Las Vegas Sun

March 18, 2024

Clark County facing $1 billion loss in revenue

Clark County is projecting a $1 billion loss in revenue over the next 16 months as a result of the coronavirus crisis, Chief Financial Officer Jessica Colvin said.

The general fund is projected to see a $315 million shortfall for fiscal 2021, Colvin said. Wages and salaries alone make up $335 million of the county budget.

Clark County commissioners received a bleak budget presentation today.

Staffers were initially scheduled to present a tentative budget to commissioners in March and submit it to the state on April 15. The pandemic altered those plans as they scrambled to develop new budget projections.

“Since (the shutdown) all hands have been on deck in really gaining an understanding of the economic impact to the county,” Colvin said. “It’s taken a lot of work to turn what we had originally prepared for our original presentation.”

Gov. Steve Sisolak in mid-March ordered all casinos and nonessential businesses closed for 30 days and later extended the shutdown through the end of April.

The brunt of revenue losses are coming from consolidated tax, room tax, gaming licenses, business licenses and service charges.

Colvin projects a $118.1 million loss by June, about 52% less than Fiscal Year 2019, which saw $227 million in revenue from March to June.

Colvin said when staffers originally prepared the budget, they predicted revenue would significantly exceed fiscal 2019 numbers.

Taxes and license fees have been generally stable revenue streams since 2007, with significant increases since 2017, Colvin said.

The county passed a $1.46 billion budget last year, optimistic that revenue streams would continue to increase.

Sales tax revenue was conservatively estimated at $453.3 million for fiscal 2021. Sales tax is about 86% of consolidated tax revenue.

The pandemic and nonessential business shutdown has cut projections for this revenue stream to $292.5 million.

County staff recommended cutting about $69 million from the general fund and about $124.5 million from things such as capital expenses and contributions to the Clark County Detention Center, Metro Police, University Medical Center and post-employment benefits.

Even after these mitigating measures, the county still faces a $128.4 million structural deficit, meaning county officials will need to make further cuts to ensure they’re not in the hole for next year.

Some things being considered include reductions to county services and supplies, a hiring freeze, a voluntary separation program and furlough program, and a nearly $60 million reduction in employee salaries and benefits.

The county may consider reducing 11% of its workforce.

About 1,100 Metro Police employees are funded outside the county’s general fund, Colvin said. Once those funds run out, it will be difficult for the county to assist, she said.

“It will be a future challenge ahead,” she said.

The county’s general obligation debt totals at $3.8 billion, $2.8 billion of which is covered by consolidated room and sales tax, as well as hospital and airport revenues, Colvin said.

If these revenues continue to decline, the county will be obligated to pay off these debts with some of its general fund or raise the property tax, Colvin said.