LVCVA bases latest budget on 2004 revenue levels

The Las Vegas Convention and Visitors Authority is basing its latest budget on 2004 revenue levels.

That's just how deep the decline has been in the room-tax revenue that funds the bulk of the authority's operations.

The authority, charged with marketing Las Vegas to leisure and business travelers, can't count on increases in room-tax revenue in fiscal 2011, and it will also see shrinking transfer payments from its reserves, Vice President of Finance Brenda Sidall said as she presented the authority's proposed budget to the group's board members at their monthly meeting on Tuesday.

The authority will have $210 million to spend when fiscal 2011 begins July 1. That's down from $211 million in fiscal 2010. It plans to spend $170.5 million in fiscal 2011, down 10 percent from $189.5 million in fiscal 2010.

"We believe it's a conservative and fiscally prudent budget, or projection of revenues," Sidall said.

The budget anticipates that the authority's revenue from room taxes will remain unchanged at $150 million from fiscal 2010 to fiscal 2011. The authority's revenue from room taxes peaked in fiscal 2008 at nearly $225 million. Revenue plummeted to $175 million in fiscal 2009, then fell to $150 million in fiscal 2010.

Reserve transfers will dip from $13 million to $10 million in the year.

Budgeting officials have projected an increase in one area: Revenue that includes rentals of its meeting centers, including the Las Vegas Convention Center. That part of the authority's business should grow from $48 million in fiscal 2010 to $50 million in fiscal 2011.

To accommodate the overall drop in revenue, personnel costs will drop roughly 10 percent, from $44.5 million to $40.3 million. The budget calls for continued freezes on hiring and on pay increases and bonuses for managers.

It also assumes a freeze in hourly pay at June 30 levels for hourly workers, and a freeze in longevity pay at fiscal 2010 rates. Ongoing furloughs are necessary to meet the budget as well. The pay freezes and mandatory unpaid time off are subject to union negotiations, Sidall noted. If the measures don't survive bargaining, layoffs would have to follow, she said.

The authority has also eliminated funding for 88 vacant positions, accounting for 15 percent of the authority's authorized positions. The agency also will slash all funding for capital improvement, and its operational tweaks will continue to include job-sharing and the elimination of graveyard shifts.

But the authority saved its steepest budget cuts for advertising. Spending on advertising will drop from $87.4 million in fiscal 2010 to $71.8 million in fiscal 2011, an 18 percent drop from $87.4 million in fiscal 2010.

"Advertising is the focus -- the heart really -- of completing our mission, and up to this point we have protected the funding dollars for advertising during all of the budget cuts of the last three years," Sidall said. "We're at a point now where we can no longer shield the advertising budget."

An executive with the advertising agency that administers the authority's ad spending said his company expected the cuts and budgeted for the ensuing drop in income.

"Governments and businesses all have decisions to make. We have to balance priorities and needs," said Billy Vassiliadas, chief executive officer and principal of R&R Partners. "(The authority) has to pay salaries and health insurance for its people, and they have to keep their buildings in good shape for the convention business that comes in. I think Brenda and the staff there have done the best they can to keep as many of their needs funded as possible."

Vassiliadas added that R&R expects no layoffs as a result of the authority's smaller advertising budget.

He also said in a Tuesday presentation to the authority's board that several key indicators are looking up, including visitor volume, consumer confidence and travelers' stated intent to visit Las Vegas.

"There's no give in this place. Everyone's fighting like crazy," he said. "Everyone's finding new ways to bring visitors here, and the trends are all right. I'm actually pretty optimistic. I'm pretty bullish on where we're going. There's a lot of fight we still have to fight, but if we continue to go the way we're going, I think our recovery's going to be strong."

The authority's budget also points to cuts in general government, which includes executives and departments such as finance, purchasing, public affairs and human resources. General government will decline to $11.1 million in fiscal 2011, down 2 percent from $11.4 million in fiscal 2010. Marketing budgets will fall to $27.3 million, off 4 percent from $28.6 million. The agency expects an increase in just one area: special events. Spending on special events includes the authority's support of the National Finals Rodeo in December. Special-events spending should rise 9 percent, $8.4 million.

The authority's board will hold a public meeting to discuss and take action on the budget on May 20 in the board room at the Las Vegas Convention Center.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.