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Henderson gets ready for more cuts

Henderson officials expected bad news. They just didn’t know how bad it would be.

City projections called for a 4 percent decline in property tax revenue in the coming fiscal year, which starts July 1, but now it looks like the drop will be more like 17 percent.

That’s an unexpected, $10 million punch in the general fund for a city already wrestling with budget-busting declines in sales tax revenue and other funding sources.

“Clearly it’s more than we were expecting,” said Richard Derrick, assistant finance director for the city. “This is worse than we had thought, and it’s going to make this year more challenging of course.”

Compared with other local governments, Nevada’s second-most populous city has weathered the recession fairly well. Henderson shed 235 positions over the past year, but nearly all of the staff cuts have come through normal attrition and an early retirement buyout program. Only two full-time employees have been laid off.

Earlier this month, the City Council directed staff to begin a second round of budget cuts outlined in the five-year contingency plan the city developed as the economy tanked.

The so-called Category 2 cuts total slightly more than $3.5 million and include such things as reducing the frequency of park maintenance, cutting some part-time jobs and slashing the amount spent on outside legal counsel.

Three departments — Parks and Recreation, Public Works and the city attorney’s office — will absorb more than 85 percent of the cuts.

Derrick said Category 1 cuts implemented in August were designed to avoid effects on services to the city’s 278,000 residents. The same cannot be said of the Category 2 cuts, he said. And the worst could be yet to come.

Derrick said all departments have been directed over the next month to prepare contingency plans for a possible third round of cuts totaling 15 percent.

He would not say when a third round of cuts could prove necessary or whether layoffs can be avoided.

“Obviously, we’re aggressively looking everywhere we can,” Derrick said.

The city’s budget of $547.9 million includes a $222.8 million general fund to cover operating costs through June 30. Estimates from the Clark County treasurer’s office call for Henderson’s general fund to receive property tax revenue of $62.2 million this fiscal year and $51.3 million next fiscal year.

The Category 2 cuts are being implemented as part of a measured response to the economic decline, Derrick said, not in reaction to the property tax revenue projections.

He acknowledged, however, that Henderson officials were surprised by the “magnitude” of the drop in property values.

The city’s property tax revenue for the coming year is likely to drop even further as homeowners appeal to the county to have their assessed values lowered.

Henderson spokeswoman Kathy Blaha said estimates suggest there are about 8,000 foreclosed homes in the city, fewer than in Las Vegas and North Las Vegas.

After decades of uninterrupted growth and prosperity, declines have become the norm in Henderson lately.

According to the most recent figures available, the city received $5.4 million in consolidated tax revenue in November, most of it from sales taxes. That’s down 12 percent from the same month in 2008.

It also might be good news, Derrick said. After all, it marked the first time in more than a year that the city’s monthly consolidated tax revenue fell less than 15 percent from the previous year.

As Derrick told City Council members earlier this month, “We are hopeful this may be a positive indication that the economy is beginning to at least level off.”

But he made that statement before news broke on Feb. 8 that the Ritz-Carlton Lake Las Vegas will cease operation at the troubled resort community in Henderson on May 2.

“It’s so hard to know when we’re at that darn bottom,” Derrick said after the most recent council meeting. “We’re looking for something positive. It’s sad we have to look so hard.”

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

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