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October 1, 2014

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County, cities putting off millions in maintenance as budgets stay squeezed

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Steve Marcus

An inmate sits in a pretrial services station during a tour of the Clark County Detention Center Tuesday, July 23, 2013.

Clark County Buildings

The Regional Justice Center is seen Friday, Sept. 27, 2013. Launch slideshow »

Clark County Detention Center Tour

An inmate shows a gang tattoo to Metro Corrections Captain Rich Suey during a tour of the Clark County Detention Center Tuesday, July 23, 2013. Launch slideshow »

The first sign of trouble at the Clark County Detention Center came in November 2009 when the cold-water line in the jail failed, requiring a $1 million emergency fix.

A year later, a report revealed substantial problems with the jail’s aging systems and recommended a set of repairs approaching $100 million.

Strapped for cash in the face of repeated budget cuts, county officials decided to delay major renovations and instead broke the project into smaller phases, the first of which was completed in May at a cost of $23 million.

Delaying maintenance projects of all sizes has become an increasingly common practice at municipalities throughout the valley in the wake of the recession. With general funds strapped by a steep drop in property tax revenue, funding for many capital projects, such as whether to fix leaky roofs or replace bad plumbing, has been virtually nonexistent in recent years.

At the same time, dedicated sources of funding for capital projects have dwindled. Federal dollars available to pay for park and trails construction has dropped by 99 percent since 2006. Funding for road construction dipped so low that Clark County commissioners approved an increase in the fuel tax this month to help pay for more than 100 projects that otherwise couldn’t have been done.

The pinch has led local governments to chronically underfund even the minimum amount needed to keep up with wear and tear on the billions of dollars worth of assets they’re responsible for.

“Our goal in order to reach fiscal stability is to have 2.5 to 5 percent excess (in the general fund) that goes towards these sorts of capital projects,” Las Vegas chief financial officer Mark Vincent said. “We’re not there. Our budget still is slightly negative. The Great Recession has put us so far behind we’re still trying to get back to a balanced budget.”

Although the delayed spending has allowed city budgets to stay afloat, officials warn that problems could start piling up the longer the situation isn’t addressed.

Las Vegas and Henderson both estimate they’re short $16 million annually when it comes to maintaining their streets, parks and buildings.

Clark County will spend $29 million this year on two dozen projects ranging from replacing bad pipes in the Regional Justice Center to fixing leaks and replacing carpet at several buildings. It’s the first time in at least two years the county has had money to spend on projects like these, but County Manager Don Burnette said it's still far short of the estimated $80 million needed annually.

A decade ago, surpluses of $100 million or more made it easy to keep up with repairs, Burnette said, but when it was time to make cuts, capital funding was one of the first things to go.

“There were a lot of important capital projects on the list, but being able to sustain our operations and deliver services was more important,” he said.

Now local governments are pinching pennies and scraping together any savings they can find — Clark County recently saved $22 million through a renegotiated fire union contract — to fund only the most important projects.

The repairs at the jail certainly qualify, but they weren’t included in the $29 million capital budget recently approved by the commission.

Finding funding for those renovations, which will include replacing almost all of the building’s plumbing, heating and electrical systems, will be a major topic of discussion for commissioners when they meet Tuesday.

Although the county managed to save up the $68 million — the original estimate for the repairs — rising construction prices and the disruption to an increasingly overcrowded jail are expected to drive up the final project cost by an additional $20 million to $40 million.

“You’ve got to maintain a jail. It’s one thing for a park if the trees aren’t trimmed, but you’ve got to have a functional jail. It’s already overcrowded,” Commissioner Steve Sisolak said. “There is money set aside, but the estimates are coming in over our budget. We might have to reduce the scope.”

Rising costs, reduced scope and emergency repairs are common downsides to delaying maintenance. They’re also a challenge governments will have to confront more frequently in coming years.

“Putting the Band-Aid on is what you do when you don’t have the money to stitch up the wound. That’s kind of what’s going on here,” Henderson Public Works Director Bob Murnane said. “Those things add up in cost, inconvenience to the public and dissatisfaction with the government.”

Departments have taken measures to preserve and extend their assets, including driving government vehicles for more miles before they’re auctioned or putting patchwork fixes on roads, but those steps have only bought local governments more time before the bills inevitably come due.

“If you don’t make investments in your capital assets over the life of that asset, you end up with really big-dollar-amount projects at the very end,” Burnette said. “Pay me now or pay me later, you have to make the investment.”

Officials are looking toward a rebound in development and property taxes to prop up their general funds and free up cash for capital spending, but it could be decades before tax revenue returns to pre-recession levels.

Other options to pay for needed maintenance include further cutting services or raising revenue, specifically taxes, but both are practically and politically unlikely, leaving officials no choice but to wait and continue delaying dozens of projects.

“As our budgets begin to rebound, we have to start making investments back into the capital program,” Burnette said. “We’ve not been doing that, and you just can’t afford that over a long period of time.”

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