The Henderson City Council this week approved $50 million in spending cuts as part of a five-year budget-balancing strategy.
“This is deep. This is really deep,” Mayor Jim Gibson said. “It’s really a new experience for us to be cutting this amount. Times are difficult and are going to become, in all likelihood, more difficult.”
As part of its budget-cutting plan, the city will implement a voluntary severance program offered to all full-time employees whose combined age and years of employment equal a minimum of 65. Any eligible employee who takes the buyout will receive two weeks’ pay for each year with the city.
City Manager Mary Kay Peck said about 350 employees are eligible, and officials expect about 15 percent will participate.
The program will cost about $3.2 million. Salary savings in the first year would pay for the cost, and the city would save $16 million over the next five years.
Peck said unions representing city employees will have to agree to the conditions before employees are given 45 days to apply for buyouts.
“I think that we need to have a realistic idea of a possible reduction in force as we get better numbers,” Councilman Andy Hafen said. “We need to be realistic that if we fall short of our numbers, we keep that option on the budget table.”
“Obviously, we can’t take any option off the table,” Gibson said.
The budget-balancing strategy will include reorganization of the Development Service Center. The center combines resources of several city agencies to help with plan review, inspection and permit services to further the development of Henderson.
Service center cuts will include a reduction of part-time and overtime hours, saving $98,000, and a $2.3 million cut from the base operating budget.
In addition to the $7.3 million savings expected with previously implemented hiring freeze, the council agreed to cut $3.5 million in base operations, $2 million in long-term liability funding and $7.1 million by deferring projects.
Other anticipated savings include $3.5 million through policy changes and $5 million in discretionary interest. A cable television show and a police academy building are some of the previously funded projects that will be eliminated. These actions are expected to reduce the budget for the fiscal year that ends June 30 by $28.4 million.
Peck said the city has experienced a 10 percent reduction in the collection of property taxes because of the high foreclosure rate in the valley.
City staff is assuming that consolidated and sales tax revenues will decline through 2010 based on state and county forecasts, although the cost of living will rise.
In one step to balance the budget over five years, the city will pull money from its financial stabilization fund, which holds $12 million for emergencies. The reserve fund was opened in 1997 after the state Legislature approved the creation of the accounts for all municipalities in Nevada.
“Reserves are a critical piece of this,” Gibson said. “If we didn’t have the reserves, we wouldn’t be having this discussion.”
Henderson’s diligence to building a reserve fund over the past decade has put the city on better economic footing than other cities in the valley.
According to Jill Lynch, manager of budget and strategic management, “Not all entities have done that, that’s why other cities have to take more drastic actions, such as layoffs.”
Money also will come from a one-time transfer of funds from the city shop, where the city’s vehicles are maintained, and from a reduction in the general fund ending fund balance from the 2008-09 fiscal year.
The city shop is taking a $2 million hit, but Peck said the city still will be able to take care of the vehicles because there is $26 million in the shop’s fund. The reserve originally was created to finance the construction of a new building, which has been put on hold.
“We’re going to work hard as an organization to get through this recession,” Peck said.
Gibson said the Nevada Legislature is talking about taking revenue from cities around the state, and the cuts could put Henderson in a critical situation.
“We cannot be the bank to which the state government looks to balance its budget,” Gibson said. “I recognize they have a responsibility, but we and they service the same people.”
City staff has been working for about three months to come up with ways to save money in every department. Peck said many ideas are under consideration, from altering the city’s take-home vehicle policy to having employees pay for covered parking and producing and selling a firefighter and police officer calendar. She said everything will be looked at to see whether there are other ways to save or generate money.
Peck said the city’s commitment to its residents will be maintained and there will no reduction in services.
Gibson directed the staff to give the council a monthly report on trends and whether the city is meeting the mark. Peck also will meet with the mayor and council after the severance program is complete.
Contact Henderson View reporter Lauren Romano at email@example.com or 702-477-3839.