Researchers at the Mercatus Center at George Mason University have published their annual “Ranking the States by Fiscal Condition,” and Nevada ranked a respectable 14th among the states in overall fiscal health and accountability.
The study ranked each state based on short- and long-term debt and other obligations, such as unfunded pensions.
The unfunded pension debt is where the warning flag was raised.
“Nevada’s trust fund solvency is ranked among the lowest in the country,” the report states, ranking Nevada 45th in the nation, down from 44th a year ago. “Unfunded pension obligations, on a guaranteed-to-be-paid basis, are $65.87 billion, or 54 percent of state personal income.”
That underfunded obligation amounts to $86,500 per household in Nevada.
Were the economy to hit another bump, Nevada taxpayers would be on the hook for writing pension checks that are the richest in the nation, according to the American Enterprise Institute.
AEI found that the average Nevada Public Employees’ Retirement System (PERS) pension is drawing — $64,000 a year or more than $1.3 million in lifetime benefits. That doesn’t include public-safety workers, such as firefighters and police, who can retire earlier and generally have higher salaries, especially in Nevada.
The average Social Security annual benefit is $16,320.
Nevada Policy Research Institute has posted at its TransparentNevada.com website the pensions paid in 2015, which lists more than 1,500 public employee pensioners drawing more than $100,000 a year.
For years we have called for public employee pension reform, such as putting new employees into a defined contribution system such as the 401(k)s used in the private section. Public workers would be able to watch their savings grow and take it with them should they move on.
A few reform bills have been introduced in the Legislature but all have died at the hands of lawmakers who themselves are PERS beneficiaries.
Over the years PERS benefits have ratcheted up by virtue of incremental benefit increases, collective bargaining gains, earlier retirement age, allowing the purchase of years of service, padding base pay with add-ons such as callback, standby, holiday, shift differential, extra duty, hazard and longevity pay, and simple compound interest.
Nevada local governments spend four times as much as the national average on pension expenses.
Mercatus is just providing another warning, but will anyone pay attention? — TM