City faces tough budget choices
April 2, 2003
In January, I addressed the erosion of the Carson City tax base due to the expansion of Douglas County’s retail sector and suggested that Douglas County and Carson City work together for their mutual benefit rather than continuing to fill Clark County’ coffers.
Supervisors Robin Williamson and Pete Livermore attempted negotiations but they were about as successful as Colin Powell’s dealings with the French. At this point, I am not sure if anyone is talking, but I hope both parties will make every effort to stop a course of action that is detrimental to the entire region.
That being said, Carson City must face the difficult reality of lower revenues and a demand for more services. Balancing a local governmental entity budget is not like budgeting for the federal government where a growing deficit is acceptable. Local governmental budgeting is more like when you and I look at our checkbook and the income needs to be greater than the expenses. A local government cannot spend what it does not have.
Based upon the most recent projections, Carson City has a revenue shortfall of approximately $1 million in the 2002-2003 biennium. That means the revenues coming in right now are not sufficient to meet our needs as budgeted. The projected shortfall for the 2003-2004 budget is in the range of $2 million. These shortfalls are caused by Wal-Mart’s move to Douglas County, Super Kmart closing, and a flattening out of auto sales. To aggravate matters, the assessed valuation of Carson City real property according to Martin and Swift was downgraded by 1 percent, costing the city coffers $400,000 in real property taxes.
What can Carson City do to maintain a reasonable level of city services and still balance the budget? In a nutshell, the total city general fund is approximately $45 million; however, a portion of that is debt service, so when that amount is deducted the total operating budget is around $40 million. On the face of it, a $1 million shortfall sounds serious, but there is good news.
The city has already saved two-thirds of that amount, leaving a shortfall of approximately $300,000. Additional savings can be derived from the refinancing of the bond for the Public Safety complex. This process has begun and it will save $500,000 the first year and $300,000 the second year, plus Carson City has significant reserve and rainy day funds that will see us through this biennium.
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What about the budget for the next biennium? The forecasters project that Carson City will have a $2 million shortfall in 2003-2004 if all service levels and tax rates remain the same. Again, there is some good news. The city staff has been asked to find savings in each department and that has realized a savings of around $750,000. Good work!
What is the best way to make up the remaining $1.2 million deficit? In addition to a raise in some user fees, the Carson City Finance Department has proposed a raise in real property taxes. The maximum allowable under state law is $4 per $100 assessed valuation. Carson City’s present rate of $2.58 is the lowest in the state. The finance department is proposing a raise to $2.70 per $100 of assessed valuation.
No one wants to see a raise in taxes, especially since we are looking at a significant raise in our state taxes, but the alternative is a reduction in services and there are not many departments where more cuts are possible. The cost of public safety including police, fire and the courts will be dictated to a large extent by binding arbitration with the employee unions. Already the sheriff’s department has cut $70,000 and the fire department has cut $32,000. Deep cuts in public safety staffing could result in lower response times and it is unlikely that the supervisors will want to make that choice.
The streets department is funded largely by gasoline taxes and federal funds and those dollars are earmarked so they cannot be cut or moved to another department.
This leaves parks and recreation, library services, animal control, and block grants to non-profit agencies such as RSVP and the Brewery Arts. All together these departments represent a very small portion of the total city budget. The first and most logical cut will be to downgrade the maintenance of the parks, so the irony is that after sinking a million-plus dollars into Fuji Park improvements, the city will have to make cuts in the parks department that will downgrade the level of maintenance at all of the parks.
Just like in our personal finances, choices must be made. The voters spoke during the last election, refusing to move the fairgrounds at Fuji for retail expansion, and now the difficult choices must be made. I would encourage you to participate in the budget process by letting your supervisor know where your priorities lie, but remember, “No whining.” Our city officials told us this was coming; we knew what the cost was going to be. So now is the time for us to accept the tough choices.
Linda Johnson is a wife, mother, attorney and observer of Carson City government for the past 28 years.