Talks with unions a crucial piece of North Las Vegas’ financial puzzle

By Conor Shine

Tuesday, March 18, 2014 | 2 a.m.

With the city teetering on the brink of financial calamity, several major pieces of North Las Vegas’ budget puzzle could fall into place this week, giving a clearer picture of whether officials will be able to avoid a state takeover this year.

After months of digging through the city’s finances, Mayor John Lee and his new executive team are facing an $18 million budget deficit with few practical tools to fix it. A property tax hike wouldn’t generate close to enough revenue, and city services and staffing levels have been deeply slashed as part of previous cuts totaling $211 million in recent years.

Balancing the budget through staffing cuts alone would require getting rid of about 40 percent of the city’s 1,000 current employees, city officials said in a meeting this month.

“The city does not have much more left that it can trim off,” interim finance director Darren Adair said.

Complicating matters is a $25 million payment the city could owe to its public safety unions for pay raises that were illegally withheld during a financial emergency declared in 2012, a budget hit that would be felt during the upcoming year.

With only a month left before North Las Vegas must submit to the state its tentative budget that includes solutions to its financial woes, attention has turned to the city’s unions as the best hope to avert disaster.

City officials said this month they hoped to wrap up union negotiations by Wednesday’s meeting of the city council, but it appears no formal agreements have been reached, and there is no item to discuss settlements on the meeting's agenda.

Still, the union negotiations will be an topic of discussion Wednesday night as the city considers other measures to reduce its budget deficit, including a resolution to reduce the city’s ending fund balance, freeing up $2 million for a potential settlement.

Relationships between the two sides have been on the mend since the 2012 decision to break collective bargaining contracts and suspend raises as part of a desperate attempt to close a then-$30 million budget deficit. Lee has distanced himself from the previous administration since taking office in July and has made reaching out to unions a top priority.

“We’re having great conversations. The city’s been transparent,” North Las Vegas Firefighters Association President Jeff Hurley said. “A lot of people have left. The ones who are still here are the ones who care and want to get the city through this process.”

Lee’s olive branch in the ongoing negotiations is $7.7 million scraped from various funds to offer as a settlement to make up for the missed raises. Although the payment amounts to little more than 30 cents on the dollar compared with what the unions are technically owed, their leaders say the offer has been a good starting point.

“Just because we’re owed one thing doesn’t mean it’s going to be what we settle for. We recognize the city is financially not in a good position,” North Las Vegas Police Officer Association President Mike Yarter. “We want to do what we can try to do to settle that and make it so they are in a better spot going forward.”

The city is negotiating new contracts with members of its police and Teamsters unions, whose current deals expire in June. Contracts for the firefighters and police supervisor unions expire next year, and those agreements will also be looked at for possible savings.

Hurley and other union leaders said their organizations were prepared to discuss concessions in 2012 and are willing to discuss them again given the city’s financial straits.

But Hurley warned further cuts in pay and benefits could make it harder to attract employees to the city. “We’ve driven off a lot of employees to other municipalities,” he said.

It isn't clear yet whether a reduced settlement of the lawsuit and more contract concessions would be enough to steer North Las Vegas away from the fiscal cliff it’s heading toward.

Rising debt service from expensive capital projects will continue to eat into the budget, and officials must still find a way to wean the city off a $24 million subsidy from its utilities fund that has become an integral part of paying the city's bills.

“It sounds like an insurmountable problem, like it might not be fixable,” Police Supervisors Association President Leonard Cardinale said. “The toughest question we have for the city is where is the light at the end of the tunnel.”