A couple of weeks ago, North Las Vegas Mayor John Lee said his financially strapped municipality wouldn’t surrender to state control, despite having just $9 million in reserves and a total annual budget of $481.5 million. “We don’t have to find dollars,” the new mayor told the Review-Journal’s Laura Myers and James DeHaven. “We just have to find a lot of dimes.”
That was before the city was dealt even more bad news. As reported by Mr. DeHaven, District Judge Susan Johnson ruled Tuesday that the city had no legal authority to unilaterally freeze pay raises owed to union employees under collective bargaining agreements signed in the mid-2000s. Now the city owes those workers $25 million in back pay.
In the wake of the court’s decision, Mr. Lee’s comment brings to mind the toll booth scene in the 1974 Mel Brooks movie, “Blazing Saddles.” A group of rampaging thugs on horseback was held up at the booth — the gate was in the middle of a vast desert, and the men easily could have gone around it — which required 10 cents per rider. Alas, much like North Las Vegas, nobody had money, which led Slim Pickens’ character, Taggart, to yell, “Somebody’s gotta go back and get a (expletive)-load of dimes!”
Covering North Las Vegas’ latest liability would indeed cost a load of dimes — 250 million, to be precise. It’s a reminder of how North Las Vegas landed in its awful financial situation. Southern Nevada municipalities, North Las Vegas among them, gave the store to bargaining groups during the good times. The terms of the contracts they negotiated were overly generous, even amid strong economic conditions, covered too many years and provided the government with no flexibility in the event of a fiscal catastrophe.
This situation underscores the importance of local governments being conservative when negotiating these deals. If municipalities learned anything from the Great Recession, it’s that tax revenues, unlike personnel costs, don’t always go up.
North Las Vegas’ unions clearly recognize that collecting on these pay raises will eliminate jobs. The city has already drained utility funds and received a state bailout. Said Police Supervisors Association President Leonard Cardinale, head of the smallest of three bargaining groups that brought legal action against the city: “This ruling wasn’t about money; it was about right and wrong. We’re still willing to sit down and talk.”
Mayor Lee was elected, in part, to rebuild a constructive relationship with the bargaining units. Now he must deliver and broker a viable compromise that doesn’t stick it to the public, now or in the future.