Washoe County Commissioners will receive a presentation at their regularly scheduled Board meeting tomorrow that outlines recommendations on how the County should plan a potential budget deficit of up to $58.5 million in fiscal year 2011-12, should the proposed State budget impacts occur.

Specifically, the Governor’s proposed budget would retain the 9 cents of property tax revenue that both Clark and Washoe Counties received but was redirected to the State coffers by the 2009 Nevada Legislature. At the time of the diversion, the State Legislature noted that it was last resort action to help the State deal with a daunting deficit, and, in fact, set the diversion to sunset June 30, 2011. In addition to retaining the 9 cents of property tax, the Governor has also proposed transferring some current State-provided services to the counties without funding resources and/or billing the counties for those services if retained by the State.

Washoe County has estimated that the Governor’s state budget as proposed would have a $25 million fiscal impact upon the county’s budget in the first year alone. Given that the County had already identified a budget deficit of $33.5 million for 2011-12 (which assumed the 9 cents of property tax would return to Washoe County as state law currently directs as of June 30, 2011), the additional $25 million impact imposed by the Governor’s recommended budget would have Washoe County taxpayers facing a staggering $58.5 million deficit for the coming fiscal year. Since the County has reduced spending by $123 million over the past four years (the first of Nevada local governments to begin significant cost cutting), any addition to the structural deficit the county already faces will have severe consequences on our ability to provide services that provide for the safety, security and health of our community—the county’s core mission.

Contingency Planning. The County’s financial staff is recommending to the County Commission that two contingency plans be developed:

1. A budget that would fund services at 90% (assumes an overall 10% reduction of current levels) to sustainably meet a $33.5 million budget deficit in 2011-12.
2. A budget that would fund services at 75% (assumes an overall 25% reduction of current levels) to meet a $58.5 million budget deficit in 2011-12.

While Washoe County continues to adamantly oppose the continuance of the State’s redirection of local property tax revenues to fund state operatons, the County also believes that it would be irresponsible not to develop plans for worst case scenarios. Further, the redirection of the 9 cents of local property tax rate for the past two fiscal years (2009-10 and 2010-11) was funded primarily through one-time use of county fund balances that are no longer available. Hence, the county cannot resolve the impact of this diversion in the same way it did last time.

Financial staff will also recommend to the Board on Tuesday the process to be followed by county departments as they develop these contingency budget plans, working in conjunction with the County’s Organizational Effectiveness Committee (OEC) which is comprised of private sector CEOs and local business owners.