Next month, Mayor James Sottile will submit his proposed 2011 city budget. But members of the Common Council, which must sign off on a final spending plan, are already anticipating having to make wrenching decisions to stave off a major tax hike in an era of escalating costs and declining revenue.

“I have nothing left to cut,” said Sottile. “Pension costs are going up, salaries are going up, medical costs are going up and we don’t have the resources.”

That bleak assessment is based on a number of factors which the council will have to contend with as they work towards a consensus, or at least a majority, on a 2011 spending plan. According to City Comptroller John Tuey, revenues and expenses have remained in line with projections contained in the 2010 budget, meaning that the city will likely not begin the new year with a budget deficit.

But that’s about the only good news. In addition to expected increases in health care costs and payments into the state pension fund, the 2011 budget will contain whopping 7.5 percent pay hikes for city firefighters and police officers. Last year, the unions which represent public safety workers agreed to a one-year suspension of a 3.25 percent pay raise contained in their contracts in order to avoid layoffs. Now, the city will have to fund that raise and another 3.25 percent pay hike due in 2011.

On the revenue side, sales tax income, which Tuey estimated would rise by only 1.7 percent, is currently running 7.4 percent over 2010 levels. But that revenue stream, as well as mortgage taxes and other funding sources, remains well below pre-recession levels, Tuey said.

“Overall, things are stabilizing and in the long term some things are looking favorable,” said Tuey. “We’ve weathered most of the storm, but we still have (the 2011) budget year to get through and it’s going to be a tough one.”

Complicating matters further, after two years of steady cutbacks there’s not much left to trim from the city’s budget. Last year the council approved Sottile’s plan to eliminate 15 positions at the Department of Public Works. Since then, the overstretched department has struggled to keep up with yard waste and recycling pickup while maintaining enough manpower to carry out basic repair and maintenance jobs. Since 2008 the city has also stopped paying for public celebrations, cut back on Parks and Recreation programs and slashed the police overtime budget by 50 percent. Now, the bulk of the city budget, about 75 percent by Tuey’s estimate, is tied up in contractually guaranteed pay and benefits for city employees.

Restructure to save

To try to cut personnel costs, without additional layoffs, council members are looking at structural changes including a proposed merger of police and fire dispatchers. Lawmakers Jennifer Fuentes (WFP-Ward 5), Hayes Clement (D-Ward 9) and Andi Turco-Levin (R-Ward 1) have also been meeting with union leaders and insurance experts to look for ways to cut health care costs. Fuentes described the closed-door talks as promising, cautioned that the savings would probably not be seen for some time.

“Because (union) contracts are not up until 2012, even though we might see some significant savings on benefits, it’s up in the air whether any of that will be realized in 2011,” said Fuentes. “In terms of the fat everyone talks about in the budget, there’s really not a lot to cut so we’re looking at longer-term savings.”

One route to more immediate savings could involve seeking additional concessions from the Police Benevolent Association, Kingston Professional Firefighters Association and Civil Service Employees Association. Last year the PBA and KPFFA offered concessions and avoided layoffs, while CSEA stood by their contracts and lost a dozen workers. But lawmakers concede that, with cutbacks in city services already stoking public anger, the council may not be able to use the prospect of layoffs as leverage for concessions from the unions.

“I don’t see how we can cut much thinner on services that have already been cut back in this downturn,” said Turco-Levin, who nonetheless hoped that the unions would agree to forgo their 2011 pay hike.

Some aldermen have their eye on the city’s economic development office as one of the few remaining fat deposits in the city budget. Fuentes and Bob Senor (D-Ward 8) both said that the office, headed by Steve Finkle, could be cut. The lawmakers noted that county already has an economic development office and that one of Finkle’s main duties, overseeing the Empire Zone economic development program will end when the program sunsets next year.

“I don’t want to see a guy lose his job,” said Senor of Finkle. “But I would rather get rid of him and put two or three guys back into DPW; and with the kind of money we’re paying him we could do that.”

Much of the debate over cost-cutting could come down to major changes in the way the city handles waste disposal. Sottile flirted with the idea of privatization earlier this summer when he invited private trash hauler County Waste to undertake a pilot program to pick up recyclables in some Kingston neighborhoods. Sottile backed off the plan in the face of strong opposition from CSEA, which said that bringing in a private company to do work once performed by laid-off DPW workers would be a clear violation of the union’s contract. But Sottile recently floated a new idea, once which would involve setting up a County Waste transfer station in the city to handle recycling. Under the scheme, DPW workers would pick up recyclables in a single container (currently they must make separate runs for cardboard, paper and metal) then selling them to County Waste which would handle the disposal. The move would cut the Ulster County Resource Recovery Agency out of the city’s recycling plan. But proponents say it would streamline operations, reduce tipping fees and boost recycling. DPW Superintendent Mike Schupp has also asked the council to fund the retrofitting of garbage trucks with automated rear-mounted loaders and bond for a new truck with a side arm loader. The investment, Schupp said, would allow him to reduce the number of workers needed for garbage runs and reassign them to other duties.

‘Pay as you throw’ still in play

The 2011 budget crunch could also impel the council to action on another much-discussed change in waste disposal — pay as you throw. The plan, which has been debated intermittently for the past five years, would make residents buy garbage bags from the city, thereby paying only for what they dispose of.

“The person who puts five barrels of trash on the curb should not pay the same as the person who puts out one barrel,” said Council Majority Leader Bill Reynolds (D-Ward 7). “I think that this will be the year we take that under very serious consideration.”

Despite the seemingly irreconcilable decision between higher taxes or fewer services, several lawmakers said that they saw an opportunity in the budget crisis to make major changes in how the city does business rather than simply tinkering around the edges.

“We definitely cannot afford to lay off any more people and we can’t afford to raise taxes,” said Alderwoman Shirley Whitlock (D-Ward 4). “Does that put us between a rock and a hard place? No, because what it will do is make us dig in our feet and be a little bit more creative about what we need to do.”

Clement said that hard times had already prodded the council into taking a more proactive stance on budget issues, including a series of meetings between lawmakers, the Mayor and department heads well in advance of budget season. Clement predicted that the council would make “two or three bold moves” during budget discussions later this year.

“I feel optimistic about it honestly,” said Clement. “Sometimes when things get so bad, it has a way of bringing people together.”