City to review its operations

The Las Vegas City Council ordered a top-to-bottom review of city operations Monday following another bleak hearing on city finances. The overall message was: Even when conditions improve, the rosy days of recent history aren't likely to return.

"The 'Happy Days Are Here Again,' when we see them, will be different from the happy days we've seen for the last eight years," Mayor Oscar Goodman said. "We're going into different times.

"We may very well be entering the era of moderate revenue that will force us to reconsider how we do business as a city."

The nationwide economic slowdown has shown up in collections of the consolidated sales tax, known as the "c-tax," which makes up a little more than half of Las Vegas' operating income.

The city trimmed expenses this year by $18.5 million to make up a budget shortfall, a deficit that is expected to be about $40 million next year and $46 million in 2010.

Although overall city revenue is expected to grow over the next few years even as the c-tax founders, expenditures are projected to grow faster. A large part of that growth is employee salaries and benefits, which include contractually required increases and rising health care and retirement costs.

The budget cuts -- estimated at $20.6 million in future years and largely achieved by holding positions vacant -- will remain in place to help meet the future shortfalls, and the city has reserves to draw on.

Finance director Mark Vincent also recommended creating a $30 million "stabilization fund" to cover costs in the 2010 and 2011 fiscal years.

The money would come from trimming or deferring capital projects, delaying the replacement of some electronic equipment and vehicles and diverting some money from other uses.

"It solves our problem in '10 and '11 and pushes it out to '12 and '13," Vincent said. "That gives us a chance to plan for that."

The move also gives the economy time to recover, he said, and if all of the stabilization fund is not needed, the money can be returned to the original expenditures.

When the recovery comes, though, Las Vegas is not likely to see the kind of heady revenue growth of the past few years.

The c-tax growth alone was often above 10 percent in 2003 through the beginning of 2007, and in some quarters in 2004 and 2005, it approached 20 percent growth.

Much of that was fueled by real estate sales and related spending. Economic analyst John Restrepo told the council Monday that the city simply does not have any room left for the kind of growth seen over the past decade.

Vincent said that future city revenue growth would be in the single digits, perhaps around 6 percent or 7 percent a year.

That forecast was behind Goodman's call for a "fundamental review of city operations, programs and services" over the next six months.

He said he wants a prioritized list of potential cuts and the amounts they would save, and he also directed city staff to review employee benefits to see whether savings and reductions could be negotiated in future contracts.

"Our revenues are down, but nevertheless expectations for services are high," Goodman said. "Our revenues are no longer sufficient to sustain the level of services we have had in the past."

City spokesman David Riggleman said the benefit review could include items such as the annual cost-of-living increase -- perhaps tying the increase to an outside measure like the Consumer Price Index instead of setting a fixed figure.

About 90 percent of city workers are covered by collective bargaining agreements, and while terms vary, annual increases usually include a step increase of 5 percent and cost-of-living adjustments of 3 percent or 4 percent.

Contact reporter Alan Choate at achoate@reviewjournal.com or (702) 229-6435.