Clark County expects $42 million shortfall

A significant drop in sales tax revenue is expected to result in a $42 million shortfall of Clark County's general fund budget this fiscal year, Finance Director George Stevens revealed Tuesday.

And if the downward spiral continues, the county's capital plan fund, money allocated mostly for big-ticket items like new buildings and parks as well as computer systems, might drop by 50 percent. The county typically allocates about $100 million to the fund, which was most recently dipped into to bail out a struggling University Medical Center.

The declining sales tax revenue stems from a decrease in residential construction, Stevens said.

Commission Chairman Rory Reid said it was premature to announce plans to implement a hiring freeze, cancel capital projects or cut programs, but he made it clear that county services eventually will suffer.

"This will be difficult," Reid said. "It shows that the county swims in the same revenue stream as the state and the city. We have our own challenges."

Sales tax revenues make up the majority of the county's consolidated tax revenue, which amounts to about 40 percent of its $1.2 billion general fund budget.

Residential construction plays a significant role in sales taxes because homebuyers purchase expensive items such as appliances. Stevens said experts do not see an upward swing in construction occurring.

"Many are predicting that this is not going to turn around soon," he said. "If it doesn't, this is really going to hurt."

But Stevens added that the county is not panicked yet.

The county has operated under a conservative budget for years, which has helped the government survive turbulent economic times.

Department heads will be notified during upcoming budget discussions that most requested positions will not be approved. Reid said he does not believe the county will reach a point at which layoffs are necessary.

"It will impact the way we grow," he said. "But I don't think it will amount to that (layoffs) ... we can't do the things we planned to do."

Reid offered no specifics on projects or programs that might suffer because of the shortfall. Because the county's population will continue to grow, he said, administrators and commissioners must identify priorities and work with a lean staff. "We are hoping we can find a way to mitigate the impact," Reid said.

The county's final budget will be presented to the commission in May.