City faces $790,000 deficit | NevadaAppeal.com

City faces $790,000 deficit

Amanda Hammon, Appeal Staff Writer

Carson City is facing a $790,000 deficit next year, and that could mean tax increases or cuts in city services.

While city Finance Director David Heath said the deficit is manageable, the solution will be up to city supervisors.

Budget sessions begin Monday with an overview of the proposed $43.4 million budget and a workshop Tuesday on the city’s public safety needs.

Last year, the city’s deficit was estimated at $1.9 million, so this year’s shortfall isn’t unexpected. It’s attributed mostly to the loss of between $780,000 and $1.2 million in sales taxes from Wal-Mart, which will open a new superstore in north Douglas County sometime this spring and close the Carson City store.

Cost-cutting measures within the city helped ease the shortfall. They included the recent reshuffling of an ambulance crew, which could eliminate a $400,000 city subsidy of the ambulance fund, and adding vehicle maintenance funds to department budgets rather than pulling around $270,000 from the city’s general fund.

The city will have to come up with around $250,000 for the Western Nevada Regional Youth Center, increasing its share of the facility’s maintenance to $500,000.

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The deficit assumes supervisors won’t raise property taxes, but they have the ability to do so each year by 5-1/2 cents. They also have the ability to add 5 cents to the property tax rate to support the Silver Springs youth center, but so far Carson City is the only county of five that contribute to the facility to not have some tax money to support it. Also on the horizon is the ability to raise utility franchise fees.

A 1 percent increase in fees to Sierra Pacific Power Co. and Southwest Gas would mean an extra $620,000 next year and $900,000 yearly after that. Those costs, as well as a 25 cent per phone line 911 franchise fee worth about $150,000, would be passed directly to Carson City residents.

“It’s a major avenue for raising revenue,” Heath said. “But it charges mom and pop businesses, and I don’t think (supervisors) are really inclined to go that route. It’s like rubbing salt in an injury.”

The big issue for this year and coming years, Heath said, is sales tax.

“Our sales tax base is declining,” he said. “Douglas County has a lot of land, and their commission is very aggressive about developing it. This trend (losing Wal-Mart) could continue.”

Sales taxes make up about 42 percent of the city’s budget and are estimated at $18.2 million this year. Despite a robust year, largely due to dramatic increases in automobile sales, city finance officials expect to end the year with a 5 percent rise in sales taxes and are estimating a 3.5 percent increase in sales taxes, $18.8 million, for the 2002/2003 budget year.

Looking ahead with more sales-tax siphoning development in Douglas County, sales tax numbers are expected to drop. Heath said that puts pressure on supervisors to raise taxes and other fees. However, City supervisors set aside $1 million from last year’s budget to deal with problems this year.

“It was a prudent, conservative measure to take,” Heath said. “But it’s one-shot money. They might be able to get by a year or two without doing anything, (but) we have a structural deficit.”

Other options to deal with the deficit aside from raising taxes include such items as cutting $275,000 from the city’s transit program or eliminating the city’s $200,000 community support program.

If you go:

What: Carson City Board of Supervisors budget hearings

When: 6 p.m., Monday and Tuesday

Where: Community Center’s Sierra Room, 851 E. William St.

Refer

Look for a more in-depth examination of the city’s budget in Sunday’s Nevada Appeal.