Is Clark County flush? Depends on the math

By Tony Cook

Sunday, June 24, 2007 | 7:07 a.m.

In March Clark County commissioners found $60 million to bail out the financially struggling University Medical Center.

In May Clark County did not fight a state transportation funding plan that will shift an estimated $14 million a year away from the county.

But in April, when asked to add staff to the overwhelmed public defender's office, commissioners said they could not afford the $90,282 a year that another lawyer would cost.

The county's ability to come up with large amounts of cash or to take big financial hits has created the perception that it has money to spare. At the same time, its inability - or unwillingness - to fund much less costly items, such as staff increases, has fostered the impression that it's stingy.

Those perceptions - true or not - bit the county during this year's legislative session, when lawmakers laid tax cuts and shifts in the county's lap. As Assemblyman Morse Arberry, D-Las Vegas, said of the county: It's "got more money than God."

County officials, though, contend that such statements are based on misperceptions. In reality, the county is strapped for cash in the face of explosive growth, they say.

So what's the truth?

The county's budget is enormous - $5.9 billion for the fiscal year that starts July 1. That's larger than the state's budget and provides services for 1.9 million residents in an area larger than New Jersey.

Many of those services - such as police, fire and public works - are the kind of urban work handled by cities in other states. That's because 43 percent of Clark County's population lives outside its five cities.

One explanation for the seeming disconnect between the county's large revenue stream and its ability to fund relatively small-ticket items is that most of its revenue comes with requirements that it be used for certain services or agencies.

About $374 million of the budget is dedicated to Metro Police and $379 million to transportation. Much of that money comes from taxes that voters or legislators passed for that purpose only, giving commissioners little choice on how the funds are spent.

The county's general fund, at $1.3 billion, is the source for basic government operations, from courthouse staff to animal control officers. About 60 percent of that goes to salaries and benefits for county employees, determined in most cases by collective-bargaining agreements with unions.

"Principally, the budget is made up of continuing obligations," County Commission Chairman Rory Reid said. "We don't have as much discretionary money as people think."

Still, the perception that the county has money sitting around isn't totally baseless.

Thanks to a self-imposed taxpayer bill of rights, county commissioners must maintain an ending fund balance of 8.3 percent to 10 percent. For the annual budget that goes into effect next week, commissioners have budgeted on the conservative side of that requirement, and they expect to have 10 percent of the general fund - $136.8 million - in the bank by the end of fiscal 2008.

If commissioners had budgeted that ending balance at 8.3 percent instead, it would have freed up $23.3 million - money that could have filled many of the more than 600 positions requested by departments but left unfilled in the budget.

Commissioners say their conservative budget saves taxpayers money in the long run because it helps keep the county's bond rating in good shape, allowing it to borrow money at lower interest rates.

"We have ending fund balances that are significant," Reid said. "There are reasons for that. We don't apologize for that."

Commissioners also say the conservative budgeting and 10 percent ending balance are necessary for emergencies. That helped the county stay afloat when tax revenue took a dip after the terrorist attacks of Sept. 11, 2001, they say. And when consolidated tax revenue, which includes sales, alcohol and motor vehicle taxes, slowed down this year, Clark County didn't have to make cutbacks, while other local municipalities found themselves facing shortfalls.

Commissioners also have some leeway with the county's capital projects fund. Budgeted at $498 million, most of it is dedicated to ongoing projects, County Budget Director Yolanda King said. However, more than one-third of that amount - about $182 million - is not allocated.

Commissioners, though, are hesitant to use that money for operating expenses such as hiring staff. That's because the capital fund includes dollars left over from the prior year - unanticipated revenue or savings. An economic downturn could eradicate much of the fund, possibly resulting in layoffs if it had been used to hire more staff.

"If in a good year, every nickel goes for new employees, then in the down year what do we do with those people we hired?" Reid said.

On the other hand, capital projects and emergency bailouts such as the one for UMC are one-time shots.

Commissioners will decide how to spend the capital budget on July 17, their last meeting before the state-mandated deadline of Aug. 1.

County spokesman Erik Pappa said that department heads have requested $891.7 million in capital improvements. Only $84 million in projects, less than 10 percent of that amount, will be funded. The county plans to save the rest of the unallocated $182 million in the event revenues fall short or to meet unanticipated expenses.

County officials say proposed projects such as a new low-level offender jail and a new headquarters for the Southern Nevada Health District suffer when the county takes an unexpected financial hit, as with the UMC bailout.

The county is still analyzing the effect of several legislative decisions, including the state transportation plan and tax breaks that lawmakers gave to some builders of environmentally friendly buildings.

Reid said the effect is likely to extend beyond just capital projects such as regional parks, because some of the revenue cuts are ongoing.

"There will be a price to pay," Reid said.