North Las Vegas given until May 1 to develop plan fixing its deficit crisis

North Las Vegas is still running under its own steam, though perhaps only for another month or two.

State Committee on Local Government Finance members on Friday decided against throwing the recession-rocked city into receivership, giving city leaders until May 1 to report back with a detailed plan for bridging next year’s projected eight-digit deficit and ducking a state takeover.

Committee members toyed with just about every revenue-raising tool at the city’s disposal — from voter-approved property tax increases to cost savings generated by sharing services with Las Vegas — before settling on cost reductions as the only cure for what ails the city’s budget.

Committee Chairman Marvin Leavitt will be looking for specifics on what the city can do with its “salaries and level of employees” when leaders report back to the board after filing a tentative budget on April 15.

Leavitt, for one, seemed in a hurry to see the state swoop in, characterizing its five-year receivership program as little more than a good tool for raising taxes and “kicking the can down the road.”

Reno City Manager and committee member Andrew Clinger isn’t sure they have a choice.

“I don’t see a solution to this that doesn’t involve the state Legislature,” Clinger said Friday. “(Severe financial emergency) may not be a sharp tool, but it’s the only one this committee has.”

Meanwhile, city leaders can feel the noose beginning to tighten.

North Las Vegas will continue to receive millions of dollars in state sewer repair funds needed to help balance its budget, but the fate of an additional $11 million subsidy freed under last year’s Assembly Bill 503 remains up in the air.

Government finance committee members haven’t ruled out future city access to AB503 funds, though city leaders didn’t make a formal push for the extra sewer dollars this week.

Nor did they factor the handout into an $18 million deficit projected for fiscal year 2015 or a seven-year, $152.6 million deficit forecast presented to the committee.

City Finance Director Darren Adair was frank about North Las Vegas’ dependency on its existing sewer cash infusion, one that has subsidized the city’s general fund with $370 million since 2000.

Adair said the city can barely afford current draws on its wastewater account. Additional strain on utility reserves could see the fund dip into the red by 2021.

John Sherman and 10 other committee members agreed.

“In the absence of a catastrophic failure, additional transfers would just exacerbate the problem,” Sherman said.

The decision to hold off on bolstering North Las Vegas’ sewer fund access won’t cost municipal leaders a dime on paper, but there is little doubt it will raise the stakes surrounding a potential $7.7 million out-of-court settlement with city bargaining groups.

A recently proposed settlement aims to end the city’s two-year legal battle over millions of dollars in pay raises first suspended under a city-declared “fiscal emergency” in June 2012.

The agreement would be worth about 31 cents on the dollar to union employees, winners of a recent court decision that could put the city on the hook for up to $25 million in back pay and increases.

Officials have delayed a multi­million-dollar plunge into North Las Vegas’ rainy day funds in the hopes of raising cash for the deal, deferring action on a move that would have defied 3-year-old government finance committee recommendations on the amount cities should keep in reserve.

Other settlement funds remain in limbo as officials await the state attorney general’s blessing to access dollars targeted in the More Cops sales tax fund.

Union representatives hold the key to millions more in salary rollbacks and individual health care contributions that officials admit they will need to balance the city’s books going forward.

City leaders have until April 15 to persuade collective bargaining groups to slide some of those concessions across the bargaining table.

So far, all that both sides have agreed on is that they are running out of time.

“I would just ask for a little more time to resolve these issues,” Mayor John Lee told committee members this week. “I know from my years in the Legislature that the state has no money to come down here and get involved. ... I will come to you and say (receivership) is my only option if that time comes.”

Contact reporter James DeHaven at 702-477-3839 or jdehaven@reviewjournal.com. Follow him on Twitter @JamesDeHaven.