Las Vegas City Manager Betsy Fretwell this week unveiled a budget reduction plan that will help the city meet a $70 million shortfall in Fiscal Year 2011, which starts on July 1. The recommendations, if approved by the City Council, would result in the elimination of 215 fulltime positions and ultimately mean 171 current employees will be laid off through a reduction in force. Forty-four of the positions in question are currently vacant. This plan assumes no concessions from the city’s four bargaining units. That means the only approach to balancing the budget includes reductions in programs, services and staff. The City Council will be weighing these recommendations in anticipation of a special City Council meeting on March 10.
To help meet the shortfall, the city manager requested a 12-percent budget reduction from each department.
“Because we are a service organization, the vast majority of the city budget goes to pay for wages and benefits,” Fretwell said. “That means the primary way for the city to save money and balance its budget is to reduce the cost of labor.”
The recommendations in the plan are based on feedback from the City Council, the community and employees. This information was gathered through citizen surveys, focus panels and a series of neighborhood meetings. The effort was known as Your City, Your Way.
The proposed budget plan calls for a two-year approach to address the budget shortfall and would use $38 million in reserves to fill part of the gap. The remainder would be in cuts.
Even with these cuts, the city will face approximately a $40 million budget shortfall in Fiscal Year 2012, which starts on July 1 of next year.
With these proposed cuts, there will be community impacts to citizens, including longer lines, longer response times to requests and reduced or eliminated programs.
The city has been taking steps since 2008 to deal with declining revenues, mostly from the consolidated tax, which makes up a majority of the city’s General Fund. The primary cause for the city’s budget problems is the sagging local economy, where Southern Nevada has seen record unemployment, tourism has fallen off dramatically and the Las Vegas Valley leads the nation in foreclosures.
Guided by a professional facilitator, the city management team began intensive reviews of departmental services and programs to identify ways to reduce the operating budget. The effort was called the Fundamental Service Review (FSR). FSR actions have already included the elimination of 383 positions prior to this latest proposal, and a reduction in costs of $106 million.
As reserves and revenues decrease, the city has no option but to decrease its programs and services, and wages and benefits. Unlike the federal government, the city cannot submit a deficit budget to the state each year. It must have a balanced budget as required by state law.