Clark County Council passes 2022 budget with only one tax increase

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The Clark County Council has approved a 2022 annual budget of about $723 million that does not raise property taxes for three of its four major funds, though two of five councilors disagree on structural deficit issues.

During a Nov. 16 meeting, the council voted unanimously to approve the 2022 budget though they voted against 1% increases on its property tax levies for its general fund, road fund and conservation futures fund. The council voted unanimously to increase its parks fund by 1%.

During a presentation for the council, Clark County Manager Kathleen Otto said there were a total of 141 funding requests submitted by county offices and departments for the 2022 budget, with 77 new requests, two requests carried forward and one budget intervention. Of those, the county manager recommended approval of 132, 57 of which have general fund impacts.

Otto noted many of the recommended requests include “must haves” for the county like items required by law or things that would become a liability to the county without them.

According to the presentation, the recommended requests would result in about $8.9 million in more expenses, though only about $1.6 million would be ongoing expenses to consider in future budgeting.

Otto recommended an increase in both the county general fund and road fund levies. The councilors, convening as the Greater Clark Parks Board, already approved a 1% increase to the county parks fund. That increase results in a 69 cent increase on property taxes for a median-priced home in the county at $441,000.

The funds denied by the council that were suggested by county staff — the general fund and road fund — would have raised $685,000 and $442,000 respectively with a 1% levy increase in both. Those increases would result in about $3.85 more and $5.25 more annually on property taxes on median-priced homes.

Otto said the county’s structural deficit in its general fund has been a major challenge to handle for years.

“This is truly hindering the county’s ability to provide the most efficient, essential services in the community,” Otto said.

She said that included law and justice, which comprises 70% of the county’s general fund expenses.

As recommended, the county general fund balance would drop by roughly $9.5 million even with the denied levy increase. With other restrictions in place, including a county policy of maintaining $30.3 million for an emergency, the county would have about $5.6 million in usable fund balance by the end of 2022.

That number drops into the negatives at the end of 2023 according to projections and continues to grow year after year, Otto explained, illustrating the structural deficit.

“That is, in my opinion, a very small amount that supports a huge function in Clark County including law and justice and our operations,” Otto said about the general fund increase.

Other challenges included salary and benefit increases, increasing demand for services, outdated systems and infrastructure, and depleted real estate excise tax (REET) funding. Salaries and benefits make up more than 70% of budgeted expenses, Otto said.

On the REET funding, although one of two portions of the tax fund’s balance would see a $600,000 growth in 2022’s budget, Otto said the fund would be depleted in future years, requiring a multi-year rebuilding of the fund balance. The second half of the fund would drop for 2022, from $12.9 million to $5.2 million including a $1 million policy-protected balance.

Both portions of REET funding may be used on capital projects in the county, though the second portion has more restrictions as to what falls under that jurisdiction, according to the Municipal Research and Services Center.

Based on recommended requests totalling $4.7 million in increased expense, the county’s road fund would still grow from a $22.4 million balance to $34.9 million. Acknowledging that road projects ebb and flow, Interim Public Works Director Eva Haney said she’s felt the county’s been on a downward trend. She explained the phase of projects, be it the engineering phase or actual construction, makes a difference on how much road funds are used at that time.

“Historically, there’s been a bit of staggering of that,” Haney said, adding in the next few years there are a number of projects heading into the less expensive phases which would move into construction, which is the most expensive stage, afterwards.

“At that point, that’s when you’re going to see a considerable amount of pressure on this fund balance,” Haney said.

Council ultimately voted to “bank” the capacity of the state-allowed 1% increase on its funds instead of instating them, meaning they can request to increase the tax by that amount in a later budgeting process. Council Chair Eileen Quiring O’Brien reasoned that with COVID-19 pandemic-induced economic issues, raising a tax didn’t make sense.

“Just because of the fact that there is a large deficit happening, generally, and people are out of jobs, I just can’t in good conscience raise taxes in the community,” Quiring O’Brien said.

Councilor Julie Olson, one of two to vote against the decision not to raise the levy, disagreed.

“I think we continue to hear year after year about the situation with our general fund expenses outpacing revenues,” Olson said.

She said the $3.85 annual increase on a median-priced home would be “very, very minimal.”

Councilor Temple Lentz, who also voted against eschewing the levy increase, brought up the continued structural deficit.

“We’ve seen clearly demonstrated the need for this in our county budget, and the compounding, cascading effects of not taking the 1%,” Lentz said.

Though there are other ways to remedy the structural deficit, she said not taking the increase makes the problem worse.

“Our constituents demand and expect a level of service that if we don’t actually try to fund our government, we won’t be able to provide,” Lentz said.

Councilor Gary Medvigy, who voted for banking the levy, focused on sales tax leakage, saying the property tax increase would not have any significant effect on the deficit.

“We’re unfairly hobbled by our tax system and I’m hoping that our local legislators’ delegation will rally to that cue and cry that this is unfair to Clark County. Palpably unfair,” Medvigy said.

“I don’t support the notion that it’s fiscally responsible to kind of emulate the Sheriff of Nottingham’s decrees and extract every farthing from every taxpayer when it doesn’t solve the problem,” Medvigy said.

Medvigy said he wouldn’t mind putting tax increases to a vote, but did not want to support decisions of that nature if the decision lands solely on the council.

Olson moved for the 1% increase to the road fund that ultimately failed, pointing to large projects like rebuilding portions of 179th Street near its Interstate 5 junction where initial estimates came in shorter than the actual cost of the project.

Medvigy advocated for banking it, pointing to an incoming federal infrastructure bill and reallocations of a state funding package as unknowns. Acknowledging the 179th Street project may have had “poor estimates” initially, he said he hasn’t seen new numbers and didn’t want to burden taxpayers given the unknown.

Lentz noted she didn’t vote on approving the project in 2019.

“Whether it’s this way or other ways, county taxpayers are going to have to meet those commitments that the county council has made,” Lentz said.

The motions to bank the levy increases ultimately passed 3-2. Councilor Karen Bowerman was the third vote in approval both times.

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