During his State of the State address, Republican Gov. Joe Lombardo called for the biggest set of raises and bonuses for state employees in almost 40 years.

But with a major budget surplus fueled by increased tax collections, Democratic lawmakers are now seeking their own comprehensive package of compensation incentives — greater cost-of-living raises, smaller quarterly bonuses and tweaks to retirement contributions — in an effort to increase state employees’ take-home pay.

The bipartisan push to address state worker pay comes as Nevada faces vacancy rates upwards of 20 percent across state agencies and as state employee wages have lagged behind the national inflation rate, with multiple recessions in the past two decades limiting legislators’ budget flexibility to increase pay. 

“It's my fourth time in this building, and it's the first time we've ever had money that we could actually do something with. And as a legislative leader, I felt we had a responsibility for the first thing we do to take care of those state employees who have been there when times were good, when times were bad,” Assemblywoman Daniele Monroe-Moreno (D-North Las Vegas) said during a committee meeting last Thursday. “The first thing we need to do this legislative session is to make them whole as much as we can.”

Thursday’s committee hearing saw legislative Democrats present their first tweaks to the budget plans for state employees laid out by Lombardo in his proposed budget, heralding the first but not the last difference in priorities between the Republican governor and the Democratically controlled Legislature.

Monroe-Moreno also noted that enacting the full package of incentives would hinge on “a lot of decisions that we, as legislative leaders, are going to have to make in the next 60-plus days.” Though some proposals will be approved through the normal budgeting process, others — including raises proposed to take effect in April — will have to be approved through specific legislation.

Below, we explore differences between Lombardo’s and Democratic lawmakers’ proposals for increasing state employee compensation.

Salary increases

Lombardo’s proposed budget includes funding for either 8 percent or 10 percent cost-of-living adjustments (COLAs) in the 2024 fiscal year, spanning July 2023 to June 2024, followed by 4 percent COLAs for all state workers in the 2025 fiscal year.

The 8 percent raises would be granted to state employees who received a 3 percent COLA in the 2023 fiscal year — a group that includes employees awarded additional raises through collective bargaining agreements approved for the first time in 2021. The 10 percent pay raises would be granted to all other state employee groups who received a 1 percent COLA in the 2023 fiscal year “for purposes of parity with state employees who received” the higher adjustment already, according to a legislative staff fiscal report.

State-employed public safety officers would see additional raises meant to align their pay with local law enforcement officers whose existing salaries are significantly higher than those of state employees, driving high vacancy rates among certain positions, such as correctional officers.

These raises are meant to adjust employee salaries to match increasing costs of living in the state, as inflation has driven up prices for everything from groceries to rent. 

But the proposed raises will still leave wages far behind increases in costs over the past four decades. From 1979 through the 2022 fiscal year ending last June, increases to state classified employee salaries were 31 percentage points lower than the cumulative change in the national consumer price index (also known as the annual average inflation rate) over that time, according to data shared by legislative fiscal staff last week.

Harry Schiffman, head of the American Federation of State, County and Municipal Employees Local 4041 — the largest union representing state workers in Nevada — told The Nevada Independent that though the proposed increases were “great news” and “really uplifting” for state workers, the move only partly addressed decades of salary and compensation issues for state workers. 

”We didn't get to where we are overnight, and we're not going to get to where we would like to be overnight.”

Democratic lawmakers are seeking to implement these same COLAs, along with an additional 2 percent raise for all state workers beginning in April that would be applied before the other raises take effect.

The additional raise is proposed under SB440, a bill sponsored by Senate Majority Leader Nicole Cannizzaro (D-Las Vegas). During last week’s hearing, Cannizzaro described the combination of all three raises as a “huge investment” in state employees.

The bill also includes appropriations to pay two arbitration awards related to collective bargaining agreements reached between the state and two employee unions — AFSCME and the Nevada Police Union. The pay increases for employees of each union were agreed to after the 2021 legislative session concluded, meaning the Legislature could not appropriate funding for the agreements until back in session this year.

Retention bonuses

Lombardo and lawmakers have already gotten rolling on the first set of bonuses for state employees, appropriating about $25 million through AB268 to give a pair of $500 quarterly bonuses to executive branch employees, judicial branch employees, full-time legislative employees and a subset of thousands of higher education professional employees.

But with Lombardo seeking an additional $4,000 in bonuses over the next two years, Democratic lawmakers’ concerns about the price tag of paying out those bonuses could result in them being trimmed in half.

The concerns stem from the whiplash process that saw Nevada System of Higher Education (NSHE) professional employees cut from and added back into the bill, as lawmakers hashed out concerns over a lack of funding for paying bonuses to those employees.

Paying out bonuses in the same manner as those set to be paid out through AB268 would cost nearly $100 million over the two years of the budget cycle. Instead, Democratic lawmakers are seeking to pay quarterly bonuses of $250 over the two years, providing $2,000 in total bonuses.

Assembly Speaker Steve Yeager (D-Las Vegas) said during last week's hearing that doing so would allow lawmakers to spend those funds on other compensation incentives for state workers

“This package altogether is just that — it's way better than a bonus,” he said. 

Other Democratic priorities

Another key portion of Democratic lawmakers’ plans for better worker compensation includes reducing an employee’s Public Employees' Retirement System (PERS) contribution rate, putting more responsibility on the state.

Some lawmakers, including Sen. Dina Neal (D-North Las Vegas), expressed concern that the pay raises would not result in significant increases to an employee’s net income because of increases to PERS contribution rates over the years that eat into an employee’s paycheck.

Their plans also include more funding for the Public Employee Benefits Program to provide more funding for employees with state-supported health savings accounts, and the reestablishment of longevity pay — a system that provides state employees with eight-plus years of continuous service semiannual payments starting at $75 and ranging as high as $1,175, depending on how long an employee has worked with the state.

After phasing out longevity pay during the Great Recession, and ultimately repealing the law providing for such benefits in 2015, there are two bills this session (AB337 and SB253) seeking to again establish a longevity pay system.

Legislative staff shared examples of how the benefit enhancements would affect a state worker’s take home pay, highlighting a fictional correctional sergeant employed with the state for eight years who, under the changes sought by Democratic lawmakers, would see their net annual pay increase from nearly $53,000 to about $68,000 by the 2025 fiscal year.

Beyond cuts to Lombardo’s recommended retention bonuses, the additional incentives mean lawmakers will face decisions over the coming weeks about how to pay for those additives, such as the 2 percent COLAs and changes to PERS. But Democratic leaders said doing so would be a priority for this session.

“I hope that everyone who is here and all the agencies who've talked to us about the great work that their folks are doing … that they hear that we do appreciate them,” Cannizzaro said. “We are going to take these steps in order to hopefully recruit and retain more of these really wonderful people, so we can keep running the state of Nevada and keep providing those services for our constituents.”

Reporter Jacob Solis contributed to this report.