The financial troubles in North Las Vegas may be getting so bad the state government may step in, according to local press reports.
Nevada state Sen. John Lee told the Las Vegas Sun that the only way to save the community is for the state to take over the suburban government’s finances.
State law allows the Department of Taxation to take over city finances in the case of a severe financial emergency.
The 100-square-mile city in Clark County is losing $165,000 a week since a judge issued a temporary restraining order preventing the layoffs of fire and police personnel, the newspaper said.
Earlier this month, Moody’s Investors Service downgraded North Las Vegas’ general obligation bonds two notches to A1 from Aa2 because of major declines in city revenue. The outlook is stable.
The downgrade affected $444 million of outstanding debt.
The rating agency said substantial declines in the tax base due to the recession and weak real estate market, resulting in multi-year revenue declines, have outpaced the city’s ability to cut spending.
Moody’s said the city has had to use reserves to balance operations and relied on water and sewer revenues to support general government operations.
Rating analysts said assessed valuations in North Las Vegas declined 27% in 2010 and more than 29% in 2011 because of increased foreclosures, declining home prices, and a virtual standstill in residential construction and commercial activity.