Las Vegas Sun

March 28, 2024

Metro, jail costs eat into Clark County’s $54 million budget surplus

Clark County commissioners got a first look today at next year’s projected budget, which shows signs of growth in the region’s economy and a decrease in operating expenses that will net a surplus of $54 million.

But much of that excess cash is already spoken for, with needs for more funding for Metro Police and the Clark County Detention Center.

Trouble also looms in the form of a potential change to Nevada’s pension system, which could drastically increase the county’s personnel costs and blow a sizable hole in future budgets.

Commissioners took no action today on the report. It is only a preview of the budget for fiscal year 2016, which begins July 1.

Commissioners next month will approve a tentative budget, which will be finalized in May.

Here are highlights from the report:

Revenues up, expenses down

After years of cuts to services and staff during the economic downturn, Clark County’s budget is beginning to benefit from the broader economic recovery.

The budget forecast predicts collections from property taxes, sales taxes, and business licenses and permits will all increase next year by a combined $34 million. Coupled with $19 million in spending cuts, the county will have a surplus of $54 million.

Tax collections haven’t fully recovered from the recession, though, with property tax and consolidated tax revenues still below 2007 levels.

Improvements at UMC

University Medical Center’s constant financial struggles seemed to escalate in recent years, as the hospital’s subsidy from the county ballooned from $31 million in 2013 to $61 million in the current budget year.

After adjusting to the turmoil brought on by the implementation of the Affordable Care Act and going through several rounds of employee layoffs last year, the hospital is making progress under new CEO Mason VanHouweling and will cut its subsidy from the county back down to $31 million.

An additional $15 million is allocated to help pay for capital projects at UMC, including repairs, renovations and purchasing new technologies.

Needs at Metro and the jail

More than half of the county’s surplus next year will go to supplementing the budgets at Metro Police and the Clark County Detention Center.

Metro is seeking an $18 million increase in its budget to $538 million. About $10 million of that increase would come from the county. The money would be used to hire 30 new police officers, fill 41 new civilian positions and fund a down payment on a new helicopter for search and rescue operations.

At the jail, overcrowding is leading to a spike in overtime and other costs that have put the operation at a $22 million deficit. To cover that, the county will have to increase its funding by $20 million next year, which, coupled with cost savings, should be enough to balance the jail’s budget.

Trouble ahead

Although the county’s budget outlook has significantly improved from recent years, there are still several potential problems looming that could throw its financials into disarray.

The first is a 20-year-old property tax levy for the fire service district that’s set to sunset in June 2016.

The tax generated about $14.5 million for the county’s fire department this year and has helped fund the construction, operation and maintenance of four new fire stations. If the commission doesn’t take action and the tax sunsets, it could lead to annual deficits at the fire department of $17 million starting in 2017.

Commissioners will have the option to increase property taxes to offset the expiring fire district levy but haven’t made any decisions on the issue yet.

Proposed changes to the state’s pension system being debated at the Legislature could also have a big impact on Clark County’s budget.

The changes would convert Nevada’s system to a hybrid model with elements from traditional public pensions and private-sector retirement accounts. But the switch would come with increased personnel costs, at least in the short term, costing the county $250 million over eight years.

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