incoming and returning policymakers the real solutions to Nevada’s educational challenges. And you can be sure he’ll be reaching out to Gov. Sandoval to thank him personally for his commitment to putting children first, and to share with him some of our ideas on how to make that happen.

Until next time,

Andy Matthews
NPRI President


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Week in Review: The future

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


Each new year brings with it a number of changes, and it’s no different here at the Nevada Policy Research Institute. Often the change is good — it’s a chance to set new organizational goals for the year ahead, and to turn the page on the occasions in the previous year when you might have come up short.

But there are also those times when change can be hard to swallow, even if you know, from a big-picture standpoint, that the change is necessary to produce s a new and exciting opportunity. And we’ll be facing a couple changes here at NPRI this year that fall into that category.

This week, we at NPRI said goodbye to two members of our team who have provided immeasurable value to the Institute in recent years.

Geoff Lawrence, who for the past few years has quarterbacked NPRI’s policy research efforts, has accepted a new position as the policy director for the Nevada Republican Assembly caucus. Those of you who follow the Institute’s efforts closely are well aware of the incredible contributions Geoff has made to our body of work. His most notable publications have probably been the first two installments of our Solutions series, sourcebooks on dozens of policy issues that are designed to assist policymakers in crafting free-market-oriented legislation.

But that, of course, hardly scratches the surface. Geoff has authored a number of other exceptional works for us, including an alternative state budget (2009), our legislative report card (2009, 2011 and 2013) and our Piglet Book (2010, 2012 and 2014), among many others. He has also served as NPRI’s point man at the legislative session, and in 2013, in a historic development for the Institute, Geoff was stationed in Carson City full-time, giving us a permanent presence throughout the session’s activities.

Eric Davis is a name that might not be as familiar to you. But it’s a name you should know. Eric has held a number of positions at NPRI since joining us as an intern back in 2007, most recently serving as our web developer. He’s had many roles with us, but his greatest contribution has been the design, development and management of NPRI’s transparency websites — transparentnevada.com and transparentcalifornia.com.

These two sites, which rank among the most successful projects we’ve ever undertaken here at NPRI, have garnered 30 million page views combined during their lifetimes, with over 21 million of those page views coming this year alone. More important than the numbers, however, is the impact — the way the government-spending data on these sites has shaped the debate over public financing. Eric has been more of a behind-the-scenes man here at NPRI, but his work has certainly not gone unnoticed, and he has been offered, and has accepted, a new position as a systems engineer with the web-development company eResources.

It may go without saying that we hate to see Geoff and Eric go. In addition to being highly productive members of our team, they’ve been very dear friends to the rest of the staff here at the Institute.

But it’s important that we all recognize these developments as the success stories they are. One of the things we’ve always prided ourselves on here at the Institute is our success in identifying and cultivating talent — bringing in hard-working and skilled individuals and then giving them the chance to develop their skills and achieve greatness. Geoff and Eric have done exactly that, and as a result, they have both earned tremendous opportunities for further career growth and advancement. Congratulations are in order to both of these gentlemen.

And even in their new roles, both will continue to serve the cause that is at the heart of NPRI’s mission. He’ll be wearing a different uniform, but Geoff will still be fighting hard in Carson City to advance the kinds of free-market reforms our state needs. And eResources, the company where Eric will now be working, hosts our flagship website, npri.org, meaning we’ll continue to work closely with him in keeping our site up-to-date with the Institute’s latest work.

Still, these departures do present challenges. And fortunately, we’ve built a team here that has the strength and the versatility to meet them. You’ll learn a lot more about what that means in the weeks and months ahead, but in particular, I’d like to share with you that Victor Joecks, NPRI’s executive vice president, will be running the show for us in Carson City during the session this year. You’ve no doubt read plenty of Victor’s work over the years, and if you have, you’ll agree with me that our policy efforts are in very good hands.

Like I said at the outset, every new year brings change, and every year has a way of throwing a lot of surprises at us, too. But one thing you can count on to remain constant is NPRI’s unyielding commitment to our mission and our principles. Whatever the future holds, that truth will always persist.

Thanks for reading, and Happy New Year!

Andy Matthews
NPRI President


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Week in Review: The holidays and freedom

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


Everyone has his or her favorite aspect of the holiday season. And there are certainly a lot of things to appreciate — there’s the great food, the gift-giving, the opportunity to spend time with loved ones and, of course, the celebration of faith.

Each of those is special to me, but there’s something else about this time of year that has always made me feel grateful. It’s easy to forget sometimes that in many parts of the world, people aren’t free to observe their holidays the way you and I are. The freedoms to associate with whom we choose, and to practice our faith as we want — we often take these things for granted here in America, even as so many on this planet go without those rights.

So I hope you’ll join me this year in taking some time to reflect on those freedoms — and to appreciate the opportunity to live in a country that, while not without its problems, is rooted in the idea that those freedoms are inherent to humanity.

We can each celebrate this holiday season however we wish, based on whatever it means to us. For me, that means celebrating Christmas with my parents, who are flying out here to Las Vegas from Massachusetts, and my brother, who’ll be joining us from San Diego.

Whatever your plans for the holidays, I want to wish you happiness, peace — and a much-deserved break from the anxiety and drama of the political world.

From all of us at NPRI, Merry Christmas and happy holidays!

Until next time,

Andy Matthews
NPRI President


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Week in Review: Powers still need to be separated

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


On Tuesday, the Nevada Supreme Court made a decision in our three-year-old separation-of-powers case.

As you may recall, in November 2011, NPRI’s Center for Justice and Constitutional Litigation filed a lawsuit against Sen. Mo Denis for holding employment in the executive branch, while also serving as a senator in the legislative branch.

Denis’ simultaneous employment in both the legislative and executive branches violated Article 3, Section 1 of Nevada’s Constitution, which clearly states that the branches of government must be separate:

The powers of the Government of the State of Nevada shall be divided into three separate departments,—the Legislative,—the Executive and the Judicial; and no persons charged with the exercise of powers properly belonging to one of these departments shall exercise any functions, appertaining to either of the others, except in the cases expressly directed or permitted in this constitution. [Emphasis added.]

This prohibition is one of the key structural provisions that protect our liberty and prevent abuse of government power. Thinkers and leaders including James Madison, Thomas Jefferson and George Washington have fought for this principle, because they recognized that the separation of powers is necessary to prevent tyranny.

We created our litigation center to defend essential constitutional principles like this one, which is why our separation-of-powers lawsuit was so important.

Three years ago, on the day NPRI served Denis with the lawsuit, he resigned his executive branch job. This was a de facto acknowledgment that he had been violating the Constitution, and rather than fight a losing battle in court, he stopped violating the Constitution.

That was a victory in a battle — one legislator stopped violating the Constitution — but our goal is to win the war by getting a Supreme Court precedent that prevents similar violations from occurring ever again.

On Tuesday, the Supreme Court failed even to address the public-interest exception to the mootness doctrine we had cited in our appeal and ruled instead that Denis’ resignation mooted the lawsuit.

It’s important to note that the Supreme Court didn’t rule on the constitutional issue at the heart of this case. Rather, the Court simply affirmed the district court’s decision to dismiss the case on mootness grounds, given the fact of Denis’ resignation.

While this ruling is disappointing, because it means another case will have to be brought before the court again, the decision does create the opportunity to educate Nevada citizens on this important constitutional protection held dear by conservatives and liberals: separation of powers.

Know for certain that NPRI’s Center for Justice and Constitutional Litigation will remain vigilant in protecting your constitutional rights through our current cases and the ones to come.

Andy Matthews
NPRI President


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If education reform requires 'money, money, money' you're doing it wrong

An amazing story in today's Las Vegas Review-Journal shows how some people think about education reform. The Las Vegas Metro Chamber of Commerce hosted a panel discussion that was reportedly on education reform, but turned into a discussion of how to get more money from taxpayers.

From the Review-Journal:

Panelists promoted pursuit of all kinds of programs: Creating a system awarding extra pay to high performing educators, making full-day kindergarten standard, providing incentives for teachers venturing into high-poverty schools and those with few English-speakers, creating more advanced computer science and technology courses, and reinventing the state’s nearly 50-year-old funding system currently providing schools a flat rate per student.

A bill draft request under consideration for the 2015 session would provide up to twice as much for students in special education, living in poverty or learning English.

All of these plans have one thing in common: a price tag above and beyond what’s currently paid for in Nevada public schools.

“We continue to talk about money, money, money,” said John Cole, a community member and former Clark County School Board member, questioning the panel and noting how voters overwhelmingly quashed the state’s two recent ballot measures to increase education funding.

This is a microcosm of the problem that's been plaguing Nevada education for the last 50 years. The education establishment demands more money for ineffective government programs, and then when those programs don't work, they come back and demand more "money, money, money."

Real reform involves taking the money Nevada's already spending and using it more effectively, as explained in NPRI’s 33 ways to improve Nevada education without spending more study. Improving education doesn't require more money. It requires using the money we already spending more effectively, because spending more simply doesn't work.

 

Week in Review: Tax reform

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


Did you hear? Liberal Nevada legislators are thinking of abolishing the modified business tax and just taking control of business owners’ bank accounts.

OK, OK, that’s not really what they plan to do — I hope — but I can’t help thinking of that joke when I read incoming legislators and media speculating about what “tax reform” in Nevada might look like in the coming session.

It seems that many — be they elected officials or liberal political commentators — don’t want to acknowledge that “reform” isn’t synonymous with “hike.”

This is an important distinction, because knowing that tax hikes aren’t popular, many politicians try to disguise their intentions to raise taxes by talking about how they want to change or update the tax structure.

That’s why the release this week of an executive summary of a report prepared by the nonpartisan Tax Foundation for the Las Vegas Chamber of Commerce is so important.

While the Chamber will release its full report in the next few weeks, the executive summary contains an important recommendation.

Nevada should consider fixing what is broken with the current tax system instead of pursuing a brand new tax to layer on top of the narrowly based, complex existing taxes.

It then gives some broad-stroke reform ideas based, in part, on recommendations NPRI first put forward in our One Sound State, Once Again tax-reform study.

As NPRI’s Director of Research and Legislative Affairs Geoffrey Lawrence laid out in a column for the Nevada Business magazine, the Silver State needs revenue-neutral tax reform that:

  • minimizes revenue volatility so officials know what to expect when budgeting
  • minimizes distortions in economic behavior
  • minimizes compliance costs
  • protects tax equity
  • reflects the character of the economy

As the Chamber notes, that doesn’t require new types of taxes, but reforming the ones we already have in place, including a broadening of the sales tax base while lowering the rate.

It is still worth keeping a close eye on the Chamber’s final recommendations, because it hasn’t announced whether it wants to pursue reforms that are revenue-neutral or reforms and tax hikes.

Regardless, these substantive recommendations have liberals changing their tune on tax reform. For instance, a liberal columnist at the Las Vegas Review-Journal seems flummoxed by the idea that tax reform might include something other than implementing a new tax, like a corporate income tax. 

So, when liberals claim free-market conservatives are against tax reform, they’re simply wrong. There are plenty of tax reforms — like those we’ve set forth — that would garner the support of fiscal conservatives.

Conservatives oppose tax hikes, because tax hikes hurt individuals and families, and also because they’re unnecessary to provide government’s core services.

Nevada needs Solutions, not more spending on failing government programs.

Thanks for reading and have a great weekend.

 

Andy Matthews
NPRI President


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