City council members and city officials are working to combat the estimated $25.3 million shortfall in the 2009 city budget.
"It is going to be a tough budget because right now our projected revenue is $26 million less," said councilman Lee Leffingwell. "We have to close that gap because the city does not have the option of funding a deficit."
The projected shortfall would come from the city's general operating funds, which mostly comes from city sales-tax revenue. This year, the sales-tax revenue is down between 8 and 9 percent and is only expected to grow by 3 percent within the next year because of decreased consumer spending.
"When people spend less, we get less," Leffingwell said. "We have felt it, no doubt about that."
The general operating funds represent $593 million of the city's overall $2.5 billion budget and affect payments for city services, including libraries, parks and police and fire departments.
City officials are hoping the projected budget shortfall will not affect city services to the extent that it will ultimately affect Austin residents. In 2003 the city had a similar budget deficit that included severe service cuts, and forced libraries to be closed more days a week, Leffingwell said.
The councilman said city department heads will have to identify areas in their departments for potential savings and will have to justify the need for possible hires during the next couple of months.
"This is something the rest of the country has been dealing with for some time," said Randi Shade, who will be inducted as a city councilwoman Wednesday. "It just shows us the city is not immune to these problems."
City Manager Marc Ott will present a budget proposal to the council July 24. Between July and September, the council will hold public hearings and will vote on the final budget in September.
During the last few months, councilmembers have attended budget work sessions on national and local economic issues.
"This is our priority - to get a handle on the budget," Shade said. "What's different this year is they have started their work sessions earlier, which is great."
Shade said she has not seen a budget presentation yet but that she will make the issue a priority.
"It's not one councilmember issue but the first thing we, as a group, address," Shade said. "I expect to tackle it and look for ways we can save."
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