Categories: utility optimization, restore general fund
Drivers: North Las Vegas had a major budget deficit that was filled in large part by transferring the majority of reserves from the water and wastewater utility to the city’s general fund. Up to $32 million per year was being transferred, and utility reserves declined from $179 million to under $20 million by the time of Table Rock’s analysis. The city was discussing going into receivership, under which the state would step in to manage the city’s budget.
Partnership Analysis: The proposed partnership included
- $40 million upfront payment to general fund support reserves and address unfunded pension liabilities
- $35 million in water and wastewater CIP funding
- $150 million to defease existing utility debt
- $60 million to replenish depleted utility reserves
- Annual lease payment of $45 million to provide a disciplined solution to the city’s budget problems without bankrupting the utility
While the proposed partnership would have impacted utility rates, the increase remained under the critical affordability threshold of 2.5% of median household income. The rate increases associated with the proposed partnership were significantly less costly to the average household than other options for addressing the budget shortfall such as property tax increases or going into receivership.
|Property Tax Increase||Water & WW Partnership|
|Annual Revenue||$46.6 million max||$45 million|
|Additional Household Cost*||$2,000/year||$715/year|