In Nevada's recession apex, cash woes abound

The alarming billboards appeared overnight on the street corners and empty lots of North Las Vegas, the hardest recession-hit city in the hardest-hit state in the nation.

"Warning: Due to recent police layoffs, we can no longer guarantee your safety!"

Once the country's fastest-growing city, the middle-class haven of 220,000 outside Las Vegas is now teetering on the brink of insolvency. The state is threatening to take over the city and desperate officials are even considering selling the brand new city hall.

The billboards came down after a court blocked mass police or fire layoffs, but the problems remain in the state's fourth-largest city. Property values have plummeted. After spending more than it earned for four consecutive years, the city will not be able to make payroll come October, state auditors said.

"Every single local government has problems. ... The way it looks to me is that their problems are much more severe," said Martin Leavitt, who oversees a state board investigating the city's financial predicament.

North Las Vegas mirrors Nevada's downfall in many ways. As construction cranes erected new casinos across Las Vegas starting two decades ago, would-be homeowners flocked to the suburb for its affordable prices.

The population nearly quadrupled, from fewer than 60,000 in 1990 to 223,394 last year. North Las Vegas earned the fastest-growing city title in 2007. Nevada was the fastest-growing state during the decade.

This year, the state leads the nation in bankruptcies, foreclosures and unemployment.

The collapse in North Las Vegas was sudden.

In 2005, more than 8,000 homes were built in the city. New construction dropped to 2,800 houses in 2008. Thousands of businesses within the city closed their doors as residents lost their homes, according to city records. Last year, about one in 15 homes in North Las Vegas was in foreclosure.

"People started panicking," said Mike Montandon, who served as mayor from 1997 to 2009.

Michelle Harrington and her husband moved to the city in 2005 because of the easy commute to her job at the nearby Nellis Air Force Base. She enrolled her son in karate classes at a city recreation center and had a daughter.

"We choose North Las Vegas because of the promise of what it was going to be," she said.

Her suburban dreams were punctured by the vacant homes flanking her house, the parade of renters who filled the other properties on her street and the too frequent sirens from police cars rushing to another crime scene.

Harrington and her husband considered moving, but the home they had once hoped to flip for a profit was now worth thousands less than they had paid.

"If you continue to have the city decline, you are not going to have anybody want to move in here," she said.

The city added more than 400 employees to keep pace with growth from 2006-08. That number and hundreds more were dismissed within three years. In all, North Las Vegas has eliminated more than 800 positions since 2009, when it had 2,260 full-time employees.

"We are sailing and there are days when the wind is in your back and there are days when the wind is in your face," Mayor Shari Buck said. "You just have to keep moving forward."

City employees tell of low morale and fears that they might be next.

On one recent afternoon, a department manager sat in a darkened office and worked under the dim glare of a small lamp because, he said, he didn't want to use more electricity. The city would unnecessarily have a larger bill.

Amid signs of financial disaster, city officials broke ground on a new $132 million city hall in June 2009.

The state has given the city two months to close a $4 million budget gap. The city is required by law to operate with a balanced budget, but projections show it will, at the current rate, have a $74 million deficit by 2015.

If a solution isn't found by October, the state could take over and begin a process that could take years to get the city back on stable footing, Leavitt said. A rarely used law would allow the state to manage spending, effectively sidelining the city council.

"They are going to run out of cash if they don't do something," Leavitt said.

City workers are mostly appalled at the idea that the state government, which struggled to close a $1.5 billion budget gap this year, would have the gall to take over North Las Vegas.

"They are not in a financial situation to take over the city," firefighter Jeff Hurley said.

Even though police union leaders pulled down their warning signs in June, public safety officials said their concerns about being able to respond to multiple fires or violent crimes are serious.

"We haven't been able to catch up to the boom," said Hurley, president of the city firefighters union.

Less than a decade after they were built, the city's playgrounds, libraries and recreation centers could face closure. The new city hall is scheduled to open in October, but officials are considering trying to sell it.

Feelings of anger and despair were palpable at a recent city council meeting, as residents lined up for hours to implore city leaders to save their parks and recreation centers. Some residents hurled insults at the mayor.

"They just never thought that the ride would be over and the ride is over," longtime resident Tom Collins said.