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Layoffs possible in North Las Vegas amid $22.6 million shortfall

Updated Thursday, April 7, 2011 | 10:08 p.m.

Shari Buck

Shari Buck

Richard Cherchio

Richard Cherchio

North Las Vegas is contemplating suing the state for a greater share of tax revenues after financial projections showed an expected $22.6 million shortfall for fiscal 2012.

Acting City Finance Director Al Noyola gave a sobering presentation on the city’s fiscal health during a special budget workshop on Thursday. Tax revenues, cost recovery and fee increases for certain services during the first quarter of 2011 have not met expectations, he said.

If major concessions with city unions are not made, more layoffs may occur, city officials said. The city might take more drastic measures, including suing the state to change the consolidated tax formula to receive more tax revenue, officials said.

The consolidated tax is made up of six taxes, including those on the sale of cigarettes and liquor, and the revenue is divided among municipalities. But North Las Vegas gets a disproportionately smaller share than other cities, officials said.

“I think it’s high time that the city start to fight back and sue the state to get our fair share of C-tax,” Mayor Shari Buck said. “I’m honestly sick and tired of the citizens of North Las Vegas paying the price for an unfair formula that we have not been able to do anything about. I think we need to get tough and sue.”

During his hour-long presentation, Noyola outlined several major revenue declines during the economic downturn, including:

• Compared to last year, property tax revenue fell by 6.02 percent.

• The city lost $10.8 million in federal funding associated with housing jail inmates, who were moved to a facility in Pahrump.

• Court fines and fees were down about $1.4 million in 2011.

• Interest earnings on investments fell about $2 million as investment values plunged from $555 million in 2008 to a projected $161 million this year.

And as revenue falls, the city’s expected expenditures for 2011 are rising, Noyola said.

On Wednesday, City Council members heard a presentation by Aon Consultants about the rising cost of the city’s self-insured health care plan.

While less expensive than private health care plans, the cost of the plan to the city is expected to rise by more than $100,000 this year.

One of the largest expenditures last year was overtime, Noyola said. The city paid $2 million more in overtime than budgeted, and unless overtime is reeled in, the city will face larger deficits in the coming years, Noyola said.

Previously, the City Council mandated that overtime be eliminated. Council members said they were disappointed it has not happened.

“Early on, when we first started talking about budget problems, there was not supposed to be any overtime, period,” Councilman William Robinson said. “And yet we have $2 million. It’s crazy.”

But the mayor and Councilman Richard Cherchio said an increase in overtime payments was to be expected after the city laid off more than 200 employees last year.

“The reality is, we’re going to pay some overtime if we want to staff our fire department and our police department and our jail,” Buck said. “So it’s a matter of can we get these costs down, are there things we can do to make that easier?”

Cherchio agreed: “When you cut staff, you [still] need to cover the bases; you get overtime. Less people, you generate more overtime.”

To address the projected deficit, city officials are developing a third round of budget reductions. The city is in talks with the Teamsters and the police and fire unions for more concessions. If major concessions are not made again, the city may have to lay off more city employees, officials said.

Layoffs could occur by June, officials said.

In addition, the city will continue to make cuts, including reducing vehicle use, delaying land acquisitions and implementing cost-saving measures such as turning off lights and using less paper.

The city said its goal is to maintain a minimum 6 percent ending balance for fiscal year 2012 in the $130.1 million general fund, its primary operating fund.

The city’s ending-fund balance is currently 4.4 percent. When the balance hits 4.1 percent, the state can take a formal look over the city’s finances to see if it is making prudent financial decisions, Noyola said.

The council is expected to vote on and adopt the third round of cuts and the final budget during a May 17 special meeting. Its final budget must be submitted to the state by June 1.

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