Las Vegas budget comes up short on revenues

Diana Sahagun

Wednesday, May 16, 2001 | 10:32 a.m.

For the first time since the early 1990s, the Las Vegas City Council has approved a budget with a revenue shortfall of more than half a million dollars.

City officials blame a slowdown in the economy for the deficit.

For fiscal year 2002, which begins July 1, the city is expecting to spend about $334 million out of its general fund but only see revenues of about $333.5 million.

The budget, representing a 4 percent increase over last year, was approved by the City Council in a special session Tuesday.

City Finance Director Mark Vincent said the funds to make up the $552,505 shortfall will come from a reserve fund that is carried over from year to year. The fund now totals $45 million and is used for emergencies.

Deputy City Manager Steven Houchens said the area can no longer count on growth to stimulate new revenues.

"We're entering a new age of fiscal instability and uncertainty," he said. "Our reliance has been on growth to provide services. We have to determine how we will survive without that growth."

Growth generates revenue through property taxes, permit fees, sales taxes and state and federal funding for new roads. While the city has enjoyed a 64 percent population increase since 1993, only a 5 percent growth rate is expected this fiscal year.

"Growth will not pay for growth, and it will place a strain on funding," City Manager Virginia Valentine said.

The council also approved a redevelopment agency budget, which will see $8 million in revenue and $7.3 million in expenditures -- leaving $700,000 for new projects.

Mayor Oscar Goodman was hesitant to approve the budget with the fate of two legislative bills up in the air, which would strip millions from Clark County and the city. But by law, the city had to submit the budget to the state to be approved by June 1, three days before the legislative session ends.

The budget is still considered somewhat "tentative" by city officials who are waiting to find out the fate of the two bills.

If the bills pass, the city will have to submit an amended budget to the state after the session ends, Valentine said.

Goodman said the council will hold a joint meeting with the Clark County Commission Monday in which the city will present a worst-case scenario budget in case one or both of the bills pass.

City officials are worried about the potential of Assembly Bill 457, which would shift the share of the motor vehicle privilege tax collected by local governments to school districts and would cost the city $9.5 million in the first year following passage.

AB653, sponsored by Assembly Speaker Richard Perkins, D-Henderson, would change the distribution formula for consolidated tax revenue to reward cities experiencing rapid growth -- cities like North Las Vegas and Henderson. It would cost the city and county at least $2 million each if the bill is approved.

"If any of those two bills pass, we would have to reevaluate everything," Goodman said.

City Councilman Larry Brown grilled Valentine and Vincent over labor costs, which make up 70 to 85 percent of the general fund.

The city will fund 57 new positions, although departments requested 108. Of the total approved, 40 positions were funded by taxpayers as a result of a tax override to hire new firefighters.

The city has frozen 85 vacant positions and Valentine is working with each department head to determine which positions are needed and are less likely to impact service levels. Three positions have already been eliminated.

Brown asked the council to schedule a special meeting after the legislative session ends to set priorities for park projects and to go through each staff vacancy to determine if the positions are needed.

"Certain positions seem to be protected...by a certain council person, or just because," Brown said.