Agencies asked to cut budgets

Department heads in Henderson have been asked to slash their budgets by 10 percent or more as the nation’s financial crisis comes crashing down on Nevada’s second-largest city.

By next week, city officials hope to have plans in place to cover a $28.2 million budget shortfall three months into the fiscal year.

Layoffs are not being proposed now, but they have not been ruled out either. City spokeswoman Cindy Herman said “nothing is off the table,” especially if the economy continues to tank.

Already the city has seen a sharp decline in tax revenue, city Finance Director Steven Hanson said.

About half of Henderson’s operating budget comes from consolidated tax revenue, and 90 percent of that money comes from sales taxes collected in the city. In July alone, Henderson saw a 6.5 percent drop in consolidated tax revenue from the previous year.

Herman said department heads were directed to start identifying cuts last week based on the unexpectedly low first-quarter revenue figures and a bleak economic forecast supplied to the city free of charge by the Restrepo Consulting Group.

“It was a forecast that said we won’t come out of this for up to two years,” said Jill Lynch, budget manager for the city of more than 260,000 people.

City officials already have cut the projected shortfall by $3.6 million by adjusting city funding for its self-insurance program in a way that will not harm employee coverage, Lynch said.

Another $6 million could be saved this year by leaving open 63 vacancies citywide. Jobs deemed too important to leave open could be filled by shifting staff members from other departments.

The goal, Herman said, is to absorb the shortfall without significantly affecting services, especially in high-demand areas such as code enforcement.

Striking that balance could prove difficult. Henderson officials have touted the city’s staffing ratio, which at 7.1 workers per 1,000 residents is the lowest in Southern Nevada. Now the city is looking to squeeze even more out of less.

“We’re going to have to find a way to be more lean,” said Herman, who in her own department has canceled plans to launch a half-hour cable access television program about Henderson.

The current money trouble does not come as a complete surprise. Two years ago, the growing city experienced its first-ever decline in consolidated tax revenue. That drop of 3.3 percent was followed with a 7 percent decline during the fiscal year ending June 30.

Hanson said the city has been tracking the economy and bracing for less revenue for “well over a year now.”

“We knew there was going to be a fall-off of some magnitude,” he said.

But as recently as late May, city officials still seemed bullish on the future.

Touting careful planning and frugal financial practices, they approved a $617.1 million budget for the current fiscal year that added 45 new full-time positions and increased spending by $44 million over the previous year. More than $13 million of the increase was in the city’s general operating fund, which grew to $237.9million.

Then came a series of what Hanson called “atrocious events” on Wall Street, the collapse of Lehman Brothers, the bailout of AIG and the buyout of Merrill Lynch.

“These are events that only happen once in a lifetime, if at all,” he said.

“We’re in a time that’s never been seen before in Henderson,” Herman added. “For us to put any options off the table would be irresponsible.”

Contact reporter Henry Brean at hbrean@reviewjournal.com or 702-383-0350.

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