Mike Shedlock

The city council of North Las Vegas, the 4th largest city in Nevada (population 216,961) voted unanimously to suspend collective bargaining agreements made with public unions.

In spite of having the highest property tax rates in the county, the city's budget is in a mess, wrecked by the busting of the housing bubble.

According to Wikipedia the city's budget deficit was $8.6 million. A budget balanced through personnel layoffs was passed last May, but judges reversed some of those pink slips, creating a financial emergency that could require the state to take over North Las Vegas' finances.

In response, the city decided to take matters into its own hands. City Manager Tim Hacker said the city was in a state of emergency and cited Nevada law NRS 288.150(4)

"A local government employer is entitled to take whatever actions may be necessary to carry out its responsibilities in situations of emergency.....such as a riot, military action, natural disaster or civil disorder."

With NRS 288.150(4) as the rationale, the city council unanimously passed Resolution 2475 suspending collective bargaining agreements as follows.

Resolution 2475 temporarily suspends certain terms of the City's existing collective bargaining agreements with the North Las Vegas Police Officers Association ("POA"), the North Las Vegas Police Supervisors Association ("PSA") and the International Association of Firefighters Local #1604 ("IAFF") beginning July 1, 2012. The suspended terms include only those that have the affect of increasing the City's labor costs in FY 2012/2013 including cost of living adjustments, merit pay, holiday sell-back pay and uniform pay.

The City's tax revenue has fallen sharply as a result of the recession and its tax base deterioration has been among the worst in the nation. The City's property tax revenue has declined by 37.1% from a high $62 million in 2009 to approximately $39 million in 2012. Similarly, consolidated tax revenue declined by 30% from a high of $54 million in 2006 to approximately $38 million in 2012. As the same time, labor costs have continued to increase largely due to automatic cost of living increases and other benefits specified in the City's Collective Bargaining Agreements.
I commend the actions of the North Las Vegas. Unions are up in arms, but they are the one who helped wreck the city.

Municipal Bankruptcy Not An Option

Unfortunately, municipal bankruptcy is not allowed in Nevada. However, should unions press the case, the city has one more possibility, disincorporation.

It would be perfectly fitting if it came to disincorporation and the unions were totally dissolved.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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