After clawing its way back to black after a recession-related revenue plunge, the city of Las Vegas once again is staring at projected shortfalls, shortfalls that could hit $17.5 million in the 2014 fiscal year.
That means city officials once again could be turning to employee labor organizations for more concessions or could be cutting back on services for taxpayers.
The mixed financial outlook is contained in a midyear forecast from city Chief Financial Officer Mark Vincent.
It projects surpluses of $12.2 million and $8.5 million in 2011 and 2012 and shortfalls of $1.8 million and $17.5 million in 2013 and 2014.
"At this point I don't believe there is a lot more we can squeeze out of office supplies and travel and training budget," Vincent said of city government, which has cut back to a four-day work week, will close for a week during the holidays and has cut about 615 positions and 270 workers since 2008.
COUNCIL REACTION MIXED
The projections drew mixed reaction from council members and labor organizations.
Councilman Bob Coffin worried the numbers, which projected little to no growth in business licenses and a slight recovery in property taxes, might still be too rosy considering the fragility of the national economy.
"I'm worried about projecting any growth at all," said Coffin, noting economic trends during the Great Depression included false hopes for an early recovery. "I wake up in the middle of the night thinking we're in 1932."
Others, such as Councilman Steve Ross, lamented spending cuts such as the $15.8 million reduction in public works spending, a 49 percent decline from 2008 levels.
"When I see public works, I think of jobs and the money we are not getting out there on the street to help this city," Ross said.
Mayor Carolyn Goodman complimented the staff for work trimming the budget to the tune of more than $115 million since 2008 but said Wednesday's presentation showed it isn't enough given the fragile economy.
"While the lay person may look at this and say, 'Wow, there is a lot of fluff in the budget,' there has been a great deal of sacrifice," Goodman said. "The pundits are saying we will continue to be suffering for a while."
The city's major labor organizations, the City Employees' Association, the Las Vegas Peace Officers Association and International Association of Firefighters Local 1285, were unimpressed by the presentation.
'ANOTHER WORST-CASE SCENARIO'
Leaders from every labor group accused management of exaggerating the severity of the financial situation to influence upcoming collective bargaining negotiations.
"They threw it out there to create a story, IAFF President Dean Fletcher said. "They've created another worst-case-scenario that I don't think is fair to the citizens or to the employees."
The Peace Officers Association, which represents corrections officers, is especially piqued.
The group recently ran a full-page newspaper ad accusing city officials of "threatening employees into wage reductions" while giving raises to "some of their highest paid management personnel."
Las Vegas Peace Officers Association Vice President Eric Fredenburg said corrections officers learned of the raises when they heard supervisors boasting about the situation at the jail.
"They told the citizens of Las Vegas we're so broke we can no longer work on Friday, but all of a sudden they have enough money to reward these supervisors," Fredenburg said.
"If it is that bleak, no one should get a raise."
City spokesman David Riggleman defended the raises, which amounted to about $265,000 for 42 people, none higher than deputy director level.
Riggleman said that many of the raises were part of a reorganization that saved about $3 million in the aggregate and that others, like those in the jail, went to supervisors who had been earning less than their subordinates.
"It makes it difficult to keep people in a job like that if there is really no incentive to be in it," Riggleman said.
Despite the city's efforts to defend the raises and stand behind Vincent's presentation, it is clear there is bad blood between labor and management that will color upcoming contract negotiations.
"We're done giving all we are going to give," CEA President Val Sharp said.
STILL MORE TO DO
The projections, which Vincent delivered before Monday's scheduled City Council retreat to discuss priorities for city government, are only estimates and are separate from the city budget, which is expected to be completed in May.
They do, however, paint a picture of a city that has gone from projected shortfalls of nearly $50 million to less than $20 million by getting labor concessions, eliminating about 615 jobs and laying off about 270 workers.
"We have done an awful lot to get where we are today," Vincent said. "We still have more to do."
According to the report, revenue will fall from $468.5 million in 2011 to $451.1 million in 2012, then increase to $457.3 million in 2013 and $461.5 million in 2014.
Expenses are expected to total $456.3 million in 2011, $442.6 million in 2012, $459 million in 2013 and $478.9 million in 2014.
The numbers reflect about $115.3 million in cuts since 2008. The biggest percentage cut was to public works, but the largest numeric cut was $37.2 million, 43.6 percent, from "general government" spending.
COST INCREASES PREDICTED
Projected cost increases in the budget for the Metropolitan Police Department, which the city shares with Clark County, are the reason for much of the shortfall forecast in 2014.
The city anticipates Police Department costs will increase from $118 million in 2012 to $131 million in 2014.
Also, employee costs for the Las Vegas City Employees' Association are projected to increase by about $2.5 million in 2013, the result of the return of step and a cost-of-living allowance pay raises that unionized workers agreed to postpone in previous negotiations.
The city will be making rent payments on a new city hall starting in 2013. Initially, interest-only payments will be about $9 million annually. Full payments of about $16 million start in 2016.
The forecast also details which sources of tax revenue have been hit hardest by the recession and which sources are recovering.
Consolidated tax, which is largely driven by sales tax, is the largest single revenue source, has increased in each of the past six quarters and is expected to grow from $208 million in 2011 to $227.3 million in 2014.
City property tax revenue, which has fallen from more than $125 million in 2009, is expected to keep falling from $101.9 million in 2011 to $90.3 million in 2014.
There is little hope for a property tax recovery even if the economy improves because state law limits residential property tax increases to no more than 3 percent and commercial to 8 percent annually, meaning it would take more than a decade of growth just to return to the 2009 level.
"The reality is we will never recover as fast as we dropped," Vincent said.
Contact reporter Benjamin Spillman at firstname.lastname@example.org or 702-229-6435.