Dealing with budget holes: City may scrimp on maintenance

So the city of Las Vegas isn't out of the fiscal woods, after all.

Just two weeks ago, the City Council was told by administrators that Las Vegas was through the worst of the recession. Once-plunging revenues had stabilized, clearing the way for the restoration of some budget cuts in fiscal year 2013. The council voted unanimously to adopt a tentative $464.6 million spending plan that takes effect July 1.

But on Wednesday, city Chief Financial Officer Mark Vincent told the council the city won't have the money to cover some $45 million worth of maintenance projects over the next five years. Roads and parks have the bulk of the unfunded liabilities.

"We will either have to pare this down as time goes on, or we may have to debt finance some of these," Mr. Vincent said.

That same day, the council voted to issue $8.5 million in bonds to pay for its share of the reopening of F Street under Interstate 15. That action alone will consume nearly $1 million of city revenue every year for the next 10 years.

Additionally, the city's tentative spending plan for 2013 can't be balanced without tapping reserves for more than $10 million. What is the city dipping into savings for? To fund pay raises city workers agreed to give up to avert some layoffs, in addition to improving staffing at a couple of fire stations and restoring hours other workers had lost.

And did we mention the city faces an estimated $28 million budget hole for 2014, thanks largely to expected increases in personnel costs?

The city has done an admirable job of navigating the valley's devastating four-year economic downturn. It has cut more than 600 positions and $115 million from the general fund. It has persuaded the city's bargaining units to agree to compensation concessions and negotiated a more sustainable salary structure for future hires. Las Vegas government was a leader in planning for steep revenue declines.

But city leaders clearly can't stray from this course -- not when the city has so many short-term expenses it can't possibly pay for. Letting city streets in need of resurfacing continue to degrade and letting park fields deteriorate to the point of becoming unsafe isn't an option. And neither is going deeper into debt for normal operating expenses.

As Councilman Steve Ross noted last week, "We are doing our citizens and people we represent a disservice in not maintaining" some recreational facilities.

No doubt, the city's unions are putting pressure on the council and city management to bring back the gravy train that lavished 8 to 10 percent annual pay raises on workers regardless of their performance. Similar agitations are playing out at the county and state levels. Bargaining groups across Nevada intend to be first in line for new dollars once tax revenues show the slightest sign of recovery.

That hasn't happened yet. The city projects flat revenues for the next few years, and that should equate to flat services and flat employee pay. Current budget realities demand continued discipline.