Clark County finance director warns of structural gap; council told new 2026 requests must be revenue‑backed or mandated

Clark County Finance Director Mark Gassaway told the County Council on May 14 that while first‑quarter 2025 revenues are within expected ranges, a 10‑year review shows base general fund revenues have not kept pace with inflation and the county faces a growing structural shortfall.

Gassaway presented a 10‑year schedule showing the Consumer Price Index rose about 34.22% while property taxes grew about 29.75% and sales tax revenue rose roughly 90% over the same period. He said county expenditures have grown about 37% over the decade, and population growth of roughly 19% also increases demand for services. “If you were to add the 2 together, the 34% CPI plus the population growth, I would suggest that we’re not keeping pace,” Gassaway said.

Why it matters: county officials said ongoing expenses are increasingly supported by one‑time or volatile sources (grants, interest income, high cash balances and sales tax gains tied to construction and changing retail patterns). At current trends, staff warned the general fund could face recurring operating deficits unless new revenues are found or spending is reduced.

Staff presentation and findings Mitchell Kelly, reporting analysis manager, said first‑quarter collections reflect the seasonal pattern: most property taxes post in April and October and road‑fund activity typically accelerates in summer construction months. He described first‑quarter spending as reflecting one‑time, up‑front annual costs and said salaries and benefits are “pretty tight” relative to budgets.

Gassaway walked the council through three main takeaways from the 10‑year schedule: (1) categorized expenditures have exceeded base revenues in each year, (2) a substantial sales tax surge in the past decade masked underlying weaknesses and cannot be relied on to repeat, and (3) the county has relied on less predictable revenues to remain solvent. “This year, I don’t anticipate that that will happen. I think this will be the first year that we’ve ever had an operating deficit,” he said.

Officials noted specific fund items council may see in decisions this year. The road fund balance recently rose after April property‑tax collections to nearly $60 million, but staff said those dollars are expected to be spent on programmed projects in the county’s TIP and annual construction plan. Gassaway and others emphasized the road fund does have a minimum fund balance policy incorporated in last year’s budget.

Community Development and fees Gassaway said prior year fee increases approved by council for Community Development (including wetland and habitat fees) are expected to reduce the annual general fund subsidy to that department; the transfer is anticipated to be “significantly lower” than prior years, though not zero because central services are still provided.

Compensation and staffing Staff and Amber (staff member) summarized the Baker Tilly compensation study that drove adjustments to bring county pay closer to market to improve recruitment and retention. Amber noted the process expanded comparables and involved elected officials and department leaders.

Budget guidance for 2026 County staff and the County Manager recommended a procedural change for the 2026 general fund budget: departments’ new requests should include an identified revenue source that would pay for the request or be limited to items mandated by law. The County Manager explained the change is intended to focus limited resources and reduce the number of unfunded decision packages presented to council.

The recommendation also included: continuing review of fee structures for cost recovery; reviewing allocation of central services charges; limiting new requests against public safety sales tax (which staff described as largely tapped out); and carrying forward one‑time savings identified at year‑end (including ARPA adjustments and an internal capital financing change tied to jail financing) to ease near‑term pressure.

Council questions and follow‑up Council members asked for the schedule to indicate years when the council elected to take the 1% property‑tax option and for clearer, cumulative population figures on the chart. Staff agreed to add those items and to publish a summary white paper on the schedule and assumptions for public transparency.

Discussion vs decision The council provided general agreement with staff’s guidance and asked staff to proceed with the proposed approach; no formal ordinance or appropriation was taken at this meeting. Staff committed to continue monthly monitoring, to return budget details through the formal budget process and to provide requested clarifications and documentation.

Ending Finance staff said they will provide the council the 2024 audited report when the audit completes and will continue to refine the 10‑year schedule and related briefing materials for the 2026 budget cycle.