Reno City Council received a grim financial update last week: the city is projecting a $24 million deficit for the coming budget cycle. This is not a one-time gap, nor a COVID-era aftershock, nor a temporary downturn. It is the second year in a row with an almost identical shortfall, and the city’s own finance and management team now openly describes the situation as a structural crisis requiring “permanent change.”
The new numbers, delivered by Finance Director Vicki Van Buren, confirm what many city-watchers suspected for years: Reno’s expenses—especially labor, benefits, and PERS—are rising automatically, while revenues are unpredictable and politically difficult to increase. The result is a recurring deficit that is no longer fixable with one-off cuts or short-term freezes.
The news will tell you the superficial reasons for the deficit, tax and fee revenues going down, but they won’t tell you the rest of the story, like I am here. Reno has spent as if downturns never happen, and taken on obligations as if there is no tomorrow.
The Deficit Is Structural — Not a Temporary Problem
The finance department projects a $24 million general fund deficit for FY 2027, almost identical to last year’s projection. Some revenues are shrinking, and others are growing too slowly to keep up with mandatory costs.
Those costs include:
Annual PERS increases
Rising health care obligations
Multi-year union contracts
Inflationary pressure on goods and services
Hiring commitments that cannot easily be undone
Massive bond debt and Tax giveaways
Some of these expenses rise automatically every year, regardless of economic conditions. Reno’s two primary general fund revenue streams—franchise fees and C-Tax are shrinking. This is the definition of a structural deficit: the gap widens unless the fundamentals are changed.
Revenue Volatility and Shrinking Franchise Fees
Two forces are hitting the city simultaneously:
C-Tax stagnation
C-Tax has growth slowed. Given that over 80% of C-Tax is tied to consumer spending and sales taxes, waning consumer confidence has blunted growth, and it is not enough to keep up with rising costs.
Franchise fee declines
A large source of fee revenue is from NV Energy, which is tied to utility bills. Reno collects fees from Waste Management for garbage collection. Cable TV and landline telephone fees are shrinking as customers cut the cord, reducing the city’s take from those sectors.
“Permanent Change” Is Not Rhetoric
City Manager Jackie Bryant’s statement that Reno must “permanently change the way we do business” signals more than a challenging year ahead. Last year’s “balanced” budget relied on one-off measures: hiring freezes, delayed purchases, and department underspending. Those are temporary tools. They cannot be repeated year after year.
Permanent change means:
Fewer filled positions
Fewer programs
Longer service response times
Shrinking internal capacity
A smaller, less ambitious city government
Why Last Year’s Balanced Budget Was a Mirage
The city ended the last budget year within half a percent of its total general fund target. But this was achieved with emergency measures:
Slow hiring
Delayed projects
Mandatory departmental savings
Deferred expenses into the next cycle
Moving one-time funds from one budget to another
None of these represents balance. They pushed problems forward another year. This is why the deficit is recurring at the same magnitude: the underlying math never changed.
Reno’s Bond Debt and TIF Giveaways: The Missing Piece of the Budget Crisis
These two issues quietly limit the city’s spending capacity and have contributed to the structural imbalance now evident in the general fund.
Reno’s Bond Debt: Large, Long-Lived, and Not Going Away
Reno currently carries hundreds of millions in long-term debt obligations across multiple categories:
General Obligation Bonds
Revenue Bonds (Sewer/Wastewater, Facilities, etc.)
Tax-Override Bonds
Special Assessment Bonds
Redevelopment Agency Bonds (the most relevant to downtown)
Some of these debts stretch out 15–30 years and have legally required repayment schedules.
Why this matters for the deficit
Bond payments are non-negotiable fixed costs. When revenue shrinks or labor costs rise, the city cannot reduce these payments.
As a result:
Debt service crowds out general fund spending
More of the annual budget is locked into mandatory payments
Fewer dollars are available for staffing, police, fire, parks, and homelessness
This is part of what City Manager Jackie Bryant means when she says the city “cannot be all things to all people.”
Areas where debt service hits particularly hard
Bowling Stadium, Reno Events Center, and Reno Ballroom bonds
These were financed on the basis of optimistic assumptions about downtown events and hotel-room tax revenue. Today, they produce minimal net revenue but require ongoing payments.
Redevelopment Agency bonds
This is the most significant hidden constraint. Reno must continue paying off old redevelopment-era borrowing, including obligations tied to:
Tessera District collapse
Baseball project financing (ACES ballpark)
The failed Freight House District project
Reno also has considerable bond debt for
RETRAC, the railroad trench
Cabela’s in Verdi
Much of this debt is backed by tax-increment revenues that never materialized as projected, or land donations that were never monetized.
TIF Giveaways: Future Revenue That Reno Has Already Promised Away
Tax-increment financing (TIF) sounds nice—use future tax growth to pay for improvements today. But in Reno, TIF districts have been structured in ways that:
Reduce revenue available for the general fund
Commit future tax growth to private development deals
Exacerbate long-term structural deficits
The Bill for the Past Five Years Has Come Due
The deficit did not appear out of nowhere. From 2019 to 2024, the city:
Signed expensive multi-year labor agreements
Expanded programs
Added permanent staff
Built new operational obligations
Assumed C-Tax and fee revenue would grow consistently
Those decisions were made in good economic conditions, and they created a cost structure that is no longer sustainable in a slower economic environment. Now the city is paying the bill.
What Reno Should Expect Next
1. Ongoing hiring freezes - Particularly in planning, code enforcement, parks, and administrative departments.
2. Program reductions - Neighborhood services, community outreach, arts programs, and quality-of-life initiatives are usually the first to be cut.
3. Slower permitting and development timelines - With fewer staff, developers and homeowners should expect longer wait times.
4. Fee increases, despite political risk - Even though the appeals fee blew up politically, the city will almost certainly pursue new or higher costs elsewhere.
5. Service prioritization - Public safety should be protected as long as possible, but everything outside of police and fire will feel pressure.
6. Limited capacity for major new initiatives - Housing strategies, economic development programs, and expansion of homelessness services will feel pressure.
Conclusion
Reno has entered a period of austerity unlike anything seen in the past 10 years. Whether the city can navigate this without significant service degradation will depend heavily on decisions made in the next six months. The harsh reality is that the problem won’t go away on its own. Reno is going to have to buckle up.
Let's see the Council take a 5% salary cut to show they are in solidarity with the rest of the city and its citizens.
Sorry. I cannot help myself. Here's my long answer to this issue. Took me a few days to polish it up.
Also, while I love MIchael's articles, it's pretty disappointing that there are only 5 comments.
Is there ANY WAY to start to build a machine to oppose the "business as usual" bureaucracy? As in vote somebody NEW into office?
Thanks for your ideas.
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To quote Malcom X, "our chickens are coming home to roost." Put another way, and I'm dating myself, "I will gladly pay you Tuesday for a hamburger today."
To many "in government" - and the City of Reno is "in government" - a budget is just "a thing" that is "required"... but it's really only an annual annoyance, and a can that can be kicked down the road year after year after year. Some spreadsheet wizard creates a monstrous file that ends with red ink everywhere, and the public and private hand wringing begins. "How the fuck did this happen? What are we going to DO? We’ll have to study this closely; let’s form a committee that can guide us. We’ll pay close attention as the year proceeds. Eh…..meeting adjourned!"
If a doctor says you have cancer all over the place, does he recommend you go home and study it? If your accountant says your household budget doesn't work, do you continue to go out to dinner weekly and rack up the credit cards? If your lawyer says you're going to be sued if you continue "to do what you're doing" do you keep on "doing what you're doing?"
Hell no!
Government is different.
1. Nearly everybody IN GOVERNMENT is either a politician or an entrenched bureaucrat.
The politicians may have started out life as normal people. Maybe they were well intentioned "volunteers" at the local PTA (more dating myself) but they pretty quickly figured out that if they had even a bit of "leadership" skills, and promised free shit to lots of people or carried the "torch du jour", that the people would "follow (adore) them" and love the free shit. And a "career of public service" became their lifelong path. Holy shit! Kamala Harris began her career as some sort of aid to California powerhouse Willie Brown, and she worked her way up the chain to nearly the President of the United States! It’s a closed circle friends. Self perpetuating, musical chairs game where once you’ve got a seat at the table, you ALWAYS have a seat at some table somewhere.
Politicians are not the best and the brightest by any stretch. Few have run businesses and had to meet payroll every Friday; had to solve dire challenges ON THEIR OWN; negotiated successfully; survived multiple ups and downs. It's tough out there. Most politicians are not battle hardened, tough as nails, smart as whips, successful veterans of anything.
Entrenched bureaucrats are, well, entrenched. In their cubicles, their departments, their org charts. As in permanently entrenched. Desiring to "do more and more" politicians build out the bureaucracy, fill the org charts and cubicles and survey the vast machine they have built! "With all these people working SO HARD, surely we are doing great things for our community!" The minions move up, down, sideways, following their masters or worshipping the new bosses. But as the Eagles say, "you can never leave" which is of course good for them.
"In the old days" (more dating myself) a job "in government" meant you could NOT find a job "in the private sector." Today, a job in the public sector is likely employment for life, with attendant raises, benefits, paid holidays, retirement plans, mutual adoration societies, upward mobility, etc.
2. Immediate gratification and praise. Long term consequences.
The politicians want to do lots of good shit to keep the electorate – or at least the (rabid?) voting electorate, which is likely different from the working their asses off/unengaged/naïve electorate - adoring them. Politicians always have ideas to "expand and grow" stuff. Many times they do hairbrained special interest stuff just because being in power means they can just implement their hairbrained special interest ideas. So they do. “Looks and sounds good on paper” doesn’t always result in “works great in the real world.”
Michael points out the cases in point. The Bowling Stadium which was SO EXCITING for the first couple of years - "Look at all the bowlers and the money they're spending in Reno" - and is now a financial anchor around the City's neck! "Where have all the flowers gone, long time passing..." Once a year - at best - the bowlers descend on Reno. But EVERY MONTH, the PAYMENTS to build the stadium have to be paid. For decades!!!!! If the hoard of bowlers NEVER AGAIN set foot in Reno, the City STILL pays on the empty stadium. For decades.
Same with the Convention Center, currently proudly home to the quarterly second class spa sales and a gun show once in a while. Year one ribbon cutting was a blast! Today, there are millions of obligations in bond or debt payments with scant revenue coming in. We apparently can’t host a Tupperware party in that space.
So all this "stuff" sounds great in year ONE, and by year 10 not so much, and in year 15 sounds awful. But by then, the Politicians have moved on and it's someone else's problem.
The whole TIF (Tax Increment Financing) is another disaster. Stated simply, the City of Reno PROJECTS that future growth from some "development" will generate lots of future taxes - taxes being the primary source of City revenue - so the City GIVES AWAY (abates) those future taxes to the developer, figuring that SOMEHOW, “all of the combined future taxes” will be MORE than the giveaway, so that net net net the City is ahead. Fat chance.
Consider the GSR expansion. Should the City give away future tax revenue to the GSR? Are you kidding me? The GSR makes a gazillion dollars already. They'll make another gazillion dollars after their expansion is complete. Why in the world should the City of Reno give away future tax revenue? We currently have a REVENUE PROBLEM!!!!! The primary source of City revenue is from taxes! And kimosabe, it’s the who citizens are going to be asked to pay MORE in taxes, while the GSR and Jacob and the ballpark AVOID taxes.
Politicians are NO MATCH for the developers, their consultants and lobbyists, their slide shows or Powerpoint presentations, spreadsheet projections or anything else. They are sheep going to slaughter. The grift is alive and well too. "We'd like to make a donation to your reelection campaign Freddie! Would that be OK? You’re doing SUCH great work! Our contribution is only because we want "access" to you.” We don’t want any real favors. But at voting time please remember how we "supported" you.”
Politicians are no match for the unions either. The ever-growing PERS expense in Michael’s article is the “enormous fund” for the Public Employee Retirement System. As in when you work as a public employee in the great bureaucracy, where you can likely never be evaluated on merit, never be fired, receive guaranteed annual raises, and retire with substantial lifelong benefits. All paid for by – wait for it – us taxpayers. So those in the great bureaucracy that got us INTO these messes, will RETIRE securely because their union did a great job in negotiating everything in their favor, and us taxpayers just have to suck it up and pay for it.
Obvious Disclaimer: Yes, there ARE some good politicians and there ARE good civil service workers. The trick is to separate the wheat from the chaff.
So, what’s the solution?
Well Trump 2.0 went to Washington with the support of the people who elected him. He has enormous cajones, a tremendous love of this country and desire for ALL of us to succeed and live fulfilling lives. He has a fearless can-do attitude, and an understanding of the swamp that he was up against. He brought business acumen and negotiating skills to the table… plus a broadsword which he isn’t afraid to use.
In 2026, maybe we can elect some business types instead of allowing the entrenched politicians to retain power by default as they just play musical chairs and claim they’re working so hard to fix the messes they themselves have created.
In Reno, if we keep electing POLITICIANS, we will continue to get politics-as-usual.
Let’s try something different.
Stay tuned…..