County officials lament state’s cash grab

The Assembly passed a bill that will allow the state to take almost 10 percent of the county’s property taxes used to pay for services such as courts, child welfare, juvenile justice and health care for the poor, county officials say.

Lawmakers also approved taking transportation funds paid for by property taxes. They also accepted county money from the dissolution of its redevelopment program.

All told, the state will snag more than $120 million over two years.

The grab will compound a $113 million shortfall that the county had to plug in its 2009-10 budget by trimming costs and pulling money from the general fund reserve.

Commissioners complained that the bill would not require major cities such as Las Vegas to chip in.

"We sent legislators to Carson City to solve problems, not just to shift money around to make everyone feel better," Commissioner Rory Reid said. "This makes it very difficult for us to serve the interest of those we jointly represent."

Reid said he hoped the state Senate will nullify the bill.

County Manager Virginia Valentine said state leaders asked for an alternative to taking $60 million in general fund money during the biennium. The county offered a $60 million package that combined $38 million in transportation funding and $22 million from scrapping the redevelopment program, Valentine said.

Instead of choosing one, Valentine said, "they took both."

Falling tax revenue has resulted in the county having $113 million less to spend on services this fiscal year than last year.

To close the gap, the county wrung $64 million in savings by reducing labor costs, trimming departmental expenses and leaving the low-level offender jail closed. The remaining $49 million was pulled from a $130 million general fund reserve, used to cover costs in a pinch.

Dipping into the reserve caused it to drop to 8.5 percent of the total general fund, putting the county at risk of a lower bond rating, said Yolanda King, the county’s budget and financial planning director.

Lenders like to see a 10 percent reserve, King said, adding that the county could wind up borrowing at a higher interest rate because of its smaller reserve.

The county cannot dig deeper into the depleted reserve to make up for the $30.4 million it will lose to the state this year, she said.

The pain must be spread across every department, demanding the county make some of its toughest decisions yet, said Don Burnette, the county’s chief administrative officer.

Commissioner Tom Collins questioned why the state won’t raise taxes. Instead, the state wants to raid the county’s coffers and push the county into a spot where it might have to raise taxes, Collins said.

Commissioner Lawrence Weekly bemoaned the ripple effect of losing $30 million a year during a budget crunch.

"Do they realize this is shutting down a lot of businesses?" Weekly said. "More people than ever are requiring services."

"Where does it stop?" Commissioner Chris Giunchigliani asked.

The county also lost $19 million in state money from the indigent accident fund. This loss contributed to University Medical Center’s deficit swelling to $94 million this fiscal year, compared to roughly $60 million last year.

An amendment to the bill that passed will let counties replace some of the $50 million in indigent accident funds that the Legislature took to help offset the state’s revenue shortfall.

Counties can use about $31 million in savings received from changes in federal Medicaid payments to replenish the indigent accident fund.

County lobbyist Sabra Smith-Newby disagreed with the constraints. She said the county should be allowed to spend the "freed up" Medicaid dollars as it sees fit.

"We are at the mercy of the Legislature," she added.

During hearings in Carson City, Gov. Jim Gibbons’ aides said the counties can reduce salaries to help make up the loss of revenue.

The raid of the indigent funds will affect UMC, which receives about 80 percent of the dollars. The money comes from a property tax levied on residents.

Smith-Newby also objected to the state taking property-tax money just from Clark and Washoe counties rather than spreading the burden to every county in the state.

Assembly Speaker Barbara Buckley, D-Las Vegas, said coming changes in car registration fees would bring another $10 million to $20 million to Clark County.

"I assume you want that?" Buckley added.

"We will take whatever we will get," Smith-Newby replied.

Contact reporter Scott Wyland at swylandreviewjournal.com or 702-455-4519.