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Mayor: Some Las Vegas city jobs might have to be privatized

City and unions still about $20 million apart in concessions to save 141 jobs

Updated Wednesday, April 7, 2010 | 3:48 p.m.

The city of Las Vegas might have to start considering hiring private contractors to replace more highly paid city employees in the future, says Las Vegas Mayor Oscar Goodman.

"We look to privatization to replace city employees who are functioning, but at a salary level that is higher than perhaps the private sector would provide to us," Goodman said at this morning's Las Vegas City Council meeting. "But we don't have any choice but to look at that as an alternative. It's not a threat. It's just a fact."

Goodman made those remarks after hearing a presentation from city staff about the status of talks with the four unions that represent the 3,300 employees concerning pay cuts that would help the city trim its budget for the 2010 fiscal year.

The city staff had just given a report detailing how far away the city's four employee unions are to meeting the city's request in concessions, which would save 141 employees' jobs.

The city's goal — which includes no cost-of-living increase for all employees, plus an 8 percent salary cut — is to trim $29.7 million from the budget.

However, the unions' offers have amounted to only a $10 million cut, leaving a $19.7 million difference, according to City Manager Betsy Fretwell and Mark Vincent, the city's chief financial officer.

After the presentation, Mayor Oscar Goodman urged the city's negotiators and the unions to keep working toward closing that gap.

Goodman said the alternatives to employee groups not accepting an 8 percent cut are to reduce city services and eliminate the jobs of 141 employees.

The council has approved a tentative budget that includes the job reductions after employees did not agree to the city's request of an 8 percent cut this year and next year. A final budget will need to be made by May 18 and then submitted to the state on June 1.

"The window is closing quickly," Goodman said.

"The 8 percent is the number. I've been asked in press conferences, 'Is that in cement?' Nothing's in cement. But we have to get the 8 percent in order to make this into livable conditions, without losing the patient," Goodman said.

Summary of offers

The summary of talks provided by the city staff, showed the following:

-- Las Vegas City Employee Association: The city is asking it to reduce compensation by $16.7 million. The LVCEA's offer, which includes 196 hours of furlough and giving up cost of living, amounts to $8.7 million. The difference is $8 million. A LVCEA representative disputed how the city arrived at the figure for the union's offer, saying the union is actually offering $10.2 million in concessions, or about two-thirds of what the city wants. He said the union would like the $10.2 million to be used to retain the jobs of most of the 121 union member who would be laid off under the city's tentative budget. He estimated that could be about 100 people.

-- International Association of Fire Fighters: The city wants it to cut $8.8 million in personnel costs. The IAFF, which is in contract negotiations, has offered $900,000. The difference is $7.9 million.

-- Las Vegas Police Officers Association, which represents corrections officers: The city's goal is for it to cut $3.1 million. The LVPOA's offer would not save any money, so the difference is $3.1 million.

-- Las Vegas Police Protection Association, which represents city marshals: The city's goal is to cut $1.1 million. The LVPPA's offer amounts to $400,000. The difference is $700,000. Chris Collins, president of the LVPPA, said no one from the city has contacted him about the union's offer in the last six weeks. He said the union is not ready to give that much back. Many of the employees recently bought homes and are underwater in those homes and can't afford to take those kinds of cuts, he said.

Fretwell said the city has not rejected any of the offers, but was still at the table, working through the process.

Deeper hole than expected

Fretwell told the council that the city would have to dig deeper into its reserves than was planned when the council approved the tentative budget on March 10.

At that time, the $493 million budget included taking $38 million from reserves. However, the new estimate will be that it will need to dip into reserves by $53 million, taking the rainy day fund down to 10 percent, Fretwell said. The 10 percent level would give the city about five weeks of cash flow in case of an emergency.

"I don't think any of us recognized how bad things were going to get," she said.

Vincent said once of the reasons for the lower revenues is that, because of the economy, more people are cutting back on their own energy use, which means the city is taking in less funds from its franchise fees included in utility bills.

About 10 years ago, the council adopted a policy to keep 12 percent of its budget in the reserve fund. Because of the economic downturn, that's now down to 10 percent and will be at the 10 percent level for the 2011 fiscal year, Fretwell said. She said 8.125 percent of the reserves are not subject to collective bargaining.

Fretwell said going any lower than 10 percent could mean the city would lose its bond rating, which would make the costs of public projects go higher.

Vincent said keeping the reserves at 10 percent would give the city more breathing room to plan for emergencies intelligently.

COLA confusion

Councilman Steve Wolfson said some people don't understand how cost of living allowances, or COLAs, work and asked how many years employees have been getting them and whether the COLA always increase each year.

Fretwell said employees have been getting them for at least 15 years. Vincent said the average Western States Consumer Price Index has gone up on average those years just under 2.8 percent. He said it would be flatter than normal for this year, but will see an uptick in the 2012 fiscal year.

Fretwell said employee COLA increases, which are negotiated by the unions, have been exceeding the Western States CPI, plus employees have also received step increases in compensation for longevity.

Mayor Pro Tem Gary Reese pointed out that over a long period of time, "that's a huge difference," in what employees make compared to the CPI increases.

Councilwoman Lois Tarkanian said the general public thought COLAs go up or down based on the CPI. Fretwell said COLAs are fixed by the terms of the negotiated contracts.

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