Good afternoon.

Thank you everybody for your patience.

This will begin we'll call to order the preliminary budget hearing for March seventeenth.

Good afternoon, Manager Schiller.

Hi.

Good afternoon again.

Your first item is public comment.

Anyone wishing to speak during the first time set aside for public comment, please come forward at this time.

Seeing no one, we'll close the first public comment period.

Commissioners, your next items, uh approval of the agenda.

I move to approve the agenda.

There's a motion for approval.

Please cast your vote.

That motion passes.

Commissioners moving to business.

Your next items to receive a report regarding the Clark County fiscal year two thousand twenty-seven general fund budget and direct staff accordingly.

Good afternoon, Commissioners.

For the record, Jessica Colvin.

As you know, I've been out of the office quite a bit over the last few weeks, so they've had to work extra hard to get this presentation ready for you today.

So with that, I will um this presentation is really to go over the general fund.

And the reason why the general fund um is really the most important fund when you're looking at the Clark County budget, is when you look it is the one fund that has their primary sources of discretionary revenue.

Um it supports a wide range of departments and agencies.

And so what we provided here for you is, you know, many people who are watching may not know is that the county provides regional services like a typical county would to two point four million residents.

And so those services are to the left.

Um and that'll be to all of our incorporated cities as well as unincorporated Clark County.

But in addition, which makes Clark County unique is that we also provide those municipal or city-like services to over a million residents and unincorporated Clark County, and those are all those services and departments to the right.

If Clark County, unincorporated Clark County were incorporated, it would be by far the largest city in southern in Nevada.

I also highlighted for you just to stress the importance of the general fund is in gold and asterisk, are all of those departments or agencies that have a high dependency on the general fund for their operating budgets each year.

This is just a snapshot of the breakout of our general fund revenues.

You can see consolidated tax revenue as our largest source of revenue, followed by property taxes, and then licenses and permit revenue.

And our general fund operating expenditures are broken out just by function for you.

And as a reminder, if you look in your packet, there is a tab in there that reports all the departments that fall under each function, if that's helpful.

One thing I wanted to note here is that we've broken out public safety with Metro and Detention, and then all of our other public safety departments.

Those are going to include family services, the fire department, juvenile justice service, coroner, public guardian, and public administrator.

And it may look like the budget, usually we have a little bit over 50% is dedicated to public safety.

It may look like we're seeing a decline in that area.

However, that's only because we reallocated or recategorized clinical services, which is a new department from family services and JJS, and they're now reported in the health function.

So the budget begins with revenues.

And in forecasting our revenues, we rely on Department of Taxation's revenue projections, but we also look at our local trends as well.

And the first trend that we look at is our the change in visitor volume.

Hospitality, as everybody knows, is our primary economic driver in this area.

And so visitor volume will have a significant impact for the county, will mostly be consolidated tax revenue.

And you can see we started seeing trends in a decline in visitor volume in fiscal year 2025, and year to date through January visitor volume is declined 7%.

In addition, we've presented this in prior budget hearings related to the number this is the number of deeds recorded.

And this is just a good indicator of the real estate transactions that are transpiring in the county.

And this helps us when we're developing our future trends or expectations for property tax and assessed values.

And so when you look at the number of deeds recorded, we're seeing recurring declines year over year, and those declines are increasing up to or down to another 7.1% in fiscal year 2026 on top of the previous year's declines.

The number of building permits were down 8% and now trending close to 17% down in fiscal year 2026 from the previous year.

And this is an indication of future growth in the pipeline that would impact consolidated tax revenue, property tax revenue, and business license revenue.

One thing I wanted to note on in building permits is the building fund is an enterprise fund.

When you look at their budget currently, we're not but the budgeted revenues are not expected to cover the budgeted expenditures.

Typically the fund will have vacancy savings, and they have built up a number of reserves over the last couple of years, and the board has committed those reserves to be used for future capital projects in the building department.

Since it is an enterprise fund, it is supposed to be self-sufficient and has no reliance on the general fund.

I wanted to bring it to your attention because we the building department has been asked to provide additional funding, whether it's to UNLV or provide fee decreases.

My recommendation to the BFAT committee has been that those reserves stay in place of the building fund because it'll allow flexibility for the board, whether it's needed for capital projects, but we may need to defer those capital projects in order to subsidize operations if we continue to see a decline in the number of permits or the workload at the building department.

Something that was an unanticipated, and you'll see this later in our rep on our report on revenues was a decline in business license fee revenue in fiscal year 2025.

We went back and saw that the actual number of business license applications declined 5.8% and is continuing continuing to trend at a material pace at 21.6%.

In addition, franchise fee revenues have decreased, which are primarily driven by the cost of energy as well as by usage.

We'll be meeting with the business license department just to get a better understanding of what's driving this.

But as far as our projections going forward for fiscal year 2026, we've reduced our projections from budget, and we've continued that projection, just assuming a modest CPI increase equal to CPI.

Before I get into their consolidated tax revenue, which is our largest source of revenue in the general fund, just a reminder that consolidated tax revenue is the most volatile source of revenue to the fund or to the county, and that any change in the local economy or the world national economy could impact that revenue source, and we will feel the impact within 60 days.

And as a result, we'll have to, if material, we would have to make budget adjustments to our expenditures.

And that was evident through the pandemic when we saw the closure of the non-essential businesses and the decline in C tax revenue.

This is just a reminder that how C tax revenues are distributed.

The distribution really occurs based on the first as a combination as the point of origin and then a proportionate allocation of the total collections.

And so it makes sense that 73% of the fiscal year 27 projected collections are expected to be distributed to Clark County.

And so that first tier of those distributions to all of the Clark County entities that gets a distribution is based on a base distribution.

It was created in 1997, and the idea was that it would increase in conjunction with the five-year average of the change in CPI.

And so each jurisdiction is expected to receive this base distribution, and if there's additional collections on top of that, there's an excess distribution.

And for so for a number of years prior to fiscal year 2024, each entity was receiving this excess distribution, which was then based on population growth assessed value in this 2%.

But what's most important is that since fiscal year 2024, the county has not received its full base distribution, meaning it has not kept with CPI.

And so to give you a visual, you'll see that prior to the pandemic, consolidated tax revenue was growing on average about 6%, which was pretty healthy, pretty healthy growth in this type of revenue, and it surpassed CPI.

So it makes sense that we were receiving this excess distribution.

Then we had that you know pretty strong recovery after the pandemic, and now we've been seeing declines in that base distribution.

And so to the right, you can see this was the base distribution shortfall each year, totaling close to six over 67 million dollars over the last four years.

And what this red line represents is just a smoothing of that 6% growth rate to kind of smooth out all of that volatility.

And so you can see that in fiscal year 2026 and fiscal year 2027, our estimates were which are equal to Department of Taxation's projections, fall below where we would have thought we would have been outside of that pandemic volatility.

Our next largest revenue source is property tax revenue.

And we're gonna go in a little bit more detail, not to take up too much time today, but something interesting is occurring in fiscal year 26 and 27 that we haven't seen occur in quite some time.

This is providing to you assessed valuation values from fiscal year 2008 to what is projected for fiscal year 2027.

And you can see that during the Great Recession, we had very significant declines in assessed valuation, and it took about 14 years for the recovery for assessed values to recover.

It wasn't until fiscal year 2023 that you can see that we got back to the peak in fiscal year 2029.

And since 2023, we've had some pretty healthy growth in assessed value, which is compounded with or partly attributed to new construction.

And so if you see to the right, that is the percentage change in assessed value.

And what we saw in fiscal year 2026 is some marginal growth of only 4.3% compared to the prior three years.

And what we're seeing in fiscal year 2027 is really kind of limited growth of only 2.2% in assessed valuation.

And when you look at the dollar amounts from 153 billion to 156 billion, a billion dollars of that is attributed to, or a third of that is attributed to new construction.

So when you're seeing the decline in building permit revenue, um we would assume or presume that you would see a decline in new construction going forward.

So something to just be on the lookout in the horizon.

But the increase in assessed valuation doesn't necessarily correlate to property taxes.

Of course.

Commissioner Kirkpatrick.

Yeah, thank you.

Thank you, Jessica.

Um so can I ask this question?

So it is somewhat concerning, and I know your next slides are gonna talk about when we get to zero, what does that mean, right?

On property taxes this is this something that we need to put on the radar for the tenth time to try and at least get a floor from the legislature so it can't go below uh this.

I just think that maybe we we can now show the data, show all those different things of what we've been saying of having that floor, because if we get below that floor, there is no real recovery, right?

So I think your next slide's gonna show that it takes about 10 years to get back on track.

Um but I do think that maybe for this board we should really talk about establishing that floor on the property tax because we we know what it looks like.

Exactly.

Uh you know, establishing a floor would provide some protection from what happened to us in the Great Recession, um, and also help us recover sooner from a decline in assessed values.

And so I I wanted to highlight this today to show that we should be keeping an eye on this because you're you'll see on the next slide, um, fewer properties are now in abatement.

So it can I uh assist so we've seen that the recordings are down, we've seen that um licensing is down, and most of that revenue is generated from new construction, right?

And so now we're seeing that that's a huge drop.

It's almost an eight percent drop over the course of one year, and that's not even really factoring in all the other variables that are coming.

Is that true?

Correct.

Okay, okay.

Um, and so the reason why assessed values do not directly correlate to increases in property tax values is because of the property tax caps or the abatements.

And just really quickly, residential property taxes cannot exceed year over year over three percent, and commercial property cannot exceed over the previous year by eight percent.

However, there is this secondary cap that needs to be considered so it's the actual the greater uh the lesser of eight percent or the 10-year average growth and assessed value or two times the consumer or the CPI.

Um thing just to put on the record, many people as well are unfamiliar that this does not reset with the resale of the property.

These tax these caps on property tax growth follow the actual property, and so when it resets, it doesn't matter if you paid um you know 20% more than the property, your property taxes are only going to increase 3% if it's residential for that property.

And just just we we are the minority in that across the country, right?

We are one of very few states that still has that kind of a provision.

Yes, it is unique that our primary revenue source is limited, the growth in that revenue source is limited in this way.

And it is, and you'll see later in the presentation, it's forced the county and other jurisdictions to seek alternative resources to pay for core functions of the government.

Do we know if is there a projection for if we were to fix that one piece of it as opposed to a broader fix to abatements, what that would uh net overall?

Um I have the values of the abatements, but not on what a legislative fix would be on whether it's a reset value, you know, do complete changing that it's that the taxes reset at resale or putting a floor in place, but we can um do some inquiries on that.

Okay, thank you.

Can I ask um Lisa?

I but I do think it requires a constitutional amendment to do so do that.

I mean, I'm just trying to understand why the legislature has not ever passed that one either, right?

When it comes to property tax.

So does it require a constitutional amendment or is it I I can't remember if it's just statutory requirement.

I mean, maybe we should look into that too, because if it's going to take four years, then the floors first and the other piece of that.

Yeah, that's something we can research for you.

I we were going into a little bit of detail on the secondary cap on the commercial property because it does be it has been relevant in prior years.

And so, like I said, the cap or the increase that is um in property tax growth is limited to 8%, or the less or the greater of the 10-year average growth rate in CPI in average assessed value or two times the CPI.

And so just for fiscal year 2027, um, you can see that when you do this analysis, that the 10-year average growth rate in assessed value is 8.1%, the cap is otherwise 8%, you take the lesser of, and so commercial properties for fiscal year 2027 will be capped at 8%.

However, they've been there have been years in the past, especially when you had those steep declines in assessed value, where your um where this the average growth rate was less than the 8%.

And so as we're seeing, if I can just go back really quick, as we're seeing the growth and assessed value um trend down to 4.3% and 2.2%, this secondary cap may come back into play and impacting or limiting the growth in the commercial property.

And so the commercial property tax cap, just as a overview, if you go back to fiscal year 2013, um, you can see due to that secondary cap that it really didn't reach the 8% until fiscal year 2022, and that was when those 10 that 10 year average of those were declines in assessed value has started to fall off.

Um residential property has for the most part been at the 3%, but there were two years where the commercial property cap was actually fell below the eight per or below three percent, and so the residential cap was also limited.

And so this is a uh overview of property tax collections and the general fund.

And you can see some correlation that you could see that decline in property tax revenue during the pandemic during the great recession and fiscal year 2011, and then a slow increase.

And again, it took like assessed value, it took close to 13 years for property tax collections to get back to where they were pre-recession.

Um, so again, some very healthy um growth in property tax revenue going forward.

Again, new property um new construction helps with that because there is no on that first year when that new construction comes online, there is no cap.

You pay the full tax levy on the assessed valuation.

Um then going forward, those years at four and a half percent and two percent growth in assessed value will start reducing abatement values and may limit property tax growth as well.

And what I mean by that is the abatements currently are giving us some protection or some cushion in our property tax collections because what we're providing here for you is that the in the dark column represents total parcels, and in the light blue column represents the abated parcels.

And so currently for fiscal year 2027, um, the number of abated parcel, we have we estimate that there's 85% of parcels that are in abatement, meaning they're not paying the full tax levy.

And so when the calculated tax levy of a property based on assessed value exceeds the statutory annual increase, which is the cap, the excess tax levy is abated.

And so as assessed value growth declines, the tax abatements will decline.

And just to put it in perspective, in fiscal year 2011, kind of the where everything really bottomed out, um, only 3% of the parcels were an abatement.

And that's why it just took so long to recover because you were limited by this 3% and 8% growth in property tax values.

May I ask another question?

I think what we also need to highlight is at least through the Board of Equalization, we're seeing more and more of those property taxes abated or the number going down.

So that's not even factored into our bigger picture.

Is that correct?

Correct.

So if you we start to see assess values decline, um what you will tend to see, or what we saw during the Great Recession was more and more property owners owners go into board of equalization to have their assessed values reset.

It creates, and if I remember correctly, there is about a five to seven percent drop in even what we had won't, what you all had at estimated at that time because more and more people were getting those abatements uh through the state board of equalization on top of everything else.

That's consistent.

And it's actually worse than an abatement because they're not even held there, it's just the whole assessed value is just completely reduced.

So Jessica, I remember a few years ago.

Um one of the northern Nevada cities had a real problem because of the effect of depreciation on the commercial uh properties.

Is that something that is still uh a nagging problem?

Is it something that we're seeing here?

Um it is, and when you look at assessed values only growing the three billion dollars, and one billion of it is um new construction.

So it's pretty limited growth.

I've talked to Brianna Johnson, the assessor, and we discussed, you know, really what that is an indication of is that depreciation is outpacing any appreciation and values.

And so it is a problem.

I know it's another another trick, another point that we could look at that may help during the legislative process to help reduce the impact of the abatements.

Recently, um of the gaming companies, maybe a majority of the gaming um buildings were sold.

Um the operators today are they operate the gaming under the gaming license, but they don't own the um real property, they don't own the buildings and those structures.

Um we missed an opportunity uh on the reset because of the billions of dollars of value that was exchanged in order to create those transactions.

Um have we had conversation with uh the gaming industry and others about caps, resets and that sort of thing, or is this more of a kind of a public discussion?

And we have it here each time, maybe some of us have a conversation with them.

But how broadly have we expanded a discussion about a fix?

We, as far as the county finance has not had that discussion.

I know that there's a variety of different working groups.

I've been part of one in um previous years, you know.

I think like Commissioner Kirkpatrick said, we've tried it this for about 10 years now, you know, working on abatements and property tax changes.

Um, but it's a good, it's it would be imperative that we do that if we wanted to make any change or suggested change.

And to quantify this, this is just a distribution of the abatements.

And as you can see, it's it's not only Clark County that's impacted by the abatements, we have special districts, um, the Metropolitan Police Department, our sit our incorporated cities, uh the school district is the largest impacted in the state of Nevada.

And if you were to quantify the total amount of abatements, um it is about a bit one billion dollars annually.

And so to us, the math is really easy, that'd be an additional 260 million dollars to the county, another 70 million dollars to Metro.

And so when I mentioned, and I think Commissioner Jones, you mentioned, you know, is this property tax cap or abatement issue unique to Nevada?

It is, and um, it is really required um the the sheriffs that have been in office, the county and cities to seek legislative revenue sources such as sales tax with our more cops and crime prevention to fund officers because we're limited on the growth in our um property taxes.

Can I ask a question?

So it seems that I'm sorry, I'm passionate about the property tax piece of it because 1984 they called it the big tax shift, and I just wonder if it would make sense for someone like a Marvin Levitt to come talk to us, right?

And I just wonder if it would make sense for someone like a Marb and Levitt to come talk to us, right?

And maybe talk about what this looks, because the one thing that I do remember in 2008 from the state perspective, because that's where I was, is that they are impacted as well, right?

Because they get a portion of that property tax.

Um really when times are good, you need staff to move faster, right?

That's what everybody says, oh, you're not moving fast enough when when times are bad, we go back to all these regional services, and what happens is from the state perspective, and I I was guilty of it, we pass it down to the local level, and we never take it back for one.

But do you think that it maybe 1984 is a long time ago?

And in 2005, we did the property tax cap because it was some people were paying 16 million dollars on their home just because of the value around them went up.

Do you maybe think that it makes sense for this board to really have a good presentation on just property tax and what its values because what I from the debt management component that I said, I always say sure C tax is our most volatile, but we have seen unprecedented times with C tax because even during COVID, our C tax kind of went back up based on what we've always been able to reinvent ourselves on C tax.

But property tax really is um most people don't pay attention to it, um, except for that once a year when they get their their bill.

But when you start looking at all the other entities, and if it's us and we rely on it mostly for our staff to provide those sources, it could really um put some pressure on us because not only are all of these entities going to lose money, then they're gonna expect us to do more, right?

So maybe it just makes sense to have a bigger, broader discussion and invite the legislature to see if maybe they can understand it.

Um I agree, and I think property tax is the most stable revenue source and highly relied on by all of the majority of our departments and agencies.

And I think Marvin Levitt would be a great person to come out probably with Department of Taxation, the assessor, the treasurer.

So I can work with government affairs and um county manager and see if we can pull something together to get um have like just a focused conversation on property tax.

And just FYI for the council of governments, formerly the the uh uh Southern Nevada Regional Planning Coalition, we're going through as we're looking at our issues.

One of the issues that was brought up was this particular issue, because there are many issues that all the jurisdictions face.

Fixing this would really fix all of the issues for all of the entities involved here in Southern Nevada.

Exactly.

Um, and just one point here to I just ask um if a house is built today, there's no abatement, right?

Because it would be based upon the current property value.

Correct.

It's not until next year, then it would be limited on how much the property tax could increase.

If we had a city like Henderson, which is a lot of new houses, they might not get as much revenue from this abatement that it that we would with a lot older neighborhoods or city of Las Vegas.

Yeah, I think it's a time it's also a just a timing issue as well, because eventually they are subject to abatement in the game.

When you look at this pie chart, um if we gave it back to the entity where it's from, we might actually benefit more than San Henderson.

Yep, we'd have to look, yeah, we'd have to look at that and quantify it.

Um we usually provide this to you that if you were to increase property tax by one cent before the abatement, it would generate 14 million dollars, but after abatement would only generate 3.2 million.

So increasing property taxes doesn't necessarily increase property tax revenue materially.

It really is only going to increase the abatement value.

So all that being considered, um we go into our revenue general fund revenue projections.

Um, as we've talked extensively, property taxes, we expect 7% growth.

Our licenses and permits, um, you're seeing a decline there because in fiscal year 2026, we overstated, we believe we've overstated um business license fee revenue.

And so we are now going to have to keep it relatively flat to fiscal year 2027.

But when you look budget to budget, it looks like a significant decline.

And then intergovernmental comprises mostly of consolidated tax revenue.

And although our luckily fiscal year 2026 C tax revenue did come in higher than expected.

If you remember at our hearing last year at this time or in May, it was really unclear how the payments were going to be coming from Department of Taxation and what was causing the decline.

It did turn out to be more of a timing issue.

So at the end of June, we received an extra payment for fiscal year 2025.

And so we've bumped up our projections for fiscal year 2026.

And so now just so you know, C tax revenue for fiscal year 26 estimate and fiscal year 27 budget is consistent with Department of Taxation projections because they have also brought their projections down for fiscal year 27.

And lastly, the transfers in, which is the last line.

Majority of that money is coming in from consolidated tax revenue and property tax revenue from our town funds as well as our fire service districts.

And so those increases should correlate with the changes in property tax and C tax revenue.

So overall, a four little over a 4% increase, which revenues are keeping up with the pace of inflation.

And then what we've presented for you are in our general fund expenditures are really our operating obligations or what we've called status quo.

So this is just to keep all of the positions that we have funded, our contracts fulfilled, and any contractual obligations that we have for increases included as well.

There is a handout in your packet that shows services, services, and supplies by department budget to budget, so that you can see any changes and we can provide you an update on why there have been increases.

When you look at public safety, it looks like it has only increased one and a half percent.

As I mentioned previously, we carved out clinical services from Department of Family Services and Juvenile Justice Justice and have incorporated them in the health and welfare line.

So you're seeing a larger increase in health and welfare as well.

And then lastly, on our transfers out, the large proportion of transfers out consists of transfers for the detention center and the police department.

So overall, just to keep our operations going, it's an increase of 5.3%, far exceeding inflation and revenue growth.

Jessica, may I ask you a question?

So on the public works line, does that incorporate the fuel tax or no?

No.

The fuel tax revenues are incorporated in other either capital funds or special product special revenue funds.

Okay.

And so what results is a structural deficit, which is our operating revenues, less operating expenditures, equating to about a $53 million structural deficit.

And so this year to balance the budget, we've taken a combination of FY26 estimated budgetary savings, and rather than rolling those entirely into capital, we have used some of that to just roll into next year using some of that fund balance.

We've also reduced fund balances in some of our town funds, as well as in the detention fund to help balance the budget as well.

And although it's it's a it's a band-aid, it works, it helps us kind of weather a storm, but it's unsustainable in the long run.

And we've gone over this, I think, in the last two budget hearings, our cost containment measures.

These measures have been deployed during the Great Recession, during the pandemic, and we've actually been implementing a couple of them over the last year or so.

Um we have some recommendations for you, but we would listed them kind of in order of priority or you know how we would address them.

You know, limiting discretionary costs, this is really the low-hanging fruit, um, reallocating resources where we can, where we have vacancies, you know, can we reorganize?

Can we reclassify positions?

Departments have been very collaborative in doing that in fiscal year 2026.

Um, also deferring future capital projects, that happens naturally when you don't have as much capital money, you just can't fund as many capital projects in the future, and deferring current capital projects.

And in this, I uh example I would give is maybe delaying or deferring replacement of sort of product of capital that don't pose a health or safety risk.

And then reducing fund balance, which we've done in the past and um have reduced fund balances in some of the other funds, like I said, the town funds and detention.

What we haven't done yet, and we are not proposing as a recommendation this year is to reduce our reserves for our long-term liabilities, that would be our pension and retiree health liabilities.

Um again, that would put us in a worse position in the future, and we're not recommending that we reduce discretionary services or reducing mandated services.

Both of those would require a reduction in our salaries and benefits, either through a hiring freeze or reductions in force.

Um neither of those three options are in our recommendations to you today.

May I ask a question?

Sorry, sorry, Jessica.

Uh when you talk about reducing the ending fund balance, what does that mean?

What does that look like?

I mean, we're already pretty conservative, and we're at like an 8% when some of our colleagues around the valley are in the 15, 16 percent.

Um yes, what I meant in the general fund, we've maintained we've budgeted the fund balance to still be at the 10%, and that's been our practice.

Um but in other funds, such as the detention fund, we were building up a healthy fund balance.

Um, and so we've reduced that significantly in fiscal year 27.

Now, hopefully there's budgetary savings, so we can increase that going into the next year.

Um, also in our town funds, we had some budgetary savings that we would normally put towards capital, instead, we've put it towards the fiscal year 27 operating budget, so it's just reducing our capital.

And so we do have some recommended cost containment measures, and so this gives you an overview.

I'll go through each of them.

Um, the idea being is that we will follow up with a memo to our departments, um, but we'll first brief each of you for more input.

Um, but the first one is is today we do not have a recommendation today for you for supplemental positions.

Um, we know that there are supplemental positions that will need to be added to the budget.

We'll be coming back to you in May to do that.

Um, but the goal is to limit them as much as possible so that we can tame the growth of the budget and identify alternative resources whenever we can.

And again, what I mean is asking departments to reclass existing positions, their vacancies, reorganize to the extent they can.

Um you know that the largest portion of the county budget is salaries and benefits.

We provide services, and so to really contain the cost of the budget, we really need to impact the growth of services and supplies.

And so our recommendation is for departments that have a vacancy of less than 10%, is to require them to provide justification to fill the position.

And this is really in lieu of a blanket hiring freeze because you have departments that are in different stages of attrition where they may have a 15% vacancy rate, but another department has been doing what very well on their recruitments or the timing's been right, and they're now down at 4%.

And so a blanket vacant or blanket hiring freeze would disproportionately impact departments.

Um we know that there's certain types of positions that if you leave them vacant, it's just going to generate more overtime, more staff burnout.

Just by the nature of some positions, we know we may need to hire them regardless of what the vacancy rate is.

You know, if you have a director or a deputy director or key positions where there's only one or very few positions available.

Um, in addition, we'd like to recommend limiting discretionary costs.

And when I say limit, I don't mean eliminate, it's just really taking a good look at where we're spending these dollars.

And some of those examples include our training budget, our travel budget, community and employee engagement, and I'll tell you that since the recession, it took a long time to be able to get those line items even back into the budget, so we don't necessarily want to eliminate them completely because it negatively impacts both the county and the community in the long term.

But just trying to put some parameters around them and help contain the growth in those areas.

And lastly, printing and postage, that's another just kind of low-hanging fruit, asking departments, use digital whenever you can.

What's happening, like I said, we're trying to keep service and supply budgets flat.

And so when printing and postage costs are increasing, it's just eating into those other line items in those department budgets.

Jessica, do you have in terms of putting this in context?

What those four categories add up to?

I don't have it quantified, but I will tell you it's not going to have a material impact, but it does sell set the overall tone in the situation that we're in.

And that the goal here from these recommendations is from departments, what departments can do is save as much as possible in our FY26 and FY27 budgets so that we can take those savings and roll them into the following year because we expect that we're going to need to.

Unless revenues really start trending upwards, we think that this is going to continue into FY28.

And what that'll do, if I can go back to the previous slide, it'll prevent us from have it'll prevent us from having to go further into these cost containment measures, is really the goal.

And I and I totally get that.

So sometimes I feel like we're more pennywise pound foolish, and I'm not suggesting that we shouldn't cut back on travel or training or any of those types of things, but I also think that it would be helpful to kind of put things in context.

Yes, and I can provide when we come back to you with input on our direction to department heads, we'll quantify what we think the expected savings would be from each of these.

Can I ask this though, Jessica?

So I um so to Commissioner Jones.

Um, but I also think that these are things that are easier to put back in the budget budget if we see an upscale, right?

As opposed to going after, I I feel like I I want to be, and I there that's why I asked on the public works.

So we approved a bunch of public works things, but that's a different different bucket of money, I think, that is being used for some of those things, and I think that's where maybe we need to have a broader discussion about what that looks like because really we have 11 billion dollar plus budget, and this is not gonna show that today, right?

So correct.

And you're getting to my last bullet here.

Um, the second to last, deferring capital replacements.

This is kind of like kind of extending the useful lives of some of our assets if they don't pose a health and safety risk, defer the replacement of those.

Um, but to the point that you're both getting at is deferring the new general fund capital projects and programs.

And so when I say general fund funded, you know, the work that we're doing on the beltway or maybe the strip resort corridor, um, we know where we have restricted revenue funds, those those projects can continue.

We're not recommending that we limit growth and um or contain costs in those areas because there's dedicated funding.

And as a side note, like back to during the great recession, if you remember there is a lot of frustration that you had all of this money for desert tortoise fees, but they could not be used for the general fund.

It was restricted.

Um, so it's the same is true for a lot of our capital project programs that we have going on.

The one thing is that on these general funded capital projects, it will give RPM the opportunity to keep working towards our so many projects in the pipeline, and so to really focus those on those projects and not take on new projects.

And that really gets me to the next slide, is in those recommendations, we're thinking about what's coming on in the future over the next five years.

And so we provided a list for you of unfunded future obligations, and I wanted to be clear.

This is not relating to unfunded retiree health or pension benefits.

This is related to you know, specific liabilities that we think we're going to need to address in the next three to five years.

And so, for example, we have several capital projects in the pipeline, whether they're you know, rec centers, fire stations, animal shelter, opioid treatment center, um, all of which are funded for capital purposes, but we are going to need to fund future operations, whether it's staff costs or contract costs, um, debt service.

And so from fiscal year 2028 to fiscal 31, we'll need to add an additional 60 million dollars to the operating fund.

Now, as those projects start coming online, we'll be having those discussions with you.

Um, but to keep that in the goal here is to be working towards funding those programs with future revenue growth prior to adding new positions or new programs.

In addition, based on our fiscal year 2025 audit, um, our unfunded workers' compensation liabilities total $87 million.

This is primarily driven from legislative mandates.

Um, also based on our audited financial statements or unfunded insurance liabilities total $56 million.

And this is primarily from our Metro and detention litigation claims, and the this liability is actually determined.

And so you'll see in our one of our last slides.

Um of the recommendations is to meet with Metro and the city, talk with our actuaries, make sure that we agree or we confirm their assumptions that they're making and developing the estimated liability, but also coming up with a plan to begin funding that unfunded liability.

And they've made a pretty good dent in it for their in their fiscal year 2027 budget, but it'll still it's still budgeted to remain about 34 million dollars unfunded.

So it's in it's important to kind of do both of those things, work with the actuary as well as increase the charges to that fund.

Um our FY25 audited child welfare permanency deficit has increased to 30 million dollars.

Um this is something we'll be talking more about during the hearing in May.

Um again, it's a combination of not receiving an increase in the block grant from the state of Nevada, as well as being compounded by increases and additional legislative mandates that have not been funded.

And lastly, those sales tax funds that we've been talking about that are funding a number of officers, um, they are in a structural imbalance of $13 million.

And the reason for that is the cost of your salaries and benefits are outpacing the increase in sales tax.

Um, and so right now those funds are kind of just um balanced with by using their reserves from prior years.

But again, this is part of that conversation that we want to have with the sheriff, metro, and the city, and coming up with a five-year plan of what these funds look like, and if there is going to be any need for officer positions to shift over to the county or to the Metro General Fund, we want to make sure that the board is aware of it and that we plan for it.

So let me ask a question.

So this is more like the more cops tax and the uh crime prevention.

Yeah, crime prevention.

So when it was initially passed, so one officer was $58,000 a year plus their equipment and all those other things.

So what is the cost today?

I should have that, but I don't, but I can tell you it exceeds $58,000.

I thought so, but I'm just trying to because we tried to do a 10-year project projection when we passed that in 2005 to ensure that we included body cameras and all those other things, but now I'm curious if it's doubled or tripled.

We'll follow up with you on that.

I know that Metro has been has done that analysis year over year, so we can give that to you.

In addition, um, over the next two months now we'll be looking at our non-general funds, um, and that is on our next slide.

I don't need to go through all of these because we talked about many of them.

Um, but two of them, the parks and recreation department will be meeting with them.

Their operating subsidies increase from 1.7 million in fiscal year 23 to now 5.2 million.

So we really want to discuss the activities that are occurring as well as with the county manager and commission office, and make sure that each of those activities are fully funded going into fiscal year 27.

Jessica, um, on this slide is on the public works section, uh, recognizing that these fees haven't been raised in 10 years, and recognizing also that we have over the last years that I've been here tried to address these kind of in piecemeal.

Um what fees are left outstanding.

I don't know that I don't expect you to know this right now, but can we better understand what fees are left that have not been adjusted to anything, haven't been tied to any increases automatically that ought to be looked at holistically.

Um yes, we'll follow up and give you, we'll do a complete analysis of all the fees, and you're right.

And you're right, we've it has been a piecemeal approach over the last couple of years where we've tried to tie escalators so we don't have to keep on, you know, come back several years later and try to catch up.

Um with the public works um development, those fees right now.

That fund is in a situation where if the fees are not increased going into fiscal year 2027, they will not be able to fill their vacancies.

So it's important that we do some sort of fee increase.

I know that the department is working with the industry and our stakeholders to come up with something that everybody can live with.

Balancing the effect on families and companies of uh the uh pressures in the economy and the need we have for increased revenues from fees and the like is a tough balancing act to do.

Uh people we pay our taxes or taxes provide us with these parks.

Um we'll begin to hear about that sum.

But the way that we're approaching it, I think is the way to do it.

It's methodical, it's deliberative, and it's specific to the kinds of fees that we're talking about and the kinds of uses in those facilities that we're that we're talking about, increasing a fee for.

But that becomes all the more important that we're really deliberate about how we do it and what we do because people feel like they've paid once and now I'm gonna pay again.

We have to be careful about that.

And we will be.

I mean, I I know we will be.

And I and I wholly agree with that.

And I I think in the any fees that we have increased has been in concert with industry, and uh I can't think of a time when we haven't had support from industry because it's been methodical and there has been a process, and uh we've tried to get to that common ground point.

Um, I think it is more frustrating perhaps when you have 10, 20-year-old fees that haven't been adjusted to the current market, and then we have to go and do take a big swing.

That to me is the most irresponsible thing we could do.

May I ask a question on this uh and remind me uh the Metropolitan Police Insurance Fund, we are the only ones that pay that, right?

So if we switch some of those into the only one that's responsible for that piece, right?

So the city does not pay into that, or is the insurance explain this to me again?

Um it's a self-funded insurance liability fund, and so the metro general fund pays into it, and so Metro's paying into it with their property tax revenues, but also with the county and city contributions.

So the only people the only entities paying into this fund is going to be the city, the county, and metro.

Um, I think where the county is kind of on its own is Metro is on the county's excess insurance carrier coverage.

Um, and so we've been trying to work through um different ways to address that going forward.

It's previous years that's causing the most challenge.

So, what I don't see in this budget, and someone can kick me if I'm saying it wrong.

Where's the litigation?

Because we have all this additional litigation dollars that we're seeing.

Where is the I I just am trying to understand there's a perception-wise, the legislature that everybody thinks said we've got more money than exist.

And so I just am wondering where the um we have to kind of point out some of these other big ticket items because in in example, workmen's comp for one portion of our budget went from six million to sixteen million.

That's a big difference, right?

And so the litigation is crazy of what we're seeing uh now.

That's increased at least since I've been here.

I mean, we've been paying more and more, and so I'm just wondering where are some of these big ticket things that maybe we need to tell the public is on our radar, and we don't have more money.

And that's really where you look at that fiscal year 25, the unfunded insurance liabilities.

And so that with the litigation associated with um metro and detention, the actuary looks at claim experience, um, they look at nationwide trends and formulate assumptions on this liability.

And so that's where I'm saying we want to talk to the ad so that 56 million would be representative of the unfunded actuarial determined liability, and that's why we really need to talk to the actuary, confirm and make sure we agree with the assumptions that are being used.

Also make sure they're aware that if we've made or there have been any legislative changes that may um help decrease that liability, but in the meantime, we know there's an unfunded liability out there, and we need to continue increasing charges to fully fund it going forward.

And it that might take a couple of years.

But but that's more than just Metro, right?

Is that I'm I'm just saying what about the coroner's office?

What about some child welfare ones?

What about all of where are all those litigations?

Are they that same 56 million?

Right now, they would be part of the Clark County self-funded insurance liability in that fund.

We we have reserved enough to fund what is actually determined, but we have an actuary study done each year.

So if that changes with increases in claims or settlements, um, then those assumptions from the actuary may change.

But I'll follow up with you once we have the FY26 actuarial study complete for the Clark County portion.

So when you say the Clark County portion, you mean like the Clark County portion of the Metro unfunded liability?

No, Clark County.

Just Clark County's own.

Yeah, because Clerk County also has litigation separate.

The reason that that matters because we're looking at some things we've never seen before that are ours and may at this juncture it almost feels like we're we're wearing it alone and we're a partner in the police department.

So it's gonna be really important for us to at least understand what it is we've got to come up with.

Thank you.

We spent a lot of time talking about this, I know.

So our next steps um is between now and April 15th.

Um, we'll be coming back to you individually for your input on some detailed recommendation recommendations on cost containment, but we'll generally follow those those measures that we outlined for you today.

And then we will file the tentative budget.

Um, in addition, in that time frame, we'll have the final property tax numbers as well that will be included.

Thank you.

Just a couple comments.

I wanted to ask if you could also uh from planning department.

I understand why we followed the building department uh data, but if we could also get the number of land use applications filed and overlay that, I think that would be instructive of a future forecast um, at least anecdotally.

Um, and then uh uh also if you could, and I know you will follow up on what you learn from uh going into the weeds on the business license 21% reduction.

I think everybody has an interest in knowing that.

Um, and then I I think it's obviously a sobering picture that you've painted and illustrated well.

Um I would just ask that you come back again.

You will throughout the weeks, but also maybe six-month mark, update us particularly on uh flatlining of supplies and services, see if there's any new direction that you need when it comes to that to make sure that we're not waiting until it's too late uh to take uh corrective course.

Yes, we will do um we'll provide the additional input or um information before April 15th, and then what I'm hearing is maybe come back in December, January, once we have December numbers to give you a status on where the budget how the budget looks um six months into it compared to what we had projected.

I think that'd be very helpful.

Can I ask this though?

Do we want to wait to December?

Because I think the economic forums in December said we'll naturally get those numbers.

Maybe maybe we need to do it in October, November, just because we well, I mean, Jessica and I watched the economic forum last time, and we kept saying, I don't think so.

And now here we are, exactly what we thought, right?

So I just think maybe you might want to do it a little bit sooner because the economic forums, the first part of December, and we don't want any surprises when the state creates their budget.

Yeah, we can look to November.

Yes, we could do both.

The lag in C tax just makes it not as beneficial, but we could do both, do maybe November and January.

Um we'll be coming back to you in May.

Um, between April 15th and May 18th, we'll be briefing each of you on supplemental and capital recommendations, and that leads us into the May 18th budget hearing for your final approval, and then we'll be filing the budget, the final budget on June 1st.

Are there any other questions, comments?

Manager Schiller.

I just wanted to add one thing, kind of tied to the update approaching November.

I think one thing we're gonna really want to be aware of is you know, we'll be approaching a legislative session.

So you're seeing we've had multiple conversations on legislative priorities and how we want to approach that.

So we'll be following up with each of you on that as we try to target that because it's already started, right?

So I think we want to be kind of ahead of that and just pass a compliment on to Jessica and her team for their hard work.

Having been through a recession, I can really appreciate the trending, all the things we're watching.

We're trying to be as proactive as we can.

So just a compliment.

Thank you very much.

If there's nothing further, we will move to our final time set aside for public comment.

Anyone wishing to speak, please come forward at this time.

Seeing none, we will go ahead and adjourn today's meeting, uh recess today's meeting until tomorrow at 9 a.m.