By Sam Skolnik

Thu, Oct 9, 2008 (2 a.m.)

State legislators, staring at a $1 billion-plus budget shortfall when they meet in February, are bracing for a bloodbath over fundamental issues of taxing and spending.

But the good news is Las Vegas, which is also facing an unprecedented budgetary decline, is acting now to face what is expected to be a $150 million deficit over the next five years.

The City Council and top administrators met Monday in hopes of preserving the city’s short- and long-term solvency. The expected deficit likely will mean cutbacks in city services, reduced benefits for city workers and possibly layoffs.

Council members, meeting at the Charleston Heights Arts Center, repeatedly expressed concern and said they must act.

“We’re out of money,” Ward 3 Councilman Gary Reese said.

“We have to have the courage and the passion to do it together, and do it the right way,” said Councilwoman Lois Tarkanian of Ward 1.

The council voted to heed several recommendations in a 200-plus page report it received after six months of work by top city staff members and outside consultants. The Fundamental Service Review included multiple graphics showing tax revenue and general fund resources will be down sharply over the next several fiscal years. The report also showed the need for increased spending in some areas.

The report concluded the city must make three changes to secure its economic future.

• Enhance revenue, preferably without causing too much inconvenience or harm to law-abiding citizens. That would mean instead of jacking up the price of, say, business licenses, officials would instead raise penalties for repeated failed building inspections.

• Streamline services to make government more efficient.

• Reduce labor costs by cutting benefits for current and future city workers — and possibly, if other changes aren’t enough — by laying off workers.

The council voted to take several steps to heed the review. By voting to approve the review’s recommendations, the council delayed moving forward with several capital projects and set the stage for increasing fees.

The council also eliminated almost $5 million worth of vacant positions and retained $20 million in previous budget cuts.

The council avoided action on labor costs until Dec. 3. The hope, repeatedly expressed by Mayor Oscar Goodman, is that the city could come to an agreement with all four unions — city workers, firefighters, city marshals and detention workers — by that date, which he moved up two months because of the urgency.

This was the big gorilla in the room — the issue that dwarfs everything else, as labor, including salaries and benefits, makes up three-quarters of the city’s $550 million annual operating costs.

This was the issue that sparked the most heated discussion at Monday’s meeting. Union representatives complained of a lack of communication with city officials and of unfairly bearing the brunt of any cutbacks. They also expressed grave concerns about reaching agreements by the Dec. 3 deadline.

Goodman qualified his usual optimism with a dire warning. The past nine years of his mayoralty were flush with money flowing into city coffers, he said. But this year “has been brutal.

“This is the clarion call, friends.”