County commissioners get first glimpse of proposed budget for fiscal year 2017

By Jackie Valley

Wednesday, March 9, 2016 | 7:30 p.m.

Clark County’s proposed budget for the next fiscal year shows small growth in general fund revenues, led by an increase in expected sales taxes.

Yolanda King, the county’s chief financial officer, presented the proposed fiscal year 2017 budget to the Clark County Commission during a special meeting Wednesday afternoon. Overall, the proposed budget projects a $26.5 million surplus.

The extra money likely won’t last long, given recommendations to divert it to pay for a Metro Police budget increase ($15.5 million), hiring more county employees ($6 million) and capital projects ($5 million).

The proposed budget estimates $1.26 billion in revenues to the general fund, which represents growth of $39.1 million — or roughly 3 percent — compared with the current fiscal year. Sales taxes, property taxes and business licenses and permits account for much of the general fund’s revenue, paying for county operating expenses.

County officials’ concern: Consolidated tax revenue, which is primarily made up of sales taxes, is the largest funding source in the proposed budget.

“Consolidated tax is not a stable revenue,” King told the commissioners. “To have your main source of revenue in your general fund be reliant upon an unstable source of revenue is obviously not prudent.”

The problem stems from stagnant property tax revenue. Although still the second-largest source of revenue for the county, property taxes remain historically low thanks to tax caps enacted into law in 2005. The law, which capped property tax increases at 3 percent for residential properties and 8 percent for commercial ones, was designed to protect homeowners from steep tax hikes as property values skyrocketed during the building boom.

Then the recession happened, throwing an unexpected wrench in the plan. Property values plummeted, so government entities’ revenue streams suffered as a result.

Ninety-four percent of Clark County parcels are expected to receive tax abatements — or, in other words, tax deductions — in the next fiscal year, up from 92 percent this year, according to county data. The lost money impacts multiple agencies, including the county, Clark County School District and Metro Police.

The proposed budget projects a 1.6 percent increase in property tax revenue, which King attributed largely to new properties being built in the valley.

In a nutshell: As Southern Nevada recovers from the recession, property values are increasing, but so are property tax abatements. County officials, in turn, argue that property tax collections no longer reflect the property’s value.

“We’re going to have to step up and help legislatively, I believe, to make some of these changes because it’s best for the community in the long run,” Commissioner Chris Giunchigliani said.

Other notes from the proposed budget:

Metro Police’s budget request totals $549.6 million. The county’s share of that amount would be $241.3 million — a $15.5 million increase over the current fiscal year. The police department hopes to hire 38 police officers, 22 civilian employees and upgrade equipment with a portion of the extra money.

University Medical Center would continue to receive a $31 million subsidy from the county. The county-run hospital only needs a $10 million subsidy to operate, so the remaining money would go to capital needs, such as facility or technology upgrades.

The county expects to end fiscal year 2016 with a fund balance of $33.1 million.

The county’s next fiscal year begins July 1. The commissioners took no action on the preview of the proposed budget; the budget will be finalized in May.