Henderson budget includes more employee severances

By Erin Dostal

Tuesday, May 18, 2010 | 11:55 p.m.

The Henderson City Council unanimously OKd its budget for the 2010–2011 fiscal year and approved a third wave of voluntary severances during a meeting Tuesday night.

Henderson is in decent financial shape given the impact the recession has had throughout the Las Vegas Valley, said Richard Derrick, acting director of finance for the city.

Derrick cited a financial stabilization fund established in 1996, good relationships with union groups, and a low employee-to-citizen ratio as reasons for the city’s position.

“Even with all of those strengths heading into the recession, we’re facing some very significant challenges,” Derrick said.

Henderson reached its peak revenues in 2006. Since then, it has grown by almost 37,000 residents, a 16 percent increase.

Consolidated tax revenue — a large part of it sales tax — for the next fiscal year is expected to be about $69.6 million, down from about $103 million at its peak in 2006.

The 2010-2011 budget will include 24 funds with estimated expenditures of $316.9 million, as well as 12 proprietary funds with estimated expenses of about $212 million.

At the end of the fiscal year, June 30, 2011, the ending balance of Henderson’s general fund is expected to be about $9.5 million, or five percent of the budget’s revenues for 2011-2012. For the city, that is an acceptable ending balance, officials said.

In total, the city has made about $90 million in cuts since 2008. Staff has been reduced by 15 percent in non-public safety sectors, and compensation for some employees has been reduced by 6 to 11 percent.

Henderson Mayor Andy Hafen said he thought the city did a good job preparing for the recession. “A couple of years ago, we saw this coming,” he said. “We took some pretty stiff measures almost two years ago.”

To balance the budget, the city has had to make cuts, Derrick said. Although no one has been laid off, the voluntary employee severance plan has vacated 89 positions the city does not immediately plan to fill.

“We spend approximately 70 percent of our general fund on employee-related costs,” Hafen said. “It has been tough.”

Since November 2008, the city’s severance plan has paid out about $6.4 million in benefits, all of which was recovered within 10 months after the first group of employees left.

The new installment could cost the city up to $6 million.

The total savings from the program, as of May 16, was about $8.2 million. The plan includes three months of COBRA or retiree medical coverage and a waiver of the 10-year service requirement for payments on sick leave.

Although many council members expressed concerns that the program was not sustainable in the future, Councilman Steve Kirk was the only one to vote against the third wave of voluntary employee departures.

“What it really amounts to is taking tax dollars from our residents and giving it to a small group of employees at the city,” Kirk said. “There’s a lot that could be done throughout the city with $6 million.”

“With no growth in the valley, nobody hiring, I think we’re just going to put off the inevitable,” he said.

Councilwoman Gerri Schroder disagreed, saying that she had experienced living on unemployment when her husband lost his job last year.

“I would much rather not contribute to the bad economy,” she said. “I would rather give them what they’re entitled to.”

Hafen, who said he thought the program had been worthwhile in the past, also said he didn’t think buyout programs are sustainable in the future.

“Reluctantly, I’m going to support it,” he said. “Hopefully, this will be the last time we’re faced with it.”