When it comes to the city budget, City Council and staff say “everything is on the table,” as long as it doesn’t tax residents.

City staff members told the council Tuesday morning during a special work session new estimates project the fiscal year 2010-11 city budget will fall short by about $4.3 million — up from a previously projected $3.8 million. Staff met for two days last week to brainstorm suggestions for where to find additional budget cuts. City Finance Director Gayle Whittle told the council that all items in the city’s expenses and revenues were considered.

“Everything is on the table for evaluation,” she told the council Tuesday morning. “We are using estimates right now to determine what cuts need to be made but everything is being considered at this point. … It is still really, really early in the budget process. Normally by this time, we haven’t even had discussions with the city manager. So a lot of this can change.”

Staff presented the City Council with a list of possible cuts developed in a “Plan Z” or “worst-case scenario” including cutting and eliminating staff options (unpaid holidays, furloughs, a 5 percent salary reduction and vehicle allowances), raising various taxes, closing the Aquatic Center, eliminating grant funding to various agencies, eliminating the shoreline acquisition transfer and withholding a $3 million contribution to the sewer fund.

Several council members then gave direction to staff. Mayor Mark Nexsen said he’s hopeful the city can find ways to come up with the $4.3 million without taxing residents.

“One of the messages I gave to staff was that trying to tax our way out of the situation is not an option,” he said. “I don’t want anything we do causing (sewer) rates to go up either. To me, that’s just another way of taxing the situation. I have no stomach for that.”

Withholding a $3 million contribution to the sewer fund was at the top of city staff’s list of recommendations. Interim City Manager Charlie Cassens previously explained that retaining the subsidy in the general fund would not affect rates positively or negatively. “The subsidy is no longer necessary and it is not affecting rates the way it did at the beginning of the sewer project,” he said. “I believe the available fund balance may be sufficient to allow the city to meet its financial obligations to its lenders, provide a systematic drawdown to offset debt service, and/or minimize the amount of money that would need to be borrowed to fund the final construction contracts.”

Nexsen said he was at first hesitant to agree to the idea, but later believed the move would not affect rates.

“How the $3 million is being utilized, (staff) is correct, does not impact rates. However, with a little imagination from rate consultants, I think we can utilize the $20 million in the sewer fund to impact rates positively,” Nexsen said. “It is a fine line, because we have to meet a number of financial ratios (to bond holders). … But I think we can easily arrange to meet debt service coverage and either maintain or lower our rates slightly in the future.”

Councilman Brian Wedemeyer said he would like to see one item not on the list of staff recommendations — looking into and possibly removing funding to outside services like tourism development through the Convention and Visitors Bureau.

“With that, I was just asking staff if there are any opportunities there we could look into bringing them in-house,” Wedemeyer said. “Obviously, times are getting pretty serious. I’m wondering if there’s any opportunity to bring services we use for other organizations in-house and have our staff work on them.”

Cassens said staff would look into the matter further but wondered how much money could be saved making those moves.

“Our recommendations do not include a reduction in force and, as Gayle mentioned, we’re pretty much on the ragged edge efficiency-wise and even with small numbers of reduction in force … the level of service would go down exponentially,” Cassens said. “As far as a cost savings that might be associated with bringing tourism in-house … I believe our CVB gets about $1 million a year from the bed tax and that in-house, I’m assuming that $1 million would come with it. We would certainly have to perform an analysis as to how we would utilize those funds to get the best bang for the buck for the community.”

As for the Aquatic Center, Whittle said the item is “on the table” but hesitated whether it would be beneficial to close it.

“We are trying to do things that have been suggested in the past by at least putting it out on the table,” Whittle said, adding that it would still cost about $300,000 a year to maintain the Aquatic Center if it were closed. “The reason we have to maintain it is if we wanted to open it in the future or give it to someone else in the future and if we were to not take care of it, it would be worthless. … I’m not sure there would be much of a savings, if any, in closing it but it is something we’re looking into.”

One cloudy uncertainty hanging over the city is the city’s state shared revenue. Nexsen said he has heard from legislators in Phoenix the revenue to cities could be cut heavily next year.

“That’s been an ongoing threat for a number of years. The Arizona League of Cities and Towns continually fights this battle of trying to tell the state to live up to the agreement made in 1972,” Nexsen said. “But as the deficit for the state becomes larger and larger, and answers become more difficult … they are more closely examining the possibility of reducing state shared revenue to cities and towns. That would be devastating for us.”

Cassens said all of the items discussed Tuesday remain options as the city nears budget work sessions in May.

“If things continue to go south, we may have to go back to look at some of those distasteful measures,” Cassens said, referring to the list of items in the “Plan Z” scenario. “One thing I have stressed to staff and people that ask is that we are definitely not out of the woods yet.”

You can contact the reporter at nbruttell@havasunews.com