Salary cuts will save state $600 million

State worker salary and other cuts announced by Gov. Brian Sandoval will save the state budget nearly $600 million over the next biennium.

The cuts will hit not only state workers but university, K-12 and legislative employees.

Sandoval announced Wednesday his proposed budget will replace the day-a-month unpaid furloughs with an across-the-board 5 percent pay cut for state workers. That's a slightly deeper pay reduction than the furloughs, which equal a 4.6 percent pay cut.

Where the furloughs were budgeted to save about $330 million this biennium, the 5 percent cut will produce a $379.7 million savings to the state budget for the coming two-year cycle.

Of that total, $256.5 million will be from the K-12 education budgets and $57.5 million from the university system. Heidi Gansert, Sandoval's chief of staff, said how the individual school districts and the university system implement the reductions is up to them.

"It's all employees and it's 5 percent," she said.

Upwards of $40 million of that savings will come from the reduced premiums the state will have to pay to the Public Employees Retirement System, which sets its monthly premium as a percentage of employee pay.

Employees, too, will pay a smaller premium to PERS, but down the road will see a 5 percent smaller monthly retirement check.

Two years ago, school districts and the university system complained they couldn't make cuts because they had signed contracts with employees. Gansert said one reason for Wednesday's announcement of salary cuts was that the districts are now in negotiations with employees.

"I would think it's important to take that into account," she said.

In addition, Sandoval said his budget anticipates continuing the suspension of merit pay (step increases for state workers) and longevity pay for veteran workers. Doing so will save an estimated $211.8 million.

Together, those decisions - if approved by the Legislature - will reduce the state budget by $591.5 million over the coming two years.

Neil Lake of the American Federation of State, County and Municipal Employees, which represents state workers, said the cuts are unfair.

Lake said state workers have borne "the brunt of budget cuts in Nevada for years with furloughs, no pay raises and skyrocketing health care costs."

He said putting the burden of balancing the budget on state workers is the same, effectively, as putting a tax on them.

"This move by the governor continues to lower worker morale and ultimately affects the public services we provide to Nevada's most vulnerable populations," he said.

Gansert said the governor's intent was that the 5 percent cuts be "across the board," including the legislative and judicial branches.

Legislative Counsel Bureau Director Lorne Malkiewich said lawmakers have, at this point, kept their 4.6 percent furloughs and agreed to extend the suspension of merit and longevity pay.

"It will be up to the Legislature to decide if they want to go to the 5 percent instead," he said. "But we're participating."

Chief Justice Michael Douglas said the Supreme Court is reviewing the governor's letter to state workers but hasn't yet determined what action is necessary.

"We understand the financial situation the state is in and we, like everyone else, have to step up," he said.

But Douglas said the courts have made "significant cuts that basically took us back to the 2007 budgetary figure which, at first blush, deal with the amounts he (Sandoval) is asking."

"We think we met with what he asked for in our prior conversations," said Douglas.

If that's not the case, he said the courts will go back and see what else they can do to cut costs.