LOS ANGELES — As North Las Vegas, Nev. officials raced to deliver a tentative budget plan to the state, Moody's Investors Service came out with a slightly more optimistic view on the city's fiscal situation in a market comment report.
The city has to present a tentative budget to the state by Tuesday to avoid a potential takeover of the financially troubled city's government.
The city's last budget forecast released in January showed a $24 million budget deficit representing 15% of revenues, according to the Moody's report.
"The situation is obviously developing and we are going to continue to track it," said Patrick Liberatore, a Moody's analyst.
North Las Vegas reached tentative budget agreements with all four unions totaling $7.7 million on April 10.
Nevada District Court Judge Susan Johnson had ruled against the city on Jan. 21 in a $25 million lawsuit brought by the unions.
Nevada Gov. Brian Sandoval and Assembly Speaker Marilyn Kirkpatrick aided the city in efforts to strike agreements with its unions.
The tentative union agreements improved assumptions made in a Moody's report issued last Wednesday in which analysts said the city's deteriorating fiscal situation "increased the likelihood of state intervention."
In Monday's report, analysts said "state intervention is less likely in the near term if union members accept the city's discounted settlements and the city produces a balanced budget."
"The judgment was $25 million, so settling for $7.7 million, which is 31 cents on the dollar, is a much smaller burden and alleviates some of the pressure," said Liberatore, author of the market comment.
The unions must ratify the agreement with the city. The North Las Vegas city council is scheduled to vote on the agreements May 21.
"Should union members accept the city's settlement offer, state intervention is less likely," Moody's said in the report. "City management has said if unions reject the plan, the city will close the budget gap with broad spending cuts of up to 20%."
The final budget must be submitted to the state by June 1.
The city of 222,000, which has junk ratings on its bonds from all three rating agencies, has been battling fiscal challenges for several years.
The bonds are rated B, Ba3, and BB-minus by Fitch, Moody's Investor's Service and Standard & Poor's, respectively.
North Las Vegas has about $436 million in limited tax general obligation bonds outstanding, according to a Fitch report. That figure includes $292 million secured by water and wastewater revenues with about $8 million in fiscal 2015 debt service costs paid from the general fund. The utilities pay about $23 million in annual debt service.