Local government budgets suffer

Local government representatives from Northern Nevada cautioned lawmakers on Tuesday against increasing local government responsibilities while cutting into their revenues.

In describing an economy that went from bad to worse, Washoe County Manager Katy Simon told the Assembly Government Affairs Committee that there were about 7,500 fewer jobs in the county last year, and one in 136 homes went through foreclosure proceedings.

Simon also said that more than half of the county's revenue comes from property taxes, but property values had to be reduced by 15 percent last month.

"There is no property tax capacity in Washoe County for us to raise any additional funds," Simon said. "Our revenues are not sufficient to meet our already reduced service levels."

Simon added that if economic conditions continue as they are, the county will have to cut about $63 million, or nearly 20 percent of its budget, over the next two fiscal years.

"These forecasts do not include any property tax shift to the state, as has been proposed, or any service shifts from the state to the county, meaning we would have a greater service responsibility," Simon said.

While money-saving suggestions have included the elimination of retiree health benefits for new hires, Simon noted Washoe County did that more than a decade ago.

"We are committed to working with the Legislature to help the state find long-term solutions, hopefully not at our expense," Simon said. "Washoe county will not initiate any legislative measures that negatively impact our local government partners in the region."

Reno City Manager Charles McNeely said the city faces similar challenges. He said the city budget has been cut by $29.9 million since February 2008, residential permits are down 43 percent and room taxes are down 17 percent.

Property taxes decreased by 1 percent, and are expected to fall further based on falling home values, he added.

The city also is working on revisions to SB88, which would revise a formula for distributing tax revenues, hoping to adjust a property tax cap in order to get more revenue.

"Currently, when a property's market value falls below the taxable value, a property owner may ask for a reassessment," said McNeely. "As the market value recovers and the taxable value goes back up, local government loses legitimate property tax revenue due to the property tax cap. We would like to see that changed so that local governments can recover from an economic downturn on pace with property owners."

Sparks City Manager Shaun Carey joined in the chorus of dismal news, saying the city's "rainy day" fund for fiscal emergencies has been depleted. He added that the city's 2009 general fund has been drawn down to $3.2 million.

Carey said the city has already reduced its work force by 20 percent, cutting 142 positions; and many employees agreed to voluntary reductions in pay to preserve the remaining positions.

"We have no authority to increase the sales tax to meet our challenges," Carey said. "This crisis continues to deepen for our community, and we cannot sustain our services to our residents if revenues continue to fall."