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November 24, 2014

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A LOOK AT 2010:

Pay and program cuts, layoffs: All possible

Economic malaise goes on for state, local government

For governments statewide, 2010 will be a time to confront hard realities. And it won’t be pretty.

There’s no federal bailout coming down the pike. Tax revenue is shrinking. And it’s an election year, so there’s no will even among the most liberal politicians to raise taxes.

So it is inescapable: State government will have to make the hardest decisions yet in the ongoing budget cutbacks that began two years ago.

A large portion of the state’s early shortfall was covered by draining accounts and abandoning one-time expenditures. Future cuts will come through further pay reductions for government workers, layoffs or cuts in programs — likely some combination of the three. This will pit various functions of state government — public safety, health and human services, K-12 and higher education — against each other.

For local governments, the decisions will be between cutting services or trimming employee salaries. Those decisions will largely be shaped by whether public employee unions are willing to grant concessions.

State government

A special session of the Legislature will likely be called to balance the state budget.

Gov. Jim Gibbons has stood firm on not raising taxes — and in a special session he dictates the agenda.

Gov. Jim Gibbons

Gov. Jim Gibbons

Not that Democrats are clamoring for that option. They appear to be heading into a November election with their brand tarnished and have yet to suggest increasing taxes.

So how to balance the current deficit, pegged at $67 million and expected to rise?

The most likely scenario in 2010 is additional cuts.

Whether a special session to balance the budget is necessary is a matter of debate. Gibbons hasn’t announced a decision, although his actions — asking agencies to prepare budget-cut recommendations up to 10 percent, calling together a special meeting of the state’s budget forecasters to make new revenue projections by Jan. 19 — seem to indicate he’s leaning that way.

Many lawmakers, meanwhile, say that financial sleights of hand can be used to postpone cuts or that the governor could avoid a special session by getting cuts passed by the Interim Finance Committee.

But there’s a sense that Gibbons inevitably will call lawmakers back to Carson City, possibly in February or March.

Here’s why:

• Democrats and Republicans agree that the Legislature needs to meet for a special session anyway. For Nevada schools to compete for $60 million to $175 million in federal “Race to the Top” funding, lawmakers must change a 2003 law that prevents test scores from being used in the process of evaluating teachers.

• Gibbons has had a tense relationship over the past year with the Interim Finance Committee. After the Legislature’s temporary money body pushed back against some of his executive decisions, Gibbons pushed back by threatening to challenge the committee’s constitutionality. It’s unlikely the governor would want to rely on the Interim Finance Committee to carry out budget cuts.

• Politically, a special session would be good for Gibbons, who is running for re-election. He controls the agenda. He can bang his anti-tax campaign drum. He can appear gubernatorial.

His staff insists a decision on a special session will be made based purely on the numbers. But the political advantage he could gain wouldn’t hurt.

So what cuts could be made?

Late last month, Gibbons sent a letter to state employees saying that he did not believe K-12 and higher education should be exempt from future budget cuts. K-12 and higher education, he wrote, represent 54 percent of the state’s general fund, and exempting them would place an undue burden on other services.

A lot of the social services budget is dictated by federal requirements that the state provide at least a minimum safety net to its residents. The Corrections Department’s director has argued that more cuts would endanger prison guards and inmates.

Administration officials have said that it will have to take a hard look at the way the state does business. Lawmakers, meanwhile, have been loath to offer up specifics. In many ways, they have painted themselves into a corner with both Senate Minority Leader Bill Raggio and Majority Leader Steven Horsford saying that budgets have been cut to the bone.

What’s left? One possibility is a further pay reduction for state workers, who took the equivalent of 4.6 percent pay cuts last year when the Legislature instituted worker furloughs one day a month after the governor proposed flat 6 percent pay cuts.

Gibbons has said that he would favor pay reductions for state workers rather than layoffs.

Because state workers are not under union contracts, that’s something the Legislature can do. Local governments, whose employees have collective bargaining rights, do not have the same flexibility.

Las Vegas and Clark County

For Las Vegas and Clark County, 2010 will be the year of the union — but not in the proud, “look for the union label” sense.

For both governments, it will be a year of unprecedented battles with their employee unions.

Public employees will seek to keep what they bargained for.

Government officials will argue they no longer have the tax dollars to pay those amounts. For the city, tax revenue is predicted to be short $69 million in fiscal 2010, which begins July 1. Clark County has predicted a $129 million deficit.

Skirmishes have begun. In late December, the union representing Las Vegas firefighters launched a Web site imploring people to tell Mayor Oscar Goodman not to cut the Fire Department’s budget. The site includes a photograph of newspaper headlines with the words “al-Qaida,” “Iraq” and “Afghan” standing out boldly.

Oscar Goodman

Oscar Goodman

City officials called the union’s approach “scare tactics.”

It is looking into 8 percent salary cuts in each of the next two fiscal years.

The more you make, the bigger the cut. And firefighters are among the city’s highest paid. In the fiscal year ending June 30, the average salary and benefits package of city firefighters was $155,496, a city spokesman said. The city employs 495 people in fire suppression. Of the city’s 705 employees who earn more than $100,000, 404 are firefighters.

Meanwhile, another union, the Las Vegas City Employees Association, representing 1,700 workers, also told the city last week that it will not consider concessions until the city negotiates with other unions.

The association’s current contract extends through June 2014. Without concessions, though, city officials have said layoffs are likely.

The battle could be more intense at the county, whose 700 firefighters are paid much more than city firefighters. The average county firefighter’s salary for the fiscal year ending June 30 was $128,026. With benefits, the average compensation was a knee-weakening $199,678.

Consider that Las Vegas and its firefighters have actually gotten along for the most part, with the union offering some concessions in early 2009.

No such love exists between the county and its firefighters. That was made clear when county firefighters kept a 3 percent cost-of-living raise after union chiefs presented salary concessions that county staff and commissioners argued amounted to no concessions at all.

“It used to be, all we had to worry about was how much we were going to give them,” said one county administrator, talking about past union negotiations. “Now we have to ask for things back.”

Henderson and North Las Vegas

Henderson has about 200 fewer employees than it did two years ago, the result of buyouts and a hiring freeze, but that is just the beginning of a shift that will occur over the next year, City Manager Mark Calhoun said.

So far, the loss of employees has not been noticeable, but that may change if the economy slides more, Calhoun said.

“There have been some cuts made, which would affect some services, but the people we still have picked up the slack,” he said. “It might be a little slower, but we haven’t cut services per se. That could be coming.”

That downsizing is key as the city makes adjustments to prepare for growth that is slower than it has been in the past 20 years.

“Internally we’re looking at not what it’s going to take today to just get through this mess … but we are going to be focusing on what the city’s going to look like when we come out of this,” Calhoun said. “It’s going to be a different era, things aren’t going to be like they were three years ago, and we’re looking at a whole new structure, a whole new way of doing business and providing services to our constituents.”

North Las Vegas has cut, and has saved millions with a hiring freeze, but the city needs to find another $58.3 million to cut to survive 2010, Acting City Manager Maryann Ustick said.

“The fiscal challenges are just overwhelming,” she said. “We’re going to have to cut and still maintain the quality of life in our city.”

So far, North Las Vegas has been able to survive by cutting travel and training for employees rather than laying off employees. “But we’re getting to the point now where we’re going to have to reduce or eliminate programs and that is going to involve staff — there’s no question about that,” Ustick said.

The city has been struggling because, in addition to falling tax revenue, its high foreclosure rate has created more of a demand for services, such as code enforcement.

“Preserving the quality of life in our neighborhoods is critical to our health as a city and it’s a huge challenge in this downturn along with the foreclosure rate,” Ustick said.

Sun reporter Kyle Hansen contributed to this story.

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