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October 22, 2014

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Crunch time for Henderson budget

Tax increase could go to voters

The idea of asking voters to raise their own property taxes started with the citizens themselves.

A budget committee led by Tim Brooks, owner of Emerald Island Casino, recommended the tax increase as the most simple, direct way to keep up with city maintenance. But it’s also the most unpopular solution.

In 2012, voters rejected a Henderson library district tax increase with a 55 percent no vote. That measure would have cost 1/10th as much as the city’s current proposed hike.

The Henderson City Council hasn’t committed to putting the tax increase on the ballot yet. The city has held 21 community meetings on the topic so far and has several more planned.

Property tax increases Henderson residents could pay in 2015

A home’s taxable value typically is about the price for which it would sell. Its assessed value is 35 percent of the taxable value. Governments use assessed value to calculate property taxes. Henderson residents currently pay 71 cents per $100 in assessed value, but officials want to raise that fee to 91 cents per $100.

• Increase from $249 to $319 on a home with a taxable value of $100,000.

• Increase from $435 to $557 on a home with a taxable value of $175,000.

• Increase from $621 to $796 on a home with a taxable value of $250,000.

• Increase from $808 to $1,035 on a home with a taxable value of $325,000.

Everywhere he goes, Mayor Andy Hafen preaches about Henderson’s status as “the premier” suburb. The city boasts leafy green boulevards, spacious parks, little crime and a standing spot as one of America’s best cities.

But Hafen now faces a tough question: Will residents pay more to maintain their premier lifestyle?

Tax revenue collapsed after the recession began in 2008. The city tapped its reserves and cut expenses, but city leaders say they’re at a breaking point.

“Something has to give,” Hafen said.

Starting July 1, the city will curtail services to trim expenses by $2 million. Among the cutbacks: Recreation centers will be closed Sundays and holidays, senior center food prices will go up, and child sports league fees will jump 25 percent to $50.

Those cuts, combined with other smaller savings, will balance next year’s budget, a requirement under state law. But city leaders say those cuts won’t leave enough money to pay for regular maintenance of parks, streets, sewers and more.

That’s why city leaders say they might need to raise taxes.

The council is considering asking voters on the June 2015 ballot to raise property taxes. Under the measure, residents with homes worth $175,000 would pay $122 more in city property taxes, according to city estimates. Those with more expensive homes would pay more.

But city leaders face some political challenges, namely the perception that the tax is a way to avoid trimming employee salaries and benefits. This month, critics discovered that city leaders handed out bonuses to top managers while pushing cuts to city services. The city dropped the bonus program, but any payroll cuts for front-line employees would face strong opposition from powerful city unions.

It hasn’t always been like this in Henderson. The boom days of the early 2000s were good for Las Vegas’ biggest suburb.

In 2003, the city brought in $130 million in revenue to its general fund, the central account for city operations. By 2008, that figure had grown by 70 percent to $221 million.

Those flush days allowed Henderson to keep up with maintenance of its parks, streets and sewers.

Then the stock market collapsed, home values plunged and tourist visits to Las Vegas fell off.

By 2010, Henderson’s total revenue fell 18 percent to $181 million.

Henderson responded by eliminating cost-of-living salary raises and offering employee buyouts. That helped trim general fund expenses from a peak of $221 million in 2008 to a low of $204 million in 2011.

Since then, Henderson’s expenses have grown almost 10 percent to $223 million for the upcoming year, surpassing the 2008 peak. Rising pay and benefits helped drive that growth.

Henderson Finance Director Richard Derrick said the city can’t slow the increases that are obligated under union contracts.

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