State panel seeks answers about North Las Vegas finances

After hearing the details of North Las Vegas' dramatic financial collapse, one state official asked Thursday how the city will continue making payroll.

"When you're out of cash you've got a big problem," said Marvin Leavitt, chairman of the state's Committee on Local Government Finance. "You've got to do something immediately to stop this outflow of cash, or you're going to be in a world of hurt."

North Las Vegas officials appeared before committee members to update them about the cash-strapped city's finances. The appearance was informal and voluntary, officials said.

The state has been keeping a wary eye on North Las Vegas' budget problems, and city staffers have said the city might suffer a severe financial emergency if it can't soon balance its budget. In the worst-case scenario, state tax officials could take over the city's finances.

Elected officials in North Las Vegas have pledged not to let that happen, and Mayor Shari Buck has blamed the media for blowing the issue out of proportion.

North Las Vegas finance officials told the committee the city is working on a plan to deal with the remaining $4.9 million hole in its fiscal 2012 budget, and the plan will be considered by the City Council on Aug. 17.

The preliminary plan includes laying off dozens of employees, probably leading to the closure of city recreation centers and pools. The council twice has delayed action on the plan after hearing from scores of residents angry about the potential closures. The city falls another $165,000 in the hole for each week action is delayed.

Council members say they hope the city soon can come to an agreement on contract concessions with its police unions to avoid the cuts.

"Rest assured that our board is actively involved" in addressing the shortfall, said Al Noyola, acting finance director for North Las Vegas.

Noyola detailed for committee members the city's remarkable financial deterioration since 2007. North Las Vegas was once among the country's fastest growing cities and flush with cash.

But plummeting property tax and other revenues during the recession sent the city into a near financial free-fall.

North Las Vegas has undergone several rounds of budget cuts and layoffs in recent years, trimming more than $60 million in the past five years from its general fund budget and cutting or freezing more than 800 positions since 2009. The city now employs about 1,300 people.

The city's ending general fund balance -- essentially its savings account -- plunged from a healthy 23.1 percent to a shaky 4.4 percent of expenditures.

A municipality whose ending fund balance falls below 4.1 percent is in violation of the Nevada Administrative Code, Noyola said. That could trigger state intervention into the city's finances.

The city's ending fund balance is about enough to make one payroll.

"The situation is pretty bleak," said Tom Baker, the city's budget manager.

Leavitt said he was alarmed to see that "in months, unless something is done, you're going to be out of cash."

Committee members asked several questions about the city's collective bargaining agreements with its four employee unions, including details about raises and other perks.

Some expressed concerns that certain concessions -- including raises -- given up by unions in talks with the city will expire next year, again landing the city in financial trouble.

"You are headed for an irredeemable situation unless you put together a sustainable long-term plan, and we're not seeing that," one committee member said.

North Las Vegas officials have been banking on more concessions to see them through the tough times ahead. But they have been struggling to come to agreements with the unions and were barred by court order from laying off public safety union members as planned if concessions weren't reached.

The state committee asked North Las Vegas officials to provide another update at the committee's next meeting.

"We want you to succeed," Leavitt said. "We definitely do not want you to go into a severe financial emergency."

Contact reporter Lynnette Curtis at lcurtis@reviewjournal.com or 702-383-0285.