North Las Vegas city leaders declare state of fiscal emergency

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Fiscal state of emergency declared in North Las Vegas

Unprecedented move by city leaders criticized by unions

To the list of the nation's summer disasters including floods, fires, and drought you can add a $30 million budget hole in North Las Vegas, Nevada.

Using a state law that highlights natural disasters and other unforeseen circumstances, North Las Vegas city leaders, prohibited from declaring bankruptcy, unanimously decided last month to declare their own state of fiscal emergency. The unprecedented move has drawn mixed reviews from town residents and a lawsuit from police brass who claim the novel twist on what makes for an emergency is nothing more than an attempt by conservative activists to bust their union.

"We've balanced our budget, we've paid all of our bills [and] all of our bonds are paid," Mayor Shari Buck recently explained before addressing a community meeting to go over North Las Vegas' finances. "Our biggest issue is salaries and compensation and benefits. And they're very unsustainable. We can't continue to do what we've done in the past."

Beyond cutting staff at city hall and closing the jail, the emergency declaration allowed Buck and the council to save millions of dollars by freezing all scheduled salary hikes and overtime opportunities owed city workers under collective bargaining contracts. Eighty percent of the city's budget goes to paying its workers and rather than laying off police officers and firefighters, the city declared an emergency allowing for the suspension of union agreements.

The creative path to a balanced budget hasn't gone over well with everyone. "They're claiming a financial disaster but they're using a natural disaster to try and break the contracts," said North Las Vegas Police Supervisors Association President Len Cardinale. His group has filed a lawsuit against the city challenging the emergency declaration. "They don't believe in supporting unions. They support downsizing, outsourcing, privatization, combining of services. That is a typical right-wing philosophy. And what I see is, for whatever reason, the mayor and city council have adopted a right wing philosophy."

Buck and the rest of the council are elected as non-partisan officials. She says her governance is fully separate from the sharp divisiveness that's readily found in national and state politics. Simply put, she argues, the actions they've taken are what's in the best interests of the city. She highlighted the firefighter who worked enough overtime to double his salary and the parks department staffer who made $62 an hour cleaning toilets. "If the residents had their way they would have us fire all of those public servants and hire someone else at a lower pay."

While Las Vegas is a tourist mecca, not too many people venture far enough from the famous strip to explore the neighborhoods and ever-present strip malls of North Las Vegas. A few years ago, the suburb was the fastest growing city in the country.  It nearly doubled in population from 2000 to 2010 with 216,000 residents.

"We have a great community where people still feel like it's a small town," Buck, a North Las Vegas native, gushed about her community. "Neighbor knows neighbor. We support local businesses."

But the housing boom busted and the economy tanked leaving thousands of construction workers and casino employees who called North Las Vegas home without steady work and homes worth a fraction of what was owed. The unemployment rate peaked at 17 percent and is now at 14 percent -- well above the national mark. Foreclosure notices hit one out of every five homes. The effect on the city treasury was a steep and sudden drop in property and sales tax revenues and a huge hole in the annual budget.

Interstate 15 divides the city down the middle with the older and tougher neighborhoods to the east while the newer sprawl moves to the west and north. There is no downtown district as the city is essentially an outgrowth of its larger more famous neighbor and is now lumped in with other communities across the country that have made headlines because of bankruptcies and massive cuts.

UNLV urban affairs professor Robert Lang recently detailed the city's woes in a report likening North Like Vegas to a high stakes gamble. "For the region, the state, and the nation, North Las Vegas is the proverbial 'canary in the coal mine,'" Lang declared. He said years of mismanagement by city leaders (including generous benefits packages for city workers and expensive capital projects including a brand new water treatment facility and city hall) and the lack of a significant commercial sector made North Las Vegas especially vulnerable to economic disruption.

Mayor Buck wants officials in the state capital to pass a law making cities less dependent on property and sales taxes that produce significant windfalls in good times but dry up during recessions.

Last week, 250 residents jammed into a hotel conference room on the edge of town to hear Buck explain the city's budget woes and how she and a unified city council plan on moving forward. "We have to attract new businesses and bring them into the city," retiree Frank Horvath observed before getting to the heart of the problem. "We need to stop spending money."

Horvath and his wife Diana moved to North Las Vegas ten years ago. They've seen plenty of people in their neighborhood lose jobs and homes. They support the council's move to trim the budget. "Just because we are embarrassed as a city, ok, doesn't mean that I'm going to pick up and move someplace else because someplace else is better. How about, we just stay here and make our city better."

Union leaders accuse Buck and city leaders of lying to the public and withholding detailed information about the city's finances. "It's crazy what this fire department is going through right now," firefighter union president Jeff Hurley said. Daily "brownouts" within the city's eight firehouse are now commonplace with emergency calls going to the stations that remain open -- leading to longer response times -- or to outside contractors. Hurley says by not filling 32 vacant positions and eliminating overtime it's impossible to keep all stations open at the same time.

The fight in city hall has now engulfed Fire Chief Al Gillespie who attended the public meeting and was seated next to the mayor but is now on paid leave. The city says it's because of an incident during a January training session. Hurley says it's retribution for Gillespie, president of the International Association of Fire Chiefs, not fully cooperating with the city's efforts to scale back service. The fire union is one of two that has filed a grievance against the city -- an effort that's separate from the lawsuit filed by the police supervisors union.

Buck defends the city's broad interpretation of the emergency declaration power and says if it's ultimately overruled they'll have no choice but to lay off police officers and firefighters -- the scenario city officials were hoping to avoid from the start.

Fox News' William LaJeunesse contributed to this report.