The Henderson City Council on Tuesday approved $50 million in budget 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.”
A voluntary severance program will look to all full-time employees whose combined age and years of employment equal a minimum of 65 to take a buyout of two weeks’ pay for each year with the city.
City Manager Mary Kay Peck said about 350 employees will be eligible, and officials expect about 15 percent to 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 the unions that city employees are members of will have to agree to the conditions before employees will have 45 days to apply for the buyout.
“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.”
“Obviously, we can’t take any option off the table,” Gibson said.
The budget-balancing strategy will include reorganization of the Development Service Center.
“Our goal is to right size to a current level of activity,” Peck said. “Sixty-five positions can no longer be supported by DSC funds.”
The DSC 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.
“We’re going to look at how we do business and streamline,” Peck said.
The plan also includes a hiring freeze, which will save $7.3 million; $3.5 million in base operations cuts; $2 million in long-term liability funding reductions; and $3 million in deferral of capital projects.
A cable television show and a police academy building are some of the previously funded projects that will be cut.
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 making the assumption that consolidated and sales tax revenues will decline through 2010 based on national forecasts, although the cost of living will rise.
To balance the budget, the city will pull from its Financial Stabilization Fund, which has $12 million saved for an emergency. The 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.”
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 fiscal year.
The city shop is taking a $29 million hit, but staff said the city still will be able to take care of the vehicles because there is $26 million in the shop’s fund. Money will be saved by extending the lives of the current fleet by one year.
“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 pieces of 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 there are many ideas on the table, from the city’s take-home vehicle policy and the reduction of heating outdoor pools, 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 money.
Peck said the city’s commitment to service for residents would be maintained and there will not be a reduction in the amenities offered.
Gibson asked that the council receives a monthly report on trends and if Henderson is meeting the mark. There also will be a meeting after the voluntary severance program is complete.
Contact Henderson View reporter Lauren Romano at email@example.com or 477-3839.