North Las Vegas could face a state takeover due to mounting problems

Sunday, Aug. 7, 2011 | 2 a.m.

Not all that long ago, North Las Vegas was one of the fastest-growing cities in the nation and a boomtown for development. But all of that has changed in the wake of the housing market’s crash, and the result has been disastrous for the city.

For the past three years, North Las Vegas has balanced its budget by cutting and pulling from its reserves. As the Las Vegas Sun’s David McGrath Schwartz reported last week, that includes taking $45 million in one-time transfers and $38 million from fund balances.

The city is in dire financial straits. It will have to cut $8.6 million in its current budget to comply with a court order that has, at least temporarily, blocked the layoffs of any firefighters or police officers. Budget projections say the city’s deficit could reach $39 million in two years, and that is based on assumptions the former state budget chief says are too optimistic.

The state’s Local Government Financing Committee on Thursday noted that the city is only months away from running out of money.

“It scares me when you look at it,” said Chairman Marvin Leavitt, the respected former finance director for Las Vegas.

In an interview last week on “Face to Face With Jon Ralston,” Assemblywoman Marilyn Kirkpatrick, chairwoman of the Government Affairs Committee, said the long-term issues facing the city were “even more scary.”

She noted that the city was locked in to some deals that have serious financial consequences.

In 2009, even though the nation was in the midst of a terrible economic downturn, the city moved ahead with building a new City Hall and a water treatment plant. There is also an issue with employee union contracts. Although the city gained some concessions from its unions, most notably from the rank-and-file employees, it has run into some stiff opposition. For example, the police union has vociferously opposed cuts, and officers will actually get a small pay increase next year and a 5.5 percent increase in 2013. Firefighters, who are taking a pay cut, will see increases of 5.75 percent in 2013 and 4 percent in 2014. Overall, the city’s employee costs are expected to go up $10 million in 2013 and $17 million in 2014 as raises kick in.

City officials say they are trying to curb costs. For example, they have cut overtime in the fire department by taking vehicles out of service instead of paying to fill the shifts of sick or vacationing firefighters.

The city will need to do much more, and if it can’t get its act together, some elected officials have suggested the state could step in.

The chairman of the state Senate’s Government Affairs Committee, Sen. John Lee of North Las Vegas, said, “No one wants to say ‘receivership,’ but it might be the only way to save my community.”

North Las Vegas’ financial problems are hurting residents, who are on the hook for the debt and are seeing cuts in services. If the city can’t take care of its budget problem and the state has to come in, that could leave Nevada taxpayers picking up the tab.

City officials have to address this problem quickly, and they should consider all options, including consolidating services with other governments. As well, the employee unions need to give up pay increases and make real concessions.