In Carson: City 'will be bankrupt' if it won't act

The city's finances don't look good.

"If Carson City doesn't take immediate corrective action," said former Finance Director Mary Walker, "they will be bankrupt in 17 months."

Walker will recommend in a report to city supervisors today that the city raise the sales tax one-eighth of a cent for street maintenance, cut almost $2 million from department budgets and use city landfill revenues, including $1.5 million a year that was planned for economic development, to finance the city's main fund.

The city faces a $3 million budget shortfall this fiscal year and the situation could get worse during the next fiscal year, which starts July 1.

Walker said this is the worst economy she has seen in her 25 years working with local governments and that the city has to watch its budget more closely than it has.

The city only has a few months to fix this fiscal year's problems, she said, and the worst thing it can do is "to do nothing."

Walker also said the city should only fund economic redevelopment programs through specific redevelopment authority programs "and not through a sales tax split which will hurt the city's general (main) fund and other funds which rely on sales tax revenues."

Supervisors approved a sales tax sharing agreement in November with the owner of the former South Carson Wal-Mart to help bring in Sportsman's Warehouse. The city also approved a $2 million up-front incentive in August to help the owner bring in Burlington Coat Factory.

The city is still developing a plan to pay for that incentive, but it had considered using money from the landfill.

Sales tax revenue, which makes up close to half of the city's main $55 million fund, has dropped about 8 percent over the last two fiscal years and is expected to continue to drop for the next year and a half.

City Manager Linda Ritter, who worked on the report with Walker, said the city knew sales tax revenue would be down this fiscal year, "but we didn't know it would fall off a cliff."

The city can get through this fiscal year with the proposals, but it could have to raise more fees and make deeper spending cuts to get through the next fiscal year, said Finance Director Nick Providenti.

The city also has an $3.5 million rainy day fund, but the city should be careful using that, because once it's gone, it's gone, he said. It also has about $4.8 million set aside for incentives for car dealers that the city could use for other services.

The city has saved about $400,000 so far this fiscal year by leaving open positions unfilled. Supervisors ordered a temporary job freeze on about 40 open positions in October, but many were unfrozen because the board of supervisors said they were critical. About 17 positions are still open, Ritter said.