Las Vegas Sun

October 23, 2017

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Localities brace for state raid on revenue

Cities, counties fear Legislature will shift much of budget shortfall burden to them

In government halls across the Las Vegas Valley, the groaning you hear is depressed bureaucrats mourning the loss of sales tax revenue and trying to figure out how to pay the bills.

They’re cutting department budgets, renegotiating union contracts and paying money to expensive, longtime employees to get them to retire.

And just when they thought they’ve about got their hands around their own budget crises, local governments fear that the state may show up like some bumbling stickup artist to raid the local till with impunity.

Just what state legislators will take from local governments isn’t yet known. They’re still plotting.

“No one knows what’s coming,” North Las Vegas City Manager Gregory Rose said. “If they are looking at taking our revenue, there should be a discussion about the impact.”

There hasn’t been.

The ability of the state government to reach into the pockets of Clark County, Las Vegas, North Las Vegas, Henderson and Boulder City springs from the state’s lack of “home rule,” the public policy of allowing local governments to raise their own operating and capital funds through taxes and, as a result, operate budgets safe from state intrusion.

In home-rule states — California is one — cities, counties and the state itself all rise and fall on the same economy, but the state can’t raid the local governments for financial help when the going gets tough.

In Nevada, though, the state authorizes and controls about 90 percent of the revenue sent to municipalities. Because of the relative lack of home rule, state lawmakers hold almost all the money cards. In the upcoming Legislature, for instance, Clark County is seeking permission simply to increase its marriage license fees from $55 to $60.

That probably won’t stir the Legislature, which is eyeing cities and the two big counties with lust in its wallet.

Dan Hart, a lobbyist hired by the county to fend off the expected raids, said: “Clearly, the governor has a plan to take money from local governments. And it’s not just revenue. It’s programmatic changes that might have local governments assuming more responsibility without receiving funding.”

Other ways the state might try to attack: shifting state programs to local government, or changing how it distributes tax revenue.

Because the Legislature hasn’t yet determined how it will lean on local governments for financial help, the municipalities are unsure how to prepare.

As Henderson City Manager Mary Kay Peck put it: “We have not drawn up scenarios for what if the states does this or what if the state does that. Nobody knows what the Legislature is going to do. It’s a moving target.”

For years, state lawmakers have pushed programs into the laps of municipal governments, “but they never get the attention that the revenue-grabs get,” said Guy Hobbs, a local economic consultant and former fiscal chief for Clark County.

In the early 1990s, for example, Gov. Bob Miller made huge cuts to mental health to help offset a budget crisis. The state “never really restored that funding,” said Chris Giunchigliani, who served in the Assembly for 16 years before being elected to the Clark County Commission. And because the county can’t afford to sufficiently fund mental health services, “more people burden our emergency rooms and police, and all the dominoes begin to fall.”

Another possible legislative tactic: Shift more tax revenue from local governments to the state.

To address the state’s $2.3 billion shortfall, Gov. Jim Gibbons says he wants the state to keep about $80 million in property taxes that would otherwise go to Clark and Washoe counties over the next two years.

Gibbons indicated the cities may be spared from this equation. But Assembly Speaker Barbara Buckley, a Las Vegas Democrat, told the Sun local government probably can do more with less, and said all options are on the table, including redirecting some property tax revenue to the state.

Next month, the legislative tax committees will review allocation of taxes between state and local governments.

And if local officials feel they have “target” written on their backs, it’s because there is a sense among Carson City lawmakers that municipal employees are paid better than their state counterparts.

Lawmakers are considering sharing more sales tax revenue with municipalities to soften the blow of the property tax raid. There is a big downside to the state’s generosity, however. By forcing them to be more reliant on sales tax revenue, local governments would be subject to the same economic trends as state government.

Operating in the blind, local budget officials are looking at how to absorb state-inflicted budget cuts — while wondering why they should have to. “I don’t believe it’s in anyone’s interest for the state to shift the burden to the cities,” Rose, the North Las Vegas city manager, said. “There is always this tendency to shift it. But we serve the same citizens.”

At Clark County, there’s talk of trimming $3 million from the recreation department and $1.7 million from the department that manages the county’s buildings and property.

Even before the state weighs in, Las Vegas is facing a predicted $150 million budget shortfall over the next five years, which has resulted in reduced benefits for some city workers.

Henderson has slashed $28 million from its current budget and North Las Vegas trimmed $15 million from its. Both of those cities and the county have ongoing hiring freezes. Henderson is offering buyouts to its most experienced — and expensive — employees.

The legislative session will begin Monday with local lobbyists having made their plea, which is basically, “Don’t rob Peter to pay Paul.”

But the local bureaucrats aren’t holding their breath.

“I know when we have met with them (legislators) they have listened,” said Peck, the Henderson city manager. “They understand the concerns ... But that doesn’t mean anything until the end of the day.”

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