A sluggish economy and overly optimistic budgeting have Storey County headed for a $236,000 deficit this summer.
County officials joined analysts from the Nevada Taxation Department Thursday to advise the Committee on Local Government Finance they will work together to get Storey back in the black.
Taxation Director Chuck Chinnock said there's no alternative because state law prohibits deficit spending by any Nevada government.
Gordon Hella, supervisor of Taxation's local government section, told the committee Storey officials didn't anticipate a dramatic drop in licensing and permit revenues over the past two years -- or the decline in revenues from the county's legal brothels.
Storey expected a huge increase in permits and license revenue as businesses moved into the Reno-Tahoe Industrial Park along Interstate 80 east of Reno.
Hella said they built the 2001 budget anticipating $500,000 in revenue but only about $93,000 showed up.
Hella said the county didn't see that as a trend and, despite the economy, projected $600,000 in revenues for 2002. Actual collections were $236,000.
He told the committee headed by former Las Vegas Finance Director Marvin Leavitt they did the same with estimated revenues from legal prostitution - projecting $200,000 in 2001 and $250,000 in 2002. Actual receipts were just $82,000 in 2001 and $78,000 in 2002.
County Commission Chairman Bob Kershaw said with the economy stalled and the Sept. 11, 2001, terrorist attacks in New York and Washington, "everything hit the brakes." He said businesses they expected to move to the new industrial park put their plans on hold, effectively drying up the revenues Storey expected.
Storey financial officer Marilou Walling said the revenue problem was compounded by a number of large and unexpected expenses. The largest, she said, was more than $600,000 added to the cost of Patrick Bridge serving the new industrial park.
Leavitt and committee member John Sherman, finance director for Washoe County, said they were concerned the county didn't see the problem coming - especially after the economic impact of 9-11 - and adjust its budget projections downward.
Sherman said he was also concerned that Storey compounded its financial woes by borrowing $1 million to buy four fire trucks. The committee was told doing so without getting state Tax Commission approval may have violated state law.
The result of all those problems is that instead of a $133,000 ending fund balance at the end of the fiscal year this June, Storey is looking at a $236,000 negative balance - a swing of $369,000 in a budget that totals only about $5 million a year.
Walling said as a result of the budgetary problems, all county departments have been told all expenditures over $250 and any overtime other than emergency services must be approved by the county commission.
But Kershaw said the problems can be fixed.
"Storey County is not going to have to shut down," he said. "We believe with Taxation's help, we can fix this."
Chinnock said his staff will investigate all possibilities, including Storey's argument that some sales tax revenue may not have been credited to the county.
"The idea is to see how we can fix it," he said.
