EDITORIAL: Labor transparency needed as local governments deal with financial pain
Las Vegas Review-Journal
March 29, 2020
The coronavirus economic shutdown is devastating local government budgets. That’s why transparency in collective bargaining negotiations is more important than ever.
It’s too early to know how much tax revenues will drop because of the forced closure of many businesses. Much will depend on how soon Gov. Steve Sisolak and health experts deem it’s safe for Nevadans to go back to work. In a best-case scenario, that recovery will happen quickly enough that the downturn doesn’t sink property values, which would decrease property tax revenues. Regardless, local governments will see a big hit from a decline in sales, gaming and room taxes.
That’s going to cause numerous problems throughout Southern Nevada. Just a few years ago, the Clark County School District’s reserve fund represented only a few hours of spending. Until the virus hit, the district had been slowly building up its reserve, but it’s still not large. Clark County’s fiscal position is stronger. Its budget this year included an ending fund balance of 9 percent, although that doesn’t account for the current drop in revenue.
Local governments spend the vast majority of their general funds on personnel costs. In the school district, it’s more than 80 percent. For the Metropolitan Police Department, it’s more than 85 percent. This means that when elected officials go looking for budget reductions, employee compensation must inevitably be considered. This is especially true if a falling stock market forces Nevada’s Public Employees’ Retirement System to hike contribution rates — again.
Absent a special session — which is almost a certainty — the school district will likely have difficulty fulfilling the contract it agreed to last year. Meanwhile, Clark County has several bargaining groups whose contracts end in June.