Butler City Council on Thursday approved the first draft of the city’s $7.89 million budget for 2013, which continues the property tax rate at 38.75 mills.

The budget is subject to change and its final draft will be approved Dec. 20.

However, the city has expenses that outpace revenues, a situation that might come to a head next year when the 2014 budget is drafted and when there will be little to no surplus funds to balance that budget.

The 2013 budget uses $541,000 in surplus funds from this year to cover the disparity between expenses and revenues as well as a $600,000 tax revenue anticipation loan, which is double the $300,000 TRAN this year, to balance the budget until tax revenues arrive in the spring.

“(Prior-year balances) go up and down. You simply don’t know if you will have one or not,” said Mayor Maggie Stock, adding that a profitable new business in the city or a harsh winter, requiring excessive manpower and materials to manage, can shift the balance either way.

“As a city, you must provide services, control costs and encourage new things to happen, all at the same time. It’s a tremendous amount of juggling.”

Butler has operated at a deficit each year since 1999 except for 2006 and 2007. It has taken a TRAN loan each year except 2009, when the city’s general fund balance dropped dangerously low before tax dollars began arriving in March. The city’s TRAN loan amount has fluctuated over the years, peaking at $1 million annually for several years leading up to 2008.

“Every member of city council is being proactive in what they can do to limit their department’s budget and be fiscally responsible,” said Councilwoman Cheri Scott, who oversees the city’s finances and who drafted the 2013 budget.