Fernley property tax bills are likely to drop significantly soon if a proposed $4 million reduction in the city’s water fund is approved by the Fernley City Council when it adopts the city’s 2025-26 budget on May 21.
The property tax savings would be realized by eliminating a water ancillary fee that is added to property tax bills to help pay for water treatment.
“If this is not collected, it will save rate payers hundreds or thousands on their property tax bills,” City Manager Ben Marchant said the second budget workshop.
“Did I hear that right? Hallelujah! Now we won’t be the highest water in the state,” councilman Stan Lau said.
“This will good news for everybody. Taxpayers need relief,” councilman Ryan Hanan said.
The city council had asked staff to look at ways to provide relief to the city’s water rate payers and this is one way to do that, Marchant said.
“The (ancillary) fee was adopted at the point in time when the operating revenue of the water fund was insufficient to cover the debt service on the water treatment plant. The water fund has the resources now to fund its operations and debt requirements without collecting this fee,” he said.
The council imposed the fee in 2016 at an amount equal to the Water Enterprise Fund debt service payments, including principal and interest.
Marchant said elimination of the ancillary fee would result in a $4 million reduction in the city’s water fund budget from $17.8 million to $13.8 million.
“But because reserves in the water fund are healthy, we’re still going to have the means to be able to keep up with the capital projects over the next three years,” Marchant said. “Because our water fund is healthy and balanced and is not in structural deficit, the justification for the ancillary fee is no longer there. And it won’t come back unless we find ourselves in a structural deficit for the terms of the ordinance.”
Councilman Joe Mendoza noted that a lot of Fernley residents will not see any benefit to reduced property tax bills because they are renters, and he questioned when the water rate study will be completed because that could possibly even impact renters if water rates themselves are also reduced.
Marchant said the water rate study is due to be completed this summer, so the study will probably be brought before the city council in September or October to determine what the water rate fee should be in coming years.
Proposed changes to the city’s general fund include a slight increase, about $400,000 in total, in city employee salaries to account for step increases and cost of living adjustments. An increase in the city Manager’s budget of $80,000 will pay for professional services for the Phase III Fernley lands bill conveyance, the proposed modular building for increased city hall office space has been eliminated from the budget, and the code enforcement manager position and salary have been changed to indicate that the position will not have law enforcement training.
Under the proposed general fund budget, another $1 million will be carried over to the next fiscal year to pay for expenditures for the Community Response and Resource Center (CRRC) that were not paid in fiscal 2025.
In addition, under special fund revenues, 60 percent of the anticipated transient lodging tax for next fiscal year, or $333,600, will be reserved for a new general government function in the budget, for construction operations and maintenance of the CRRC, like paying utility bills and general maintenance.
The general fund budget will also provide for a salary increase for the municipal court judge
from $45,000 a year to $95,000 a year to bring the position in line with salaries for a municipal court judge.
“In good conscience we need to prepare for the future and to have that be properly budgeted for continuity of operations,” Marchant said.
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