A worst-case scenario for city finances

The city has established a worst-case scenario for its predicted revenues in 2009.

If it bares out, it won’t be pretty.

The city may be forced to shave an additional $2.4 million from a budget still smarting after recent staff and service cuts.

The City Council asked the administration to develop a baseline revenue estimate after having seen estimates trimmed down in recent months.

While Finance Director Elray Konkel is predicting $18 million in revenue for 2009, the baseline estimate – which he considers the lowest revenues could possibly go based on current data – puts possible revenues at $15.6 million. The city’s revenues haven’t been that low since 2004.

Should the city’s finances take such a tumble, more cuts – likely in the areas of support for local social service and arts organizations – could follow later this month.

Councilman Bill Knobloch said the city’s declining financial state will cause a substantial shift “in the way city does business.” Other councilors have predicted that the city may focus on core services, such as roads and police, and leave many popular projects and services unfunded.

City officials have not entered into formal discussions about possible new revenue sources to fill immediate funding gaps.

“If we’re going to start at this (baseline estimate), then, yes, we’re going to have to cut some things,” Konkel said. “We’ll have to decide what is an essential services. We’ll have to decide if the arts are an essential service or if having two police officers on duty is an essential service.”

The city had predicted $19.8 million in revenues for 2009 late last year. By January, that number was reduced to $18 million.

“This is all uncharted territory,” Konkel said. “Never in my 26 years (in finance) have I seen seen things change so dramatically in so short a time.”