As city councilors grapple for the second year in a row with significant budget cuts, Finance Director Jim Howard says the outlook won't be getting rosier anytime soon. Concord taxpayers likely can expect higher tax rates and fewer services in the future, he said.

The financial downturn the city is experiencing is similar to what it faced in the recession of the early 1990s, with one significant difference: It's not being driven by a recession but rather by a trend of rising expenses, mostly in health care and retirement costs, and of dipping revenues, Howard said. In other words, the city's belt-tightening during the recession was a temporary squeeze. There's no such recovery in sight now, Howard said.

Budget models show that to maintain city services and capital improvement projects, tax rate increases will rise over the next five years, reaching between 18 percent and 21 percent by 2013.

Howard and City Manager Tom Aspell said the increases won't reach that high. City staff will make cuts, delay construction projects and make other changes to prevent it. But Howard said it's important to look at those projections to realize the pressures the city faces now.

For example, this year's tax rate increase was projected to be about 12 percent. It was cut to 4 percent.

"What did we have to do to get that 4 percent?" Howard said. "We had to make some choices."

Those choices included cuts to public safety budgets, fewer library books, less money for social services and delayed road improvements.

Aspell's proposed $46.6 million budget, $27.2 million of which would be raised by taxes, left about $1 million in department requests unfunded and cuts the equivalent of 4.6 full-time positions. Four new police positions, totaling $150,000, were tentatively added to the budget by the city council last week.

The budget also includes the use of $1.38 million in surplus, $200,000 more than last year, veering from the plan that Howard started last year to try to make the city's budget a truly balanced one that doesn't rely on a surplus.

Surplus is money that the city sets aside to stabilize tax rates when revenues exceed expectations. It is one of the factors that credit-rating companies use to determine a city's financial health, so it affects the interest rates the city pays on loans.

In the market crash of the early 1990s, the city couldn't afford the services it offered. Surplus was depleted, the city's credit rating plunged, staff positions were cut, and solid waste collection was contracted out to save money.

In the rebound of the late 1990s, the surplus was built up again and some staff were added. Employee numbers never returned to pre-recession levels of 548 full-time-equivalent employees. They've dropped again in the last three years, from 514.37 full-time-equivalent employees to 500.97 in the proposed budget for next year, not including the added police officers.

As those employees have become more expensive in recent years, Howard said he has had to budget more conservatively. The surplus has been drawn down again, mostly to pay for road projects, some of which were put off in the late 1990s in favor of keeping taxes low.

"Someday - which is today - it comes back to you," Aspell said.

Aspell said the solution lies in carefully deciding what services the city wants to offer in the future and finding the creativity to do so. He has suggested, for example, looking for donations to pay for some city projects; finding a new way to pay for solid waste disposal, possibly through a pay-as-you-throw program; making recreation programs self-sustaining and requiring utility companies to pay more for road improvements.

Aspell said he decided against cuts in street sweeping and ambulance service this year but might consider them in the future. He said some of the most dramatic changes could be in what people won't see in the future. (next page »)