Storey County FY18-19 Budget

It’s Budget Season and we have been focusing on how Storey County spends your tax dollars. We wrote about the tentative budget earlier here. We wrote about the record 1.6 billion in taxable sales from 2017 here. And finally, we wrote about the current taxable sales totals here.

At the May 15th Storey County Commissioners meeting, Hugh Gallagher circulated a document titled General Fund Revenue and Expenditure Summary. He explained the nearly final budget has been revised from the tentative budget and that he was able to shave a couple hundred thousand dollars based on more accurate benefit numbers becoming available.

Because Tesla has not set a meeting date to renegotiate their agreement with the county, the tentative budget remains $1,703,533 in the red. Since the county is required by statute to submit a finalized budget next week, if the Tesla agreement can’t be hammered out, Storey County will submit a budget to the State that is upside down.

According to Comptroller Gallagher, the Department of Taxation will be okay with this because of the health of the county. The General Fund Balance at the end of FY 2017-18 was $10,247,696. If Tesla and the county cannot reach an agreement, the General Fund will dip to $8,544,163 and will mark the second year in a row that Storey County is in the red despite the booming business at TRIC.

Troubling Trends

As we drill down into the numbers of the soon to be final budget, some troubling trends are revealed.

The expenses are projected to be 16.4% higher this year compared to last. That increase is driven by the ballooning payroll and benefits the county pays. The head count continues to rise and salaries are, with few exceptions, up. Payroll and benefits are up 24% across the board with three departments showing a reduction and the rest up. The Fire Department grew exponentially under Gary Hames and now that he heads up Community Development, their payroll is up 40%.

Below are the individual departments Salary and Benefit Numbers as provided in the packet at the May 15th meeting. They represent a troubling trend based on the fact that revenues are below FY 15-16 levels.

 

 

 

Heads May Roll

Comptroller Gallagher advised the commissioners that if they are not able to balance the budget and come up with additional revenues to remedy the deficit, measures will need to be taken to make up the difference. While he alluded to the reduction of staff, we should keep in mind that Storey County employees are all part of a union. Based on past experience, the unions don’t take to staff reductions kindly.

The County has been adding full and part-time employees regularly and they show no signs of slowing down despite flat revenues and increased expenses. Anyone who has operated an actual business knows how this usually works out. It never works out the same way in government.

What’s the Deal With Tesla?

Anyone paying attention to the real world already knows that Tesla is on the rocks. CEO Elon Musk is giving President Trump a run for the “What in the world did he just tweet” money, and the smell of desperation is reaching even the most zealous Musk disciples. Tesla lost $710 million last quarter (it would have been closer to a cool billion if not for some new accounting rules) and is on track to lose a billion this quarter. His bonds are rated at junk status and he is burning through cash.

These two charts tell a chilling tale:

 

Storey County’s investment in Tesla is estimated to be $750 million over the course of the sales, personal property, and real property tax abatements, according to the Governors Office of Economic Development and Lance Gilman’s numbers man Jeremy Aguero.

While it is clear that Don Norman and Lance Gilman cleaned up on the Tesla deal, it’s looking like the chumps of Storey County, us taxpayers, ended up with the short end of the stick.

Storey County FY18-19 Budget Finalized Next Week

The Commissioners will meet on Monday, May 21st. We will file yet another report on the Final Final budget then.

Stay Tuned.