City council will need to trim hundreds of thousands of dollars from the 2015 city budget.

Council met Wednesday night to discuss next year’s budget for the first time. Each council member talked about the needs of their respective departments and offered rough estimations on how much revenue and expenses their department would generate.

Council concluded the difference between anticipated revenues and expenses could be up to as much as $1 million.

“The problem is revenue is flat and expenses are rising,” said Mayor Tom Donaldson.

The 2014 budget is $7.67 million.

While most revenues are expected to be about the same as this year’s budget, city clerk Mindy Gall said a big hurdle for the city next year is the lack of a surplus available to help balance the budget.

The surplus comes from a savings of prior year funds. The city used a $248,000 surplus from last year to balance its existing budget, although Gall said it has used more than $400,000 annually in years past.

However, no such revenue is an option for 2015.

“In the past we’ve been able to pull money from our reserve to balance the budget,” said Councilwoman Kathy Kline. “There’s nothing left in the savings.”

Much of the additional costs come from projected new expenses for the city’s three unions, which represent its police, firefighters, and nonuniformed workers.

Contracts with all three unions expire at the end of the year, and new deals will likely bring an increase in thousands of dollars for wage expenses, insurance coverage and other fees.

The problem for council members is they will not know how much an impact the new contracts will have until they are finalized. All three are still in negotiations.

Councilman Richard Schontz Jr. said the negotiations are tough because if the city doesn’t offer a fair wage, then the unions can take the city to arbitration.

The city just finalized its current contract with the fire department in August, about two and a half years after its previous deal expired at the end of 2011.

Council used between 2 percent and 3 percent salary increases as a prediction for employee wages in 2015.

Kline questioned why the city would negotiate raises to its employees if it is facing a large deficit.

“It doesn’t make sense to me,” she said.

Schontz said the unions likely won’t accept a deal with no increase.

“If we don’t (offer a raise), then they will go to arbitration and get one anyway,” he replied.

Contractual obligations are expected to account for most of the city fire department’s increased request of $133,000 on its $1.7 million budget. Fire Chief Nick Ban said a portion of that number also comes from mandatory safety equipment purchases.

Donaldson, who oversees the city police department, requested a $273,000 hike to the department’s $2.08 million budget from this year.

While much of that comes from contractual obligations, the mayor included other items he is requesting from council, including new computers and money to pay for part-time officers.

The mayor said up to four part-time officers would cut back on the department’s overtime hours and would allow for better enforcement.

“You have to spend money to fight crime,” he said.

Meanwhile, Donaldson said some of the computers at the police station barely work.

“There are a lot of things that need attention,” Donaldson said.

The mayor admitted he likely won’t receive all the money he is asking for police protection, and said this level of budget talks is more of a “wish list.”

“That’s how it works,” he said. “I ask for what I would want, and we’ll see what (council) agrees upon.”

The city streets and parks departments requested an additional $39,000 and $7,000 respectively for their departments.

Other administrative costs estimate thousands of additional dollars in expenses, although city officials are working to cut some expenses before an official budget needs to be passed.

John Evans, city code official, said he believes his department can save about $15,000 per year by replacing a vacant code enforcement officer position with a part-time employee and by passing a share of the work to Evans.

The city treasurer’s office was the one department that presented a budget less than this year, proposing a $400 reduction on its $145,000 expense in the 2014 budget.

The city tax rate is 38.75 mills. The only two taxes the city can raise are the debt service tax, which is 6.25 mills, and the recreation tax, which is 2 mills. Those taxes bring in about $411,000 and $131,000 respectively.

Council members will review the requested budget items and introduce a proposed budget at council meetings on Nov. 18 and Nov. 20. The budget would be adopted in December.

While council hopes it can find a way to cut away at some of its expenses, its five members did discuss the possibility that the city could hit a shortfall next year. Under that scenario, the city would shut down some of its services until money became available.

Council did not say how such a scenario would unfold, and whether administrative roles or public safety departments would stay open.

“There are different options available if that were to happen,” said Councilwoman Cheri Readie. “We haven’t eliminated any options.”